Questions for Practice - OM

Note: The following questions are given primarily for practice purposes and do not ensure
that the identical question format will be repeated in the end term.

1. Deb Bishop Health and Beauty Products has developed a new shampoo, and
you need to develop its aggregate schedule. The cost accounting department
has supplied you the costs relevant to the aggregate plan, and the marketing
department has provided a four-quarter forecast. All are shown as follows:

Quarter Forecast
1 1400
2 1200
3 1500
4 1300

Costs
Previous quarter’s output 1500 units
Beginning inventory 0 units
Stockout cost for backorders $50 per unit
Inventory holding cost $10 per unit for every unit held at
the end of the quarter
Hiring workers $40 per unit
Layoff workers $80 per unit
Unit cost $30 per unit
Overtime $15 extra per unit
Subcontracting Not available

Your job is to develop an aggregate plan for the next four quarters.
a) First, try hiring and layoffs (to meet the forecast) as necessary.
b) Then try a plan that holds employment steady.
c) Which is the more economical plan for Deb Bishop Health and Beauty
products?

2. SummerFun, Inc., produces a variety of recreation and leisure products. The

production manager has developed an aggregate forecast:

Month Mar Apr May Jun Jul Aug Sep Total

Forecast 50 44 55 60 50 40 51 350
 Use the following information to develop aggregate plans.

Costs
Regular production cost $80 per unit
Overtime production cost $120 per unit
Regular capacity 40 units per month
Overtime capacity 8 units per month
Subcontracting cost $140 per unit
Subcontracting capacity 12 units per month
Holding cost $10 per unit per month
Backorder cost $20 per unit
Beginning inventory 0 unit

Develop an aggregate plan using each of the following guidelines and compute
the total cost for each plan. Hint: You will need extra output in April and
August to accommodate demand in the following months.

a) Use regular production. Supplement using inventory, overtime, and

subcontracting as needed. No backlogs allowed.

b) Use a level strategy. Use a combination of backlogs, subcontracting, and

inventory to handle variations in demand. There should not be a
backlog in the final period.

3. Manager Chris Channing of Fabric Mills, Inc. has developed the forecast shown
in the table for bolts of cloth. The figures are in hundreds of bolts. The
department has a regular output capacity of 275(00) bolts per month, except for
the seventh month, when capacity will be 250(00) bolts. Regular output has a
cost of $40 per hundred bolts. Workers can be assigned to other jobs if
production is less than regular. The beginning inventory is zero bolts.

a) Develop a chase plan that matches the forecast and compute the total
cost of your plan. Overtime is $60 per hundred bolts. Regular production
can be less than regular capacity.

b) Would the total cost be less with regular production with no overtime,
but using a subcontractor to handle the excess above regular capacity at
a cost of $50 per hundred bolts? Backlogs are not allowed. The inventory
carrying cost is $2 per hundred bolts.

Month 1 2 3 4 5 6 7 Total
Forecast 250 300 250 300 280 275 270 1925
4. A company is setting up an assembly line to produce 192 units per 8-hour shift.

The following table identifies the work elements, task times and immediate

predecessors.

Task Precedence Task Time (Sec)

A - 40
B A 80
C D, E, F 30
D B 25
E B 20
F B 15
G A 120
H G 145
I H 130
J C, I 115

Use the most appropriate heuristic to balance the assembly line and
calculate the efficiency.

5. The following table refers to Green Grass Inc., a manufacturer of lawn and
garden equipment.

Task Description Precedence Task Time (Sec)

A Bolt leg frame to hopper - 40
B Insert impeller shaft A 30
C Attach axle A 50
D Attach agitator B 40
E Attach drive wheel B 6
F Attach free wheel C 25
G Mount lower post C 15
H Attach controls D, E 20
I Mount nameplate F, G 18

The company wants a production line to be designed to make 2400

spreaders per week. The plant will operate 40 hours per week. Use the most
appropriate heuristic to balance the assembly line and calculate the
efficiency.
6. Processing time in minute of six jobs on two machines are given below (order
is M1 then M2). Use the Johnson’s algorithm the schedule these jobs and also
calculate the idle times on each machine.

Job 1 2 3 4 5 6
Machine M1 4 6 7 8 9 1
Machine M2 5 8 1 3 6 10

7. Consider seven jobs that are processed on two operations X and Y. The job is
processed in sequence so that Y should X. Determine the optimal order in
which jobs should be sequenced.

Job 1 2 3 4 5 6 7
Processing 4 2 1 6 7 8 9
time on X
Processing 7 6 2 3 7 5 6
time on Y

8. From the given data, use FCFS and SPT rule to calculate average completion
time, utilization, average number of jobs in the system, and average job
lateness. Job starts at day 1 so yesterday will be 0.

Job (in sequence of arrival) Processing time (in days) Due date
J1 4 6
J2 5 7
J3 3 8
J4 7 10
J5 2 3

9. A defense contractor in Dallas has six jobs awaiting processing. Processing time
and due dates are given in the table. Assume jobs arrive in the order shown
below in the table and start day is 1, apply FCFS and SPT rule to find:

Processing time Job due date

(days) (days)
A 6 22
B 12 14
C 14 30
D 2 18
E 10 25
F 4 34
 a) The average job lateness?
b) The utilization of the system?

10. A dry cleaner uses exponential smoothing to forecast equipment usage at its
main plant. August usage was forecasted to be 88 percent of capacity; actual
usage was 89.6 percent of capacity. A smoothing constant of 0.1 is used.

a) Prepare a forecast for September.

b) Assuming actual September usage of 92 percent, prepare a forecast of
October usage.
c) Calculate mean absolute deviation (MAD) considering two months Sep
and Oct.
d) Now assume smoothing constant of 0.6. Compare MAD with 0.6 and 0.1
considering two months Sep and Oct.

11. The monthly demand for units manufactured by the Acme Rocket Company
has been as follows:

Month Units

May 100
June 80
July 110
August 115
September 105
October 110

a) Calculate forecast for October using 3-month moving average method.

b) If weight for Sep is 0.4, Aug is 0.3, July is 0.18, and June is 0.12, forecast
for October using weighted average.
c) If forecasted demand in October was 105.4 units; calculate the forecast
for November using exponential smoothing method with smoothing
constant α =0.20.
d) Compare MAD of all forecasting methods results considering all
months.
e) Compare MAD of all methods using Aug, Sep, and October period only.