Top-Rated Free Essay

Ch1 ModA Solutions 1: Operations Management and Productivity

Satisfactory Essays
3101 MSOM
1st in-class Group Assignment (Ch 1 and Mod A)

Q1) Lake Charles Seafood makes 450 wooden packing boxes for fresh seafood per day, working in two 10-hour shifts. Due to increased demand, plant managers have decided to operate three 8-hour shifts per day instead. The plant is now able to produce 650 boxes per day. (2-points)
i. Before the change in work rules, the company's productivity = boxes/hour ii. After the change, the new productivity level = boxes/hour iii. Based on the changes made, the percent increase in productivity =. If it wished to increase its productivity by more than 18%, did it happen? _YES_.

iv. If production is increased to 800 boxes per day (with the three 8-hour shifts), the new productivity is boxes/hour.

Q2) Charles Lackey operates a bakery in Idaho Falls, Idaho. Because of its excellent product and excellent location, demand has increased by 45% in the last year. On far too many occasions, customers have not been able to purchase the bread of their choice. Because of the size of the store, no new ovens can be added. At a staff meeting, one employee suggested ways to load the ovens differently so that more loaves of bread can be baked at one time. This new process will require that the ovens be loaded by hand, requiring additional manpower. This is the only thing to be changed. (Productivity remains the same. Each worker works 160 hours per month)
If the bakery currently makes 1500 loaves per month with a labor productivity of 2.344 loaves per labor hour, then Lackey will need to add _______ worker(s) to meet the increased demand. (2-points)

Solution: Each worker works for 160 hours in a month and has a productivity of 2.344 loaves/ hour. Therefore, in a month’s time, he can produce 160*2.344 = 375.04 loaves.

Increase demand = 0.45*1500 = 675. To make 675 loaves in a month, when 1 person can make 375.04, Charles would need to hire people

Q3) There are three likely states of nature (High (50%), Medium (30%), and Low (20%) demand). If the large factory will post profits of $50,000, $25,000, and - $10,000 under these states of nature, respectively, what will be the EMV of the factory? (1-point)

EMV = 50000*0.5 + 25000*0.3 - 10000*0.2 = 30,500

Q4) A plant manager wants to know how much he should be willing to pay for perfect market research. Currently there are two states of nature facing his decision to expand or do nothing. Under favorable market conditions the manager would make $100,000 for the large plant and $5,000 for the small plant. Under unfavorable market conditions the large plant would lose $50,000 and the small plant would make $0. If the two states of nature are equally likely, how much should he pay for perfect information? (2-points)

The expected value of perfect information for Smith =

= 100,000*0.5 + 0*0.5 = 50,000
= 25,000

EVPI = 25,000

Q5) Smith Jones, Inc., is considering building a sensitive new airport scanning device. His managers believe that there is a probability of 0.35 that the ATR Co. will come out with a competitive product. If Smith adds an assembly line for the product and ATR Co. does not follow with a competitive product, Smith’s expected profit is $65,000. If Smith adds an assembly line and ATR follows suit, Smith still expects $10,000 profit. If Smith adds a new plant addition and ATR does not produce a competitive product, Smith expects a profit of $600,000, if ATR does compete for this market, Smith expects a loss of 120,000 (3-points)

Solution: The decision table for this problem is as follows:

ATR comes out with a competitive product
ATR does not follow the product
Smith adds an assembly line
+10,000
+65,000
Smith adds a new plant
-120,000
+600,000
Probability
0.35
0.65

a) Expected value for the ‘Adds an assembly line’ option is $45,750. Expected value for the ‘Adds a new plant’ option is $348,000

The alternative that provides Smith the greatest expected monetary value is ‘Adds a new plant’.

b) Using the maximax and maximin methods, the appropriate decisions are ‘Adds a new plant’ & Adds an assembly line’ respectively.

c) The expected value of perfect information for Smith = = $ 45,500

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Moda

    • 415 Words
    • 2 Pages

    Points included in our exam Chapter 1: Introduction (The whole chapter) 1. International Economics Definition 2. Difference between domestic trade and foreign trade Chapter 2: Labor Productivity and Comparative Advantage: The Ricardian Model 1. The Ricardian model is based on technological differences across countries. 2. These technological differences are reflected in differences in the productivity of labor. 3. Opportunity Cost 4. Comparative Advantage…

    • 415 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Hw Solution Ch1-6

    • 1632 Words
    • 7 Pages

    HW Solution Chapter 1: Case (One day in the life) This case shows a glimpse of what it is like to be a project manager. It also underscores that being a project manager is more social than technical and that project managers spend the majority of their time interacting with various people who impact a project. 1. How effectively do you think Rachel spent her day? You may argue that she is inefficient and does not have control over her time. You may also argue that this is…

    • 1632 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    ch1

    • 1793 Words
    • 12 Pages

    • The World Around You • Objects and Properties • Your physical surroundings include naturally occurring and manufactured objects such as sidewalks and buildings. • Objects are physical "things" in our environment – How we experience these things are due to our experiences as we grow and mature. • Properties – Properties of objects are those qualities that make an object what it is. – We need some common way of describing the properties of objects in our physical environment. • Referent – A…

    • 1793 Words
    • 12 Pages
    Powerful Essays
  • Good Essays

    Vero Moda Marketing mix

    • 877 Words
    • 4 Pages

    VERO MODA Shreya Ghosh Fashion Communication Fashion Marketing and Retailing VERO MODA was one of the first brands to launch within the Bestseller family. Today VERO MODA is one of the largest brands in the company. The vision of the brand was to fulfill a need for good quality, on-trend clothing at affordable prices. VERO MODA is the brand of choice for the fashion-conscious, independent young woman who wants to dress well and pay less. Today, VERO MODA has more than 1,000 stores in…

    • 877 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Solutions 1

    • 1970 Words
    • 6 Pages

    will affect the performance of the two divisions in the company because there is still inequality and complaints - complaints that occur mainly the issue of cost - the cost of the underlying transfer pricing between divisions . 7.4 Aloha Products 1. Overview of Aloha Products: Aloha Products is a United States-based coffee-processor company that has been providing non-specialty and low-priced coffee for over a hundred years. It purchases the raw materials or what buyers and sellers refer…

    • 1970 Words
    • 6 Pages
    Powerful Essays
  • Satisfactory Essays

    Quiz 1 ch1 BUS 302

    • 738 Words
    • 8 Pages

    Quiz 1 ch.1 Current Location 1. BUS302087VA016-1148-001 Management Concepts 2. Week 2 3. Review Test Submission: Quiz 1: Chapter 1 (45 pts) Skip to Course Content Skip to Top Frame Tabs Menu Management Options Course Menu: BUS302087VA016-1148-001 (Management Concepts) Course Home Student Center Mobile Learn Announcements Email Gradebook Resources Class Introductions Week 1 Week 2 Week 3 Week 4 Week 5 Review Test Submission: Quiz 1: Chapter 1 (45 pts) Skip to Course Menu…

    • 738 Words
    • 8 Pages
    Satisfactory Essays
  • Satisfactory Essays

    MSQ CH1

    • 8802 Words
    • 36 Pages

    Essentials of Organizational Behavior, 11e (Robbins/Judge) Chapter 1 Introduction to Organizational Behavior 1) Until the late 1980s, business school curricula emphasized the ________ aspects of management. A) ethical B) people C) technical D) human E) global Answer: C Explanation: C) Until the late 1980s, business school curricula emphasized the technical aspects of management, focusing on economics, accounting, finance, and quantitative techniques. Course work in human behavior and…

    • 8802 Words
    • 36 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Ethics Ch1

    • 2210 Words
    • 19 Pages

    Explain the difference between ethical values and other values  Clarify the difference between ethics and the law  Describe the distinction between ethics and ethos  Introduce the distinction between personal morality, virtues and social ethics 1-2 McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. DISCUSSION CASE: MADOFF  Madoff pleads guilty to 11 counts of financial fraud and theft in March 2009  Is sentenced to 150 years in prison  A Ponzi scheme…

    • 2210 Words
    • 19 Pages
    Satisfactory Essays
  • Good Essays

    Osm Ch1

    • 1325 Words
    • 6 Pages

    STUDY OUTLINE FOR CHAPTER 1 INTRODUCTION TO Operations Management 1. Operations management is: The management of systems or processes that create goods and/or provide services 2. What are the three basic functions in business organizations? 1)Marketing 2)Operations 3) Finance 2. A supply chain consists of A sequence of activities and organizations involved in producing and delivering a good or service 4. What is meant by the term value-added? The amount by which the price or value…

    • 1325 Words
    • 6 Pages
    Good Essays
  • Good Essays

    ch1 testbank

    • 1626 Words
    • 7 Pages

    CHAPTER ONE PAST, PRESENT, AND FUTURE Multiple Choice 1. E-marketing affects traditional marketing in which of the following ways? a. increases efficiency of traditional marketing functions b. technologically transforms marketing strategies c. marginalizes customer value but increases profitability d. both A and B (d; Moderate; LO2; Use of Information Technology) 2. ________ is the subset of e-business focused on transactions that include buying/selling, digital value creation…

    • 1626 Words
    • 7 Pages
    Good Essays