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Attachment 1;

Dominican University

Brennan School of Business

MGMT 609-01

Fall 2019

Midterm Exam 

Instructions 

• This is a take home exam.

• You may consult only your books, notes and any book in the library. You may not consult any person regarding the exam

• The exam is due on or before Sunday November 7,2019. Any exams submitted later than this date will not be accepted and will be assigned a grade of 0

• The exam can be turned submitted electronically via canvas.

Name: Abdulrahman Almahmood 

SID: 908675 

Question Grade Out of

One 10

Two 10

Three 10

Four 10

Five 10

Six 10

Seven 10

Eight 10

Nine 10

Ten 10

Total 100

Good Luck 

Question One                  

The XYZ Company supplies a component to several large automobile manufacturers. The parts that XYZ assembles into the finished components come from two sources: the XYZ molding department makes one very critical part, and the rest come from outside suppliers. The process flow diagram of the operation is shown below. 

In the molding shop, there are 11 machines capable of molding the one part done in-house, but historically one machine is always being maintained or repaired at any given time. Each machine requires a full-time operator who earns an hourly wage of $15, though only 50 minutes of a molding operator's typical hour is occupied with the tasks of loading, unloading, actively monitoring, and adjusting the machine. The machines can each produce 25 parts per hour. The workers will work overtime at a 50% wage premium. There are currently only 6 operators dedicated to molding this automobile component. An additional 4 operators are available from a labor pool within the company. 

In the final assembly shop, purchased parts and those molded in-house are assembled by 15 workers working an eight-hour shift on an assembly line that moves at the rate of 150 components per hour. Each assembly worker earns a wage of $10 per hour, though on average only 37.5 minutes of an assembly worker's typical hour is spent working directly on components. Management believes that they could hire 15 more workers for a second shift if necessary. 

The size of inventories represented in the figure depend on many factors, including the degree of synchronization in the scheduling that takes place in molding and in purchasing. It may be reasonable to assume that, in order to have uninterrupted final assembly, there are always some molded and purchased parts in inventory. 

Determine the rate of output (or capacity) of the component operation. Assume the department purchasing parts has virtually unlimited capacity, i.e., it can provide any reasonable number of parts each week. Determine the direct labor content, direct labor utilization and labor cost of the molding and assembly tasks. 

Component workers 

 Ti 1/Ti Ci Ci/Ti

Component Worker 2.5 parts per min 1 /2.5

= .4 15 workers 15 / .4

=6

Effective Capacity of Component 8 hr day 

6 * 480 mins = 2880

1200/2880 = .4166

^^(150 components * 8 hr = 1200)

Capacity Utilization = 41.66%

Molding Direct Labor Cost 

($15/ 1 hour) / (25/hr)

.25/.41 = $.6 per minute .6* 60 mins = $36

$36 per hour * 6 = $216 per hour direct labor cost

Direct Labor Content 

50 mins on machine * 6 workers = 300 min per hour

Labor Utility  

50 min/ 60 min = .83 per hour

Labor Utility = 83% per hour

Assembly workers 

Direct Labor Cost

($10/ hr) / (150 components/ hr)

(10/60) / (150/60)

.166/ 2.5 = .0664

.0664 * 60 mins = $4 per hour

4*15 workers = $60 for direct labor cost for 15 workers

Direct Labor Content 

37.5 min on machine * 15 workers = 562.5 mins of Direct Labor content

Avg. labor utility 

562.5*(562.5 + 337.5 mins idle) = .625

 (^^ all 15 workers accounted for)

Average labor utility = 62.5%

Question Two                 

Daffy Dave’s Sub Shop makes custom submarine sandwiches to order. They are analyzing the processes at their shops. The general flow of the process is shown below. There is a separate person working at each of the steps in the process.

1 min per order 3 mins /order 4 mins/order 2 min/order 

Daffy Dave wants to figure out the following for a typical 8-hour work day. 

a. What is the current maximum output of the process?

i. The current max output for a typical 8 hour work day is 48 sandwiches

ii. 60 min * 8 hours = 480

iii. 10 min/ order

iv. 480/10 = 48 sandwiches

b. If we add another person, where would we add him or her? What is the benefit? 

i. If you add another person it would have to be at the bottleneck to reduce the amount of time it takes for toppings to be put on the sandwich. Your line is as fast as your bottleneck so therefore if you reduce that time you can get more orders done.

c. Is there a benefit if we can shift 1 minute from Bun and Meat to order taking? Assume we do not make change in part b above. 

i. No because your bottleneck will not change. Your product will still be held up at the condiments station no matter the times that the stations take before it. (Unless they are longer than 4 mins of course)

d. Is there a benefit if we shift 1 minute of work from Condiments to Bagging? Assume we do not make the changes in parts b and c above. 

i. Yes because by doing this you’re making the production line somewhat equal, therefore the orders will come out on a timely manner.

Question Three                

Bill’s Car Wash offers two types of washes: Standard and Deluxe. The process flow for both types of customers is shown in the following chart. Both wash types are first processed through steps A1 and A2. The Standard wash then goes through steps A3 and A4 while the Deluxe is processed through steps A5, A6 and A7. Both offerings finish the drying station A8. The number in parenthesis indicate the minutes it takes for that activity to process a customer.

a. Which step is the bottleneck for the Standard car wash process? For the Deluxe car wash process? 

i. For the Standard Wash, the bottleneck is step A4

ii. For the Deluxe Car wash it is Step A6

b. What is the capacity (measured as customers served per hour) for Bill’s Car Wash to process a Standard and Deluxe customers? Assume no customers waiting at step A1, A2 or A8.

i. Your line moves as fast as your bottleneck! Therefore if we have to wait 15 minutes at the standard you can do up to 4 cars per hour in the Standard wash. During the Deluxe wash, the bottle neck is 20 minutes therefore we can do 3 cars per hour.

c. If 60 percent of the customers are Standard, and 40 percent are Deluxe, what is the average capacity of the car wash per hour?

i. 7*.6 = 4.2

ii. 7*.4 =2.8

iii. (4.2+2.8)/2 = 3.5 cars average per hour

d. Where would you expect Standard wash customers to experience waiting lines, assuming the new customers are always entering the shop and that no Deluxe customers are in the shop? Where would the Deluxe customers have to wait, assuming no Standard customers?

assuming no deluxe customers, the standard customers would have to wait during step A4. If there was no standard customers , the Deluxe customers would have to wait at step A6

Question Four

A company manufactures 4 products on 3 machines. The production schedule for the next 3 months is

Product Jan Feb Mar 

1 200 0 200

2 100 100 100

3 50 50 50

4 100 0 100

The number of hours each product requires on each machine is 

Machine Product

 1 2 3 4

1 0.25 0.15 0.15 0.25

2 0.33 0.20 0.30 0.50

3 0.20 0.30 0.25 0.10

Setup times are roughly 20% of the operation times. The numbers of hours available during the three months are:

Machine Jan Feb Mar 

1 120 60 60

2 180 60 180

3 120 60 120

Determine if there is enough capacity to meet the product demand. 

January for Machine 1: 96 hours actually available

Prod 1: 50 hours on machine

2: 15 hours

4: 7.5 hours

4: 25 hours

Total 97.5 hours

 not enough capacity

Febuary Machin 1 48 hours actually available  

1: 0

2: 15 hours

3: 7.5 hours

4: 0 hours

Total 22.55

 enough capacity in febuary

March Machine 1

1: 50 hours

2: 15 hours

3: 7.5 hours

4: 25 hours

Total 97.5 hours

not enough capacity

Machine 2

January : 144 available, 151 needed

Febuary: 48 hours available. 35 needed

March: 144 available, 151 needed

It seems there is a pattern of having enough capacity during february and not enough in january and march. Therefore we conclude that we do not have enough capacity to meet demand at these rates. 

Question Five

a. Jill’s Job Shop buys two parts (Tegdiw and Widgets) for use in its production systems from two different suppliers. The parts are needed throughout the entire 52-week year. Tegdiws are used at a relatively constant rate and are ordered whenever the remaining balance drops to the reorder level. Widgets are ordered from a supplier who stops by every three weeks. Data are as follows 

ITEM TEGDIW WIDGET

Annual Demand 10,000 5,000

Holding cost(% of item cost) 20% 20%

Setup or order cost $150.00 $25.00

Lead time 4 weeks 1 week

Safety stock 55 units 5 units

Item cost $10.00 42.00

i. What is the inventory control system for Tegdiw? That is, what is the ordering quantity and what is the reorder point. 

ii. What is the total cost associated with the system developed in question i?

iii. What is the inventory control system for widgets?

iv. What is the total cost of Widgets inventory system?

Given the following information, formulate an inventory management system(ordering quantity, reorder point and Total cost). The item is demanded 50 weeks a year. 

Item cost $10 Standard deviation of weekly demand

Order cost $250 25 per week

Annual Holding cost (%) 33% of item cost Lead time 1 week

Annual demand 25,750 Service probability 95%

Average demand 515 per week

 Question Six                  

Flexibility and flexible capacity can provide the company with strategic advantages when facing uncertain demand. Based on the capacity models discussed in the Eli Lilly case, explain how would a company utilize flexible capacity as a hedge against demand fluctuations and uncertainty?

When you have flexible capacity it is always in your advantage. We saw in a previous question that ertain months did have capacity and other months did not due to fluctuation in demand of a product. With this flexibility you are able to utilize your machines and employees to their full potential. We discussed Shouldice adding an extra 45 beds to their site in order to make for better business. Without these extra 45 beds they could be running behind or have an even longer waiting list. Keeping customers waiting is something that you never want to do in the first place. Making sure you have that extra room to grow gives you an advantage over your competitors. And if it so happens that during some months demand is lower, then you can just cut back on the utilization of those extra machines or beds. It is said that is costs less per unite to produce more units at once. Therefore if you have more space and machines available to make more product you will be helping the customer and saving yourself money as well. What could go wrong here is that there could be excess product that is produced or in the case of the hospital there could be extra staff that are not really needed that day.

Question Seven

The beginning step in studying a productive system is to develop a description of that system. Once a system is described, we can determine why the system works well or poorly and recommend production related improvements. Because most of us are familiar with restaurants, try your hand on describing the production system employed, answering the following questions:

a. What are the important aspects of the service package?

i. important aspects of the service package are good suppliers, good working line in the kitchen, good staff to interact with customers and a good location.

b. Which skills are needed by the service personnel? 

i. The service personnel must have a very positive attitude, filled with patience, have an outgoing personality. Without these things they cannot really connect to the customer. The service personnel are the ones that create the image of the restaurant. If you get a bad waiter, it makes you not want to go back there again regardless of how pretty it looked, or how good the food tasted. Operations and production are always important back of the house tasks. But customer service and appearance will always be the first thing that customers think about.

c. Develop a rough-cut service blueprint of the delivery system. Critique the blueprint pointing out points of potential failure 

.
d. Can the customer/provider interface be changed to include more technology? 

Yes it can constantly improve itself. during recent years restaurants have developed a buzzer system that they give to customers when they come in for reservations. you can wait in and around the restaurant until your buzzer tells you that your table is ready. It has made things easier on the host because they are not constantly bombarded about a table being ready and it helps keeps everything more organized. Customers could also maybe get Apps downloaded onto their phones that allows for registering a reservation or acting as its own buzzer for seating. Recently i saw that Cinemark has a do no disturb button on their app that puts your phone on silent during the time of the movie. Regular phones already to this, but the perks of using it through the app is that you get free treats and rewards at the end of the movie if you do not use your phone during the duration of it. This provides customers with interaction on the app and interaction in real life at the concession stands.

Question Eight

The following are Deming’s 14 points for Total Quality Management. Which point(s) do you believe will have greatest resistance in your company? Why? What strategies and course of action you would recommend to overcome such resistance? 

Deming's 14 points 

The 14 points are a basis for transformation of [American] industry. Adoption and action on the 14 points are a signal that management intend to stay in business and aim to protect investors and jobs. Such a system formed the basis for lessons for top management in Japan in 1950 and in subsequent years.

The 14 points apply anywhere, to small organizations as well as to large ones, to the service industry as well as to manufacturing. They apply to a division within a company.

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

6. Institute training on the job.

7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of an overhaul, as well as supervision of production workers.

8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

10. Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

11. a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.

b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

12. a. Remove barriers that rob the hourly paid worker of his right to pride in workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.

b. Remove barriers that rob people in management and engineering of their right to pride in workmanship. This means, inter alias, abolishment of the annual or merit rating and management by objective.

13. Institute a vigorous program of education and self-improvement.

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.

‘End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust. “ 

I believe it would be hard to implement this into a company because of the kind of business world we live in today. Everything lately has become about getting it the cheapest, the fastest, all while still trying to maintain the best product. Plans should be made to have one supplier so that they can gain a partnerships where you help each other grow. To have a reliable supplier means that you would have consistency and the prices could eventually be cut down if you stay in business with them for so long. The amount that you are with the supplier and how much you order could affect the price. In order to convince people that this would be the best way to go is to have seminars and show them that those who go the cheap and easy route usually have bad publicity or have backlash from their customers. I would show examples of those companies who are very ethical and responsible with their money. Patagonia and Chipotle are two that come to mind currently. Chipotle stops serving carnitas if they have problems with the farmer that raise the pigs. They are very transparent with the public. if they were to just act like any other business that is cutting corners they would jump to a different supplier and still provide carnitas even if they are not up to their standards.  

Institute a vigorous program of education and self-improvement. 

This point could also have resistance in our company not just from employees but from the board as well. This sort of thing requires extra time from the employees and much more money from the employer. Someone would have to be hired to teach these programs and the material that is used would probably have to be bought. Then on the part of the employees, they would have to come in on their spare time, all to in reality improve the company but of course themselves as well. They might not see it as something that benefits them right away so the company would have to make sure to give them good incentives for completing these classes or even paying them while they do the training. We would have to show the importance of growing and education yourself. The tasks that are taught could be utilized at a different job not just their current one. We would have to educate them that this is for their best interest.

Question Nine           

You have been appointed as the quality manager for the credit department at a local bank. The bank issues guaranteed loans for its customers. The loan approval system is summarized as follows: 

a. Customer files a loan application.

b. The loan application is then forwarded to the credit department.

c. The credit department verifies the information given by the customer for its correctness.

d. The credit department then establishes the credit limit for the customer.

e. The customer then provides all the documentation needed for guaranteeing the loan.

f. The bank’s legal department issues the proper legal paperwork.

g. The loan officer then issues the loan and gives the money to the customer.

At which point(s) of this process will you perform inspection and why? 

I would inspect between points B and C and also between E & F to make sure that the the employees are doing a good job of reviewing the application in a timely manner. This is important because if the process takes too long or takes longer than the competitor then this is an opportunity for us to lose a customer. You never know who the customer is looking into for loans. They could have applied to 4 different banks for the same loan to see who can help them out the most. You want to make sure that the employees are on top of their game in order to give that fast service. I also would check the amounts of applications that they get through per day or per week. I would analyze if there would be a need to add more people to any of these steps. Any employees that directly interact with the customer have to make sure to get them to always think of our bank first. You want to have a system that helps prevent problems in the future not one that just catches the mistakes. Because once the mistakes are made, a person has already made their opinion about the business. You can go above and beyond to fix it, and maybe this will allow the customer to forgive the business but you can never come back from a mistake fully. That is the difference between quality control and quality assurance. You want to be pro- active not reactive!

Question Ten

Discuss the following statements (100 words maximum for each): 

1. If a new technology does not reduce costs. Should it be used?

It should be used if it reduces the time spent on something, the workload of the employees or customers waiting. It is not always about reducing the cost. There are other factors that can come into play when trying to install technology. If the technology allows you to ship out product in 3 days instead of 5, that right there allows you to have more capacity to create more orders which in itself gets you more revenue. 

2. What human weaknesses favor automation? What human strengths favor people over machines? 

Simple Human error and the time it takes for someone to do something make you favor automation. Screwing caps onto a tube of toothpaste could take an extra minute for a human than a machine that can be programmed to twist something on to the tube at a certain speed. The advantage we have is instinct. If something is going wrong on the line they can realize it, fix it and continue. If a machine breaks down it could take days or weeks for a tech to fix it and then you would have to sift through the product that passed through that machine to see if there are any errors on those products. 

3. How serious is the problem of being late to market? Can the design team do much about the problem? Explain? 

In a sense, it is pretty serious. Your customers will already have in mind a different company or brand to get these products from. The product that you bring out will automatically be of lesser value, or maybe viewed as the knock off version. A design team can take what is already on the market and find ways to put an edge on it. Therefore when you release it onto the market again you are seen as someone new and innovative, instead of a copy- cat who came late into the game.  

4. If a surge in demand projected by the marketing department were to occur, what would be the potential effects on manufacturing? How should manufacturing respond? 

It would negatively affect manufacturing because this is not something that they were prepared to handle. There could be a start of backorders or their products quality could decline because they are trying to get out all of the orders placed. To avoid these problems manufacturing should add machines or workers to ensure that they do not fall behind or loose quality in the product. 

5. A local fast-food restaurant processes several customer orders at once. Service clerks cross paths, sometimes nearly colliding, while they trace different paths to fill customer orders. If customers order a special combination of toppings on their hamburger, they must wait for quiet sometime while the special order is cooked. How would you modify the restaurant’s operations to achieve competitive advantage? Because demand surge at lunchtime, volume flexibility is a competitive priority in the fast food business. How would you achieve volume flexibility? 

Instead of having different clerks running around with one order, I would create a production line that allowed the ordered to be fulfilled at a timely manner. A station for taking the order, splitting the buns & putting on the meat, putting on toppings and taking the order out. There would be extra employees in the topping section because that is the part of the burger that is customized, therefore that could become the bottleneck. That is something that we want to avoid to keep the food coming out quickly and consistently. We have to create a safe and effective work environment.