Operations Management

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Essay Questions

 

Question 1: You are designing a grocery delivery business. Via the internet, your company will offer staples and frozen foods in a large metropolitan area and then deliver them within a customer-defined window of time. You plan to partner with two major food stores in the area. What should your competitive priorities be and what capabilities do you want to develop in your own core and support processes?

 

Is it possible for a project to have more than one critical path? Discuss the implications of such a situation with respect to each of the following aspects:

 

  1. Project risk
  2. Total available slack
  3. Resource dependencies
  4. Responsibilities of the project manager

 

Question 2: A flowchart helps us see all of the steps in a process, which in turn helps us improve the process. It also helps us identify and eliminate any redundant steps in a process. Using Word tools (SmartArt under the Insert tab), design a process flow chart for the grocery delivery business in Question 1 above. In the discussion element of your response, clearly define the steps within the process and provide a rationale for each step. Include all elements that you feel are necessary and appropriate to the process of a singular customer. The assumption is that the process is repeatable for every customer using the service. Think of the elements that you will be addressing or answering in the succeeding questions.

 

Question 3: For the grocery delivery business addressed in Question 1, the grocery chains that you are planning to partner with use differing inventory control models. Company A utilizes the Just-in-Time (JIT) inventory control model and Company B uses an Economic Order Quantity model. In reviewing your business plan, the bank loan officer has noticed this. As the loan officer is not overly familiar with either model, a request has been made of you to provide a description of each model and an explanation of why partnering with these companies would or would not create a conflict within your operations. Provide a detailed analysis of the situation in your business model.

Question 4: A Quality Assurance (QA) Program is essential to the success of any business.In establishing your grocery delivery business, what are some of the Quality Control (QC) processes that you envision employing? Why? Provide examples of potential metrics. Justify your choices.

 

 

 

Question 5: Efficiency is a critical element both in terms of individuals and machinery in any business. Describe some efficiency measures that you would implement in your grocery delivery business. What are the analysis tools that you would utilize to determine the effectiveness of these efficiency measures? 

Problem Questions

Problem 1

Tried and True Clothing has opened four new stores in college towns across the state. Data on monthly sales volume and labor hours are given below. Which store location has the highest labor productivity?

Store

Annandale

Blacksburg

Charlottesville

Danville

Sales volume

$40,000

$12,000

$60,000

$25,000

Labor hours

    250

     60

    500

    200

 

 

Problem 2

Construct a Gantt chart for the project described by the following set of activities, and indicate the project completion time:

Activity

Activity Predecessor

Time (Weeks)

1

5

2

4

3

1

3

4

2

6

 

 

 

 

Problem 3

Backwoods American, Inc., produces expensive water-repellent, down-lined parkas. The company implemented a total quality-management program in 2005. Following are quality-related accounting data that have been accumulated for the five-year period after the program's start.

 

Year

 

2006

2007

2008

2009

2010

Quality Costs (000s)

 

 

 

 

 

Prevention

$3.2

10.7

28.3

42.6

50.0

Appraisal

26.3

29.2

30.6

24.1

19.6

Internal failure

39.1

51.3

48.4

35.9

32.1

External failure

118.6

110.5

105.2

91.3

65.2

Accounting Measures (000s)

 

 

 

 

 

Sales

$2,700.6

2,690.1

2,705.3

2,310.2

2,880.7

Manufacturing cost

420.9

423.4

424.7

436.1

435.5

 

Please calculate failure costs as a percentage of total quality cost for each year in which the data is provided. Is there a trend?

 

Problem 4

AV City stocks and sells a particular brand of laptop. It costs the firm $625 each time it places an order with the manufacturer for the laptops. The cost of carrying one laptop in inventory for a year is $130. The store manager estimates that total annual demand for the laptops will be 1500 units, with a constant demand rate throughout the year. Orders are received within minutes after placement from a local warehouse maintained by the manufacturer. The store policy is never to have stockouts of the laptops. The store is open for business every day of the year except Christmas Day. Determine the following:

 

a. Optimal order quantity per order

b. Minimum total annual inventory costs

c. The number of orders per year

d. The time between orders (in working days)

Problem 5

The Great North Woods Clothing Company sells specialty outdoor clothing through its catalog. A quality problem that generates customer complaints occurs when a warehouse employee fills an order with the wrong items. The company has decided to implement a process control plan by inspecting the ordered items after they have been obtained from the warehouse and before they have been packaged. The company has taken 30 samples (during a 30-day period), each for 100 orders, and recorded the number of defective orders in each sample, as follows:

Sample

Number of Defectives

Sample

Number of Defectives

 1

12

16

 6

 2

14

17

 3

 3

10

18

 7

 4

16

19

10

 5

18

20

14

 6

19

21

18

 7

14

22

22

 8

20

23

26

 9

18

24

20

10

17

25

24

11

 9

26

18

12

11

27

19

13

14

28

20

14

12

29

17

15

 7

30

18

 

Construct a P-chart for the company that describes 99.74% (3σ) of the random variation in the process, and indicate if the process seems to be out of control at any time.

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