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Problem 1 Working hours per day Working hours to produce a unit Average pay rate Overtime pay rate Currently worker Cost of hiring and training for additional worker Cost of layoff worker Beginning inventory Inventory cost Stock out cost : 8 hours : 10 working-hours : $6 per hour ($48 per day) : $9 per hour (above 8 hours per day) : 20 people : $300 per person : $400 per person : 50 units : $2 per unit per month : $20 per unit per month
Month
Workdays (W)
Worker (DD 10 8) 20 15 33 24 6 11 19
Total Cost
2. Plan 2 (Level strategy by fixed amount of 20 workers and utilize overtime when there are large demand)
Production Cost (Wo W $48) $21,120 $18,240 $20,160 $20,160 $21,120 $19,200 $120,000 Production per Day (PD) (Wo 8 10) 16 16 16 16 16 16 Production per Month (PM) (PD W) Over time (SO 10) 0 940 640 0 0 0 1,580
Month
Worker (Wo) 20 20 20 20 20 20 20
22 19 21 21 22 20
Total Inventory
Total Production Cost + Total Inventory Cost + Total Overtime Cost $120,000 + (1,134 $2) + (1,580 $9) $120,000 + $2,268 + $14,220 $136,488
Worker = 15 10 8 19
Month
Production Cost (PC) (Wo W $48) $20,064 $17,328 $19,152 $19,152 $20,064 $18,240 $114,000
22 19 21 21 22 20 125
15 15 15 15 15 15
0 127 81 0 0 0 208
Total Cost
= = = =
Total Production Cost + Total Inventory Cost + Total Stock Out Cost +Total Layoff Cost $114,000 + (1,013 $2) + (208 $20) + (1 $400) $114,000 + $2,026 + $4,160 +$400 $120,586
Problem 2 (Not Sure) a) I think this problem is not clear (multi-interpretation). The simplest answer is just sort the data. b) I think this problem is not clear (multi-interpretation). The simplest answer is just sort the data. c) Scatter Diagram or Cause-and-Effect Diagram. These are tools of Total Quality Management (TQM) for generating ideas. An example for scatter diagram might be a plot of time and sales for each firm. However, Cause-and-Effect Diagram might be a chart of possible locations for increasing quality problem which starts with four categories: material, machinery/equipment, manpower, and method.
Problem 3
Type 1 2 1 2 3 Units 1 to 40 41 or More 1 to 30 31 to 60 61 or More Price per Unit (Thousand Rupiahs) 220 200 220 208 198
Supplier A Supplier B
Annual Demand (D) = 1.000 units Carrying/Holding Cost (H) = 10% per unit per year Ordering/Setup Cost (S) = Rp 250.000
QA1 QA 2 QB1 QB 2 QB 3 2 DS 2 1.000 250 151 units per order H 0,1 220 2 1.000 250 159 units per order 0,1 200 2 1.000 250 151 units per order 0,1 220 2 1.000 250 156 units per order 0,1 208 2 1.000 250 159 units per order 0,1 198
Annual Ordering Cost (D Q S) Annual Carrying Cost (Q 2 H)
Supplier Type A B 2 3
Total Cost
Daisy Corp. should choose Supplier B for 159 units which gives total cost Rp201.146.427.
Problem 4
Level 0 Product 1
Level 1
Product A (3)
Product B (2)
Product C (1)
Level 2
Product D (3)
Product E (2)
Level 0
Product 2
Level 1
Product A (5)
Product E (2)
Level 0
Product 3
Level 1
Product A (2)
Product B (3)
Product D (2)
Lot Lead On Level Product Size Time Hand Lot for Lot Gross Requirements Projected On Hand Net Requirements Planned Order Receipts Planned Order Releases Gross Requirements Projected On Hand Net Requirements Planned Order Receipts Planned Order Releases Gross Requirements Projected On Hand Net Requirements Planned Order Receipts Planned Order Releases Gross Requirements Projected On Hand Net Requirements Planned Order Receipts Planned Order Releases Gross Requirements Projected On Hand Net Requirements Planned Order Receipts Planned Order Releases Gross Requirements Projected On Hand Net Requirements Planned Order Receipts Planned Order Releases Gross Requirements Projected On Hand Net Requirements Planned Order Receipts Planned Order Releases Gross Requirements Projected On Hand Net Requirements Planned Order Receipts Planned Order Releases 15
1 15
2 15
3 15
Week 4 5 15 15
6 15
7 15
8 15
15
9 80 15 65 65
65 8 8 8 8 8 8 8 40 8 32 32 30 5 25 25
32 5 5 5 5 5 5 5 5 5
1602 1951 7 0 153 195 153 195 1301 15 115 115 651 7 58 58
25 503 0 50 50 753 0 75 75
153 195 15 15 15 15
50 15 15 0
15
115 7 7 7 7 7
75 7
15
15
15
15
15
1&2
503 0 50 50
1&2
50 642 0 64 64
Problem 5 a) Infant mortality is the failure rate early in the life of a product or process. It can be applied as guidelines to know when a system requires service or when it is likely to fail for performing preventive maintenance. We should note that many infant mortality failures are not product failures per se, but rather failure due to improper use. This fact points up the importance in many industries of operations managements building an after-sales service system that includes installing and training. b)
Number of Breakdowns (N) 0 1 2 3 4 5 6 7 8 Total Number of Weeks in Record (TO) Number of Weeks That Breakdowns Occurred (O) 1 1 3 5 9 11 7 8 5 50 Frequency (F = O TO) 0.02 0.02 0.06 0.1 0.18 0.22 0.14 0.16 0.1 Expected Number of Breakdowns FN 0 0.02 0.12 0.3 0.72 1.1 0.84 1.12 0.8 5.02 breakdowns/week
= = = = = =
Expected Number of Breakdowns Cost per Breakdown 5.02 Rp250,000 Rp1,255,000/week Cost of Expected Breakdowns if Service Contract Signed Cost of Service Contract (3 breakdowns/week Rp250,000) + Rp645,000 Rp1,395,000/week
This preventive maintenance system based on contract is not profitable because it is more expensive than to not do so (the lowest cost strategy).