Dominican University

Brennan School of Business

MGMT 609-01
Fall 2017

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 12,2017. 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:

SID:

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.

Raw Molded
Materials Parts
Mold Parts Inventory

Finished
Products
Final Assembly

Purchased
Parts Inventory
Purchase parts from
supplier

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.
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.

Take the Slice the Bun Add the Bag the

order and add the toppings and Order
Meat/Cheese Condiments

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?

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

A3 A4
(12) (15)

Standard
A1 A2 A8
or Deluxe
(5) (6) (10)

A5 A6 A7
(5) (20) (12)

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

Product

Machine 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.

Question Five
The production manager at Sunny Soda, Inc. is interested in tracking the quality of the company’s 12-
ounce bottle filling line. The bottles must be filled within the tolerances set for this product because
of dietary information on the label shows 12 ounces as the serving size. The design standard for the
product calls for a fill level of 12.00  0.10 ounces. The manager collected the following sample data
(in fluid ounces per bottle) on the production process.

Sample Number Observation (ounces)

1 12.00 11.97 12.10 12.08
2 11.91 11.94 12.10 11.96
3 11.89 12.02 11.97 11.99
4 12.10 12.09 12.05 11.95
5 12.08 11.92 12.12 12.05
6 11.94 11.98 12.06 12.08
7 12.09 12.00 12.00 12.03
8 12.01 12.04 11.99 11.95
9 12.00 11.96 11.97 12.03
10 11.92 11.94 12.09 12.00
11 11.91 11.99 12.05 12.10
12 12.01 12.00 12.06 11.97
13 11.98 11.99 12.06 12.03
14 12.02 12.00 12.05 11.95
15 12.00 12.05 12.01 11.97

a. Are the process average and range in statistical control?

b. Is the process capable of meeting the design standard? Explain.
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 Shouldice and Eli Lilly cases,
explain how would a company utilize flexible capacity as a hedge against demand fluctuations and
uncertainty?
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?

b. Which skills are needed by the service personnel?
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?
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.
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?
Question Ten

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

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

2. What human weaknesses favor automation? What human strengths favor people
over machines?
3. How serious is the problem of being late to market? Can the design team do much
about the problem? Explain?
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?
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?