In partial fulfillment of PGP Term III,

OM-II
Assignment #1

By Group 10

Harish Tandon 19PGP059

Dasgupta Aditi Amitansu 19PGP046
Biplab Roy 19PGP035
Devika K. 19PGP047
Chaniyara Suruchi Hasmukhlal 19PGP038
Gayatri Kindo 19PGP056
Kamal Singhvi 19PGP066
(1)
a) Passenger per flight has increased from 396.9 to 442, so productivity of airline has seen improvement after
new schedule.
Passenger per
Schedule Passenger Flights flight
Old 8335 21 396.9047619
New 10608 24 442
b) Yes, productivity should also be measured in terms of other inputs like fuel consumption, labor or employee
cost etc. We can also use multifactor productivity where we can identify passengers to total input cost ratio.

(2)
a) Productivity of new system has worsened as seen from below table

Total
System Manpower Cars/Hour Sale/Hour Total Manpower Cost/Hour Productivity
Old 1 60 420 7.25 57.93103448
New 3 100 700 21.75 32.18390805

b) As increase in input cost is higher compared to increase in sales, which reduces the productivity.

(3)
a) MAPE = 0.000245, MAPE is quite less so we can conclude that the deviation is not much, and estimates
are quite accurate.
b) As we can see from the table and chart below, productivity in terms of all the inputs have improved from
2010 to 2019. Productivity has most improved in terms sq. feet, then in employees and in no. of stores least.

Year Productivity (Sales/Stores) Productivity (Sales/sq. feet) Productivity (Sales/Employees)

2010 27.61403509 244.6632124 197.5732218
2011 27.91023442 247.7918782 208.6111111
2012 28.77249284 254.8629442 202.4516129
2013 28.80330673 256.4517766 206.2081633
2014 29.15775109 267.085 203.1064639
2015 30.55597826 279.7164179 212.1622642
2016 31.81152396 292.4455446 217.1838235
2017 27.49133192 305.2441315 223.4261168
2018 28.66290727 319.1581395 220.6398714
2019 31.74933215 341.1913876 239.2919463
 c) Based on no. of stores: Sales = 29.3868*(no. of stores) – 238.5462
Based on no. of sq. feet: Sales = 1088.4245*(no. of sq. feet) – 163254.8307
Based on no. of employees: Sales = 319.0651*(no. of employees) – 28020.4

(4)
a) Data contains trend and seasonality as seen in chart it has increasing trend year on year and seasonality
also present in month of July to October every year.

b)
  Demand for next year if trend is considered.

1003 Jan-10
932 Feb-10
1006 Mar-10
1155 Apr-10
1298 May-10
1409 Jun-10
1417 Jul-10
1458 Aug-10
1436 Sep-10
1367 Oct-10
1130 Nov-10
967 Dec-10

 Demand for next year if trend is ignored

Jan-10 1168
Feb-10 1099
Mar-10 1202
Apr-10 1398
May-10 1593
Jun-10 1752
Jul-10 1786
Aug-10 1863
Sep-10 1860
Oct-10 1797
Nov-10 1507
Dec-10 1309

c)
 Value of tracking signal = 6.695
 over forecast since value greater than 6.

(5)
a) Here we have done forecast based on exponential smoothing, found following characteristics below
  Data is quite fluctuating causing the error statistics like MAD, MSE and standard error to be higher
as can be seen from table. MAPE is also quite high at 18.473%

b) Yes, spiking in tracking signal can be seen in the graph. This is because of unpredictable and fluctuating
nature of actual data.
c) Here smoothing constant are taken alpha=0.1 and beta=0.2, which means we are putting less weight on the
actual data to determine forecast value of next period thus spike in tracking signal will be observed when
actual data deter highly from forecast.
(6)

 Here in this classification we have kept top 8o percent revenue generated SKU in class A which
are very important to company and must be checked a active check on their levels of inventory
class next 18 percent and in C remaining customers.
 This classification is useful for welsh corporation as it can keep class A SKU which are very
important for revenue generation in stock and keep resources in check to produce them as priority.
 Priority will be decreasing from A to B and then C.
 WC971 should be placed in class A as demand of item is not high but cost of item is highest as
compared to other SKU so revenue wise it is important and must be kept in Class A.

Class Distribution
120000

100000

80000

60000

40000

20000

0
A B C
(7)
a. Cycle time = 4.4 week, Average Inventory=74
b. Flow rate=Demand/week= 148/week
c. EOQ = 148
d. Annual Holding cost = 89 Ordering cost =88. Total Cost = 177.
e. If 500 is the EOQ then
 Annual Holding cost= 26 Annual Holding Cost = 3000
 Holding cost and Ordering cost should be equal at EOQ to minimize total cost and here at
500 holding cost is very high.
f. Reorder Point = 38 units.
g. Reorder point with safety stock = 47 units.
h. Inventory position before planning order without safety stock = 40 units.
 Inventory position after planning order without safety stock = 189 units.
 Safety stock = 9 units.
 Inventory position before planning order with safety stock = 49 units.
 Inventory position before planning order with safety stock = 198 units
i. NO, because current inventory level is greater than 47 units.

(8)

a. Review period = 0.0087 yrs = 32 days.

 Replenishment level without safety stock= 400

 Replenishment level with safety stock = 400+170 = 570 units

b. System operation

(9)

a. Protection Period = 7 weeks.

b. Mean demand = 1050 units.
St. Deviation = 79.37 units or 80 units.
c. Target Inventory level at 98.5 percent service level = demand in lead time + safety stock. = 1223.
d. if 300 units are present order qty. = 1223-300 = 923 units.

(10)
a. Period of review = 11.44 weeks, Target Inventory = 409 units
 b. Safety stock for review system=228 units, Increase in safety stock = 228-38=190 units
c. Order placed to reach target inventory=409-53=366 units

(11)
a. At 60 percent orders served
 In Service Level = 0.66.
 Z level at 66 percent = 0.41.
 Order quantity = mean + z*deviation = 121.
b. Charity case
 Overstock cost = 0, Understock = 200
 Service level =1.
 Z value = 4.
 Order qty. = 100+4*50 = 300 units.

(12)
a) y= a + bx1

Where:
y = the dependent variable (addition sales potential);
a = the y-axis intercept;
b = the slope of the regression line;
x1 = the dependent variable (Day rating)
Day Day rating (X1) Add. Sales potential x2 xy
(y)

Wednesday 3 $12,331 9 36,993

Friday 5 $29,004 25 145,020

Wednesday 3 $109,412 9 328,236

Wednesday 3 $75,783 9 227,349

Wednesday 3 $42,557 9 127,671

Thursday 4 $120,212 16 480,848

Monday 1 $20,459 1 20,459

Sunday 5 $231,020 25 1,155,100

Wednesday 3 $28,455 9 85,365

Sunday 5 $110,561 25 552,805

Friday 5 $44,971 25 224,855

Wednesday 3 $30,257 9 90,771
Total ∑x=43 ∑y=855,022 ∑𝒙𝟐 =171 ∑xy=3,475,472
̅=3.58
𝒙 ̅=71.252
𝒚

b) y= a + bx2

Where:
y = the dependent variable (addition sales potential)
a = the y-axis intercept
b = the slop of the regression line
x2 = the dependent variable (opponent rating)

Team Team Add. Sales x2 xy

rating potential (y)
(X2)
Phoenix Suns 0 $12,331 0 0
Detroit Pistons 1 $29,004 1 29,004
Cleveland 6 $109,412 36 656,472
Miami Heat 3 $75,783 9 227,349
Houston Rockets 2 $42,557 4 85,114
Boston Celtics 4 $120,212 16 480,848
New Orleans 1 $20,459 1 20,459
L. A. Lakers 8 $231,020 64 1,848,160
San Antonio 1 $28,455 1 28,455
Denver Nuggets 1 $110,561 1 110,561
NY Knicks 0 $44,971 0 0
Philadelphia 1 $30,257 1 30,257
Total ∑x=28 ∑y=855,022 ∑𝒙𝟐 =134 ∑xy=3,516,679
̅ =2.33
𝒙 ̅ =71,252
𝒚

∑𝒙𝒚−𝒏𝒙
̅𝒚̅
b= ∑𝒙𝟐 −𝒏𝒙̅𝟐 =22,141 a=𝒚
̅-b𝒙
̅ = 19,661

y= 19,661 + 22,141x

c) There are 3 independent variables x1, x2 and x3

y = a + b1x1 + b2x2 +b3x3

Where
y = dependent variable, sales;
a = a constant, the y intercept
x1, x2 and x3 = values of the two independent variables, Day rating, opponent rates, and season rate
respectively;
b1, b2 and b3= coefficients for the 3 independent variables calculated
Date Time Add. x2 xy
rating(X3) Sales
potential
(y)
4 Nov 0 $12,331 0 0
6 Nov 0 $29,004 0 0
11 Nov 0 $109,412 0 0
25 Nov 0 $75,783 0 0
23 Dec 3 $42,557 9 127,671
28 Jan 1 $120,212 1 120,212
3 Feb 1 $20,459 1 20,459
7 Mar 2 $231,020 4 462,040
17 Mar 2 $28,455 4 56,910
23 Mar 2 $110,561 4 221,122
9 Apr 3 $44,971 9 134,913
14 Apr 3 $30,257 9 90,771
Total ∑x=17 ∑y=855,022 ∑𝒙𝟐 =41 ∑xy=1,234,098

𝒙=1.416
̅ ̅=71,252
𝒚
∑𝒙𝒚−𝒏𝒙
̅𝒚̅
b3= ∑𝒙𝟐−𝒏𝒙̅𝟐 =1,380.48 a=𝒚
̅-b𝒙
̅ = 69,297

y= 69,297 + 1,380.48 x3
 d)
 Average ages of the public.
 Gender
 Race
 Time of day

(13)
A)

Population
x y ('000)
P1 1 11 290
P2 11 11 95
P3 4 8 145
P4 2 1 80
P5 10 2 120

ΣXiQi ΣQi Coordinate

X-coordinate 3275 730 4.48630137
Y-coordinate 5715 730 7.828767123

Centre of gravity is (4.49, 7.83)

Site A is the nearest to the center of gravity.
B)

Weighted Scoring Model Of Qualitative Factors

Site A Site B Site C Site D

Criteria Weights Rating W*R Rating W*R Rating W*R Rating W*R

Gain Environmental Group Endorsement 0.1 3 0.3 1 0.1 1 0.1 4 0.4

Traffic Access And Congestion 0.4 4 1.6 1 0.4 1 0.4 3 1.2

 Utility, Road, Environment, And
Construction Permit Ready To Go 0.2 4 0.8 3 0.6 4 0.8 5 1
(Shortest Permit Time)

Long-term economic growth and

development around site (1 lowest to 5 0.3 3 0.9 2 0.6 4 1.2 2 0.6
highest/best)

Total 1 3.6 1.7 2.5 3.2

In qualitative factors, most important factor is traffic because if stadium is located at such places where roads are not
that wide, traffic jams will be very frequent. Furthermore, long-term economic growth is also very important in order to
attract more and more visitors.
Looking at qualitative factors, it seems Site A is the best suitable site for the stadium.

Weighted Scoring Model Of Cost Factors

Site A Site B Site C Site D

Criteria Weights Rating W*R Rating W*R Rating W*R Rating W*R
Stadium land cost 0.75 3 2.25 2 1.5 5 3.75 2 1.5
Additional utility cost 0.1 3 0.3 4 0.4 2 0.2 4 0.4
New Road Cost 0.15 3 0.45 4 0.6 1 0.15 3 0.45
Total 1 3 2.5 4.1 2.35

In cost criteria, land cost is the major component, so it needs to be weighted the most.
If we consider only cost factor, it seems Site C is the best suitable site for the stadium.

C)

Weighted Scoring Model Of All Factors

 Site A Site B Site C Site D
Criteria Weights Rating W*R Rating W*R Rating W*R Rating W*R
Proximity to Center of Gravity 0.2 4 0.8 3 0.6 1 0.2 2 0.4
Stadium land cost 0.1 3 0.3 2 0.2 5 0.5 2 0.2
Additional utility cost 0.05 3 0.15 4 0.2 2 0.1 4 0.2
New Road Cost 0.05 3 0.15 4 0.2 1 0.05 3 0.15
Gain Environmental Group Endorsement 0.05 3 0.15 1 0.05 1 0.05 4 0.2
Traffic Access And Congestion 0.3 4 1.2 1 0.3 1 0.3 3 0.9

Utility, Road, Environment, And

Construction Permit Ready To Go 0.05 4 0.2 3 0.15 4 0.2 5 0.25
(Shortest Permit Time)

Long-Term Economic Growth And

Development Around Site (1 Lowest To 5 0.2 3 0.6 2 0.4 4 0.8 2 0.4
Highest/Best)

Total 1 3.55 2.1 2.2 2.7

To incorporate all three components, we have included proximity to center of gravity as one of the criteria in weighted
scoring model and mixed both the model having qualitative and cost factors making it all factor model. In order to
incorporate proximity to center of gravity, we find the distance of all 4 sites to the center and gave the lowest rating
for the farthest site and highest rating to the site which is nearest to the center of gravity.
D)
After considering all three components by weighted scoring model (as shown in C), Site is A is scoring the highest
score and hence Site A is the best suitable site if consider all the factors.