Case 1: Pristine Oil Company

Benz the production manager of Pristine Oil believes that the productivity of his unit increased since the
time he assumed the position three years ago. According to the latest raw data prepared by his
secretary Bevs, the output last year 2017 increased to 680 barrels. Aside from the increase in the
production over the three year period, his department generated additional employment for the
community. They hired 40 regular workers in the plant. In addition they were able to maintain the
number of units required in hauling coconut meat.

2015 2016 2017 P per unit

(optional)

Output 600 650 680 550

Energy 200 220 312 8
Chemicals 15 15.7 17 55
Labor units 33 38 40 500
Hauler 8 8 8 0.33
Inventory cost 11 12 13 15

However, Benz's unit supervisor is doubtful on the claim that their unit's productivity increased. He
approached Benz and expressed his doubts. Benz asked the supervisor to run the figures and make a
report.

1. Compute the productivity report the company’s output and input.

2. Compute the period to period ratio
3. Conclude the result of the computations.
 Case 2: Honeyed Trader

Francisco, the owner of Honeyed Trader, a company that exports sugar to European countries was
worried. He kept starring at the graph of sugar price in Europe and cannot help but feel hopeless. The
price of imported sugar to European market is declining for the past ten years. In fact, AB sugar, the
world’s leading sugar business income decline 13 percent. It was lower than the forecasted revenue,
primarily due to lower EU sugar prices specifically hitting the UK and the Spanish market. If the price hit
0.38 next month, below their breakeven, he must inform the company’s more than 30 employees that
they need to close the business.

Sugar price (EU)

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
May-08

May-09

May-10

May-11

May-12

May-13

May-14

May-15

May-16

May-17
Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17
Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

Sep-13

Sep-14

Sep-15

Sep-16

Sep-17
1. Prepare a forecast using the moving average technique. How robust is the forecastl? (MSE, MAD) Will
Francisco close the business?

2. If Tim, one of their Financial Management graduate used the weighted moving average do you think
there is a difference. Is there any difference between the three or four weighted average?

3. Eventually, they hired a consultant, Brad, who gave a forecast based on the exponential smoothing
techniques. He submitted two forecasts with 0.2 and 0.8 alphas. Which forecast will you recommend?
Why?

4. However, another expert, Bob, submitted a trend adjusted exponential smoothing with a 0.5 alpha
and 0.3 beta, with a strong opinion that this forecast is better than the plain exponential smoothing. Do
you agree?

5. “All the forecast are static,” claimed Kim a former employee. It is better to forecast with a model
using the linear or multiple regression. He presented a linear model and a multiple regression model. Is
his model better?
 Case 3-Lucky: The Loan Officer

Lucky is the loan officer of a multipurpose cooperative in South Cotabato. Last week he received
complaints that members’ loan application is always delayed. Clients claimed that a loan application of
more than a week or eight normal working days is unreasonable. The general manager commented that
if the loan closing or the verification is delayed the entire application will be delayed. Lucky identified
the five steps in the loan application.

A. The first step is application and approval which normally takes a day.
B. The second step is the processing which takes two days.
C. The third step is receiving approval, for three days processing. But processing cannot start if
application and processing is not finished.
D. The fourth step is loan closing or verification in two days, but the last three activities must be
finished before this activity can start.
E. The last step is loan servicing which takes three days, but the application and receiving must be
finished before this step starts.

1. Is it possible to delay the fourth step? If yes how many days?

2. Are there anymore activities that they can afford to delay and if yes how many days?
3. How many days can the cooperative process loan applications?

Lucky made presented to the board the operation of the loan department and claimed that than 50
percent of the loan application was finished within eight (8) days. He randomly picked five finished loan
applications. He showed the Board the table below.

Activity Loan 1 Loan 2 Loan 3 Loan 4 Loan Total Mean SD

A 1 1.1 0.8 1 1.2 5.1 1.02 0.13
B 2 2.1 1.7 1.7 2.2 9.7 1.94 0.21
C 3 3.3 2.5 3 3.5 15.3 3.06 0.34
D 2 2.1 1.8 2 2.2 10.1 2.02 0.13
E 3 2.8 2.5 3 3.2 14.5 2.9 0.24

1. Is the claim of Lucky that the probability of finishing the loan application is more than 50 percent.

The Board decided that the loan processing must take only three days. Lucky was asked to reduce the
process and determine the cost to the cooperative for the Board’s decision. Lucky approached the
general manager to make an appeal, but the manager informed him that the Board’s decision is already
final.

Lucky meet with his department and discuss how far they can reduce the loan process. They suggested
that with the same predecessors, the following reduction on the five steps

A. The first step is reducible to half day

 B. The second step is reducible to one day
C. The third step can be accomplished in one and a half day.
D. The fourth step can be done in one day
E. The fifth step is reducible to one and a half day.

1. How many days is the minimum loan processing?

2. If they reduce the processing cost, how much is the additional cost per loan?
 Case 4- Natural Living Company Case

Natural Living Company is planning to build a new plant to manufacture food supplements products. The
management is evaluating three sites and they assigned weights in each factor as follows. They wanted
to use these ratings to compare each location.

Weight Site 1 Site2 Site 3

Available manpower 0.1 8 9 7
Proximity to suppliers 0.25 15 23 18
Peace and order situation 0.15 15 11 14
Transportation modes 0.2 13 16 11
Wage rates 0.3 22 25 26

Which site do you think is objectively appropriate for their proposed manufacturing plant?

Case 5- Emperor Pizza Restaurant Chain Case

The Emperor Pizza restaurant chain buys ingredients from three different food suppliers. The
management wanted to relocate in a new central distribution warehouse to process and package the
ingredients before distributing them to their different outlets. The suppliers transport ingredients
regularly and located in a (x,y) coordinates. The first supplier delivers 3,000 kilos twice a month with,
(0.2,0.4) coordinates; the second supplier delivers 3,000 kilos thrice a month with (0.7,0.3) coordinates
and the last supplier delivers 5,000 kilos once a month, with (0.4, 0.5) coordinates.

Identify the suggested location for the proposed new warehouse.

Case 6-Tyler Custom Machine Shop Case

Tyler Custom machine shop won a contract for 180,000 units of new product. Lee, the owner measured
the cost for the three process alternatives using three different processes. Fixed cost will be: Precision
process (PP), P75,000; Pinpoint manufacturing (PM), P180,000; and Accurate Automation (AA),
P300,000. Variable cost will be PP, P8; PM, P12; and AA, P6.

What process will you recommend?

 Case 7- Microchips Inc.

Microchips Inc. is manufacturing components for smartphones for the last three years. Over the years
Microchips main component is the main processor.

Due to the increasing number of competitors there was a steady decline in sales, Microchips decided to
expand its production line. After consultation with the production engineers and marketing personnel,
they decided to produce the 300GB backup system. Microchips intend to convert its disk expertise to
plug-in expertise and become the cost leader for this one type of product.

The marketing department run over some computation and declared that 50,000 units per year is a
practical goal. The management feel that the goal is overly optimistic. The management feel that 500
units per week are more realistic. Present operation use a standard forty hour week and the operation
manager insisted to do the same for the new product.

Engineers, production managers, line assembly workers collaborated to create the assembly line design.
They reduce the original proposed steps from 18 to 7 steps. Then the team set the precedences for each
step. Finally, the team presented the assembly line table below

Task Name Task Time Immediate Predecessors

A 9 -
B 5 a
C 11 a,b
D 4 -
E 7 c,d
F 13 e
G 2 d

In addition, the team was able to determine the process require 13 cycle time. The senior management
wanted to maintain an efficiency of more than 80 percent.

Was the team successful? Why? Why not?

Performing several revisions the production team came out with a lay-out with three rooms and three
departments in each room. The total movement cost was 313. The Vice-president for operations
believed that the cost is reducible to 219.

Dept. 2
3

ROOM 1 13
Dept. 1

11 6
Dept. 3

Dept.1
1
Dept. 2
18
12 ROOM 2 4
Dept. 3

Dept. 1
18 2

13 Dept. 3

ROOM 3 5
Dept. 2

Was the Vice-president on operations right or wrong? Why?