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THE PRODUCTION/OPERATIONS FUNCTION IN BUSINESS ...........1 True/False................................................................................................................................1 Multiple Choices.....................................................................................................................2 1. Which of the following is NOT a major activity of operations in supporting company success? ..................................................................................................................................2 a. provide products/services suited to the company’s capabilities..........................................2 C. Fill In The Blanks And Cross-Match Questions................................................................9 D. Short Answer....................................................................................................................11 E. Essay Type Questions.......................................................................................................11 PRODUCTIVITY..............................................................................................................................13 A. Multiple Choices..............................................................................................................13 B. Problems...........................................................................................................................14 FORECASTING ............................................................................................................................17 A. Multıple Choices.............................................................................................................17 B. Essay Questions...............................................................................................................17 C. Problems..........................................................................................................................18 MONTH DEMAND............................................................................................................18 Period Units..........................................................................................................................18 II ___ 197.2.................................................................................................................19 III ___ 204.4................................................................................................................19 IV ___ 211.6...............................................................................................................19 ............................................................................................................................................20 Construction Plasterboard ............................................................................................20 Permits Shipments ....................................................................................................20 Day Demand for Total sales....................................................................................21 WINS ATTENDANCE............................................................................................................36 DECISION MAKING........................................................................................................................40 A. True / False.......................................................................................................................40 B. Questions..........................................................................................................................40 C. Problems..........................................................................................................................40 TYPES OF PIPE..............................................................................................................................48 A................................................................................................................................................48 B................................................................................................................................................48 C................................................................................................................................................48 AVAILABLE..................................................................................................................................48 X................................................................................................................................................48 580.............................................................................................................................................48 600.............................................................................................................................................48 520.............................................................................................................................................48 Y................................................................................................................................................48 620.............................................................................................................................................48 560.............................................................................................................................................48 580.............................................................................................................................................48 Z................................................................................................................................................48 600.............................................................................................................................................48 580.............................................................................................................................................48 580.............................................................................................................................................48

WAREHOUSE % OF TOTAL PRODUCTION ..................................................................49 PLANT ANTICIPATED PRODUCTION(000 UNITS)...................................................................49 Izmir 250 420 380 280 ............................................49 Isparta................................................................................................................................50 INVENTORY CONTROL....................................................................................................................65 Demand Prob. of Demand................................................................................................65 Demand(in 000s) Prob. Of Demand................................................................................65 DEMAND PROBABILITY....................................................................................................66 DEMAND(DOZENS) RELATIVE PROBABILITY........................................................................68 DEMAND PROBABILITY.....................................................................................................70 Demand Prob. of Demand Demand Prob. of Demand..............70 Demand(in 000s) Prob. Of Demand....................................................................71 PERT/CPM....................................................................................................................................82 ACTIVITY X M Y..........................................................................................................82 Activity x m y................................................................................................................82 LINEAR PROGRAMMING..................................................................................................................71 A. Sımplex Method...............................................................................................................71 DEPARTMENT HOURS/TON MAX. HOURS................................................................71 I 2 3 40...............................................................................................................71 THE STANDARD MODELS CONTRIBUTE 30 MU EACH AND THE DELUXE 50 MU EACH TO PROFITS. THE MOTOR INSTALLATION PRODUCTION LINE HAS A FULL 60 MINUTES AVAILABLE EACH HOUR, BUT THE STAMPING MACHINE IS AVAILABLE ONLY 30 MINUTES PER HOUR. THERE ARE TWO LINES FOR WIRING, SO THE TIME AVAILABILITY IS 120 MINUTES PER HOUR..........................................................................................80 B. Assignment Method........................................................................................................84 C L I E N T S ......................................................................................................86 C. Transportation Method....................................................................................................91 1. YOU HAVE BEGUN A BUSINESS OF YOUR OWN AND HAVE DECIDED TO PRODUCE ONE OR MORE OF PRODUCTS A, B, C, AND D. YOU HAVE APPROACHED FOUR BANKS – W, X, Y, AND Z – WITH YOUR IDEAS ON THESE PROJECTS IN ORDER TO OBTAIN THE NECESSARY FINANCING. THE FOLLOWING TABLE REFLECTS THE LEVEL OF FINANCING REQUIRED FOR EACH PROJECT, THE INTEREST RATE EACH OF THE BANKS IS WILLING TO CHARGE ON LOANS FOR EACH OF THE PROJECTS, AND THE TOTAL LINE OF CREDIT EACH OF THE BANKS IS WILLING TO LEND YOU.............................................................................................................................................91 WAREHOUSE % OF TOTAL PRODUCTION........................................................................................92 PLANT ANTICIPATED PRODUCTION (000 UNITS)...........................................................................93 Isparta................................................................................................................................93 BREAK-EVEN ANALYSIS................................................................................................................91 ANSWERS TO SELECTED QUESTIONS................................................................................................83 Introduction To Production/Operations Management..........................................................95 A. True Or False...............................................................................................................95 B. Multiple choices..........................................................................................................95 C. Fill in the blanks and cross-match questions..............................................................95 D. Short answers..............................................................................................................96 E. Essay type questions.....................................................................................................96 Productivity...........................................................................................................................99 A. Multiple choices...........................................................................................................99 B. Problems.......................................................................................................................99 Forecasting..........................................................................................................................101 A. Multiple choice..........................................................................................................101 B. Essay..........................................................................................................................101 C. Problems.....................................................................................................................102 2

8. Day Demand for Total sales....................................................................................104 Inventory Control..................................................................................................................93 DEMAND PROBABILITY CUM. PROB. .................................................................94 DEMAND(DOZENS) PROBABILITY CUM.PROB............................................................................95 Lınear Programmıng...........................................................................................................127 A. Sımplex Method.........................................................................................................127 TABLES AND FORMULAS..........................................................................................................161

Introduction to Production / Operations Management

**THE PRODUCTION/OPERATIONS FUNCTION IN BUSINESS
**

TRUE/FALSE

1. Production/operations Management refers to creation of goods whereas production refers to the creation of services. 2. All organisations, including service organizations such as banks and educational institutions, have a production function. 3. Production is a creation of goods and services. 4. W. Edwards Deming is known as the Father of Scientific Management. 5. Lillian Gilbreth is credited for the early popularization of interchangeable parts. 6. The person most responsible for initiating use of interchangeable parts in manufacturing was Whitney Houston. 7. The origins of the scientific management movement are generally credited to James Taylor. 8. Operations Management is the set of the activities that create goods and services by transforming inputs into outputs. 9. Operations Management only applies to the creation of tangible goods. 10. An example of a “hidden’ production function is money transfers at banks. 11. Operations management has benefited from advances in other fields of study. 12. In order to have a career in operations management, one must have a degree in statistics or quantitative methods. 13. The operations manager performs the management activities of planning, organizing, staffing, leading, and controlling of the POM function. 14. “Should we make or buy this item?” is within the Human Resources and Job Design critical decision area. 15. Marketing is one of the three functions critical to an organization’s survival. 16. Students wanting to pursue a career in operations management will find multi-disciplinary knowledge beneficial. 17. The quality of a product is more difficult to measure than that of a service. 18. Consumer interaction is often high during the manufacturing process. 19. A company is considered excellent only if it is the best in its business. 20. The three primary functions in a business organization are operations/production, finance, and marketing. 21. Business functions are autonomous, thus each function can set objectives without much coordination. 22. In batch manufacturing, a few or several products share the same production resources. 23. Productivity and quality are easier to measure in manufacturing operations than in service operations. 24. Since customers are present in all service operations, service operations can provide only custom services. 25. Batch manufacturing must be capable of performing a wider variety of tasks as compared to job shop manufacturing. 26. A project for a service organization might be development of a computer software package. 27. There is a clear dividing line between manufacturing operations and service operations. 28. Specialization means each component of a product is fashioned to fit that particular item and should not fit any other item. 29. Because of the use of specialization, the industrial revolution brought about the need for a less formal procedure and a less sophisticated method of management. 30. Management Science (because of its use of mathematical theory) is the same as scientific management. 31. The primary difference between Taylor’s study of management and Fayol’s is that Fayol’s was a top-down approach, with emphasis on overall administration, whereas Taylor’s study was a bottom-up approach, with an emphasis on shop management. 32. The Industrial Revolution began in Japan.

Prof.Dr.Dr.M.Hulusi DEMIR

1

**Introduction to Production / Operations Management
**

33. According to Adam Smith, specialization was more likely to lead to the development of mechanical devices to assist operations. 34. Sergio Farmerson’s success is attributable to the use of specialization and interchangeable parts. 35. In using F. Taylor’s scientific management, a duty of management was to select the best worker for a job, so that not much time or money need be spent on training. 36. Quality is easier to measure in a service organization. 37. An organization’s mission statement is its broad statement of purpose. 38. Once an organization’s mission has been decided upon, each functional area within the firm determines its own supporting mission. 39. Operations strategies are implemented in the same way in all types of organizations. 40. An organization’s behaviour will be optimized if each of its departments optimizes their behaviours independently. 41. Top-level managers usually define the missions of each functional area, and then merge these missions to define the mission of the organization. 42. Strategies are mostly the same from one manufacturing company to another. 43. An organization’s mission and its strategy are basically the same thing. 44. An organization’s mission statement provides a plan of action. 45. An organization’s strategy provides the purpose of the organization. 46. Differentiation, cost, and response are the three strategies for achieving competitive advantage. 47. An organization’s ability to generate unique advantages over competitors is central to a successful strategy implementation. 48. Errors made within the location decision area may overwhelm efficiencies in other areas. 49. Decisions regarding quality are among the core decisions of POM. 50. Decisions regarding the location are among the core decisions of POM. 51. In order to maintain focus, an organization’s strategy must not change during the product’s life cycle. 52. Opportunities and threats are classified as internal factors of strategy development. 53. Strategies change because an organization’s internal strengths and weaknesses may change. 54. The operations function is most likely to be successful when the operations strategy is integrated with other functional areas. 55. For the greatest chance of success, an organization’s POM strategy must support the company’s strategy. 56. Taylor’s shop system was directed principally at improving the performance of top managers. 57. Time study, motion study and work sampling were all important techniques in scientific management. 58. Most of the techniques and approaches of scientific management eventually were developed into the modern field of industrial engineering. 59. New P/O Management computer applications today are in the areas of payrolls, billings, cost reports and inventory transactions. 60. Production functions are usually called manufacturing departments in manufacturing firms and operations departments in retailing and tracking firms.

MULTIPLE CHOICES

1. Which of the following is NOT a major activity of operations in supporting company success?

**a. provide products/services suited to the company’s capabilities.
**

b. produce product with consistent quality level. c. minimize cost. d. provide a product/service which has sufficient market. 2. Operations are concerned with ___________while marketing is concerned with____________. a. demand, quality b. efficiency, cost c. supply, demand d. demand, supply

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**Introduction to Production / Operations Management
**

3. Job shops are a. the same as batch. b. do not relate to service operations. c. often have large percentages of their inventory as work in process. d. are generally set up for repeat business. 4. Common characteristics of operations do NOT include a. fixed output capacity b. continuous improvement c. feedback from the pool of customers and potential customers d. the need to obtain inputs 5. The achievement of high quality is most closely related to ________________. a. repetitive operations. b. design specifications c. service operations d. customer needs. 6. The transformation of a set of inputs into a set of outputs is a characteristic of a. universities. b. prisons c. automobile assembly plants d. all of the above 7. Services such as a chartering a bus or repairing an automobile are similar to the following a. project operations b. batch operations c. job shop operations d. productivity 8. All of the following are differences between manufacturing and service operations EXCEPT a. quality is more easily measured in service operations. b. productivity is easier to measure in manufacturing operations c. contact with customers is more prevalent with persons working in service operations. d. accumulation or decrease in inventory of finished products is more applicable to manufacturing operations. 9. According to Adam Smith, which of the following was NOT an advantage of specialisation of labour? a. rapid development of dexterity b. saving time in task shifts c. division of work between management and workers d. development of mechanical devices 10. Who of the following is NOT associated with scientific management a. Frederick W. Taylor b. Henry L. Gantt c. Elton Mayo d. Henry R. Towne 11. Lillian and Frank Gilbreth are responsible for principles of a. sociotechnical systems b. zero inventory c. motion study d. interchangeable parts 12. The principles of scientific Management included a. the rise of the service sector. b. increased motivation through additional employee fringe benefits c. the implementation of the 44 hrs. work week

Prof.Dr.Dr.M.Hulusi DEMIR

3

efficiency experts b. Frederick W. Which of the following is least related to the management science era a. Walther Shewhart e. Whitney Houston c. statistical quality control d. W. to the manufacturing sector exclusively 15. to manufacturing and service sectors d. Just a figure of speech. The person most responsible for initiating use of interchangeable parts in manufacturing was Eli Whitney 4 . Management must do more to improve the work environment and its processes so that quality can be improved c. Frank Gilbreth b. measuring productivity in the service sector c. Sergio Farmerson d. POM is applicable a. operational research c. time and motion studies 19. statistical theory 14. The person most responsible for popularizing interchangeable parts in manufacturing was a. to services exclusively e. The era of POM will be succeeded by the era of scientific management 20. 13. development of cooperation between management and production workers. standardization of parts e. mostly to the service sector b. Eli Whitney b. Taylor c. Taylor and Deming would have both agreed that a. Henry Ford is noted for his contributions to a. Which one of the following statements is TRUE? a.Introduction to Production / Operations Management d. Productivity is more important than quality e. Frederick Winslow Taylor 16. Just-in-Time inventory methods e. Lean production and MRP I and MRP II 18. optimum solution d. Edwards Deming d. The “Father of Scientific Management” is a. quality control b. Walter Shewhart is listed among the most important people of POM because of his contributions to a. assembly line production b. scientific management d. not a reference to a person 17. Eli Whitney was an important contributor to statistical theory d. EMU is one of the best universities in the world b. mostly to the manufacturing sector c. Lillian Gilbreth e. assembly line operations c.

leading and controlling c. long range b. organizing. selling. accounting and financing d. The field of POM is shaped by advances in which of the following fields? a. All of the above statements are TRUE 21. e. none of the above 23. b. c. staffing. information sciences d. Mission 28. The functional areas develop their supporting missions. Which of the following activities takes place once the mission has been developed? a. Minimal d. Which of the following is true? a. They provide guidance for functional area missions. e.Which of the following is not an element of the management process? a. Which of the following is TRUE about business strategies? a. advising and auditing e. industrial engineering and management science b. They are formulated after strategies are known. marketing. corporate mission is shaped by corporate strategy c. chemistry and physics e. b. All firms within an industry will adopt the same strategy. None of the above. Well defined missions make strategic development much easier. leading e. forecasting. staffing. corporate strategy is shaped by functional strategies b. planning c. The origins of management by exception are generally credited to Enrique Iglesias d. An organization should stick with its strategy for the life of the business. d. Short ranged c. external conditions are shaped by corporate mission e. e. Policies b. Strategy c. They reflect a company’s purpose. Bylaws d. ecology and zoology 22. planning. The responsibilities of Production and operations manager include a.Dr. pricing 24. Organizational strategies depend on the knowledge given in EMU. organizing. medium range e. They indicate what a company intends to contribute to society.Dr. Temporal 29. Which of the following statements about organizational missions is FALSE? a. 27. staffing b. Procedures e. biology and anatomy c. procuring.M. The ten POM decision areas are prioritized. planning.Introduction to Production / Operations Management b. b. Strategies are formulated independently of SWOT analysis. The fundamental purpose for the existence of any organization is described by its a. The origins of the scientific management are generally credited to James Taylor e. 25. The fundamental purpose of an organization’s mission statement is to Prof. and reviewing b. The person most responsible for initiating use of interchangeable parts in manufacturing was Whitney Houston c. corporate mission is shaped by functional strategies 30. c. d. The functional areas develop their functional area strategies.Hulusi DEMIR 5 . The firm develops alternative or back-up missions in case the original mission fails. controlling d. c. Which of the following is true? The impact of strategies on the general direction and basic character of a company is a. functional strategies are shaped by corporate strategy d. d. 26. designing. They define a company’s reason for existence.

a simulation model used in TT classes c. quality e. Product duplication c. Which one is not generally considered to be an advantage of using models for decision making? a. Hulusi Demir. all the above are operations strategies 34. a hospital d.J. Frank B. Which came last in the development of manufacturing techniques? a. The foremost pioneers in scientific management are a. Henry L. Tayfun Turgay. Which of the following is not an operations strategy? a. Providing a systematic approach to problem solving b. Ikujiro Monako. Differentiation d. 41. Elton Mayo. Gilbreth. Which of the following is not a key way in which business organizations compete with one another? a. K. Requiring users to be specific about objectives 38. A strategy is a. Quality control c. a bank c. Mass production d. Howard J. Imai. Frederick W. Ilhan Dalci c. Interchangeable parts e. Flexibility d. Barry Render. Interchangeable parts 39. Hamdy Taha. F. Barth. create a good human relations climate in the organization 31. It is impossible to tell e. Yuhua Cui b. Henry Ford is noted for his contributions to a.Demir’s POM courses and TT’s MIS presentations b. Emphasizing quantitative information c. they all use. Richard Levin. Herbert Simon d. Roethlisberger. M. a CPA firm b. How to motivate employees? e. Which one of the following is not typical question dealt with operations managers? a. Jay Heizer. 36. Taylor. 33. Weiss e. to persuade parents for a new car. define the organization’s purpose in the society b. generate good public relations for the organization d. What is s satisfactory location for a new facility? c. It will increase b. Providing an exact representation of reality d. Low cost c. Serhan Ciftcioglu. Which one does not use operations management? a. a broad statement of purpose b. Which products/services should be offered? d. Chris Argyris. an action plan to achieve the mission e. define the functional areas required by the organization e. Hitotaka Takeuchi. what will happen to productivity? a. Henry Ford. define the operational structure of the organization c. It will remain the same d.Introduction to Production / Operations Management a. Lean production b. Time and motion studies 35. If inputs decrease while output remains constant. a supermarket e. Enabling managers to answer “what if” questions e. The scientific study of work 6 . Division of labour c. Yotaro Kobayashi. Craft production e. Carl G. Response b. 37. Assembly line operations d. production cost b. It will decrease c. how much capacity will be needed in months ahead? b. Technology e. a plan for cost reduction d. Time to perform certain activities 32. Prof. Gantt. All are typical of operations management. It depends on which inputs decreases 40.

Design of products and processes c. 46. d. Harris’ EOQ. Forecast error b. The industrial revolution: a. falls at the extreme end of the goods-services continuum c. 42.Taylor d.Hulusi DEMIR 7 . a. applies the scientific method of the management of work b. c. none of these 48. mark this answer if all the above are service system characteristics 51. views production/operations as a separate organizational function b. The differences between the actual demand for a period and the demand forecast for that period is called: a. is faced with a highly perishable product that can’t be stored in inventory d. a. Computers serve Production/Operations Management by. allowing use of sophisticated mathematical models d. has continued application in the service industries. d. The scientific management era spanned approximately what time period? Prof. substituted manpower for machine power c. All of the following decisions fall within the scope of operations management EXCEPT for a. is relieved of workforce decisions by marketing function b. A service organization. no finished goods inventory is accumulated e. a. quality of output can be highly variable c. Location of facilities d. Shewhart’s quality control approach. all of these 50. accurate analysis 47. has in some cases been misapplied by management. Which is not a discipline used by the production/operations function? a. is of limited use in service organizations d. Bias 43. General management principles c. Mean square error e. weighted arithmetic mean c. A productive systems approach. came about through the efforts of F. Which of the following is not a characteristic of most service system? a. all of these e. can be reconciled with a modern socio-technical approach.M. reducing need for the middle managers c. production and consumption occur simultaneously d. linear programming c. computer systems d.Dr. and Dantzig’s simplex method are examples of. Economics b. Decision process. Quality management e. eliminating clerical processing b. Facility Management 44.Dr. a. None of these 45. Quantitative analysis d. all of these. fostered the domination of manufacturing over service organizations b. must provide feedback information for control of process inputs and technology c. mathematical decision making models b. product is tangible b.W.Introduction to Production / Operations Management a. Financial analysis b. disregards human and social concerns 49.

Which of the following is not a way of organising a production process? a. a and b d. goods and services e. vertical integration. Which of the following are ways of classify services? a. 1945-present b. b and c e. labour intensity b. intensive training was required. repetitive flow d factory e. Henry Fayol 63. The founder of the scientific management movement was: a. Henry Gantt f. require extensive technical training for service personnel d. extent of customisation e. 55. short planning horizon b.Taylor d. components and products d. Walter Shewhart b. a. 60. Walter Shewhart c. batch process 59. none of the above. continuous flow b. all of the above e. none of the above. labour d. work was largely based on multi-skilled artisans e. does not extend to service activities. The person who developed the economic order quantity model was: a. components and services f. Frederick W. the socio-technical movement d. efficiency d. have high variability in customer requirements e. growth c. 1776-1865 e. energy c. high-volume. job shop c. During the mass-production era of operations: a. Ford Harris e. 1875-1925 d. Which of the following are not inputs into the production process? a. father of industrial engineering d. is concerned primarily with marketing and public relations c. P/O managers rely heavily on computers in their decision making because a. the human relations movement c. standardised production was possible d. products and goods c. is restricted to activities in profit making organizations d. Frederick W. 62. usually involve the customer in the execution of the process b. have limited uncertainty in customer arrival rates c. adaptability b. materials e. the lean production movement. Frank Gilbreth b. Taylor d. 8 . Operations management is concerned with production and distribution of: a. father of scientific management c. has evolved from terms like manufacturing management b. 1640-1840 c. 53. 61. 58. The Hawthorne Studies stimulated the development of: a. George Dantzig c. Henry Gantt e. time b. P/O managers closed view of their external environments provide their organizations with a. open view of external environment e. all of the above. Ford Harris f. customer contact c. optimal goals c. finished goods 57. none of the above 54. none of the above 52. lend themselves to appointment system. Which phrase best describes the term “Production Management”? a. vendor relationship d. high-volume production was possible c. standardisation of production was possible b. Lillian Gilbreth 64. the scientific management movement b. father of operations research b. Frederick Winslow Taylor is called. products and services b. 56. High-contact services: a.Introduction to Production / Operations Management a.

Taylor f. Motion study principles e._____________________is the set of activities that transforms inputs into goods and services 2. First Quantitative Approach formulas 10. b. Operations is concerned with ______________ while marketing is concerned with______________________. Charts used for scheduling 9.Hulusi DEMIR 9 . Adam Smith e. Eli Whitney d. Henry Gantt c. the human factors engineering field c. Richard Trevitchick i. Charts used for scheduling f. Match this list of contributions with the originator a. Sergio Bauersohn vi. motion study principles 2.Dr. Total Quality management b. 3. The moving assembly line was developed by: a. father of scientific management 1.Lillian and Frank Gilbreth are responsible for principles of _________ _________. Yuhua Cui Prof. Taylor c. Frank Gilbreth d. FILL IN THE BLANKS AND CROSS-MATCH QUESTIONS 1. Match each pioneer with the appropriate description a. Henry Ford v. linear programming models d. Henry Ford b. human relations movement 3. division of labour 4. mass production and the moving assembly line b. Taylor ii. Henry Ford b. Henry Ford’s focus was largely on manufacturing efficiency. 7. Frank &Lillian Gilbreth iv. Elisabeth Taylor f.The achievement of high quality is most closely related to _____________ ____________. First train c. Taylor iii. Walter Shewhart developed: a. Clark Gable e. iii. Eli Whitney v. ii. F. Total Quality Management 7.Introduction to Production / Operations Management 65. 6. Henry Ford iv. F. Vilfred Pareto g. Mass production and moving assembly line d. Vilfred Pareto g. a. Frank Gilbreth d.M. division of labour 4. Frederick W. Henry Gannt i. interchangeable parts c. 4. Motion study principles e. Frank Gilbreth iii.Dr. statistical quality control techniques e. 5. c. Match each pioneer with appropriate description a. Adam Smith e. the economic order quantity model b. father of scientific management 1. father of scientific management d. charts for planning and scheduling 6. Whitney Houston 8. charts for planning and scheduling 6. Henry Gantt ii. Henry Ford c. Elton Mayo b. Henry Gantt c.W. Match this list of contributions with the originator a. a few factors are important 5. motion study principles 2.W. Ray Charles C. Total Quality Management 7. operations sequencing charts. Frederick W. Adam Smith’s idea to increase productivity a system of specialisation or a division of labour included: i. a few factors are important 5. human relations movement 3. 66.

Introduction to Production / Operations Management 8. Sergei Bauersohn 10 .

that is where they belong and what they accomplish. 2. 6. Discuss four conditions or changes that will continue to affect operations managers. and outputs of the productive system. What are the four major improvements in management history? Briefly describe the emphasis or concerns of each. Distinguish between repetitive production and batch production 8. 10. How do services differ from goods? List five ways. Prepare a table showing the continuum of characteristics (differences between) services producer and goods producer. Which aspect. Classify and explain briefly the types of production in two traditional ways? (If possible support your explanation with a diagram) 16. 3.Introduction to Production / Operations Management D. why should you study POM? E. Identify different approaches to management and then define what you mean by the term “management”. 3. Which event at about 1776 was especially significant in the development of industry? 22. What are the differences among Pure Service. 7. a fast-food restaurant 23. List three primary functions of a business State five reasons for the claim that service sector productivity is difficult to improve. 15. According to Frederick Winslow Taylor. Using the history of production management. List five elements of the management process. hotel c. 5.Hulusi DEMIR 11 . For the organizations listed below. Classify the problems of management in the POM function. of Taylor’s philosophy of scientific management corresponds most closely with some firm’s efforts to improve the quality of work life today? 27. Who were the foremost pioneers in scientific management. 4. Prof. the construction trades d. and what were their contributions? 20. In what ways is management of production/operations different from executive management? 21. accounting c. university teaching b. describe the inputs.Dr. 26. SHORT ANSWER 1. the transformation process. Why was scientific management in the early 1900s aimed at the shop level? 19.M. Describe how the concept of division of labour applies to the following situations: a. Briefly state the relative importance of technical competence and behavioural competence of managers. 2. What are the THREE conceptual ways to compete advantage proposed by the authors of your text-book Heizer and Render? 13. Identify the duties of management and indicate what management tries to do in performing these duties. 5. as noted by Adam Smith in “Wealth of Nations”. Diagram the operations function or production system (transformation process. 4. ESSAY TYPE QUESTIONS 1. Describe how an organization’s mission and strategy have different purposes 12. According to the textbook. Explain how production activities fit into the cultural pattern of a society. a small manufacturing firm 25. a. Quasi Service and Manufacturing operations from a customer’s point of view? From the operation’s point of view? 18. Discuss the differences between manufacturing and service operations.Dr. Discuss three major changes in organizations caused by the information age and reduced trade barriers..) 9. 14. what approaches have been used to improve productivity over the last century? Can these same approaches be used to improve productivity in today’s world and in the future? 24. Explain the advantages of the division of labour. What examples of pure service can you identify? What is being transformed in each of these service processes? 17. a high school/university library b. what are the four major duties of management? 11. or principle.

a.Introduction to Production / Operations Management 28. List the important differences between goods production and service operations. Briefly discuss each of these terms related to the historical evolution of POM. Describe also the production/operations function and the nature of production/operations manager’s job? 34. 30. Division of Labour 29. or both? 33. Briefly describe the term “Production/Operations Management”. Identify the three major functional areas of business organizations and briefly describe how they interrelate. a manufacturing organisation. Pareto Phenomenon e. 31. Division of labour 32. List the key ways that organisations compete. System d. Is McDonald’s a service operation. Interchangeable parts d. Scientific Management c. 12 . Production/Operations Management c. Briefly describe the following terms: a. Industrial revolution b. Production/Operations b.

.

Dr. the productivity of the line is a. 2 valves/hr 2. If 1600 valves are produced in an 8hour shift. 150 boxes/hr e. it has increased by 50 sets/shift b. it would then be a. If the productivity is increased by 10%. and precise units of measure b. 32. it has decreased by 8. The ABC plant produces 500 cypress packing boxes in two 10-hour shifts. the fact that precise units of measure are often unavailable c. they have decided to operate three 8-hour shifts instead. it has increased by 20% d. 200 valves/hr180 valves/hr 5. decreasing outputs while holding inputs steady c. 65 boxes/hr d. all of the above 7. external elements. currently producing 1600 valves each 8-hour shift. 300 boxes/hr 6. 1760 valves/hr b. Productivity measurement is complicated by a. 40 valves/hour e. They are now able to produce 600 boxes per day.M. MULTIPLE CHOICES 1. 200 valves/hr c. increasing inputs and outputs in the same proportion d.1% 3. 220 valves/hr d. What has happened to production? a. Productivity can be improved by a. and labour c. quality. the competition’s output b. it has increased by 37. Due to higher demand. 1600 valves/hr b. Productivity is now approximately a. labour. efficiency of the student to work and money Prof. decreasing inputs while holding outputs steady e.Hulusi DEMIR 13 .Introduction to Production / Operations Management PRODUCTIVITY A. the type of equipment used 4. The ABC Box plant produces 500 cypress packing boxes in two 10-hour shifts.5 sets/hour c. Ahmet Uslu produces cast bronze valves on an assembly line.3% e. produces cast bronze valves on an assembly line. and social overhead d. ABC Co. education. diet.Dr. technology. Three commonly used productivity variables are a. 60 boxes/hr c. 80 valves/hr d. stable quality d. The use of new technology has enabled them to increase productivity by 30%. quality of the student. it has decreased by 9. the workforce size e. capital and management e. increasing inputs while holding outputs steady b. raw materials. 880 valves/hr c.5 boxes/hr b.

Serra has the following data to work with: Last Year This Year Production (finished units) 4000 Greenware (pounds) 5000 Labour (hrs) 350 Capital (MU) 15000 Energy (kWh) 3000 Were the modifications BENEFICIAL? 4000 5000 375 18000 2600 14 . Serra is concerned that the new kiln requires extra labour hours for its operation. They utilized 10 gallons of solvent. They utilized 12 gallons of solvent. a. Last February. a. He harvested 1350 kgs. What is her new productivity? c. A firm cleans chemical tank cars in the Bay Gazimagusa area. He then sells the crop at the local farmer’s market. Did the fertilizer live up to its promise? 3. in the belief that it would cut energy usage 25 % over the old kiln. and also to look over other measures of their productivity to see if the change really was beneficial. PROBLEMS 1. and two employees worked 6 hours a day. Ahmet grows domatoes in his 100 by 100 meters garden.Introduction to Production / Operations Management B. Serra’s Ceramics spent 3 000 MU on a new kiln last year. The company decided to switch to a larger cleaning machine. What is the change in productivity? 5. This kiln is an oven that turns “greenware” into finished pottery. they cleaned 60 tank cars in only 15 days. Last summer. Suzan has a part-time “cottage-industry” producing seasonal plywood yard ornaments for resale at local craft fairs and bazaars. he tried a new fertilizer that promised a 20% increase in yield. and two employees worked 20 days per month. What was their productivity with the standard equipment? b. the firm typically cleaned 60 chemical tank cars per month. What is her percentage increase (or decrease) in productivity? 2. Two summers ago. The following data are available: ______________Last Year This Year OUTPUT 10 500 units 12 100 units Labour Hours 12 000 13 200 Utilities 7 600 MU 8 250 MU Capital 83 000 MU 88 000 MU Has the company improved its PRODUCTIVITY during the past year? 4. She currently works a total of 4 hours per day to produce 10 ornaments. What is her productivity? b. With standard equipment. What is their productivity with the larger machine? c. he was able to produce and sell 1200 kgs of tomatoes. Serra wants to check the energy saving of the new oven. 6 hours a day.She thinks that by redesigning the ornaments and switching from use of a wood glue to a hotglue gun she can increase her production to 20 ornaments per day. A company has asked YOU to evaluate the firm’s productivity by comparing this year’s performance with last year’s.

his costs have gone up and he has a newfound interest in efficiency. has 12 direct labour employees whose compensation (including wages and fringe benefits) amounts to 21 MU/hour. b. but he did invest an additional 3 000 MU for modifications to the bakery’s ovens to make them more energy efficient. produced 1 730 fans in 10 working days. which she gave him this morning. Balci has asked you. the typical standard for comparison. Haldun LOP. In May.hrs. TRNC. The modifications were supposed to make the ovens at least 15 % more efficient.M. The Co. is preparing his quarterly report which is to include a productivity analysis for his department. and other products were produced on other days. Last year’s records can provide a fairly good estimate of the parameters for this year. to check the energy savings of the new ovens and also look over other measures of the bakery’s productivity to see if the modifications were beneficial. The report.Dalci is interested in determining the productivity of his organisation.Introduction to Production / Operations Management 6. (Include your interpretations for each productivity figure) Prof.Dr.s) 50 45 Capital invested (MU) 10 000 11 000 Energy (BTU) 3 000 2 850 Show the productivity change for each category and then determine the IMPROVEMENT for labour. Ilhan’s. a. What is the percentage in labour productivity of windows from May? 7. __________________Last year Now Units produced 1 000 1 000 Labour (hours) 300 275 Resin (kg. He has the following data representing a month from last year and an equivalent month this year.Dr. the Cool-Tech Co. in Gazimagusa. Mr. is worried about increased costs – particularly energy. During May. showed the following: 2005 2006 Production (units) 4 500 6 000 Raw Material Used (barrels of Petroleum by-products) 700 900 Labour Hours ` 22 000 28 000 Capital Cost applied to the Department (MU) 375 000 620 000 Haldun LOP wondered if his productivity had increased at all. his operation analyst. The Cool-Tech Co. as a brilliant graduate of EMU. One of the inputs is production data prepared by Meltem SERIN. In June. the production manager of LOP Chemicals. He would like to know if his organisation is maintaining the manufacturing average of 3% increase in productivity. I. With a recent increase in taxes.Hulusi DEMIR 15 . window fans were produced on 9 working days 9of 8 hours each). does not believe things have changed much. the company produced 1728 window fans at a standard price of 40 MU. a local bakery. You have the following data to work with: Production (dozen) Labour (hours) Capital Investment (MU) Energy (kw-hrs) Last Year 1 500 350 15 000 3 000 Now 1 500 325 18 000 2 750 9. Determine the productivity of the window fans. the owner. He called Meltem into his office and conveyed the above information to her and asked her to proceed with preparing this part of the report. Mr. produces various types of fans. 8. Ilhan DALCI makes billiard balls in his Beyarmudu plant. Ilhan Balci.

If they can increase the rate to 125 per day. Kleen Karpet cleaned 65 rugs in April. consuming the following resources: Labour: 520 hours at 13 MU/hour Solvent: 110 litres at 5 MU/litre Machine Rental: 20 days at 50 MU/day a. What would be their increase in productivity? 12. Ilhan Dalci is president of Ilhandir Manufacturing. Ahmet and his three employees invest 40 hours per day making the 120 boxes. A Turkish manufacturing company operating a subsidiary in TRNC shows the following results: Sales (in units) Labour (hours) Raw materials (in MU) Capital Equipment (hrs) TURKEY 100. Are the results better? c.000 60. Do the results seem misleading? b. 11.Introduction to Production / Operations Management 10. On a recent day.000 15.000 a. Ahmet and his employees have discussed redesigning the process to improve efficiency. Calculate single factor productivity figures of labour and capital for the parent and subsidiary.000 20. What is the percent change in multifactor productivity if Ilhandir can reduce energy bill by 1000 MU without cutting production or changing any other inputs? 16 . Dalci makes 1000 tires per tires per day with the following resources: Labour: 400 hours at 12. Ahmet Uslu makes wooden boxes in which to ship motorcycles.000 20.000 5.000 TRNC 20. Calculate the productivity of the line. Now compute multi-factor labour and capital productivity figures. a. What is their productivity? b. Explain why these figures might be greater in TRNC. Finally. Magusa Metal Works produces cast bronze valves on an assembly line. calculate raw material productivity figures. What is the labour productivity for these tires at Ilhandir Manufacturing? b. 13. 160 valves were produced during an 8-hour shift.50 MU/hr Raw Material: 20 000 kgs/day at 1MU/kg Energy: 5 000 MU/day Capital: 10 000 MU/day a. What is the labour productivity? b.000 2. What is the multifactor productivity for these tires at Ilhandir Manufacturing? c. What is the multifactor productivity? 14. what would be their new productivity? c. a producer of Go-Kart Tires.

is mainly used as an alternative to exponential smoothing. arge b.Dr. 6. 8. recent b. Define the terms “Qualitative Methods”. False 7. A large value of “alpha” ( α ) puts more weight on a.Hulusi DEMIR 17 . What does this indicate with respect to the emphasis if placed on past data. (a) and (b) f. and I`m doing 25% more business than last year”. The method that considers several variables that are related to the variable being predicted is a. Regression and correlation are both termed “causal” methods of forecasting. requires resolution of differences via face-to-face debate. 3. the time required to derive the forecast. the time period for which the forecast is valid. What do you see as the main problem with qualitative (judgmental) forecasts? Are they ever better than “objective” methods? 5. small 3. 4. the standard error of the estimate gives a measure of a. b. none of the above. Panel of experts c. (a) and (c) e. a a. c. Explain how they are similar in this respect and also how they are different. If the data being observed can be best thought of as being generated by random deviations about a stationary mean. None of the above 6. d. c. A firm uses exponential smoothing with a very high value of alpha. e. Prof. the overall accuracy of the forecast. Describe the uses of them. d. B. Describe briefly the steps to develop a forecasting system. Is there a difference between forecasting demand and forecasting sales? 2.Dr. (b) and (c) 5. delphi b. Describe briefly the “Delphi Method”. The manager of a local firm says “the forecasting techniques are more trouble than they are worth. true b. trend adjusted exponential smoothing d. The Delphi Method a. All of the above e. Comment. Exponential smoothing is an example of causal model a. relies on the power of written arguments. none of the above. With regard to a regression based forecast. the maximum error of the forecast. and “Causal Forecast”. Qualitative forecasting methods include a.M. oder 2. ESSAY QUESTIONS 1.Introduction to Production / Operations Management FORECASTING A. MULTIPLE CHOICES 1. b. “Trend Analysis Method (Time Series Method). 7. 4. Causal forecasying c. Exponential smoothing b. I don`t forecast at all. Weighed moving average d.

d.20) for the enrollment data. Make a forecast for the next semester (semester 9) with the most accurate approach. The department has accumulated the following enrollment data for the past 8 semesters. 2. Semester Students enrolled in POM 1 2 3 4 5 6 7 8 a. A computer software firm has experienced the following demand for its “Personal Finance” software package. Indicate which forecast would seem to be most accurate Make a forecast of september by using both approaches.40 3. b. 3 and 2 for the most recent demand values. Compare two forecasts and indicate the most accurate. PROBLEMS 1. in that order. 18 . 80 90 70 84 100 115 98 130 Compute a 3-semester moving average forecast for semester 4 through 8 Compute the exponentially smoothed forecast (alpha=0. Period Units 1 2 3 4 5 6 7 8 56 61 55 70 66 65 72 75 Develop an exponential smoothing forecast using an alpha value of 0. A manufacturing company has monthly demand for one of its products as follows: MONTH January February March April May June July August DEMAND 520 490 550 580 600 420 510 610 Develop a three-period average forecast and a three period weighted moving average forecast weights of 5. c. The head of Business Department at EMU wants to forecast the number of students who will enroll in production/operations management next semester in order to determine how many sections to schedule.Introduction to Production / Operations Management C.

ABC Hardware handles spare parts for lawn-mowers.6 Prof. 5.2 204.2. starting with F = 15 and alpha=0.Dr.Dr.4 211.Hulusi DEMIR 19 .M. Find also the forecast for the 8th day. Fill in the blank places. Day 10 12 13 15 17 20 21 Demand 15 16 18 22 21 23 24 Simulate a forecast using simple smoothing for the week. The following data were collected for one week in April when replacement for lawn-mower blades were in high demand. Quarter 2007 I II III IV __________________________ 2008 I II III IV 2009 I II III IV 34 50 58 38 ___ ___ ___ ___ Quantity 26 38 54 34 Moving Totals 160 172 176 180 190 197.Introduction to Production / Operations Management 4.

Is the correlation coefficient significant at the level 5%? h.5% (normal) for the specific amount of shipments when the permits number 30.8 24.(std.-t table) e. (for this part assume your regression equation has been derived from a sufficiently large sample that the prediction interval form equal to y+/-z. c. Determine a point estimate for plasterboard shipments when the number of construction permits is 30. Find a regression forecasting equa b. and explain why this equation is different than the one you found in (a). The manager has collected the data shown in the accompanying table. The general manager of a building materials production plant feels the demand for plasterboard shipments may be related to the number of construction permits issued in the municipality during the previous quarter. Given the data on permits and shipments.6 33. g. Using total moving average method to forecast the quarterly values of 2007. Determine r and coefficient of determination and interpret them. Test the correlation coefficient at 5% level of significance. Find the prediction interval of 90%.2 30.8 2008 2009 7.2 17. compute the standard deviation of regression.Introduction to Production / Operations Management 6.2 18.2 21. Construction Permits Plasterboard Shipments 15 6 9 4 40 16 20 6 25 13 25 9 15 10 35 16 a.s may be used.2 29. Find the prediction interval of 95. 20 .2 22. d.) f.2 26. Years 2007 Quarters I II III IV I II III IV I II III IV Sales (million bottles) 18.4 19.2 20. By using correlation coefficient analysis find the regression forecasting equation.

Dr. e. The firm also collected necessary data on the total sales dollars generated by the store. find the forecasted demand for lawn-mower blade sales for the same date with 90% probability. d. what would be the expected ice-cream sales? c. Compute the forecast of 8th day total sales of the store. What percentage of variation in lawn-mower blade sales can be explained by total sales of the store? c. the observed sales of ice-cream (in MU) and the number of Laguna visitors are Month 1 2 3 4 5 6 Ice-cream sales (MU) 200 300 400 600 700 800 Laguna Visitors 800 900 1100 1400 1800 2000 a. After six months of operation. Prof. b.M. Determine a regression equation treating ice-cream sales as the dependent variable and Laguna visitors as the independent variable. b.Introduction to Production / Operations Management 8.Hulusi DEMIR 21 . Express your forecast with 68.Dr. Test the correlation coefficient at 5% level of significance. and interpret the result. ABC Hardware handles spare parts for lawn mowers. 9. Day 1 2 3 4 5 6 7 Demand for Lawn-mowers 10 12 13 15 20 25 24 Total sales of the store(000MU) 10 13 14 16 19 20 20 a. Ali and Arzu are planning to set up an ice-cream stand in Laguna/Gazimagusa. Using the forecast of total sales you found at (d). If you expect the Laguna visitors to peak out at about 3000 persons next month. For the above data calculate the correlation coefficient between Demand for lawn-mower blade and Total sales of the store. The following data were collected for one week in April when replacement lawn-mower-blades were in high demand. The manager of the store would like to know if the total sales are a good predictor of lawn-mower-blade sales.3% probability limits.

c. Use the equation developed in part (a) to forecast the number of defective parts found for a line speed of 50 meters per minute. What is the coefficient of determination? What does it mean to you? c. # of defective Line parts found speed 21 20 19 20 15 40 16 30 14 60 17 40 a. Advertising Expenditures (000 MU) 1 4 Sales (000 MU) 19 44 40 52 55 6 10 14 a. management devised a situation where the same batch (lot) of parts was inspected visually at a variety of line speeds. b. Express your forecast within 95. Using correlation coefficient find regression forecasting equation. Test the correlation coefficient you found in (a) at 5% level of significance. In a manufacturing process the assembly-line speed (meter/minute) was thought to affect the number of defective parts found during the inspection process. (Assuming n is large) 11.5% probability limits. To test this theory.Introduction to Production / Operations Management 10. Determine the strength of the causal relationship between advertising expenditures and sales of the restaurants and interpret the result. The following data were collected. Is the correlation coefficient significant at this level? d. 22 . Develop the estimated Regression Equation that relates line speed to the number of defective parts found. Sergio’s Restaurants collected the following data on the relationship between advertising and sales at a sample of five restaurants. b.

e. Manager of the company uses the number of employees (in thousands) to predict the number of accidents.5 percent confidence limits for the number of accidents when the number of employees is 33(000).M.Hulusi DEMIR 23 . The data shown in the accompanying table include the number of lost-time accidents for the Izmir Lumber Company over the past 7 years. calculate the 95. 175 140 4939 3388 3873 b. YEAR NO. What percentage of the variation in the number of accidents is explained by the employment level? Is the correlation significant at the 5% level? Prof. Assuming n is large.Dr.Introduction to Production / Operations Management 12. Use the normal equations to develop a linear regression equation for forecasting the number of accidents on the basis of the number of employees. Some additional calculations are included to help you answer the following questions. c. d. What is the correlation coefficient between number of employees and the number of accidents? Interpret your result. Use the equation to forecast the number of accidents when the number of employees is 33(000). Year 2007 Quarter I II III IV I II III IV I II III IV Demand (tons) 105 150 93 121 140 170 105 150 150 170 110 130 2008 2009 Use Moving Totals to forecast the quarterly demand for the year 2010. OF NO. OF EMPLOYEES ACCIDENTS (000) 15 12 20 26 35 30 37 5 20 15 18 17 30 35 225 144 400 676 1225 900 1369 25 400 225 324 289 900 1225 75 240 300 468 595 900 1295 2003 2004 2005 2006 2007 2008 2009 Totals a. 13. State the equation.Dr.

These data as follows: Monthly Construction Permits 42 70 20 24 32 18 82 30 36 52 Monthly Carpet Sales (000 metres) 20 40 16 12 32 8 48 44 36 56 a. BUILDING PERMITS (00) 2 5 1 2 5 4 3 4 1 27 CABINET SALES (000 MU) 3 5 5 6 7 6 5 5 3 45 a. e. g. Establish a 99. Compute the standard deviation of regression c. b. A company wants to develop a means to forecast its carpet sales. Test the significance of r for 10% and n=9. f. Use the normal equations to derive a regression forecasting equation.7% prediction interval estimate for the specific amount of cabinet sales (000 MU)when permits number 4. c. Kitchens of Tomorrow Inc.Introduction to Production / Operations Management 14. Compute the coefficient of correlation and explain the meaning of it. Assume your regression has been derived from a sufficiently large sample that the interval estimate form equal to Y ±Z.4(00). Calculate the standard deviation of regression. The manager has gathered data from Chamber of Commerce records of monthly house construction permits and from store records on monthly sales.Syx may be used. has collected the following data to learn if the number of building permits might be a useful predictor of their cabinet sales. State your forecast in the confidence limits of 90%. Is there any difference between the two equations you derived at a and f. b. Develop a linear Regression Model for these data and forecast carpet sales if 30 construction permits for new homes are filed. d. Use the correlation coefficient formula to derive a regression forecasting equation. 15. The store manager believes that the store’s sales are directly related to the number of new housing starts in town. 24 .

A retail chain of eyewear specialist has been experimenting with sales price of contact lenses. b.Dr. c.5 ____ 777 ____ 820. Average lenses per day_______ 200 190 188 180 170 162 170 Price per lens. For the above data calculate the correlation coefficient between lens price and lens sales and interpret the result. Make a forecast for period 9. What is 95% confidence interval for demand at price 28 MU? (Hint: n=7) 18.Dr. The following data have been obtained. 17. What percentage of variation in lens sales can be explained by prices.Introduction to Production / Operations Management 16. MU 24 26 27 28 29 30 32 a. Fill in the blank places Year 2007 Quarters I II III IV I II III IV I II III IV Demand(tons) 105 150 95 120 Moving TOTALS 150 515 200 565 125 595 175 650 ____ 690 ____ 733. Test the correlation coefficient at 5% level of significance. Assume the forecast for Period 1 was 120.5 2008 2009 Prof.6.Hulusi DEMIR 25 . d. Demand for hockey skates at a local sports store for the past eight weeks has been Week 1 2 3 4 5 6 7 8 Demand 122 130 98 121 96 152 113 124 Use a simple exponential smoothing model with alpha=0.M.

Compute a forecast for the demand in each of the quarters of the following years. By using correlation coefficient analysis find the regression forecasting equation. 21. g. Year Quarter Demand 2008 1 92 2 82 3 84 4 92 2009 1 90 2 80 3 82 4 90 20. Compute the standard deviation of regression c.Introduction to Production / Operations Management 19. Find the prediction interval of 90%. 2010. h. The manager has gathered data from Chamber of Commerce records of monthly house construction permits and from store records on monthly sales. Determine r and interpret it. Monthly Construction Permits 42 70 20 24 32 18 82 30 36 52 Monthly Carpet Sales (000 metres) 10 20 8 6 16 4 24 22 18 28 26 . Establish a 95. b. f. Test the correlation coefficient at 5% level of significance.4 (00). A company has collected the following data to learn if the number of building permits might be a useful predictor of their kitchen cabinet demand. d. Use the normal equations to derive a regression forecasting equation. Determine coefficient of determination and interpret it. Assume our regression equation has been derived from a sufficiently large sample. A company wants to develop a means to forecast its carpet sales. and explain why this equation is different than the one you found in (a). e. Building permits Cabinet Sales (00 MU) x (000 MU) y__ 2 6 5 10 1 10 2 12 5 14 4 12 3 10 4 10 1 6 a. when permits number is 4.4 (00).5% confidence limits estimate for the specific amount of cabinet sales (000 MU) when permits number is 4. The store manager believes that the store’s sales are directly related to the number of new housing starts in town.

management devised a situation where the same batch (lot) of parts was inspected visually at a variety of line speeds. Assuming n is large (i. n≥30). develop a trend equatin relating to registrations to time. b. b. State your forecast in the confidence limits of 95%.Introduction to Production / Operations Management a.M. Develop the estimated Regression Equation that relates line speed to the number of defective parts found. The following data were collected. Test the correlation coefficient at 10% level of significance. In a manufacturing process the assembly-line speed (meter/minute) was thought to affect the number of defective parts found during the inspection process. Room registrations in the Magusa Plaza Hotel have been recorded for the past nine years.5 probability. b.5% probability limits. 24. d. Forecast next year’s registrations. Give your next year’s forecast with 95% probability (i. 22. Prof.e. Determine the strength of the causal relationship between monthly sales and new home construction using correlation. Use the equation developed in part (a) to forecast the number of defective parts found for a line speed of 50 meters per minute. Management would like to determine the mathematical trend of guest registration in order to project future occupancy. a. assuming the level of significance is equal to 5%) c. To test this theory. e. f. Then. Using total moving average method to forecast the quarterly values of 2010. # of defective parts found Line speed 22 20 18 19 15 20 20 20 40 30 60 40 a. c.Hulusi DEMIR 27 . Develop a linear Regression Model for this data and forecast carpet sales if 27 construction permits for new homes are filed.Dr. Years Quarters 2007 I II III IV I II III IV I II III Sales (million bottles) 91 146 111 87 96 154 121 91 108 166 131 2008 2009 23.e. show your confidence limits for the next year with %95. Express your forecast within 95. Given the following time-series data. Calculate the standard deviation of regression. Determine r and interpret it.Dr. c. This estimate would help the hotel management to determine whether a future expansion will be needed.

Introduction to Production / Operations Management Years 2001 2002 2003 2004 2005 2006 2007 2008 2009 25. or smaller (α≤0. Compute also the forecast error for each quarter. Compare the above methods.3. would you prefer alpha = 0. Assume F1 = 8 and α = 0. If you were to use an exponential smoothing model to forecast this time series.2 and 1 to forecast demand for time13.3 . h. Compute the quarterly forecasted demand for the year 2010.3. Find the mean absolute devaiation (average error). Find the mean absolute deviation of exponential smoothing. e. d. Compute a three-quarter moving average forecast. Use a four-period moving average with weights 4. Year Quarter 28 . Demand for fertilizer (tons) 2007 I 50 II 73 III 45 IV 60 2008 I 71 II 85 III 50 IV 61 2009 I 71 II 80 III 55 IV 65 a.3). b. Repeat the analysis using alpha = 0. f. a larger (α≥0. b.5. Registrants(000) 17 16 16 21 20 20 23 25 24 2 3 4 5 6 7 8 9 10 11 12 14 19 26 31 35 39 44 51 55 61 54 Time 1 Demand 10 a.3) value of alpha? Why? 26. Use an exponential smoothing factor to forecast demand in periods 2-13. Which one you prefer? Why? g. Use a simple four-period moving average to forecast the demand for periods 5-13. c.

Years Thousands of Miles driven 2004 22 2005 24 2006 34 2007 30 2008 40 2009 50 a. d. using the method you chose.Introduction to Production / Operations Management 27.Dr. c. Assuming n is large (i.2.e. 2011 and 2012) b. and 3 with the heaviest weights applied to the most recent months. Which method you prefer and why? e. forecast January sales of the coming year. a 6-month weighted average using 1. 28. Compare the methods and state which one you prefer and why? 29.1. Exponential smoothing using an α = 0. Prof.e. Compute the forecast of miles driven for the next three years (2010.Dr. November 10 11 12 13 14 15 Demand 20 28 38 52 62 70 a. Give your forecast for the year 2007 with %95 probability (i. The monthly sales for Telco Batteries Inc. c.Hulusi DEMIR 29 . Assume that F1=24 and α= 0. b. Use an exponential smoothing method to forecast demand in periods 11 November-15 November. were as follows: Month Sales January 20 February 21 March 15 April 14 May 13 June 16 July 17 August 18 September 20 October 20 November 21 December 23 Forecast past sales using each of the following.M. assuming the level of significance is equal to %5) c. a. Find the average error for that period. wishes to forecast the number of miles driven by his trucks for the coming three years. Use a simple 3-period moving average to demand for 13 November-15 November. The manager of Magusa Transport Co. Find the average error.3 and a January forecast of 20. n≥30).2.3 probability. show your confidence limits for the year 2008 with %68.2.. b. d. A three-month moving average.6.

Yakar has seen each year for the past 10 years. f. four-year moving average and a weighted moving average. d.3 to forecast the demand for fertilizer. DEMAND FOR FERTILIZER YEAR (000 of BAGS) 1 4 2 6 3 4 4 5 5 10 6 8 7 7 8 9 9 12 10 14 11 15 a. Data collected on the yearly demand for 50-kg bags of fertilizer at Ilhandir Garden Supply are shown in the table below. Explain your choice. Using trend analysis. Alev Yakar. Estimate demand again with weighted three-year moving average in which sales in the most recent year are given a weight of 2 and sales in other two years are each given weight of 1. Assume that last period’s (year’s) sales forecast for year 1 is 5 000 bags to begin the procedure. 31. b. 30 . These three forecasts are a three-year moving average. Use exponential smoothing with a smoothing constant of 0. The following table indicates how many patients Dr. n>30). Assuming sample is large (i. Develop a four-year moving average for demand for fertilizer. d. Three different forecasts were developed for the demand for fertilizer. Dr. Develop a three-year moving average to forecast sales. specializes in treating patients who are agoraphic (afraid to leave their homes). And according to your choice forecast the year 12. a Magusa psychologist. c.e. predict the number of patients Dr. Which one would you use and explain why? e.of Patients 36 33 40 41 40 55 60 54 58 61 a. b. state your forecast of 2007 within 95. Forecast number of patients in 2007 at 5% level of significance. Would you prefer to use the exponential smoothing model or one of the above models. Yakar will see in years 2010 and 2011. Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 No.Introduction to Production / Operations Management 30.5%confidence interval. What is the standard error of the forecasts? c.

c. The manager of the Petroco Service Station wants to forecast the demand for unleaded gasoline next month so that the proper number of gallons can be ordered from the distributor.2009 is shown in table below. March 645 c. Electrical Generators Sold 74 79 80 90 105 142 122 Develop a linear trend line by using the least squares method. c. Assume n is large (n>30). using 6 for the most recent week. Calculate the standard error of the past record. give your forecast for the year 2010 within 95. Gasoline MONTH Demanded (gallons) November 800 a.2. in 33. b. Girne Manufacturing Company’s demand for electrical generators over the period 2003 . Compute an exponentially smoothed forecast December 725 using α = 0. Compute the forecast for the above data using exponential smoothing with a forecast for August 4 of 360 and α =0.Dr.Introduction to Production / Operations Management 32. Use a 3-week-weighted moving average.Hulusi DEMIR 31 . d. Year 2003 2004 2005 2006 2007 2008 2009 a. Estimate the demand in 2010 and 2011. Forecast the demand for the coming month April 690 September.M.3 and F1 = 700.) 34. Forecast demand for the week September 15. (Show all your calculations and errors in tabular form. The owner has accumulated the following data on demand for unleaded gasoline from sales during the past 10 months. Forecast the demand for the week of September15. with weights of 1. e. May 730 June 810 July 1200 August 980 Prof.3.5% confidence interval. Forecast the demand for the week of September 15 using a 3-week moving average.Dr. Give your forecast for the year 2011 at 5% level of significance. b. The following gives the number of pints of type O (Rh+) blood used at Nalbantoglu Hospital the past 6 weeks: Week of August 4 August 11 August 18 August 25 September 1 September 8 Pints Used 360 389 410 381 368 374 a. January 630 b. and 6. Compute the error of each month and find the February 500 average error for the past record.

Quarterly data for the failures of certain aircraft engines at a local military base during the last two years are Quarters Engine failures 1 2 3 4 5 6 7 8 200 250 175 186 225 285 305 190 a.1. If Weights Applied Period 3 last week 2 2 weeks ago 1 3 weeks ago Forecast the weeks 4. She has collected the data shown in the accompanying table. Compare the above mentioned methods for the periods 4 and 8. week 6 and week 7. Actual Week Bicycle Sales 1 8 2 10 3 9 4 11 5 10 6 13 a. The sales manager of a large apartment rental complex feels the demand for apartments may be related to the number of newspaper ads placed during the previous month. Determine one-step-ahead forecasts for periods 2 and 8. Use exponential smoothing to forecast bike sales. Assume that the forecast for Week 1 was 9 and α = 0. Based on this comparison conclude which method is a superior method for the given series. Use 3-week moving average for forecasting week 4. 37. c. b.Introduction to Production / Operations Management 35. week 5. 6 and 7. Ads Purchased Apartments leased 15 6 9 4 40 16 20 6 25 13 25 9 15 10 32 .7. 5. c. Bicycle sales at TT’s Bikes are shown below. Determine one-step-ahead forecasts for periods 4 and 8 using threeperiod moving averages method. Let us assume that the forecast for period 1 was 200. b. Also suppose that α = 0. Which method would you prefer and why? d. 36.

Given the data on ads and apartment rentals as above.4 1.4 3. OF TOURISTS (in millions) 7 2 6 4 14 15 16 12 14 20 15 7 132 RIDERSHIP (in millions) 1. YEAR NO. Find the mathematical equation by using the least squares regression approach. compute a forecast for the demand in each quarters of the following year. Explain the predicted ridership if there are no tourists at all. Given below are 2 years of quarterly demand data for a particular model of personal computer from a local computer store.8 6.29 256 5.3 1. England.Introduction to Production / Operations Management 35 16 a.4 2.5 38. d.Hulusi DEMIR 33 .0 2. e.e. f.9 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 TOTALS a.0 7.5 2. at 5% level of significance 38.59 10. Prof.8 88. Compute the correlation coefficient and interpret. During the past 12 years. Deseasonalize the data with a moving total and compute a linear equation for the trend in demand. c.76 144 4. estimate the number of apartments leased.00 36 1.1 49 2. Bus and subway ridership for the summer month in London. is believed to be tied heavily to the number of tourists visiting the city.0 11. b.36 225 11. c. If the number of ads is 30.4 24. i. Year 2008 Quarter I II III IV I II III IV Demand 40 46 39 42 44 57 43 45 2009 a.0 1.56 49 2.25 4 1. Compute the determination coefficient and interpret. the following data have been obtained.0 51.29 400 19.5 2.25 225 7.5 1.89 1796 71.0 40. b.7 4. r = 0.25 196 6.7 27.Dr. compute the standard deviation of regression (Syx).00 196 7.0 37. State the equation. b. Use the normal equations to develop a linear regression equation for forecasting the number of ridership on the basis of the number of tourists. Test the hypothesis.7 2.5 2.0 35.69 16 2. Using the trend you have developed.9 352.Dr. 39. Use the equation to forecast the number of ridership when the number of tourists visit London in a year is 10 million.M.

f. Forecast April through September using a 3-month simple moving average. Assuming n is large. What percentage of the variation in the number of ridership is explained by the tourist level? g. forecast 2010 sales. exponential smoothing with α = 0. Using a weighted moving average with weights 6. Is the correlation significant at the 5% level? 40.3) and assume that the forecast for March was 130. b. Your supervisor wants to test three forecasting methods to see which method was better over this period. According to the method you have chosen. 34 . forecast April through September. Use a 3-year moving average to forecast the sales of VW beetles in Istanbul through 2008. Following are the actual tabulated demands for an item for a nine-month period. Month Actual Demand January 110 February 130 March 150 April 170 May 160 June 180 July 140 August 130 September 140 a.5 percent confidence limits for the number of ridership when the number of tourists is 10 million. The sales manager had predicted in 2004 that 2005 sales (F 1) would be 410 VWS. 2008 Year 42. b. Year Sales 2005 450 2006 495 2007 518 2008 563 2009 584 a. develop forecast for 2006 through 2009. (Use average errors) d. c. Quarter Demand (Units) I 92 II 82 III 84 IV 92 2009 I 90 II 80 III 82 IV 94 Compute a forecast for the demand in each of the quarters of the following year. Sales of Volkswagen’s Beetle have grown steadily at auto dealership in Istanbul during the past 5 years (see the table below).30. from January through September. calculate the 95. Use simple exponential smoothing to estimate April through September (α = 0. 3. Using exponential smoothing with a weight of α = 0. 41. 2010. 1 from recent to oldest.3 or a 3-year moving average. What is the correlation coefficient between number of ridership and the number of tourists? Interpret your result.Introduction to Production / Operations Management d. c. Which method you would use. e.

Dr. Prof.M.Hulusi DEMIR 35 .Introduction to Production / Operations Management d. Use absolute errors to decide which method produced be better forecast over the six-month period.Dr.

948 “. The Carpet City Store has kept records of its sales (in m2) each year. Turgay believes attendance is directly related to the number of wins by the team. d. c. Calculate standard deviation of regression equation. what is the coefficient of determination.5% confidence interval. Test the hypothesis r = 0 at 5% level of significance. Use linear relationship and find regression forecasting equation. Forecast 2010 sales based on forecasted permits for that year. and the Vice Director Mr.Introduction to Production / Operations Management 43. i. Is the correlation coefficient significant (meaningful) at this level? e.. find 95. 36 . What would be the 2010 sales? e. Suppose that there are 25 new housing permits granted in 2010. Test the correlation coefficient at 5 % level of significance. Using correlation coefficient find regression equation and explain the difference between two regression equations you have calculated. Find confidence limits of 90% for the forecasted sales. f. Carpet City`s operations manager believes that forecasting carpet sales is possible if the number of new housing permits is known for that year. Football attendance accounts for the largest portion of its revenues. Compute the standard deviation of regression. 44. Forecast attendance for at least 7 wins next year. b. The Vice Director has accumulated total attendance figures for the last eight months. Assuming “n” is large. f. Of Permits 18 15 12 10 20 28 35 30 20 Housing Sales (in 000m2)___ 14 12 11 8 12 16 18 19 13 c. WINS ATTENDANCE 4 3 630 6 4 010 6 4 120 8 5 300 6 4 400 7 4 560 5 3 900 7 4 750 a. l. Find the correlation coefficient and interpret it. along with the number of permits that were issued for new houses in its area. T. Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 No. k. Develop a simple regression equation. If “ r = 0. Dumlupinar Sports Club wants to develop its budget for the coming year using a forecast for football attendance. Interpret both. j. How much of the changes in the dependent variable are “explained” by the changes in the independent variable? g. h. Using correlation coefficient find regression forecasting equation. d.

Month 1 2 3 4 5 6 Tires Used 100 150 120 80 90 180 Thousand of Miles Driven 1 500 2 000 1 700 1 100 1 200 2 700 The manager of Azim Trucking Co. e. Test the correlation coefficient at 10% level of significance. c. d. w2 = 3. the number of daily calls for repair of Speedy Copy Machines has been recorded as follows: October 2007 1 2 Calls 92 127 103 165 132 111 174 97 3 4 5 6 7 8 47. F1 = 90. Year 2008 Quarters I II III IV I II III IV a. 46. a. Using correlation coefficient find regression forecasting equation. What percentage of variation in tire use can be explained by mileage driven? b. Deseasonalise the data above bu computing 4-Quarter Moving Averages with a mean absolute deviations (errors) and also forecast Quarter I of 2010. the above data covering the past 6 months have been collected. Prepare exponentially smoothed forecast for α = 0. Prof. Determine the trend line for the above data and forecast the next quarter.Introduction to Production / Operations Management 45. Determine the errors for this model. b. Accordingly. Forecast the following quarter. w3 = 2. 2009 Demand (units) 350 460 280 360 500 590 450 530 a.2 and F1 = 400 units.Dr. In the Magusa area. Determine exponentially smoothed forecast with α = 0.3. Believes that Demand for Tires Used on his trucks is closely related to the number of miles driven.Hulusi DEMIR 37 . c. Compute 7th month tires used based on the forecasted thousands of miles driven for that month. Prepare a three-period weighted moving average forecast using weights of w1 = 5. Find confidence limits of 90 % for the 7th month forecast.M. b.Dr.

TT Construction Company renovates old homes in Magusa. Interpret them. the company has found that its MU volume of renovation work is dependent on the Magusa area payroll. d. Salim Selim. sales manager for Magusa Gas Grills Ltd. Calculate standard deviation of regression equation and express your forecast (found in (b)) within 90% probability limits. Find correlation coefficient and determination coefficient.5 %confidence intervals. 38 . b. c. 50. Forecast the expected roofing sales for the next month in which 125 units of framing lumber is expected to be sold. Using the correlation coefficient.. Month Lumber Roofing ________Sales Sales____ 1 90 50 2 115 52 3 120 60 4 125 64 5 145 72 6 145 74 7 150 74 8 140 84 9 135 82 10 120 72 11 115 72 12 100 60 1500 816 Φ = 125 68 4500 5980 7200 8000 10440 10730 11100 11760 11070 8640 8280 6000 103700 8100 13225 14400 15625 21025 21025 22500 19600 18225 14400 13225 10000 191350 2500 2704 3600 4096 5184 5476 5476 7056 6724 5184 5184 3600 56784 a. Test the correlation coefficient at 5 % level of significance. f. Over time. The figures for TT’s revenues and the amount of money earned by wage earners in Magusa for the past six years are presented in the table below. The sales manager of a local building material supply chain suspects that the sales of roofing materials are correlated with the amount of fraing lumber sold. He has the following data from the last 2 years. Mr. 49. Assuming n is large state your forecast within 95. Using the sales data above. develop a regression equation to express the number of units of roofing that you would expect to sell as a function of the number of units of lumber sold.Introduction to Production / Operations Management 48. (Sales are in 000 grills) Year Quarter Sales Year Quarter Sales 2008 I 60 2009 I 105 II 91 II 130 III 277 III 522 IV 34 IV 73 Compute quarterly sales forecasts for the coming year. needs a sales forecast for the next year. Is the correlation coefficient meaningful (significant) at this level? e. find regression equation and explain the difference between two regression equations in (a) and (e). g.

b. state your forecast for 2010. Assuming sample is large (n>30) find the confidence intervals for 65. Assuming n is large. Calculate standard deviation of the regression equation and express your forecast within 90% probability limits. b.M. Interpret them.5 Payroll (100. 51. if the local chamber of commerce predicts the Magusa area payroll will be 600 million MU next year. c. Forecast the expected roofing sales for the next year (2010) depending on the forecast of lumber sales for 2010. Years Lumber Sales Roofing Sales 2003 9 5 2004 10 5 2005 12 6 2006 14 6 2007 15 8 2008 18 9 2009 20 10 a. Prof.0 2. Find the forecast of Magusa Area Payroll for the year 2010. Find the regression equation using the forecast found in (f) h. within 95. 10% level of significance. Using correlation coefficient.Hulusi DEMIR 39 .0 3.5% probability.000.e.000MU) 1 3 4 2 1 7 a. Find correlation coefficient and determination coefficient. find regression equation. Is the correlation coefficient meaningful (significant) at this level? d. c. Using correlation coefficient. f. Is the correlation significiant at 5% level. f. d.Dr. The sales manager of a local building material supply chain suspects that the sales of roofing materials are correlated with the amount of framing lumber sold.Dr. e. find regression equation and explain the difference between the two regression equations in (a) and (d).5 2.0 2. Find correlation coefficient and determination coefficient and interpret. Using sales data above develop a regression equation. i.Introduction to Production / Operations Management Years 2004 2005 2006 2007 2008 2009 Sales (100. Test the correlation coefficient at 5% level of significance. e.5 confidence interval. g.0 3. Calculate standard deviation of the regression equation and express your forecast found in (c) within 90% probability limits.000MU) 2.

cloudy or rainy. decision making under risk. 3. The table below summarizes your level of satisfaction for the various combinations on a sale 1 – 10 (10 = most satisfied) Alternative Outdoor Outdoor with tent Indoor Sunny 10 9 4 Cloudy 6 6 5 Rainy 1 3 7 Which alternative would you choose by using the following criteria? a. 4. Minimax regret calculates the expected monetary value of each alternative thereby minimizing any regret. The equally likely criterion leads to an optimistic alternative that is appropriate when the decision-making is seeking to be exposed to risk. 5. Decision-making under risk is issued when probability information about the states of nature is unavailable. 8. 2. PROBLEMS 1. The decision maker has the option to choose the best state of nature available.Introduction to Production / Operations Management DECISION MAKING A. 7. What is an alternative? What is a state of nature? 3. Describe what is involved in the decision process. You are planning your wedding day and need to decide this week whether the reception will be outdoors. Discuss the differences among decision making under certainty. The maximum criterion leads to a pessimistic alternative that is appropriate when the decision-making is seeking to avoid risk. Maximax 40 . The consequence of each alternative needs to be known when using decision making under certainty. The criterion of realism relies on a weighted average approach when choosing an alternative. 4. Ayse Mutlu is trying to decide whether to invest in real estate. QUESTIONS 1. 9. Decision-making under risk requires the use of a payoff table. stocks. outdoors with a tent or indoors. B. and decision making under uncertainty. To maximax criterion is part of decision making under uncertainty. 10. TRUE / FALSE 1. Develop C. 2. Your level of satisfaction will be affected by the weather on the day of reception. It will be sunny. Calculate the probabilities for various states of nature are a step of Decision Theory process. 6. a decision table (excluding conditional values) to describe this situation. or certificates of deposit. How well she does depends on whether the economy enters a period of recession or inflation.

Dr.Hulusi DEMIR 41 . Equally likely d.Introduction to Production / Operations Management b. Minimax regret Prof.Realism (α = 0.Maximin c.M.7) e.Dr.

Introduction to Production / Operations Management 2. Turkmenistan and Kirghizia.9 3 $0.3 3.2 19 18.Maximin 3.2 17.8 14.2 0. including monetary Exchange rates. Cyprus.6 -4. It is planning to build new manufacturing and distribution facility in either W.2 1.2 3.3 4 3 3 8.5 Determine the best investment using the following decision criteria. Serin Cumbul has come into an inheritance from her grandparents. The Company has estimated the facility cost ( in $ millions) in each Country under three different future economic / political climates as follows Economic / Political Climate Decline Same Improve 21.8 13. 42 . B and C) and the three future market conditions (payoffs = $ millions) Market Conditions Decision A B C 1 $0.1 14.5 3 3.1 -2 5 3.9 22.8 25 21.7 19. the maximax criteria becomes minimin and maximin becomes minimax) a.9 1. The various investment alternatives plus their returns ($10000) given the interest rate changes are shown in the following table: Interest Rate 7% 4 2. Azerbaijan.5 5 8% 4.7 3. Demir Comp is a Turkey-based manufacturer of personal computers. Maximax b. Minimin b.7 2 $2 1.2 Investments Money market fund Stock growth fund Bond fund Government fund Risk fund Saving funds 5% 2 -3 6 4 -9 3 6% 3.5 17. The cost of the facility will differ between Countries depending on the economic and political climate.5 16. Consider the following payoff table for three product decision (A. Minimax c. Equally likely 4.Cyprus Azerbaijan Kazakhstan Turkmenistan Kirghizia Determine the best decision using the following decision criteria.2 12.7 Determine the best decision using the following decision criteria: a. The return after 1 year is dependent on the interest rate during the next year.8 0.5 Country N.7 15.6 19. Hurwicz (α = 0.50 0. The rate is currently 7% and she anticipates it will stay the same or go up or down by at most 2 points. Kazakhstan. She is attempting to decide among several investment alternatives.40) d.10 0. (Note that since payoff is the cost.4 9% 5 6 2 2.

if Serin constructs a small station and the market is good. she will realize a profit of 50 000 MU. Jayfer is vice-president of finance. d. c. The annual returns will depend on both the size of her station and a number of marketing factors related to the oil industry and demand for gasoline. Even though independent gasoline stations have been having a difficult time. e. N.000 300.000 25. Develop a decision table for this decision b. Jayfer is credited with making the company a financial success.000 Order MHD 250.000 -200.000 30. Serin developed the following table. What is the minimax regret decision? Prof.What decision criterion should he use? c. Although Sergio is the principal owner. What is the criterion of realism decision? Assume α = 0. After a careful analysis. Sergio is forced to consider purchasing some more equipment for Double T Oil because of competition. What alternative is best? B. What is the maximax decision? c.000 Fair Market(MU) 20. He is likely to arrive a different decision than Sergio.000 80. and what alternative will he select? 6. Maximax Maximin Equal likelihood Minimax regret Hurwicz (α = 0.M.000 -18.Dr. His alternatives the are shown in the following table: STATES OF NATURE Equipment Favorable Unfavorable Market Market(MU) (MU) Sub 100 300.000 A.000 30. Jayfer use.Dr.000 -20.000 -160.000 100. b. his friend. a.000 Poor Market(MU) -10.000 -100.000 Petrosan 75.000 For example. Serin Cumbul has been thinking about starting her own independent gasoline station. What decision criterion should N. Sergio has always been a very optimistic decision maker a.000 -40.Introduction to Production / Operations Management a. What is the maximin decision? d.80 f. What type of decision is Sergio facing? b. N. Size of gas station Small Medium Large Very Large Good Market(MU) 50. He attributes his success to his pessimistic attitude about business and the oil industry. Sergio Bauersohn is the principal owner of Double T Oil Inc. After quitting his university teaching job. Serin’s problem is to decide how large her station should be. Sergio has been able to increase his annual salary by a factor of over 100.40) 5. At the present time.Hulusi DEMIR 43 . What is the equally likely decision? e.

glue that is made just for Ilhan’s Hardware. Manufacturing cost is 12 MU/gallon. and 2000 gallons. Assume that the cost/tree is 6MU.75 MU. the number of trees that are stocked for a given season is a very important decision. 1000 gallons. The cost of the glue is 0. a. but during Chrismas. Ilhan’s Hardware does a brisk business in Girne during the year. The probabilities of selling 1000.4. the chemical loses much of its important properties as a developer. and lubricants. and handling and warehousing costs are estimated to be 1 MU/gallon. Mehmet has allocated advertising costs to MHD-158 at 3 MU/gallon. What is the best solution? c.10 0. 1500 gallons. Unfortunately. Develop a decision tree of this problem. MHD-158. In the past. and the standard deviation is 7. If the cost increased to 12 MU per tree and Ilhan continues to sell trees for 17 MU each. If Mehmet does run out. Mehmet Demir was able to determine that the probability of selling 500 gallons of MHD-158 is 0. but his cost is only 6 MU. Mehmet has guaranteed to his suppliers that there will always be an adequate supply of MHD-158. If MHD-158 is not sold after the batch run. It can. he has agreed to purchase a comparable chemical from a competitor at 25 MU/gallon. To produce MHD-158 efficiently. is used by several photographic companies to make a chemical that is used in the film developing process. b.05 0. It is expected that the probability of selling 50. Inc. 75. One of their products.10 0. so his shortage means that Mehmet loses the 5 MU to buy more expensive chemical. Using historical data. however. Demir Chemical uses the batch approach. but unfortunately the glue gets hard and unusable after one month.2. What do you recommend? 8. Demand 50 75 100 125 150 175 200 Probability 0. in which a certain number of gallons is produced at one time. Demir Chemical produces MHD-158 in batches of 500 gallons. Ilhan does not expect to sell more than 125 trees with this price increase. Mehmet sells the entire chemical at 20 MU/gallon. Demir Chemical. 9. Determine the EVPI 44 .20 0. preservatives. 100. develops industrial chemicals that are used by other manufacturers to p roduce photographic chemicals.25 each.20 0. MHD158 has a very short shelf life of about one month. Thus. a. The following table reveals the demand for Christmas trees. the means sales of glue have been 60 units. How many bottles of glue should Ilhan’s Hardware stock? Assume that sales follow a normal distribution. or 125 trees will be 0. In addition to selling Christmas trees during the Christmas holidays.3. any trees not sold at the end of the season are totally worthless. how many trees should Ilhan stock? c. Mehmet sells the entire chemical at 20 MU/gallon. Unfortunately. How many trees should Ilhan stock at his hardware store? b.05 Ilhan sells trees for 15 MU each. 0. MHD-158 sells for 20 MU/gallon. be sold at a salvage value of 13MU/gallon.1 respectively. 1500 and 2000 gallons are 0. One of the most popular items is Great Glue HD.Introduction to Production / Operations Management 7.30 0. The selling price is 2 MU per bottle. Ilhan is thinking about increasing the price to 18 MU per tree. This reduces set-up costs and allows Demir Chemical to produce MHD-158 at a competitive price. During the past several months. and 0. Furthermore. Ilhan’s Hardware sells Christmas trees for a substantial profit. Ilhan’s Hardware sells all the ordinary hardware items. The question facing Mehmet is how many gallons to produce of MHD-158 in the next batch run.

and building and selling condominiums.4. The various development projects and their 5 year financial return (MU millions) given that interest rates will decline.e. build a duplex. building with four apartments). buying and leasing a warehouse. A favorable report from the study would increase the probability of a favorable rental market to 0. If the rental market is favorable. however. She can build a quadplex (i. is considering several alternative development projects. Of course. gather additional information or simply do nothing. Serin will earn 15 000 MU with the quadplex or 5 000 MU with the duplex. These include building and leasing an office park.6 Projects Office Park Office Building Warehouse Shopping Center Condominiums Decline 0. Serin could lose 20 000 MU with the quadflex or 10 000 MU with the duplex. Serin estimates that the obability of a favorable rental market is 0. Minimax regret d. Any steak left over at the end of the week is sold to a local zoo for 0.7.2 0. The Steak and Chop Butcher Shop purchases from a local meatpacking house. but it would cost her 3 000 MU to gather the information. Place-Plus.7 0. building a strip shopping center.6 1. remain stable or increase are shown in the following payoff table: Interest Rates Stable Increase 1. What is your advice to Serin? 11. Serin does not have the financial resources to do both.M.9 2.3 0.5 1.Maximin c. The financial success of these projects depends on interest rate movement in the next 5 years. Hurwicz (α = 0. Serin believes that there is a 50-50 chance that the information will be favorable.9.3 0.1 0.Hulusi DEMIR 45 .Dr.Introduction to Production / Operations Management 10. Furthermore.7 4.Dr. If she gathers additional information.00 MU/kg and the shop sell the steak for 3.2 Determine the best investment using the following decision criteria: a.5 0. purchasing a parcel of land and building an office building to rent.00 MU/kg.1 The shop must decide how much steak to order in a week? 12. Serin Cumbul is not sure what she could do. Without gathering additional information.4 3.Equally Likely e. an unfavorable report from the additional information would decrease the probability of a favorable rental market to 0. With an unfavorable rental market. a real estate development firm.4 1 2. the result could be either favorable or unfavorable.5 1. Serin could forget all of these numbers and do nothing. The possible demands for steak and the probability for each are as follows: Demand (kg) 20 21 22 23 24 Probability 0. Maximax b.3) Prof.5 1.50 MU/kg.7 3. The meat is purchased on Monday at 2.4 1.

The manager has narrowed the decision to two alternatives: buy one machine or buy two.40 MU/kg and sells for 1. The net present value for one machine and low demand is 90 000 MU.90 MU/kg. The fixed costs associated with oven A are 20 000 MU and the variable costs are 200 MU/pizza. A second option is to subcontract.25 MU/pizza. a second machine can be purchased at a later time. DEMAND FREQUENCY 2 700 8 2 800 12 2 900 20 3 000 25 3 100 15 3 200 10 3 300 5 3 400 5 3 500 10 a. What is the long-run expected loss under the current policy? 16. How many units of this type of product should be prepared prior to tourism sector each year? b. Past records indicate that 3 500 units are enough to prevent any shortage. Each unit of product costs 3 MU and sells for 12 MU per unit. Oven B is larger and can handle 40 pizzas an hour. a. If only one machine is purchased and demand is more than it can handle. The third option is to purchase a second machine. that would have a net present value of 110 000 MU. However. The pizzas sell for 14 MU each. If the eggs are not shipped within a week.) 15. The fixed costs associated with Oven B are 30 000 MU and the variable costs are 1. any remaining blue fish is sold to a producer of a cat food for 0. and the estimated probability of high demand is 0.30. Oven A type can handle 20 pizzas an hour. The Magusa Livestock Company receives order for an average of 6000 dozen quail eggs a week.Introduction to Production / Operations Management 13. and a standard deviation of 10 kg. If demand is high. there are three options: One option is to do nothing. What is the optimal stocking level? 17. which would have a net present value of 90 000 MU. and this is the number prepared before tourism season in the past 10 years. what is the break-even point for each oven? 46 . At the end of each business day. their fertility is impaired and Magusa`s can not sell them as first-quality. The standard deviation of weekly orders is 425 dozen. Seaman’s Fish Market buys fresh Izmir Bluefish daily for 1. the cost per machine would be lower if the two machines were purchased at the same time. Calculate Magusa`s optimum weekly order of eggs. The owner of Double-T Pizza is considering a new oven in which to bake the firm’s signature dish “Vegeterian Pizza”. The manager must decide how many machines of certain type to buy. The estimated probability of low demand is 0. How many machines should the manager purchase initially? (Use a decision tree to analyse this problem.80 MU/kg.70. and 130 000 MU if demand is high. A company is faced with the decision of how many units of product to prepare before the tourism season at the local market. The eggs cost 7 MU/dozen and are resold for 10 MU/dozen. This option would have a net present value of 100 000 MU. The net present value associated with the purchase of two machines initially is 75 000 MU if demand is low. Daily demand can be approximated by a normal distribution with a mean of 80 kg. Unsold product is disposed of at a total loss. they can however be sold for 1 MU/dozen. 14. The following data summarizes the sales history. The machines will be used to manufacture a new gear for which there is increased demand.

if the owner expects to sell 12 000 pizzas. What is the expected value of sample information? How much might the physicians be willing to pay for a market study? 19. The market researchers claim their experience enables them to use Bayes` theorem to make the following statements of probability.Dr.M.55 − Probability of an unfavorable research study = 0. at what volume should the owner switch ovens? 18. In the absence of any market data.Introduction to Production / Operations Management b. Develop a new decision tree for the medical professionals to reflect the options now open with the market study b. If the medical demand is high (i. Use the EV approach to recommend a strategy c. Construct a decision tree to help analyzing this problem.45 a.11 − Probability of an unfavorable market given an unfavorable study = 0.Dr. A) A group of medical professional is considering the construction of a private cardiology clinic. Of course they do not have to proceed at all. To From A B C Unfilled Demand W 12 8 1 40 X 4 1 12 20 Y 9 6 4 50 Z 5 6 7 20 Excess Supply 55 45 30 Use Vogel’s Approximation method to find an initial assignment of the excess supply Prof.Hulusi DEMIR 47 . they could lose 40000 MU. which oven should the owner purchase? c. If the market is not favorable. if the owner expects to sell 9 000 pizzas.89 − Probability of a favorable research study = 0. Hospital of Cardiology (HOC). the best the physicians guess is that there is a 50 – 50 chance the clinic will be successful.e. which oven should the owner purchase? d. What should the medical professionals do? B) The phsycians have been approached by a market research firm that offers to perform a study of the market at a fee of 5 000 MU. there is a favorable market for the clinic).82 − Probability of a unfavorable market given a favorable study = 0. the physicians could realize a net profit of 100000 MU. − Probability of a favorable market given a favorable study = 0. in which case there is no cost.18 − Probability of a favorable market given an unfavorable study = 0.

Manufacturer Y can provide 5 000 meters and Manufacturer Z can provide 3 000 meters. Also included are the transport hours per plane. Determine Magusa Plumbing Co’s least–cost purchasing plan for the pipe should be? (Use VAM method) 21. The critical factor in the movement of these supplies was speed. and Z) are willing to provide the needed pipe at the costs given below (in MU per 1 000 meter). actual flight time. Magusa Plumbing wants delivery within I month. including loading and fuelling. transportation charges from factory to warehouse are not uniform. and unloading and refuelling. wishes to purchase 3 000 meters of pipe A. Each of these factories is responsible for maintaining warehouse supplies in 5 different warehouses. Determine the OPTIMAL DAILY FLIGHT SCHEDULE that will minimize total transport time. Shipping charges per unit are summarized below: WAREHOUSE 48 . Because of varying distances.Introduction to Production / Operations Management 20. Manufacturer X can provide 6 000 meters. The following table shows the number of planeloads of supplies available each day from each of six supply depots and the number of daily loads demanded at each of five bases. Three manufacturers (X. 2 000 meters of pipe B and 3 000 meters of pipe C. (each planeload is approximately equal in tonnage). Types of Pipe (Cost MU/1000 Metres) A X Y 580 620 B 600 560 C 520 580 Available Z 600 580 580 Amount Needed Supply Military Base Depot A B C D E _________________________________________________ #1 36 40 32 43 29 #2 28 27 29 40 38 #3 34 35 41 29 31 #4 41 42 35 27 36 #5 25 28 40 34 38 #6 31 30 43 38 40 _________________________________________________ Demand 18 12 24 16 20 Supply _________ 14 20 16 16 18 6 22. The purchase agent of Magusa Plumbing Co. During the Gulf War. ABC Air Conditioners operates factories in four different cities. Operation Desert Storm required large amounts of military material and supplies to be shipped daily from supply depots in the USA to bases in the Middle East.Y.

Dr. Burdur. shipments are made from these three production facilities to four distribution Warehouses located in Turkey. Periodically. Warehouse Istanbul Ankara Adana Burdur % of Total Production 31 30 18 21 The production quantities at the factories in the next month are expected to be (in thousand of units) Plant Anticipated Production(000 units) Izmir 45 Magusa 120 Beijing 95 The unit costs for shipping 1000 units from each plant to each warehouse is given in the table below.Dr. Antalya and Afyon. The manufactures are located at Izmir. Over the next month. The YUHUA Disk Drive Co. In order to reduce the cost of meeting demand for supplier.Introduction to Production / Operations Management FACTORY 1 F 1________ 8 F 2________ 6 F3 20 F4 12 2 3 4 9 12 7 8 13 9 7 10 11 7 14 15 5_ 18 21 8 22 Factory output and warehouse supplies that must be maintained are as follows: Factory Units produced/day #1 35 #2 25 #3 40 #4 32 5 Warehouse 1 2 3 4 Daily Supply 15 12 22 30 20 Determine. MAGUSA/TRNC and BEIJING/CHINA. a. Aydin and Denizli. (use VAM) (Hint: When finding total production at the three plants you may round the figures to the nearest unit) Shipping costs per 1000 units in MU: Istanbul Ankara Adana Burdur Izmir 250 420 380 280 Magusa 1280 990 1440 1520 Beijing 1550 1420 1660 1730 24. YUHUA produces drives in three plants (factories) located in IZMIR/TURKEY. b. Manisa. ABC ship supplies from 4 principal manufacture to four regional stores. The goal is to minimize total transportation cost. The best possible factory-to-warehouse shipping program using Vogel’s Approximation Method.What is the cost of this shipping program? 23.M. namely: ISTANBUL. it has been determined that these warehouses should receive the following proportions of the company’s total production of the drives. The regional stores are located in Isparta. Produces drives for personal computers. ANKARA ADANA and BURDUR. ABC has decided to allocate its material according to the standard transportation Prof.Hulusi DEMIR 49 .

and 0. If a small plant is built and the demand is low. 1200 hrs of processing time are available. and for the coming month.40. what is the optimal product mix? 27./box 3 Sec. and maintaining small plant would have a net present value of 5 000 MU. If the demand is high. While product 2 requires 1 hour of processing time per kg. Antalya 30 26 34 22 60 Afyon 20 15 40 25 80 SHIPMENT 70 50 90 100 Isparta 44 34 25 32 90 Burdur 22 28 30 40 50 Determine an initial shipping program Calculate the daily cost of this program./Box 3 Sec./Box TIME AVAILABLE 2 Hours 3 Hours 4 Hours Cutting Sealing Packaging If OBDB’s profit contribution is 0. Separately. M&D Chemicals produces two products that are sold as raw materials to companies manufacturing bath soaps and laundry detergents.10MU for each box of 5-kg bags produced. the net present value will be -1 000 MU. An analysis of daily shipping records reveal that the following costs per unit are typical for the current shipping operations. M&D’s objective is to satisfy the above requirements at a minimum total production cost. sealing and packaging. the estimated net present value is 80 000 MU. M&D’s management has specified that the combined production for products 1 and 2 must total at least 700 Kgs. 50 . three operations are required to produce each end product: cutting. b./Box 4 Sec. Production costs are 2 MU/kg for product 1 and 3 MU/kg for product 2. A firm that plans to expand its product line must decide whether to build a large or a small plant to produce the new products. the firm can either maintain the small plant or expand it. Product 1 requires 2 hours of processing time per kg. The probability of low demand is 0. TO FROM Izmir Manisa Aydin Denizli NEEDS a. the net present value after deducting for building costs will be 40 000 MU. If it builds a large plant and demand is high. b. The Our-Bags-Don’t-Break (OBDB) plastic bag company manufactures three plastic refuse bags for home use: a 5-kg garbage bag. a 10-kg garbage bag. and a 15-kg leaf-and-grass bag./Bag TYPE OF BAG 10-kg Bag 15-kg Bag 3Seconds/Box 3 Seconds/Box 2 Sec.The production time required to process each type of bag in every operation and the maximum production time available for each operation are shown (Note that the production time figures in this table are per box of each type of bag). Expansion would have a net present value of 45 000 MU. Based on an analysis of current inventory levels and potential demand for the coming month.70. Using purchased plastic material. Place the figures of the model in an initial simplex tableau and find which variable is entering and which variable is leaving. 25.15MU for each bpx of 10-kg bags. compute the EVPI. If demand turns out to be low.Introduction to Production / Operations Management model. a major customer’s order for 250 kgs of product 1 must also be satisfied. The probability that demand will be high is estimated to be 0.20 MU for each box of 15-kg bags./Box 5 Sec. analyze using a tree diagram. How would this information be used? 26. 0. 5-kg Bag 2 Seconds/Box 2 Sec. a. Construct the GENERAL SIMPLEX MODEL properly.

and a deficit of one car in each of cities 7.5. The Izmir Aerospace Company has just been awarded a rocket engine development contract.3. III. C. Which bids should Izmir accept in order to fulfil the contract terms at the least cost? b. D.Hulusi DEMIR 51 .M. A national car rental service has a surplus of one car in each of cities 1.Introduction to Production / Operations Management 28. B. and E ) to do subcontract work in five areas ( I.9. II. IV and V ). The bids are as follow: Cost information: I 45000MU 50000 60000 30000 60000 Subcontract bids II III 60000MU 55000 70000 20000 25000 75000MU 40000 80000 60000 65000 IV 100000MU 100000 110000 55000 185000 V 30000MU 45000 40000 25000 35000 Company A B C D E a.10. What is the total cost of subcontracts? Prof.Dr.8. So Izmir requested bids from five small companies ( A.4. The contract terms require that at least five other smaller companies be awarded subcontracts for a portion of the total work.12.Dr.6.11. The distances between cities with a surplus and cities with a deficit are displayed in the matrix below.2. How should the car be dispatched so as to minimize the total mileage travelled? 7 1 2 From 3 4 5 6 41 22 27 45 29 82 8 72 29 39 50 40 40 To 9 39 49 60 48 39 40 10 52 65 51 52 26 60 11 25 81 32 37 30 51 12 51 50 32 43 33 30 29.

then utilize the results of the market study to determine wherher to market Melcola nationally. If Melcola is a national success. Melcola has three alternatives: Alternative 1 Test market Melcola locally. Azim Kola`s asset position will increase by 600 000 MU. If a local success is observed. In the absence of a market study Azim Kola believes that Melcola has a 55% chance of being a national success and a 45% chance of being a national failure. Alternative 2 Immediately (without test marketing) market Melcola nationally. there is only 10% chance that Azim Kola will be a national success. Alternative 3 Immediately (without test marketing) decide not to market Melcola nationally. what strategy should the company follow? . If Azim Kola is a risk-neutral (wants to maximise its expected final asset position). and if Melcola is a national failure.Introduction to Production / Operations Management 30. If Azim Kola performs a market study (at a cost of 60 000 MU). there is an 85% chance that Melcola will be a national success. If a local failure is observed. Azim Kola`s asset position will decrease by 200 000 MU. there is a 60% chance that the study will yield favourable results (referred to as a local success) and a 40% chance that the study will yield unfavourable results (referred to as a local failure). Azim Kola has assets of 300 000 MU and wants to decide whether to market a new melonflavoured soda. Melcola.

15 0. and leftover units are worthless. how many units should be purchased? 2. What is the optimal order size? 3. of Demand 0.M. Sergio pays 0. A wholesaler of stationery is deciding how many desk calendars to stock for the coming year. Sweet cider is delivered weekly to Sergio’s Produce stand.Dr. Use marginal analysis to find how many calendars should be ordered. The incremental cost of selling (commissions) is 5 MU per thousand. if a camera is unsold after the major selling season. Of Demand 0. 4.20 MU/litre for the cider and charges 0.00 Each unit sells for 50 MU.05 0.15 0. and the incremental purchase cost is 70 MU. For each camera sold. it makes a unit profit of 20 MU. Assuming no reordering is possible. The following table indicates the possible demand levels and the wholesaler’s prior probabilities.30 0. Demand varies uniformly between 300 litres and 500 litres per week.Hulusi DEMIR 65 .25 200 300 400 The calendars sell for 100 MU per thousand. Find the optimal stocking level and the stock-out risk for that quantity. Demand(in 000s) 100 Prob.10 0. it must be sold at a reduced price.80 MU/liter for it. It is impossible to reorder. 5. The purchase costs of a unit are 10 MU. Unsold cider has no salvage value and cannot be carried into the next week due to spoilage. A camera manufacturer makes most of its sales during the New Year selling season.35 0. Unsold units have no value. which is 5 MU less than the variable cost of manufacturing the camera. Demand for a product is approximately normal with a mean 40 units and standard deviation 12 units.50 0. The probability distribution of the demand for a product has been estimated to be Demand 0 1 2 3 4 5 6 Prob. it is completely worthless. and if the product is not sold.10 0. The manufacturer estimates that demand is normally distributed with a mean of 10 000 units and a standard deviation of 1 000 units. What is the optimum number to order? Prof. The product costs 2 MU per unit and sells for 5 MU.Introduction to Production / Operations Management INVENTORY CONTROL 1.Dr.05 0.

Because bad weather and heavy rain is common in the month December. Ali Caliskan sells New Year trees.90 MU/kg. Ali will sell his trees for an average of 25 MU each. TRNC. The magazines cost 250 MU/hundred and sell for 4.10 0. A special style of sweater can be purchased by retail store for 18.30 0. Ali has always harvested the trees he intends to sell in a given year by December 1. Any unsold trees at the end of the year can be sold for kindling wood at a price of 5 MU a piece.00 For the coming year.15 0. When purchase in lots at this price. Cases that are not sold can be sold for 1 MU a case at the end of the day to a small grocery store. The probabilities of sales for cases of greens are as follows: Daily sales (cases) 5 6 7 8 9 10 Probability at this level 0. Ahmet Koc owns and operates a large fresh fruit stand in Gazimagusa. What should be the ordering quantity for the next period? 9. Ahmet’s cost is 5 MU for each case.50 MU/each.20 0. How many of these sweaters should the store stock? 8.25 0.1__________ Determine the best policy to stock each week? 7.80 MU/kg. Any sweaters left at the end of the season will be sold for 14. At the end of each business day. the publisher accepts no returns.95 MU during the season. the demand of which varies from 1000 to 2400 copies.25 MU on a one-time opportunity. and a standard deviation of 10 kg. The store plans to offer the sweater at a retail price of 34.1 0. and has kept detailed records of sales in previous years.2 0. any remaining blue fish is sold to a producer of a cat food for 0. His cost to grow and cut each tree is estimated to be 10 MU. Daily demand can be approximated by a normal distribution with a mean of 80 kg. Seaman’s Fish Market buys fresh Izmir Bluefish daily for 1.1 0. Each case of greens sells for 15 MU. From this data. Fresh greens are his primary produce.40 MU/kg and sells for 1. which he grows on his farm in Guzelyurt.Introduction to Production / Operations Management 6.95 MU.3 0. he has determined that probability of selling various quantities of trees in a given year as follows: DEMAND 500 550 600 650 700 750 + PROBABILITY 0.2 0. What is the optimal number of trees that Ali should harvest? 66 . Ali has been selling trees for many years. What is the optimal stocking level? 10. It is estimated that the demand for this item at this location will have a normal probability with a mean of 80 and a standard deviation of 22. A magazine shop owner orders a popular monthly magazine.

20 MU if sold before New Year. and itcosts approximately 6 MU to order and receive a shipment of paper. The product will sell for 130 MU during the season and any units left at the end of the season will be for 50 MU. but retails for 2. a.000 MU and carrying cost is 23%. The bakery uses an average of 4860 bags a year. Annual carrying costs are 30 MU/bag. Would you recommend that the office manager use the optimal order size instead of 200 packages? Justify your answer.Compute the total annual inventory cost using your order size from part a. What order size would minimize total ordering and carrying costs? b. On the basis of past records. The pots are purchased at 2 MU each. Garden Variety Flower Shop uses 750 clay pots a month. What is optimal MU per order? (optimal quantity in monetary units) 15. The office manager is currently using an order size of 200 packages. It costs Ahmet 30 MU to place an order and his carrying cost is 18%. c.Hulusi DEMIR 67 . The manager of a drugstore is wondering how many New Year Cards to order before December. How many orders per year should Ahmet place for the balls? 14. the manager has developed the following table. Demand 3 000 3 500 4 000 4 500 5 000 5 500 Probability 0. Annual carrying costs are estimated to be 25 percent of cost. Prof. a. Ayse Guzel. and ordering costs are 30 MU per order. Each card costs 1.15 How many cards should be ordered? 12.15 0.Dr.25 0. Ayse has estimated order costs to be 48 MU/order. and no additional units can be ordered. Determine the amount to stock to order that will give the maximum expected profit? 13. A large bakery buys flour in 25-kg bags. Determine the economic order quantity b.Introduction to Production / Operations Management 11. Determine the economic order quantity and the total annual cost of carrying and ordering.05 0.15 0. If annual ordering cost were to increase by 1 MU per order. How much would that affect the minimum total annual cost? 16. Storage and handling costs for the paper are 3 MU a year per pack. Except for rounding. Annual demand for the computers is 28. The firm operates 260 days a year.25 0. Ahmet Caliskan experiences an annual demand of 220 000 MU for quality tennis balls at the Gazimagusa Tennis Supply Company.Dr. The probability distribution of demand during the season is estimated normally distributed with a mean of 200 units and a standard deviation of 50. A style item can be purchased for 65 MU/unit before the season. What is the average number of bags on hand? c. How many orders per year will there be? d. needs to determine an optimal ordering policy for Genius Computers. are annual ordering and carrying costs always equal at EOQ? d. A large law firm uses an average of 40 packages of copier paper a day. owner of Computer Village. a.M. The partners of the firm expect the office to be managed “in a cost-efficient manner”. Preparing an order and receiving a shipment of flour involves a cost of 4 MU per order. After New Year the store reduces the price by 60%. Compute the total cost of ordering and carrying flour e. 17.30 MU.

of meat. What is the resulting service level? Demand(dozens) Relative Probability 19 0. to stock if labour. the ordering cost can be cut to 4 MU. in dozens. Burger Prince buys top-grade ground beef for 1. The cost of one such bicycle is 800 MU. which it purchases at a cost of 10 U/crate and carrying cost is 35% of the purchase price per crate.05 21 0.00 MU. What daily order quantity is optimal? *(HINT: Shortage cost must be in MU/kg) 21. Ali Uslu sells bicycles.20 MU per dozen. What is the optimal number of days between orders? d. The soft goods department of a large department store sells 150 units per month of a certain large bath towel.18 23 0.10 28 0.Introduction to Production / Operations Management b. What are total annual ordering costs and annual total holding costs? Verify your results. Determine the optimal number of doughnuts.12 22 0.80 MU per dozen. order frequency.10 26 0. and condiments costs0. 68 . If through automation of the purchasing process. buns. What is the economic order quantity? b. Currently the manager orders once a month.50 MU and the cost of placing an order has been estimated to be 12. A produce distributor uses 800 packing crates a month. what will be the new EOQ.80/kg. and overhead are estimated to be 0. The store uses an inventory carrying charge of 27% per year. Labour. 22.50 MU/burger. a. Determine the optimal order quantity. How much could the firm save annually in ordering and carrying costs by using economic order quantity? 19. One particular model is highly popular with annual sales of 2000 units per year. Any leftover meat is sold to the local high school cafeteria for 0.13 24 0. The store is open 250 days a year. and the annual cost of inventory management. Four hamburgers can be prepared from each kg. Burgers sell for 0. materials.11 27 0.04 29 0.01 20 0.02 20. and leftover doughnuts at the end of each day are sold the next day at half price. A large sign over the entrance guarantees that the meats fresh daily. how much extra cost would the firm incur? 18. Annual holding costs are 25% of the item’s cost and the ordering cost is 40 MU. If the order size wasn’t changed. Demand is normally distributed with a mean of 400 kgs per day and a standard deviation of 50 kgs a day. doughnuts are sold for 1. What are the annual total costs? e.14 25 0. Ordering costs are 28 MU. overhead.60 MU/each. Demand for jelly doughnuts on Saturdays at Ilhan’s Doughnut Shoppe is shown in the following table. meat. Suppose an analysis shows actual carrying costs are roughly double the current estimate. order frequency and the annual inventory management cost? Explain these results.00MU/kg. The unit cost of a towel to the store is 2. What is the optimal number of orders? c.

The warehouse space currently available for storing this product is limited to 600 square feet. A local distributor for a national tire company expects to sell approximately 9600 steel belted radial tires of a certain size and tread design next year. It costs 100 MU to set up the manufacturing (production) process and the carrying cost is about 0. For what value of ordering cost would their action be optimal? 26.000 Units and 12. For what value of annual demand is their action optimal? 27. The Rushton Trash Co. Ordering costs are 5 MU/order. Each unit costs 3.50 MU/unit-year. The firm estimates that carrying cost is 30% per year.000 Units.What is the minimum annual total inventory cost? 30. How many months’ supply should the purchasing director order at one time to minimize the total annual cost of purchasing and carrying? 24. The firm’s estimated demand for the year is 10 000 units. a. What is the total annual inventory costs if the EOQ is ordered? 29. The assumptions of the EOQ model are thought to apply.00 MU. 25. and that annual demand is about 240 units /year.Dr.Hulusi DEMIR 69 . The assumptions of the EOQ model are thought to apply. when the limited amount of warehouse space is taken into consideration? d. a certain container. Holding costs are 2 MU/container/year. A local firm has traditionally ordered a supply item 60 units at a time. How many refrigeration units should TT Manufacturing produce in each batch? b. Once the production process is set up.M. What is the length of an order cycle? d. The current price of the ingredient is 200 MU/kg. s = 120 MU/set-up. The demand during the production period has traditionally been 60 units each day. The firm estimates that carrying cost is 40% of the 10 MU unit cost. stocks. and has a salvage value of 1. What is the cost-minimizing order quantity decision for Rushton? b. each of which occupies four square feet of warehouse space.Introduction to Production / Operations Management 23. A firm that makes electronic circuits has been ordering a certain raw material 60 kgs at a time. among many other products. Prof. if not sold. produces commercial refrigeration units in batches. TT Manufacturing Co. a. What would the firm willing to pay for additional warehouse space? 28. Demand during lead-time varies uniformly between 8. The purchasing director of the university estimates the ordering cost at 45MU and thinks that the university can hold this type of inventory at an annual storage cost of 22% of the purchase price. What is the total inventory-related cost of managing the inventory of this product.00 MU. How many times per year does the store reorder? c.20 MU. and that ordering cost is about 20 MU/order. p = 4 MU/unit.How long should the production part of the cycle? c. What is the EQO? b. Annual carrying cost is 16 MU/tire and ordering cost is 75 MU. The distributor operates 288 days a year. What is the total inventory-related cost of this decision? c. a. Use the single-period model to find the optimal level of inventory to stock. sells for 4. Given the following data : C = 72 000 units/year.Dr. Demand for the product is 12000 units per year. Z = 25% /year Calculate EOQ and calculate annual costs following EOQ behaviour. What is the maximum inventory level at this production rate? d. EMU uses 96 000 MU annually of a particular toner cartridge for laser printers in the student computer labs. 80 refrigeration units can be manufactured daily.

Each back-order is filled as soon as the production run is completed. Each production run requires an outlay of 160 MU/machine set-up. Osman will sell his trees for an average of 30 MU each. If the shampoo sells for 1. From this data.00 10 0. The probability distribution of the demand for a product has been estimated to be Demand Prob.35 Each unit sells for 50 MU. Determine the economic order quantity and the time between placements of orders for this product. e. a.30 13 0.05 0. and each unit carried in inventory costs 100 MU.05 11 0. find the reorder point. A local supermarket sells a popular brand of Shampoo at a fairly steady state of 380 bottles per month. Any unsold trees at the end of the year can be sold for kindling wood at a price of 5 MU a piece.10 0. The back-order quantity? d. His cost to grow and cut each tree is estimated to be 15 MU. The optimal size of each production run? b. and has kept detailed records of sales in previous years. of Demand Demand Prob. he has determined that probability of selling various quantities of trees in a given year as follows: DEMAND 501 551 601 651 701 750 + PROBABILITY 0. Determine the following: a. 32.35 0. Because bad weather and heavy rain is common in the month December. of Demand 0. What is the optimal number of trees that Ali should harvest? 34. If the procurement lead-time is two months. Osman has always harvested the trees he intends to sell in a given year by December 1. it is completely worthless. how many units should purchased? 7 8 9 70 . Osman Sabit sells New Year trees.50 MU. and if the product is not sold. what is the total annual cost of the shampoo? d. The time between runs (assume 250 days/year)? f.Introduction to Production / Operations Management 31. which he grows on his farm in Guzelyurt. c. Determine the optimal number of orders. Osman has been selling trees for many years. The total annual cost of the inventory policy? g. Assume that holding costs are based on a 25% annual interest rate.00 For the coming year.15 12 0. Azim Co. what effect does this have on Azim’s original inventory policy? 33.05 0.45 MU and the cost of placing an order has been estimated at 8.25 0. If annual demand is doubled at Azim Co.00 MU. Projected demand for Product A equals 200 000 units. The optimal number of productiın runs in a year? e. What is the total annual holding cost? Verify your result. b. The purchase costs of a unit are 10 MU. The cost of each bottle to the supermarket is 0. Assuming no reordering is possible.25 0. manufactures Product A.10 0. The maximum level of inventory that the firm can expect to have on hand? c. The estimated cost of a back-order is 600 MU. and a wage increase doubles the set-up cost.

how large should each batch of subassemblies be? b. Of Demand 0. Annual Demand= 50 000 units Daily subassembly production rate = 1 000 Set-up cost = 65 MU per batch Daily subassembly usage rate = 200 Carrying cost = 0.M. It is impossible to reorder. Use marginal analysis to find how many calendars should be ordered. Demand varies uniformly between 300 litres and 500 litres per week. Holding costs are 1. Approximately how many days are required to produce a batch? Prof. and the order cost is 20 MU per order. What size batch should be used? b.Hulusi DEMIR 71 . Demand(in 000s) 101 201 301 401 Prob.50 0. How much does management of this good in inventory cost the firm each year? 40.00 MU per unit per year. Demand during this period averages 100 units per day. The following table indicates the possible demand levels and the wholesaler’s prior probabilities. a. which are then put into toys.15 0. Lead-time for one of Azim Manufacturing’s fastest moving product is 3 days.What is the optimal order quantity? b. 37. What would be an appropriate re-order point? 41. If they wish to produce this product in economic batches. The new office supply discounter. if a camera is unsold after the major selling season. and leftover units are worthless.80 MU/liter for it.20 MU/liter for the cider and charges 0.Dr. annual demand is 600. (PCE) sells a certain type of ergonomically correct office chair. A camera manufacturer makes most of its sales during the New Year selling season. Data on the manufacture of the motors appears below. What is the optimum number to order? 39. Production averages 100 per day. What is the maximum inventory level? c.Unsold cider has no salvage value and cannot be carried into the next week due to spoilage. What is the optimal order size? 36. The product costs 2 MU per unit and sells for 5 MU. For each camera sold. A wholesaler of stationery is deciding how many desk calendars to stock for the coming year. and the incremental purchase cost is 70 MU. Paper Clips Etc. a. A toy manufacturer makes its own wind-up motors. 38.The manufacturer estimates that demand is normally distributed with a mean of 10 000 units and a standard deviation of 1 000 units. The annual holding cost rate is 40%.00 MU. To minimize cost. Unsold units have no value. Azim Manufacturing produces a product for which the annual demand is 10 000. it must be sold at a reduced price.10 0. which is 5 MU less than the variable cost of manufacturing the camera. which costs 300 MU. Find the optimal stocking level and the stockout risk for that quantity. it makes a unit profit of 20 MU. While the toy manufacturing process is continuous. set-up costs 200. The incremental cost of selling (commissions) is 5 MU per thousand. The store is open 300 days per year. What is the reorder point? 42. The lead-time is 4 days. Demand for a product is approximately normal with a mean 40 units and standard deviation 12 units.10 MU per unit-per year a. Sweet cider is delivered weekly to Sergio’s Produce stand. while demand is 40 per day. Sergio pays 0.Dr.Introduction to Production / Operations Management 35.25 The calendars sell for 100 MU per thousand. the motors are intermittent flow. How many order cycles are there per year? d.

e. Find optimal order number. The back-order quantity? e. How long is the ordering period (in weeks)? h. Usage: 200 000 units/year Set-up cost: 80 MU/set-up Carrying cost: 25 % of the price Price: 200 MU/unit Back-order cost: 950 MU/unit-year a. the production process is most efficient at 8 units per day. Inc. Determine the maximum level of inventory that the manufacturer can expect to have on hand. 47. If lead time is 1 week . The cost of placing an order with the vendor (supplier) is 45 MU. Determine the stock-out time. and each unit is carried in inventory 25% of the purchasing price 72 MU. What is the annual cost of using a 390-unit lot size? b. 72 .85 MU on a one-time opportunity. makes and sells specialty hubcaps for the retail automobile aftermarket. e. Any sweaters left at the end of the season will be sold for 13. Find average inventory level.The museum operates 52 weeks/year. 44. f. Determine the complete size for each run. Sergio Manufacturing. find the reorder point. However.85 MU. It is estimated that the cost of permitting a back-order is 9 MU/unit/year. The maximum level of inventory/ c. How long is a complete cycle? d. Management chose a 390-unit lot size so that orders could be placed less frequently. solve for the optimum number of units per order. Show your verification. Given the following values. It is estimated that demand for this item at this location will have a normal probability distribution with a mean of 75 and a standard deviation of 21. expects next year’s sales to be 360 000 units. What is the total inventory cost (rounded to nearest MU) of the optimal behaviour in this problem? 43. Jayfer’s Sewing machines Co. c. The optimal number of runs in a year? f. The store plans to offer the sweater at a retail price of 35. Sergio’s forecast for its wire-wheel hubcap is 1 000 units next year. Find how much such a policy will cost to the company. b. Find the total inventory cost of the optimal order policy. average inventory level? d. One of the top-selling items in the container group at the museum’s gift shop is a bird-feeder. Would a lot size 468 be better? c. The time between runs in a year? (assume 311 days/year) g. a. The total annual cost? i. g. Annual holding cost is 25% of the feeder’s value.85 MU during the season.. Calculate the number of runs in a year. Each back-order is completed as soon as the production run is completed. What effect does an increase of yearly usage to 400 000 units have on the firm’s inventory policy? 45. d. Find the minimum annual ordering cost. A special style of sweater can be purchased by a retail store for 17. f. Each production run requires an outlay of 100 MU for machine set-up. d.Introduction to Production / Operations Management c. How many of these sweaters should the store stock? 48. Find the optimal order size (EOQ). a. The total annual inventory cost? h. Optimal size of each production run? b. Sales are 18 units per week and the supplier charges 60 MU/Unit.

Optimal Lot Size for each production run. What is the reorder point level? Prof.Introduction to Production / Operations Management Set-up cost = 10 MU/run Holding cost = 0. Away for 15 MU each and the lead-time is 2 days. The firm operates 250 days each year.95 MU during the season. Each unit of product costs 3 MU and sells for 12 MU per unit. c. Product X is produced at a rate of 100 units a day. a. d. The time between runs.M. 51. There are 250 working days per year. The holding cost per bracket per year is 10% of the unit cost and the ordering cost is 18. and no additional units can be ordered. The assembly line uses the product at a rate of 40 units a day. and this is the number prepared before tourism season in the past 10 years. Given the EOQ. The probability distribution of demand during the season is estimated to be normally distributed with a mean of 160 units and a standard deviation of 45 units. during the 250 days/year the shop operates. The total annual cost of the OLS policy. What would be the annual ordering cost? f. In minimizing cost. what is the average inventory? c. The total annual cost e. Given the EOQ. Sergio Farmerson’s machine shop uses 2 500 brackets during the course of a year. 52. b.Dr. These brackets are purchased from a supplier 100 kms. Unsold product is disposed of at a total loss. What is the long-run expected loss under the current policy? 50. A company is faced with the decision of how many units of product to prepare before the tourism season at the local market. The product will sell for 64. How many units of this type of product should be prepared prior to tourism sector each year? b.5 MU a unit before the season. The time between production runs. A style can be purchased for 32. DEMAND 2 700 2 800 2 900 3 000 3 100 3 200 3 300 3 400 3 500 FREQUENCY 8 12 20 25 15 10 5 5 10 a. a. What is the EOQ? b.Hulusi DEMIR 73 .) 49.75 MU. f.50 MU/unit-year. The following data summarizes the sales history.Dr. how many orders would be made each year? e. Determine.50 MU/unit/year (Note: This plant schedules production of this hubcap only as needed. Each product X costs 7 MU and requires a lead-time of 7 days. Determine the amount of stock to order that will give the maximum expected profit. and any units left at the end of the season will be sold or 24. Past records indicate that 3 500 units are enough to prevent any shortage. Set-up costs total 50 MU and the average annual holding cost is 0. and this usage is relatively constant throughout the year. what is the total annual cost (including purchase cost)? g. What is the annual inventory holding cost? d.95 MU. What is the time between orders (days)? h. The reorder point.

Introduction to Production / Operations Management 53. What would be the average inventory level? g. The production rate is 30 rackets per day. and 50 brackets could be produced in a day once the machine has been set-up. (Hint: 1 ton: 1 000 kg : 10 bags) a.80 MU. a manufacturer of sewing machines. What is the daily demand rate? b. in days. What is the reorder point level. The maximum inventory level and the number of runs in a year. if the lead time is one-half day? 54. The time between runs. Demand for this product is 20 tons per day. The racket is worth 45 MU. equals 200 000 units. c. e. The estimated cost of a back-order is 550 MU. Calculate minimum total inventory cost. Set-up costs 100 MU. Each production run requires an outlay of 80 MU for machine set-up. TT Company produces material for National Defence Ministry of Turkey. a. The probability distribution of demand during the season is estimated normally distributed with a mean of 200 units and a standard deviation of 50. The product will sell for 130 MU during the season and any units left at the end of the season will be for 50 MU. The holding costs would be 10% of this cost. a. or cycle time for OLS? d. The annual demand for rackets is 5000 units per year. The capacity for producing the producing the product is 50 tons per day. Assume there are 250 working days in a year. The annual holding cost is 25 % of the value of the racket. Sergio estimates that the cost (including labour time and materials) of producing one bracket would be 14. Each unit carried in the inventory costs 50 MU. Each production run requires an outlay of 100 MU for machine set-up. The back-order size (shortage quantity) and the optimal number of runs? 56. How much could the company save annually if the set-up cost could be reduced to 25 MU/run? 58. What is the total annual inventory cost? h. Projected demand for a secret material TT007. If Sergio uses the optimal production quantity. The annual cost of the optimal system? e. How much inventory is sold during the production run time? e. expects next year’s sales to be 180 000 units. What is the optimal lot size? b. and no additional units can be ordered. What is the optimal production quantity? c. Determine the approximate length of a production run. Stitch-in-Time. The optimal size for each production b. Calculate maximum inventory level of this firm. The maximum level of inventory that TT Co. c. and storage and handling costs are 5 MU per ton per year. The production time per lot. what would be the maximum inventory level? f. What would the average inventory be for this lot size? d. e. A chemical firm produces Sodium Bisulphate in 100 kg bags. Machinery set-up costs to produce these rackets are 400MU. He has determined that set-up costs would be 25 MU in machinist time and lost production time. g. Determine the amount to stock to order that will give the maximum expected profit? 57. Determine the following: a. Each back-order is filled as soon as the production run is completed. About how many runs/year would there be? f. The time between runs (assume 250 working days/year) d. A style item can be purchased for 65 MU/unit before the season. Sergio Farmerson (see Problem 52) wants to reconsider his decision of buying the brackets and is considering making the brackets in-house. and each unit carried in 74 . How many bags per run are optimal? b. 55. can expect to have on hand? c. The TOTAL annual set-up and inventory holding cost for this item. How long will it take to produce the optimal quantity? d.

One of the components/parts of Product X is produced within TT’s facilities at a rate of 100 units/day.Calculate the total expected annual cost of each Safety Stock options open to Cheap-Shot and choose the best option. Determine the optimal size (quantity) for each production run. Determine the following: a. What is the time between runs (in days)? 60.Dr.Hulusi DEMIR 75 . The maximum level of inventory that the firm can expect to have on hand? c. recent demand has become somewhat unstable. the reorder point is set at 150 units. Projected demand for Material X equals 100 000 units.Dr. The annual cost of the optimal lot size policy d. what effect does this have on Blast-off’s original inventory policy? 61. The total annual cost of the optimal inventory policy g.M. The following data summarizes company records: Reorder period (Units)_________ Frequency of Use 50 15 100 21 150 32 200 16 250 10 300 _ 6_ 100 Cheap-Shot currently places orders five-times/year and has estimated that the cost of running out of stock is 25 MU/unit and holding cost is 30 MU. However. It is estimated that the cost of permitting a back-order is 16 MU/unit/year. Product X is a standard item in TT’s inventory. Find how much such a policy will cost to the company. Set-up costs total 50 MU and the average annual holding cost is 0.. The optimal size of each production run? b. The reorder point c.Introduction to Production / Operations Management inventory costs 9 MU. At the present time. Blast-Off Inc.. What is the TOTAL ANNUAL COST OF PRODUCTION AND INVENTORY SYSTEM? e.Each production run requires an outlay of 80 MU/machine setup. Using this data determine the following: a. uses a fixed-quantity model as the basis for its inventory policy. The assembly line uses the component at a rate of 40 units/day. If annual demand is doubled at Blast-Off and a wage increase doubles the set-up cost. manufactures Material X. The assembly line uses the product at a rate of 80 units a day. Determine the maximum level of inventory that the manufacturer can expect to have hand. 62. Product A is produced at a rate of 200 units a day. Optimal Production Lot Size (OLS) b. The back-order quantity d. The optimal number of production runs in a year e. For the past five years. a policy that incurs no stock-outs 68% of the time.50 MU/unit/year. Determine the time between runs. The firm operates 250 working days/year. Set-up costs total 25 MU and the average holding cost is 0. a. Each back-order is filled as soon as the production run is completed. on 59. The estimated cost of a back-order is 600 MU. The component costs 7 MU and requires a leadtime of 7 days. Each Prof. The time between runs (assume 250 days/year) f. demand has been relatively constant. and each unit carried in inventory costs 25 MU. Cheap-Shot Sales Inc. and management has asked for an update on its reorder policy. Each back-order is filled as soon as the production run is completed.50 MU/unit/year. What is the optimal number of runs per year? f. d. b. c.

Maximum level of inventory c. How many units of this type of product should be prepared prior to tourism sector each year? b.04 0.10 0. How many orders per year should Serin place for the balls? 65. The reorder point. The following data summarizes the sales history.06 0. Optimal size for each production run? b. The total annual inventory cost e. Unsold product is disposed of at a total loss. The EOQ analysis indicates that the company should reorder 10 times a year. The annual cost. f. Based on the information in the table below. ABC Motor Co. e. c. d. What is the long run expected loss under current policy? 64. and this is the number prepared before tourism season in the past 10 years. Optimal Lot Size for each production run. b. The number of runs per year. what would you advise the company to do? USAGE DURING REORDER PERIOD 200 220 240 260 280 PROBABILITY OF THIS USAGE 0. A company is faced with the decision of how many units of product to prepare before the tourism season at the local market. DEMAND 5 400 5 600 5 800 6 000 6 200 6 400 6 600 6 800 7 000 FREQUENCY 8 12 20 25 15 10 5 5 10 a. has determined that the cost of being stocked out is 150 MU/unit.Introduction to Production / Operations Management product A costs 7 MU and requires a lead-time of 7 days. The total annual cost of the Optimal Lot Size policy. g. Number of runs per year Set-up cost = 80 MU/set-up Back-order cost = 550 MU/unit/year 66. It costs Serin 30 MU to place an order and his carrying cost is 18%. a. Serin Cumbul experiences an annual demand of 220 000 MU for quality tennis balls at the Cyprus Tennis Supply Co. Carrying costs are 25 MU/motor. The company is considering dropping the reorder point from 255 to 220 units. Demand = 200 000 units/year Holding cost = 50 MU/unit/year Number of days/year = 250 days a. 63. The time between production runs. Back-order quantity f. Time between runs d. Each unit of product costs 6 MU and sells for 24 MU per unit. The firm operates 250 days each year. Determine. The time between runs. Past record indicate that 7 000 units are enough to prevent any shortage.08 0.02 76 .

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67. The manager of LEMAR is wondering how many New Year trees to order before December. Each tree costs13 MU but retails for 22 MU if sold before New Year. After New Year the trees will have no salvage value. On the basis of past records, the manager has developed the following table?

Demand 300 350 400 450 500 550

Probability 0.05 0.15 0.25 0.20 0.20 0.15

How many trees should be ordered? (Add your interpretations to every step) 68. A) Sweet cider is delivered weekly to Sergio’s Cider Bar. Demand varies uniformly between 300 liters and 500 liters per week. Sergio pays 0.20 MU per liter for the cider and charges 0.80 MU per liter for it. Unsold cider has no salvage value and cannot be carried over into the next week due to spoilage. Find the optimal stocking level and its stock-out risk for that quantity. B) Sergio’s Cider Bar also sells a blend of cherry juice and apple cider. Demand for the blend is approximately normal, with a mean of 200 liters per week and a standard deviation of 10 liters per week. Cost=0.20 MU/liter, Price=0.80 MU/liter, and salvage value is 0 MU. Find the optimal stocking level for the apple-cherry blend 69. A large bakery buys flour in 25-kg bags. The bakery uses an average of 4860 bags a year. Preparing an order and receiving a shipment of flour involves a cost of 10 MU per order. Annual carrying cost is 7.5% of its price, 1000 MU per bag. a. Determine the economic order quantity. b. What is the average number of bags on hand? c. How many orders per year will there be? d. Compute the total cost of ordering and carrying flour. e. If ordering costs were to increase by 1 MU per order, how much would that effect the minimum total inventory cost? 70. As New Year promotion LEMAR is going to sell turkeys. Each turkey will cost LEMAR 8.50 MU and will sell them for 11.99 MU each. Since LEMAR is not in the turkey business, they will give all unsold turkeys to an orphanage.If demand for turkeys is estimated to be normally distributed, with a mean of 550 and a standard deviation of 40, how many turkeys should LEMAR ırder, if one order is allowed? 71. TT Distribution Company can purchase TV sets for 285 MU a set and sell these sets at 490 MU through regular channels. Any sets unsold at the end of the model year can be sold to another distributor, Bauersohn Co. For 215 MU. Calculate P(C)* and the distributor’s recommended order quantity based on the probability distribution of demand for the TV sets and the assumption that the distributor can only order these new sets one time. Demand 8 and fewer 9 10 11

Prof.Dr.Dr.M.Hulusi DEMIR

Probability 0.00 0.27 0.34 0.19

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12 13 14 or more 0.12 0.08 0.00

72. Gulum Iren, Inc., which sells children’s art sets, has an ordering cost of 40 MU for the TT-1 set. The carrying cost for TT-1 set is 5 MU per set per year. In order to meet demand, Gulum orders large quantities of TT-1 seven times a year. The stock-out cost is estimated to be 50 MU per set. Over the last several years, Gulum has observed the following demand for TT-1 during the lead time: Probability 0.1 0.2 0.2 0.2 0.2 0.1 1.0 The reorder point for TT-1 is 60 units. What level of safety stock should be maintained for TT-1? 73. Assume Carpet Discount Store allows shortages and the shortage cost, d, is 2 MU/metre/year. All other costs are as follows: Annual Demand : 10 000 metresAnnual Carrying cost : 0.75 MU/metre/year Ordering Cost : 150 MU/order Total working days : 311 days/year Find; Demand During Lead Time 40 50 60 70 80 90

a) Xo

b) S

c) Imax

d) Ke

e) No

f) to

74. Azim Furniture Co. handles several lines of furniture, one of which is the popular Layback Model TT Chair. The manager, Mr. Sergio Farmerson, has decided to determine by use of the EOQ model the best quantity to obtain in each order. Mr. Farmerson has determined from past invoices that he has sold about 200 chairs during each of the past five years at a fairly uniform rate, and he expects to continue at that rate. He has estimated that preparation of an order and other variable costs associated with each order are about 10 MU, and it costs him about 1.5% per month to hold items in stock. His cost for the chair is 87 MU. a. How many layback chairs should be ordered each time? b. How many orders would there be? c. Determine the approximate length of a supply order in days. d. Calculate the minimum total inventory cost. e. Show and verify that the total holding cost is equal to the annual ordering cost (due to rounding the figures may be approximately equal 75. Suppose that TT Beverage Co. has a soft-drink product that has a constant annual demand rateof 3 600 cases. A case of the soft drink costs TT 3 MU. Ordering costs are 20 MU per order and holding costs are 25% of the value of the inventory. There are 250 working days per year and the lead-time is 5 days. Identify the following aspects of the inventory policy. a. Economic order quantity. b. Reorder point. c. Cycle time (in days). d. Total annual inventory cost. e. A general property of the EOQ inventory model is that total inventory holding and total ordering costs are equal at the optimal solution. Use data above to show that this result is true.

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Introduction to Production / Operations Management 76.

Azim Electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other appliances. One of the components has an annual demand of 250 units, and this is constant throughout the year. Carrying cost is estimated to be 1 MU/unit/year and the ordering cost is 20 MU/order. a. To minimize cost, how many units should be ordered each time an order is placed? b. How many orders per year are needed with the optimal policy? c. What is the average inventory if costs are minimized? d. Suppose the ordering cost is not 20 MU, and Azim has been ordering 150 units each time an order is placed. For this order policy to be optimal, what would the ordering cost have to be? 77. Azim Accessories produces paper slicers used in offices and art stores. The minislicer has been one of its most popular items: Annual demand is 6 750 units and is constant throughout the year. Minislicers are produced in batches. On average, the firm can manufacture 125 minislicers/day. Demand for these slicers during the production process is 30 minislicers/day. The set-up cost for the equipment necessary to produce the minislicers is 150 MU. Carrying costs are 1 MU/minislicer per year. How many minislicers should Azim manufacture in each batch?

78.

Sergio Farmerson is the owner of a small company that produces electric scissors use to cut fabric. The annual demand is for 8 000 scissors, and Sergio produce 150 scissors per day, and during the production process, demand for scissors has been about 40 scissors per day. The cost to set-up the production process is 100 MU, and it costs Sergio 0.30 MU to carry one pair of scissors for one year. How many scissors should Sergio produce in each batch? 79. A. The Call-Us Plumbing Co. stocks thousands of plumbing items sold to regional plumbers, contractors, and retailers. The firm’s general manager wonders how much money could be saved annually if EOQ were used instead of the firm’s present rules of thumb. He instructs an inventory analyst to conduct an analysis of one material to see if significant savings might result from using the EOQ. Necessary information is as follows: C = 10 000 units/year Xcurrent = present order quantity = 400 units/order E = 0.40 MU/unit/year B = 5.50 MU/order

B. The Co. has an adjacent production department that could produce the item. If the units were produced in-house in production lots, they would flow gradually into inventory at the main warehouse for use. The carrying cost, ordering or set-up cost and annual demand would remain about the same. Because the units actually flow into inventory rather than being received all at once as a batch. The firm’s general manager wonders how this would effect the order quantity and annual stocking (inventory) cost. The estimates are; C = 10 000 units/year E = 0.40 MU/unit/year s = 5.50 MU/order R = 120 units/day 1 year = 250 working days

C. If the general manager to back-order some units and to fill each back-order as soon as the order cycle is completed. If the cost estimation indicates back-order cost as 5.60 MU/order. Find how this would effect the order quantity and annual inventory cost. 80. The manager of a bottling (bottle-filling)plant which bottles soft drinks needs to decide how long a “run” of each type of drink to ask the lines to process. Demand for each type of drink is reasonably constant at 80 000 per month (a month has 160 production hours).The bottling lines fill ata rate of 3 000 bottles per hour but take an hour to change over between different drinks. The cost of each changeover (cost of labour and lost production capacity) has been calculated at 100 MU/hour. Stock holding costs are counted at 0.1 MU/bottle-month. a. How many bottles the company produce on each run?

Prof.Dr.Dr.M.Hulusi DEMIR

79

The store keeps several brands and styles of carpet in stock. the production process is most efficient at 8 units per day. d. solve for the optimum number of units per run. Assume that the Carpet Discount Store has its own manufacturing facility in which it produces Super Shag Carpet. the total minimum inventory cost e. with an average daily demand of 4 units. a. The attachment cost Bur-Al 1400 MU/unit. Carpet Discount Store in Gazimagusa stocks carpet in its warehouse and sells it through an adjoining showroom.) 84. total ordering cost and verify it is ½ of total inventory cost d. Weekly Demand Probability 80 . All other costs are as follows. Given an estimated annual demand of 10 000 meters of carpet. makes and sells specialty hubcaps for the retail automobile aftermarket. However. Jantsan Co.75 MU/meter/year Ordering Cost: 150 MU/order Total working days: 311 days/year Find. the store wants to determine a. We will further assume that the ordering cost. a firm wants to determine what length of the set-up time of a manufacturing operation should be in order to accommodate an OLS of 10 units of a part. the shortage level c. is 4 MU/metre/year. As a part of a factory-wide JIT program to reduce set-up times so that production lot sizes can be smaller. B. produces 8 per day but uses only 4 per day. the number of orders that will be made annually e. the time between orders (The store is open 311 days annually. total inventory cost for this brand of carpet c. Assume now Carpet Discount Store allows shortages and the shortage cost. its biggest seller is Super Shag Carpet. Jantsan`s forecast for its hubcap is 1000 units next year. the maximum inventory level d. the time during which there is a shortage 86. and an ordering cost of 150 MU/order. the time during which inventory is on hand h. however. Daily demand is 32 meters and daily production is 32 meters of the carpet.) Given the following values.75 MU/meter. an annual carrying cost of 0. Bur-Al Auto Sales is offering a special car attachment at the unheard-of-price of 2000 MU/unit. the optimal order size b. A production analyst has developed these data for the operation: C = 10 000 units/year c = 250 units/day R = 500 units/day OLS = 10 units/run E = 5 MU/unit/year s = ? (to be determined) If the labour rate for the operation is 10 MU/hour. Annual demand: 10 000 meters Annual Carrying Cost: 0. The staff who operate the lines have devised a method of reducing the changeover time from 1 hour to 30 minutes. the time between orders g. 85. How would that change the Economic Lot Size? 81. is the cost of setting up the production process to make Super Shag carpet.50 MU/unit/year Daily production rate = R = 8 units daily 82. the optimal order size b. Unsold units can be salvaged for 600 MU/unit. the total number of orders per year f.Introduction to Production / Operations Management b. Management has projected the following weekly demand pattern. what set-up time results in an economic production lot size of 10 units? 83. Annual demand = C = 1 000 units Set-up cost = s = 10 MU Holding cost = E = 0. (So the Co. Determine and interpret the optimal lot size.

00 Using marginal analysis. it is held over to the next period. b.M.Dr.15 0.10 0.15 0. determine the optimal stock level.) Prof.25 0.Introduction to Production / Operations Management (units) 70 71 72 73 74 75 76 + a.10 0. of Demand 0. However.25 0. What is the optimal stock level under these conditions? (Use marginal analysis and assume that any unsold unit is held over for one period only. Suppose that restocking is a continual process.Hulusi DEMIR 81 . If a unit is not sold in one period. there is an additional cost of 300 MU for handling and storage.Dr.

Calculate the expected completion time and variance for the entire project. Draw a PERT network of the installation plan in the space below and show “TE” c. b.Show “TE” and “TL” of each event on the network d. What is the probability that the project is completed in 18 days? d.Introduction to Production / Operations Management PERT/CPM 1. and pessimistic (y) times for the activities associated with installation of a new computer centre. b. most likely (m). State which activity has the most precise time and which has the most uncertain time. e. ACTIVITY 12 13 14 25 35 46 56 67 x 4 4 2 6 3 8 1 2 m 6 6 4 9 4 12 3 4 y 14 14 8 12 5 20 5 6 a. Find the critical path. duration of the project and mark also the critical path on the network with a heavy line. What are the PERT assumptions used to calculate the probability in part (c) realistic in this case? Why or why not? f. What is the effect of the large variance in activity 13? 82 .What is the probability the installation will be completed within a scheduled 5 weeks (25 working days)? 2. A planning consultant has collected the following estimates (days) for optimistic (x).Compute the estimated time (te) and the variance (δ2) of each activity. c. An advertising campaign uses a network as shown below: Activity 12 13 24 25 34 35 46 56 x 4 3 1 5 2 2 4 3 m 5 4 2 6 3 3 5 4 y 6 8 5 9 4 6 6 8 a. Draw a network and label each activity with its expected time and variance.What is the probability that the project be completed in 15 days? e.

Introduction to Production / Operations Management Prof.Dr.M.Dr.Hulusi DEMIR 83 .

78 0. Draw a PERT network. Calculate te. A complex NASA project has the following time estimates in weeks: Activity Time 1 2 2 3 2 4 3 5 4 5 4 6 57 6 7 7 8 7 9 8 10 9 10 a. d. Find Project Duration Time and Project standard Deviation ( √Σσ2cp) d.00 0. Write the answer next to the appropriate letter on the network. What is the slack between the paths containing Event 3 and the critical path? What is the slack of event 3? Compute the probability that the project will be completed within 49 weeks? Compute the probability that the project will be completed within 60 weeks? 84 . Find the probability that the task can be completed in 56 days. Find the probability that the task can be completed in 45 days.44 1. Calculate TE and TL for each node (event).Introduction to Production / Operations Management 3. 4. h. c. and σ2 c.44 1.78 b. Optimistic Time 1 2 2 6 4 6 8 12 4 10 2 6 Most likely Time 2 4 6 8 6 10 10 14 8 12 4 10 Pessimistic 4 6 10 10 8 14 12 16 12 16 6 14 te σ2 10 10 14 8 12. TE. e. Nodal Sequence 1 2 1 3 2 3 2 4 3 4 3 5 4 5 4 6 5 6 5 7 6 7 7 8 Time Estimates (days) x m y___ 2 3 10 5 6 7 6 10 14 3 6 15 2 6 10 3 7 11 3 6 9 1 4 7 6 10 14 5 7 9 6 8 16 1 3 5 a. Construct a network diagram Determine te for each activity. e. g.3 4 10 1. b. f. What is the CRITICAL path? Give it’s completion time and variance.78 1. Write your answer on the network above each node. Project activities and their time estimates are given in the following table.44 0.

J D C C G A Construct a CPM network for the project.Dr.Hulusi DEMIR 85 . I D None (Start) B.Dr.Introduction to Production / Operations Management 5. Activity A B C D E F G H I J Predecessors C.M. F H. Prof.

Introduction to Production / Operations Management .

and Type B contributes 4 MU/ton. x2. The deluxe mix has 2/3 pound raisins and 1/3 pound peanuts. The Stevens Fertiliser Co. The owner must decide how many bags of deluxe mix and how many bags of standard mix of Peanut/Raisin Delite to put up. Solve each of these problems by computer and obtain the optimal values of the decision variables and the objective function.60 per pound and raisins cost $1. x2. SIMPLEX METHOD 1. Maximize Z = 6A + 3B (revenue) Subject to Material 20A + 6B ≤ 600 1bs Machinery 25A + 20B ≤ 1000 hrs Labour 20A + 30B ≤ 1200 hrs A. and each W contributes $30 to profits. markets two types of fertiliser. What is the expected profit? 4. Maximize Subject to 10x1+ 1x1 + 2x1 + 1x1 + 5. a. The owner estimates that no more than 110 bags of one type can be sold. What quantities of H and W will maximize profits? 3. and the standard mix will sell for $2. What are the optimal values of decision variables and Z? b. Maximize Subject to 4x1 1x1 1x1 3x1 + + + + 2x2 + 5x3 2x2 + 1x3 4x2 + 2x3 3x2 + 1x3 x1. The deluxe mix will sell for $2. x3 6x2 + 3x3 1x2 + 2x3 1x2 + 4x3 2x2 + 3x3 x1.90 per pound. The shop has 90 pounds of raisins and 60 pounds of peanuts to work with.55 per pound. which are manufactured in two departments. which one(s) and how much slack does each have? 2.M.Hulusi DEMIR 71 . Department Type A I II 2 3 Hours/ton Type B 3 3 Max. and each W uses two hours of fabrication and six hours of assembly. x3 ≤ ≤ ≤ ≥ ≤ ≤ ≤ ≥ 25 40 30 0 25 40 40 0 b. Peanuts cost $0. An appliance manufacturer produces two models of microwave ovens: H and W. Do any constraints have (non zero) slack? If yes.Introduction to Production / Operations Management LINEAR PROGRAMMING A. Type A contributes 3 MU/ton.Dr. Both models require fabrication and assembly work. Hours worked per week 40 75 Prof. A small candy shop is preparing for the holiday season. B ≥ 0 a.Dr. each H uses four hours of fabrication and two hours of assembly. how many bags of each types should be prepared? b.5 per pound. and the standard mix has ½ pound raisins and ½ pound peanuts per bag. There are 600 fabrication hours available this week and 480 hours of assembly. Each H contributes $40 to profits. If the goal is to maximize profits. a.

et.al. A and B. The purchaser has indicated that all of the units that are manufactured will be bought. Product X1 contributes 6 MU and takes 6 hours in Dept. Product B also requires twice as much inspection time as does Product A.4 houra/day 32 MU/day Quantity 8 X1 1 0 0 8 0 6 X2 . An analysis of current assembly operation revealed the following: Product A requires 5 man-hours per unit and Product B requires 6 man-hours per unit. 10.1 has a capacity of 38 hours and Dept. which requires 1 man-hour per unit. However.and product B returns a profit of $3 per unit. R. Product X2 contributes 14 MU and takes 8 hours in Dept. Trailer frame Line 1 Line 2 72 . Gul’s Craft Shoppe manufactures two products in two departments. Dept.1 and 12 hours in Dept.75 20 -20 0 S2 0 1 0 0 0 0____ S3 0 0 1 0 0 _________________________________________________________ Is this an optimal solution? Is there more than one optimal solution to this problem? If so. 7. Hurşit Manufacturing has contracted to build two products. Gramco Industries operates two assembly lines. Product A return a profit of $ 2 per unit. and show the MU contribution between the two. small.5 -. Use simplex algorithm to solve your problem. Hurşit plans to manufacture as many units as possible each operating day. for an out. Daily outputs for each line-product combinations are fixed. (Levin. The following is tableau for maximisation problem: Cj Product Mix 8 0 0 X1 S2 S3 Zj Cj-Zj a. Use the simplex method to determine the most profitable daily combination. b. What is the optimal objective value? 8.Introduction to Production / Operations Management Set up a linear programming problem to determine how much of the two fertilisers to make in order to maximise profits.175 6 0 0 S1 2.2. “Quantitative Approaches to management) 6.of –state purchaser. capacity restrictions are such that Hurşit can produce at most 10 units of an at most 6 units of B per day.05 . 2 has a capacity of 42 hours. as shown below. Solve the following problem using the simplex algorithm. and large. c.5 -.2. Maximise! D + 2F Subject to D + 3F < 50 6D + 9F < 150 3D + 8F < 120 D. medium. find another one. 1 and 6 hours in Dept.75 . Each line is used to produce three grades of quality metalframe toy trailers. Hurşit has a maximum of 60 man-hours per day for producing both products and at most 16 man-hours for inspection. Indicate the maximum production level in units and the maximum monetary units ($ or TL) contribution production level. F > 0 What conclusions can you reach about this problem? 9. 4 units/day 4 hours/day 1.

requires 5 tons of grade B1 ore. and X3. Ore requirements per unit of product produced are as follow. rolls. where the time in each centre per pan of baked goods is as follows.M. and doughnuts. Product Bread Rolls Doughnuts Man-hours per pan Centre 1 Centre 2 3 2 4 1 2 2 Centre 3 1 3 2 Each one of the three baking centres has a limited amount of man-hours available for the daily operation of the bakery. The Zingo Bakery produces three types of baked goods – bread. Set up the appropriate linear program. Deep-Hole Mining has 1000 tons of B1 grade ore. X1. and Centre 3. Identify any existing unused resource.Introduction to Production / Operations Management Small Medium Large 300 100 200 100 100 600 On the basis of past records.Dr. Profit contribution from Product X3 is $50 per unit. 11. Each unit of Product X1 contributes $100 to profit and each unit of Product X2 contributes $200 per unit to profit.Dr. c.Hulusi DEMIR 73 . Set up the appropriate linear program b. and at least 4800 large metal-frame trailers. can be made from these ores at one of Deep-Hole’s subsidiaries. X2. d. a. (3) Product X3 requires 10 tons of grade B1 ore. Determine the optimal mix of products X1. 2000 tons of B2 grade ore. Gramco wants to minimize total production cost and satisfy demand. (2) Product X2 requires 5 tons of grade B1 ore. What is the maximum daily profit? Prof. and 500 tons of B3 grade ore. b. and X3. 40 man-hours. a. Each pan of the baked goods passes through three baking centres. the firm can expect to sell at least 2400 small metal-frame trailers. Management wishes to determine how much of each product to make from the available ores so as to maximize the profit from the overall operation. 10 tons of grade B2 ore. c. Determine the number of days the two lines should run to meet these requirements. and 5 tons of grade B3 ore. Rolls contribute $4 per pan to profit. and 10 tons of grade B3 ore. 80 man-hours. Daily production costs for the two lines average $600 for Line 1 and $400 for Line 2. (1) Product X1. and at least 1600 medium metal-frame trailers. These hours are as follows: Centre 1. 5 tons grade B2 ore. What is the optimal profit from Deep-Hole’s operation at the subsidiary? 12. Doughnuts contribute $3 per pan profit. Three products. Bread contributes $2 per pan to profit. 60 man-hours. Determine the optimum product mix for Zigo’s daily operation. Centre 2. 8 tons of grade B2 ore. X2. and none of grade B3 ore.

Set up the appropriate linear program b. Otherwise. but he also decides that he must keep his six full-time packers employed all 240 hours (6 workers. The Roniger Company produces two products: bed mattresses and box springs. each gallon of cherry cider cost $6. Each weekend in his spare time. Each box spring takes 2 hours of stitching time. Schurman Orchards has apple trees and cherry trees. he can expect to sell as many as many boxes as he can produce. They can use either or both of two types of trucks – model M or model P. a profit of $14. Each model M truck is capable of hauling a load of 10 tons at a cost of $300 for the trip. Because of prior commitments. Schurman Orchards has the weekly capacity to produce at least 100 gallons of apple cider or at least 50 gallons of cherry cider or any linear combination of apple cider and cherry cider. Bagwell Distributors packages and distributes industrial supplies. In addition. a class K container. Formulate this problem so as to minimize total production costs. Ali Caliskan uses his wood lathe to produce either Cigar Boxes or Cigarette Boxes. each box spring costs $24. Use the simplex method to determine how many of each type of truck should be scheduled to haul the 20 tons at minimal cost. as seen in the following table: Class of Packing Material Packing Time Container (Pounds) (Hours)____ A 2 2 K 1 6 T 3 4 Total amount of resource 120 pounds 240 hours Available each week _ Bill Bagwell. a class K container. only two model P trucks can be made available for the scheduled haul. A single class A container yields a profit of $8.Introduction to Production / Operations Management 13. Each gallon of apple cider cost Schurman Orchards $4. 18. 40 hours) each week. Minimize: 3X + 4Y Subject to: 3X – 2Y ≤ 30 − + 2Y ≤ 40 X 6X + 8Y ≥ 240 74 . and Cigarette boxes yield a contribution of 8 MU per box. A prior contract requires that the firm produce at least 30 mattresses or box springs. The Statewide Trucking Company needs to haul 20 tons of fertilizer from Masena to Pottsdam. head of the firm. which is one production period. The apples and cherries that are grown at Schurman Orchards are used to produce both apple cider and cherry cider. must decide the optimal number of each class of container to pack each week. a. in any combination. Each shipment prepared requires a certain amount of packing material and a certain amount of time. and a class T container. Use the simplex algorithm to find the optimal solutions to the following linear programming problem. Cigar boxes contribute 9MU per box to profit. Each cigar box requires 30 minutes machine time while each Cigarette box requires 25 minutes of machine time. while each mattress takes 1 hour on the machine. 16. b. or a class T container. union labor agreements demand that stitching machines be kept running at least 40 hours per week. Solve using the simplex method. 17. He spends 20 hours each weekend in this pursuit. a. 14. A standard shipment can be packaged in a class A container. Each mattress produced costs $20. He is bound by the previously mentioned resource restrictions. Formulate and solve this problem using the simplex method. Each model P truck can haul 5 tons at a cost of $100 for the trip. Weekly sales commitments by the owners of Schurman Orchards require at least 50 gallons of apple cider and at least 20 gallons of cherry cider. a profit of $6. Solve the result of (a) using the simplex algorithm. Ali has a firm commitment to deliver 25 cigar boxes. Next week. How many of each type of box should Ali make this weekend in order to maximize profit? 15.

Y ≥ 0 19. the eating area could accommodate 10 of the Category B visitors to 3 of the Category A visitors. It must decide how many units to construct in each complex subject to labour and material constraints.8x1 + 0. surplus. Objective function: Max! Z= 9x1 + 7x2 Subject to: 2xx + x2 ≤ 40 x1 + 3x2 ≤ 30 x1 .Hulusi DEMIR 75 . The profits generated for each apartment in the first complex is estimated at 900 MU. Do not attempt to solve. is building two apartment complexes. 20. In response to this concern. Set up the complete initial simplex tableau for this problem.Zj ___________ a) b) c) d) e) f) ___________________ 10 1 500 0 x2 s1 4 1 12 0 0 s2 0 1 Complete the initial tableau. x2. b) Find the shadow prices for the two constraints. In addition. x3 x4 ≥ 0 a) b) c) Convert these constraints to equalities by adding the appropriate slack. or artificial variables. A and B. At no point in time were there more than 300 of the Category A visitors in the park. The Magusa Development Co. Objective function: Maximize Earnings! Z = 0. Write the problem’s original objective function.Dr.Introduction to Production / Operations Management X. for each apartment in the second complex 1 500 MU.2 x3 – 0. The study has also revealed that Category B visitors required twice as many as man-hours per week from the park rangers as Category A visitors.4x2 + 1.Dr.1 x4 Subject to: x1 + 2x2 + x3 + 5x4 ≤ 150 x2` . The management of Parks Resource National Forest is concerned with the influx of visitors to the general recreation area. A partial initial simplex tableau for Magusa is given in the following table: Cj Prod. Reconstruct the problem’s original constraints (excluding slack variables). Also add the new variables into the problem’s objective function. Prof. x2 ≥ 0 a) Solve the above LP problem and give the final solution. 22. Give the values for all variables in this initial solution. a recent study was conducted in which it was found that two basic categories of visitors used the general recreation area. What is the basis for the initial solution? Which variable should enter the solution at the next iteration? Which variable should leave the solution at the next iteration? g) How many units of the variable entering the solution next will be in the basis in the second tableau? h) How much will profit increase in the next solution? 21. 900 Mix Quantity x1 3 360 14 9 600 Zj Cj.M.4x3 + 8x4 = 70 6x1 + 7x2 + 2x3 – x4 ≥ 120 x1.

b.0 2. a) Set up the appropriate linear program. Solve the problem manually.Introduction to Production / Operations Management Because of other duties. Phosphate costs 10 MU/kg and potassium costs 12 MU/kg. Each bookcase contributes 6 MU to profit and each table. and at least 300 kilos of potassium must be used.5 1 600 _________________________________________________________ The ABC model costs 250 MU and sells for 400 MU. He currently makes two products. and quantities of each ingredient. Emre Uslu manufactures inexpensive set-it-up-yourself furniture for EMU students.) 25. how many of each category should be admitted each week? What is the maximum profit? 23. Use simplex algorithm to find the product mix that produces the maximum profit for Emre. 5 MU. 76 . a. manufacturing time maximum hours per unit in hours available ABC XYZ ___ ________ Machining 4.5 1.0 1 200 Testing 4. Bookcases take 4 hours in cutting and 4 hours in finishing.5 MU from each Category B visitor. CUTTING and FINISHING. No more than 600 kilos of phosphate can be used. The eating area could accommodate at most 1 500 persons. management is interested in optimizing its product mix. (You are not supposed to submit this to the instructor. The initial matrix of a maximization linear programming problem with all ≤ constraints was found to be as follows: Cj 0 0 0 187 45 95 0 0 0 Product Quantity X1 X2 X3 S1 S2 S3 Mix_______________________________________________________ S1 600 200 180 80 1 0 0 S2 500 500 0 90 0 1 0 S3 120 40 40 0 0 0 1______ Z 0 0 0 0 0 0 0 Cj-Zj 187 45 95 0 0 0______ a. There are currently 40 hours available in cutting and 30 in finishing. Azim Co. Bauersohn Chemical Corporation must produce exactly 2000 kilos of a special mixture of phosphate and potassium for a customer. Market demand is such that Azim can sell either product.5 1. Manufacturing time and monthly capacities are given below. 24. Use whatever computer package is available to solve this problem. What is the objective function and what are the constraints? b. The problem is to determine the least-cost blend of two ingredients. The XYZ model costs 375 MU and sells for 575 MU. regardless of the category. b) Solve this problem using the simplex algorithm and interpret the resulting solution. If the park makes a profit of 2 MU from each Category A visitor and 1.0 1 600 Fitting and Assembly 2. Each product passes through two manufacturing points.) 26. markets two products: ABC and XYZ. However.bookcases and tables. Tables require 3 hours a unit in cutting and 5 in finishing. the park rangers cannot devote more than 400 man-hours/week to the visitors. (Please indicate the total cost.

ABC ceramics offers 2 of its best figurines for sale to the general public.exactly 400 kgs of vitamin A. A food supplement for livestock is to be mixed in such a way as to contain -. On a weekly bases ABC ceramic has available a minimum of (at least) 32 kilos of clay. bookends and shadow boxes are made of oak. Style 1 uses 1. The wall shelves. and shadow boxes. has a power saw for cutting the oak boards. bookends require 60 minutes and a shadow box requires 90 minutes. b). It is necessary to plan the production schedule for next week.Introduction to Production / Operations Management 27. a). A wall shelf requires 4 sq. how much of each product should be produced? c. bookends. A wall shelf requires 30 minutes. feed #1 and feed #2. -. 29. Style 1 costs 2MU per unit. and each labourer is expected to operate for 80 hours next week. The power saw is available for 32 hours next week. Each mattress produce costs 20 MU and each box spring costs 24 MU.6 kilos of clay and 2 hours of oven time. Formulate the objective function and constraints for a LP problem (i. State also which variable should enter the basis and which variable should leave the basis for the next iteration (second simplex tableau). X2 ≥ 0 28. Azim Specialties produces wall shelves. 1 kg of B and 3kgs of C. In addition. b. 6kgs of B and 4kgs of C. style 2 costs 1MU per unit. Each box spring takes 2 hours of stitching time. Each bag of feed #1 costs 5 MU and a bag of feed #2 costs 3 MU. meters.Hulusi DEMIR 77 . Each bag of feed #1 contains 2kgs of A. Write the following linear program in tableau form and complete the initial tableau. The supplement is to be made from two commercial feeds. the pieces are hand finished in the finishing department. a bookend requires 2 sq. The company currently has 600 square meters of oak boards. After cutting. A prior contract requires that the firm produce at least 30 mattresses or box springs. The company has a commitment to produce 10 wall shelves for Business Department. and -. How much contribution selling the output will make? Prof. while each mattress takes 1 hour on the machine. Solve this problem using simplex method. Maximize : Z = 3X1 + 4 X2 Subject to : 6X1 – 4 X2 ≤ 60 -2X1 + 4 X2 ≤ 80 12X1 + 16 X2 ≤ 480 X1. a bookend requires 15 minutes. a.at least 640 kgs of vitamin C. A bag of feed #2 contains 4 kgs of A. Solve using the simplex method. There are 4 skilled labourers in the department. and a shadow box requires 15 minutes. A wall shelf requires 30 minutes of finishing.e.Dr. meters. Both figurines are made in a common oven and require the use of a common type of clay. union labour agreements demand the stitching machines be kept running at least 40 hour/week. b. meters. a. For maximum contribution. in any combination. The Sweet Dreams Company produces two products: Bed Mattresses and Box Springs.Dr. Set up the initial simplex tableau and state which variable is leaving and which variable is entering the solution. The firm normally operates to achieve maximum contribution. which is one production period. and a shadow box requires 3 sq. The Co. How many figurines of each style should the firm produce each week to optimise the operations? 30. for each bookend 7 MU and for each shadow box is 8 MU. 31. Style 2 uses 0. Formulate this problem so as to minimise total production costs. The profit contribution for each wall shelf is 12 MU. but only 65 hours of oven time.8 kilos of clay per unit and only 1 hour of oven time.at least 240 kgs of vitamin B.M.General and standard form of LP model).

The initial simplex tableau given below was developed by Ilhan Balci. so she decided to reconstruct the problem from the initial simplex tableau. The Double-T Corporation manufactures two electrical products: air-conditioners and large fans. a. Ms. Unfortunately Mr. Each fan must go through 2 hours of wiring and 1 hour of drilling.Introduction to Production / Operations Management 32. She could find no statement of the problem in the files. Each air conditioner sold yields a profit of 25 MU. at least 20 air conditioners should be produced. Her first need was to be certain that Balci correctly formulated the objective function and constraints. Which variable will enter this current solution mix in the second tableau? Which basic variable will leave? What are the new values of the entering variable? Solution Cj M 0 M M 0 M Mix A1 s2 A3 A4 s5 A6 Quantity 100 900 250 150 300 70 12 X\ 1 0 2 18 0 0 18 10 20 7 X2 X3 X4 X5 0 -3 0 0 25 1 2 8 1 0 4 0 -15 -2 -1 15 0 0 0 0 0 0 0 2 . The foundry can buy scrap metal in unlimited quantities from two sources: IZMIR (IZ) and ISTANBUL (IST). Management decides that to ensure an adequate supply of air conditioners for a contract. 78 . What is the correct formulation. Each fan assembled may be sold for a 15 MU profit. management also insists that no more than 80 fans be produced during this production period. Balci quit before completing this important LP application. If the foundry needs at least 5/2 tons of copper and at least 4 tons of lead per day foreseeable future. Write the following linear program in tableau form and complete the initial tableau.The scrap is melted down. and it receives the scrap daily in railroad cars. X2 ≥ 0 34.e. How many railroad cars of scrap should be purchased from source IZ and source IST to minimize the long-range scrap metal cost? 33. was immediately given the task of using LP to determine what different kinds of ingredients should be used to minimize costs. Each railroad car of scrap from source IST yields 1 ton of copper and 2 tons of lead and costs 15 000 MU. The assembly process for each is similar in that both require a certain amount of wiring and drilling. Each railroad car of scrap from source IZ yields 1 ton of Copper and 1 ton of lead and costs 10 000 MU. using real decision variables (i. the newly hired replacement. During the next production period 240 hours of wiring time are available and up to 140 hours of drilling time may be used. Ayse Sumbul. Because Double-T incurred an oversupply of fans in the preceding period. Formulate and solve this LP production mix situation to find the best combination of air conditioners and fans that yields the highest profit. State also which variable should enter the basis and which variable should leave the basis for the next iteration (second simplex tableau). and lead and copper are extracted for use in the foundry processes. Xi ‘s) only? b.5M 5M 21M 8 M 0 0 X6 A1 s2 s3 0 1 0 0 0 0 1 0 1 0 0 -1 0 0 0 0 25 0 0 0 6 0 0 0 M 8-M M 0 0 0 -M M M A3 0 0 1 0 0 0 M 0 0 s4 0 0 0 -1 0 0 -M M M A4 0 0 0 1 0 0 0 0 s5 0 0 0 0 1 0 0 0 M s6 A 6 0 0 0 0 0 0 0 0 0 0 -1 1 -M M M 0 Zj C j – Zj 570 M 21M -14M M 0 12-21M 10+5M 7-21M 18+14M 20-5M 35. Each air conditioner takes 3 hours of wiring and 2 hours of drilling. Objective Function: Subject to: Minimize ! Z = 3X1 + 4 X2 6X1 – 4 X2 ≤ 60 -2X1 + 4 X2 ≤ 80 12X1 + 16 X2 ≥ 480 X1. The Cyprus Foundry is developing a long-range strategic plan for buying scrap metal for its foundry operations.

Programming work during the coming week is limited to 50 hrs (maximum). of programming work available? • What is the shadow price associated with the 80 hrs total time constraint? • How much could the systems analysis time be increased? • What would be the effect upon profits of such a change (i. and 60 MU in profits per ton respectively.Dr. A data processing manager wishes to formulate a LP model to help him decide how to use his personnel as programmers (X1) or system analysts (X2) in such a way as to maximise revenues (Z). MU amount of increase or decrease)? A company producing a standard line and a deluxe line of electric clothes dryers has the following time requirements (in minutes) in departments where either model can be processed: 38. c) From optimal solution 37. 50 MU. Activity Standard Deluxe • ---------------------------------------------------------------------------Metal Frame Stamping 3 6 Electric Motor Installation 10 10 Wiring 10 15 ---------------------------------------------------------------------------- Prof. X2.Hulusi DEMIR 79 .Introduction to Production / Operations Management 36.Dr. and X3.M. c) Indicate what variables are in the final solution and the optimal profit value.e. X1 X2 X3 Total Available --------------------------------------------------------------------------------------------Labour hrs 4 4 5 80 hours Raw Material A (kg) 200 300 300 6000 kg Raw Material B (kg) 600 400 500 5000 kg --------------------------------------------------------------------------------------------a) Set up the initial simplex tableau b) Use hand calculations (not computer program) to find the mix of products that would yield maximum profits. How many hrs of time should the manager schedule for systems analysis work? • How many hrs of time (in total) should be scheduled? • How much revenue can the firm expect to gain from the optimal scheduling plan? • How much more revenue would be gained if there were one more hr. A commercial fertilizer manufacturer produces three grades X1. a) State the objective function and constraints. The products require the labour and materials per batch that are shown in the accompanying table. b) Set up the initial simplex tableau. The production scheduler has also specified that the total of programming time plus two times the system analysis time be limited to 80 hrs or less. which net the firm 40 MU. Each programmer generates 40 MU/hr in income and system analysts bring in 50 MU/hr.

The initial matrix of a maximisation LP problem with all ≤ constraints was found to be as follows: Cij → ↓ Variable Quantity 0 80 S1 600 187 X1 200 45 X2 180 95 X3 80 0 S1 1 0 S2 0 0 S3 0 . The contract specifies that ABC Company will provide exactly 1000 pounds of the mix. Each product requires different hours of time on each of two machines as shown. X23 costs $6 per pound. The motor installation production line has a full 60 minutes available each hour. b) Use the simplex method to solve the problem manually.Introduction to Production / Operations Management The standard models contribute 30 MU each and the deluxe 50 MU each to profits.) 41. the mix must contain at least 150 pounds of X23 and at least 200 pounds of HC5. However. What is the least-cost blend of two ingredients? (Please indicate the total cost. but the stamping machine is available only 30 minutes per hour. no more than 300 pounds of Z100 can be used. and HC5. and HC5 costs $7 per pound. ABC Company has contracted to produce a special mix for use in a high grade agriculture fertilizer. A manufacturer makes 4 MU profit on each unit of X 1 and 2 MU on X2. Because of EPA restrictions. 39. X23. There are two lines for wiring. Use the simplex method to maximise objective function Max Z = 20 X1 + 40 X2 Subject to the constraints 3 X1 + X2 ≤ 9 2 X1 + 2 X2 ≤ 10 X2 ≤ 4 X1. X2 ≥ 0 43. and quantities of each ingredient. a) State the objective function and constraints. 42. Lathe Mill a) b) X1 req’ts 6 2 X2 req’ts 4 8 Total Available 12 hrs 16 hrs State the objective function and constraints Use the simplex algorithm to find the optimal values of X1 and X2 to maximise profits. The initial matrix of a maximisation LP problem with all ≤ constraints was found to be as Cij → ↓ variable Quantity 0 0 0 S1 S2 S3 Zj C j – Zj a) b) follows: 187 X1 200 500 40 0 187 45 X2 180 0 40 0 45 95 X3 80 90 0 0 95 0 S1 1 0 0 0 0 0 S2 0 1 0 0 0 0 S3 0 0 1 0 0 600 500 120 0 What is the objective function? What are the constraints? 40. so the time availability is 120 minutes per hour. Z100 costs $5 per pound. Three ingredients are used in this special mix: Z100.

the firm will be forced to rely on its present resources for the upcoming building season. they produce apple and grape pies.Hulusi DEMIR Quantity 81 . MODEL A and MODEL B. and 10 minutes of drilling per unit. Due to long lead times for ordering supplies and scarcity of skilled and semi-skilled workers in the area. 46. b. Complete the initial tableau b. which they sell to a local grocery store.M. and 200 000 board meters of lumber. 4 minutes for inspection. 150 tons of stone. They plan to work no more than 60 hours. and the grape pies are sold for 1. which variable should enter the basis. they have 1200 cups of sugar and 2100 cups of flour. flour and time that will be unused. A small firm makes three similar products. consisting of milling.50 MU to the grocer. B contributes 2. inspection and drilling. 15 hours for inspection. and 24 hours for drilling. A retired couple supplement their income by making fruit pies. The firm offers two basic types of houses. and Product C requires 8 minutes of milling. What is the value of the objective function at this initial solution d.50 Prof. and 8 minutes of drilling per unit. Flour and sugar are purchased once each month. product B requires 10 minutes of milling. which will allow the same three-step process. 4 minutes for inspection. The department has 20 hours available during the next period for milling. Determine the amounts of sugar.Introduction to Production / Operations Management 0 0 S2 S3 Zj Cj – Zj 500 120 0 500 40 0 187 0 40 0 45 90 0 0 95 0 0 0 0 1 0 0 0 0 1 0 0 a) What is the objective function? b) What are the constraints? 44. For the next iteration (tableau).40 MU per unit to profit. How many units of entering variable will be in the next solution? What do you think will be the value of the objective function after the second simplex tableau? f. Model B houses require 10000 labour hours. Write the problem in original linear program c. Product A requires 12 minutes of milling. They use fresh ingredients. It has 400 000 hours of labour. A small construction firm specializes in building and selling single-family homes. Product A contributes 2. During the month of September. 2 tons of stone and 2000 board meters of lumber. For the month of September. Each apple pie requires 3/2 cups of sugar and 3 cups of flour. Each grape pie requires 2 cups of sugar and 3 cups of flour. 3 tons of stone and 2000 board meters of lumber.Dr. The couple is able to sell all the pies they produce owing to their high quality. Determine the number of grape and the number of aplle pies that will maximize revenues if the couple working together can make an apple pie in 6 minutes and grape pie in 3 minutes.20 MU. and which variable should leave the basis e. Cij → Product ↓ Mix 5 20 25 0 0 0 X1 X2 X3 S1 S2 S 40 2 1 0 1 0 0 30 0 2 1 0 1 0 15 3 0 -1/2 0 0 1 _______________________________________________________________ Zj Cj -Z ____________________________________________________ 45. 5 minutes for inspection. 47. a. Model A houses require 4000 labour hours. Find the optimal solution using the simplex algorithm and interpret. The apple pies are sold for 1. and 16 minutes of drilling. The following partial initial simplex tableau is given a. What mix of Model A and B houses should the firm construct if Model As yield a profit of 1 000 MU per unit and Model Bs yield 2 000 MU per unit? Assume that the firm will be able to sell all the units it builds.Dr.

5 MU. X3 ≥ 0 82 . A DVD takes 4 hours to assemble and 8 hours to bench check. a. CUTTING and FINISHING. Bookcases take 4 hours in cutting and 4 hours in finishing.. Tables require 3 hours a unit in cutting and 5 in finishing. while Machine Y can be operated as long as desired. He currently makes two products. while a unit processed on machine Y takes 25 minutes. Each unit of Product A when processed on machine X takes 30 minutes of time. 48.Introduction to Production / Operations Management MU per unit and C contributes 3. They can produce on either machine X or machine Y or both. Use simplex algorith to find her best combination of these two products. Each product passes through two manufacturing points. VCDs and DVDs. What is the total profit on the combination you found? 53. 50. Each bookcase contributes 6MU to profit and each table. Tomorrow.) 49. Alev Yakar assembles stereo equipment for resale in her shop. How many of each type of box should Ali make this weekend in order to maximize profit? The Farmerson Company needs to produce 40 units of Product A tomorrow. Ali has a firm commitment to deliver 25 cigar boxes. X2. (You are not supposed to submit this to the instructor. and Cigarette boxes yield a contribution of 8 MU per box. Determine the optimal mix of products in terms of maximizing contribution to profits for the period. It costs the company 2 MU per minute and 3 MU per minute respectively to operate machines X and Y. Next week. Otherwise. Looking at this month’s schedule.X3≥0 Each weekend in his spare time.Use simplex algorithm to find the product mix that produces the maximum profit for Emre. Both must go through two steps in her shop –assembly and bench checking. She makes a profit of 10 MU on each VCD and 6 MU on each DVD.bookcases and tables. He spends 20 hours each weekend in this pursuit.Use whatever computer package is available to solve this problem. Cigar boxes contribute 9MU per box to profit. he can expect to sell as many as many boxes as he can produce. Emre Uslu manufactures inexpensive set-it-up-yourself furniture for EMU students. She offers two products. A VCD takes 12 hours to assemble and 4 hours to bench check. There are currently 40 hours available in cutting and 30 in finishing. X2. 52. Construct the model to be used to determine how many hours to schedule on each machine to minimize production costs. Maximize 10X1+ 6X2+3X3 Subject to: X1+X2+2X3 ≤ 25 2X1+X2+4X3≤ 40 X1+3X2+3x3≤ 40 X1. Use simplex algorithm to solve the model. Ali Caliskan uses his wood lathe to produce either Cigar Boxes or Cigarette Boxes. Each cigar box requires 30 minutes machine time while each Cigarette box requires 25 minutes of machine time.00 MU per unit. b. Alev sees that she has 60 assembly hours uncommitted and 40 hours of bench-checking time available. 51. Machine X has only 10 hours available to produce Product A. Solve the following Objective function: Minimize! Subject to: Z = 2X1+ 7X2 – 3 X3 3X1 + 2 X3 = 9 2X1 + 3X2 ≥ 4 X1 + X2 ≥ 1 X1.

and 0. 1200 hrs of processing time are available./Box TYPE OF BAG 10-kg Bag 15-kg Bag 3Seconds/Box 3 Seconds/Box 2 Sec./Box 4 Sec. sealing and packaging.10MU for each box of 5-kg bags produced. M&D’s management has specified that the combined production for products 1 and 2 must total at least 700 kgs.15MU for each box of 10kg bags. a 10-kg garbage bag. and for the coming month. Construct the GENERAL SIMPLEX MODEL properly./box 3 Sec. Separately./Box 3 Sec. While product 2 requires 1 hour of processing time per kg.M. Cutting Sealing Packaging 5-kg Bag 2 Seconds/Box 2 Sec. The Our-Bags-Don’t-Break (OBDB) plastic bag company manufactures three plastic refuse bags for home use: a 5-kg garbage bag.Hulusi DEMIR 83 . Product 1 requires 2 hours of processing time per kg.Dr. a major customer’s order for 250 kgs of product 1 must also be satisfied./Box 5 Sec.Introduction to Production / Operations Management 54. and a 15-kg leaf-and-grass bag. three operations are required to produce each end product: cutting. 0. M&D’s objective is to satisfy the above requirements at a minimum total production cost.20 MU for each box of 15-kg bags. Based on an analysis of current inventory levels and potential demand for the coming month. M&D Chemicals produces two products that are sold as raw materials to companies manufacturing bath soaps and laundry detergents. what is the optimal product mix? 55. Using purchased plastic material. Production costs are 2 MU/kg for product 1and 3 MU/kg for product 2. Prof.Dr. The production time required to process each type of bag in every operation and the maximum production time available for each operation are shown (Note that the production time figures in this table are per box of each type of bag)./Box TIME AVAILABLE 2 Hours 3 Hours 4 Hours If OBDB’s profit contribution is 0. Place the figures of the model in an initial simplex tableau and find which variable is entering and which variable is leaving.

Estimated project completion times (days) for the ABC assignment problem are as follows. The distances between cities with a surplus and cities with a deficit are displayed in the matrix below. make the optimal assignment and state the solution time. 3.12. ABC Company is an accounting firm that has 3 new clients. 5. 1 10 14 22 14 What is the optimal assignment? How did the assignment change compared to the best assignment possible in Problem 2? Was there any savings associated with considering Emine as one of the possible project leaders? c. A national car . Project leaders will be assigned to the three clients. Which project leader remains unassigned? 4. How should the cars be dispatched so as to minimise the total mileage travelled? To 7 8 9 10 11 12 1 2 3 From 4 5 6 51 32 37 55 39 92 82 39 49 60 50 50 49 59 70 58 49 50 62 75 61 62 36 70 35 91 42 47 40 61 61 60 42 53 43 40 84 .10. Client_____________ 2 3 16 32 22 40 24 34 18 36 Project leader Ahmet Hüseyin Mustafa Emine a. The following table shows the assignment alternatives and the estimated completion time.rental service has a surplus of one car in each of cities 1. Client ↓ Ahmet Hüseyin Mehmet Project 1 10 9 6 2 15 18 14 3 9 5 3 (Hint: time=26 days) 2. 4. Assume that in problem 2 and additional employee is available for possible assignment.8. the various leader client assignments differ in terms of projected completion times.Introduction to Production / Operations Management B.11.9.. Based on the different backgrounds and experiences of the leader. ASSIGNMENT METHOD 1. 6 and a deficit of one car in each of cities 7. 2. b. The possible assignment and the estimated completion time in days are: Client____________ Project leader 1 2 3 Ahmet 10 16 32 Hüseyin 14 22 40 Mustafa 22 24 34 What is the optimal assignment? What is the total time required? 3.

The average time required for a student to get to and from classes in the building depends upon the location of the department in which he or she is taking the class. L 1 2 3 4 5 6 8. the crews are needed to work games in four different cities. The distances between cities with a surplus and cities with a deficit are displayed in the matrix below. When these are finished.Hulusi DEMIR 85 . To From Kansas Chicago Detroit Toronto Seattle Arlington Oakland Baltimore 1500 460 1500 960 1730 810 1850 610 1940 1020 2080 400 2070_ 1270_ X__ 330__ $500 625 825 590 450 2 $525 575 650 650 750 3 $550 700 450 525 660 4 $600 550 750 690 390 5 $700 800 775 750 550 7.Dr.11. the dean estimated the following mean student trip times in minutes.9. What are the profits from your assignment in part (a)? 6. Based on the distribution of class loads.4.Introduction to Production / Operations Management 5.2. A 13 18 16 18 19 22 B 18 17 14 14 20 23 O C A T I O N C 12 12 12 12 16 17 D 20 19 17 13 19 24 E 13 17 15 15 20 28 F 13 16 19 12 19 25 A national car rental service has a surplus of one car in each of cities 1.12. EMU is moving its Business and Economics Faculty into a new building. Use the assignment method to assign the five customers to the five different brokers to maximize profits for the brokerage house. which has been designed to house six academic departments. Baseball umpiring crews are currently in four cities where three-game series are beginning.Dr.10. The distances (km) from each of the cities where the crews are currently working to the cities where the new games will begin are shown in the table below. and a deficit of one car in each of cities 7.8.3. Five customers must be assigned to five stockholders in a brokerage house estimated profits for the brokerage house for all possible assignments are show below: BROKERS 1 A B C D E CUSTOMERS a. How should the car be dispatched so as to minimize the total mileage travelled? To Prof.6. given the departmental locations.M. b.5.

headquartered in Lefkoşa. What is the optimal assignment of personnel to branches. however. 86 . 800 MU to relocate Beton there and 1500 MU to move Halil. The scheduling alternatives and variable costs of power. Beton and Halil to branch offices in Lefke.But the bank also has an opening in DAU Campus Branch and would send one of the three there if it were more economical than to move to Lefke. but some of the tanks are restricted to a specific use. Cemal. wants to assign 3 recently hired EMU graduates. N T S Statistician A B C _____________________________________________________ I 300 420 540 C L I E 11.Introduction to Production / Operations Management 7 1 2 From 3 4 5 6 41 22 27 45 29 82 8 72 29 39 50 40 40 9 39 49 60 48 39 40 10 52 65 51 52 26 60 11 25 81 32 37 30 51 12 51 50 32 43 33 30 9. Which assignment of jobs to plating tanks will minimize the total cost? _________________________________________ __ Plating Tank Cost (MU)_____ _Job 1 2 3 4 5_____ A 120 100 200 B 80 70 50 130 300 C 40 70 90 180 D 110 150 190____ A market research firm has three clients who have each requested that the firm conduct a sample survey. and therefore each can handle only one of the clients. Merkez Kooperatif Bank. all four statisticians are busy. Lefke Girne Güzelyurt 800 MU 500 MU 500 MU 1100 MU 1600 MU 1000 MU 1200 MU 1300 MU 2300 MU An electroplating shop scheduler has four jobs to schedule through a plating operation. Girne and Güzelyurt. Girne or Güzelyurt. plating material. Branch Hire Cemal Beton Halil 10. Some jobs can be done in any one of the five plating tanks. and labour are shown in the table. the differences in time are based on experience and ability of the statisticians. It will cost 1000 MU to relocate Cemal to DAU Campus Branch. The following data show the number of hours required for each statistician to complete each job. Four available statisticians can be assigned to these three projects.

M. So Izmir requested bids from five small companies ( A. M A C W X 10 14 12 13 9 12 14 16 H I N ES Y Z_ 16 13_ 15 12_ 12 12_ 18 16_ J O B S 15. The contract terms require that at least five other smaller companies be awarded subcontracts for a portion of the total work. III.Introduction to Production / Operations Management II III IV 12. IV and V ). Find the assignment of project leaders to clients that will minimize the total time to complete all projects. II. The combinations 1-A and 2-D are undesirable.Dr. The hours required for each job on each machine are presented in the following table. The bids are as follow: Cost information: I 45000MU 50000 60000 30000 60000 Subcontract bids II III 60000MU 55000 70000 20000 25000 75000MU 40000 80000 60000 65000 IV 100000MU 100000 110000 55000 185000 V 30000MU 45000 40000 25000 35000 Company A B C D E a). The combination 2-D is undesirable. Prof. B. Use the assignment method to find the best solution. What is the total cost of subcontracts? 13. b.Hulusi DEMIR 87 . D. Which bids should Izmir accept in order to fulfil the contract terms at the least cost? b). C. 340 360 320 460 460 480 440 450 460 The Izmir Aerospace Company has just been awarded a rocket engine development contract. A B C D Use the assignment method to obtain a plan that will minimize the processing cost in the following table under these conditions: a. NG Marketing Research has four project leaders available for assignment to three clients.Dr. four jobs may be performed on any of four machines. 1 10 9 6 8 C l i e n t 2 3 15 9 18 5 14 3 16 6 In a job shop operation. and E ) to do subcontract work in five areas (I. The estimated project completion times in days are as follows: Project Leader Emre Baran Berkay Sevki 14. The plant supervisor would like to assign jobs so that total time is minimized.

Introduction to Production / Operations Management Job Machi ne A B 1 14 18 2 14 15 3 12 16 4 11 13 5 10 16 C 20 19 15 14 15 D 17 16 14 12 14 E__ 18_ 17_ 17_ 14_ 13_ 16. A 17 12 11 14 13 B 10 9 16 10 12 C 15 16 14 10 9 D 16 9 15 18 15 E 20 14 12 17 11 the each The Bunker Manufacturing firm has five employees and six machines and wants to assign employees to the machines to minimize cost. Given their various contacts. because he does not have enough experience machinist 3 cannot operate Machine B. R E G I O N SALESPERSON 1 2 3 4 5 19. The Santapharma pharmaceutical firm has five salespersons. A shop has four machinists to be assigned to four machines. There are four researchers available now who are free from other duties. Human Care Laboratories has just been notified that it has received three government grants. A cost table showing the cost incurred by 88 . The lab administer has estimated the project completion time (in weeks) for each director-grant combination. The lab administrator must now assign research directors to each of these projects. 18. Which salesperson should be assigned to each region to minimize total time? Identify the optimal assignments and compute total minimum time. Determine the optimal assignment and compute total minimum cost. Machinist 1 2 3 4 A 12 10 14 6 Machine B C 11 8 9 10 8 7 8 10 D 14 8 11 9 However. The hourly cost of having each machine operated by each machinist as follows. The amount of time (days) required by each salesperson to cover each city is shown in the following table. whom the firm wants to assign to five sales regions. The time required to complete the required research activities will be the function of experience and ability of the research director who is assigned to the project. the salespersons are able to cover the regions in different amounts of time. What assignments should be made to minimize the total time? 1 80 54 46 72 Grant 2 3__ 90 54_ 108 30_ 104 48_ 96 48_ NG TT SC SA 17.

As a criterion for judging who should teach each course. Tanova reviews the past two years’ teaching evaluations (which were filled by students).Dr. Salesperson 1 2 3 4 5 20. The rating for each instructor for each course is given the following table (a perfect score is 100). employee 3 cannot be assigned to Machine E and employee 4 cannot assign to Machine B. Solve this problem. The instructor who is not assigned to teach a course will be assigned to grade exams. china. Chairman of EMU’s Business Department. Find the best assignment of professors to courses to maximize the overall teaching ratings. Prof. indicate the optimal assignment and compute total minimum cost.Introduction to Production / Operations Management employee on each machine follows. 160 610 370 520 -350 220 630 190 570 320 490 Jewelry 290 450 420 150 310 360 Employee 3 has not worked in the china department before. 22. and jewelry. Since each of the four professors taught each of the four courses at one time or another during the two-year period. The department head wants to know the optimal assignment of instructors to courses that will maximize the overall average evaluation. Determine which employee to assign to each department and indicate the total expected daily sales.Dr. appliances. so the manager does not want to assign this employee to china.Furn. 340 560 270 360 450 280 Department Sales (MU) China Appl. Tanova is able to record a course rating for each instructor. __________________________________________________ Course _ __ Instructor A B C D_ 1 80 75 90 85_ 2 95 90 90 97_ 3 85 95 88 91_ 4 93 91 80 84_ 5 91 92 93 88_ 21. Because of union rules regarding departmenta transfers. A 12 10 5 9 10 B 7 14 3 11 6 C 20 13 6 7 14 Machine D 14 20 9 16 8 E 8 9 7 9 10 F 10 11 10 10 12 The Business Administration Department head of EMU has five instructors to be assigned to four different courses. These ratings are shown in the following table.M. Employee 1 2 3 4 5 6 H. All of the instructors have taught the courses in the past and have been evaluated by the students.Hulusi DEMIR 89 . Cem Tanova. has decided to use decision modelling to assign professors to courses next semester. Sergio’s Department Store has six employees available to assign to four departments in the storehome furnishings. Most of the six employees have worked in each of the four departments on several occasions in the past and have demonstrated that they perform better in some departments than in others. The average daily sales for each of the employees in the each of the four departments are shown in the following table.

**Introduction to Production / Operations Management
**

Courses MRKT MIS OR 65 95 40 60 80 75 40 80 60 80 65 55

Instructors

QM TT 90 MHD 70 SF 85 NG 55

23.

A local college is sponsoring a community job fair that requires hiring 4 temporary employees to handle 4 separate tasks. The table below provides the number of approximate hours each employee would require to perform each task along with their hourly labour costs. Assuming each employee can be assigned only one task, assign employees to tasks in a manner that minimizes total labour costs. Employee Osman Kadriye Gokhan Hale Mailings Phone Registration Set Up Calls 15 11 8 6 19 10 5 8 14 13 7 5 17 8 6 4 Hrly.Labour Costs (MU) 10 15 14 12

90

**Introduction to Production / Operations Management C. TRANSPORTATION METHOD
**

1. You have begun a business of your own and have decided to produce one or more of products A, B, C, and D. You have approached four banks – W, X, Y, and Z – with your ideas on these projects in order to obtain the necessary financing. The following table reflects the level of financing required for each project, the interest rate each of the banks is willing to charge on loans for each of the projects, and the total line of credit each of the banks is willing to lend you. PROJECT ( Interest Rate ) BANK W X Y Z AMOUNT REQUIRED A 16% 15 17 18 $40,000 B 18% 17 16 19 30,000 C 19% 20 18 19 20,000 D 17% 16 18 18 20,000 MAX CREDIT $20,000 10,000 20,000 30,000

As each project should be as attractive profitwise as any other, you have decided to undertake all or part of any number of projects you can at the lowest total interest cost. Which projects should you adopt and from which banks should you finance them?

2. A Company has 6 warehouse and 4 stores. The warehouses altogether have a surplus of 17 units of a given commodity, divided among the 4 stores. Costs of shipping one unit of the commodity from warehouse i to store j are displayed in the following matrix. Find feasible (not necessarily optimal) solutions, and the cost associated with each.

Warehouses Stores I II III IV Available A 5 5 2 9 3 B 3 6 8 6 3 C 7 12 3 10 6 D 3 5 4 5 2 E 8 7 8 10 1 F 5 11 2 9 2 17 Required 3 4 2 8 17

Prof.Dr.Dr.M.Hulusi DEMIR

91

Introduction to Production / Operations Management

3. Solve the following transportation problem with Vogel’s approximation method and show the calculations and find the minimum feasible solution. TO FROM Izmir Istanbul Ankara Warehouse Totals Manisa 31 20 23 300 Aydm Muğla Factory Totals

21 21 20 900

42 30 15 800

400 100 600

**4. ABC Air Conditioners operates factories in four different cities. Each of these factories is responsible for
**

maintaining warehouse supplies in 5 different warehouses. Because of varying distances, transportation charges from factory to warehouse are not uniform. Shipping charges per unit are summarized below: WAREHOUSE 2 3 4 5_ 9 12 7 18 8 13 9 21 7 10 11 8 7 14 15 22

FACTORY F 1________ F 2________ F3 F4

1 8 6 20 12

Factory output and warehouse supplies that must be maintained are as follows: Factory Units produced/day #1 35 #2 25 #3 40 #4 32 Warehouse 1 2 3 4 5 Daily Supply 15 12 22 30 20

Determine; c. The best possible factory-to-warehouse shipping program using Vogel’s Approximation Method. d. What is the cost of this shipping program? 5. The YUHUA Disk Drive Co. Produces drives for personal computers. YUHUA produces drives in three plants (factories) located in IZMIR/TURKEY, MAGUSA/TRNC and BEIJING/CHINA. Periodically, shipments are made from these three production facilities to four distribution warehouses located in Turkey, namely: ISTANBUL, ANKARA ADANA and DIYARBAKIR. Over the next month, it has been determined that these warehouses should receive the following proportions of the company’s total production of the drives. Warehouse Istanbul % of Total Production 30

92

Burdur. To From A B C Unfilled Demand W 12 8 1 40 X 4 1 12 20 Y 9 6 4 50 Z 5 6 7 20 Excess Supply 55 45 30 Use Vogel’s Approximation method to find an initial assignment of the excess supply. In order to reduce the cost of meeting demand for supplier. Determine an initial shipping program d. To From Izmir Manisa Aydin Denizli NEEDS Isparta 44 34 25 32 90 Burdur 22 28 30 40 50 Antalya 30 26 34 22 60 Afyon 20 15 40 25 80 SHIPME NT 70 50 90 100 c. Aydin and Denizli. The regional stores are located in Isparta. Magusa Plumbing wants delivery within I month. 8. 7. wishes to purchase 3 000 meters of pipe A. The manufactures are located at Izmir. The purchase agent of Magusa Plumbing Co. Determine Magusa Plumbing Co’s least–cost purchasing plan for the pipe should be? (Use VAM method) Prof. The goal is to minimize total transportation cost.Introduction to Production / Operations Management Ankara 30 Adana 15 Diyarbakir 25 The production quantities at the factories in the next month are expected to be (in thousand of units) Plant Izmir Magusa Beijing Anticipated Production (000 units) 50 140 110 The unit cost for shipping 1000 units from each plant to each warehouse is given in the table below.Hulusi DEMIR 93 .Dr.Dr. and Z) are willing to provide the needed pipe at the costs given below (in MU per 1 000 meter). Three manufacturers (X. Manufacturer X can provide 6 000 meters. Manisa. ABC ship supplies from 4 principal manufacture to four regional stores. 2 000 meters of pipe B and 3 000 meters of pipe C. Manufacturer Y can provide 5 000 meters and Manufacturer Z can provide 3 000 meters.Y. (use VAM) (Hint: When finding total production at the three plants you may round the figures to the nearest unit) Shipping costs per 1000 units in MU: Istanbul Ankara Adana Diyarbakir Izmir 250 420 380 280 Magusa 1280 990 1440 1520 Beijing 1550 1420 1660 1730 6. An analysis of daily shipping records reveals that the following costs per unit are typical for the current shipping operations. ABC has decided to allocate its material according to the standard transportation model. Calculate the daily cost of this program. Antalya and Afyon.M.

Introduction to Production / Operations Management Types of Pipe (cost MU/ 1000 Meters) A B C 580 600 520 620 560 580 600 580 580 Available X Y Z Amount Needed 9. and the unit costs. The critical factor in the movement of these supplies was speed. Determine the OPTIMAL DAILY FLIGHT SCHEDULE that will minimize total transport time. 10. Also included are the transport hours per plane.40 MU 1. Military Supply Base Depot A B C D _________________________________________________ #1 36 40 32 43 #2 28 27 29 40 #3 34 35 41 29 #4 41 42 35 27 #5 25 28 40 34 E Supply _________ 29 14 38 20 31 16 36 16 38 18 94 .20 MU Use TRANSPORTATION MODEL to develop the minimum-cost production schedule for the products and machines. During the Gulf War. Operation Desert Storm required large amounts of military material and supplies to be shipped daily from supply depots in the USA to bases in the Middle East. are as follows: MACHINE 1 2 3 Product Machine 1 2 3 Capacity (units) 1 500 1 500 1 000 A 1.10 MU B 1. including loading and fuelling. Machine capacities for the next week. The Demir Manufacturing Company has orders for three similar products: PRODUCT Orders(Units) A 2000 B 500 C 1200 Three machines are available for the manufacturing operations.00 MU C___ 0. All three machines can produce all the products at the same rate.30 MU 1. and unloading and refuelling.20 MU 1. (each planeload is approximately equal in tonnage). the unit costs of the products vary depending on the machine used.20 MU 1.90 MU 1.00 MU 1. actual flight time. However. The following table shows the number of planeloads of supplies available each day from each of six supply depots and the number of daily loads demanded at each of five bases. due to varying defect percentages of each product on each machine.

The firm has 3 plants with capacities as follows: Plant Capacity (cases/week) Metro 40 000 Ridge 30 000 Colby 25 000 Estimated demands in each of the warehouse localities are: Warehouse Demand (cases/week) SR 1 24 000 SR 2 22 000 SR 3 23 000 SR 4 16 000 SR 5 20 000 The estimated shipping cost/case for the various routes are: TO FROM SR 1 SR2 SR3 SR 4 SR5 Metro 0. During the months of peak demand.70 0. Excess supply is distributed on the basis of cost/kw-hr. 6 An air conditioning manufacturer produces room air conditioners at plants in Houston. the firm wants to determine shipping routes and costs.Dr. however. and the company would like to find the least-cost way to meet the demands at each of the distribution centers.75 0. and Memphis.M.70 0.70 0.75 0. 13.Introduction to Production / Operations Management #6 31 30 43 38 40 ____________________________________________________ Demand 18 12 24 16 20 11. Guzelyurt.85 Colby 0.80 0.B.80 0.80 Determine the feasible shipping plan that will minimize total shipping cost (using VAM).90 Ridge 0. The shipping costs vary. Before making final agreements. Phoenix.Hulusi DEMIR 95 .70 0. KIB-TEK authorizes these companies to pool their excess supply and to distribute it to smaller independent power companies that do not have generators large enough to handle demand.80 0. transmitted. These are sent to regional distributors in Dallas. TRNC has three major power-generating companies (A.Dr. Lefkosa and Gazimagusa.75 0. A soft drink manufacturer has recently begun negotiations with brokers in areas where it intends to distribute new products.60 0. The following table shows the demand and supply in millions of kw-hrs. and costs per kw-hr of transmitting electric power to four small companies in cities of Girne. and C).85 0. Atlanta and Denver. To Girne Guzelyurt Lefkosa Gazimagusa Excess Prof. How many units should be shipped from each plant to each regional distribution center? What is the total cost for this? FACTORY FROM \ TO DALLAS ATLANTA DENVER CAPACITY_ HOUSTON 8 12 10 850____ PHOENIX 10 14 9 650____ MEMPHIS 11 8 12 300____ WAREHOUSE 800 600 200 REQUIREMENTS_____________________________________________ 12.

Gaziantep Demand 10 16. The following table shows the shipping costs per truckload (100 MU). 15. Oranges are grown. and then stored in warehouses in Yesilyurt. Kayseri and Trabzon. __________________________________________________________ TO FROM LEFKOSA MAGUSA ISKELE MERSIN SUPPLY YESILYURT 9 14 12 17 200___ LEFKE 11 10 6 10 200____ GIRNE 12 8 15 7 200____ DEMAND 130 170 100 150 ____________ Solve this problem using VAM. Kayseri 20 4. _____________________________________________________________ Site A B C Supply (tons) Plant _________________________________ 1 8 5 6 120 ______________________________________________________________ 2 15 10 12 80 _______________________________________________________________ 3 3 9 10 80 _______________________________________________________________ Demand (tons) 150 70 100 __________________ Solve this problem using Vogel’s approximation method. the demand requirements at the three sites. The supply capacities of the three plants. Manisa. picked. Iskele and Mersin. Plant Production 1. supply and demand. Lefke and Girne. Bursa 5 2. and the transportation costs per ton as follows. 14. Trabzon 25 Three trucking firms purchase the following numbers of engines fot their plants in three cities. 96 . The company is able to produce the following numbers of engines per month. A manufacturing firm produces diesel engines in four cities – Bursa. A concrete company transports concrete from three plants to three construction sites. Firm A.Introduction to Production / Operations Management From Supply_ A 12 MU 4MU 9 MU 5 MU 55 B 8 1 6 6 45 C 1 12 4 7 30___ Unfilled Power 40 20 50 20 Demand______________________________________________ Use Vogel’s Approximation Method to find an initial transmission assignment of the excess power supply. These warehouses supply oranges to markets in Lefkosa. Manisa 25 3. Magusa.

The company wants to transfer employees to ensure the maximum increase in product output.. A Company has 5 warehouse and 5 stores. The warehouses altogether have a surplus of 32 units of a given commodity.Hulusi DEMIR 97 . A 73 62 96 57 56 6 B 40 93 65 58 23 8 C 9 96 80 29 87 10 D 79 8 50 12 18 4 E 20 13 65 87 12 4 Available 8 7 9 3 5 32 MARKET WAREHOUSE I II III VI V Required Prof. Konya 20 15 The transportation costs per engine (100 MU) from sources to destinations are shown in the following table.Dr. The number of employees available for transfer from each closing plant is as follows. Open Plants Employees Demanded A 45 B 90 C 35 Total 170 Each transferred employee will increase product output per day at each plant as shown in the following table. Costs of shipping one unit of the commodity from warehouse i to store j are displayed in the following matrix.Introduction to Production / Operations Management B. _____________________________________________ To From A B C__ 1 7 8 5___ 2 6 10 6___ 3 10 4 5___ 4 3 9 11___ 17.M. Find feasible (not necessarily optimal) solutions. Solve this problem by using VAM and find feasible total transportation cost. 18. A large manufacturing company is closing three of its existing plants and intends to transfer some of its more skilled employees to three plants that will remain open. divided among the 5 stores. and the cost associated with each. Adana C. To From A B C 1 5 8 6 2 10 9 12 3 7 6 8 Solve this problem by using VAM. Closing Plant 1 2 3 Transferable Employees 60 105 70 Total 235 The following number of employees can be accommodated at the three plants remaining open.Dr.

Introduction to Production / Operations Management 32 98 .

00 2. if the owner expects to sell 9 000 pizzas.Snacks Selling Price/unit 1.00 0. manufactures and sells bedroom suites. b.Introduction to Production / Operations Management BREAK-EVEN ANALYSIS 1.50 0. During preceeding year. What her unit sales would be at break-even for each item? c.75 MU/unit 0. Sells four basic products: Ovens. The owner of Double-T Pizza is considering a new oven in which to bake the firm’s signature dish “Vegetarian Pizza”. washing machines.000 MU. and electric fans.50 1. what is the break-even point for each oven? b.80 1. at what volume should the owner switch ovens? 2.50 MU/unit 2.M. 5. overhead and other costs total is 40.000 MU. and the percent revenue by item.25 MU/pizza. What is the break-even sales for the Buffet (in MU) ? b. wanted to develop a break-even report for her food-service operations. Algebraic analysis The general formula approach.Hulusi DEMIR 91 .000 MU and a volume of 500 units per month the total is 100. What is your best estimate of the variable cost per unit? b.000 MU to total fixed cost. 4. refrigerators. Oven B is larger and can handle 40 pizzas an hour. The fixed costs associated with oven A are 20 000 MU and the variable costs are 200 MU/pizza. Given that the current production volume is 500 units per month. the total fixed cost associated with the four products was 420 000 MU. if the owner expects to sell 12 000 pizzas. A company produces product A which is sold for 300 MU each. Oven A type can handle 20 pizzas an hour. At volume of 100 units per month.40 Percent revenue 25% 25 20 20 10 Fixed Costs = 105 850 MU a. Item Soft Drink Coffee Hot Dogs Hamburgers Misc. What the expected profit would be. It also provides and an estimate of the percentage of the total revenues that would be expected for each of the items based on the historical sales data. TT Co. and her estimate of the variable costs. What her unit sales would be at 100 000 MU profit for each item? 3.00 2. Fixed costs at DEMIR Furniture total 150. Determine the breakeven-point using a. however. if the sales is 200 000 MU? d. it will add 20. and assume no other change. materials. Ltd. which oven should the owner purchase? c. She developed the following table showing the suggested selling prices. owner of the buffet at the entrance of the faculty building. a. The respective sales volumes. their labor. The pizzas sell for 14 MU each. Prof. which oven should the owner purchase? d. should the company purchase the new machine? Why or why not? DEMIR Furniture Co. The fixed costs associated with Oven B are 30 000 MU and the variable costs are 1. a. Mrs.Dr. Each suite costs 500 MU and sells for 800 MU. Gulmez KARGUDER. unit prices and unit costs are summarized below.Dr. Now the general manager is considering the addition of a new machine to its present assembly line which is expected to reduce variable cost by 10% per unit.00 Variable cost/unit 0.

Introduction to Production / Operations Management Product Oven Refrigerator Wash. Elect.Dr. At what production quantity X0 are the total costs of A and B are equal? Prof.Dr.Hulusi DEMIR 92 . whereas Process B has fixed costs of 32 000 MU per year and variable costs of 48 MU/unit. Process A has fixed costs of 80 000 MU per year and variable cost of 18 MU/unit.Fan Unit Sales Unit variable Volume Unit Price Cost 2000 500 MU 450 MU 1000 600 500 5000 320 280 4000 200 160 6.M.Mach.

ANSWERS TO SELECTED QUESTIONS .

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3. 35. 13. 20. 6. 19. 41. T F F F T F T T F F F F F F F 31. 47. 26. 24. 60. 9. FILL IN THE BLANKS AND CROSS-MATCH QUESTIONS 1. T T T T T F F T T T T T T F T B. 14. 14. 7. supply. 58. the use of specialised machines. 22. 27. 47. 27. 39. 24. by adopting fix work-stations. 36. 9. 33. 36. 49. 64. 40. 45. 38. 38. 18. 61. customer needs 4. 5. a d d c a c c c d a c 57. 57.Hulusi DEMIR 95 . 49. 4. 42. Prof. 52. 55. 8. 21. 30. 54. 43. iii. demand 3. 48. 16. 22. 6. T F T T F F T T F F F F F F F 46. 28. 42. F T T F F F F T F T T F T F T 16. 44. 65. 52. 29. 15. 21. 6. 17. avoidance of lost time due to changing jobs. 2. 17. TRUE OR FALSE 1. a.Dr. 28. 32. 60. 66. 12. 15. 50. 3. 12. 50. 4. a d d a c b c a c d c c a a C. 48. 20. 59. 35. 5. 34. 7.M. 53. 25. c a b d d c e e c a a e d a 62. 8. 58. e c b d d 43. i. 34. 44. 10. 51. 51. 46. motion study 5. 56. 26. 53. 10. 13. 30. 40. 18. 31. 39.Dr. 54. 2. 37. 55. 11. 23.Introduction to Production / Operations Management INTRODUCTION TO PRODUCTION/OPERATIONS MANAGEMENT A. 19. 23. 59. b and d d c and d c d a b c b b a all true b e b c c e a 29. 11. Production/Operations Management 2. 37. skill development on the part of the workers. 25. 56. 32. 33. c c c. MULTIPLE CHOICES 1. 41. 63. 45. ii.

the less the ability to influence the performance of the operation at the time at which it is being performed and. and legal opinions. and it is integrally related to all the other business functions. The customer therefore has a direct say in the type and quality of the service. ii.Introduction to Production / Operations Management b. although the customer may be at a service desk close to the actual operation. b. c. but that is not transformation. therefore. or low contact. POM is one of the three major functions of any organisations. organising. staffing. Examples of pure services include university lectures. This will help us explore the numerous and lucrative career opportunities in POM. and the time required to perform the service. Frequently individually processed iii. Pick the following: * A service is tangible * It is often produced and consumed simultaneously * Often unique * It involves high customer interaction * Product definition is inconsistent * Often knowledge-based * Frequently dispersed. Often difficult to evaluate for quantity. the more influence the customer has in the process the greater the degree of uncertainty that needs to be accommodated. In a manufacturing operation the customer is likely to be close to the operation at all. the need to more clearly and comprehensively state needs and expectations before the operation starts. a. and lower middle managers in factories because it was here that most of management’s problems of the day were found. pure service might therefore be synonymous with the high contact service. services do not involve the customer in the performance of the service itself. Therefore. and controlling. D. increasing task specialisation. Marketing. Quasi Manufacturing. Finance/Accounting 2. we study how people organise themselves for productive enterprise. Taylor and his associates concentrated on the problems of foremen. It provides a major opportunity for an organisation to improve its profitability and enhance its service to society. i. ESSAY TYPE QUESTIONS 16. many physical examinations. From the operator’s point of view. Typically labour intensive ii. The further removed the customer. superintendents. the greater the need for appropriate surplus resources. 4. 17. i. c. 5. SHORT ANSWERS 1. E. moving work to the worker. therefore. primarily into usable knowledge. What was needed most was mass production and efficiency in the factories to respond to the great western markets. In pure services the customer is usually involved in the service operation. Planning. 96 . The closer to the customer. Information is being transformed. 3. the more complicated the resource scheduling and the higher the likely cost to the customer. leading. It is such a costly part of an organisation. There may be some “consumption” of physical materials during the service process. 18. We want to know how goods and services are produced. Production/Operations iii. Often an intellectual task performed by professionals iv. Often difficult to mechanise and automate v. d. We want to understand what production/operations managers do.

d. a.The industrial revolution began in the 1770s in England. A number of inventions such as steam engine. 25. and spread to the rest of Europe and to the US in the late eighteenth century and the early nineteenth century. Gilbreth Henry L. Accounting departments within organisations hire accountants with these distinct specialisations. the spinning Jenny. Carpentry work. their view of the external environment is relatively closed. a. P/O managers are usually strive toward optimal short run goals. human factor in work Gantt Charts Inaugurated assembly-line mass production for autos 20. durable products * Intangible. Gilbreth Lillian M. or international * Local markets markets * Large facilities with economies * Small facilities (often difficult to automate of scale * Capital intensive * Labour intensive * Quality easily measured * Quality not easily measured * Site of the facility is important * Site of the facility is important for customer for cost contact * Selling is distinct from production * Selling is often a part of the service * Product is transportable * Provider. James Watt’s steam engine b. Taylor Frank B. Production/operations managers are usually inseparately related to the productive system. national. is often transportable 31. perishable products * Product can be resold * Reselling a service is unusual * Output can be inventoried * Many outputs cannot be inventoried * Low customer contact * High customer contact * Long response time to demand * Short response time to demand * Regional. There also were ample supplies of coal and iron ore to provide the necessary materials for generating the power to operate and build the machines which were much stronger and more durable than the simple wooden ones they replaced. b. labour is divided among trades according to skills and materials required. In the construction industry. cost. Accounting is divided into several disciplines for instructional purposes: financial. and the power loom helped to bring about to bring this change. Adam Smith’s “Wealth of Nations”. Gantt Henry Ford Father of Scientific Management Motion Study. their daily routine is relatively more predictable. cooking. 26. Their purpose is to deliver goods and services that enhance the level of existence of society. Executives.M. A fast-food restaurant produces services and facilitating goods by assigning food preparation.Dr. therbligs Fatique Studies. Certification of accountants is accomplished through separate examinations and licences for CPA`s and CMA`s. on the other hand.University teaching duties are divided according to academic specialisation: among faculties/schools within the university among departments within the faculties/schools and among instructors within a department. c. Frederick W. b. Prof. their view of the external environment is relatively open and they deal principally with people and ideas in their daily jobs. 21. a. methods. 22. More Like A Goods Producer More Like A Serices Producer___ * Physical. have their daily routines that are unpredictable. not product. Production activities are a major part of technology and economics.Hulusi DEMIR 97 . is supplied by carpentry contractors. tax accounting. assembly and customer services tasks to specifically trained workers. c. a. strive toward sufficient long-run goals. Taylor’s principle (3) of striving for a spirit of cooperation between management and the workers was also aimed at fostering higher productivity.Dr. for example. and auditing.Introduction to Production / Operations Management 19. and their decisions are principally based upon computations. 30.

carefully selecting and training workers. depending on the unit of analysis. At the counter McDonald’s is a service. The science of management was based on observation. in the back of restaurant operations McDonald’s is very much a manufacturing. 98 . achieving cooperation between management and workers. Taylor. analysis.Introduction to Production / Operations Management b. Parts of a product made to such precision that each part would fit any of the identical items being produced. 32. This points out the need to carefully identify the aspect of the firm’s operations that is being analysed. avoiding the delays of workers shifting from one activity to another. each performed by a different worker. c. Breaking up a production process into a series of tasks. measurement. or both. Frederic W. McDonald’s is either. and separating management activities from work activities. spearheaded the scientific management movement. improvement of work methods and economic incentives. finding the best way to perform each job. It meant that individual parts would not have to be custom made because they were standardised. or. d. Management should be responsible for planning. It enabled workers to learn jobs and become proficient at the more quickly. who is often referred as the father of scientific management.

33 tanks/hr [(5-6) tanks/gallon]/6tanks/gallon = .47-1. b 4.88 units/hr = 0. Change in productivity = 5 ornaments/hour – 2.43) units/hr (-0.54 units/kw = 0.76 units/hr = .0. b 2.7% 4000units/3000kw 1500units/kw (1.22 units/MU = .14 units/MU = 0. MULTIPLE CHOICES 1.38 units/MU = 1.16.92 units/hr = 0. Productivity = (output)/(input) Plabour = (10 ornaments/day) / (4 hours/day) = 2.13 units/MU = 0.67% [(0.135 kg/m2 Change = 0.5 ornaments/hour b.88units/hr = 0. labour and capital productivity decreased. a 6.01units/MU-0.0.32 = 32% 5.04units/MU)/ (0.078 = 7. 4.048 = 4.5 ornaments/hour) x100 = 100% 2.12 kg/m2 Productivity = (1350 kgs) /(10 000m2) = 0. Resource Last Year Labour Capital Energy This Year Change % Change_________ 4000units/350hrs 1500units/325hrs (10.09units/MU/ 1.5% not 20%.38 0. a. Productivity = (1200 kgs)/ (100m x 100m) = (1200 kgs)/(10 000m2) = 0. PROBLEMS 1.09 units/MU = 0.0. Resource Standard Solvent Labour Larger Machine Percent Change Equipment__________________________________________________ 60 tanks/10 gallons = 6 tanks/gallon 60 tanks/240 hrs = 0. Prof.01 0.33)units/kw (0.21units/kw)/(1/33units/kw) = 1.2 % 10500units/83000MU 12100units/88000MU 0. c 5.12 kg/m2) x 100 = 12. The increase in productivity was 12.38units/MU = 1. The fertilizer was not good as advertised.067 = -6. Utilities showed medium.Introduction to Production / Operations Management PRODUCTIVITY A.Dr.7% 4000units/15000MU 1500units/18000MU (0. Resource Labour Utilities Capital Last Year This Year Change Percent Change 10500 units/12000 hrs 12100 units/13200hrs 0.M.14 – 0.5 ornaments/hour = 2.04 units/hr/0.76units/hr)/11.Dr.5% No.22-0.8 % 10500units/7600MU 12100units/8250MU 1.015 kg/m2)/(0.Hulusi DEMIR 99 .43 units/hr = 10. d 7.12 kg/m2 = 0.4% The energy modifications did not generate the expected savings.27)units/MU (-0.015 kg/m2 Percent change = (0.5 ornaments/hour Percent change = (2.67 units/hr = . c 3.47 units/MU = 0.43units/hr) = 11.04 units/MU = .25 tanks/hr = 0.88 0.33-0.27units/MU) = 0. capital showed the greatest and labour the least.04 units/hr = 0.154 = 15.06 = 6. 3.0.25)tanks/hr]/0.67-11.21 units/kw = 0.54-1.27 units/MU = 0.01 units/MU = 0.8% Productivity improved in all three categories this year.5 ornaments/hour) / (2. the fertilizer didn’t live up to its promise.0.25 tanks/hr 60 tanks/12 gallons = 5 tanks/gallon 60 tanks/180 hrs = 0.16. Plabour = (20 ornaments/day) / (4 hours/day) = 5 ornaments/hour c.167 = .92 – 0.33 units/kw = 1.13units/MU = 0.1667 = . d B.135 kg/m2 – 0.

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They may be useful in the long range if applicable historic data exist and in the short range if the cost of the method is low relative to its benefits. ESSAY Demand is a measure of the amount desired by customers. Thus they may. It would undoubtedly be improved if it were performed in a methodical. Qualitative (Judgmental) forecasts tend to be variable among individual forecasters. 3. and lacking an objective basis for improvement. depending upon the data. The regression curve expresses the nature of the relationship between two or more variables. he is tacitly acknowledging that he has made a forecast. Sales will actually reflect demand if there have been no stock-outs. MULTIPLE CHOICE 1. e. They are most useful when historic data exists or when existing data are not applicable. 2. 4. A high value of α emphasizes recent demand and causes the forecast to follow demand closely. Demand can only be forecast from historical sales data if there have been no stock-outs. 7. The forecast is subjective. A low value damps out fluctuations and yields a much smoothed forecast. The smoothing constant dictates how much weight should be given to the past versus current demand.Dr. have some advantages over objective forecasts in that they can incorporate intangible and subjective inputs along with objective ones.Introduction to Production / Operations Management FORECASTING A. but rather of equal status. Qualitative Method forecasts which rely on the judgment of individuals or groups. b. but he is assuming that has happened in the past will persist in the future. systematic manner. When a manager of a local firm says he’s doing 25% more business than before. a. capacity planning and facilities location. This process is repeated for a set number of rounds or until consensus is reached. Causal Method forecasts which assume that the variable to be forecast is causally related to one or more intrinsic or extrinsic variables. The Delphi Method involves a panel of (usually) anonymous people who fill in questionnaires and return them to the coordinator. b. purchasing. Sales measures the amount actually purchased by customers. The consolidated results are sent out again. the outliers are required to explain the reasons for their divergence from general consensus. whichever is sooner. Time series forecasts are primarily useful in the short range for purposes such as materials management. 8. 3.Dr. recent small relies on the power of written arguments (a) and (b) causal forecasting false overall accuracy of the forecast B. 2. 6. however.M. Studies show that the general public are likely as experts to produce reasonable forecasts. b. linear or nonlinear. Prof. 5. be better than objective methods. Time Series Method forecasts which assume that time is the only important independent variable. or if the data are adjusted for stock-outs. and scheduling. They may be simple or multiple. and perhaps unconscious. Qualitative forecasts are useful for long range time horizons and for such purposes as process design. Correlation is different in that it is a means of expressing the degree of relationship between two or more variables which are not considered dependent upon one another. They do. The regression equation states how the dependent variable changes as a result of changes in the independent variable. difficult to analyse. Causal models are primarily useful in the medium range for aggregate planning and budgeting. at times. a. 5. Regression and correlation methods are similar in that both describe the association among two or more variables. 6. a.Hulusi DEMIR 101 . not precise. 4.

0 28.6 0.07 102 .6_ Forecast for September: MA3= 5 13.4 22.4 0.0 47 584 .67 14 115 84. Period Units Last Period’ Units 1 56 2 61 3 55 4 70 5 66 6 65 7 72 8 75 FORECAST: 9 3.0 26.00 540.6 0.08 63.67 1.8 34. a.6 0.65 64.4 0.33 25.31 33. 56 61 55 70 66 65 72 75 α 0.4 0.34 Average 16.33 510.6 56 (Guess) 56 58 56.4 Forecast of Smoothed Forecast α(LPU) (1-α) Last Period (1-α)(FLP) for the period 22.39 Semester Students MA3 Error 9 80 10 90 11 70 12 84 (80+90+70)/3 = 80 4.33 Average 79.00 576.51 40.19 38.33 18.0 58.67 Total 80.23.6 34.33 Units WMA3 = 542 Units The weighted moving average is slightly better. PROBLEMS 1.33 15 98 99.0 28.8 62.156 .00 13 100 81.87 WMA3 ERROR 526.0 0.33 100 __________ Totals 399.4 0.164 506 4 501 109 _______ 378__ 75.6 0.6 0.39 56.6 33.0 30.31 70.25 38.4 26.08 63.67 30.4 0.4 24.67 16 130 104.6 0.0 54 553.4 0. Month January February March April May June July August Demand 520 490 550 580 600 420 510 610 MA3 520.19 67.08 37.65 64.Introduction to Production / Operations Management C.6 0.00 533.0 56.19 67.4 0.00 ERROR 60 60 .8 62.

76 +/. (SFPE) Forecast ERROR 80 0.2 14 0.91 Trend forecasting equation is Y = 0. Three period moving average is preferred.2 18 0.07 and the average error of exponential smoothing is 17.8 80 (Guess) 64 80 10 90 0.5 100 0.4 84 0.8 80 64 82 12 70 0.6 115 0.1.M.Dr.395 X Y = 0.Syx 12.2 19.y x2 y2 15 6 90 225 36 9 4 36 81 16 40 16 640 1600 256 20 6 120 400 36 25 13 325 625 169 25 9 225 625 81 15 10 150 225 100 35 16 560 1 225 256 184 80 2 146 5 006 950 a.9 80.2) Prof.6 63. Smtr.5 % is.395 (2146)] / (8-2) = 2.a∑y .5 90.8 79. Φ 17.8 0. α Enrolm.76 b.b∑xy] / (n-2) Syx = √[950 – 0.58.58 The average error of MA3 is 16. Smoothed Enrolm.5 8.Introduction to Production / Operations Management b. ∑y = n. the value of Y (the demand for plasterboard shipments) can be expected to lie with 90% probability within the interval of 17 shipments and approximately 8 shipments.4 92 38__ Total 123 *(neglecting the sign) Average.8 84.395 in Eq. Syx = √ [∑y2 .6 0. (1) 80 = 8a + 184(0. x x y x.5 98 0. y Construction permits ------ Independent variable.2(2.5 64.4 84.49 shipments If the number of permits is 30.2) 17. Enrollm. Y +/.395(30) Y = 13 shipments Y= 12.2 16 0.91 + 0.91 + 0.a + ∑x (1) 80 = 8a + 184b (1) ∑xy = ∑x + ∑x2 (2) 2146 = 184 a + 5006 b (2) Multiplying (1) by (23) -1840 = -184 a + 4232 b (1) 2146 = 184a + 5006 b (2) Therefore b = 0.2 16.5 19.4 67. Plasterboard shipments --- Dependent variable.4 30.395X c. MA3 forecast for the coming semester is (115+98+130)/3 = 114.91(80) – 0.33 7.2 shipments d.t.03 8.8 82 65.395) a = 0.Hulusi DEMIR 103 .395 Substituting b = 0.8 90.6 4.Dr. 1 80 2 90 3 70 4 84 5 100 6 115 7 98 8 130 Previous α (Previous Smoothed Forecast (1-α).943 (2.76 +/.2 23 0.2Syx 12.) 1-α of Previous Enrolm.91 + 0.5 72.2 20 0. Prediction interval (confidence limits) of 90% is Y +/.6 79.8 80. Prediction interval (confidence limits) of 95. Y = 0.

90 is meaningful. Day Demand for Lawn-mowers. the correlation is deemed significant at specified level.x a = 10 – 0. b = [n∑xy .36 shipments There is a 95.91 + 0. r2 = (0. If the statistical-t value of r ( tc ) > theoretical-t value of r (tk).05 Degree of freedom (n-2) = 6 From student-t table tk = 2. 104 .81)] tc = 5. i. tc = |r|√[(n-2)/(1-r2)] tc =| 0. The computed value of r (statistical-t value of r) is compared with a tabled value of r (theoretical-t value of r) for a given size (n = 8) and significance level of 5%.e.395(23) Y = 0. i.06 Level of significance (α) = 0.90 can. be tested under a hypothesis that there is no correlation between the number of permits and demand for plasterboard shipments. y 1 10 2 12 3 13 4 15 5 20 6 25 7 24 119 y = 17 a. Hor = 0.x)2 10 -6 -7 36 13 -3 -5 9 14 -2 -4 4 16 0 -2 0 19 3 3 9 20 4 8 16 20 4 7 16 112 0 0 90 x = 16 r = 0. that is.90 There is a very strong relation between the number of permits and the demand for plasterboard permits. r = 134 / √(90)(216) Total sales of the store(000MU). however. x (x –x) (y – y) (x .Introduction to Production / Operations Management 17. f. r = 0.06 > 2.81 The demand for plasterboard shipments and the change in demand depends 81% on construction permits and 19% on other factors. h. r = [n∑xy .395X There is no difference between the both regression equations.91 r = [∑(x – x)(y – y)] / √[∑(x – x)2.90)2 = 0.5% probability that the shipments for 30 permits will lie between 8 and 17 shipments.∑(y – y)2] There is a very strong relation between the total sales of the store and lawn-mowers. g. the hypothesis is rejected.395 a = y –b. The significance of value of r = 0.96 (y –y)2 (x –x)(y –y) 49 42 25 15 16 8 4 0 9 9 64 32 49 28 216 134 a = 0.447 The hypothesis is rejected.9|√[(8-2)/(1-0.16 8. The computed r.∑x∑y]/√ [n∑x2 – (∑x)2][n∑y2 – (∑y)2] r = [8(2146) – 184(80)]/[(8(5006)-(184)2][8(950) – (80)2] = 0.∑x∑y]/[n(∑x2 – (∑x)2 b = [8(2146) – 184(80)]/[8(5006) – (184)2] b = 0.447 tc > tk 5. 8.

96√[(n -2)/(1 – 0.∑x (1) ∑xy = a∑x + b∑x2 (2) a = 10. can however.571 The hypothesis r = o is rejected.22 MU Syx = √[(∑y2 . that is Hor = 0.82 Y = -6.48x2038(/(7 – 2)] Syx = 1.015)(1.48(23) Y = 27.Dr.Dr.75 Y = 10. Day. The computed statistical-t value of r is compared with a theoretical-t value of r for a given size (n = 7) and significance level of 5%.y) / (n – 2)] Syx = √[(2239 -6. rr = (0. Only 8 % of the variation is explained by other factors.a∑y . x 1 0 2 1 3 2 4 3 5 4 6 5 7 6 21 Total Sales.68x119 – 1.571 tc (7.t.82 31.96.M.75 + 1.82 + 1.48(16) a = . be tested under a hypothesis that there is no correlation between total sales of the store and lawn mowers.589 tk = 2.(2.75(7) = 23 (000)MU e.75X Y8 = 10.92.897 Y +/. c.48X x 10 13 14 16 19 20 20 112 y 10 12 13 15 20 25 24 119 x.92)] tc = 7. The computed r is meaningful.96)2 r2 = 0. d.04 23.a + b.589) > tk (2.6.x Y = -6.b∑x.3 +/.3.4 MU Prof.75 + 1.75 b = 1.22 +/.y 10 13 14 16 19 20 20 112 x2 0 13 28 48 76 100 120 385 0 1 4 9 16 25 36 91 112 = 7a + 21b 385 = 21a + 91b ∑y = n.Introduction to Production / Operations Management b.y 100 156 182 240 380 500 480 2038 y2 __ 100 144 169 225 400 625 576 2239 a =17 – 1.Hulusi DEMIR 105 .82 + 1. tc = | r |√[(n -2)/(1 – rr)] tc = 0. The significance of the value of r = 0. we could say that 92% of the variation of the lawn mower blade sales is explained by total sales of the store.92 Since determination coefficient is 0. y x.897) 27. b = ∑(x – x) / ∑(x – x)2 b = 134/90 = 1.489 a = y – b.Syx 22.

y x.48(3000) Y = 1 300 ice-creams c.4 MU. Syx = √{[∑ y2 . (1) 3000 = 6a + (8000)0.45 1 345 1255 ice-creams Ice-cream sales for 3 000 persons will fall with 68. Month 1 2 3 4 5 6 a.2]} Syx = √{[1780 000 – (-140)(3000) – 0. demand for lawn mower blade sales for the 90% probability fall between 31.48 a = -14 Y = -140 + 0. Demand 92 82 84 92 Moving x_____350___ Totals.a∑y .48 Substituting in Eq.Introduction to Production / Operations Management Assuming total sales of 8th day be 23 MU.48(4570 000)] / [n – 2)} Syx = 45 ice-creams Y +/.y = a∑x + b∑x2 (2) 2060 = 6a + 14b a = 348 b = -2 Y = 348 – 2X Y2007/I = 348 – 2(4) = 340 Y2007/II = 348 – 2(5) = 338 Y2007/III = 348 – 2(6) = 336 Y2007/IV = 348 – 2(7) = 334 Year Quarter 2005 I II III IV ___ ___ 2006 I II III IV (1) (2) 106 .a + b.Syx 1 300 +/.y x2 0 90 348 0 0 1 80 346 346 1 2 82 344 688 4 3 90 342 1026 9 6 1380 2060 14 ∑y = na + b∑x (1) 1380 = 4a + 6b ∑x.140 + 0.∑x 3000 = 6a + 8000b 2 ∑xy = a∑x + b∑x 4570000 = 8 000a + 11860 000b (1) x 4000 12000 000 = 24000a + 32000 000b (1) (2) x 3 13710 000 = 24000a + 35580 000b (2)-(1) 1710 000 = 3580 000b b = 0.b∑xy] / [n . 9. 19.48 X b.3 probability within the range of 1 345 icecreams and 1 255 ice-creams.04 MU and 23. Ice-cream sales (MU). Y = . y 200 300 400 600 700 800 Totals 3000 Laguna Visitors x 800 900 1100 1400 1800 2000 8000 xy x2 160 000 270 000 440 000 840 000 1260 000 1600 000 4570 000 y2_ 640 000 810 000 1200 000 1960 000 3240 000 4000 000 11860 000 40 000 90 000 160 000 360 000 490 000 640 000 1780 000 (1) (2) (2) ∑y = n.

x 2000 0 2001 1 2002 2 2003 3 2004 4 2005 5 2006 6 2007 7 2008 8 36 Registrants(000).13) Y = 15.13 in Eq.75 9 51 37. 1 796 = 36 + 204b (2) (2) – (1) 68 = 60 b b = 1. Years.75 12.50 7 39 27.13 Substitute b=1.25 11.50 11.25 11.y 0 16 32 63 80 100 138 175 192 796 x2 0 1 4 9 16 25 36 49 64 204 ∑y = n.75 8 44 32. y 17 16 16 21 20 20 23 25 24 182 x.69 + 1.25 6 35 22.69 + 1. Total Average 13.25 12 54 52.25 11 61 47. (1) 182 = 9a + 36b 182 = 9a + 36(1.Dr. 4 728 = 36a + 144b (1) (2).Introduction to Production / Operations Management 2007 I II III IV 88 units 78 units 80 units 88 units 24.75 1.75 b.Dr.69 Therefore trend forecasting equation is Y2009 = 15.25 10 55 42.Hulusi DEMIR 107 . a.13 (9) Y2009 = 25.25 13.75 12. Time Demand MA3 Error 1 10 2 14 3 19 4 26 5 31 17.∑x 182 = 9a + 36b (1) ∑xy = a∑x + b∑x2 796 = 36a + 204b (2) (1) .25 90.28 WMA4 forecast of period 13 = [4(54)+3(61)+2(55)+ 1(51)] / 10 = 56 Units Prof.M.13X a = 15.a + b.75 13.86 Y2009 = 25 860 Registrants 25.

4 0.176 22.78 0.7 13.6 5.3125 25.7 33. Sales Last Period α 10 0.8 11.352 19.66 23.74 25.7 8.25 10.3 26 0. you will get smaller average error.5 7 0.7 16.5 0.088 10.5 5.5 8 4 9 5 19 14 0.6 6.798 14.82 61 55 0.676 45.406 8.3 39 0.70 17. 108 .906 30.7 7.0 4.66 17.5 30.3 α(SLP) 3.37 20.5 7.297 51 44 0.214 12.5 9.5 27.75 31 26 0.5 11.3 14 0.912 54 61 0.5 34.8 9.5 5 0.406 15.813 9.Introduction to Production / Operations Management d.63 0.56 38.588 50.5 0.7 38.625 20.7 29. Sales 10 14 19 26 31 35 39 44 51 55 61 54 e.176 9.187 39 35 0.594 44 39 0.7 10.3 51 0.7 21.5 15.02 10.5 0.5 15.703 9.5 30. since it has lower average error compared to smoothing forecast with α = 0.70 30.37 14.3 10.06 14.5 17.7 12.5 0.20 43. Sales SF of P Smoothed Forecast Period Period α α(SLP) (1-α) for this period_ (1-α)(SFPP) SFTP ERROR_ 10 14 10 0.86 27.146 0. g.66 f.5 0.5 25.76 21.56 33.75 15.25 7.5 25.67 29.5 18.3 SF of P.2 5.5 26 19 0.998 16.625 10.3 to forecast the given timeseries.24 17.24 13.6 8.703 17.544 11.86 16.203 34.11 Total Average 139.5 9 4.76 0.7 43.30 0.854 13.85 8.3 16.5 13 0. If you were to use an exponential smoothing factor larger than o.3 61 0.5 11.22 7.7 25.60 48.044 55.5 22 0.5 19. Smoothed Forecast (1-α) Period (1-α)(SFPP) for this period___ ERROR 0.352 39.648 55 51 0.34 0.5 39.154 12.202 0.813 12.06 13.2 15.3 35 0.3 55 0.3 44 0.3.088 25.94 0. 631 Average 8.625 10.5 11. MA4 is preferable.5 0.375 35 31 0.14 0.5 50.352 11.5 45.90 5.7 8 5.603 h.544 Total 94.3 31 0.5 0.5 20.22 8.3 19 0.

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39. YEAR NO. OF RIDERSHIP TOURISTS (in millions) (in millions) x y x2 y2 1996 7 1.5 49 2.25 1997 2 1.0 4 1.00 1998 6 1.3 36 1.69 1999 4 1.5 16 2.25 2000 14 2.5 196 6.25 2001 15 2.7 225 7.29 2002 16 2.4 256 5.76 2003 12 2.0 144 4.00 2004 14 2.7 196 7.29 2005 20 4.4 400 19.36 2006 15 3.4 225 11.56 2007 7 1.7 49 2.89 TOTALS 132 27.1 1796 71.59 a. ∑y = n.a + b∑x (1) 2 ∑xy = a∑x + b∑x (2) a = 0.51 b. Y = 0.51 + 0.159 (10) b = 0.159

x.y ____________ 10.5 2.0 7.8 6.0 35.0 40.5 38.4 24.0 37.8 88.0 51.0 11.9 352.9 27.1 = 12a + 132b 352.9 = 132a + 1796 b (1) (2)

Y = 0.51 + 0.159X Y = 2.1 = 2 100 000 persons

c. If there are no tourists at all, the model predicts of 0.5 or 500 000 persons. One would not place much confidence in this forecast, however, because the number of tourists is outside the range of data used to develop the model. d. Syx = √{(∑y2 - a∑y - b∑x.y)/(n – 2)} Syx = √{[71.59 – 0.511(27.1) – 0.159(352.9)] / (12 -2)} Syx = 0.404 mil. Persons Y +/- 2Syx 2.1 +/- 2(0.404) 2.9 1.3 mil. Persons There is 95.5% probability that the ridership will fall between 2 900 000 persons and 1 300 000 persons, if the tourist population is 10 mil. People. There is only 4.5% risk that the ridership may fall outside these limits. e. r = [nΣxy - ΣxΣy] /√[nΣx2 – (Σx)2][nΣy2 – (Σy)2] r = [12(352.9) – 132(27.1)] / √[12(1796) – (132)2][12(71.59) – (27.1)2] = 0.917 There is a very strong relationship between ridership and number of tourists. f. r2 = (0.917)2 r2 = 0.84 84% of variation in ridership depends on number of tourists, 16% depends on other factors.

g. degree of freedom = 12 - 2 = 10 level of significance = 5% from normal distribution table tk = 2.228 tc = | r |√[(n – 2) / (1 – r2)] tc = 0.917 √(10)/(1-0.84) tc = 7.25 tc (7.25) > tk (2.228) Ho(r=0) Hypothesis is rejected. The computed r is meaningful.

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40. a. Year 2003 2004 2005 2006 2007 b. Year 2003 2004 2005 2006 2007 Sales 450 495 518 563 584 Sales 450 495 518 563 584 P.Sales 450 495 518 563 α α(P.Sales) (1-α) SFPS (1-α)(SFPS) SFTP | Error | 0.3 135 0.7 410 287 422 73 0.3 148.5 0.7 422 295.4 443.9 74.1 0.3 155.4 0.7 443.9 310.73 466.13 96.87 0.3 168.9 0.7 466.13 326.29 495.19 88.81 Total 332.78 Average 83.20 MA3 | Error | 487.7 75.3 528.3 58.7 Total 134 Average 67

c. Moving Average of 3-period is preferred, because it has less average error. d. MA3 for 2008 = *518 + 563 + 584)/3 = 555 units 41. Year Quarter Demand (Units) 2005 I 92 II 82 III 84 IV 92 Moving __________x___________350_ Totals 2006 I 0 90 348 II 1 80 346 III 2 82 344 IV 3 94 346 6 1384 ∑y = n.a + b∑b ∑x.y = a∑x + b∑x2 (1) (2)

x.y x2 0 0 346 1 344 4 1038 9_____ 2072 14____ 1384 = 4a + 6b 2072 = 6a + 14b b = 347.2 2007 I II III IV 88 79.2 81.2 93.2 units un its units units (1) (2)

a = - 0.8 Y = 347.2 – 0.8X

Y2007/I = 347.2 – 0.8(4) = 344 Y2007/II = 347.2 – 0.8(5) = 343.2 Y2007/III= 347.2 – 0.8 (6) = 342.4 Y2007/IV = 347.2 – 0.8(7) = 341.6 42.

a. b. Month Actual Demand MA3 | Error | WMA3 | Error | January 110 February 130 March 150 April 170 130 40 [(6x150)+3(130)+(110)]/ 10 = 140 30 May 160 150 10 160 June 180 160 20 162 18 July 140 170 30 173 23 August 130 160 30 154 24 September 140 150 10 138 2 Total 140 107 Average 23.33 17.83

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44.

Year

No. of Housing Permits, x 1999 18 2000 15 2001 12 2002 10 2003 20 2004 28 2005 35 2006 30 2007 20 TOTALS 188

Sales (000m2), y 14 12 11 8 12 16 18 19 13 123

x.y 252 180 132 80 240 448 630 570 260 2792

x2 324 225 144 100 400 784 1225 900 400 4502

y2___ 196 144 122 64 144 256 324 361 169 1780

a. Regression forecasting equation is found as follows; Σy = n.a + b.Σx (1) 123 = 9a + 188b (1) Σxy = Σx + bΣx2 (2) 2792 = 188 a + 4502b (2) b = 0.3757 Substitute b=0.3757 in Equation (1), we get 123 = 9a + 188(0.3757) a = 5.818 Therefore the regression forecasting equation is Y = 5.818 + 0.3757 b. If we suppose that there are 25 new housing permits granted in 2008, the sales for 2008 will be Y2008 = 5.818 + 0.3757 (25) Y2008 = 15.211 = 15 211 m2 of carpet (This assumes that the number of housing permits issued in a year is known at the beginning of the year.) c. The correlation coefficient is calculated as follows; r = [nΣxy - ΣxΣy] /√[nΣx2 – (Σx)2][nΣy2 – (Σy)2] r = [9(2792) – (188)(123)] / √[9(4502) – (188)2][9(1780) – (123)2] r = 2004 / √(5174)(891) r= 0.93 There is a very strong relationship between number of housing permits and carpet sales. d. Determination coefficient is therefore, r2 = (0.93)2 r2 = 0.86 86% of changes in carpet sales from year to year can be attributed to a change in the number of housing permits issued. Only 14 % of the changes in the carpet sales depend on other factors. e. Testing the hypothesis r = 0 at 5% level is significance is done as follows; Level of significance = 5% Degree of freedom = n – 2 = 9 – 2 = 7 tc = | r |√ [(n- 2)/(1 – r2)] tc = | 0.93 | √[(9-2)/(1- 0.932)] tc = 7.103 From student-t table tk = 2.365 tc (7.103) > tk ( 2.365) Hypothesis r =0 is rejected. The computed r is meaningful. f. By using correlation coefficient formula, we can find b = 2004/5174 = 0.387 a = y – b.x mean value of x = 20.89 a = 13.67 – 0.387(20.89) = 5.89 Y = 5.89 + 0.387 X

mean value of y = 13.67

g. Forecast 2008 sales based on forecasted permits for that year. First we have to forecast permits of 2008 by using trend analysis.

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Introduction to Production / Operations Management 112 .

a + b.5%probability will be Y +/.516 (000)m2 Assuming permits of year 2008 be 30.Syx 17.64.2(1.y x2 0 0 15 1 24 4 30 9 80 16 140 25 210 36 210 49 160 64 869 204 Σy = n.09 + 1.987 r = 0.5% risk that it may fall outside this interval.2 + 0. r = 0.09 b = 1.329 +/.485 (000) m2 Confidence limits of 90% probability for the forecasted sales: Y +/.2Syx 17.485) 20. with 90% probability carpet sales will fall between 20 142 m2 and 14 516 m2.64 permits By using regression equation we may forecast 2008 expected sales.329 +/.Σx (1) 188 = 9a + 36 b Σx. Syx = √{[Σy2 – aΣy .(1.3757(2792)]/(9-2)} = 1.352 (000)m2 Assuming permits of year 2008 be 30. Y2008 = 13.818 + 0. carpet sales will fall with 95.818(123) – 0. There is only 10% risk that forecasted sales may fall outside this range. r2 = (0.bΣxy] / (n-2)} Syx = √{[1780 – 5.Hulusi DEMIR 113 .Dr.064X b. the forecasted sales of 2008 with 95.y 18 15 12 10 20 28 35 30 20 188 x. Assuming n is large.306 14. Tires Used.5% probability within the limits of 20 306 m2 and 14 352 m2. x x.a + b.987)2 r 2 = 0.3757X Y2008 = 5.M.2 b = 0.09 + 1.95X The forecasted permits for the year 2008 will be.329 = 17 329 m2 of carpet h.Introduction to Production / Operations Management Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 Totals x 0 1 2 3 4 5 6 7 8 36 Permits.y 1 500 150 000 2 000 300 000 1 700 204 000 1 100 88 000 1 200 108 000 2 700 486 000 10 200 1 336 000 x2____ 2 250 000 4 000 000 2 890 000 1 210 000 1 440 000 7 290 000 19 080 000 (1) (2) ∑y = n.y = aΣx + b. 45.4% Prof. Y2008 = 5.818 + 0.95 Therefore trend forecasting equation for permits is.064 Y = 11.Dr.974 = 97.895)(1.y = a∑x + b∑x 1 336 000 = 10 200a + 19 080 000 a = 11.3757 (30.99 There is a very strong relationship between tires used and miles driven.64) = 17.64. There is still 4.485) 20.142 14.95 (9) = 30. Y = 13.∑x 720 = 6a + 10 200 b 2 ∑x.Σx2 (2) 869 = 36a + 204 b a = 13. Month 1 2 3 4 5 6 a. y 100 150 120 80 90 180 Totals 720 Thousand of Miles Driven.

Calls Previous α α(P.x Demand (units).y x.3 39.3 33.52 71.9 8 97 = 146.21 174 111 0.38 39.25 84.75 97 174 0.9 0. 46.87 11.1 0.7 124.7 90 63 90.7 90.61 124.6 0.21 13.1 45.18 136.38 Total 218.37 120.8 6 111 = 136.5 55 400 100 x2 0 1 4 9 16 25 36 49 140 3520 = 8a + 28b (1) b.6 0. a.2 0.4% of the variation in tires used is explained by the miles driven.6 63.7(136.7 Total 184. Year Quarters.Forecast Error Calls__________________________________________________________ 92 127 92 0.5 Average 36.a + bΣx (1) 114 .7 101.42 101.39 Average 31.1 25.Introduction to Production / Operations Management 97.3 30.5 190 17.5 0.3(97) + 0.06 101.3 27.3 49.9 Forecast for October 9 = 122.1 7 174 = 128.87 84.8 6. which is a good fit.52 1.2 Forecast for October 9 = 0.25 53. 400 432.38) = 124.5 137. a.48 165 103 0.7 120.13 111 132 0.96 63.21 86.95 120.5 475 Total Φ 517. Year Quarters 2006 I II III IV 2007 I II III IV 2008 I Demand (units) 350 460 280 360 500 590 450 530 MA4 | Error| 362.7 101.3 38.7 120.6 36. October 2007 Calls WMA3 |Error| 1 92 2 127 3 103 4 165 [5(103) + 3(127 + 2(92)]/10 = 108 57 5 132 = 138.7 49.04 132 165 0.3 52.57 = 125 calls 47.9 = 123 calls b.96 71.y 2006 I 0 350 0 II 1 460 460 III 2 280 560 IV 3 360 1080 2007 I 4 500 2000 II 5 590 2950 III 6 450 2700 IV 7 530 3710 28 3520 13460 Σy = n.3 0.4 103 127 0.Calls) (1-α) SFPC (1-α)(SFPC) S.

8 375.Hulusi DEMIR 115 .44) 156 = 12a a = 13 Y = 13 + 0.64 0.36 124.14X Y = 345 + 27.Dr.14X Y = 345 + 27.y_ 1 90 50 2 115 52 3 120 60 4 125 64 5 145 72 6 145 74 7 150 74 8 140 84 9 135 82 10 120 72 11 115 72 12 100 60 1500 816 Φ = 125 68 a.2 70 460 0.46 _x2__ 8100 13225 14400 15625 21025 21025 22500 19600 18225 14400 13225 10000 191350 y2 2500 2704 3600 4096 5184 5476 5476 7056 6724 5184 5184 3600 56784 (1) (2) (1) (2) 48. ∑y = n.D.2 19.74 Average 89.8 404 323.a + b∑x ∑xy = a∑x + b∑x2 x.23 11.58 440.∑x∑y] / √{(n∑x2 – (∑x)2}{n∑y2 – (∑y)2} r = [12(103700) – 1500(816)] / √[12(191350) – (1500)2][12(56784) – (816)2] Prof.Dr.71 0.8 390 312 404 124 0.) 350 0.82 0.14 units a = 345 c.y .29 320.36 300.2 92 280 0.8 440.2 56 360 0.29 189.36 375.14(8) = 562.M.46 458.58 89.48 352.2 106 (2) (2) (1-α) (SFPD) (1-α)(SFPD) SFTP | Error| 0.2 100 590 0. Year 2006/ I II III IV 2007/I II III V 2008/I Demand 350 460 280 360 500 590 450 530 Previous Demand α α (P.2 72 500 0.8 400.42 Total 628.77 0. r = [n∑x.23 350.2 118 450 0.8 379.44(125) c.x Sales.14 Y = 345 + 27.23 438. Month Lumber Roofing ________Sales.2 0. Y = 13 + 0.8 400 320 390 70 0.y 4500 5980 7200 8000 10440 10730 11100 11760 11070 8640 8280 6000 103700 (1) 816 = 12a + 1500b (2) 103700 = 150a + 191350b (1)x125 102000 = 1500a + 187500b 1 03700 = 1500a + 191350b ___________________________________ 1700 = 3850b b = 0/44155 Substitute b=0.44 in Equation (1) 816 = 12a + 1500(0.Introduction to Production / Operations Management Σxy = aΣx + b Σx2 13460 = 28a + 140b b = 27.8 438.2 379.29 400.44X Y = 68 Units b.2 90 530 0.2 303.

a∑y .4 Y2008/I = 486. f.76 There is a strong relationship between lumber sales and roofing sales.Syx 68 +/.1 + 121.t. degree of freedom = 12 – 2 = 10.4(4) = 972 Y2008/II = 486.b∑xy]/(n – 2)] Syx = √[56784 – 13(816) – 0.228) Hypothesis r=0 is rejected.71 from normal distribution table.4 643.2 116 . y 2007 I 0 105 507 II 1 130 546 III 2 522 791 IV 3 73 830 6 2674 ∑y = n. There is only 4. e.4 194. r2 = (0.812)(7. and 42% depends on other factors. They are same.8 53.2 Units There is 95.58 58% of roofing sales depends on Lumber sales.4 Y2008/III = 486.Introduction to Production / Operations Management r = 0. Y +/.4(7) = 1336.228 tc (3.59 Units There is 90% probability that lumber sales will fall within the limits of 55 units and 81 units.4(6) = 1214.44(103700)/(12 – 2) Syx = 7.2 Syx 68 +/.71) > tk (2.4) 81.2(7.4X Year 2008/I II III IV Sales 247 251.4 units Y +/. Syx = √[∑y2 .8 Y2008/IV = 486.58) tc = 3.76 √(12 – 2)/(1 – 0.4 + 121. tc = | r |√ [ (n – 2) / (1 – r2)] tc = 0. There is only 10% risk that lumber sales may fall outside these limits. level of significance = 5% tk = 2. g.1 + 121.44(125) a = 13 Y = 13 + 0. b = [12(103700) – 1500(816)] / [12(191350) – (1500)2] = 0.5% probability that it may fall outside these limits.76)2 = 0.4 Y = 486.44 a = y – bx a = 68 – 0.4 (5) = 1093. d.a + b∑x ∑x.5 % probability that lumber sales will fall within the limits of 53 units and 83 units.y 0 546 1582 2490 4618 x2___ 0 1 4 9 14 2674 = 4a + 6b 4618 = 6a + 14b b = 121.4 (1) (2) a = 486.1 + 121.y = a∑x + b∑x2 (1) (2) x.1 + 121.(1.40) 82. The computed r is meaningful.44X There is no difference between two regression equations. Year Quarter Sales 2006 I 60 II 91 III 277 IV 34 Moving ____________ x______462__ Totals.4 54. 49.

0 2006 2.y .598 (000 000) MU There is 90% probability that the sales will fall between 3 902 000MU and 2 598 000MU.y 2.306) Syx = 0.81 The determination coefficient indicates that 81% of the total variation is explained by the regression equation. The computed r is meaningful. Years Lumber Sales.5 – 0.75 + 0.0 2007 3.Introduction to Production / Operations Management 50.25X (1) (2) x=3 Payroll (000.5) – 18(15)] / √[6(80) – (18)2][6(39.b 51. Syx = √[∑y2 .25 29.25 (1) (2) 15 = 6a +18.(2. ∑y = n.306 (000 000)MU Y = 3.5 2005 2.∑x∑y] / {(n∑x2 – (∑x)2} b = [6(51.776) d.0 2003 3.y 2002 2.0 2.0 4.901)2 = 0. b = 0.75 level of significance = 5% degree of freedom = n – 2 = 6 – 2 = 4 tc (4.∑x∑y]/√[(n∑x2 – (∑x)2)(n∑y2 – (∑y)2)] r = [6(51.25X There is no difference between the regression equations.b∑xy]/(n – 2)] Syx = √{[(39.Syx 3.a∑y .t.901| √[(6 – 2)/(1 – 0. Years Sales (00.5) – (15)2] r = 0.5) – (18)(15)]/ [6(80) – (18)2] a = y – b.901 The r value of 0.5 51.25(6) Y +/.129) > tk (2.y .50 b.Hulusi DEMIR 117 . r2 = (0.25(51.x a = 2.25 +/.75 + 0.0 2004 2.a + b∑x ∑x.000. 51.000MU).Dr.81)] tc = 4.25X Y = 1.75 b = 0.0 10.y = a∑x + b∑x2 a = 1.5 a. if next year’s payroll is 6 000 000 MU.0 9.000MU).75 + 0.902 2.25 (000 000)MU 3.Dr.y 1 3 4 2 1 7 18 x.0 y = 2.5 – 1.x 2001 9 2002 10 2003 12 2004 14 2005 15 2006 18 2007 20 98 x = 14 y=7 Roofing Sales. e.5 = 18a + 80b Y = 1.25 a = 1.25(3) Y = 1.129 tk = 2.5)] / (6 – 2)} Y = 1.132)(0.776 Ho(r=0) is rejected. c.25 4 4 12.75 + 0. There is still 10% risk that sales may fall outside these limits.75(15) – 0.5 15. tc = | r |√[(n -2)/(1 – r2)] tc = |0.901 appears to be a very strong correlation between sales and payroll.5 x2 1 9 16 4 1 49 80 y2 4 9 6.0 24. b = [n∑x.y (x – x) 5 -5 5 -4 6 -2 6 0 8 1 9 4 10 6 49 0 (y – y) -2 -2 -1 -1 1 2 3 0 (x – x)2 25 16 4 0 1 16 36 98 (y – y)2 4 4 1 1 1 4 9 24 (x – x)(y – y) ___ 10 8 2 0 1 8 18 47 Prof.M. r = [ n∑x.

86 Y = 8.a + ∑x ∑xy = a∑x + b∑x2 118 . Y2008 = 0. left to the student f.48 X Y2008 = 0.87 (7) Y2008 = 21.45) Y2008 = 10.43 b = 1.28 + 0.58 units e.48 a = y – b.45 units Forecast of roofing sales of 2008.85 tk = 2.05 at 10% level of significance and 5 as the degree of freedom.94 94% of variation in lumber sales depends on roofing sales.48(21. d. only 6% depends on other factors. x 2001 2002 2003 2004 2005 2006 2007 Lumber Sales. r = [∑(x – x)(y – y)] / √[∑(x – x)2. tc = | r |√[(n – 2)/(1 – r)2] tc = 0.97 There is a very strong relationship between Lumber sales and Roofing sales.28 + 0. b.28 c.015) The computed r is meaningful. left to the student ∑y = n. b = 47/98 = 0.48(14) = 0.43 + 1. r2 = (0.Introduction to Production / Operations Management a.86X Trend Forecasting Equation Y2008 = 8.48X a = 7 – 0.43 + 1.06) = 8. tc (8. Years.97) r2 = 0.x Y = 0.97 √(5/0.28 + 0. y xy 0 9 0 1 10 10 2 12 24 3 14 42 4 15 60 5 18 90 6 20 120 21 98 346 x2 0 1 4 9 16 25 36 91 (1) 98 = 7a + 21b (1) (2) 346 = 21a + 91b (2) a = 8.∑(y – y)2] r = 47/ √(98)(24) r = 0.85) > tk (2.

.

50 MU/copy Cost/copy = 2.L. 7.7 MU/sweater Thus the Service Level is.10 0.44) = 1616 copies The magazine shop should order 1600 copies.Cost/case Ku = 15 MU/case – 5 MU/case = 10 MU/case Therefore the critical ratio will be.50 MU/copy Ku = Price/unit – Cost/unit Ku = 4.σ Iopt = 80 + 0. Ku = Price/case . the loss per unit for every excess kg of blue fish at the end of the day will be.5 – 2.10 The stand should order and sell 9 cases/day.50 MU/copy Salvage Value/copy = 0 MU/copy Ko = 2. at Cumulative Sales this level Probababity 5 0. K0 = Cost/sweater – Salvage Value/sweater K0 = 18. S.7/(3. the opportunity cost for every sweater the store could sell but did not stock will be.56 Thus the service level is.34 = 101 Sweaters The store should order and stock 101 sweaters. 63 cases/week. ∆I = 2400 – 1000 = 1400 copies Selling price/copy = 4.56 = 0.00 6 0.20 0.25 MU/sweater = 16.835 From normal distribution table Z = 0.e. the loss per unit for every excess sweater at the end of the season will be. = Ku/(K0 + Ku) S. = 1. = 16.5 + 2) = 0.30 P(C)* = 0. If the store overstocks.10 1.5 = 2 MU/copy P(C)* = Ko / (Ku + Ko) P(C)* =2.) Iopt = 1000 – 1400(0.00 – 0.3 MU/sweater If the store understocks.80 8 0.29 Daily Prob. the loss per case for every excess case at the end of the day will be.25 MU/sweater – 14.30) > critical probability (0.30 0. P(C)* = Ko / (Ku + Ko) P(C)* = 4/(4+10) = 0.10 0.29). . 9. the opportunity cost for every case the stand could sell but did not stock will be.20 0.44 Iopt = Cmin + ∆I (S.7) = 0.29 10 0.95 MU/sweater = 3. i.60 9 0. because it has cumulative probability (0. K0 = Cost/case – Salvage Value/case Ko = 5 MU/case – 1 MU/case = 4 MU/case If the store/stand understocks.3 + 16.INVENTORY CONTROL 6. S.L.95 MU/sweater – 18. Selling price = 15 MU/unit Cost = 5 MU/unit Salvage Value = 1 MU/unit If the store overstocks.L.97 Iopt = µ + Z.5/(2.90 7 0.L.97(22) =101. 8. Ku = Price/sweater – Cost/sweater Ku = 34. If the Fish Market overstocks.

7 kg The Fish Market should order and sell 79 kgs.25 0.55)≥ Critical probability (0. K0 = Cost/unit – Salvage Value/unit K0 = 1. Usage = 40 packages/day x 260 days/year = 10400 packages/year Xo = √(2CB)/E Xo = √(2(10 400)(6)) / 3 = 204 packages/order b. 1. the opportuniy cost for every kg of blue fish the Market could sell but did not stock will be.13(10) = 78.L.20 MU/unit – 1. of blue fish daily.Using equation Xo (MU) = √(2CpB)/Z We obtain X0√(2(28 000)(48) / 0.42 MU/unit If the drugstore understocks.50 MU/kg Thus the Service Level is. S.80 0.30 0. 13.40 MU/kg – 0.90 MU/kg – 1. 11.55 0.80 MU/kg = 0.90) = 0.32).42 + 0. = 0. the opportunity cost for every excess unit the store could sell but did not stock will be.Z/2B) we obtain No = √(220 000)(48))/2(30) = 25.15 0.23 15.95 0. b.40 MU/kg = 0. a.00 0.32 Demand 3 000 3 500 4 000 4 500 5 000 5 500 Probability 0.30 MU/unit = 0.25 0. a.15 Cum.15 CRITICAL PROBABILITY (0.Introduction to Production / Operations Management Ko = Cost/kg – Salvage Value/kg = 1.42 / (0.48 MU/year It will affect the total inventory cost to increase by 127. because it has cumulative probability (0.90 MU/unit Thus the critical probability is: P(C)* = Ko/(K0 + Ku) P(C)* = 0.32) We recommend Drugstore to order 4 500 cards.50) = 0.48 MU/year.50 / (060 + 0.60 MU/kg If the Fish Market understocks.48 – 1 080 = 127.σ Iopt = 80 – 0.88 MU/unit = 0. Ku = Price/kg – Cost/kg = 1.69 orders/year 14. e. Xo (MU) = 3 418.05 0. the loss/unit for every excess unit at the end of the New Year will be. = Ku / (Ko + Ku) S.15 0.If the drugstore overstocks.45 From normal distribution table Z = 0. c. Ku = Price/unit – Cost/unit Ku = 2.L. Prob.48 MU/year Increase = 1 207. 16.30 MU/unit – 0.88 MU/year 94 .13 Iopt = µ + Z. d. That is you have to use the formula Ke = √(2CBE) Ke = √(2(10 400)(6)(3) = 611.Using equation No = √(CE/2B) or No = √ (Cp.62 MU/order Xo = √(2CB)/E Xo = √(2(4860)(4)/30 = 36 bags/order Average number of bags on hand = X/2 = 36/2 = 18 bags/order No = C/X = 4 860/36 = 135 orders/year Ke = √(2CBE) = √(2(4860)(4)(30) = 1 080 MU/year Ke = √(2(4 860)(5)(30) = 1207.

which is negligible. K0 = Cost/dozen. If İlhan’s Doughnut Shoppe overstocks. the total annual ordering cost must be equal to the annual ordering cost at EOQ.37 MU/year Usage = 800 crates/month Purchase cost = 10 MU/crate Carrying cost = 35% of purchase cost annually Ordering cost = 28 MU/order Ke according to EOQ: Ke = √(2CBE) Ke = √{2(800x12)(28)(0.Prob.20 MU/dozen If İlhan’s Shoppe understocks.33 Cum. From the table you see that 25 dozens of Doughnuts is the highest level wit a cumulative probability greater than 0. 19.12 0. .02 The level of stock that will maximize expected profit is the highest level of stock that has a cumulative probability greater than or equal to 0.10 .14 0.82 0.80 MU/dozen – 0.60 MU/dozen K0 = 0.6 29 0.35)(10)} = 1 371.02 0.99 0.5) = 779.88 MU/year d.11 0. Ke = (C/X)B + (X/2)E= (10 400/204)6 + (204/2)3 = 305.12 MU/year.88 + 306 = 611.29 MU 18.33.71 = 364.1 371.37 CRITICAL PROBABILITY ( 0.20 /(0.18 0.80 MU/dozen Ku = 0.04 00.40 MU/dozen Thus the critical probability is: P(C)* = K0/(K0 + Ku) = 0.33 that will be sold.10 0.13 0. the loss per dozen for every excess dozen at the end of the day will be.33) 26 0. 21.64 0. the opportunity cost for every dozen the Shoppe could sell but did not stock will be. It will only save 0.40) = 0. Yes. Ku = Price/dozen – Cost/dozen =1.94 0.01 0.25)(2) = 519.71 MU/year Ke according to current policy: Ke = (C/X)B + (X/2)E Ke = 12(28) + (800/2)(0/35)(10) = 1 736 MU/year Saving due to using EOQ model.16 28 0. 1.62 MU/year b.c.Salvage Value/dozen = 0. Ke = (C/X)B + (X/2)E = (10 400/200)6 + (200/2)3 = 312 + 300 Ke = 612 MU/year No.27 27 0. I won’t recommend.20 MU/dozen – 0.51 0.05 0.Ke (EOQ) + Ke (current) = 1 736 . 17. Ke = (C/X)B + (X/2)E Ke = (9 000/1039)/30 + (1039/2)(2)(0.00 0. Usage = 750 pots/month = 750 x 12 = 9 000 pots/order Price = 2 MU/pot Carrying cost = 25% annually Ordering cost = 30 MU/order a. Xo = √(2CB)/Zp √{2(9 000)(30)/0/25(2) = ~ 1 039 pots/order Ke = √(2CBE) √2 (9 000)(30)(0. Demand rate = 2 000 bikes/year Ordering cost = 40 MU/order Cost = 800 MU/bike Carrying cost = 25% item`s cost Demand(dozens) 19 20 21 22 23 24 25 Probability 0.20 + 0. Since we round the figures.

5)} = 252/98 = ~ 253 units/order No = C/X = 1800/252.5)} = 98.40)(10) B = 30 MU/order Order quantity = 60 kgs/order Carrying cost = 30% year Ordering cost = 20 MU/order Price of the item = 200 MU/kg Xo = √(2CB)/Zp 60 = √{2)(C)(20)/(0/30)(200) C = 5 400 kg/year A container occupies 4 ft2 of space Available space = 600 ft2 Therefore the warehouse will hold 600/4 = 150 containers Demand = 12 000 units/year Holding cost = 2 MU/unit-year Order cost = 5MU/order a.43 = ~ 71 orders/year c.25)(800)} = 5 656.78 month`s supply (x 4 = about 3 weeks usage) C = 72 000 units/year s = 120 MU/st-up p = 4 MU/unit Z = 25%/year Qo = √(2Cs)/Zp Qo = √{2(72000)(120)/(0.3 MU/year At order cost 12. EOQ ‘s 253 units/order and there are about 7 orders per year.5)} = 146. 24. Annual inventory costs fall to 98.98 = 7. 96 .25)(800)} = 28.12 = ~ 7 orders/year .80 MU (due to rounding) Annual holding cost = (X/2)(Zp) = (28. 25.5) = 170/76 MU/year Annual ordering cost = 85.95 = ~245 containers/order b.38 MU/year Annual holding cost = 85.85 MU annually e. EOQ falls to 146 units/order. Demand rate = 96 000 MU annually Ordering costs = 45 MU/order Holding costs = 0.25)(4) = 4 156.92 units/order Ke = √(2CsZp) Ke = √{2(72000)(120)(0. Annual ordering cost = N.5 days between orders d.B =70.59 MU/year.8/96000)12 = 0.Introduction to Production / Operations Management Store open 250days per year a.46 MU) Order quantity = 60 units/order Carrying cost = 0. Xo = √(2CB)/E Xo = √{2(12000)(5)/2} = 244. The lower order cost encourages smaller.5 MU/towel Ordering cost = 12 MU/0rder Carring cost = 27%/year Current process: Xo = √(2CB)/Zp Xo = √{2(1800)(12)/(0.25x800) = 2828 MU 22. Ke = √(2CsZp) Ke = √{2(12000)(5)(2) = 489.40 of units price Cost = 10 MU/unit Annual demand = 240 units/year Xo = √(2CB)/Zp 60 = √{2)240)(B)/(0. No = C/X = 2000/28 = 71. In this problem the “units” are “MU” Xo (MU) = √(2CpB)/Z Xo = √{2(96000)(45)/(0.27)(2. 26. At order cost 4 MU.28 = ~ 28 bikes/order b. Xo = √(2CB)/Zp X0 = √{2(2000)(40)/(0. To = 1/No to = (1/71)250 = 3.76 MU.27)(2. Demand rate : 150 units/month = 1800 units/year Cost/towel = 2.25)(4) = 4 156.90 MU/year 23.27)(2.27)(2. Ke = √(2CBE) Ke = √{2(1800)(12)(0. more frequent orders.06 = 12.22 of purchase price/year First calculate EOQ from the data provided. and order frequency rises to 12.32 orders/year Ke = √(2CBE) Ke = √{2(1800)(4)(0. Ke = √(2CBE) Ke = √{2(2000)(40)(0.72(40) = 2828.80 MU/order To = 1/No to = (6266.06 units/order No = C/X = 1800/146.3 MU/year Annual holding cost = 49. Annual costs of inventory management are 170.92 MU/year (Annual set=up cost = 2078. 27.46 MU Annual holding cost = 2078.38 MU/year With automation: Cost of ordering = 4 MU/order Xo = √(2CB)/Zp Xo = √{2(1800)(4)/(0.28/2)(0.22)} = 6 266.59 MU/year Annual ordering cost = 49.

1 units/run S = Qo – Imax S = 864.50x0. C = 400 000 units/year s = 320 MU/set-up Qo = √{2Cs/E} . to = (1/N)240 to = (1/5.10/200000)250 = 1. Xo (EOQ) = 245 containers/order Ke (EOQ) = 489.c.10 (600/700) = 740.d Ke = 124(600) = 74 400 MU/year 32. This cost is 61. Rushton would consider paying up to 61.10 units/run Imax = Qo (d/(E+d) Imax = 864. Ke = √[2CBE(1 – c/R] Ke = √[2(10 000)(100)(0. Qo = √[(2Cs)/(1 – c/R)] Qo = √[(2)(10000)(100)] / [1. C = 10 000 units/yr s = 100 MU/set-up E = 0. 28.25x0.√(100+600)/600 = 864.50 MU/unit/yr R = 80 units/day c = 60 units/day a. t1 = 4 000/80 = 50 days/run c. Imax = Qo(1 – c/R) Imax = 4 000(0.08 days/run Ke = S. The total annual cost at 245 containers is 489. Sales = 380 bottles/month Sales = 380x12 = 4 560 bottles/year Price = 0. Xo = √[(2CB/E] b.1 – 740. No = √[CE/2B] No = √[4560(0.5)/(0. Ro = c.50)(0. Ke = √[2CBE] E = 16 MU/tire/yr days/yr = 288 days/yr Xo = √[2(9600)(75)/ 16] Xo = 300 tires/order No = 9600/300 = 32 orders/yr to = (1/32)288 = 9 days Ke = √[2(9600)(16)(75)] = 4 800 MU/yr 29. The economic order quantity is 245 containers.45 runs/year to = ( X/C)250 t0 =(564. No = C/Xo c.39 MU/year Demand = 200 000 Units/year Carrying cost = 100 MU/unit/year a.49)240 = 43.60/80] Qo = 4 000 units/run b.√{(E+d)/d} b.1 = 124 units/run No = C/Q No= 200000/864. The annual cost of inventory at X o = 150 is 550 MU.25] Ke = 93.25) = 1 000 units/run d. g.45)(0.tlt Ro = 380(2) = 760 bottles d.45) Xo = 830. Qo = √{2Cs/E} . To = 1/No d.1 MU/year Result: The warehouse will hold only 150 containers. more than there is room to store. Set-up cost = 160 MU/set-up Back-order cost = 600 MU/unit Qo = √{2(200000)(160)/100}.45x0. d.1 = 231.1 MU for a year`s rental of enough space to store 95 additional containers.10 units/order e.50)] No = 5.50 MU/order Holding Cost = 25% a. Ke = (C/X)B + (X/2)E Ke = (12000/150)(5) + (150/2)(2) = 550 MU/year d.45 MU/bottle Order Cost = 8. √(600+100)/600 .90 MU/year Xo (current) = 150 containers/order Ke (current) = 550 MU/year Extra = 95 containers = 61.25)/(2(8.90 MU.√{(E+d)/d} Qo = √{2(400000)(320)/100}. C = 9 600 tires/yr B = 75 MU/order a. e. f.10 MU less than current cost which reflects the limited storage space.25)] = 500 MU/yr 31. Ke = √[2CBZp] Ke = √[2x4560x8. c.72 days = ~ 44 days c.49 orders/year b. Xo = √[2CB/Zp] Xo = √[2(4560x8.

3 units/run Imax = Qo (d/(E+d) 45.50 + 187. Annual inventory holding cost = (X/2)(Zp) An. Ro = c. which is a half year supply would be a more expensive option than the current policy.88MU/unit If the store overstocks.88 MU/unit = 0. a) We begin with computing the annual demand. the loss per unit for every excess unit at the end of the season will be.97 units g.50 MU/year d.90 MU/unit Thus the critical probability is: P(C)* = Ko/(K0 + Ku) = 0. Hold.30 MU/unit Price = 2.92 units/run c.10)(15) = 250 units/order b. Data Summary: R = 100 units/day s = 50 MU/run c = 40 units/day 98 .05 MU/year (C/X)B = (936/75)(45) = 562 MU/year f) No = C/X = 936(75 = ~12.42/(0. Ka = C.75)/(0. Inv.92/50 = 6.to = 18 units/weekx1 week = 18 units 46.20 MU/unit – 1.50 MU/year f.20 units/run Imax = 1728. Ke = √[2CsE(1-c/R)] Ke = √[2(2500)(25)(0.25x60)] = 74. No = C/X No = 2500/250 = 10 orders/year e.42+ 0.75) = 187.94 = ~75 units/order d) Ke = √[2CBZp] Ke = √[2(936)(45)(0.25x60) = 3 033 MU/year b) The annual cost of 468 units-lot size is Ke = (C/X)B + (X/2)Zp = (936/468)45 + (468/2)(0.42 MU/unit If the store understocks.80)(1-10/50)] = 384.p + Annual ordering Cost + Annual carrying cost Ka = 2500(15) + 187.25x60) = 3600 MU Decision Point : A lot size of 468 units. c) EOQ = X0=√[2CB/Zp] = √[2(936x45)/(0. a.20 (600/700) = 1481. Cost = 1.92(1-10/50) = 259.tlt Ro = (2500/250)(0.B Annual ordering cost = 10(18. Av. Q0=√[2Cs/E(1-c/R)] Q0= √[2(2500)(25)/1.25)(60) = ~1 124.Introduction to Production / Operations Management Qo = 1728.32.17 weeks/order h) Ro = c. Imax = Qo(1 – c/R) Imax = 324.94 units/run f.tlt Ro = (2500/250)(2) = 20 units 53. 52.5) = 5 units 59. Cost = (250/2)(0. EOQ = X0=√[2CB/Zp] = √[2(2500)(18.32 The level of stock that will maximize the expected profit is the highest level of stock that has a probability greater than or equal to 0.5 days/run d.40 = 0. Annual ordering costs = N. a.48(1-10/50)] =324. Daily Demand = C/250 = 10 units/day b. to = (X/C)no. = Imax/2 Imax = 129.71 MU/year h. Inventory sold = 10 units/day x 6.48 Orders/year g) to = X/C = 75/18 = 4. t1 = Qo/R t1 = 324.32.50 = 37 875 MU/year g. Ku = Price/unit – Cost/unit = 2.20 MU/unit Salvage Value = 2. Average Inventory = Xo/2 Average Inventory = 250/2 = 125 units/order c.10(15) = 187.30 MU/unit – 0. Ro = c.90) = 0. of days to = 1/10(250) = 25 days h.10/2 = 562. C = 18 units/week x 52 weeks = 936 units/year The annual cost for the current policy is (ordering 390 units every time) Ke = (C/X)B + (X/2)Zp = (936/390)45 + (390/2)(0.30 MU/unit = 0. Ko = Cost/unit – Salvage Value/unit = 1. From the table you can see that 4 500 cards is the highest level with a probability greater than 0.20x0. the opportunity cost for every unit the company would sell but did not stock will be.5 days/run = 65 units/run e.10 MU/year e) Total Ordering Cost = Ke/2 =1124.10)(14.

50 (600/625) = 783.65 = ~ 46 days 60. the opportunity cost for every turkey LEMAR could sell but did not stock will be. Ku= Price/turkey – Cost/turkey = 11.993 = ~ 1633 units/run Imax = Q0 (d/(E+d) Imax = 1632.E = 0. SL = Ku/(Ko + Ku) = 3.993(600/625) = 1567.29 The optimal inventory level will be . If LEMAR overstocks.04 = ~ 2 days f.74 = ~ 1826 units/run Ro = c. c. workdays = 250 days/year p = 7 MU/unit Q0= √[2(40x250)(50) / (0. C = 200 000 units/year s = 160 MU/set-up Q0=√[2Cs/E] √[(E+d)/d Qo = √[2(200000)(160)/25]√[(25+600)/600] = 1632.47 runs/year e. f. of days to = (816.50)(1-40/100) = 547.10 when 250 100 0.06 when 300 100 0. 61.06(100)(5)(25)=750 1375 MU/yr 50(30)=1500MU/yr 2875MU/yr Min! 150 100 0.50 MU/unit-year Tlt = 7 days a.66 = ~ 33 units/run d.72 MU/year Ka = C.10 when 250 50 0.50/turkey – 0 MU/turkey = 8.50 = ~ 817 units/run b.50 – 783.d Ke = (1632. 150 units Stock-out cost = 25 MU/unit/yr Ro SS Probability of Annual Total Total Total Safety Number Stock-out Stock-out Carrying Safety Being out Short Cost Cost Cost Stock Cost 150 0 0. Ro = 150 units/order No = 5 orders/yr Holding Cost = 30 MU/unit Safety Stock Levels = 0 units. Imax = Q0 (d/(E+d) Imax = 816.6734)(600) = 39 192 MU/year All figures are doubled.p +√[2CsE(1-c/R)] Ke = (40x250)(7) + 547.16(50)(5)(25)=1000 0.06 when 300 50 0. 70.tlt Ro = 40 units/day(7 days) =280 units Ke = √[2CsE(1-c/R)] Ke = √[2(40x250)(50)(0.50/100000)250 = 2. Data Summary: Demand = C = 100 000 units/year d = 600 MU/unit-year s = 80 MU/set-up E = 25 MU/unit-year a.72 = 70 547.50 = ~ 122.67 = ~ 1568 units/run Ke = S.49) = 0.10(50)(5)(25)= 625 0.20(100)(5)(25)=1250 0.48)(250) = 45.49 MU/turkey Thus service level is. 100 units.06(50)(5)(25)= 375 375MU/yr 100(30)=300MU/yr 3375MU/yr 150 150 150(30)=4500MU/yr 4500MU/yr Safety stock level of 5o units is preferred.66(600) = 19596 MU/year (slight difference is due to rounding the figures) g. to = (X/C)no.50 + 3.48 = ~ 6 runs/year to = (X/C)no. Ke = √[2CsE] √[(E+d)/d)] Ke = √[2(100000)(80)(25)(625/600)] = 19 595.50 MU/turkey If LEMAR understocks.06(150)(5)(25)=1125 3375 MU/yr 3375MU/yr 150 50 0. So = Qo – Imax So = 816. Q0=√[2Cs/E] √[(E+d)/d Qo= √[2(100000)(80)/25]√[(25+600)/600] = 816. d.96 MU/year or Ke = S. the loss per turkey for every excess turkey at the end of the new year will be.72 MU/year No = C/X No = 10 000/1825/74 = 5.84 = ~ 784 units/run c. The new reorder level will be 200 units.d Ke = 32. Q0=√[2Cs/E(1-c/R)] b. No = C/X No = 100000/816.99 MU/turkey – 8.16 when 200 50 0.49/(8.50 MU/turkey = 3. e. 50 units. of days to = (1/5.06 when 300 150 0.50)(1-40/100)] = 1825.993 – 1567. Ko = Cost/turkey – SV/turkey = 8.84 = 32.

√[(2+0.2(10)(7)(50) = 700 0.2 when 80 0.2(20)(7)(50) = 1400 0.6/10000)311 = 53.1(30)(7)(50) = 1050 3150MU/yr 0MU/yr 70 10 80 20 90 30 0.00 9 0.0. Ko = Cost/set – SV/set = 285 MU/set – 215 MU/set = 70 MU/set If TT understocks.σ = 550 . because it has cumulative probability which is greater than critical probability (0.27 1.75) = 639. Imax = Xo .Z. 73.6(2) = 1279.6/10000)311 = 19. 90 units.73 11 0.1(20)(7)(50) = 700 0. the opportunity cost for every set TT could sell but did not stock will be.6 = 528 turkeys LEMAR should order and stock 528 turkeys.1 when 90 10 20 10 0.1(10)(7)(50) = 350 - 1400MU/yr 10(5)=50MU/yr 1450MU/yr 350MU/yr 20(5)=100MU/yr 150MU/yr 30(5)=150 MU/yr 150MU/yr Min! The optimal safety stock level is 30 units. therefore. Xo = √[2(10000)(150)/0.2(10)(7)(50) = 700 0.25) 12 0. 76.Introduction to Production / Operations Management Iopt = µ .2 (0. The optimal reorder point is.75].00 10 0. Ku = Price/set – Cost/set = 490 MU/set – 285 MU/set = 205 MU/set Thus the critical ratio will be. No = C/X No = 10000/2345.26 orders/year f.00 0. So = Q0 (E/(E+d) So = 2 345.2 = 4. of days to = (1/4.2 when 70 10 0.2 when 80 20 0.08 0.6 metres/order c. 72. so the optimal order quantity is 100 .6 = 1705.19 0.56 (40) = 527. E = 5 MU/unit/year Stock-out cost = 50 MU/unit Total Safety Stock Cost 3150MU/yr Ro SS Probability of Annual Total Total Safety Number Stock-out Stock-out Carrying Being out Short Cost Cost Cost 60 0 0. 8 and fewer 0. t1 = Imax/c ts =S/c t1 = (1705.So Imax = 2345.2 metres/order b.12 0.2 MU/year e. X0=√[2CB/E] √[(E+d)/d g. If TT overstocks. B = 40 MU/order Reorder point.1 when 90 30 0.26)(311) = 73 days/order a.00 1.6 metres/order d.39 CRITICAL PROBABILITY (0. the loss per set for every excess set at the end of the model year will be.08 14 or more 0. h.75)/2] = 2 345.25 Demand Probability Cum. 71.2 – 639.9 days/order a. Prob. P(C)* = Ko/(Ko + Ku) = 70/(70 + 205) = 0.20 13 0.34 0. Ordering cost.00 TT should order 11 TV sets. to = (1/N)No.d Ke = 639. Ke =S. Ro = 60 Units Number of orders = 7 orders/year Carrying cost.1 when 90 0.75/(2+0.2 days/order ts = (639.25). The EOQ assumptions are met.

OLS = Qo = √(2Cs/E(1-c/R)) Qo = √[2(100)(80000)/0. aa. The total annual inventory cost if EOQ is employed calculated as follows: Ke = √[2CBE] Ke = √[2(10000)(5.4 units/order ac. a carrying cost of 1 MU.26 units/run bb. d.6] = 542. Estimated annual savings in inventort is calculated: Saving = Ke (current) – Ke (EOQ) = 217. must determine what the ordering cost would have to be for the order policy of 150 units be optimal.62)(5. The max inventory level Imax = Q0 (d/(E+d) Imax = 542.4) = 217.4 units/order and Ke =209.0) = 506. ba. The inventory analyst concludes that if the annual savings on this one material were applied to the thousand of items in inventory.4] = 524. C = 80 000 bottles/month = 500 bottles/hour a.1(1-500/3000)] = 13 856 bottles/run b.81 (5.26 MU/year bd.5)/ 0. c. 80.76 MU/year.4)(1.76 – 217.10 = . when the units were delivered all at once.76 = 7.5)(0.1(1-500/3000)] = 9 798 bottles/run . The estimated savings are calculated: Savings = Ke (Model 1) – Ke (Model 2) = 209. be. New s = 50 MU/set-up New Qo = √(2Cs/E(1-c/R)) Qo = √[2(50)(80000)/0.5)/(0.7. the Co.4)/5.c/R) Imax = 624. Maximum inventory in the stocks: Imax = Q0 (1 . 78.5)/(0.b.76 MU/year ad.6+0.34 MU/year The policy will result in loss.81 units/run cb.6/6.4)(1-40/120)] = 171.5 orders/year Average inventory = Xo/2 Average Inventory = 100/2 = 50 units/order Given an annual demand of 250. were 524. The EOQ is: Q0=√[2Cs/E] √[(E+d)/d Qo = √[2(10000)(5. EOQ is calculated as follows: EOQ = Xo = √(2CB/E) Xo = √[2(10000)(5.76 -171. A.(10000/250)/120)] Qo = 642.81-506. Let`s calculate the present total annual inventory cost: Ke = (C/X)B + (X/2)E Ke = (10000/400)(5/5) + (400/2)(0.62 units/run cc. EOQ = Xo = √(2CB/E) (150)2 = 2(250)B/1 B = 22500/500 = 45 MU/order OLS = Qo = √(2Cs/E(1-c/R)) Qo = √[2(6750)(150)/1(1-30/125)] = 1632 minislicers/run OLS = Qo = √(2Cs/E(1-c/R)) Qo = √[2(8000)(100)/0/3(1-40/150)] = 2697 scissors/run 77. To find the answer to this problem.74 MU/year ae. and an order quantity of 150.6) = 217.As you can see in the calculations that follow an ordering cost of 45 MU needed for the order quantity of 150 units to be optimal.5)(0.10 MU/year cd. The estimated savings are calculated: Savings = Ke (minimum from be) – Ke (Model 3) = 209.26 = 38. The EOQ and total annual inventory costs from A. The new total inventory cost is calculated: Ke = √(2CsE(1-c/R)) Ke = √[1(10000)(5.50 MU/year ab. to is EOQ = Xo = √(2CB/E) Xo = √[2(250)(20)(1)] = 100 units/order No = C/X No = 250/100 = 2. therefore this policy is not recommended.4)] = 209.50 MU/year C. The new total inventory cost is calculated: Ke = S. EOQ is calculated as follows: OLS = Qo = √(2Cs/E(1-c/R)) Qo = √[2(10000)(5. ca. B.17 units/run bc.4)]√[(5. the savings from EOQ would be significant.50 – 209. we must solve the traditional EOQ equation for the ordering cost.26(1 – 40/120) = 428. 79.d Ke = (542.

the opportunity cost for every unit the company would sell but did not stock will be. b.125 MU/run/10 MU/hour = 0. 102 . Ko = Cost/unit – Salvage Value/unit = 1400 MU/unit – 600 MU/unit = 800 MU/unit If the store understocks.0125 MU/run Set-up time = s/ labour rate set-up time = 0. From the table you can see that 72 units is the highest level with a probability greater than 0. Qo = √(2Cs/E(1-c/R)) Qo = √[2(1000)(10)/0. Each unsold unit increases the cost of the unit by 300 MU.75(1-32/32)] = ∞ 86. Ke = 1500/2 = 750 MU/year Total Ordering Cost (C/X)B = (10000/2000)150 = 750 MU/year d.57 The level of stock that will maximize the expected profit is the highest level of stock that has a probability greater than or equal to 0. EOQ = Xo = √(2CB/E) Xo = √[2(150)(10000)/0. c = 32 metres/day Qo = √(2Cs/E(1-c/R)) Continuous production R = 32 metres/day Qo = √[2(10000)(150)/0.00125 hour/run or set-up time = 0. because it`s cumulative probability (0.5(1-4/8)] = 282.57. Ku = 2000 MU/unit – 1400 MU/unit = 600 MU/unit Ko = 1400 MU/unit + 300 MU/unit – 600 MU/unit = 1100 MU/unit P(C)* = Ko/(K0 + Ku) = 1100/(1100 + 600) = ~ 0.75] = 2000 metres/order b. Ke = √[2CBE] Ke = √[2(10000)(150)((0.8 hubcaps/run Qo= ~ 283 hubcaps/run 10 = √[2(10000)(s)/5(1-250/500)] 100 = 20000s/(5/2) s = 0. No = C/X No = 10000/2000 = 5 orders/year e. of days) to = 1/5(311) = 62.Introduction to Production / Operations Management 81. to =(X/C)(No.6471 The optimal level is again 72 units of attachment.075 minutes/run or = 4. a. Cost = 1400 MU/unit Price = 2000 MU/unit Salvage Value = 600 MU/unit If the store overstocks. the loss per unit for every excess unit at the end of the season will be.2 days/order 84.75)] = 1500 MU/year c. Ku = Price/unit – Cost/unit = 2000 MU/unit – 1400 MU/unit = 600 MU/unit Thus the critical probability is: P(C)* = Ko/(K0 + Ku) = 800/(800 + 600) = ~ 0. Qo = √(2Cs/E(1-c/R)) 82. a.57.75) is greater than critical probability.5 seconds/run 83.

1/20=0.5 0 – 25(0.08) = .5=1.3(1) = 0 0.024 Prof.08) = .05 – 0. 0/12. 0 Cj 0 0 0 New Values of S2 1000 .Dr. New B values: 250/125=20.3 – 0.25/12.3(0.92 127 .3.Hulusi DEMIR New Values of S3 600 – 24(20) = 120 0 – 24(0) = 0 24 – 24(1) = 0 .05) = -1 0 – 20(0) = 0 1 – 20(0) = 1 bi/aij_____ 600/20 = 30Min! Leaving 1000/25 = 40 1200/20 = 60 ______ Z = 6A + 3B + 0S1 + 0S2 + 0S3 20A + 6B + S1 = 600 25A + 20B + S2 = 1000 20A + 30B + S3 = 1200 All variables ≥ 0 Max! Entering variable B is entering while S2 is leaving.05.3) = 24 0 – 20(0.Introduction to Production / Operations Management LINEAR PROGRAMMING A. -1.1.5=0.25 1 – 25(0) = 1 0 – 25(0) = 0 2nd Simplex Tableau: Cj 6 0 0 Product Quantity 6 Mix bi A A 30 1 S2 250 0 S3 600 0 Zj 120 6 Cj .5=-0.1) = 0.5 -1. 6/20=0.B ≥ 0 Initial Simplex Tableau: Product Quantity 6 3 0 0 0 Mix bi A B S1 S2 S3 S1 600 20 6 1 0 0 S2 1000 25 20 0 1 0 S3 1200 20 30 0 0 1 Zj 0 0 0 0 0 0 Cj .2 .8 0.3 1.1.4 0 – 24(0.3(0) = 1 0.M.1) = 1. 20/20=1.08 0 – 0.05 12.1 – 24(-0. SIMPLEX METHOD 1.0.5=20Min! Leaving 1 600/24= 25 0 0 New Values of S3 1200 – 20(30) = 600 20 – 20(1) = 0 30 – 20(0.3 0.5=0. 0 New Values of A 30 .Zj 6 3 0 0 0 Max! ENTERING VARIABLE A is entering while S1 is leaving.08.25 24 -1 1. 1/12.25(30) = 250 25 – 25(1) = 0 20 – 25(0.3(=0.Dr. New A values: 600/3=30.05) = -1.3 0 S2 0 1 0 0 0 0 S3 bi/aij_____ 0 30/0. 0. a) Objective Function: Z = 6A + 3B Subject to: 20A + 6B ≤ 600 25A + 20B ≤ 1000 20A + 30B ≤ 1200 A.5/12.Zj 0 3 0 B S1 0.0.3) = 12.3(20) = 24 1 – 0. 12.3 = 100 0 250/12.0.

X2 ≥ 0 Initial Simplex Tableau: Cj 0 0 Product Quantity Mix bi S1 600 S2 480 Zj 0 Cj . S3 has non-zero slack.08 0 1. A = 24 units B = 20 units Z = 204 MU b) 2.2(1) = 0 6 – 2(1/2) = 5 128 ./unit) Total hours X2 available 2 6 30 MU 600 hrs.0. Model building: Objective function: Max! Z = 40X1 + 30X2 Subject to: 4X1 + 2X2 ≤ 600 2X1 + 6X2 ≤ 480 X1. 480 hrs.08 -0.Zj 40MU 30MU X1 X2 4 2 2 6 0 0 40 30 Max! Entering Max! Z = 40X1 + 30X2 + 0S1 + 0S2 4X1 + 2X2 + S1 = 600 2X1 + 6X2 + S2 = 480 All variables ≥ 0 0MU S1 1 0 0 0 0MU S2 bi/aij____ 0 600/4=150 Min! Leaving 1 480/2=240 0 0 ___________ X1 is entering. 0 New values of S2 480 – 2(150) = 180 2 .096 0 .3(0) = 0 3 Simplex Tableau: rd 1 – 24(0) = 1 3 B 0 1 0 3 0 0 0 0 S1 S2 S3 0.024 0 .92 1 0.0. Information from the question: Models Department Fabrication Assembly Profit/Unit H (hrs. ¼. therefore optimal solution is attained.Zj 0 There is no positive value in the row of “Cj – Zj”.Introduction to Production / Operations Management 0 – 0. 4/4=1.1 0.18 .2/4= ½ .1. S3 has 120 hrs.0.096 0 Cj 6 3 0 Product Quantity 6 Mix bi A A 24 1 B 20 0 S3 120 0 Zj 204 6 C j . while S1 is leaving.18 0.4 ./unit) X1 4 2 40 MU W (hrs. New X1 values: 600/4=150. of idle labour hour.

36 units of Model W.½ (-0.1. 1.Z j 40MU 30MU 0MU 0MU X1 X2 S1 S2 _ 1 0 0. New X2 values: 180/5=36.5MU ___ Model construction: Objective function: Subject to: Max! Z = 1.05 Profit/kg.½ (0) = 1 0.3 .0. 3.1 Third Simplex Tableau: Cj 40 30 Product Quantity Mix bi X1 132 X2 36 Zj 6360 Cj . 0.½ 1 – 2(0) = 1 Second Simplex Tableau: 40MU 30MU 0MU X1 X2 S1 1 ½ ¼ 0 5 -½ 40 20 10 0 10 .__ (0.) X2 Available Raisins 2/3 ½ 90 kgs.5(2/3)+0. (kgs. therefore optimal solution is obtained.5X2 2/3X1 + ½ X2 ≤ 90 1/3X1 + 1/2X2 ≤ 60 X1 ≤ 110 129 Prof. We should produce 132 units of Model H.6(1/3)=1.) X1 (kgs.Z j 0MU S2 bi/aij____ 0 150/0.M.1 0. 1.a) Data summary from the question: Deluxe Mix Standard Mix Total kgs.2 1.2) = -0.Dr.Hulusi DEMIR .-0.3 0 – ½ (0.Introduction to Production / Operations Management 0 – 2(1/4) = .60(1/2)=1.5(1/2)+0.5=300 1 180/5 =36 Min! Leaving 0 0 ___________ There is no positive value in the row of “Cj – Zj”.Dr.) Peanuts 1/3 ½ 60 kgs.2 Cj 40 0 New values of X1 150 – ½ (36) = 132 1 . while S2 is leaving.1) = 0.55MU Cost/kg. Maximum profit is 6360MU.5 – ½ (1) = 0 ¼ .1.7X1 + 1.7MU 1. 2.) Selling Price/kg.0. (1/5MU/kg.2 40 30 9 2 0 0 -9 .9MU 2.60MU/kg.1 0 1 .2___ Product Quantity Mix bi X1 150 S2 180 Zj 6000 Cj .10 Max! Entering X2 is entering. 0.

1/3(0) = 0 1 .0(110) = 110 0 – 0(1) = 0 1 – 0(0) = 1 0 – 0(0) = 0 0 – 0(0) = 0 0 – 0(1) =0 1 .1.7 X1 0 S4 Zj C j .5MU Cj Mix bi X1 X2 S1 0 S1 90 2/3 ½ 0 S2 60 1/3 ½ 0 S3 110 1 0 0 S4 110 0 1 Zj 0 0 0 C j . 1.2/3(0) =0 0 . 1.Zj Quantity X1 50/3 70/3 110 110 187 1. while S3 is leaving the tableau. 0.1/3(0) = ½ 0 .-2/3/1/2=-4/3.Introduction to Production / Operations Management X2 ≤ 110 X1.2/3(0) = ½ 1 . New values of X1: 110/1=110.7 0 0 .7MU X2 0 0 1 0 1.1/3(1) = 0 ½ . X2 ≥ 0 Changing the inequalities into equations.5 Max! Entering 0MU 0MU 0MU 0MU S2 S3 S4___bi/aij 1 0 0 0 90/2/3=135 0 1 0 0 60/1/3=180 0 0 1 0 110/1=110 Min! Leaving 0 0 0 1 0 0 0 0 0 0 0 0 ___ X1 is entering.7X1 + 1/2X2 + 0S1 + 0S2 + 0S3 + 0S4 Subject to : 2/3X1 + ½ X2 + S1 = 90 1/3X1 + 1/2X2 + S2 = 60 X1 + S3 =110 X2 + S4 = 110 All variables ≥ 0 Initial Simplex Tableau: Product Quantity 1.1/3(0) = 1 0 . we have.7 1. 1. 0.7 0 ___ X2 is entering the solution.2/3(0) =0 Second Simplex Tableau: Product Cj Mix bi 0 S1 0 S2 1. 0 130 . Objective function: Max! Z = 1.2/3(0) =1 0 .2/3(1) = . 0.1/3(1) = -1/3 0 . 0.5 0 Max! Entering New values of S2 60 – 1/3(110) = 70/3 1/3 . New X2 values: 50/3/1/2=100/3.1/3(0) = 0 New values of S4 110 .5MU 0MU S1 S2 ½ 1 ½ 0 0 0 1 0 0 0 1.7 0 1. 0. while S1 is leaving the solution.2/3 0 .7MU 1.0(0) =1 0MU 0MU 0MU S3 S4___bi/aij 0 -2/3 0 50/3/1/2= 100/3 Min! Leaving 1 -1/3 0 70/3/1/2=140/3 0 1 0 110/0= 0 0 1 110/1=110 0 1. 2. 0 New values of S1 90 – 2/3(110) = 50/3 2/3 – 2/3(1) = 0 ½ .Zj 1.

1 0.5 X2 60 0 1 -2 4 0 0 0 S3 20 0 0 -3 3 1 0 1.Hulusi DEMIR 131 New values of X1 110 – 1(20) = 90 1 – 1(0) = 1 0 .4/3(0) = 1 .7 X1 0 S4 Zj Cj .1(0) = 0 New values of S4 230 . Expected maximum profit is 243 MU.5MU 0MU 0MU 0MU 0MU Cj Mix bi X1 X2 S1 S2 S3 S4___ 1.1 -0.7 X1 90 1 0 3 -3 0 0 0 S4 50 0 0 2 -4 0 1 Zj 243 1. New S3 values are: 20/3/1/3= 20.4/3(20) = 50 0 – 4/3(0) = 0 0 – 4/3(0) = 0 -2 .5 2.5MU 0MU S1 S2 1 2 0 -1 0 0 0 -2 1.Zj Quantity X1 100/3 20/3 110 230/3 237 New values of X1 Since the key number is zero.Introduction to Production / Operations Management New values of S2 70/3 – ½(100/3) = 20/3 0 . 0 New values of X2 100/3 – (-4/3)20 = 60 0 – (-4/3)0 = 0 1 – (-4/3)0 = 1 2 – (-4/3)(-3) = -2 0 – (-4/3)3 = 4 -4/3 – (-4/3)1 = 0 0 – (-4/3)0 = 0 Fourth Simplex Tableau: Product Quantity 1.7MU 1.1(3) = -3 1 . 60 bags of standard.½ (1) =0 0 – ½ (2) = -1 1 – ½ (0) =1 -1/3 – ½ (-4/3) = 1/3 0 – ½ (0) =0 Third Simplex Tableau: Product Cj Mix bi 1.7 1.1(1) = 0 0 . New values of S4 110 – 1(100/3) = 230/3 0 – 1(0) =0 1 – 1(1) =0 0 – 1(2) = -2 0 – 1(0) =0 0 – 1(-4/3) = 4/3 1 – 1(0) =1 1.M.7MU X2 0 0 1 0 1. 1.Dr. 0. therefore we have obtained the optimal solution.4/3(-3) = 2 0 .3 0 0 0. b) We should prepare 90 bags of deluxe. Prof.9 0 0 Cj .1(-3) = 3 0 . 3. the row values remain same.7 0 1. while S2 is leaving.Zj 0 0 -2.4/3(3) = -4 4/3 – 4/3(1) = 0 1 .5 3 0 -3 0MU 0MU 0MU S3 S4___bi/aij 0 -4/3 0 1 1/3 0 20 Min! Leaving 0 1 0 110 0 4/3 1 115/2 0 -0.1(0) = 0 0 .9 0 0 ___ There is no positive value in the row of “C j – Zj”.3 0 ___ Max! Entering S3 is entering the solution. -3.5 X2 0 S2 1.Dr. 0.½ (0) =0 ½ .

In this case X1. In fact.75 5 1/3 Min! 4 0.Introduction to Production / Operations Management 7. variable X2 which is not in the product mix also has a zero “Cj – Zj” value. However. S2 and S3 are in the product mix. a) b) An optimal tableau for a maximization problem must contain all zeroes or negative values in the “Cj – Zj” row. We always find zero values in the “Cj – Zj” row beneath the coloumns associated with those variables in the product mix. This means we can enter variable X2 in another iteration and still not change our optimal profit of 32 MU/day. the tableau is optimal. c) 9. Therefore.05 80 ¼ 0. S2 and S3 all contain zeroes in the “Cj – Zj” row. and the variable coloumns X1. X2 ≥ 0 Initial Simplex Tableau: Cj 0 0 0 0 Product Quantity Mix bi S1 60 S2 16 S3 10 S4 6 Zj 0 2 X1 5 1 1 0 0 Max! Z = 2X1 + 3X2 + 0S1 + 0S2 + 0S3 + 0S4 5X1 + 6X2 + S1 = 60 X1 + 2X2 + S2 = 16 X1 + S3 = 10 X2 + S4 = 6 All variables ≥ 0 3 X2 6 2 0 1 0 0 S1 1 0 0 0 0 0 S2 0 1 0 0 0 0 S3 0 0 1 0 0 0 S4 0 0 0 1 0 bi/aij 60/6=10 16/2=8 6/1=6 Min! Leaving 132 . Data Summary: Man-hours Inspection Time Production: A Production: B Profit Contribution Product A X1 5 hours 1 hour 1 2MU/unit Product B X2 6 hours 2 hours 1 3MU/unit Available Capacity 60 hours maximum 16 hours maximum 10 units maximum 6 units maximum Formulation of the problem: Objective function: Max! Z = 2X1 + 3X2 Subject to: 5X1 + 6X2 ≤ 60 X1 + 2X2 ≤ 16 X1 ≤ 10 X2 ≤ 6 X1. we can introduce any amount of X2 in the continuous range of 0 to 5 1/3 units per day giving rise to an infinite number of possible solutions. The optimum value of Zj is 32MU/day.175 8 Therefore. as in this case. The most X2 we can expect is the least-positive quotient of the three: Quantity X2 Quotient (bi/aij) 4 0. there are an infinite number of optimal solutions. whenever there exists another optimal solution.

0. New X1 values are as follows: 4.(New X2 Values) = New S1 Values Old S2 Row – Key No.M. 0.Z j 2 X1 5 1 1 0 0 2 3 X2 0 0 0 1 0 0 0 S1 1 0 0 0 0 0 0 S2 0 1 0 0 0 0 0 S3 0 0 1 0 0 0 0 S4 -6 -2 0 1 0 -3 bi/aij 24/5=4.(New X2 Values) = New S2 Values 60 – 6(6) = 24 5 – 6(0) = 5 6 – 6(1) = 0 1 – 6(0) = 1 0 – 6(0) = 0 0 – 6(0) = 0 0 – 6(1) = -6 16 – 2(6) = 4 1 – 2(0) = 1 2 – 2(1) = 0 0 – 2(0) = 0 1 – 2(0) = 1 0 – 2(0) = 0 0 – 2(1) = -2 Since the key number of S3 row is 0. 0.Hulusi DEMIR . therefore the values of X2 remain same.8 4/1=4 Min! Leaving 10/1=1 6/0=∞ - Max! Entering X1 is entering and S2 is leaving. Third Simplex Tableau: Cj 0 2 0 3 Product Quantity Mix bi S1 4 X1 4 S3 6 X2 6 Zj 26 2 X1 0 1 0 0 2 3 X2 0 0 0 1 3 0 S1 1 0 0 0 0 0 S2 -5 1 -1 0 2 0 S3 0 0 1 0 0 0 S4 4 -2 2 1 -1 bi/aij 4/4=1 Min! Leaving 6/2=3 6/1=6 133 Prof.Introduction to Production / Operations Management Cj . 0.Dr. 0. 0. therefore the values of S3 remain same. 1 Old S1 Row – Key No. New X2 values are: 6/1=6. 1.(New X1 Values) = New S3 Values 24 – 5(4) = 4 5 – 5(1) = 0 0 – 5(0) = 0 1 – 5(0) = 1 0 – 5(1) = -5 0 – 5(0) = 0 -6 – 5(-2) = 4 10 – 1(4) = 6 1 – 1(1) = 0 0 – 1(0) = 0 0 – 1(0) = 0 0 – 1(1) = -1 1 – 1(0) = 1 0 – 1(-2) = 2 Since the key number of X2 is 0.Z j 2 3 0 0 0 0 Max! Entering Variable X2 is entering and variable S4 is leaving the tableau. -2 Old S1 Row – Key No. 0. Second Simplex Tableau: Cj 0 0 0 3 Product Quantity Mix bi S1 24 S2 4 S3 10 X2 6 Zj 18 Cj .1.Dr. 1/1=1.(New X1 Values) = New S1 Values Old S3 Row – Key No.

0. 134 . they both equal zero. In order to achieve maximum profit. The S3 value indicates that Hurşit will have 4 units of unused capacity for producing Product A as given in the original formulation of the problem. 1 Old X1 Row – Key No. 0.(New S4 Values) = New X2 Values 6 – 2(1) = 4 0 – 2(0) = 0 0 – 2(0) = 0 0 – 2(1/4) = -½ -1 -2(-5/4) = 3/2 1 – 2(0) = 1 2 – 2(1) = 0 6 – 1(1) = 5 0 – 1(0) = 0 1 – 1(0) = 1 0 – 1(1/4) = -¼ 0 – 1(-5/4) = 5/4 0 – 1(0) = 0 1 – 1(1) = 0 Fourth Simplex Tableau: Cj 0 2 0 3 Product Quantity Mix bi S4 1 X1 6 S3 4 X2 5 Zj 27 Cj . Hence production an d inspection time will be totally consumed. Since S1 and S2 do not appear in the solution set. The S4 value of 1 indicates that there will be 1 unit of unused capacity for producing Product B. New S4 values are: 1. The solution is X1 = 6 X2 = 5 S3 = 4 S4 = 1 . 0. which means the optimal solution is attained.(New S4 Values) = New S3 Values 4 – (-2)1 = 6 1 – (-2)0 = 1 0 – (-2)0 = 0 0 – (-2)¼ = ½ 1 – (-2)(-5/4) = -3/2 0 – (-2)0 = 0 -2 – (-2)1 = 0 Old X2 Row – Key No.Zj 0 0 0 -2 0 1 Max! Entering S4 is entering and S1 is leaving.(New S4 Values) = New X1 Values Old S3 Row – Key No.Zj 2 X1 0 1 0 0 2 0 3 X2 0 0 0 1 3 0 0 S1 ¼ ½ -½ -¼ ¼ -¼ 0 S2 -5/4 -3/2 3/2 5/4 3/4 -3/4 0 S3 0 0 1 0 0 0 0 S4 1 0 0 0 0 0 Inspection of 4th Tableau reveals that “Cj – Zj” ≤ 0 for all values of “Cj – Zj”. ¼. -5/4.Introduction to Production / Operations Management Cj . This combination will result in a maximum of 27 MU. it is necessary to produce 6 units of Product A. and 5 units of Product B.

we’ll have. 1/5 Old S1 Row – Key No. X2.M.Dr.Introduction to Production / Operations Management 11.Z j 100 200 50 X3 10 5 0 0 50 0 S1 1 0 0 0 0 0 S2 0 1 0 0 0 0 S3 bi/aij 0 1000/5=200 0 2000/8=250 1 500/5=100 Min! Leaving 0 0_________ Max! Entering S3 is leaving and X2 is replacing. 0.(New X2 Values) = New S1 Values Old S2 Row – Key No. 0. 5/5=1.Dr.8/5 Prof.6 8 – 8(1) = 0 5 – 8(0) = 5 0 – 8(0) = 0 1 – 8(0) = 1 0 – 8(1/5) = . Objective function: Max! Z = 100X1 + 200X2 + 50X3 + 0S1 + 0S2 + S3 Subject to: 5X1 + 5X2 + 10X3 + S1 = 1000 10X1 + 8X2 + 5X3 +S2 = 2000 10X1 + 5X2 + S3 = 500 All variables ≥ 0 Initial Simplex Tableau: Cj 0 0 0 Product Quantity 100 200 Mix bi X1 X2 S1 1000 5 5 S2 2000 10 8 S3 500 10 5 Zj 0 0 0 Cj . a) Data Summary: Product X1 5 10 10 100 MU Product X2 5 8 5 200 MU Product Capacity X3 (Resource Limits) 10 1000 5 2000 500 50 MU B1 Grade Ore B2 Grade Ore B3 Grade Ore Profit Contribution Formulation of the problem: Objective function: Max! Z = 100X1 + 200X2 + 50X3 Subject to: 5X1 + 5X2 + 10X3 ≤ 1000 10X1 + 8X2 + 5X3 ≤ 2000 10X1 + 5X2 ≤ 500 X1.1 2000 – 8(100) = 1200 10 – 8(2) = .(New X2 Values) = New S2 Values 1000 – 5(100) = 500 5 – 5(2) = .5 5 – 5(1) = 0 10 – 5(0) = 10 1 – 5(0) = 1 0 – 5(0) = 0 0 – 5(1/5) = . X3 ≥ 0 Changing the model into standard form. New values of X2: 500/5=100. 10/5=2.Hulusi DEMIR 135 . 0.

We have 0 and negative values for “Cj – Zj” row. 1.6 – 5(-1/2) = -7/2 0 – 5(0) = 0 5 – 5(1) = 0 0 – 5(1/10) = -1/2 1 – 5(0) = 1 . values of X2 row remain same. The optimum profit for Deep-Hole Mining equals 22500 MU. All other grades. -5/10=-1/2. B1 and B3.8/5 – 5(-1/10) = -11/10 Third Simplex Tableau: Cj 50 0 200 Product Quantity Mix bi X3 50 S2 950 X2 100 Zj 22500 Cj .Introduction to Production / Operations Management Second Simplex Tableau: Cj 0 0 200 Product Quantity 100 200 Mix bi X1 X2 S1 500 -5 0 S2 1200 -6 0 X2 100 2 1 Zj 20000 400 200 Cj . 100 units of X2 and no units of X1. 1/10.(New X3 Values) = New X2 Values 1200 – 5(50) = 950 . 0. New X3 values are: 500/10=50. -1/10 Old S2 Row – Key No. this means that Deep-Hole Mining will consume all but 950 tons of B2 Grade Ore.(New X3 Values) = New S2 Values Old X2 Row – Key No. 50 X3 1 0 0 50 0 0 S1 1/10 -½ 0 5 -5 0 S2 0 1 0 0 0 0 S3 -1/10 -11/10 1/5 35 -35_________ b) The solution set (Quantity) in the 3rd simplex tableau is optimal. The only unused resource is the one associated with the S2 variable. It is unused in the sense that it is not totally consumed. c) d) 136 . Since S2 = 950. will be totally consumed. X3 is replacing. 0. Deep-Hole Mining should produce 50 units of X3.Zj -300 0 50 X3 10 5 0 0 50 0 S1 1 0 0 0 0 0 S2 0 1 0 0 0 0 S3 bi/aij -1 500/10=50 Min! Leaving -8/5 1200/5=240 1/5 100/0= ∞ 40 -40_________ Max! Entering S1 is leaving.Zj 100 200 X1 X2 -½ 0 -7/2 0 2 1 375 200 -275 0 Since key number is zero.

a) Data Summary: Bread Rolls Doughnuts X1 X2 X3 3 4 2 2 1 2 1 3 2 2MU 4MU 3MU Capacity __ 60 40 80___ __ Centre 1 Centre 2 Centre 3 Profit/pan Formulation of the problem: Objective function: Max! Z = 2X1 + 4X2 + 3X3 Subject to: 3X1 + 4X2 + 2X3 ≤ 60 2X1 + X2 + 2X3 ≤ 40 X1 + 3X2 + 2X3 ≤ 80 X1. 0 Old S2 Row – Key No.Hulusi DEMIR . New X2 values are computed as follows: 15. X2.(New X2 Values) = New S3 Values 40 – 1(15) = 25 2 – 1(3/4) = 5/4 1 – 1(1) = 0 2 – 1(1/2) = 3/2 0 – 1(1/4) = -1/4 1 .(New X2 Values) = New S2 Values Old S3 Row – Key No. ½ .M. ¾. ¼.Dr. X2 is entering the solution.Introduction to Production / Operations Management 12.Dr. X3 ≥ 0 b) Initial Simplex Tableau: Cj 0 0 0 Product Quantity Mix bi S1 60 S2 40 S3 80 Zj 0 Cj – Z j 2 X1 3 2 1 0 2 Z = 2X1 + 4X2 + 3X3 + 0S1 + 0S2 + 0S3 3X1 + 4X2 + 2X3 + S1 = 60 2X1 + X2 + 2X3 + S2 = 40 X1 + 3X2 + 2X3 +S3 = 80 all variables ≥ 0 4 X2 4 1 3 0 4 3 X3 2 2 2 0 3 0 S1 1 0 0 0 0 0 S2 0 1 0 0 0 0_ S3 0 0 1 0 0 bi/aij 60/4=15 Min! Leaving 40/1=40 80/3 ____ Max! Entering S1 is leaving. 1.1(0) = 1 0 – 1(0) = 0 Second Simplex Tableau: Cj 4 0 Product Quantity 2 Mix bi X1 X2 15 3/4 S2 25 5/4 4 X2 1 0 3 X3 ½ 3/2 80 – 3(15) = 35 1 – 3(3/4) = -5/4 3 – 3(1) = 0 2 – 3(1/2) = ½ 0 – 3(1/4) =-3/4 0 – (0) = 0 1 – 3(0) = 1 0 S1 ¼ -¼ 0 S2 0 1 0_ S3 bi/aij 0 15/1/2=30 0 25/3/2=50/3 Min! Leaving 137 Prof. 0.

0. c) 14.(New X2 Values) = New S2 Values Old S3 Row – Key No. 0 Old S2 Row – Key No.S2 + A2 = 25 138 .½(5/6) = 1/3 1 – ½(0) = 1 ½ . 2/3. The maximum daily profit for Zingo Bakery is 76. Data Summary: Cigar Boxes Cigarette Boxes X1 X2 Machine Time 30 min.½(1) = 0 -3/4 – ½(-1/6) = -2/3 0 – ½(2/3) = -1/3 1 – ½(0) = 1 0 S1 1/3 -1/6 -2/3 5/6 -5/6 0 S2 -1/3 -2/3 -1/3 2/3 -2/3 0_ Sj 0 0 1 0 0 ____ The solution is optimal. X2 ≥ 0 After augmenting. There will be 26 2/3 man-hours of unused capacity at Centre 3.½(1) = 0 ¼ . X2 = 20/3 units X3 = 50/3 units. we have: Objective function Max! Z = 9X1 + 8X2 + 0S1 + 0S2 – MA2 Subject to 30X1 + 25X2 + S1 = 1200 X1 . 25 min.67MU.(New X2 Values) = New S3 Values 15 – ½ (50/3) = 20/3 ¾ . -1/6. New X3 values are: 50/3.Introduction to Production / Operations Management 0 S3 Zj Cj – Zj 35 60 -5/4 3 -1 0 4 0 ½ 2 1 -¾ 1 -1 0 0 0 1 0 0 35/1/2 =70 ____ Max! Entering S2 is leaving. Order 1 Profit/box 9MU/box 8MU/box Available Capacity ______ 20 hours (=1200 min.½(-1/6) = 1/3 0 – ½(2/3) = -1/3 0 – ½(0) = 0 Third Simplex Tableau: Cj 4 3 0 Product Mix X2 X3 S3 Zj Cj – Zj Quantity 2 bi X1 20/3 1/3 50/3 5/6 80/3 -5/3 230/3 23/6 -11/6 4 X2 1 0 0 4 0 3 X3 0 1 0 3 0 35 – 1/2(50/3) = 80/3 -5/4 – ½(5/6) = -5/3 0 – ½(0) = 0 ½ . X3 is replacing.) 25 boxes minimum___ _ Objective function: Maximize weekend contribution! Z = 9X1 + 8X2 Subject to: Available time 30X1 + 25X2 ≤ 1200 Commitment X1 ≥ 25 Non-negativity X1. 1. 5/4/3/2=5/6.

0. A2 ≥ 0 Initial Simplex Tableau: Product Quantity Cj Mix bi 0 S1 1200 -M A2 25 Zj -25M Cj .(New X1 Values) = New S1 Values 1200 – 30(25) = 450 30 – 30(1) = 0 25 – 30(0) = 25 1 .M. S2. After necessary calculations we obtain: Third Simplex Tableau: Cj 0 9 Product Quantity Mix bi S2 15 X1 40 Zj 225 Cj .Dr.Introduction to Production / Operations Management X1. X2 enters the solution. -1 Old S1 Row – Key No.Z j 9 X1 0 1 9 0 8 X2 25/30 25/30 75/10 ½ 0 S1 1/30 1/30 3/10 -3/10 0_ S2__bi/aij)___ 1 15/25/30 =18 Min! Leaving variable 0 40/25/30=48 0 0 ______ Max! Entering variable S2 leaves.Z j 9 X1 0 1 9 0 8 X2 25 0 0 8 0 S1 1 0 0 0 0_ S2__bi/aij)___ 30 450/15 =15 Min! Leaving variable -1 25/-1= -9 9 ______ Max! Entering variable S2 enters the solution and S1 leaves the solution.30(0) = 1 0 – 30(-1) = 30 Second Simplex Tableau: Cj 0 9 Product Quantity Mix bi S1 450 X1 25 Zj 225 Cj .) New X1 values are as follows: 25. Prof. S1.Hulusi DEMIR 139 . (We eliminate A2 from the 2nd Simplex Tableau. X2. After necessary calculations we obtain the fourth simplex tableau.1.Dr.Z j 9 X1 30 1 -M 9+M 8 X2 25 0 0 8 0 S1 1 0 0 0 0 S2 0 -1 M -M -M A2__bi/aij)___ 0 1200/30 =40 1 25/1=25 Min! Leaving variable -M M__________ Max! Entering variable X1 enters the solution and A2 leaves the solution. 0.

Let Container A = X1 Container B = X2 Container C = X3 Objective Function: Max! Z = 8X1 + 6X2 + 14X3 Subject to : 2X1 + X2 + 3X3 ≤ 120 2X1 + 6X2 + 4X3 ≤ 240 X1.Zj Quantity bi 18 25 369 9 X1 0 1 9 0 8 X2 1 0 8 0 0 S1 1/25 0 8/25 -8/25 0_ S2 6/5 -1 3/5 -3/5 Since all the variables in the “Cj . 1/3. 15. 1. we obtained the optimum solution. while S1 is leaving. we have: Objective Function : Max! Z = 8X1 + 6X2 + 14X3 + 0S1 + 0S2 Subject to : 2X1 + X2 + 3X3 + S1 ≥0 2X1 + 6X2 + 4X3 + S2 ≥ 0 All variables ≥ 0 Initial Simplex Tableau: Product Mix S1 S2 Zj Cj . Cigar Boxes = 25 Boxes Cigarette Boxes = 18 Boxes must be produced. New values of X3 are as follows: 40.Introduction to Production / Operations Management Fourth Simplex Tableau: Cj 8 9 Product Mix X2 X1 Zj Cj .Zj Quantity bi 120 240 0 8 X1 2 2 0 8 6 X2 1 6 0 6 14 X3 3 4 0 14 0 S1 1 0 0 0 0__ S2_ bi/aij 0 120/3=40 Min! Leaving 1 240/4=60 0 0_________ Cj 0 0 Max! Entering X3 is entering the solution. Therefore. 1/3. X2 ≥ 0 After augmenting. 2/3. Total profit will be 369 MU.(New X1 Values) = New S2 Values 240 – 4 (40) = 80 2 – 4 (2/3) = -2/3 6 – 4 (1/3) = 14/3 4 – 4 (1) = 0 0 – 4 (1/3) = -4/3 1 – 4 (0) = 1 140 .Zj” row are either o or negative. 0 Old S2 Row – Key No.

Dr. New values of X2 : 120/7. while S2 is leaving the solution.1 0 0_________ Min! Leaving Max! Entering X2 is entering the solution. -2/7.14 units Container T : 240/7 units = 34.Z j Quantity bi 40 80 560 8 X1 2/3 -2/3 28/3 -4/3 6 X2 1/3 14/3 14/3 4/3 14 X3 1 0 14 0 0 S1 1/3 -4/3 14/3 -14/3 0__ S2_ bi/aij 0 40/1/3=120 1 80/14/3=17.Dr.M. 0.Introduction to Production / Operations Management Second Simplex Tableau: Cj 14 0 Product Mix X3 S2 Zj Cj . 1. 3/14 Old X3 Row – Key No.Z j Quantity bi 240/7 120/7 582. Let X1 : Number of bed mattresses X2 : Number of box springs Objective function: Subject to : Minimize! Cost (Zj) = 20X1 + 24X2 X1 + X2 ≥ 30 X2 + 2X2 ≥ 40 X1. -1/7.29 units Maximum profit : 582/9 MU 16.9 8 6 X1 X2 5/7 0 -1/7 1 64/7 6 -8/7__ _0__ 14 X3 1 0 14 0 0 0__ S1 S2_ 3/7 0 -2/7 3/14 30/7 4/14 -30/7_ -4/14 Since there is no positive value in the row of “Cj –Zj”.(New X2 Values) = New X3 Values 40 – 1/3 (120/7) = 240/7 12/3 – 1/3 (-1/7) = 5/7 1/3 – 1/3 ( 1 ) =0 1 – 1/3 ( 0 ) =1 1/3 – 1/3 (-2/7) = 3/7 0 – 1/3 (3/14) = -1/14 Third Simplex Tableau: Cj 14 6 Product Mix X3 X2 Zj Cj . X2 ≥ 0 141 Prof. Container A : No Container K : 120/7 units = 17.Hulusi DEMIR . we have obtained yhe optimal solution.

Zj 20-2M 24-3M 0 S1 -1 0 -M M M A1 1 0 M 0 0 S2 0 -1 -M M M A2 bi/aij 0 30 1 20 Min! Leaving M 0_________ Min! Zj = 20X1 + 24X2 + 0S1 + MA1 + 0S2 + MA2 X1 + X 2 – S1 + A1 = 30 X1 + 2X2 . A1 must not appear in the next tableau.1. 1.(New X2 Values) = New A1 Values 30 – 1 (20) = 10 1 – 1 (1/2) = ½ 1 – 1 (1) = 0 -1 – 1 (0) = -1 0 – 1 (0) = 0 0 – 1 (-1/2) = 1/2 Second Simplex Tableau: Cj M 24 Product Quantity 20 24 Mix bi X1 X2 A1 10 ½ 0 X2 20 ½ 1 Zj 480+10M 12+M/2 24 Cj . 1 Old X2 Row – Key No.(New X1 Values) = New X2 Values 20 – ½ (20) = 10 ½ . New X2 values are : 20.1 Third Simplex Tableau: Cj 142 Product Quantity Mix bi 20 X1 24 X2 0 S1 0_ S2 . 0.½ (1) = . -1/2 Old A1 Row – Key No.Introduction to Production / Operations Management After augmenting we have: Objective function: Subject to: Initial Simplex Tableau: Cj M M Product Quantity 20 24 Mix bi X1 X2 A1 30 1 1 A2 40 1 2 Zj 70M 2M 3M Cj .Zj 8-M/2 0 0 S1 -1 0 -M M M A1 1 0 M 0 0_ S2 bi/aij ½ 10/1/2 Min! Leaving -½ 20/1/2= 40 M/2-12 12-M/2_____ Max (absolute)! Entering X1 is entering. Since A2 is leaving the solution. it must not appear in the tableau. 0.1/2. 0. while A1 is leaving.S2 + A2 = 40 All variables ≥ 0 Max (absolute)! Entering X2 is entering and A2 is leaving.½ (1) = 0 1 – ½ (0) = 1 0 – ½ (-2) = 1 -½ . -2. New X1 values are: 20.

8+6M 0.2-2M -0.1+7M Prof.Dr.4 Mix bi X1 X2 S1 150 1 2 A2 70 0 1 A3 120 6 7 Zj -190M -6M -8M Cj . Profit will increase by “Cj – Zj” (units of variable entering the solution) = (1500)(800) = 1 200 000 MU Tableau for the problem: Cj 0 0 Product Quantity Mix S1 3 360 S2 9 600 Zj 0 Cj .Z j 900 1500 X1 X2 14 4 10 12 0 0 900 1500 0 S1 1 0 0 0 0_ S2 0 1 0 0 bi/aij 3360/4=840 9600/12=800 Min! Leaving Max! Entering 21. The minimum cost is 640 MU.S3 + A3 = 120 All variables ≥ 0 Product Quantity 0. X2 ≥ 0 Maximisation profit = 900X1 + 1 500X2 Basis is S1 = 3 360 S2 = 9 600 X2 should enter basis next.4X2 +1.2 X3 1 -4 2 2M b) Cj 0 -M -M -0. a) Objective function: Max! Z = 0.Z j 20 10 640 1 0 20 0 0 1 24 0 -2 1 -16 16 1 -1 -4 4 Since there is no negative value in the row of “Cj – Zj”. a) b) c) d) e) f) g) h) See the table below.1 X4 5 8 -1 -7M 0 S1 1 0 0 0 0 -M A2 0 1 0 -M 0 0 S3 0 0 -1 M -M -M A3 0 0 1 -M 0_ 1. 14X1 + 4X2 ≤ 3 360 10X1 + 12X2 ≤ 9 600 X1. 20.2X3 – 0.M.Introduction to Production / Operations Management 20 24 X1 X2 Zj Cj .8 0. S2 will leave next.4+8M 1.1X4 + 0S1 – MA2 + 0S3 – MA3 Subject to: X1 + 2X2 + X3 + 5X4 + S1 = 150 X2 – 4X3 + 8X4 + A2 = 70 6X1 + 7X2 + 2X3 – X4 .Hulusi DEMIR 143 . 800 units of X2 will be in the solution at the second tableau.Z j 0.8X1 + 0.Dr. 10 units of box springs. We should produce 20 units of bed mattresses. we have obtained the optimal solution.

5 0 X1 X2 S1 1 2 1 3 10 0 1 0 0 0 0 0 2. Second Simplex Tableau: Cj 0 0 20 Product Quantity Mix bi S1 100 S2 600 X1 300 Zj 600 C j . while S1 leaves the solution. X2 ≥ 0 Initial Simplex Tableau: Cj 0 0 0 Product Quantity Mix bi S1 400 S2 1500 S3 300 Zj 0 C j . 144 .Introduction to Production / Operations Management c) S1 = 150 A2 = 70 A3 = 120 All other variables = 0 22.Zj 2 X1 0 0 1 2 0 1.5X2 Subject to: X1 + 2X2 ≤ 400 3X1 + 10X2 ≤ 1500 X1 ≤ 300 X1.______ __ Max! Z = 2X1 + 1. 1500 max. 300 max.5 0 Max! Entering 0 S2 0 1 0 0 0 0 S3 bi/aij 0 400 0 500 1 300 Min! Leaving 0 0_________ B (X2) 2 10 1.5 1. Data Summary: A (X1) Man-hours 1 Eating Area 3 Availability for Group A 1 Profit/visitor 2 MU Formulation of the problem: Objective function: Max! Z = 2X1 + 1.5 MU Resource Limits 400 max.Zj 2 1.5 0 0 X2 S1 S2 2 1 0 10 0 1 0 0 0 0 0 0 1.5X2 +0S1 + 0S2 + 0S3 X1 + 2X2 + S1 =0 3X1 + 10X2 + S2 =0 X1 + S3 = 0 All variables ≥ 0 X1 enters the solution. while S3 leaves the solution.5 0 0 Max! Entering 0 S3 bi/aij -1 50 Min! Leaving -3 60 1 ∞ 2 -2_________ X2 enters the solution.

5 X2 ≤ 1600 X1.Zj Quantity bi 1600 1200 1600 0 150 X1 4.5(800) = 400 4.5(1) = 0 145 . 1.5 – 1.0 – 1 (1) = 0 Prof.5 – 1 (2) = ½ 1.5 4.Introduction to Production / Operations Management Third Simplex Tableau: Cj 1. X2 = 50 visitors X1 = 300 visitors S2 = 100 spaces in the eating area.5X2 + S3 = 1600 All variables ≥ 0 23. X2 ≥ 0 b) The basic initial simplex tableau is as follows: 200 0 0 0_ Cj X2 S1 S2 S3 bi/aij 0 2.Dr.5 0 20 Product Quantity Mix bi X2 50 S2 100 X1 300 Zj 675 Cj .5 0.5(2) = 3/2 1.25 0 -1.5X1 + 1.75 0 -0. 0 Product Mix S1 S2 S3 Zj Cj .25_ From the third simplex tableau.Zj 2 X1 0 0 1 2 0 1. Maximum weekly profit = 675 MU Profit for X1 = 400 MU – 250 MU = 150 MU Profit for X2 = 575 MU – 375 MU = 200 MU Max! 150X1 + 200X2 + 0S1 + 0S2 + 0S3 4X1 + 2X2 + S1 = 1600 2.5X1 + X2 + S2 = 1200 4. a) ABC Model = X1 XYZ Model = X2 Objective function: Max! Z = 150X1 + 200X2 Subject to: 4X1 + 2X2 ≤ 1600 2.5X1 + 1.M.1/2.5 0 150 Old S2 Row – Key No. 2.5 0 X2 S1 1 ½ 0 -5 0 0 1.(New X2 Values) = New S2 Values Old S3 Row – Key No. New X2 values are: 800.0 1 0 0 800 Min! Leaving variable 0 1.5 0 0 1 3200/3 0 0 0 0 200 0 0 0__ Max! Entering variable X2 will enter and S1 will leave the solution.Hulusi DEMIR 1600 – 1.5X1 + X2 ≤ 1200 4.5 – 1.0 0 1 1 1200 0 1.Dr. 0.75 0 0 S2 S3 0 -½ 1 -2 0 1 0 1.0 2.(New X2 Values) = New S3 Values 1200 – 1 (800) = 400 2.

We know that X1 equals zero.(New X2 Values) = New A1 Values 2000 – 1(300) = 1700 1 – 1(0) = 1 1 – 1(1) = 0 146 S2 remains same. since pivot (key) number is 0. This will result in an optimal profit of 160 000 MU and the following surplus resources: S2 = 400. X2 ≥ 0 Initial Simplex Tableau: Cj M 0 M Product Quantity 10 Mix bi X1 A1 2000 1 S2 600 1 A3 300 0 Zj 2300M M Cj .S3 + A3 = 300 All variables ≥ 0 M A1 1 0 0 M 0 0 S2 0 1 0 0 0 0 S3 0 0 -1 -M M M A3 bi/aij 0 2000 0 1 300 Min! Leaving M 0 The MOST negative value. while A3 is leaving. .Introduction to Production / Operations Management 0 – 1 (1/2) = -1/2 1 – 1 (0) = 1 0 – 1 (0) = 0 0 – 1. should market only 800 units of ABC Models. Entering value.5(0) = 0 1 – 1. 0.5(1/2) = -3/4 0 – 1. because it is not present in the optimal solution set.5(0) = 1 Second Simplex Tableau: Cj 200 0 0 Product Quantity Mix bi X2 800 S2 400 S3 400 Zj 160000 Cj . 1 Old A1 Row – Key No. 0. 24. New X2 values are: 300. which means that fitting and assembly will have 400 unused hours. X2 is entering. the solution set is optimal. 0. -1. Objective Function: Min! Z = 10X1 + 12X2 Subject to: X1 + X2 = 2000 X1 ≤ 600 X2 ≥ 300 X1.Zj 10-M 12 X2 1 0 1 2M 12-2M Min! Z = 10X1 + 12X2 + A1 + S2 – S3 + A3 X1 + X2 + A1 = 2000 X1 + S2 = 600 X2 . A3 will not appear in the 2nd simplex tableau. 1. which means that there will be 400 unused hours in testing. and none of the XYZ Models. S3 = 400.Zj 150 X1 2 ½ 3/2 400 -250 200 0 X2 S1 1 ½ 0 -½ 0 -3/4 200 100 0 -100 0 S2 0 1 0 0 0 0_ S3 0 0 1 0 0__ Since every entry in the “Cj – Zj” row is less than or equal to zero. Azim Co.

Z j 10 X1 0 1 0 10 0 12 X2 0 0 1 12 0 X2 remains same. -1.Hulusi DEMIR Old X1 row will remain same. 0. 0. 0. 0.M. Entering value. A1 will not appear in the 4th simplex tableau. 1. 0 Old A1 Row – Key No.Dr.(New X1 Values) = New A1 Values 1700 – 1(600) = 1100 1 – 1(1) = 0 0 – 1(0) = 0 1 – 1(0) = 1 0 – 1(1) = -1 1 – 1(0) = 1 Third Simplex Tableau: Cj M 10 12 Product Quantity Mix bi A1 1100 X1 600 X2 300 Zj 1100M+9600 Cj . since pivot (key) number is 0. 1. New S3 values are: 1100.Introduction to Production / Operations Management 1 – 1(0) = 1 0 – 1(0) = 0 0 – 1(-1) = 1 Second Simplex Tableau: Cj M 0 12 Product Quantity 10 Mix bi X1 A1 1700 1 S2 600 1 X2 300 0 Zj 1700M+3600 M Cj . while S1 is leaving. 10 12 0 0 147 . 1 Old X2 Row – Key No. Entering variable S3 is entering and A1 is leaving. New X1 values are: 600. M 0 0 A1 S2 S3 bi/aij 1 -1 1 1100 0 1 0 0 0 -1 M -M+10 M-12 0 M-10 12-M Min! Leaving The MOST negative value. since 0 is the corresponding key number.Dr.Z j 10-M 12 X2 0 0 1 12 0 M A1 1 0 0 M 0 0 S2 0 1 0 0 0 0 S3 bi/aij 1 1700 0 600 Min! Leaving -1 M-12 12-M The MOST negative value. X1 is entering.(New S3 Values) = New X2 Values 300 – (-1)(1100) = 1400 0 – (-1)(0) = 0 1 – (-1)(0) = 1 0 – (-1)(-1) = -1 -1 – (-1)(1) = 0 Fourth Simplex Tableau: Product Quantity Prof.

Data Summary: Cutting Finishing Profit Bookcases X1 4 hrs 4 hrs 6 MU Tables X2 3 hrs 5 hrs 5 MU Available ___ 40 hours 30 hours__ ___ Formulation of the problem: Objective function: Max! Z = 6X1 + 5X2 Subject to: 4X1 + 3X2 ≤ 40 4X1 + 5X2 ≤ 30 X1 . The cost of this solution is 22800MU. 25. No positive values in the “Cj . 148 . The Chemical Company’s decision should be to blend 600 kgs.Zj! row. of phosphate (X 1) with 1400 kgs. X2 ≥ 0 Initial Simplex Tableau: Product Quantity Mix bi S1 40 S2 30 Zj 0 _____Cj-Zj Cj 0 0 Second Simplex Tableau: Product Quantity Cj Mix bi 0 S1 10 6 X1 15/2 Zj 4/5 _____Cj-Zj 6 X1 0 1 6 0 5 X2 -2 5/4 15/2 -5/2 Z = 6X1 + 5X2 + 0S1 + 0S2 4X1 + 3X2 + S1 = 40 4X1 + 5X2 + S2 = 30 All variables ≥ 0 6 5 0 X1 X2 S1 4 3 1 4 5 0 0 0 0 0 0 0 Max! Entering 0 S2 bi/aij 0 10 1 15/2 Min! Leaving 0 0__________ 0 S1 1 0 0 0 0 S2 -1 ¼ 3/2 -3/2 The solution is optimal.Zj bi 1100 600 1400 22800 X1 0 1 0 10 0 X2 0 0 1 12 0 S2 -1 0 -1 -2 2 S3 1 1 0 0 0 The optimal solution has been reached. This provides a surplus of (S3) of 1100 kgs. because only positive and zero values appear in the “Cj-Zj” row. of potassium more than required by the constraint X2 ≥ 300 kgs. of potassium (X2).Introduction to Production / Operations Management Cj 0 10 12 Mix S3 X1 X2 Zj Cj .

hence they must have a negative sign. a) Ingredient Vitamin A Vitamin B Vitamin C Cost/kg. 0 Notes for the student: • Note that the “ =” constraint (Vitamin A requirements) requires one artificial variable (A1) to ensure its equality. • All artificial variables are assigned an extremely large cost “M” to ensure that they are driven out of solution by the simplex iterative procedure.Dr. Data Summary: WS X1 Prof. or others that involve more than two or three variables or constraints. 4 kgs.Dr.S3 + A3 = 640 All variables ≥ 0 Initial simplex tableau would be as shown below: Variables in Quantity 5 3 Cj Solution bi X1 X2 M A1 400 2 4 M A2 240 6 1 M A3 640 4 3 Zj 1280M 12M 8M Cj . _ Min! Z = 5X1 + 3X2 + MA1 + 0S2 + MA2 + 0S3 + MA3 2X1 + 4X2 + A1 = 400 6X1 + X2 . Objective function: Min! Z = 5X1 + 3X2 Subject to: 2X1 + 4X2 = 400 6X1 + X2 ≥ 240 4X1 + 3X2 ≥ 640 X1.S2 + A2 = 240 4X1 + 3X2 . 3 kgs. 5 MU Bag No. at least 640 kgs. are most easily solved on a computer.Hulusi DEMIR BE X2 SB X3 Available Capacity_ 149 . 3 MU Available exactly 400 kgs. while A2 leaves the solution. 0. 2 X2 4 kgs. • The slack variables in “ ≥” constraints represent amounts that must be subtracted from the constraint values. • The two “ ≥” constraints each require a slack variable and an artificial variable. -1/6. 1 kg. • The solution procedure is the same as in maximisation problems except that the variable with the most negative value in the bottom “Cj-Zj” row is always the one introduced. 1 X1 2 kgs.M. X2 ≥ 0 b) Bag No.Z j 5-12M 3-8M M A1 1 0 0 M 0 0 S2 0 -1 0 -M M M A2 0 1 0 M 0 0 S3 0 0 -1 -M M M A3 bi/aij 0 400/2=200 0 240/6=40 Min! 1 640/4+160 M 0 Max! Entering (The most negative value) X1 enters the solution.Introduction to Production / Operations Management Thus Bookcases (X1) = 15/2 units Available hours in cutting = 10 hours Total profit = 45 MU 28. 6 kgs. at least 240 kgs. 1/6. 0. New X1 values are: 40. 31. • Problems such as this.1.

Objective function: Max! Z = 12X1 + 7X2 +8X3 + 0S1 + 0S2 + 0S3 + 0S4 – MA4 Subject to: 4X1 + 2X2 + 3X3 + S1 = 600 30X1 + 15X2 + 15X3 + S2 = 1920 30X2 + 60X2 + 90X3 + S3 = 19200 X1 . A4 will not appear in the following tableau.(New X1 Values) = New S1 Values Old S2 Row – Key No. 0. 0. 1.S4 + A4 = 10 All variables ≥ 0 Initial Simplex Tableau: Cj 0 0 0 -M Product Quantity 12 Mix bi X1 S1 600 4 S2 1920 30 S3 19200 30 A4 10 1 Zj -10M -M Cj .4(1) = 0 2 – 4(0) = 2 3 – 4(0) = 3 1 – 4(0) = 1 0 – 4(0) = 0 0 – 4(0) = 0 0 – 4(-1) = 4 150 1920 – 30(10) = 1620 30 – 30(1) = 0 15 – 30(0) = 15 15 – 30(0) = 15 0 – 30(0) = 0 1 – 30(0) = 1 0 – 30(0) = 0 0 – 30(-1) = 30 . 0.C j 12+M 7 X2 2 15 60 0 0 7 Max! Entering 8 X3 3 15 90 0 0 8 0 S1 1 0 0 0 0 0 0 S2 0 1 0 0 0 0 0 S3 0 0 1 0 0 0 0 S4 0 0 0 -1 M -M -M A4 bi/aij 0 150 0 64 0 640 1 10 Min! Leaving -M 0 __ X1 enters in the place of A4.(New X1 Values) = New S2 Values 600 – 4(10) = 560 4 .Introduction to Production / Operations Management Lumber Saw Finishing Commitment Contribution 4 2 30 15 30 60 1 12MU 7MU 3 15 90 8MU 600 1920 (=32x60) 19200 (=80x60x4) 10 ≥ ___ Formulation of the given problem as a mathematical model is as follows: Objective function: Max! z = 12X1 + 7X2 + 8X3 Subject to: 4X1 + 2X2 + 3X3 ≤ 600 30X1 + 15X2 + 15X3 ≤ 1920 30X1 + 60X2 + 90X3 ≤ 19200 X1 ≥ 10 X1. New X1 values are: 10. 0. -1 Old S1 Row – Key No. 0. X2 ≥ 0 After augmenting we have.

Fourth Simplex Tableau: Cj 0 8 0 12 Product Quantity Mix bi S1 236 X3 108 S3 9180 X1 10 Prof.30(0) = 1 0 . ½. 1 Third Simplex Tableau: Cj 0 0 0 12 Product Quantity Mix bi S1 344 S4 54 S3 17280 X1 64 Zj 768 Cj .(New X1 Values) = New S3 Values 19200 . 0.30(0) = 0 1 . 1/3.30(10) = 1620 30 – 30(1) = 0 60 – 30(0) = 60 90 – 30(0) = 90 0 .Hulusi DEMIR 12 X1 0 0 0 1 7 X2 -1 1 -30 0 8 X3 0 1 0 0 0 S1 1 0 0 0 0 S2 1/15 1/15 5 0 0 S3 0 0 0 0 0 S4 -2 2 150 -1 151 . 0. 0. New S4 values are: 54.Dr.Dr.C j 12 X1 0 0 0 1 12 0 7 X2 2 15 60 0 0 7 8 X3 3 15 90 0 0 8 0 S1 1 0 0 0 0 0 0 S2 0 1 0 0 0 0 0 S3 0 0 1 0 0 0 0 S4 4 30 30 -1 -12 12 bi/aij 140 54 Min! Leaving 630 - __ Max! Entering S4 enters in the place of S2. ½.C j 12 X1 0 0 0 1 12 0 7 X2 0 ½ 4/5 ½ 6 1 8 X3 1 ½ 75 ½ 6 2 0 S1 1 0 0 0 0 0 0 S2 -2/15 1/30 0 1/30 2/15 -2/15 0 S3 0 0 1 0 0 0 0 S4 0 1 0 0 0 0 bi/aij 344 108 Min! Leaving 2304 128 __ Max! Entering X3 enters in the place of S4.30(-1) = 30 Second Simplex Tableau: Cj 0 0 0 12 Product Quantity Mix bi S1 560 S2 1620 S3 18900 X1 10 Zj 120 Cj .M.30(0) = 0 0 .Introduction to Production / Operations Management Old S3 Row – Key No.

X2 Available (tons) 1 1 2½ ≥ 1 2 4 ≥ _ 10 000 MU 15 000 MU __ Copper Lead Cost/ton Objective function: Min! Z = 10 000X1 + 15 000X2 Subject to: X1 + X2 ≥ 2 ½ X1 + 2X2 ≥ 4 X1. 0.Zj 10 000-2M 15000-3M M M A1 1 0 M 0 0 S2 0 -1 -M M M A2 bi/aij 0 2½ 1 2 --> Min! Leaving M (smallest + ve number) 0_________ Max! Entering ( largest number among – ve signed figures) X2 enters the solution. 32. while A2 leaves the solution.Zj” row.S2 + A2 = 4 All variables ≥ 0 where X1 = carloads of scrap purchased from Izmir/day X2 = carloads of scrap purchased from Istanbul/day Initial Simplex Tableau: Cj M M Product Quantity 10000 15000 0 Mix bi X1 X2 S1 A1 2½ 1 1 -1 A2 4 1 2 0 Zj 6½M 2M 3M -M Cj . Azim should produce WS (X1) = 10 units SB (X3) = 108 units Maximum Profit = 984 MU There will be 236 m2 of oak boards (S1) and 9180 minutes free in the finishing department. New X2 values are: 2. 1. A2 will not appear in the next tableau. ½. thus optimal solution is obtained. 0.Introduction to Production / Operations Management Zj Cj .S1 + A1 =2½ X1 + 2X2 .C j 984 12 0 8 -1 8 0 0 0 8/15 -8/15 0 0 4 -4_ There is no positive value in the “Cj . Data summary: Car Loads Scrap Purchased from Izmir. -1/2 Old A1 Row – Key No. X2 ≥ 0 After augmenting the model becomes. X1 Istanbul. Objective function: Min! Z = 10 000X1 + 15 000X2 + 0S1 + MA1 + 0S2 + MA2 Subject to: X1 + X2 .(New X2 Values) = New A1 Values 152 .

1 (2) = ½ 1 – 1 (½) = ½ 1 – 1 (0) = 0 -1 – 1 (0) = -1 1 – 1(0) = 1 0 – 1(-1/2) = ½ Second Simplex Tableau: Product Quantity 10000 15000 Cj Mix bi X1 X2 M A1 ½ ½ 0 15000 X2 2 ½ 1 Zj 30000+M/2 7500+M/2 15000 Cj . New X1 values are : 1.M. X2 ≥ 0 Prof. 1. Objective function: Min! Z = 3X1 + 4X2 Subject to: 6X1 – 4X2 ≤ 60 -2X1 + 4X2 ≤ 80 12X1 + 16X2 ≥ 480 X1 .½ .Introduction to Production / Operations Management 2 ½ .Hulusi DEMIR Min! Z = 3X1 + 4X2 + 0S1 + 0S2 +0S3 + MA3 6X1 – 4X2 + S1 = 60 -2X1 + 4X2 + S2 = 80 12X1 + 16X2 -S3 + A3 = 480 all variables ≥ 0 153 .Dr. 0. -2. Carloads of scrap from Izmir (X1) = 1 ton Carloads of scrap from Istanbul (X2) = 1 ½ tons Total Minimum cost = 32 500 MU 33.Z j 0 0 5000 0__ S2__ 1 -1 -5000 5000 There is no “.½ (1) = -1 Third Simplex Tableau: Product Quantity 10000 15000 0 Cj Mix bi X1 X2 S1 10000 X1 1 1 0 -2 15000 X2 1½ 0 1 1 Zj 32500 10000 15000 -5000 Cj .(New X1 Values) = New X2 Values 2 – ½ (1) = 1 ½ ½ . Thus optimum solution is attained in the minimisation problem. 1 Old X2 Row – Key No.Dr.Z j 2500-M/2 0 0 S1 -1 0 -M M A1 1 0 M 0 S2 ½ -½ M/2-7500 bi/aij 1 Min! Leaving (smallest + ve number) 4 M 0 7500-M/2 _____ Max! Entering ( largest number among – ve signed figures) A1 leaves the solution and X1 enters the solution.ve” value in the “Cj – Zj” row.½ (1) = 0 1 – ½ (0) = 1 0 – ½ (-2) = 1 .

. -1. 1.½.Zj Quantity bi 60 80 480 480 M 3 4 0 0 X1 X2 S1 S2 6 -4 1 0 -2 4 0 1 12 16 0 0 12M 16M 0 0 3-12M 4-16M 0 0 Max! Entering 0 S3 0 0 -1 -M M M A3 bi/aij 0 0 80/4 = 20 Min! Leaving 1 480/16=30 M 0_________ X2 enters in the place of S2.0. New X2 values are = 20. X2 ≥ 0 Zj = 25X1 + 15X2 + 0S1 + 0S2 + 0S3 + MA3 + 0S4 3X1 + 2X2 + S1 = 240 2X1 + X2 + S2 = 140 X1 . 0. ¼.20M -M 25+M 15 X2 2 1 0 1 0 15 0 S1 1 0 0 0 0 0 0 S2 0 1 0 0 0 0 0 S3 0 0 -1 0 M -M -M A3 0 0 1 0 -M 0 0 S4 bi/aij 0 240/3=80 0 140/2=70 0 20/1=20 Min! Leaving 1 0 0________ Max! Entering X1 enters the solution. 0. 1. 0 Second Simplex Tableau: Cj 0 0 25 154 Product Mix S1 S2 X1 Quantity bi 180 100 20 25 X1 0 0 1 15 X2 2 1 0 0 S1 1 0 0 0 S2 0 1 0 0 S3 3 2 -1 0 S4 0 0 0 bi/aij 60 50 Min! Leaving - . A3 leaves the solution. 0. 0 35. 0. New X1 values: 20.S3 + A3 = 20 X2 + S4 = 80 All variables ≥ 0 Initial Simplex Tableau: Cj 0 0 -M 0 Product Mix S1 S2 A3 S4 Zj Cj .Zj Quantity 25 bi X1 240 3 140 2 20 1 80 0 . Objective function: Max! Zj = 25X1 + 15X2 Subject to: 3X1 + 2X2 ≤ 240 2X1 + X2 ≤ 140 X1 ≥ 20 X2 ≤ 80 X1.Introduction to Production / Operations Management Initial Simplex Tableau: Cj 0 0 M Product Mix S1 S2 A3 Zj Cj .

Introduction to Production / Operations Management 0 S4 Zj Cj . Therefore Air conditioners (X1) = 40 units Air fans (X2) = 60 units Total Profit = 1900 MU Over the minimum air conditioner production (S3) = 20 units Unused air fan capacity = 20 units 36.5 0 S2 -3 2 2 3 5 -5 0 S3 0 1 0 0 0 0 0 S4 0 0 0 1 0 0_ There is no positive value in the “Cj – Zj” row.Z j 0 15 X2 1 0 0 0 15 0 0 S1 2 -1 -1 -2 5 .20M 0 25 0 1 0 15 0 0 15 0 0 0 0 -25 25 1 0 0 ________ Max! Entering S3 enters the solution. Thus optimum solution is attained. X3 ≥ 0 After augmenting the model becomes: Objective function: Prof.Dr. Fourth Simplex Tableau: Cj 15 0 25 0 Product Quantity 25 Mix bi X1 X2 60 0 S3 20 0 X1 40 1 S4 20 0 Zj 1900 25 Cj . a) Objective function: Max! Zj = 40X1 + 50X2 + 60X3 Subject to: Labour 4X1 + 4X2 + 5X3 ≤ 80 Material A 200X1 + 300X2 + 300X3 ≤ 6000 Material B 600X1 + 400X2 + 500X3 ≤ 5000 Non-negativity X1. X2. Third Simplex Tableau: Cj 0 0 25 0 Product Quantity 25 Mix bi X1 S1 30 0 S3 50 0 X1 70 1 S4 80 0 Zj 1750 25 Cj . while S2 leaves the solution.Z j 0 15 X2 ½ ½ ½ 1 25/2 5/2 0 S1 1 0 0 0 0 15 0 S2 -3/2 ½ ½ 0 50 -50 0 S3 0 1 0 0 0 0 0 S4 0 0 0 1 0 0 bi/aij 60 Min! Leaving 100 140 80 ________ Max! Entering X2 enters the solution.Hulusi DEMIR 155 .Dr.Z j 80 . while S1 leaves the solution.M.

6/5. 0. 1.X2 = new S2 row Product Quantity Mix bi S1 30 S2 3000 X3 10 Zj 600 Cj .Zj 40 X1 -2 -160 6/5 72 -32 50 X2 60 X3 0 S1 1 0 0 0 0 0 0 S2 S3 0 -1/100 1 . 4/5. 0. – 160 – 60(3/2) = -250 60 – 60(1) = 0 0 – 60(5/4) = -75 0 – 60(0) = 0 1 – 60(0) = 1 -3/5 – 60(1/400) = .Introduction to Production / Operations Management Max! Zj = 40X1 + 50X2 + 60X3 + 0S1 + 0S2 + 0S3 Subject to: 4X1 + 4X2 + 5X3 + OS1 = 80 200X1 + 300X2 + 300X3 + 0S2 = 6000 600X1 + 400X2 + 500X3 + 0S3 = 5000 All variables ≥ 0 Initial Simplex Tableau: Cj 0 0 0 Product Quantity Mix bi S1 80 S2 6000 S3 5000 Zj 0 Cj .9/20 Third Simplex Tableau: 156 . because the 3000 -60(25/2) = 2250 Key number is zero.5(10) = 30 4 – 5(6/5) = -2 4 – 5(4/5) = 0 5 – 5(1) = 0 1 – 5(0) = 1 0 – 5(0) = 0 0 – 5(1/5) = -1/100 Second Simplex Tableau: Cj 0 0 60 6000 – 300(10) = 3000 200 – 300(6/5) = -160 300 – 300(4/5) = 60 300 – 300(1) = 0 0 – 300(0) = 0 1 – 300(0) = 1 0 – 300(1/500) = -3/5 0 0 60 0 4/5 1 48 60 2 0 Max! Entering Values for entering variable.0.#. 3/2. X2: 25/2. 1/500 Old S2 row .Zj 40 X1 4 200 600 0 40 50 X2 4 300 400 0 50 60 X3 0 S1 1 0 0 0 0 0 S2 0 1 0 0 0 0 S3 0 0 1 0 0 bi/aij 80/5=16 6000/300 =20 5000/500=10 Min! Leaving 5 300 500 0 60 Max! Entering b) Values for entering variable. 0.#. 1/400 Old S1 row – #.3/5 0 1/500 0 6/50 0 -6/50 bi/aij ∞ 3000/60 =50 10/4/5=25/2 Min! Leaving Remains same. 5/4.X3 = new S2 row Old S1 row – #. X3 = new S1 row 80 . 1. X2 = new S1 row Old S2 row . X3 : 10.

a) Objective function: Max! Z = 40X1 + 50X2 Subject to: Programming constraint: Total time constraint: X1 ≤ 50 X1 + 2X2 ≤ 80 X1.5 units S1 = 30 hours S2 = 2250 units 37. X2 = new S1 row 40 X1 1 1 0 40 c) Since the key number is zero.Introduction to Production / Operations Management Cj 0 0 50 Product Quantity Mix bi S1 30 S2 2250 X2 25/2 Zj 625 Cj .Z j 50 0 0 Decision Variables X2 S1 S2 bi/aij 0 1 0 ∞ 2 0 1 80/2=40 Min! Leaving 0 0 0 50 0 0__ Max! Entering X2 enters the solution. X2 ≥ 0 b) Objective function: Max! Z = 40X1 + 50X2 + 0S1 + 0S2 Subject to: X1 + S1 = 50 X1 + 2X2 + S2 = 80 All variables ≥ 0 Initial Simplex Tableau: Cj 0 0 (Variables in solution) Quantity Product Mix bi S1 50 S2 80 Zj 0 Cj .Dr. X2 = 12. because all values of “Cj – Zj” are either negative or zero.9/20 1/400 1/8 -1/8__ Optimal solution is reached. 0. while S2 leaves the solution. Values of entering variable X2 are: 40.Dr.M. ½ Old S1 row – #. The variables in the second tableau will be S1 and X2.Hulusi DEMIR 40 X1 50 X2 0 S1 0 S2 Decision Variables bi/aij 157 .Z j 40 X1 -2 -250 3/2 75 -35 50 X2 0 0 1 50 0 60 X3 0 S1 0 1 -75 0 5/4 0 125/2 0 -5/2 0 0 S2 0 1 0 0 0 0 S3__ -1/100 . Only X2 is produced. Second Simplex Tableau: Cj (Variables in solution) Quantity Product Mix bi Prof. ½. there will be no change in the values of S1 row. 1.

X2 = 15 hrs Total = 65 hrs. X1 = 50 hrs.½ (1) = 1 1 – ½ (0) = 1 0 – ½ (1) = . X1 are: 50. Values of entering variable.Zj 50 40 2000 1 0 ½ 1 50/2 50 15 0 Max! Entering 1 0 0 0 0 50/1=50 Min! Leaving ½ 40/1/2=80 50/2 -50/2__ X1 enters in the place of S1.½ (0) = ½ Third Simplex Tableau: Cj 40 50 (Variables in solution) Quantity Product Mix bi X1 50 X2 15 Zj 2750 Cj . a) Objective function: Max! Z = 30X1 + 50X2 Subject to: 3X1 + 6X2 ≤ 30 10X1 + 10X2 ≤ 60 10X1 + 15X2 ≤ 120 X1. X1 = 50 hrs.½ ½ . X2 = new S1 row 40 – ½ (50) = 15 ½ . (the -1/2 in the S1 column indicates that the variable in solution X2 could be increased by ½ hr@50MU = 25MU increase) -15 (results from the 40 MU loss of 1 hour of programming time + 25 MU gain from ½ hour of system analysis time) Max! Z = 30X1 + 50X2 + 0S1 +0S2 + 0S3 3X1 + 6X2 + S1 = 30 10X1 + 10X2 + S2 = 60 10X1 + 15X2 + S3 = 120 All variables ≥ 0 38.Zj 40 X1 1 0 40 0 50 X2 0 1 50 0 0 S1 1 -½ 15 -15 0 Decision Variables S2 0 ½ 25 -25__ ca) cb) cc) cd) ce) cf) cg) Optimal solution is attained.Introduction to Production / Operations Management 0 50 S1 X2 Zj Cj .0. The system analysts have to work 15 hours as shown for X2 under “Quantity”. X2 = 15 hrs. X2 ≥ 0 b) Initial Simplex Tableau: 158 . 1.0 Old S1 row – #.1. The total revenue to be expected = 2750 MU 15 MU (The shadow price under S1) 25 MU (The shadow price under S2) ½ hr.

½ (1) = 0 1 – ½ (0) = 1 1/6 – ½ (-1/3) = 1/3 0 – ½ (1/5) = -1/10 0 – ½ (0) = 0 Third Simplex Tableau: Cj 50 30 0 Product Quantity Mix bi X2 4 X1 2 S3 40 Zj 260 30 X1 0 1 0 30 50 X2 1 0 0 50 45 – 5/2(2) = 40 5/2 – 5/2(1) = 0 0 – 5/2(0) = 0 -5/2 – 5/2(-1/3) = -5/3 0 – 5/2(1/5) = -1/2 0 – 5/2(0) = 1 0 0 S1 S2 1/3 -1/10 -1/3 1/5 -5/3 -1/2 20/3 1 0 S3 0 0 1 0 159 Prof. 1/5.#.Z j 30 X1 3 10 10 0 30 50 0 0 X2 S1 S2 6 1 0 10 0 1 15 0 0 0 0 0 50 0 0 Max! Entering 0 S3 0 0 1 0 0 Cj 0 0 0 bi/aij 30/6=5 Min! Leaving 60/10=6 120/15=8 X2 enters in the solution in the place of leaving variable S1.X2 = new S3 row 60 – 10(5) = 10 10 – 10(1/2) = 5 10 – 10(1) = 0 0 – 10(1/6) = -5/3 1 – 10(0) = 1 0 – 10(0) = 0 Second Simplex Tableau: Cj 50 0 0 Product Quantity Mix bi X2 5 S2 10 S3 45 Zj 250 Cj . 0 Old S2 row – #.Hulusi DEMIR . New X2 values are: 5.#.-1/3.Dr. X2 = new S2 row Old S3 row . New X1 values are: 2. 1/2. 1. 0. 0. 0 Old X2 row – #.M.Z j 120 – 15(5) = 45 10 – 15(1/2) = 5/2 15 – 15(1) = 0 0 – 15(1/6) = -5/2 0 – 15(0) = 0 1 – 15(0) = 0 30 50 0 X1 X2 S1 ½ 1 1/6 5 0 -5/3 5/2 0 -5/2 25 50 25/3 5 0 -25/3 Max! Entering 0 S2 0 1 0 0 0 0 S3 0 0 0 0 0 bi/aij 5/1/2=10 10/5=2 Min! Leaving 45/5/2=18 X1 enters in the place of S2. 1.X1 = new S3 row 5 – ½ (2) = 4 ½ .Dr. 1/6. X1 = new X2 row Old S3 row .Introduction to Production / Operations Management Product Quantity Mix bi S1 30 S2 60 S3 120 Zj 0 Cj .

X2. X3 ≥ 0 160 . Solution: X1 = 2 units/hr X2 = 4 units/hr S3 = 40 units/hr Z = 260 MU 39.Zj 0 0 -20/3 -1 0 Optimal is arrived.Introduction to Production / Operations Management Cj . a) Objective function: b) Constraints are: Max! Z = 187X1 + 45X2 + 95X3 200X1 + 180X2 + 80X3≤ 600 500X1 + 90X3≤ 500 40X1 + 40X2 ≤ 120 X1 .

Dr.Dr.Introduction to Production / Operations Management Prof.Hulusi DEMIR 127 .M.

TABLES AND FORMULAS 161 .

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