E0015

MIDTERM EXAMINATIONS

General Directions:

1. Read and understand each statement carefully.

2. Avoid unnecessary erasures.
3. Use black or blue pen only.

I. STEM-OPTION. Mark only one answer for each item by encircling the letter of your choice. (10 pts.)

1. It refers to the use of computers in process control such as robots and numerically controlled
machines.

a. Automated Guided Vehicles

b. Computer Aided Manufacturing
c. Computer Integrated Manufacturing
d. Flexible Manufacturing Systems

2. An advocate of quality who popularized the phrase, “do it right the first time.”

a. Armand Feigenbaum
b. Genichi Taguchi
c. Philip Crosby
d. William Edwards Deming

3. An element of TQM where the Japanese used the term kaizen in reference to this.

a. Competitive benchmarking
b. Continuous improvement
c. Employee empowerment
d. Team approach

4. The control chart that measure the proportion of number of defectives in a sample.

a. c-charts
b. p-chart
c. r-chart
d. x-chart

5. A technique for evaluating process and equipment alternatives.

a. Break-even Analysis
b. Cash Flow Analysis
c. Process Mapping
d. Work Flow Analysis

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6. A type of process that is used when a highly uniformed product or service is to be produced or
rendered.

a. Batch Processing
b. Continuous Processing
c. Intermittent Processing
d. Repetitive Processing

7. This certification is given to companies who have conformed to the European Community’s
environmental management standard.

a. ISO 9000
b. ISO 9001
c. ISO 9004
d. ISO 14000

8. An element of TQM that involves studying how other companies have become successful in what
they do, then incorporating the learned values to improve operations.

a. Competitive Benchmarking
b. Continuous Improvement
c. Knowledge of Tools
d. Team Approach

9. Long term capacity needs are determined through this technique which the values obtained are then
converted into capacity requirements.

a. Break-even analysis
b. Cash-flow analysis
c. Forecasting
d. Identification of seasonal variations

10. It is the difference between the largest and smallest items in one sample.

a. attributes
b. mean
c. range
d. standard deviation

II. ALTERNATE RESPONSE. Write the word TRUE if the statement is correct; otherwise write
FALSE. (10 pts.)

________ 1. When using control charts, it would be best to collect samples less than 20.
________ 2. If the product or service has highly specialized quality requirement, it would be better if
the firms perform the job itself.
________ 3. The user’s manual guarantees that the product will function properly and safely.

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________ 4. According to the Japanese expert Kaoru Ishikawa, quality is a “total field” meaning
when improvements were made in the process, other areas of the organization will
also improve.
________ 5. Batch processing is used by companies producing moderate volumes of similar items.
________ 6. There are more units to absorb the fixed cost of facilities and equipment as output is
increased.
________ 7. Effective capacity is the maximum output that can possibly be attained under ideal
conditions.
________ 8. Problems that occur due to natural variations are correctable and happen less
frequently.
________ 9. When using control charts, data under attributes are counted as to the number of calls
per day, and number of defective parts among others.
________ 10. Determining how well the product conforms to the design is the starting point for the
achievement of quality.

III. PROBLEM SOLVING. Write the complete solution in each problem. You may use the back of
this paper if the space provided is not enough for your solutions. (64 points)

1. Cargo and Load Repair facility has the capacity to repair 650 trucks per month. However, due to the
scheduled maintenance of their equipment, the operations manager feels that they can repair no
more than 400 trucks per month. A month ago, four of the employees were absent several days
each and only 300 trucks were repaired. Determine the utilization and efficiency of Cargo and Load
Repair facility.

2. The packaging process of Multi-Packs Company is being monitored using a mean and range chart.
Six samples of n = 18 observations have been gathered and the sample means and ranges were
computed as follows:

Sample Mean Range

1 3.18 0.45
2 3.05 0.38
3 3.12 0.42
4 3.08 0.41
5 3.28 0.49
6 3.15 0.51
a. Determine the average mean and the average range.
b. Compute for the upper and control limits for mean and range charts. (See the table at the end
of this exam in identifying the factors for x and R charts).
c. Is the process in control?

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3. Using samples of 150 observations, the quality inspector of a garments factory found the following.

Sample 1 2 3 4 5
Number of defectives 3 4 5 8 7

a. Determine the fraction defective in each sample.

b. What is the mean fraction defective and standard deviation of the sampling distribution of
fractions defective of samples of this size?
c. Suppose that the long-term fraction defective of the process is known to be 3%. What is the
standard deviation of the sampling distribution?
d. Construct the control charts assuming a fraction defective of 3% using two-sigma control limits.
Is the process in control?
e. Using control limits of .052 and .020, is the process in control?

4. Universal Bottling Corporation wants to increase the speed of its operations by adding a new
machine. Two alternatives, Option 1 and Option 2 are identified. The associated costs and unit
price have also been estimated. For Option 1, annual fixed costs would be P240,000 and
P180,000 for Option 2. Variable cost per unit would be P35 for Option 1 and P40 for Option 2. The
unit price for Option 1 would be P42 and P48 for Option 2.
a. Determine the break-even even point in units and peso (amount) of each option.
b. If expected annual demand is 40,000 units, which alternative would yield the higher profit?

5. A manager of a computer parts provider is trying to decide whether to purchase a certain part of a
printer or have it produce internally. Internal production could use either of the two processes. One
process would entail a variable cost of P125 per unit and an annual fixed cost of P64,000; the
other process would entail a variable cost of P120 per unit and an annual fixed cost of P73,000.
Three vendors are willing to provide the part. Vendor A has a price of P135 per unit for any volume
up to 25,000 units. Vendor B has a price of P140 per unit for demand of 1,000 units or less, and
P130 per unit for larger quantities. Vendor C offers a price of P138 per unit for the first 1,000 units,
and P128 per unit for additional units.
a. Which alternative would be best from a cost standpoint, if the manager anticipates an annual
volume of 10,000 units?
b. For 20,000 units, which alternative would be best?

IV. ESSAY. Answer the following questions briefly. (16 points)

1. Discuss the impact of poor quality performance to the organization in terms of productivity and
costs.
2. Give at least 2 importances of capacity decisions.
3. Identify the advantages and disadvantages of automation over human labor.

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APPENDIX: Factors for Three-Sigma Control Limits for x and R Charts

n A2 D4 D3

2 1.88 3.27 0
3 1.02 2.57 0
4 0.73 2.28 0
5 0.58 2.11 0
6 0.48 2.00 0
7 0.42 1.92 0.08
8 0.37 1.86 0.14
9 0.34 1.87 0.18
10 0.31 1.78 0.22
12 0.27 1.72 0.28
13 0.25 0.31 1.69
14 0.24 0.33 1.67
15 0.22 0.35 1.65
16 0.21 0.36 1.64
17 0.20 0.38 1.62
18 0.19 0.39 1.61
19 0.19 0.40 1.60
20 0.18 0.41 1.59

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