Operations Management

Supplementary Assessment (40 marks)

Due date: 14 January 2024 at 11.55 PM

Instructions:
1. Answer the problems according to the assigned order in each question.
2. All steps of the calculations must be shown clearly, leading to the final answer.
3. Use two decimal points in your final answers wherever applicable.
4. Wherever possible use word processing to write your answer. While handwriting can be
used (particularly for diagrams and formulas), readability and good layout need to be
carefully maintained.
5. No word limit for this assessment.
6. Submit your assignment in pdf format.
7. Put your name and student ID at the top right corner of the first page of your assignment.
8. You need to pass this Supplementary Assessment (20 marks or higher) to pass the unit.

Question 1 Line Balancing (10 marks)

A company sets up its assembly line as the table below:
Task Time Preceding Task Time Preceding
Task (seconds) Tasks Task (seconds) Tasks
A 15 - G 11 C
B 24 A H 9 D
C 6 A I 14 E
D 11 B J 5 F, G
E 18 B K 15 H, I
F 7 C L 10 J, K
The assembly line operates 7½ hours per day, and the daily demand is 1,000 units.
a) Draw the precedence diagram of this assembly line (1 mark)
b) Calculate the workstation cycle time and the estimated number of workstations required to
achieve the demand (1 mark)
c) Balance the assembly line using the longest-task-time rule as the primary rule and the most
following tasks as the secondary rule to achieve the demand. Use a table to construct the
work stations and show the amount of idle time of each work station (3 marks)
d) Is it possible for the assembly line balance of sub-question c) to produce extra outputs
within normal operating hours? If yes, how many? (1 mark)
e) If the demand increases by 20%, how long overtime is needed by the assembly line
balance of sub-question c) to meet this new demand? (1 mark)
f) Re-balance the assembly line using the most followers as the primary rule and the longest-
task-time as the secondary rule to achieve the new demand of sub-question e) with the
minimum amount of overtime. Show the table of the number of following tasks, the table
to construct the work stations, the amount of idle time of each work station, and the
amount of overtime required to achieve the demand (3 marks).
Question 2: Aggregate Capacity Planning (10 marks)
A company is setting up a production plan over four seasons. It operates for 60 days per
season and 8 hours per day. The demand forecast for each season is as follows: Fall: 10,000
units, Winter: 8,000 units, Spring: 7,000 units, and Summer: 9,800 units. At the beginning of
Fall, the company already has 30 workers and 1,100 units of inventory. The productivity for
each employee is 0.5 unit per hour, and all employees work at their full capacity within the
normal operating hours in the season unless overtime is required. The company has set the
following costing standards for its production plan:
 Overtime cost is $80 per hour
 Backorder cost is $100 per unit-season
 Inventory holding cost is $50 per unit-season
 Straight-time cost is $50 per hour
 Hiring cost is $1,000 per worker
 Laying off cost is $2,500 per worker
Based on the above production plan, calculate the following:
a) Construct a complete production plan for the four seasons to produce the lowest total
production costs under the following restrictions. No hiring or laying off employees is
allowed in all seasons, except in Summer, but the company must not have backorders or
inventory at the end of Summer. Overtime (maximum of 4,000 hours per season) is not
allowed except during Winter and Spring to reduce backorder only. (4 marks)
b) The company simplifies its production plan by constantly keeping 35 employees over the
four seasons. Overtime (maximum of 4,000 hours per season), inventory, and backorders
are now allowed in all seasons except in Summer. Construct a complete production plan
over the four seasons to produce the lowest total production costs (4 marks). Explain
clearly how you decide to use overtime (when and how many hours), inventory, and
backorder in constructing your production plan (2 marks).

Question 3 Material Requirement Planning (10 marks)

A manufacturer makes a product A that is made of one unit of item B and one unit of item C.
One unit of item B requires four units of item C, one unit of item E, and one unit of item F,
while one unit of item E requires three units of item F. One unit of item C is made of two
units of item D and one unit of item E.
The production lead time of each item is as follows: item C requires one week, items A, B, E,
and F require two weeks, and item D requires three weeks.
Lot-for-lot (L4L) lot sizing is used for items A, D, and E; lot sizes of 50, 100, and 50 are used
for items B, C, and F respectively.
Items A, C, D, and E have beginning inventories of 30, 150, 150, and 10 units respectively,
while items B and F have zero beginning inventory.
The manufacturer is scheduled to receive 50 units of D in Week 3.
The manufacturer receives an order of 50 units of product A to be delivered in Week 10.
a) Draw the low-level-coded Bill of Materials of product A (2 marks)
b) Construct an MRP table to set the Planned Order Releases for all items of this product.
Can the manufacturer fulfil the order? Explain the reason (4 marks)
c) Construct another MRP table to set the Planned Order Releases for all items of this
product if all items have zero beginning inventories and have no scheduled receipt. Can
the manufacturer fulfil the order? Explain the reason (4 marks)
Question 4 Single-periodic inventory control (10 marks)
A small shop sells daily newspapers every morning. The shop purchases the newspapers from
the publisher at $0.50 a copy and sells it for $1.50. However, any unsold copies on the day
are worthless and have to be discarded to a recycle bin. The average of daily demand of the
newspapers is 250 units with a standard deviation of 25 units.
a) What is the optimal quantity of the newspapers needs to be carried daily? (2 marks)
b) What is the percentage of the demand that cannot be served by the quantity of the daily
stock in sub-question a)? (1 mark)
c) How many daily stocks of newspapers that the shop needs to carry in order to serve 90%
of the demand? (2 marks)
d) Suppose one day the shop carries 275 newspapers, what is the percentage of the demand
that can be served on the day? (2 marks)
e) How much the shop must sell the newspapers so that the optimal quantity of the daily
stock of the newspapers will be 275? (3 marks)