Question 1

Company H is a paint manufacturing company, it requires almost 5,000 pounds of

titanium dioxide per year. They procure this chemical from a factory for a price of $50
per pound, with an ordering cost of $120 per order. The annual holding cost is 35% of
the purchasing cost. Find the EOQ and the number of orders required in a year.

Solution:

Step 1: The question asks to find the EOQ and number of orders required in a year.
Identify the inputs

The inputs to the EOQ formula are:

Annual demand (D): 5,000 pounds

Ordering cost per order (S): $120

Holding cost per pound per year (H): $17.50

Explanation: These inputs are important because they determine the optimal order
quantity that minimizes the total inventory costs.

Step 2: Calculate the EOQ

The EOQ formula is:

( )
EOQ = ( )

Plugging the inputs from Step 1 into the formula, we get:

, $
EOQ = ( $ .
)

EOQ = 261.86 pounds

Explanation: The EOQ formula calculates the optimal order quantity by balancing
the ordering costs and holding costs. Ordering costs are incurred each time a new
order is placed, while holding costs are incurred for each unit of inventory held in
stock. The EOQ formula calculates the order quantity that minimizes the total of these
two costs.

Step 3: Calculate the number of orders required in a year

The number of orders required in a year is calculated using the following formula:
Number of orders =

Plugging the inputs from Step 1 and Step 2 into the formula, we get:

Number of orders = .

Number of orders = 19.09 orders

Explanation: The number of orders required in a year is calculated by dividing the

annual demand by the EOQ. This tells us how many times we need to order inventory
each year to meet the annual demand.

Final Answer:

The EOQ for Company H is 261.86 pounds. They need to place 19.09 orders per year.
Question 2
A carpenter was asked to make 8 wooden chairs. For the assembly of a chair, leg
assembly, back assembly, and cushion seat assembly are required. The product
structure tree is given below.

Each leg assembly required 4 legs with 2 crossbars. Back assembly required 2 sidebars,
2 L-joint supports, and 1 crossbar. The carpenter’s in-hand inventory had only 3 leg
assemblies, 2 back assemblies, 16 legs, 7 crossbars, 8 sidebars, and 11 L-joint supports.
How much more quantities of assemblies and components will be required to assemble
the 8 chairs and complete the order?

Solution:

Step 1: Calculate the total quantity of assemblies and components required for 8 chairs

To assemble 8 chairs, the carpenter will require the following quantities of assemblies
and components:

● 8 leg assemblies
● 8 back assemblies
● 32 legs (4 legs per leg assembly)
● 16 crossbars (2 crossbars per leg assembly, 1 crossbar per back assembly)
● 16 sidebars (2 sidebars per back assembly)
● 16 L-joint supports (2 L-joint supports per back assembly)

Explanation:
This step is important because it helps us to understand the total quantity of assemblies
and components required to complete the order.

Step 2: Calculate the carpenter's in-hand inventory of assemblies and components

The carpenter's in-hand inventory of assemblies and components is as follows:

● 3 leg assemblies
● 2 back assemblies
● 16 legs
● 7 crossbars
● 8 sidebars
● 11 L-joint supports

Explanation:
This step is important because it helps us to identify the carpenter's existing inventory
of assemblies and components.

Step 3: Calculate the quantity difference between the total required quantity and the
carpenter's in-hand inventory

To calculate the quantity difference, we need to subtract the carpenter's in-hand

inventory from the total required quantity:

● Leg assemblies: 8 - 3 = 5
● Back assemblies: 8 - 2 = 6
● Legs: 32 - 16 = 16
● Crossbars: 16 - 7 = 9
● Sidebars: 16 - 8 = 8
● L-joint supports: 16 - 11 = 5

Explanation:
This step is important because it helps us to identify the additional quantities of
assemblies and components that the carpenter needs to purchase to complete the order.

Final Answer:
The carpenter will require the following additional quantities of assemblies and
components to assemble the 8 chairs and complete the order:

● 5 leg assemblies
● 6 back assemblies
● 16 legs
● 9 crossbars
● 8 sidebars
● 5 L-joint supports
Question 3
Define Kaizen and list the three things that are required for a successful kaizen program.

Solution:

Kaizen is a Japanese word that means "continuous improvement." It is a philosophy

and a set of practices that focus on making small, incremental improvements to
processes and products over time. Kaizen is based on the idea that anyone can make a
difference, and that even small changes can lead to significant results in the long run.

Three things that are required for a successful kaizen program:

1. Leadership support: Kaizen must be supported by leadership at all levels of the

organization. This means that leaders need to be visible and involved in the
kaizen process, and they need to provide the resources and training that
employees need to be successful.
2. Employee engagement: Kaizen is most successful when all employees are
engaged in the process. This means that employees should be encouraged to
identify areas for improvement and to come up with solutions. Employees should
also be given the authority to implement their ideas and to make decisions.
3. A culture of continuous improvement: Kaizen is more than just a one-time
project. It is a commitment to continuous improvement. This means that
employees should be constantly looking for ways to improve their processes and
products. It also means that the organization should be willing to change and
adapt as new information and ideas become available.

Examples of Kaizen:

● A factory worker might suggest a way to improve the assembly line layout,
which could save time and reduce errors.
● A software engineer might suggest a change to the code that could improve the
performance of a software application.
● A customer service representative might suggest a new way to handle customer
complaints, which could improve customer satisfaction.

Kaizen can be applied to any process or product, and it can be used in any industry. It
is a powerful tool for continuous improvement, and it can help organizations to achieve
their goals.

Final Answer:
Kaizen is a powerful tool for continuous improvement. It can be applied to any
process or product, and it can be used in any industry. To be successful, kaizen
programs require leadership support, employee engagement, and a culture of
continuous improvement.
Question 4
A tea processing company uses exponential smoothing to forecast equipment usage at
its main plant. January usage was forecasted to be 88 percent of capacity; actual usage
was 89.6 percent of capacity. A smoothing constant of .1 is used.

a. Prepare a forecast for February.

b. Assuming actual February usage of 92 percent, prepare a forecast for March usage.

Solution:

Step 1: Identify the known values.

● Forecast for January: 88 percent of capacity
● Actual usage for January: 89.6 percent of capacity
● Smoothing constant: 0.1

Explanation: Identifying the known values is important because it allows us to plug

the correct values into the exponential smoothing formula.

Step 2: Calculate the forecast for February.

𝐹 = 𝐹{ } + 𝛼(𝐴{ } − 𝐹{ })

𝐹 = 88 + 0.1(89.6 − 88) = 88.16

Explanation: Calculating the forecast for February involves plugging the known
values into the exponential smoothing formula and simplifying the expression. The
exponential smoothing formula takes the previous forecast value and the actual value
from the previous period and combines them to generate a new forecast value. The
smoothing constant controls how much weight is given to each value. A higher
smoothing constant will give more weight to the most recent actual value, and a lower
smoothing constant will give more weight to the historical forecast values.

Step 3: Calculate the forecast for March, assuming actual February usage of 92 percent
of capacity.

𝐹 = 𝐹{ } + 𝛼(𝐴{ } − 𝐹{ })

𝐹 = 88.16 + 0.1(92 − 88.16) = 88.544

Explanation: Calculating the forecast for March is similar to calculating the forecast
for February, except that we use the actual usage for February instead of the forecast
for February. This is because the exponential smoothing formula uses the most recent
actual value to generate the new forecast value.
Final Answer:
The forecast for February equipment usage is 88.16 percent of capacity. The forecast
for March equipment usage, assuming actual February usage of 92 percent of capacity,
is 88.544 percent of capacity.
Question 5
Describe the differences between forward operation scheduling and backward
operation scheduling.

Solution:

Step 1: Defining forward operation scheduling and backward operation scheduling.

Explanation:

Forward operation scheduling: Starts at the beginning of the production process and
schedules operations in the order in which they will be performed.

Backward operation scheduling: Starts at the end of the production process and
schedules operations in reverse order, starting with the due date of the finished
product.

Step 2: Explaining the key differences between forward operation scheduling and
backward operation scheduling.

Explanation:

Start point: Forward operation scheduling starts at the beginning of the production
process, while backward operation scheduling starts at the end of the production
process.

Scheduling order: Forward operation scheduling schedules operations in the order in

which they will be performed, while backward operation scheduling schedules
operations in reverse order, starting with the due date of the finished product.

Typically used: Forward operation scheduling is typically used for well-defined

production processes with no major constraints, while backward operation scheduling
is typically used for production processes with due dates for the finished product and
constraints such as limited capacity or material availability.

Step 3: Providing examples of when each type of scheduling might be used.

Explanation:

Forward operation scheduling: A manufacturer of widgets might use forward

operation scheduling to schedule the production of a new batch of widgets. The
production process is well-defined and there are no major constraints.
Backward operation scheduling: A construction company might use backward
operation scheduling to schedule the construction of a new building. The project has a
due date and there are constraints on the construction process, such as limited
availability of materials and labor.

Step 4: Explaining that forward operation scheduling and backward operation

scheduling are not mutually exclusive.

Explanation:

It is possible to use a combination of both approaches to schedule operations in a

production process. For example, a manufacturer might use forward operation
scheduling to schedule the production of standard components and backward
operation scheduling to schedule the assembly of finished products.

Step 5: Explain that the best approach to scheduling operations will depend on the
specific needs of the production process and the organization.

Explanation:

There is no one-size-fits-all approach to scheduling operations. The best approach will

depend on the specific needs of the production process and the organization. For
example, a manufacturer of custom products may need to use a more flexible
approach to scheduling than a manufacturer of mass-produced products.

Final Answer:

Forward operation scheduling and backward operation scheduling are two different
approaches to scheduling operations in a production process. The best approach to
scheduling operations will depend on the specific needs of the production process and
the organization.