Practice Problems Problem 1 A major drug store

Practice Problems Problem 1: A major drug store chain wishes to build a new warehouse to serve the whole Midwest. At the moment, it is looking at three possible locations. The factors, weights, and ratings being considered are given below: Ratings Factor Weights Peoria Des Moines. Chicago Nearness to markets 20 4 7 5 Labor cost 5 8 8 4 Taxes 15 8 9 7 Nearness to suppliers 10 10 6 10 Which city should they choose? Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 1 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Problem 1: Based upon the weights and A major drug storerating, chain wishes to build a new Des Moines should bewarehouse to serve the whole Midwest. chosen. At the moment, it is looking at three possible locations. The factors, weights, and ratings being considered are given below: Weighted Ratings Factor Weights Peoria Des Moines. Chicago 80 140 100 Nearness to markets 20 4 7 5 40 40 20 Labor cost 5 8 8 4 120 135 105 Taxes 15 8 9 7 100 60 100 Nearness to suppliers 10 10 6 10 Total 340 375 325 Which city should they choose? Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 2 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Problem 2: Balfour’s is considering building a plant in one of three possible locations. They have estimated the following parameters for each location: Location Waco, Texas Tijuana, Mexico Fayetteville, Arkansas Fixed Cost $300, 000 $800, 000 $100, 000 Variable Cost $5. 75 $2. 75 $8. 00 For what unit sales volume should they choose each location? Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 3 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Transition Waco and Tijuana Problembetween 2: Transition between Waco and Fayetteville 300, 000 + 5. 75 x = 800, 000 + 2. 75 x Balfour’s is considering building a plant in =one of three 300, 000 + 5. 75 x 100, 000 + 8. 00 x 3 x = 500, 000 possible locations. They have estimated following 2. 25 x = the 200, 000 x = 166, 000 parameters for each location: x = 88, 888 Location Waco, Texas Tijuana, Mexico Fayetteville, Arkansas Fixed Cost $300, 000 $800, 000 $100, 000 Variable Cost $5. 75 $2. 75 $8. 00 For what unit sales volume should they choose each location? Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 4 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Transition Waco and Tijuana Problembetween 2: Transition between Waco and Fayetteville 300, 000 + 5. 75 x. Locate = 800, 000 + 2. 75 x in Fayetteville Balfour’s is considering building a plant in =one of three 300, 000 + 5. 75 x 100, 000 + 8. 00 x 3 x = 500, 000 possible locations. They have estimated following 2. 25 x = the 200, 000 x = 166, 000 parameters for each location: x = 88, 888 Location Waco, Texas Tijuana, Mexico Fayetteville, Arkansas Fixed Cost $300, 000 $800, 000 $100, 000 Variable Cost $5. 75 $2. 75 $8. 00 For what unit sales volume should they choose each location? Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 5 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Problem 3: Our main distribution center in Phoenix, AZ is due to be replaced with a much larger, more modern facility that can handle the tremendous needs that have developed with the city’s growth. Fresh produce travels to the seven store locations several times a day making site selection critical for efficient distribution. Using the data in the following table, determine the map coordinates for the proposed new distribution center. Store Locations Mesa Glendale Camelback Scottsdale Apache Junction Sun City Pima Map Coordinates (x, y) (10, 5) (3, 8) (4, 7) (15, 10) (13, 3) (1, 12) (5, 5) Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 6 Truck Round Trips per Day 3 3 2 6 5 3 10 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems (10*3) + (3*3) + (4*2) + (15*6) + (13*5) + (1*3) + (5*10)255 3 + 2 + 6 + 5 + 3 + 10 32 = = + (8*3) + (7*2) + (10*6) + (3*5) + (12*3) + (5*10)214 Problem 3: C(5*3) = y 3 + 2 + 6 + 5 + 3 + 10 32 = = Cx = Our main distribution center in Phoenix, AZ Truck is due Round to be Trips replaced with Locations. Map a much larger, Coordinates more modern that. Day can Store (x, facility y) per handle the tremendous needs that have developed with the Mesa (10, 5) 3 city’s growth. Fresh produce travels to the seven store Glendale (3, 8) 3 locations several times a day making site selection critical Camelback (4, data 7) in the following 2 table, for efficient distribution. Using the Scottsdale (15, determine the map coordinates for 10) the proposed new 6 Apache Junction (13, 3) 5 distribution center. Sun City (1, 12) 3 Pima (5, 5) 10 Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 7 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems (10*3) + (3*3) + (4*2) + (15*6) + (13*5) + (1*3) + (5*10)255 3 + 2 + 6 + 5 + 3 + 10 32 = = + (8*3) + (7*2) + (10*6) + (3*5) + (12*3) + (5*10)214 Problem 3: C(5*3) = y 3 + 2 + 6 + 5 + 3 + 10 32 = = Cx = Our main distribution center in Phoenix, AZ is due to be replaced with a much larger, more modern facility that can handle the tremendous needs that have developed with the city’s growth. Fresh produce travels to the seven store locations several times a day making site selection critical for efficient distribution. Using the data in the following table, determine the map coordinates for the proposed new distribution center. Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 8 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Problem 4: The following table gives the map coordinates and the shipping loads for a set of cities that we wish to connect though a central “hub. ” Near what map coordinates should the hub be located? City Map Coordinate (x, y) Shipping Load A (5, 10) 5 B (6, 8) 10 C (4, 9) 15 D (9, 5) 5 E (7, 9) 15 F (3, 2) 10 G (2, 6) 5 Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 9 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems C = (5*5) + (6*10) + (4*15) + (9*5) + (7*15) + (3*10) + (2*5)355 x 5 + 10 + 15 + 10 + 5 65 Problem 4: (10*5) + (8*10) + (9*15) + (5*5) + (9*15) + (2*10) + (6*5)475 Cy = 5 + 10 + 15 + 10 + 5 65 = =7 The following table gives the map coordinates and the shipping loads for a set of cities that we wish to connect though a central “hub. ” Near what map coordinates should the hub be located? City Map Coordinate (x, y) Shipping Load A (5, 10) 5 B (6, 8) 10 C (4, 9) 15 D (9, 5) 5 E (7, 9) 15 F (3, 2) 10 G (2, 6) 5 Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 10 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems C = (5*5) + (6*10) + (4*15) + (9*5) + (7*15) + (3*10) + (2*5)355 x 5 + 10 + 15 + 10 + 5 65 Problem 4: (10*5) + (8*10) + (9*15) + (5*5) + (9*15) + (2*10) + (6*5)475 Cy = 5 + 10 + 15 + 10 + 5 65 = =7 The following table gives the map coordinates and the shipping loads for a set of cities that we wish to connect though a central “hub. ” Near what map coordinates should the hub be located? Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 11 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Problem 5: A company is planning on expanding and building a new plant in one of three countries in Middle or Eastern Europe. The general manager, Patricia Donegal, has decided to base her decision on six critical success factors: technology availability and support, availability and quality of public education, legal and regulatory aspects, social and cultural aspects, economic factors, and political stability. Using a rating system of 1 (least desirable) to 5 (most desirable) she has arrived at the following ratings (you may, of course, have Critical Success Factors Turkey Serbia Slovakia different opinions). In which country should the plant be built? Technology availability and support Availability and quality of public education Legal and regulatory aspects Social and cultural aspects Economic factors Political stability Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 12 4 4 2 5 4 4 3 3 2 4 3 5 4 3 3 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Problem 5: A company is planning on expanding and building a new Critical Factors Turkey Serbia Slovakia plant in Success one of three countries in Middle or Eastern Europe. Technology support 4 has decided 3 The generalavailability manager, and Patricia Donegal, to 4 Availability and quality ofcritical public success educationfactors: technology 4 4 base her decision on six Legal and regulatory aspects 2 quality 4 of public 5 availability and support, availability and education, and regulatory aspects, 5 social and Social and legal cultural aspects 3 cultural 4 aspects, Economiceconomic factors, and political stability. 4 3 3 Political stability 4 2 3 Using a rating system of 1 (least desirable) = 23 to 5 (most 19 22 desirable) she has arrived at the following ratings (you may, of course, have different opinions). In which Based upon her ratings of the country critical should the plant be built? success factors, Patricia should choose Turkey. © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 13 07458

Practice Problems Problem 6: Assume that Patricia decides to use the following weights for the critical success factors: Technology availability and support Availability and quality of public education Legal and regulatory aspects Social and cultural aspects Economic factors Political stability 0. 3 0. 2 0. 1 0. 2 Would this change her decision? Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 14 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Problem 6: Assume that Patricia decides to use the. Turkey following weights Critical Success Factors Wgt Serbia. Slovakia for the critical success and factors: Technology availability support 0. 3 4 1. 2 3 0. 9 4 1. 2 Availability and quality of public education 0. 2 0. 8 4 0. 63 Technology availability and support 0. 1 Legal and regulatory aspects 2 0. 3 4 0. 4 5 0. 5 Availability and quality of public education Social and cultural aspects 0. 1 5 0. 2 3 0. 3 4 0. 4 Legal and factors regulatory aspects Economic 0. 1 4 0. 1 3 0. 3 Social and cultural aspects Political stability 0. 2 4 0. 8 0. 1 2 0. 4 3 0. 6 Economic factors 0. 1 3. 1 22 3. 6 = 23 3. 9 19 Political stability 0. 2 In this case, use of the weighting factors Would thisdoes change decision? not her change the recommendation. Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 15 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems Problem 7: Patricia’s advisors have suggested that Turkey and Slovakia might be better differentiated by either: a. doubling the number of critical success factors, or b. breaking down each of the existing critical success factors into smaller, more narrowly defined items, e. g. , Availability and quality of public education might be broken into primary, secondary, and postsecondary education. How would you advise Ms. Donegal? Power. Point presentation to accompany Heizer/Render – Principles of Operations Management, 5 e, and Operations Management, 7 e 16 © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. 07458

Practice Problems a. Doubling Problem 7: the number of critical success factors. There are two issues here. First, from a practical perspective there a limited number ofthat truly “critical” Patricia’s advisors have suggested Turkey andsuccess Slovakia factors and these should be the ones presently being might be better– differentiated by either: considered. Any additional factors should be of (a) doubling the number of importance. critical success factors, or the secondary or tertiary Second, given (b) breaking down eachofofthe therating existing criticaladding success subjective nature process, factors into smaller, more narrowly defined additional factors would also increase theitems, overall e. g. , Availability quality publicto education margin of errorand of the finalofratings a degreemight that may beeliminate broken into secondary, and post- from the use anyprimary, gain in differentiation arising secondary education. of the additional factors. The use of a maximum of How would you advise Ms. Donegal? seven to nine critical success factors is usually appropriate. b. Given that one’s ability to estimate or rate an aggregate is usually better than one’s ability to estimate or rate the © 2004 by Prentice Hall, Inc. , Upper Saddle River, N. J. Power. Point presentation to accompany 07458 Heizer/Render – Principles of Operations individual components of 17 the aggregate, this approach Management, 5 e, and Operations Management, 7 e