1) Consider two products A and B that have identical cost,retail price and demand parameters and the same short sellingseason (the summer months from May through August). The newsvendormodel is used to manage inventory for both products. Product A isto be discontinued at the end of the season this year, and theleftovers will be salvaged at 75% of the cost. Product B will bere-offered next summer, so any leftovers this year can be carriedover to the next year while incurring a holding cost on each unitleft over equal to 20% of the product's cost. How do the stockingquantities for these products compare?
a) Stocking quantity of product A is higher. b) Stockingquantity of product B is higher. c) Stocking quantities are equal.d) The answer cannot be determined from the dataprovided.
2) Customers arrive at a mountain bike rental store in Moab,Utah, between 10 am and 12 pm at a rate of 12 customers per hour.From 12pm to 6pm, the arrivalrate is at 6 customers per hour. The average time it takes a staffperson of the bike rental store to help a customer get set on thebike, charge their credit card, and chat about the dangers of localriding is 50 minutes and the coefficients of variation for both theinter-arrival time and the service time is equal to one. Allcustomers patiently wait until they are served. Assume that 8 staffmembers are working in the rental store throughout theday.
How much idle time, on average, will a staff member havefrom 10 am and 12 pm?
a. 0 mins b. 5 mins c. 10 mins d. 15 mine. 20 mins f. None of the above
3) A recent article on GM said that the company had atarget of 91 days of supply of cars. When viewed thru the lens ofLittle’s Law, this statement isstaying
a. T = 91 b. 1/T = 91 c. R = 91 d. I =91
4) If a process is demand constrained, thenadding capacity to the bottleneck is likely to have the followingimpact:
a. the flow rate will increase
b. utilization of the bottleneck willincrease
c. bothinventory turns and days of supply willincrease
d. all of the above e. none of the above
5) A construction company has signed a contract to build anoffice tower. The contract stipulates that the project will becompleted in 1500 days from today and also includes a penalty onthe construction company of $30,000 per day if the project is late.In addition, the construction company estimates that its internalcost is $60,000 for each day the project is late. However,completing the project early is costly to the firm as well: eachday the project is early costs the firm $45,000. (Thisincludes the opportunity cost of capital and idlecapacity.) The firm estimates the project’s completion time isNormally distributed with a mean of 1400 days and a standarddeviation of 60 days.
Given this data, how many days should the firm waitto begin construction?
Choose the closest answer.
a. 0 days, they should start immediately
b. 50 days c. 75 days
d. 100 days
e. 125 days
6) In the National Cranberry Case, the trucks were forced to waitdue to which of the following factors (circle all that arecorrect)
a. The dryer was the bottleneck
b. The holding bins had limited capacity
c. The dry berries had to wait behind the wet berries ontrucks.
d. The destining machine was a full capacity
e. There was uncertainty in the arrival process.
7) In the Virginia Mason Medical Center case, the practices of LeanManufacturing allowed for the following changes to take placewithin the hospital
a) Computer automation of processes
b) Standardization of process
c) Elimination of non-value added activities
d) Removal of all inventory within the hospital
e) Involvement of all employees in the waste eliminationprocess
