Answer the qustions.

Its TWO parts:

PART I:Two Short Essays (40 points)

PART II:Problems—Answer all THREE problems (60)

PART I–ESSAY:Maximum length—One single-space (or two double-space pages) per question

Short Essay Question 1

Congratulations!You have just been appointed the Operations Manager of XYZ Hotel located in Baltimore.In the first meeting you attended with the company’s senior executives, the CEO turned to and said: “I am not sure if many staff members in our company clearly understand the role effective management of operations plays to ensure the success of our establishment. At the next general staff meeting, I ask that you make a short presentation to staff explaining operations management’s role for the success of any business, with particular reference to hotels like ours.”

Explain how XYZ Hotel can use effective operations management as a powerful tool for improving its performance and overall competitiveness.

Short Essay Question 2:

Suppose you are a member of a team of MSB students working on a project to assess the quality management practices of Eastern Shore Appliance Company.To develop better understanding of the company’s quality management practice, suppose your team has collected the data shown in Tables 1 – 4 below.

Instructions: Based on analysis of the data, write a short memo to management.Your memo must first critique the company’s current quality management practice, and then show what changes the company should introduce in its quality management approach to improve its profitability. (Maximum length: one page, single-space).

Table 1: Customer evaluation of the company’s product (based on last year’s survey results)

StyleGood

PriceExcellent

ReliabilityPoor

Recommend to friend?No

Table 2: Percent defective of the company’s products last year (from company records)

Fabrication10%

Assembly6%

Finished goods8%

Table 3: Quality Costs Last Year (from company records)

Training$25,000

Scrap cost $475,000

Inspection in plant$85,000

Rework (full shop cost)$1,200,000

Payment to cover warranty program$545,000

Processing and repairing returns$675,000

Table 4: Financial results Last Year ((from company records)

Annual sales$18,000,000

Total cost of goods sold$8,000,000

PART II:PROBLEMS–Please answer all three problems in this section

Problem 1:Productivity Measurement

The following data are given for a caterer in Washington, DC:

Last YearThis year

Total sales:$5,800,000 $6,500,000

Total cost of materials
(produce & other food items):$450,000$510,000

Labor hours used:24,000 hours23,000 hours

Cost of labor (including fringe):$21.00 per hour$21.50 per hour

Energy & other overhead costs:$165,000$192,000

• Determine multi-factor productivity for labor & materials for each year.
• Determine the total factor productivity for each year.
• The company’s goal is to improve its total productivity performance by 6% each successive year.Has it achieved its productivity growth goal this year compared to the previous year? If not, which factor or factors had adversely affected productivity growth?(Please show your work to receive credit.)

PROBLEM 2:Process flow analysis at Neighborhood Clinic

A neighborhood health clinic is staffed by two receptionists, three nurses, and three physicians.While actual patient experience may vary, suppose the following depicts a typical process that most patients go through during a visit to the clinic:

Upon arrival at the clinic one of the receptionists welcomes the patient, verifies insurance information, and collects required payment which takes about five minutes.The patient is then asked to take a seat in the waiting room, and after about 6 minutes waiting time, one of the nurses leads the patient to an examination room, verifies and updates patient information, and takes temperature and blood pressure.The nurse spends about 8 minutes on average with each patient.After waiting for about 5 minutes, the physician comes in and spends an average of about 12 minutes with the patient.The patient then returns to the receptionist to make follow-up appointment which takes about 2 minutes.

1. What is the bottleneck activity and what is the capacity of the process?

2. What is the throughput time of a typical patient visit?
3. If an average of 12 patients arrive at the clinic per hour, how many patietns will be in the clinic on average during operating hours?

1. Suppose each receptionist is paid $15/hour, the nurses are paid $25/hour each, and physicians are paid $85/hour each.In addition, assume fringe benefits cost 25% of the direct labor cost.What is the average cost of labor and fringe benefits per patient visit for the clinic if 12 patients are served per hour?

1. What will be the average hourly cost of labor and fringe benefits when the clinic operates at full capacity?

Problem 3:Production Planning

The Operations Manager of XYZ, Inc. needs to prepare an aggregate production plan for next year to meet demand forecast at minimum cost. Demand for the next four quarters is shown below:

QuarterDemand Forecast

1 22,000

2 27,000

3 29,000
4 20,000

Suppose at the beginning of the planning period (i.e., Quarter 1) there were 40 production workers and 1,500 units in inventory.Each worker produces 500 units per quarter and is paid $11,000 per quarter.If used, overtime is paid at 150% of regular pay.It costs $3,500 on average to lay off a worker and $1,700 to hire a new worker. Quarterly inventory holding cost averages $30 per unit.At the end of the fourth quarter, the manager plans to have 5,500 units of inventory on hand.

Instructions:

Suppose the operations manager was using the level strategy in the past. She is wondering if using the chase strategy will provide a more cost-effective option.To help her make an informed decision, she has asked you to develop a production plan for next year using:

(b) Level strategy.

NOTE: To minimize total cost, which strategy would you recommend for next year?[Please use the tables below to facilitate your computations.]

(c) Mixed Strategy:Suppose the manager is also wondering how many workers will be needed if XYZ Company used a mixed strategy that combines level with overtime. Determine the number of workers that will be required if a mixed strategy of level plus 20% overtime is used during the two peak demand quarters, i.e. during Quarters 2 and 3.

[Please note: In the interest of time, you are ONLY expected to determine the number of workers the company needs to have during each of the four quarters if it chooses to use level plus 20% overtime strategy.You are NOT required to compute the total cost for the mixed strategy.

Please copy and use the table below for each strategy.

Use the table given next page to answer part (a) (i) Level strategy, and (a) (ii) Chase strategy:

• (i) Level Strategy

• (ii):Chase Strategy

(c)Mixed Strategy:(See instructions on the previous page)