MECH 3170 Assignment #1

This assignment covers material from Chapters 1, 2, 3, and 7 of Operations and Supply Chain
Management by Jacobs and Chase (14th Edition)

Instructions:

Please answer all questions.

You are encouraged to work and share ideas with fellow students on the assignment, however, each
student is required to submit their own, original, hard copy assignment for grading. Please refer to
the Universitys policy on Academic Integrity at
http://umanitoba.ca/student/resource/student_advocacy/academicintegrity/students/
If you work with others, please list their names on your assignment.
Assignment #1 is worth 1% of your final grade in the course.
Assignment #1 is due by Wednesday, Feb 8, 2017 at 9:30am (in class). Late assignments will be subject
to the penalties outlined in the course syllabus.

Question 1 (4 Marks)
Read the case entitled Chads Creative Concepts, attached to this assignment (taken from: Operations
Management Processes and Supply Chains, 9th Ed, by Krajewski, Ritzman, and Malhotra, pg. 30-31) and
answer the four (4) questions included with the case.

Question 2 (3 Marks)
Grandmothers Chicken Restaurants was established five years ago. It features a unique recipe for
chicken, just like grandmother used to make. Business has been good for the last two years for both
lunch and dinner. Customers normally wait about 15 minutes to be served, although complaints about
service delay have been increased. The owner is currently considering whether to expand the current
facility or to open a similar restaurant in neighbouring town, which has been growing rapidly.

a) What types of strategic plans should the owner make?

b) What environmental forces could be at work in both towns that the owner should consider?
c) What are the possible distinctive competencies of Grandmothers?

Question 3 (2 Marks)
Travis and Jeff own a new start-up company with the goal of designing, making and marketing a new
product. Since they are just starting out, the demand has not been firmly established. They anticipate
selling their product for $100 each. They estimated the fixed cost for the equipment will be $2,000, and
the material and labor costs will be $50 per unit.

a) What volume of demand is necessary for them to break even on their new product?

Jeff is optimistic and believes that the demand for their products is going to exceed the breakeven found
in (a). He proposes spending $10,000 in more advanced equipment instead of the previous equipment.
The advanced equipment will reduce the material and labor cost to $30 per unit. The product will be
sold for $100, regardless of which equipment is chosen.

b) Compare the two proposals and determine for what level of demand each equipment would be
preferred.

Question 4 (5 Marks)
LASON Inc. recently commenced the manufacture of phones in Ottawa. As part of management strategy
to gain access into the ICT industry, the company has decided to offer high quality, medium-cost products.
The parts required would be sourced globally and assembled at their production facility in Ottawa. There
are six different parts to be sourced from several suppliers across the globe as listed in the table below:

Part Number Unit Cost ($)

A 25.00
B 12.00
C 30.00
D 2.50
E 10.00
F 2.50

For the parts assembly, one piece each of parts A, B, C, D, E and F are required to produce one component
which is then sent to the packaging unit for sealing. The assembly line has 20 automated machines, each
capable of assembling 100 components per hour. Each of the machines is manned by two technicians with
an hourly wage rate of $25.00 per personnel. The company has one automated packaging unit with a
maximum sealing capacity of 2,500 units per hour, and is manned by 4 operators each earning $20.00 per
hour. All other technical and administrative staffs receive a total of $10,000.00 per week in wages. The
production facility is run for 8 hours per day, 5 days in a week until management decides otherwise.

The factory currently operates on a lease-to-own facility with a monthly rent of $8,000.00. The
depreciation cost and operational expenses amounts to $125.00 and $3,000.00 per week respectively.

a) Draw a process flow diagram and determine the process capacity (number of components
produced per week). Assume that all the machines are operational and working to full capacity.
b) The company received her first order from a foreign vendor for 140,000 units which must be
available for delivery within 4 weeks of order confirmation, and a sales forecast estimates an
additional weekly order of 40,000 units for the first 12 weeks of production. Calculate the total
number of units produced by the company by the 8th week if it wants to maintain a 2 weeks
delivery stock in inventory.
c) Due to an increase in accumulated orders, management decided to run an overtime shift of two
hours daily on the parts assembly line only with all 20 assembling machines in operation. If the
technicians receive $37.50 each per overtime hour worked, what is the new process capacity
 (number of components produced per week)? Also, assume that all the machines are operational
and working to full capacity. Which of the operations, if any, limits the capacity of the production?
d) Determine the cost per unit output for questions a. and c.