UniversityofPennsylvania

TheWhartonSchool
DepartmentofOperationsandInformationManagement

EXAM1A:OPIM101,Spring2011

Monday,February28,6:008:00pm.
ProfessorsCachonandSavin

Section#(201,,213):_________

Instructor(circle):AmirHenryRitterSaundersSilvagni Singzon

PennCardLastName:
Totalscore:
PennCardFirstName:


Instructions:

SHOWALLOFYOURWORKonthisexam.Nocreditisgivenonthequantitative
questionsunlessworkisshown.Thereisnopenaltyforguessingonmultiple
choicequestions.

Leaveanswersinfractionalformorindecimalformwithatleast3significant
figures.Donotroundintermediatecalculations.

Writeyourinitialsoneachpageheader.

Duringtheexamyoumaynotconsultwithanyoneotherthanaproctor.Youmay
useonedoublesidedreferencesheetofpaperduringthisexamthatdoesnot
exceed8.5x11.Youcannotsharereferencesheetswithothers.Writeyour
nameonyourreferencesheetandsubmititwithyourexam.

Youmayuseacalculatoronthisexamaslongasthecalculatorcannot
communicatewithanotherdevice.Calculatorscannotbesharedwithothers.

Youmaynotusecomputers,cellphonesoranyelectronicdevicethatcan
communicatewithanotherdevice.

Thereare30questionsonthisexam.Nopartialcreditisgiven.Allcorrect
answersareworth1pointeach.

Usepentowriteallofyouranswers.
Q1.ButternutisskiresortinMassachusetts.Oneoftheirtriplechairliftsunloads1296skiers
perhouratthetopoftheslope.(Atriplechairliftcancarrythreepassengersperchair.)The
ridefromthebottomtothetoptakes5minutes.Howmanyskiersareridingontheliftatany
onetime?

Answer:UseLittlesLaw.1296skier/hour*5/60=108skiers

Q2.HomeDepotsannualturnsare4.7,itsCostofGoodsSold(COGS)is$44.7Billion,andits
grossmarginis33%.Recall,grossmargin=(RevenueCOGS)/Revenue.Whatistheaverage
inventoryitholdsin$Billion?

Answer:$44.7billion/4.7=$9.51billion.Notethataverageinventoryin$sismeasuredbythe
costofgoodssold,thusthegrossmargindoesnotplayaroleinthecalculation.

Q3.Applesdaysofsupplyofinventoryis10.5.Whatisitsannualinventoryturns?Assume365
daysperyear.

Answer:365days/10.5days=34.8turns.

Q4.Acompanysholdingcostis16%peryear.Itsannualinventoryturnsare9.5.Thecompany
buysanitemfor$50.Whatistheaveragecost($s),toholdthisitemininventory?

Answer:theitemwillbeturned9.5timesayear.Thus,foreachturnitstaysininventory,the
holdingcostis16%/9.5ofthecostoftheitem.Thus,theaveragecosttoholdthisitemin
inventoryis$50*(16%/9.5)=$0.84.

Your initials: _________ Page 3 of 17

Q5.PhiladelphiaAirporthas5deicingstations.Eachplaneusesasinglestationandeach
stationtakes11.5minutestodeiceaplane.Howmanyplanesperhourcanbedeicedatthe
PhiladelphiaAirport?

Answer:eachstationdeices60min/11.5minplanesperhour.5stationscandeice
60/11.5*5=26.1planes.

(Q68)FurnitureFaceLiftrefinishesoldwoodfurniture.Theirprocessforrefinishingchairshas
8workersand4stations.EachchairstartsattheStrippingstation,thengoestoPriming,thento
PaintingandfinallytoInspection.Wheretherearemultipleworkerswithinastation,each
workerworksindependentlyonhis/herownchair.Assumeinventorybuffersareallowed
betweeneachstation.

Station Staffing Activitytime(hours

perchairperworker)
Stripping 3 2.5
Priming 2 1.5
Painting 2 1.75
Inspection 1 0.8

Q6.Whatisthemaximumnumberofchairsperhourthatcanbeproduced?Assumetheystart
thedaywithinventoryateachstationtoworkon.

Answer:theaveragetimeneededtofinishonechairateachstationareasfollows,
Capacity=staffing/activitytime:
Station Staffing Activitytime(hours) Capacity=staffing/activitytime
Stripping 3 2.5 1.2
Priming 2 1.5 1.333333333
Painting 2 1.75 1.142857143
Inspection 1 0.8 1.25

Paintingisthebottlenecksinceithasthelowestcapacity.Theprocesscapacityisthecapacity
ofthebottleneck.Thus,theprocesscapacityis1.14chairs/hour.

Your initials: _________ Page 4 of 17

Q7.Supposeatthestartofthedaythereisnoinventoryofchairsintheshop.Thatis,thereare
nochairswithinanyofthestationsorbetweentheminanybuffer.Atruckloadedwith15
chairsarrives.Howmanyhourswillittakethemtocompletethese15chairs?

Answer:ittakes2.5+1.5+1.75+0.8=6.55hoursforthefirstchairtobeproduced.Ittakes1/1.14
hoursforeachofthesubsequentchairs.Intotal,ittakes6.55+1/1.14*14=18.8hoursto
complete15chairs.

Q8.Supposenowthateachworkeristrainedtodoalltasksandeachworkerworksonachair
fromstarttofinish,i.e.,eachworkerdoesStripping,Priming,PaintingandInspection.Whatis
themaximumcapacityoftheprocessinchairsperhour?

Answer:inthissystem,therewillbenobottleneck,i.e.,everyworkerisworkingattheirfull
capacity.Ittakeseachworker2.5+1.5+1.75+0.8=6.55hourstofinishonechair.3+2+2+1=8
workscancomplete8/6.55=1.22chairs/hour.

Your initials: _________ Page 5 of 17

(Q911)TheWhiteToothDeviceCompanyisamanufacturerofhighendelectrictoothbrushes.
Foreachtoothbrush,thereareasequenceofassemblystepsperformedbyfiveworkers.Each
workerdoestwotasks.Inventorybuffersareallowedbetweenworkers.

Worker Task Time(seconds)

A T1 40
A T2 25
B T3 20
B T4 15
C T5 10
C T6 15
D T7 10
D T8 20
E T9 25
E T10 35

Q9.Whatisthecapacityofthisprocess(toothbrushesperminute)?

Answer:theprocesstimeateachworkerare:A:65sec,B:35sec,C:25sec,D:30sec,E:60sec.
WorkerAisthebottleneck.Theprocesscapacityis60sec/65sec=0.92toothbrushes/min.

Your initials: _________ Page 6 of 17

Q10.Supposetwoworkerscouldbehired,FandG,andtheytakethesametimetocomplete
tasksasthecurrentfiveworkers.FandGcanbeassignedtoworkeronthesamepairoftasks
asoneofthecurrentworkers.Forexample,FcouldbeassignedtasksT1andT2(justlike
workerA)whileGisassignedT5andT6(justlikeworkerC).Theycannotbeassignedtasksthat
arecurrentlyassignedtotwoworkers.Forexample,FcannotbeassignedtotasksT2andT3
(becausetheyarecurrentlybeingdonebyworkersAandB).Whatisthecapacityofthis
processwithworkersFandGincluded(toothbrushesperminute)?

Answer:assigntheextraonebyonetothebottleneckintheprocess.FirstassignworkerFtothe
currentbottleneckA.Thus,thetimetocompleteT1andT2foronetoothbrushatAandFis
65sec/2=32.5sec.NowthebottleneckisE.AssigntheotherworkerGtobeworkingwithE.The
timetocompleteT9andT10foronetoothbrushis60sec/2=30sec.ThecurrentbottleneckisB
with35secactivitytime.Thus,theprocesscapacityis60sec/35sec=1.71toothbrushes/min.

Q11.Returntothecaseof5workers.Supposetheassignmentoftaskstoworkerscanchange
butthesequenceoftasksmustremainthesame,workersmustbeassignedtoconsecutive
tasksandeachtaskcanbeassignedtoonlyoneworker.Forexample,workerAcoulddotasks
T1T3(becausetheyareconsecutive)butcannotbeassignT1,T2andT4.IfworkerAisassigned
totasksT1T3,thenworkerBsfirsttaskmustbeT4(workerBcannotalsobeassignedtotask
T3).Whatwouldthemaximumcapacitybeafterpossiblyreassigningtasks(toothbrushesper
minute)?

Answer:Thetotalprocesstimeforonetoothbrushis(40+25+20+15+10+15+10+20+25+25+35)=
215sec.Ifwehave5workers,thesystemcandonobetterthanis215/5=43sec/worker.Wetry
toassigntaskssuchtheprocesstimeattheslowestworkerisascloseasto43sec/worker.The
bestwecandoisthefollowing:A:T1(40sec),B:T2andT3(45sec),C:T4T7(50sec),D:T8T9
(45sec),T10(35sec).ThebottleneckisworkerC.Theprocesscapacityis60sec/50sec=1.2
toothbrushes/hour.

Your initials: _________ Page 7 of 17

(Q1213)ThelocalDepartmentofMotorVehiclesissuesnewlicensesandrenewslicenses.(See
thediagrambelow.)Theofficereceives110customersperhours.Allcustomersfirstseea
receptionist.Thereceptionistdirectstheminoneofthreedirections.75%godirectlytoIssue
License(staffedby9workers)whereanewphotoandlicensearedone.15%arerequiredto
takeaneyetest(staffedbyoneworker)and10%mustfirsttakeamultiplechoiceelectronic
writtentest(ononeofthreecomputers).Only85%ofpeoplepasstheeyetestandthe
remaining15%exit.ThecustomerswhopasstheeyetestproceedontotheWrittenTest.10%
ofthepeoplewhotakethewrittentestfailit,while90%passthetestandthenproceedto
IssueLicense.

75%

15% 15% Issue

Reception Eye Test Exit Exit
License

85%
10%
Written 90%
Test
Exit
10%

Dataoneachstationareprovidedinthefollowingtable:
Workers Activitytimeperworker(min)
Reception 1 0.4
EyeTest 1 5
WrittenTest 3 15
IssueLicense 9 6

Q12.WhatistheutilizationoftheReceptionist(asa%)?

Answer:
Work Activity Capacity Implied
ers time(min) Flowrate perhour utilization
Reception 1 0.4 110 150 73%
EyeTest 1 5 110*0.15=16.5 12 138%
WrittenTest 3 15 110*0.1+16.5*0.85=25.025 12 209%
IssueLicense 9 6 110*0.75+25.025*0.9=105.0225 90 117%

Utilizationofthereceptionist=73%.

Your initials: _________ Page 8 of 17

Q13.WhatistheimpliedutilizationofIssueLicense(asa%)?

Answer:theimpliedutilizationofIssueLicenseis117%.

(Q1415)TheYumandYeefoodtrucknearthebusinessschoolservescustomersduringlunch
hourbytakingordersandmakingfreshbatchesofstirfry.Customershaveonlyonechoice
duringthelunchhour,sincetheobjectiveistomaximizethenumberofcustomersserved.
Assumethateachcustomerplacesjustonelunchorder,andalllunchordersarethesamesize
oneunitofstirfry.
Thestirfrycookingworksinthismanner.First,abatchofordersiscookedinawokbyone
person.Thecookingdependsuponthenumberofordersinthebatch.Thetimetocookjust
oneorderis3minutes.Foreachadditionalorderinthebatch,ittakes0.5minutesmoreto
cook.Thus,cookingtwoordersinabatchtakes3.5minutes,cookingthreeorderstakes4
minutes,andsoon.

Theotherprocessisbaggingandacceptingpayments(donebyaseparateperson),whichtakes
0.80minutesperorder.

Q14.IfYumandYeeoperateswithbatchsizesof8units,whatistheirprocesscapacity(in
ordersperminute)?

Answer:thecapacityforcooking:setuptimeis2.5min.activitytimeperorder=0.5min.The
foodtruckproduces8unitswith2.5min+0.5min*8=6.5min.Thecapacityis
8/6.5min=1.23units/min.
Thecapacityforbaggingandacceptingpayments:1min/0.8min=1.25units/min.
Theprocesscapacityisthecapacityofcooking(bottleneck)=1.23unit/min.

Your initials: _________ Page 9 of 17

Q15.Calculatethebatchsize(inorders)thatwillmaximizetheoverallflowrate(assumethere
isampledemand)?DoNOTroundthebatchsize(i.e.,assumeforthiscalculationthatanon
integerbatchsizeispossible).

Answer:optimalordersizeshouldequalizethecapacityofthecookingstepandthebagging
step.Thatis,supposethebatchsizeisdenotedbyx,thenwehave(2.5+0.5*x)/x=0.8min.Solve
forx,x=8.3units/batch.

(Q1618)SarahsOrganicSoapCompanymakesfourkindsoforganicliquidsoapregular,
lavender,citrusandteatree.Demandforthefourscentsare150,120,75and50kgsper
hourrespectively.Sarahsproductionprocesscanproduceanysoapattherateof450kgsper
hourbut1.5hoursareneededtoswitchbetweenscents.Duringthoseswitchovertimes,the
processdoesntproduceanysoap.Sarahwantstochooseaproductionschedulethat(i)cycles
repeatedlythroughthefourscents,(ii)meetstherequireddemandand(iii)minimizesthe
amountofinventoryheld.

Q16.HowmanykgsofregularshouldSarahproducebeforeswitchingovertoanotherscent?

Answer:totalsetuptime=1.5*4=6hours.Totaldemandforallfourscentsperhour
=150+120+75+50=395kgs/hour.Supposexkgsofallfourscentsareproducedperbatch,thenit
takesxkgs/450kgs+6hourstoproducexkgs.Theprocesscapacityequalsthedemand,i.e.,x
/(x/450+6)=395kgs/hour.Solveforx,x=19390.91kgs.Ineachbatch,150/395*19390.91
=7363.636kgsofregularshouldbeproduced.

Your initials: _________ Page 10 of 17

Q17.SarahneedstopurchaseorganicPalmoiltomakehersoaps.Sheneeds1,000kgsofPalm
oilperdayonaverage.Thesupplierchargesa$60deliveryfeeperorder(whichisindependent
oftheordersize)and$4.75perkg.Sarahsannualholdingcostis25%.Assume52weeksper
yearand5daysperweek.IfSarahwantstominimizeinventoryholdingandorderingcosts,how
muchPalmoilshouldshepurchasewitheachorder(inkgs)?

Answer:Q*=sqrt(2*fixedcost*demand/holdingcost)=sqrt(2*$60*1000/($4.75*0.25/(52*5)))
=5125.786kgs.

Q18.SarahssupplieriswillingtosellherPalmoilata5%discountifshepurchases10,000kgs
atatime.Ifsheweretopurchase10000kgsperorderwhatwouldbeheraverageinventory
holdinganddeliveryfeesperday(in$s)?(Note,doNOTincludeherpurchasingcostsperday,
whichwouldbe1000x4.75x95%.)

Answer:deliverycostperdaywillbe$60/(10,000kgs/1000kgs/day)=$6/day
Theaverageinventorylevelis10,000/2=5000kgs.Inventorycostperdaywillbe$4.75*(1
5%)*(25%/52/5)*5000kgs=$21.6947.Thesumofthetwois$27.6947

Your initials: _________ Page 11 of 17

(Q1920)CPUonDemand(CPUD)offersrealtimehighperformancecomputingservices.CPUD
owns5supercomputersthatcanbeaccessedthroughtheInternet.Theircustomerssendjobs
thatarriveonaverageevery4minutes.Thestandarddeviationoftheinterarrivaltimesis4
minutes.Executingeachjobtakesonaverage16minutesofoneofthesupercomputers
(duringthistime,thecomputercannotperformanyotherwork).Thestandarddeviationofthis
processingtimeis24minutes.

Q19.Whatistheutilization(asa%)ofeachsupercomputer?

Answer:utilization=16min/(4min*5)=0.8

Q20.Onaverage,howmanyjobsarewaitingtostartprocessing?

.
Answer: . min
.

Iq=(1/4)jobs/min*15.003min=3.75jobs

Your initials: _________ Page 12 of 17

Q21.FestEventsisaconcertorganizerthatisevaluatingtheinstallationofportabletoiletsatan
outdoorvenuewhereaconcertisgoingtotakeplace.Inparticular,itisconsideringanareaof
thevenuethatisfarawayfromtheexistingrestrooms.Assumetherewillbeonesinglequeue
toaccessalltheportabletoiletsinthisareaandthatonlyonepersonusesatoiletatatime.
FestEventsisconcernedthatifthelineistoolong,peoplewillfindotherwaysandplacesto
answernaturescall.

FestEventsestimatesthattherewillbe4arrivalsperminuteonaveragetothetoilets,witha
standarddeviationofthetimebetweenarrivalsof15seconds.Theaveragetimeaperson
spendsusingthetoiletis3.12minuteswithstandarddeviationof2minutes.

WhatistheminimumnumberofportabletoiletsthatFestEventsmustinstalltoensurethatthe
queuelengthwillnotcontinuetogrowwithoutlimit(i.e.,sothatthequeuewillbestable)?
Youranswershouldbeanintegertheycaninstall2toiletsor3toiletsbuttheycannotinstall
2.6toilets.

Answer:toensurethatthequeuewillnotwithoutlimit,thecapacityshouldbegreaterthan
demand,orimpliedutilizationshouldbesmallerthan1.Thatis,p/(a*m)<1,or
m>p/a=3.12min/(1/4min)=12.48.Roundtheresultup,13toiletsareneeded.

Q22.Thereare30teamsinMajorLeagueBaseballwithintheU.S.,includingthePhiladelphia
Phillies.ThePhillieshaveagreatteamassembledforthe2011baseballseason.LasVegasis
providingtwocurrentpredictions:(i)thereisa13%chancetheywillmakeittotheWorld
Series,whichwillbeplayedinOctoberofthisyear;and(ii)thereisa9%probabilitytheywill
makeittotheWorldSeriesandwinit!Basedontheseprobabilities,whatistheprobability(as
a%)thattheywintheWorldSeriesconditionalthattheymakeittotheWorldSeries?

Answer:Pr(win|maketoworldseries)=Pr(win,maketowordseries)/Pr(maketoworld
series)=0.09/0.13=69.2%

Your initials: _________ Page 13 of 17

(Q2325)USAToday.comisconsideringitsadvertisingstrategy.Currently,whenauseropensa
newsarticletheyreceivethenewsarticlealongwithabanneradatthetopofthepage.
USAToday.commakesmoneyfromthebanneradiftheuserclicksonit.SoUSAToday.comhas
anincentivetoshowadstocustomersthatarelikelytobeclickedon.Thecurrentpracticeisto
showastandardadthatisindependentoftheparticularnewsstory.Theyareconsideringa
newsysteminwhichatargetedadwouldappearthatdependsonthenewsstory.Forexample,
ifauseropensupanarticleabouttheearthquakeinChristchurch,NewZealand,theycould
receiveatargetedadforearthquakeinsurance.Thereisa1.25%probabilitytheyclickona
targetedad.Iftheyclickonthetargetedad,USAToday.comsrevenueis10pennies.Ifa
targetedadisshownandtheuserdoesntclick,revenueiszero.IfUSAToday.comdisplaysa
standardad,theexpectedrevenueis0.1penniesperuser.(Wellworkwithpenniesratherthan
dollarstoavoiddealingwithsuchsmalldecimals.)

Q23Whatistheexpectedrevenue(inpennies)ofeachusertoUSAToday.com?

Answer:0.125pennies

Q24Whatistheexpectedrevenuewithperfectinformation(inpennies)?Note,thisquestionis
NOTaskingfortheEVPI,whichisthedifferencebetweenexpectedrevenuewithperfect
information(whatthisquestionisaskingfor)andexpectedrevenuewithoutinformation(the
previousquestion).Instead,youaretoanswerjustthefirstpart,theexpectedrevenuewith
perfectinformation.

Answer:10*0.0125+0.1*(10.0125)=0.2238pennies

Your initials: _________ Page 14 of 17

Q25Astartupcompany,UPAnalytics(UPA,forshort)sellsaservicethatclaimstopredictuser
intentionsbetterthanUSAToday.comcandoonitsown.Inparticular,theylookatmoredetails
oftheusershistoryaswellasthewordingofthearticletoderivenewestimatesofuser
behavior.Iftheyarehiredtomakeadecision,theyprovidearecommendation,eitherTarget
orStandard.IftherecommendationisTarget,experienceshowsthattheuserwillclickon
atargetedadwitha4.8%probability.However,iftherecommendationisStandard,
experienceshowsthattheuserwillclickonatargetedadwithonlya0.2%probability.Whatis
theprobability(asa%)thatUPAwillrecommendTarget?

Answer:Pr(click)=Pr(click|target)*Pr(target)+Pr(click|standard)*(1Pr(target))
Thus,0.0125=0.048*Pr(target)+0.002*(1Pr(target))=0.2283

Q26.Itiscostlytoholdinventory(e.g.,storagecosts,obsolescencecosts,etc.)
butinventorycanalsobeusefulinaprocessbecause(choosethebestanswer)
a) Addinginventorytoaprocesswillshortentheaveragetimeaunitspends
inaprocess.
b) Addinginventorytoaprocesscanincreasethecapacityoftheprocess.
c) Addinginventorytoaprocessislikelytoincreasequality.
d) Noneoftheabove
e) Alloftheabove

Answer:B.Addinginventory(oraddingbuffer)reduceschancesthattheprocess
starvingforitemstoworkon,thusimprovetheprocesscapacity.

Q27.Whichofthefollowingmostdirectlyexpressesthemotivationbehindthe
expressionDonotblockthebottleneck!?
a) Ifthebottleneckhasnothingtoworkon,theoverallcapacityofthe
processwillbelowerthanitcouldbe.
b) Ifthebottleneckispreventedfromworking(e.g.,ithasnowheretoput
itsoutput),theoverallcapacitywillbereduced.
c) Blockingthebottleneckwillincreasethecoefficientofvariationofthe
arrivalprocess,whichdecreasescapacity.
d) Blockingthebottleneckincreasesinventoryturns,whichincreasesthe
annualholdingcosts.
e) Itisnotgoodtoblockthebottleneckbecausethereareeconomiesof
scaleininventorymanagement.
Answer:B.

Q28.Whichofthefollowingmostdirectlyexpressesthemotivationbehindthe
expressionBufferorSuffer?
a) Addingproductvarietytoaprocesswithsetuptimesislikelytoincrease
theaverageamountofinventoryneeded.
b) Toincreasecapacity,itisimportanttoreducesetuptimesinaprocess.
c) Ifyouwanttoincreasethecapacityofaprocess,addcapacityfirsttothe
bottleneck.
d) Ifthereisvariabilityinthearrivalprocessorinactivitytimes,makesure
thereissufficientinventorybetweenstages,otherwisecapacitywillbe
reduced.
e) Whentherearesetupcosts,producinginlargeenoughbatchesis
importanttoavoidreducingcapacity.

Answer:D.

Your initials: _________ Page 16 of 17

Q29.Whichofthefollowingbestreflectspoolingcapacitytoreducerestroom
queuelengths?
a) Addmoretoiletstoincreasecapacity.
b) Installaflexiblepartitionthatcanalterthesizeofthewomensandthe
mensrestrooms.
c) Converttheseparatemensandwomensroomsintoasingleunisex
restroom(thatbothmenandwomencanuse).
d) Removemirrorsintherestroomtodecreasethetimeusersspendinthe
restroom.
e) Addautomaticflushcapabilitytoeachtoilettodecreaseprocessing
times.

Answer:C

Your initials: _________ Page 17 of 17

Q30.Thefollowingfourgraphs(labeledA,B,CandDintheupperrightcorner)
displaythenumberofcustomersinaqueuingsystem(yaxis)overalongperiod
oftime(xaxis).Whichofthefollowingismostlikelyastablesystem?
a) OnlyA
b) OnlyB
c) OnlyC
d) OnlyD
e) OnlyBandC
f) Noneofthem
g) Allofthem

100
100

90
A B
90
Total number of customers in the system

Total number of customers in the system

80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
0 5000 10000 15000 20000 25000 30000 0 5000 10000 15000 20000 25000 30000
Time (seconds) Time (seconds)

100 100

90 C 90 D
Total number of customers in the system
Total number of customers in the system

80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
0 5000 10000 15000 20000 25000 30000 0 5000 10000 15000 20000 25000 30000
Time (seconds) Time (seconds)

Answer:D.