OPIM 101 - Spring 2013

Recitation 1 Exercise SOLUTIONS

Section#(201,202,,214):_____________

Instructor(circle): Greminger Kaaua Kang Mannarino Routh

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Q1 A Rhode Island company produces communion wafers for churches around the country and the
world. The little company produces a lot of wafers more than 400 million per year. When in
production,theprocessproduceswafersattherateof80persecond.Duringthisproductionprocess
thewafersmustspend15minutespassingthroughacoolingtube.Howmanywafersdoesthecooling
tube hold on average when in production (in other words, dont count the time they are not in
production)?Assumethecompanyproduces250daysayearand6hoursduringeachofthosedays.

I=R*T
72,000
R=80/sec

T=15*60=900seconds

I=80*900=72,000

Q2Supposearetailersannualinventoryturnsis5.5.Whatisitsdaysofsupplyofinventory?Assume
365daysperyear.
66.4
Yearsofsupply=1/AnnualInventoryTurns=1/5.5

Daysofsupply=365*Yearsofsupply=365*(1/5.5)=66.4

Q3 Suppose a retailer turns its inventory of soda 50 times per year. On average it has 225 bottles of
sodaonitsshelves.Whatisitsaveragedailysalesrate?(Assume365daysperyear).

Annualinventoryturns=50=R/I
17.1
30.8
I=225bottlesofsoda

R=IxAnnualTurns=225x50=11,250peryear

11,250peryear/365daysperyear=30.8perday

Medtronicsellsmedicaldevices.Thecompanyenjoysmanygrowthopportunities,andsoitmeasures
itsinventoryholdingcostattherateof30%peryear.Itcurrentlyturnsitsinventoryover5timesper
year.Itsgrossmarginasapercentageofitscostofgoodssoldisanenviable250%.

Q4ForanitemthatcostsMedtronic$1500toproduce,whatwouldbethehypotheticalcost(in$s)to
holdthisitemforoneyearininventory?

$1500*0.3=$450
$450

Q5ForanitemthatcostsMedtronic$500toproduce,whatistheactualcosttoholditininventory(in
$s)?

AnnualTurns=5
$30

Holdingcostforanitemwith5turnsis30%/5=6%

6%x$500=$30

 Process Process Process Process Process

Step1 Step2 Step3 Step4 Step5

Theabovediagramdepictsafivestepheadphonemanufacturingplant.Theheadphonesaremeantto
beusedwithpersonalmusicplayers.Step1involvesaworkerbendingametalstripintoanarcshape.
Instep2,themetalarcisfittedwithaplasticsleeve.Instep3,theheadphonesarefittedattheendof
themetalandplasticstrips.Instep4,thewiresaresolderedintotheheadphones.Step5involvesa
speciallydesignedpackagingunit.Theplantmanagernotesthefollowing:

#ofworkers/machines Processinginformation
perworkerormachine
Step1 3 45secondsperheadphone
Step2 1 3headphonesperminute
Step3 1 2.5headphonesperminute
Step4 2 40secondsperheadphone
Step5 1 15secondsperheadphone

Q6Whatisthecapacityofstep5inheadphonesperhour?
240
15secs/headphone=4headphone/min=240headphones/hour

Q7Howmanyheadphonescanthemanufacturingplantproduceperhour?

150

Weneedtoevaluatethecapacityofeachstep:

Step1:For1worker:45sec/headphone=(3600/45)=80headphones/hour

3workersproduce3x80=240headphones/hour

Step2: 3headphones/min=3x60=180headphones/hour

Step3: 2.5headphones/min=2.5x60=150headphones/hour

Step4: For1worker:40sec/headphone=(3600/40)=90headphones/hour

2workersproduce2x90=180headphonesperhour

Thebottleneckisstep3(minimumcapacity).Theprocesscanproduce150headphones/hour

20% 50% 90%

R1 R2 R3 Accept

80% 50% 10%

Reject Reject Reject

Q8Thediagramabovedescribesathreestagepublicationprocess.PapersaresubmittedaninstageR1,
80%arerejectedwhile20%moveontostageR2.OfthepapersthatenterstageR2,50%arerejected
and50%aresenttoR3.Finally,90%ofthepapersthatenterstageR3areeventuallyaccepted.Thegoal
istoaccept100papersperyear.Howmanypapersneedtobesubmitted(i.e.,theflowrateintoR1)to
achievethisgoal?

If100papersleaveR3,then100/0.9=111mustenterR3. 1111

If111leaveR2,then111/0.5=222mustenterR2

If222enterR2then222/0.2=1111mustenterR1