MGMT 410 Production Management Midterm Exam

MGMT 410 Production Management Midterm

Midterm Exam TYPE: A

DUE: 11:59PM, Sunday, March 7 2021

Part 2: Problem Solving

Spring 2021

MGMT 410 Production Management

Department of Management and Marketing School of Business and Management Azusa Pacific University

Azusa, CA 91702


· There are 6 pages to this exam, including this cover.

· You have 4 problem-solving questions in the 2nd part.

· The exam is open book, open note exam.

· You may use a calculator, if you desire. You’re NOT allowed to use a laptop computer/cell. phone.

· Partial credit will be given for partial answers wherever possible – don’t leave questions blank.

· If you find a problem confusing or ambiguous, write out your assumptions and answer.

· Good Luck!

On my honor, as an Azusa Pacific University student, I have neither given nor received unauthorized assistance on this work.

Signature: _______________________________________________________ Name: _________________________________________________________

APU email address: ___________________________

Date: __________________________________

Part II. Problem Solving (50 pts. 4 Questions, 5~20 points for each question)

1. [Ch. 1. Calculation of Productivity] A Cougars Moving Supply company makes 390 packing boxes for household items per day. We assume that THIRTY employees work for 10-hours per day. Due to decreased demand, the plant manager has decided to operate TWENTY 8-hour shifts instead in the near future. (Twenty employees will work for 8 hours per day.) The plant will be able to produce 200 to meet the market demand under the new production plan. (10 pts)

(a) Calculate the company’s labor productivity before the change (=The productivity of the current system) and after the change (=The productivity of the new system). Please format your numbers to display two decimal places with rounding. (3 pts)

(b) What is the percentage change in the labor productivity from the current system to the new production plan? (Please specify percentage increase/decrease or positive/negative.) (3 pts)

(c) If the labor productivity can be increased to 1.40 boxes per labor-hour in the NEW system, how many items should be produced to achieve that productivity on that day? (Hint: Labor input will remain the same as TWENTY 8-hour shifts, which means that Twenty employees work for 8 hours per day.) (4 pts)

2. [Ch. 3. Project Management] Azusa Bike Shop is behind the project schedule on a custom bike and needs to crash 1 day of time from the 6-step project. Given the project table below answer the following questions. Suppose this shop calls the customer and asks for a project extension, reducing the amount of time she/he needs to crash. [Note: The project can be speeded up (or “crashed”) by spending more money on each activity. For example, activity A currently takes 10 days, but can be reduced to either 9 days or 8 days at additional costs.] (10 pts)

Activity Immediate Predecessors Normal Time (days) Normal Cost Crash Time (days) Crash Cost
A __ 10 30 8 70
B A 8 120 6 150
C B 10 100 7 160
D A 5 40 4 50
E D 10 50 8 75
F C, E 3 60 1 95

(a) Draw a project network diagram, including activity durations under the normal business conditions. (Please show all the activities from the starting point to the end.) You may use either AON (Activity On Node) method or AOA (Activity On Arrow). (1 pt)

(Hint: Please use the normal time for the duration of each activity.)

(b) What is the Critical Path in the network? (1 pt)

(Hint: Please use the normal time for the duration of each activity.)

(c) What is the Project Completion Time? (1 pt)

(Hint: Please use the normal time for the duration of each activity.)

2. (Continued)

(d) What is the maximum possible reduction time (in days ) for the activity C? (1 pt)

(e) [Challenging Question based on Online Class Discussion – Slack Time] What is the slack time (in days) associated with any and all non-critical paths through the project? If activity D were delayed by TWO time units (days), what would happen to the entire project duration? Please specify whether the entire project will be delayed or not. (Please show all your work. You may compute the slack time using ES, EF, LS, and LF in your project network diagram) (3 pts)

(f) [Project Crashing] Let’s assume that your client wants you to finish your project one day earlier. [Part 1] Which activities should be crashed to reduce the duration of the project and [Part 2] how much is the minimum additional cost, if the objective is to minimize the total crashing costs, while meeting the deadline of 30 days (by reducing the duration of the project by one day)? (Please show all your work.) (3 pts)

3. [Ch. 4. Business Forecasting – Decision Making on Forecasting Models] Alexa is a department manager at a local department store. He took statistics and operations management in college and has recently forecast sales of toasters using a combination of forecasting methods and his expertise/experiences as below: (10 pts)

Based on the forecasting error, Mean Absolute Deviation (MAD) for the manager’s forecast and all the other forecasts, which method seems the most accurate method and the least accurate among proposed forecasting approaches? Why? (Please state your reasons using the forecasting errors.) [You don’t have to calculate any statistical measures or indexes.]

4. [Switching Points/Cross-Over Points – Applications of Breakeven Point Analysis] Luke Jordan, the owner of Lakers Pizza restaurant, is considering a new oven in which to bake the restaurant’s signature dish, vegetarian & seafood pizza. Oven type A can handle 20 pizzas an hour. The fixed costs associated with oven A are $25,000 and the variable costs are $2.15 per pizza. Oven B is larger and can handle 60 pizzas an hour. The fixed costs associated with oven B are $35,000 and the variable costs are $1.65 per pizza. The pizzas sell for $15.00 each. (10 pts)

(a) What is the Break-Even Point (BEP) for each oven?

(b) If the owner of this restaurant expects to sell 9,000 pizzas, which oven system are you going to recommend? (Net Profit = Total Revenue (TR) – Total Cost (TC))

(c) If the owner of this restaurant expects to sell 39,000 pizzas, which oven system should he/she purchase? (Net Profit = Total Revenue (TR) – Total Cost (TC))

(d) At what volume, should the owner of this restaurant switch ovens to maximize the profit? (Switching Point (= Cross-over Point) where TC1 = TC2)

5. [Application of Capacity/Bottleneck Analysis (10 pts)] Azusa Automotive Company is a 5-station work cell process in its laboratory. The following flow chart shows one of the inspection processes in the lab. As an operations management specialist, you are assigned to analyze the relationship between the capacity and the bottleneck in the process.

(a) Where is a bottleneck process? (2 pts)

(b) What is the bottleneck time? (1 pt)

(c) What is the throughput time of the entire process? (1 pt)

(d) [Challenging Question] If we get 13 items per hour at the station#2 (Machine D) in an 8-hour shift per day, what would the daily utilization rate be at this station? (3 pts)

(e) [Challenging Question] If the firm operates 10 hours per day, 5 days per week, what is the weekly capacity of this process? (3 pts)








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