Solution for HW3

1.Suppose that AlwaysRain Irrigation's marketing department will undertake an intense ad campaign for the bronze
sprinklers, which are more expensive but also more durable than the plastic ones. Forecast demand for the next four
years is

YEARLY DEMAND
1 (in 000s) 2 (in 000s) 3 (in 000s) 4 (in 000s)
Plastic 90 32 44 55 56
Plastic 180 15 16 17 18
Plastic 360 50 55 64 67
Bronze 90 11 15 18 23
Bronze 180 6 5 6 9
Bronze 360 15 16 17 20

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Both production lines can produce all the different types of nozzles. The bronze machines needed for the bronze
sprinklers require two operators and can produce up to 12,000 sprinklers. The plastic injection molding machine

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needed for the plastic sprinklers requires four operators and can produce up to 200,000 sprinklers. Three bronze

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machines and only one injection molding machine are available.

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a. What are the capacity implications of the marketing campaign (assume no learning) ----- 4
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Year 1 2 3 4
Demand for plastic
sprinklers
97 115 136 141
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Machine
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Requirement 0.49 0.58 0.68 0.71

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Labor Requirement
1.96 2.32 2.72 2.84

Year 1 2 3 4
ed d

Demand for Bronze 32 36 41 52

Machine
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Requirement 2.67 3 3.42 4.33

Labor Requirement 5.34 6 6.84 8.66
It is obvious that not enough capacity is available after year two to meet the increased demand.
AlwaysRain will have to consider purchasing additional machines for the bronze operations.
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b.

Comment on the capacity to support the four year marketing campaign. -1

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A. Enough capacity

B. Not enough capacity

2. At a decision point in a decision tree, which machine would you select when trying to maximize payoff
when the anticipated benefit of selecting machine A is $45,000 with a probability of 90%; the expected

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 benefit of selecting machine B is $80,000 with a probability of 50% and the expected benefit of selecting
machine C is $60,000 with a probability of 75%? ----3

A. Machine A

B. Machine B

C. Machine C

D. You would be indifferent between machines A and C

3. The way to build in greater flexibility in your workers is to do which of the following? ---1

A. Pay higher wages to motivate a willingness to do a variety to tasks

B. Provide a broader range of training

C. Provide a wide variety of technology to augment workers skills

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D. Institute a "pay for skills" program

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4. The capacity focus concept can be put into practice through a mechanism called -PWP--------------------? --1

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5. Capacity planning involving acquisition or disposal of fixed assets such as buildings, equipment or facilities
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is considered as Long Range----------------- planning horizons? ---1
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6. Number of rooms in a hotel is -----Internal---------------- measure of capacity? ---1

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7. The ability to rapidly and inexpensively switch production from one product to another enables what are
sometimes referred to as: ----1
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A. Economies of scale
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B. Economies of size

C. Economies of shape
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D. Economies of scope
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8. In practice achieving a perfectly balanced plant is usually both impossible and undesirable. ----1
sh

True

False

9. Low rates of capacity utilization in service organizations are never appropriate. ----1

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 True

False

10. Sharing capacity is a common source of External -------- capacity. ----1

11. The ultimate in plant flexibility is a one-hour-changeover time plant. ----1

True False

12. A piece of equipment with twice the capacity of another piece typically costs twice as much to purchase
and to operate. ----1

True False

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13. If the actual output of a piece of equipment during an hour is 500 units and it's designed capacity is at a

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rate of 400 units per hour, which of the following is the capacity utilization rate? ----2

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A. 1.25

B. 1.00 rs e
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C. 1.50

D. None of the above( because Capacity utilization is actual output over the effective capacity or best
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operating level ).
aC s
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sh

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