Faircloth Financial specializes in home equity loans, loans that customers can take out against the equity they have in their homes. (“equity” represents the difference between the home’s value and the amount a customer owns on any other loans.) The current process is as follows: • The customer downloads the loan application forms from the Web, fills them in, and mails them to Faircloth (3–5 days).
• If there are any problems with the forms (and there usually are), a customer sales representative calls up the customer and reviews these problems. It may take 1 to 2 days to contact the customer. After reaching the customer, resolving the problem can take anywhere from 5 minutes to 30 minutes. If the customer needs to initial or sign some new forms, it takes 5–7 days to mail the forms to the customer and have her send them back.
• Every Monday morning, the customer sales representatives take a batch of completed, correct application forms to the loan officers. This means that if a correct loan application comes in on Tuesday, the soonest it can get to a loan officer is the following Monday. The loan officers then take 2 to 3 days to process the batch of loans, based on information on the forms and information available from credit rating bureaus. Customers are advised by email and regular mail regarding the final decision.
a. (***) Map out the current process. Identify any rework loops and delays in the process. What causes these? What is the impact on cycle times? How might this affect customers’ willingness to do business with Faircloth?
b. (***) What changes might you recommend to redesign this process with the needs of the customer in mind? You might start by imagining how the “perfect” process would look to the customer and base your recommendations on that
> Reiss Inc. was organized on June 1, Year 1. It was authorized to issue 500,000 shares of $10 par common stock and 100,000 shares of 4 percent cumulative class A preferred stock. The class A stock had a stated value of $50 per share. The following stock t
> Newly formed Irwin Services Corporation has 100,000 shares of $10 par common stock authorized. On March 1, Year 1, Irwin Services issued 20,000 shares of the stock for $12 per share. On May 2, the company issued an additional 30,000 shares for $15 per sh
> ALR Corporation had the following stock issued and outstanding at January 1, Year 1: 1. 200,000 shares of $10 par common stock. 2. 8,000 shares of $100 par, 4 percent, noncumulative preferred stock. On May 10, ALR Corporation declared the annual cash div
> When Ching Corporation was organized in January Year 1, it immediately issued 10,000 shares of $50 par, 5 percent, cumulative preferred stock and 15,000 shares of $10 par common stock. The company’s earnings history is as follows: Year 1, net loss of $18
> Ford Motor Company is one of the world’s largest automobile manufacturing companies. The following data were taken from the company’s 2016 annual report: Required: a. Compute Ford’s price-earnings r
> The stockholders’ equity section of Creighton Company’s balance sheet is shown as follows: Required: a. Assuming the preferred stock was originally issued for cash, determine the amount of cash that was collected whe
> Bronson Inc. has 300,000 shares authorized, 175,000 shares issued, and 25,000 shares of treasury stock. At this point, Bronson has $820,000 of assets. $250,000 liabilities, $400,000 of common stock, and $170,000 of retained earnings. Further, assume that
> D. Reed and J. Files started the RF partnership on January 1, Year 1. The business acquired $70,000 cash from Reed and $140,000 from Files. During Year 1, the partnership earned $75,000 in cash revenues and paid $39,000 for cash expenses. Reed withdrew $
> Pepper Company’s earnings were approximately the same in Year 1 and Year 2. Even so, the company’s P/E ratio dropped significantly. Required: Speculate about why Pepper’s P/E ratio dropped significantly while its earnings remained constant.
> A sole proprietorship was started on January 1, Year 1, when it received $30,000 cash from Maria Lopez, the owner. During Year 1, the company earned $50,000 in cash revenues and paid $22,300 in cash expenses. Lopez withdrew $10,000 cash from the business
> Davis, Inc. and Royal, Inc. reported net incomes of $81,000 and $93,000, respectively, for their most recent fiscal years. Both companies had 10,000 shares of common stock issued and outstanding. The market price per share of Davis’ stock was $130, while
> The Cutting Edge (TCE) is one of the world’s largest lawn mower distributors. TCE is concerned about maintaining an adequate supply of the economy line mowers that it sells in its stores. TCE currently obtains its economy-line mowers from two suppliers.
> On December 30, Odom Enterprises (OE) had $120,000 of cash, $35,000 of liabilities, $50,000 of common stock, and $35,000 of unrestricted retained earnings. On December 31, OE appropriated retained earnings in the amount of $15,000 for a future remodeling
> The market value of Granger Corporation’s common stock had become excessively high. The stock was currently selling for $240 per share. To reduce the market price of the common stock, Granger declared a 3-for-1 stock split for the 200,000 outstanding sha
> Egrett Corporation issued a 4 percent stock dividend on 20,000 shares of its $10 par common stock. At the time of the dividend, the market value of the stock was $30 per share. Required: a. Compute the amount of the stock dividend. b. Show the effects o
> Listed here are data for five companies. These data are for the companies’ 2016 fiscal years. The market price per share is the closing price of the companies’ stock as of March 24, 2017. Except for market price per sh
> Obtain the Target Corporation’s annual report at http://investors.target.com using the instruction in Appendix B, and use it to answer the following questions: Required: a. What is the par value per share of Target’s stock? b. How many shares of Target’
> (***) Omega Design is moving into an old Victorian building with a very unusual floor layout:Distances, in meters, between the areas are as follows:The numbers of daily interdepartmental trips are as follows:Use the “minimal distance tr
> Dr. Mike Douvas is opening a new sports clinic and is wondering how to arrange the six different departments of the clinic:1. Waiting;2. Reception;3. Records and staff lounge;4. Examination;5. Outpatient surgery; and6. Physical therapy.A map of the clini
> (**) As the new facilities manager at Hardin Company, you have been asked to determine the layout for four departments on the fourth floor of the company’s headquarters. Following is a map of the floor with distances between the areas:T
> ABS sells construction materials to commercial and home builders. One of ABS’s key processes is the order fulfillment process shown below and described as follows:• All orders are assessed on arrival. Of the orders, 30
> The Lenovo Refurbishing Center repairs used laptops that are returned under warranty. • The center receives and processes, on average, 200 laptops per day.• All laptops are tested upon receipt: 30% are immediately reje
> (***) (Microsoft Excel problem) The following figure shows an expanded version of the Excel spreadsheet described in Using Excel in Capacity Management (see the following page). In addition to the break-even and indifference points, the expanded spreadsh
> The local university has developed an eight-step process for screening the thousands of admissions applications it gets each year. The provost has decided that the best way to take a first cut at all these applications is by employing a line process. The
> Rich Sawyer runs a landscaping firm. Each year Rich contracts for labor and equipment hours from a local construction company. The construction company has given Rich three different capacity options: Cost per labor hour: …â
> After graduating from college, your friends and you start an Internet auction service called TriangCom. Business has been fantastic, with 10 million customer visits—or “hits”—to the
> Wake County has a special emergency rescue team. The team is practicing rescuing dummies from a smokefilled building. The first time, the team took 240 seconds (4 minutes). The second time, it took 180 seconds (3 minutes).a. (*) What is the estimated lea
> Benson Racing is training a new pit crew for its racing team. For its first practice run, the pit crew is able to complete all the tasks in exactly 30 seconds—not exactly world-class. The second time around, the crew shaves 4.5 seconds off its time.a. (*
> Peri Thompson is the sole dispatcher for Thompson Termite Control. Peri’s job is to take customer calls, schedule appointments, and in some cases resolve any service or billing questions while the customer is on the phone. Peri can handle about 15 calls
> Clay runs a small hot dog stand in downtown Chapel Hill. Clay can serve about 30 customers an hour. During lunchtime, customers randomly arrive at a rate of 20 per hour.a. (*) What percentage of the time is Clay busy?b. (*) On average, how many customers
> Merck is considering launching a new drug called Laffolin. Merck has identified two possible demand scenarios:Demand Level………………â
> Philip Neilson owns a fireworks store. Philip’s fixed costs are $15,000 a month, and each fireworks assortment he sells costs, on average, $10. The average selling price for an assortment is $30.a. (*) What is the break-even point for Philip’s fireworks
> Emily Watkins, a recent college graduate, faces some tough choices. Emily must decide whether to accept an offer for a job that pays $35,000 or hold out for another job that pays $45,000 a year. Emily thinks there is a 75% chance that she will get an off
> You are the new CEO of Dualjet, a U.S. company that makes premium kitchen stoves for home use. You must decide whether to assemble the stoves in-house or to have a Mexican company do it. The fixed and variable costs for each option are as follows: a. (*
> Rayloc rebuilds automotive components. Its main facility has a work cell dedicated to rebuilding fuel pumps. The tasks, times, and predecessor relationships are as follows:a. (**) Draw a precedence diagram for the tasks. Rayloc would like the cell to be
> Consider the two capacity options for Arktec Manufacturing shown below:Demand (Units Per Year)…………………. Probability
> (*) Suppose the Shelly Group has identified two possible demand levels for copies per month:Copies (Per Month) ………..Probability5,000 …………………………….....……..50%10,000……………………………...…..….. 50%What is the expected cost if it costs $700 per month to lease a new
> Arktec Manufacturing must choose between the following two capacity options:a. (*) What would the cost be for each option if the demand level is 30,000 units per year? If it is 80,000 units per year?b. (**) In general, which option do you think would be
> (*) The Shelly Group has leased a new copier that costs $850 per month plus $0.20 for each copy. What is the total cost if Shelly makes 10,000 copies a month? If it makes 20,000 copies a month? What is the per-copy cost at 10,000 copies? At 20,000 copies
> Consider Example 4.1 and the accompanying Figure 4.6 from the book chapter.a. (**) Calculate the percent value-added time for the current process. Which activities do you consider to be value added? Why?b. (***) Suppose management actually does put a sys
> Average waiting times and ride times for two of Dizzy- World’s rides are as follows:a. (*) Calculate the percent value-added time for each ride.b. (**) Now suppose DizzyWorld puts in place a reservation system for the Haunted Roller Coa
> (**) When a driver enters the license bureau to have his license renewed, he spends, on average, 45 minutes in line, 2 minutes having his eyes tested, and 3 minutes to have his photograph taken. What is the percent value-added time? Explain any assumptio
> Insurance agency has determined that the standard time to replace a fender is 2.5 hours (i.e., “standard output” = 0.4 fenders per hour) and is willing to pay Gibson $50 per hour for labor (parts and supplies are billed separately). Gibson pays its worke
> (**) Precision Machinery has set standard times for its field representatives to perform certain jobs. The standard time allowed for routine maintenance is 2 hours (i.e., “standard output” = 0.5 jobs per hour). One of
> (*) A customer support job requires workers to complete a particular online form in 60 seconds. Les can finish the form in 70 seconds. What is his efficiency? What other performance measures might be important here?
> The state tax department wants to set up what would amount to a series of identical production lines (running 8 hours a day) for processing state tax returns that are submitted on the state’s “EZ” for
> Smarmy Sales, Inc. (SSI), sells herbal remedies through its Web site and through phone reps. Over the past six years, SSI has started to depend more and more on its Web site to generate sales. The figures below show total sales, phone rep costs, and Web
> (**) Consider the output and labor hour figures shown in the following table. Calculate the labor productivity for each week, as well as the average labor productivity for all six weeks. Do any of the weeks seem unusual to you? Explain.,,,
> Marci spends 15 hours researching and writing a 20-page report for her philosophy class. Jack brags that he has a “streamlined process” for performing the researching and writing. Jack takes just 8 hours to research and write the paper, but his report is
> Billy’s Hamburger Barn has a single drive-up window. Currently, there is one attendant at the window who takes the order (30–40 seconds), gathers up the food and bags it (30–120 seconds), and then takes the customer’s money (30–40 seconds) before handing
> (***) (Microsoft Excel problem) The following figure shows an Excel spreadsheet that calculates the value index for each of two alternative suppliers. Re-create this spreadsheet in Excel. You should develop the spreadsheet so that the results will be rec
> Reconsider Figure 2.3. Suppose Supplier B improves its conformance quality so that the chemicals it produces are now 99.9% pure. The chart at the bottom of the previous page shows the new competitive situation: a. (*) Will this be enough to make Supplie
> A Chicago-based manufacturer is looking for someone to handle its shipments to the West Coast. In order to evaluate potential transportation providers, the manufacturer has developed the following criteria. At a minimum, a shipper must be able to:a. Pick
> You have just graduated from college and are looking to buy your first car. Money is tight right now, so you are concerned with initial cost as well as ongoing expenses. At the same time, you don’t want to drive a slow, outdated car lik
> Visit the Web site for the Supply Chain Council, at www .supply-chain.org. What is the purpose of the council? Who are some of the members?
> LightEdge Technologies would like to put in place an assembly line in its Mexican facility that puts together Internet servers. The tasks needed to accomplish this, including times and predecessor relationships, are as follows:a. (*) Draw a precedence di
> Visit the Web sites for the professional organizations listed in this chapter. Who are their target audiences? Are some more focused on purchasing professionals or logistics professionals? Which of the careers listed in these Web sites are mentioned in t
> Draw out the transformation process similar to Figure 1.1 for a simple operations function, such as a health clinic or a car repair shop. What are the inputs? The outputs?
> AnderSet Laboratories produces rough lenses that will ultimately be ground into precision lenses for use in laboratory equipment. The company has developed the following thickness measures, based on 15 samples of four lenses that were taken when the proc
> (**) LaBoing produces springs, which are categorized as either acceptable or defective. During a period in which the manufacturing processes are under control, LaBoing takes multiple samples of 100 springs each, resulting in a calculated p value of 0.07.
> (*) The River Rock Company sells 200-pound bags of decorative rocks for landscaping use. The current bagging process yields samples with X and R values of 200 pounds and 12 pounds, respectively. Each sample consists of 12 observations. Develop the approp
> mean value of 64 ounces and a standard deviation of 6 ounces.a. (**) Suppose that the upper and lower tolerance limits are 79 and 65 ounces, respectively. What is the process capability ratio? What would the standard deviation have to be in order for the
> Leah’s Toys guarantees to ship customer orders in 24 hours or less. The following chart contains results for five samples of nine customer orders each:a. (**) Based on these results, estimate the p and Sp values.b. (**) A student commen
> Leah’s Toys makes rubber balls. The current process is capable of producing balls that weigh, on average, 3 ounces, with a standard deviation of 0.25 ounces.a. (*) What is the process capability ratio, assuming upper and lower tolerance limits of 3.5 and
> (*) Leah’s Toys produces molded plastic baby rattles. These rattles must be completely smooth. That is, there can be no rough edges where the molded halves fit together. Rattles are judged to be either acceptable or defective with regard to this requirem
> (*) Tyler Apiaries sells bees and beekeeping supplies. Bees (including a queen) are shipped in special packages according to weight. Suppose Tyler changes its processes so that the average package weight is now 1.7 kg, with a new standard deviation of 0.
> (**) Solar Stoves makes high-end gas stoves for domestic use. The total task time needed to make a stove is 400 seconds, with the longest individual task taking 60 seconds. Solar stoves would like to set up a line capable of producing 100 coolers per 8-h
> (**) Lazy B Ranch produces leather hides for use in the furniture and automotive upholstery industry. The company has taken 10 samples of nine observations each, measuring the square footage of each hide. Summary data are as follows: Use these data to s
> (*) Tyler Apiaries sells bees and beekeeping supplies. Bees (including a queen) are shipped in special packages according to weight. The target weight of a package is 1.5 kg. Historically, Tyler’s shipments have weighed on average 1.5 kg, with a standard
> (***) (Microsoft Excel problem) The Excel spreadsheet to the right calculates the upper and lower control limits for an attribute (in this case, the proportion of dissatisfied customers). Re-create this spreadsheet in Excel. You should develop the spread
> (***) (Microsoft Excel problem) The Excel spreadsheet at the top of the next page calculates the upper and lower control limits for a continuous variable. Re-create this spreadsheet in Excel. You should develop the spreadsheet so that the results will be
> The Oceanside Apparel Company manufactures men’s knit shirts. The production process requires material to be cut into large patterned squares, which are then sewn together. If the squares are not the correct length, the final shirt will
> Central Airlines would like to set up a control chart to monitor its on-time arrival performance. Each day over a 10-day period, Central Airlines chose 30 flights at random and tracked the number of late arrivals in each sample. The results are as follow
> BHC produces bags of cement. The stated weight for a bag of cement is 200 pounds. Customers will accept an occasional bag weighing as little as 196 pounds, as long as the average weight is at least 209 pounds. At the same time, BHC doesn’t want to give a
> Crawford Pharmaceuticals has developed a new drug, Vaxidene. The target amount for a single dose of Vaxidene is 125 mg. Patients can receive as little as 98 mg or as much as 102 mg without experiencing any ill effects. Because of potential liability issu
> EK Chemical Company sells a specialty chemical in packages marked 100 g. In reality, EK has set the process mean at 100.5 g, and the process currently has a standard deviation of 0.50 g. Suppose the customer will accept anywhere least 100 g.a. (**) Calc
> An insurance company has an online help service for its customers. Customer queries that take more than 5 minutes to resolve are categorized as “unsatisfactory” experiences. To evaluate the quality of its service, the
> (*) A production line has five workstations and a 60-second cycle time. The total amount of actual task time across all four workstations is 120 seconds. What is the idle time? The percent idle time? The efficiency delay?
> All Frute Company bottles and distributes Frute Ade, a fruit drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 70 cents per bottle. For the year 2014, management estimates the following revenues and costs.Ins
> Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 75 cents per bottle. For the year 2014, management estimates the following revenues and costs.(a) Pr
> Schultz Electronics manufactures two large-screen television models: the Royale which sells for $1,600, and a new model, the Majestic, which sells for $1,300. The production cost computed per unit under traditional costing for each model in 2014 was as f
> FireOut, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds
> Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.Instructions:(a) Compute the overhead cost assi
> Innova uses 1,000 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows.Direct materials ………………….65Direct labor ………………45Overhead ……………….126.5Total……………..236.5Overhe
> DeWitt Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $170,000 to $200,000. Variable costs and their percentage relationship to sales are sales commissions 6%, advertising 4%, traveling 3%, and del
> Norton Company reports the following operating results for the month of August: sales $310,000 (units 5,000); variable costs $210,000; and fixed costs $75,000. Management is considering the following independent courses of action to increase net income.1
> Using the information in E22-3, assume that in July 2014, Thome Company incurs the following manufacturing overhead costs.Instructions:(a) Prepare a flexible budget performance report, assuming that the company worked 9,000 direct labor hours during the
> Schopp Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100% of capacity, and variable manufacturing overhead is charged to production at the rate of 70% of direct labor cost. The direct materials and
> Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2014 sales forecast is as follows.Quarter HD-240……………….HD-2401……………….50002…………………….70003…………………80004…………………..10000The January 1, 2014, inventory of HD-240 is 2,000 units.
> Thome Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.Indirect labor …………………1Indirect materials ……………….0.6Utilities ……………….0.4Fixed overhead
> Edington Electronics Inc. produces and sells two models of pocket calculators, XQ-103 and XQ-104. The calculators sell for $15 and $25, respectively. Because of the intense competition Edington faces, management budgets sales semiannually. Its projection
> BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below.Ins
> Atlanta Company is preparing its manufacturing overhead budget for 2014. Relevant data consist of the following.Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000.Direct labor: time is 1.5 hours per unit.Variable overhead costs per direct
> Chen Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Larco, Marco, and Narco. Each of these products can be sold as is, or each can be processed further and sold for a hig
> Cook Company estimates that 300,000 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data, shown below, are computed for the year.During October, 27,000 d
> Frio Company uses standard costs with its job order cost accounting system. In January, an order (Job No. 84) was received for 5,500 units of Product D. The standard cost of 1 unit of Product D is as follows.Direct materials—1.5 pounds at $4.00 per pound
> The Bonita Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $60 a night. Operating costs are as follows.Salaries………………………………………………….8800Utilities………………………………………………..2400Depreciation………………………………………... 1500Maintenanc
> Isaac’s Auto Repair is considering the purchase of a new tow truck. The garage doesn’t currently have a tow truck, and the $65,000 price tag for a new truck would represent a major expenditure for the garage. Isaac Mayer, owner of the garage, has compile
> The Borders and Noble partnership is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows.Depreciation is computed by the straight-line method with no salvage
> Huang Company uses a standard cost accounting system to account for the manufacture of exhaust fans. In July 2014, it accumulates the following data relative to 1,800 units started and finished.Manufacturing overhead was applied on the basis of direct la
