Question: In what situations should a company work

> Use any method of economic analysis to display on the spreadsheet the value of the incremental ROR between server 2 with a life estimate of 5 years and a life estimate of 8 years.

> Tom, the owner of Burger Palace, determined that his weighted average cost of capital is 8%. He expects a return of 4% per year on all of his investments. A proposal presented by the owner of the Dairy Choice next door seems quite risky to Tom, but it is

> Five independent projects were ranked in decreasing order by two measures—rate of return (ROR) and present worth (PW)—to determine which should be funded with the total initial investment not to exceed $30 million. (a)

> A new cross-country, trans-mountain water pipeline needs to be built at an estimated first cost of $200,000,000. The consortium of cooperating companies has not fully decided the financial arrangements of this adventurous project. The WACC for similar pr

> For each of the following scenarios, state whether an incremental ROR analysis is required to select an alternative and state why or why not. Assume that alternative Y requires a larger initial investment than alternative X and that the MARR is 20% per y

> Jamison Specialties manufactures programmable incremental encoders that resist shock and vibration for use in harsh environments. Five years ago, the company invested $650,000 in an automated quality control system and recorded savings of$105,000 per yea

> Explain how the viewpoint established before a public sector analysis is started can turn an estimate from being categorized as a disbenefit to a cost, or vice versa.

> Identify the following funding sources as primarily public or private. (a) Municipal bonds (b) Retained earnings (c) Sales taxes (d) Automobile license fees (e) Bank loans ( f ) Savings accounts (g) An engineer’s IRA (Individual Retirement Account) (h) S

> Determine i* per year for the cash flows shown using factors and the IRR function.

> Use factors and a spreadsheet to determine the interest rate per period from the following equation: 0 = −40,000 + 8000(P∕A,i*,5) + 8000(P∕F,i*,8)

> If a manufacturer of electronic devices invests $650,000 in equipment for making compact piezoelectric accelerometers for general purpose vibration measurement, estimate the rate of return from revenue of $225,000 per year for 10 years and $70,000 in sal

> Use incremental ROR analysis to decide between the servers at MARR = 12%.

> A chemical engineer working for a large chemical products company was asked to make a recommendation about which of three mutually exclusive revenue alternatives should be selected for improving the marketability of personal care products used for condit

> When conducting an ROR analysis of mutually exclusive cost alternatives: (a) All of the projects must be compared against the do-nothing alternative (b) More than one project may be selected (c) An incremental investment analysis is necessary to identify

> A company that manufactures high-strength epoxys is considering investing $100,000 in two new adhesives identified as X and Z. The investment in X is $20,000 and is expected to yield a rate of return of 40% per year. Your supervisor asked you to determin

> The rate of return for alternative X is 18% per year and for alternative Y is 17%, with Y requiring a larger initial investment. If a company has a minimum attractive rate of return of 16%: (a) The company should select alternative X (b) The company shou

> Alternative A has a rate of return of 14% and alternative B has a rate of return of 17%. If the investment required in B is larger than that required for A, the rate of return on the increment of investment between A and B is: (a) Larger than 14% (b) Lar

> For the nonconventional net cash flow series shown, the external rate of return per year using the MIRR method, with an investment rate of 20% per year and a borrowing rate of 8% per year, is closest to: (a) 10.8% (b) 12.0% (c) 14.8% (d) 16.7%

> When applying the MIRR approach to determine the external rate of return of a project, which of the following statements is true? (a) The borrowing rate, ib, is usually equal to the MARR. (b) The borrowing rate, ib, is usually greater than the investment

> Five years ago, an alumnus of a university donated $50,000 to establish a permanent endowment for scholarships. The first scholarships were awarded 1 year after the contribution. If the amount awarded each year, that is, the interest on the endowment, is

> A bulk materials hauler purchased a used dump truck for $50,000 two years ago. The operating costs have been $5000 per month and revenues have averaged $7500 per month. The truck was just sold for $11,000. The rate of return is closest to: (a) 2.6% per m

> An investment of $60,000 ten years ago resulted in uniform income of $10,000 per year for the 10-yearperiod. The rate of return on the investment was closest to: (a) 10.6% per year (b) 14.2% per year (c) 16.4% per year (d) 18.6% per year

> In a separate conversation, the line manager told you to not plan for a rebuild after 6000 hours because the pump will be replaced after a total of 10,000 hours of operation. The line manager wants to know what the base AOC in year 1 can be to make the E

> Basset, a furniture manufacturing company, borrowed $1 million and repaid the loan through monthly payments of $20,000 for 2 years plus a single lump-sum payment of $1 million at the end of 2 years. The interest rate on the loan was closest to: (a) 0.5%

> For the net cash flow and cumulative cash flows shown, the value of x is nearest: (a) $−8,000 (b) $−16,000 (c) $16,000 (d) $41,000

> A $10,000 mortgage bond that is due in 20 years pays interest of $250 every 6 months. The bond coupon rate is: (a) 2.5% per year, payable quarterly (b) 5.0% per year, payable quarterly (c) 5% per year, payable semiannually (d) 10% per year, payable quart

> A $20,000 collateral bond has a coupon rate of 7% per year payable quarterly. The bond matures 30 years from now. At a market interest rate of 7% per year, compounded semiannually, the amount and frequency of the bond interest payments is: (a) $1400 per

> A municipal bond with a face value of $10,000 was issued today with an interest rate of 6% per year payable semiannually. The bond matures 20 years from now. If an investor paid $9,000 for the bond and holds it to maturity, all of the following equations

> As part of your inheritance, you received a bond that will pay interest of $700 every 6 months for 15 years. If the coupon rate is 7% per year, the face value of the bond is (a) $10,000 (b) $20,000 (c) $30,000 (d) $40,000

> When positive net cash flows are generated before the end of a project, and when these cash flows are reinvested at an interest rate that is greater than the internal rate of return, (a) The resulting rate of return is equal to the internal rate of retu

> According to Norstrom’s criterion, there is only one positive rate of return value in a cash flow series when: (a) The cumulative cash flow starts out positive and changes sign only once (b) The cumulative cash flow starts out negative and changes sign o

> According to Descartes’ rule of signs, the possible number of rate of return values for the net cash flow series ++++−−−−−−+−+−−−++ is (a) 2 (b) 4 (c) 6 (d) 8

> Five mutually exclusive cost alternatives that have infinite lives are under consideration for decreasing the fruit-bruising rates of a thin skin-fruit grading and packing operation (peaches, pears, apricots, etc.). The initial costs and cash flows of ea

> The plant superintendent told you, the safety engineer, that only one rebuild should be planned for, because these types of pumps usually have their minimum-cost life before the second rebuild. Determine a market value for this pump that will force the E

> Jewel-Osco evaluated three different pay-by-touch systems that identify a customer by a finger scan and automatically deduct the amount of the bill directly from their checking account. The revenue alternatives were ranked according to increasing initial

> If the alternatives are mutually exclusive and the MARR is 25% per year, the alternative to select is: (a) B (b) D (c) E (d) None of them

> If the alternatives are mutually exclusive and the MARR is 15% per year, the alternative to select is: (a) Either B, D, or E (b) Only B (c) Only D (d) Only E

> If the alternatives are independent and the MARR is 15% per year, the one(s) to select is (are): (a) Only D (b) Only D and E (c) Only B, D, and E (d) Only E

> Standby power for pumps at water distribution booster stations can be provided by either gasolineor diesel-powered engines. The estimates for the gasoline engines are as follows: ……………………………….Gasoline First cost, $....................... −150,000 M&O, $

> The incremental cash flow between two alternatives is shown below. The equation that can be used to correctly solve for the incremental rate of return is: (a) 0 = −20,000+3000(A∕P,Δi*,10)+400(P∕F,Δi*,10) (b) 0 = −20,000+3000(A∕P,Δi*,10)+400(A∕F,Δi*,10) (

> When comparing two mutually exclusive alternatives by the ROR method, if the rate of return on the alternative with the higher first cost is less than that of the lower first-cost alternative: (a) The rate of return on the increment between the two is gr

> When a B/C analysis is conducted, the benefits and costs: (a) Must be expressed in terms of their present worth values (b) Must be expressed in terms of their annual worth values (c) Must be expressed in terms of their future worth values (d) Can be expr

> When comparing different-life alternatives by the B/C method, the alternatives should be compared over: (a) The life of the shorter-lived alternative (b) The life of the longer-lived alternative (c) The LCM of their lives (d) An infinite time period

> If a company finances an expansion in its production facilities by issuing $6 million in preferred stock, using $3.5 million in retained earnings, and obtaining $15 million via a secured loan, it will have a D-E mix closest to: (a) 60 –40 (b) 50 –50 (c)

> Determine the economic service life of the pump. How does the ESL compare with the maximum allowed rebuilds?

> It is now 12 years after the products were developed, and the engineers invested most of their savings in an innovative idea. However, the question of “When do we sell?” is always present in these situations. To help with the analysis, determine the foll

> The top management team at your company is considering outsourcing the supply management function. Do you support this idea? Why, or why not?

> Consider the purchase of a new mobile phone. How would you determine the total cost of ownership? What are the costs that you might incur before the purchase, during the purchase, and after the purchase?

> Digital technologies are rapidly changing sourcing and supply management. What are the potential benefits and drawbacks to the adoption of digital technologies in supply management?

> What are the costs and challenges involved with switching suppliers?

> Can you think of an organization that has benefited by extending social responsibility to its supply chain? What about one whose supply chain practices have hurt its reputation?

> One of the observations made in this chapter focuses on the relentless series of changes continuously being introduced by Amazon. How would these changes affect your firm and decision-making within the firm, as it pertains to the customer?

> The chapter offers one approach to customer management and relationship strategy based on sales volume and profitability. Can you think of other criteria that might be used to determine the most appropriate form of relationship?

> What aspects of operations management can contribute to customer success?

> Why don’t companies attempt to offer a commitment at the level of customer success with all of their customers?

> Why should metrics be regarded as primarily methods of communication? Think about the relationship between a metric, the strategy, and the task being carried out by an operations person.

> How can a company use the gap model of customer satisfaction to improve its operations management processes?

> Which market orientation would you consider for a standard product that has low, infrequent demand? What are the tradeoffs you would consider in making this decision?

> Consider products you consume. Identify purchases you have made from firms with the following market orientations:

> Consider some of your recent shopping experiences and discuss instances in which a store was out of stock of items you were planning to purchase. What did you do as a result of the stockout?

> You are a manager for a firm that sells computer and technological equipment through your stories and various on-line sites. You recently have found out that Amazon is releasing a new line of products (through its AmazonBasics line) that are in direct co

> In this chapter, we began with a discussion of Macy's and its omnichannel strategy. What are the possible implications of this strategy for the relationships between marketing and operations/supply chain management? The relationship between operations/su

> Explain the critical differences between basic customer service, customer satisfaction, and customer success.

> Under what conditions would you use a Kaizen Event?

> How would a restaurant use the 5-S program? How would an operating room using this program?

> What would happen if you tried to introduce a new strategy based on radical innovation into a facility where the organization has adopted wholeheartedly the lean culture?

> Most people have worked as “operations managers” at some time. Describe a job or experience that you had that involved the management of a process.

> Using the discussion of Lean Design, consider the design of a iPod competitor. Give examples of each of the following design wastes:

> Discuss how lean systems might apply to a fast-food hamburger stand. How will it have to be modified to deal with daily demand variation?

> You work in the marketing department of a firm that sells mountain bicycles and related gear. Its manufacturing division has decided to wholeheartedly adopt the lean systems philosophy. Will this affect your ability to delight your customers? Make a list

> Why is achievement of the following goals critical to the success of lean systems? Give an example of how each area contributes to the success of a lean system.

> Figure 8-4 illustrates the analogy of a boat hitting rocks as the level of water falls. Why is water a good analogy for inventory? Is the sequence in which rocks are encountered a good way to prioritize inventory reduction activities? How might this prio

> Imagine that your customer base is located in North America and your suppliers are located in China. Is it possible to implement lean supply chain management under such conditions? What are the challenges now facing the firm?

> Can a supply chain ever be too lean? What would happen to the supply chain if an unexpected disruption/interruption were to occur? How might you as a supply chain manager reduce the effects of such an unexpected disruption, while staying consistent with

> Where would you most successfully apply lean systems principles, during the introductory or growth stages of the Product Life Cycle?

> Can lean systems enhance a worker's quality of life? Discuss how it might or might not.

> One lean systems’ consultant has stated that “without standardization, there can be no improvement.” Why?

> Why should a firm consider the position of stakeholders when evaluating operational alternatives? Consider the role of government and its impact. (Hint: Consider working conditions and pollution.)

> What is the relationship between bottlenecks and TAKT Time?

> Why should you NOT include setup times when calculating the TAKT times?

> While Taichi Ohno was impressed by certain aspects of the Ford Production System, he was bothered by other aspects. These included: large, special purpose equipment, a focused specialized workforce, and an ever driving emphasis on cost efficiency. Why ar

> Why should one company in a supply chain consider total supply chain inventory as well as its own inventory levels?

> What steps do you think companies can take to improve the accuracy of their inventory information systems?

> Suppose you have been given the task of reducing inventory in your company, without negatively impacting customer service. What actions might you be able to take to accomplish this task?

> A firm is presently using the basic EOQ model and is considering switching to the production order quantity model (i.e., receiving gradual deliveries over time). If all the cost and demand parameters stay the same, what changes should the firm expect?

> Early in the chapter it was stated that planning inventory levels is both an art and a science. Explain in your own words why this is true.

> Why does total system inventory increase as a company increases its number of stocking locations?

> Explain the tradeoffs involved in the economic order quantity. How do these change when quantity discounts are considered?

> The following firms have long been seen as having strong competitive advantages. Read about one of these companies. Also draw from your experience as a customer to identify that company’s competitive advantage. Discuss how operations management relates t

> Explain the different types of costs related to inventory planning.

> Why do some executives believe that inventory is “bad”? Explain why this thinking is incorrect.

> Provide an example of automation that enhances customer service and one that reduces customer service. Why is this the case?

> Think about three of your favorite fast food restaurants. What type of layout is used in the food preparation area of each? Are these layouts a good fit with the organization? Why or why not? Should the layout be changed and if so, how?

> Some upscale restaurants have their kitchens visible to their customers changing the traditional view of front-office and back-office processes. What are the benefits and drawbacks to this approach?

> Which of the service categories would you put a large state university? Why? Would a small private university be in the same category? Why or why not?

> Are some process structures inherently safer or more environmentally friendly than others?

> Provide an example of how technology has made it possible to use processes that are not on the diagonal of the product/process matrix.

> Consider several members of the supply chain of a company that makes plastic toy cars and trucks. Which of the five processes described in the product-process matrix is likely to be used by the following supply chain members? Why?

> Think of two companies in the same industry that use different process structures. Why is this the case? Is one process structure a better choice than the other? Why or why not?

> Recall the last time you went to a fast-food restaurant such as McDonald’s. Describe all of the goods and services that make up your total product experience.