OPIM Bus Inc. offers low-cost bus transportation between Philadelphia and Bryn Mawr. The invested capital is $500,000, corresponding to the investment in the two vehicles it owns. Each of the two buses can carry 50 passengers. Each bus does 12 daily trips from Philadelphia to Bryn Mawr and 12 from Bryn Mawr to Philadelphia. The price is $10 for each one-way ticket. The current load factor is 70 percent (i.e., 35 seats are sold on average). The annual cost of operating the service and running the business is $6 million. The company operates 365 days a year. a. Draw an ROIC (return on invested capital) tree for the company. [6.2] b. What is the current ROIC? [6.2] c. What is the minimum load factor at which the company breaks even? [6.3] d. What load factor would the company have to achieve so that it obtained a 10 percentage-point increase in the ROIC (e.g., an ROIC increasing from 5 percent to 15 percent)? [6.3]
> Geoff Gullo owns a small firm that manufactures “Gullo Sunglasses.” He has the opportunity to sell a particular seasonal model to Land’s End. Geoff offers Land’s End two purchasing options: ∙ Option 1. Geoff offers to set his price at $65 and agrees to c
> To ensure a full line of outdoor clothing and accessories, the marketing department at Teddy Bower insists that they also sell waterproof hunting boots. Unfortunately, neither Teddy Bower nor TeddySports has expertise in manufacturing those kinds of boot
> Teddy Bower is an outdoor clothing and accessories chain that purchases a line of parkas at $10 each from its Asian supplier, TeddySports. Unfortunately, at the time of order placement, demand is still uncertain. Teddy Bower forecasts that its demand is
> Weekday lunch demand for spicy black bean burritos at the Kiosk, a local snack bar, is approximately Poisson with a mean of 22. The Kiosk charges $4.00 for each burrito, which are all made before the lunch crowd arrives. Virtually all burrito customers a
> Four partners in a big consulting firm try to estimate the number of new recruits needed for the next year. Their forecasts are 32, 44, 21, and 51, respectively. What would be the result of a simple forecast combination? [13.6]
> GoPro is a training company that helps athletes applying for college improve their sports. Most colleges have their application deadline at the end of December, so the third and fourth quarters tend to be the busiest for the company. Based on the last th
> Mt. Kinley is a strategy consulting firm that divides its consult- ants into three classes: associates, managers, and partners. The firm has been stable in size for the last 20 years, ignoring growth opportunities in the 90s, but also not suffering from
> Online-MBA is an online university that allows students to get credit for various online courses they have taken, as long as they come to campus for a six-week intense boot camp. Demand for this program is quickly increasing. For the last six months, mon
> Tom’s Towing LLC operates a fleet of tow trucks that it sends to help drivers in need on the nearby highway. The numbers of calls requesting a tow truck for Monday, Tuesday, Wednesday, and Thursday were 27, 18, 21, and 15, respectively. What would be its
> Tom’s Towing LLC operates a fleet of tow trucks that it sends to help drivers in need on the nearby highway. The numbers of calls requesting a tow truck for Monday, Tuesday, Wednesday, and Thursday were 27, 18, 21, and 15, respectively. What would be its
> Tom’s Towing LLC operates a fleet of tow trucks that it sends to help drivers in need on the nearby highway. The numbers of calls requesting a tow truck for Monday, Tuesday, Wednesday, and Thursday were 27, 18, 21, and 15, respectively. What would be its
> Jim and John run a barber shop. Every night, both of them predict how many guests will come on the next day. Over the last four days, they have collected some data about their predictions and the actual outcome. Jim predicts the number of guests to be 56
> A small project consists of three activities: A, B, and C. To start activity C, both activities A and B need to be complete. Activity A takes 3 days with a probability of 50 percent and 5 days with a probability of 50 percent, and so does Activity B. Act
> Thierry, Ute, and Vishal are getting ready for their last period in the MBA program. Following the final exams, they intend to throw a big party with many of their friends from back home. Presently, they have identified the following set of activities th
> Consider the dependency matrix and the activity durations provided above. a. Build a project graph, visually depicting the evolution of this project. [12.2] b. Find the critical path. What is the earliest time that the project can be completed? [12.4] c.
> If the jobs displayed in Table 11.20 are processed using the earliest-due-date rule, a. What would be the lateness of job B? [11.4] b. What would be the tardiness of job E? [11.4] c. What is the maximum tardiness? [11.4] d. What is the average flow time?
> There are five planes ready for departure at an airport. The number of passengers on each plane is displayed in Table 11.18. Each plane requires 10 minutes to taxi to the runway and 2 minutes to take off (i.e., there needs to be 2 minutes between departu
> Strohrmann, a large-scale bakery in Pennsylvania, is laying out a new production process for their packaged bread, which they sell to several grocery chains. It takes 12 minutes to bake the bread. How large an oven is required so that the company is able
> Assume the jobs displayed in Table 11.17 need to be processed on a single resource and are sequenced with the WSPT rule. Which job would be processed third? [11.3]
> Given the projects displayed in Table 11.15, assume FCFS is used to sequence the jobs. a. What is the average flow rate of the projects (in projects per hour)? [11.2] b. What is the average flow time of the projects (in hours)? [11.2] c. What is the aver
> An architect has five projects to complete. She estimates that three of the projects will require one week to complete and the other two will require three weeks and four weeks. During the time these projects are completed (and assuming no other projects
> Gotham City Ambulance Services (GCAS) owns eight ambulances. On average, emergencies are reported to GCAS every 15 minutes (with a coefficient of variation of 1, no seasonality exists). If GCAS has available ambulances, it immediately dispatches one. If
> XTremely Fast Service Inc. is a call center with several business units. One of its business units, Fabulous 4, currently staffs four operators who work eight hours per day Monday through Friday. They provide customer support for a mail-order catalog com
> Suppose a process contains two workstations that operate with no buffer between them. Now consider the three possible scenarios below a. Which of the three scenarios will have, on average, the highest flow rate? b. Which of the three scenarios will have,
> Consider the situation of Mr. R. B. Cheney, who owns a large gas station on a highway in Vermont. In the afternoon hours, there are, on average, 1,000 cars per hour passing by the gas station, of which 2 percent would be willing to stop for refueling. Ho
> A small video store has nine copies of the DVD Captain Underpants, The Movie in its store. There are 15 customers every day who request this movie for their children. If the movie is not on the shelf, they leave and go to a competing store. Customers arr
> A friend of yours approaches you with the business idea of a private home security service. This private home security service guarantees to either dispatch one of their own five guards immediately if one of their customers sends in an alarm or, in the c
> Mango Electronics Inc. is a Fortune 500 company that develops and markets innovative consumer electronics products. The development process proceeds as follows. Mango researches new technologies to address unmet market needs. Patents are filed for produc
> While driving home for the holidays, you can’t seem to get Little’s Law out of your mind. You note that your average speed of travel is about 60 miles per hour. More- over, the traffic report from the WXPN traffic chopper states that there is an average
> A university offers a walking escort service to increase security around campus. The system consists of specially trained uniformed professional security officers that accompany students from one campus location to another. The service is operated 24 hou
> Webflux is an Internet-based DVD rental business specializing in hard- to-find, obscure films. Its operating model is as follows. When a customer finds a film on the Webflux website and decides to watch it, she puts it in the virtual shopping cart. If a
> RentAPhone is a new service company that provides European mobile phones to American visitors to Europe. The company currently has 80 phones available at Charles de Gaulle Airport in Paris. There are, on average, 25 customers per day requesting a phone.
> Atlantic Video, a small video rental store in Philadelphia, is open 24 hours a day, and—due to its proximity to a major business school—experiences customers arriving around the clock. A recent analysis done by the store manager indicates that there are
> The following situation refers to Tom Opim, a first-year MBA student. In order to pay the rent, Tom decides to take a job in the computer department of a local department store. His only responsibility is to answer telephone calls to the department, most
> The airport branch of a car rental company maintains a fleet of 50 SUVs. The interarrival time between requests for an SUV is 2.4 hours, on average, with a standard deviation of 2.4 hours. There is no indication of a systematic arrival pattern over the c
> My-law.com is a recent start-up trying to cater to customers in search of legal services who are intimidated by the idea of talking to a lawyer or simply too lazy to enter a law office. Unlike traditional law firms, My-law.com allows for extensive intera
> What is the relationship between the number of Kanban cards in a process and the inventory level? Pick one of the following answers [8.4]. A. There can never be more inventories in the process than what was authorized via Kanban cards. B. The inventory o
> In the Toyota Production System, jidoka refers to [8.4] a. Level production, where different models are produced alongside each other on the assembly line. b. Continuous improvement, where workers organize meetings to discuss ways of improving the produc
> Consider the following two production processes making an electronic component for a navigation system. Both processes consist of 20 stations and operate at a cycle time of 1 minute/unit. Their most error prone operation is step 9. Process 1: Has a final
> LaVilla is a village in the Italian Alps. Given its enormous popularity among Swiss, German, Austrian, and Italian skiers, all of its beds are always booked in the winter season and there are, on average, 1,200 skiers in the village. On average, skiers s
> If you were to implement heijunka at a production facility, which of the following tasks would you prioritize? [8.4] a. Encourage feedback among workers so as to introduce kaizen teams. b. Reduce setup and changeover times at the different stations. c. R
> Consider a worker-paced line with three process steps, each of which is staffed with one worker. The sequence of the three steps does not matter for the completion of the product. Currently, the three steps are operated in the following sequence. a. What
> A production process has two machines. The first machine has a capacity of 100 units per hour and the second machine has a capacity of 60 units per hour. Demand for the process is 100 units per hour. a. In a push process, what would be the utilization of
> An employee in a restaurant spends his time on the following: waiting for a customer order, taking the order, forwarding the order to the kitchen, waiting for the kitchen to confirm the order, bringing the food to the customer, serving the customer, and
> Once the raw materials are collected, a single flow unit manufacturing process comprises three sequential steps: ∙ Step 1 consumes large amounts of an expensive paint ∙ Step 2 is the bottleneck ∙ Step 3 has a large amount of idle time There exists a 20 p
> A company making tires for bikes is concerned about the exact width of their cyclocross tires. The company has a lower specification limit of 22.8 mm and an upper specification limit of 23.2 mm. The standard deviation is 0.25 mm and the mean is 23 mm. a.
> Vetro Inc. is a glass manufacturer that produces glasses of every shape and type. Recently it signed a contract to supply round glasses to Switch, a Swiss watch manufacturer. The specifications require the diameter to be between 4.96 cm and 5.04 cm. With
> For a key joint, a precision machining process has a lower specification limit of a width of 0.99 mm and an upper specification limit of 1.01 mm. The standard deviation is 0.005 mm and the mean is 1 mm. a. What is the process capability index for the bot
> John is a newly minted quality engineer at MakeStuff Inc. His boss, intending to promote higher quality in the company, tells him to increase the process capability index of their main product. John decides to simply increase the upper specification limi
> A large catalog retailer of fashion apparel reported $100,000,000 in revenues over the last year. On average, over the same year, the company had $5,000,000 worth of inventory in their warehouses. Assume that units in inventory are valued based on cost o
> Oscar is considering getting into the real estate business. He’s looking at buying an existing office building for $1.8 million in cash. He wants to estimate what his return on invested capital (ROIC) will be on an annual basis. The building has 14,000 s
> PhillyAir Inc. offers low cost air travel between Philadelphia and Atlantic City. Philly Air’s invested capital is $5,000,000, corresponding to the investment in the two planes the company owns. Each of the two planes can carry 50 passengers. Each plane
> Penne Pesto is a small restaurant in the financial district of San Francisco. Customers order from a variety of pasta dishes. The restaurant has 50 seats and is always full during the four hours in the evening. It is not possible to make reservations at
> A carpet manufacturer makes four kinds of carpet on a machine. For simplicity, call these four types of carpet, A, B, C, and D. It takes 3 hours to switch production from one type of carpet to another. The demand rates (yards/hr) for the four types of ca
> Bruno Fruscalzo decided to set up a small production facility in Sydney to sell to local restaurants that want to offer gelato on their dessert menu. To start simple, he would offer only three flavors of gelato: fragola (strawberry), chocolato (chocolate
> Precision Testing (PTests) does fluid testing for several local hospitals. Consider their urine testing process. Each sample requires 12 seconds to test, but after 300 samples, the equipment must be recalibrated. No samples can be tested during the recal
> Kinga Doll Company manufactures eight versions of its popular girl doll, Shari. The company operates on a 40-hour workweek. The eight versions differ in doll skin, hair, and eye color, enabling most children to have a doll with a similar appearance to th
> JCL Inc. is a major chip manufacturing firm that sells its products to computer manufacturers like Dell, HP, and others. In simplified terms, chip making at JCL Inc. involves three basic operations: depositing, patterning, and etching. ∙
> Consider the following batch-flow process consisting of three process steps performed by three machines: Work is processed in batches at each step. Before a batch is processed at a step, the machine at that step must be set up. (During a setup, the machi
> Consider the following batch flow process consisting of three process steps performed by three machines: Work is processed in batches at each step. Before a batch is processed at step 1, the machine has to be set up. During a setup, the machine is unable
> A manufacturing company producing medical devices reported $60,000,000 in sales over the last year. At the end of the same year, the company had $20,000,000 worth of inventory of ready-to-ship devices. a. Assuming that units in inventory are valued (base
> Consider the following two-step process: Step A has a processing time of 1 minute per unit, but no setup is required. Step B has a processing time of 0.1 minute per unit, but a setup time of 9 minutes is required per batch. a. Suppose units are produced
> Powered by Koffee (PBK) is a new campus coffee store. PBK uses 50 bags of whole bean coffee every month, and you may assume that demand is perfectly steady throughout the year. PBK has signed a year-long contract to purchase its coffee from a local suppl
> Millennium Liquors is a wholesaler of sparkling wines. Their most popular product is the French Bete Noire. Weekly demand is for 45 cases. Assume demand occurs over 50 weeks per year. The wine is shipped directly from France. Millennium’s annual cost of
> The accompanying diagram depicts a five-step, worker-paced headphone manufacturing plant. The headphones are meant to be used with iPods and DVD players. Step 1 involves a worker bending a metal strip into an arc shape. In step 2, the metal arc is fitted
> A manufacturer of women’s designer gloves has employed a team of students to redesign her manufacturing unit. They gathered the following information. The manufacturing process consists of four activities: (1) fabric cutting; (2) dyei
> Atlas Inc. is a toy bicycle manufacturing company producing a five-inch small version of the bike that Lance Armstrong rode to win his first Tour de France. The assembly line at Atlas Inc. consists of seven work stations, each performing a single step. S
> A small, privately owned Asian company is producing a private-label soft drink, Yoggo. A machine-paced line puts the soft drinks into plastic bottles and then packages the bottles into boxes holding 10 bottles each. The machine-paced line is comprised of
> The Geneva Watch Corporation manufactures watches on a conveyor belt with six stations. One worker stands at each station and performs the following tasks: These six workers begin their workday at 8:00 a.m. and work steadily until 4:00 p.m. At 4:00, no n
> Consider the following tasks that must be assigned to four workers on a conveyor-paced assembly line (i.e., a machine-paced line flow). Each worker must perform at least one task. There is unlimited demand. The current conveyor-paced assembly-line config
> PowerToys Inc. produces a small remote-controlled toy truck on a conveyor belt with nine stations. Each station has, under the current process layout, one worker assigned to it. Stations and processing times are summarized in the following table: a. What
> Consider the baggage check-in of a small airline. Check-in data indicate that from 9 a.m. to 10 a.m., 255 passengers checked in. Moreover, based on counting the number of passengers waiting in line, airport management found that the average number of pas
> Consider the following six tasks that must be assigned to four workers on a conveyor-paced assembly line (i.e., a machine-paced line flow). Each worker must perform at least one task. The current conveyor-paced assembly line configuration assigns the wor
> Kim Opim, an enthusiastic student, is on her flight over from Philadelphia (PHL) to Paris. Kim reflects upon how her educational experiences from her operations courses could help explain the long wait time that she experienced before she could enter the
> After an “all night” study session the day before their last final exam, four students decide to stop for some much-needed coffee at the campus Starbucks. They arrive at 8:30 a.m. and are dismayed to find a rather long line. Fortunately for the students,
> CC Car Wash specializes in car cleaning services. The services offered by the company, the exact service time, and the resources needed for each of them are described in the following table: The company offers the following packages to their customers: &
> VF is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every December, VF sends out a short survey to their customers, asking for the information required for preparing the tax statements. Based
> The Western Pennsylvania Milk Company is producing milk at a fixed rate of 5,000 gallons/hour. The company’s clients request 100,000 gallons of milk over the course of one day. This demand is spread out uniformly from 8 a.m. to 6 p.m. If there is no milk
> International Cranberry Uncooperative (ICU) is a competitor to the National Cranberry Cooperative (NCC). At ICU, barrels of cranberries arrive on trucks at a rate of 150 barrels per hour and are processed continuously at a rate of 100 barrels per hour. T
> The following provides 2012 financial information for Kroger (in million $s): a. In 2012, what were Kroger’s inventory turns? [2.4]
> BCH, a large consulting firm in the United Kingdom, has a consulting staff consisting of 400 consultants at the rank of “associate.” On average, a consultant remains at the associate level for two years. After this time, 30 percent of the consultants are
> Smith and Jackson Inc. (SJ) sells an outdoor grill to Cusano’s Hardware Store. SJ’s wholesale price for the grill is $185. (The wholesale price includes the cost of shipping the grill to Cusano). Cusano sells the grill for $250 and SJ’s variable cost per
> Handi Inc., a cell phone manufacturer, procures a standard display from LCD Inc. via an options contract. At the start of quarter 1 (Q1), Handi pays LCD $4.50 per option. At that time, Handi’s forecast of demand in Q2 is normally distributed with mean 24
> Each year the admissions committee at a top business school receives a large number of applications for admission to the MBA program and they have to decide on the number of offers to make. Since some of the admitted students may decide to pursue other o
> Consider the example of the Park Hyatt Philadelphia discussed in the text. Recall that the full fare is $225, the expected full-fare demand is Poisson with mean 27.3, the discount fare is $159, and there are 118 king/queen rooms. Now suppose the cost of
> Ron, the director at the Annenberg Center, is planning his pricing strategy for a musical to be held in a 100-seat theater. He sets the full price at $80 and estimates demand at this price to be normally distributed with mean 40 and standard deviation 30
> Consider the Philadelphia–Los Angeles flight discussed in Q18.5. Assume the available capacity is 200 seats and there is no overbooking. The high fare is $675 and the low fare is $375. Demand for the low fare is abundant while demand for the high fare is
> An air cargo company must decide how to sell its capacity. It could sell a portion of its capacity with long-term contracts. A long-term contract specifies that the buyer (the air cargo company’s customer) will purchase a certain amount of cargo space at
> The following figures are taken from the 2003 financial statements of McDonald’s and Wendy’s.1 Figures are in million dollars. a. In 2003, what were McDonald’s inventory turns? What were Wendyâ&
> In the production of pizza, which of the following four variables is not an input variable? [7.1] a. The amount of dough prepared for the pizza b. The temperature of the oven c. The type of cheese on the pizza d. The time that the customer leaves the piz
> Limerick Fare is a furniture manufacturer in Dublin, Ireland. For August 2020, Limerick had the following standards for one of its products, a coffee table: The following data were compiled regarding actual performance: actual output units (tables) produ
> The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: The number of finished units budgeted for January 2020 was 10,000; 9,850 units were actually produce
> SallyMay, Inc., designs and manufactures T-shirts. It sells its T-shirts to brand-name clothes retailers in lots of one dozen. SallyMay’s May 2020 static budget and actual results for direct inputs are as follows: SallyMay has a policy
> Consider the following data collected for Theta Homes, Inc.: Required Compute the price, efficiency, and flexible-budget variances for direct materials and direct manufacturing labor.
> Modern Tiles Ltd. manufactures ceramic tiles. For January 2020, it budgeted to purchase and use 10,000 pounds of clay at $0.70 a pound. Actual purchases and usage for January 2020 were 11,000 pounds at $0.65 a pound. Modern Tiles Ltd. budgeted for 40,000
> McKenzie Ltd produces chairs and employs three workers. The staff normally work 40 hours per week for €12 per hour (including social security). It takes four hours for a worker to produce a cabinet: it sells for €80 and contains two square meters of timb
> The Alpha Company manufactures designer jewelry for jewelry stores. A new accountant intern at Alpha Company has accidentally deleted the calculations on the company’s variance analysis calculations for the year ended December 31, 2020.
> Dartford Enterprises Ltd manufactures just one product line of scientific calculators for engineers. The current standard cost of one unit of the product is as follows: During last month, due to an unexpected fall in demand for the product, only 15,000 u
> L’Accessorio, an Italian manufacturer of leather belts, budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per luxury belt—€41, â‚&no
> Daytona Wheels is a Japanese tire manufacturer. For August 2021, it budgeted to manufacture and sell 3,000 tires at a variable cost of $74 per tire and total fixed costs of $54,000. The budgeted selling price was $110 per tire. Actual results in August 2
