Uploaded the Mock Exam for reference to confirm you can do this. Actual exam will be released on March 11th
- 1 - EMBA 533: Operations Management Mock Exam Be sure to show all the relevant work (e.g. by including spreadsheet screenshots) to get full credits! Good luck! By submitting the exam, you acknowledge that you are a member of a learning community in the Foster School of Business that is committed to the academic standards of honesty, respect, and integrity, and that you adhered to these standards while completing this exam. You have neither received nor given help on any part of this exam. - 2 - Part I (30 points) Pick one of the two following questions to answer: 1. A local pizzeria is facing severe competition and looking for measures to distinguish itself. After going to a seminar on Service Management at the University of Worthington Business School, the owner is considering offering a service guarantee. Specifically, from a survey, she knows that customers would like to receive order delivery within 40 minutes of placing an order. Therefore, “delivery within 40 minutes or $3 off” during rush hours sounds appealing. Before offering it, the owner would like to perform a queueing analysis of the impact of such a guarantee. From data collection, she believes - during rush hours, customer order arrivals follow Poisson distribution; on average an order arrives every 6 minutes - almost all the orders are for one pizza only, so it’s safe to assume this - although there are several steps in the entire production and delivery process, the pizza dough maker is the bottleneck - there is only one pizza maker; he spends an exponential amount of time making each pizza, with an average of 4 minutes - it’s safe to assume that all the other steps (e.g. baking, delivery) take a constant 15 minutes Questions: 1) Assuming the demand remains unchanged, how much would such a service guarantee cost per hour? 2) The owner hopes that the service guarantee will show customers that she is serious about making speedy delivery, hence increase customer demand. If the guarantee is projected to increase demand by 20%, should it be offered (assuming an average order gives $3 in profit)? (Hint: the MMm queueing spreadsheet gives you the probability of waiting longer than t in the queue.) 2. The fruit platter is one of Bothell Airlines’ most popular meal items on its Seattle – Miami flight. Due to FDA regulation, any onboard fresh food remaining at the end of each day must be destroyed (spoilage). Daily demand for the fruit platter on this plane can be approximated by a normal distribution with a mean of 10 and a standard deviation of 2. Because it is random, it is possible on any given day that the fruit platters can run out quickly or be left over at the end. Consider the following facts: - Bothell airlines sells the platter for $9 each and it costs $4 each. - The salvage value of each remaining platter is zero. - The airline estimates that if the platter is out of stock during a flight, about half of the customers can be persuaded to purchase something else instead. The profit margin on that “sometime else” is estimated to be $1.5 on average. The other half customers will choose not to buy anything. We will ignore loss of customer goodwill for this analysis. How many fruit platters would you recommend the airline to carry on this plane every day? (Hint 1: to find “Cu,” consider how much profit the airline is losing on a customer who wants the platter but it’s out of stock. Hint 2: when using the spreadsheet, you can leave the r, c, s cells blank.) - 3 - Part II (30 points) Pick one of the two following questions to answer: 3. Explain how pooling will improve the efficiency of a queueing system. Then list two potential drawbacks in practice, and what can be done to address them. Please use an example if possible. 4. Explain what the bullwhip effect in a supply chain is. Then explain two possible causes of the bullwhip effect, and what can be done to address them. Use examples if possible. Part III (40 points) Jerry's Cookie Company Jerry and his roommate are preparing to launch a cookie company in their on-campus apartment to provide fresh cookies to hungry students late at night. The idea is to bake fresh cookies to order, using any combination of ingredients that the buyer wants. The cookies will be ready for pickup at the apartment. Two factors distinguishes the new cookie company: 1) The cookies will be completely fresh and made to order. 2) There will be a variety of ingredients available to add to the basic dough, including chocolate chips, M&M's, chopped Heath bars, coconut, walnuts, and raisins. Buyers will enter their orders online or in an app, and specify which of these ingredients they want in their cookies. The Production Process Baking cookies is simple: place all the ingredients in a mixing bowl and mix them; spoon the cookie dough onto a tray; put the cookies into the oven; bake them; take the tray of cookies out of the oven; let the cookies cool; and, finally, take the cookies off the tray and carefully pack them in a box. A detailed examination of the production process follows. Jerry and his roommate have carefully timed the necessary operations. • Order processing The first step is to take the orders, which are processed on a first- come-first-served basis. Jerry has developed both an app and a website for taking orders. • Mixing The next step is to place the specified ingredients in the electric mixer's bowl and turn on the mixer to mix the ingredients. The electric mixer can hold and mix ingredients for up to three dozen cookies. Jerry then spoon the cookies, one dozen at a time, onto a cookie tray. Adding the ingredients to the bowl and mixing takes 6 minutes, regardless of how many cookies are being made in the batch. That is, to mix enough dough and ingredients for three dozen cookies takes the same 6 minutes as for one dozen cookies. However, spooning the cookies onto the tray takes 2 minutes per tray. • Baking The next step, performed by Jerry’s roommate, is to put the cookies in the oven and set the timer. The time to do this is negligible, and will be ignored in this analysis. The cookies bake for 10 minutes. Because the oven only holds one tray, a second dozen takes an additional 10 minutes to bake. • Finishing Jerry’s roommate also performs the last steps of the process by first removing the cookies from the oven and putting them aside to cool for 5 minutes, then - 4 - carefully packing them in a box and accepting payment. Removing the cookies from the oven takes a negligible amount of time, but it must be done promptly. It takes 2 minutes to pack each dozen and about 1 minute to accept payment for the order. As experienced bakers know, a few simplifications were made in describing the actual cookie production process. For example, the first batch of cookies for the night requires preheating the oven. However, such complexities will be put aside for now. Begin your analysis by developing a process flow diagram of the cookie-making process. Questions Given the wide variety of options and possibility for customization, assume that no two orders are exactly the same. Hence different orders are always processed separately. (To answer the following questions, you may find it better to draw a process diagram first.) 1) Assume all the orders are for one dozen cookies. a. How long does it take to process a rush order of one dozen cookies, assuming that no other cookies are currently in process (i.e., what is the system flow time)? b. Where is the bottleneck? What is the system capacity (that is, how many cookies can be made and sold each hour at the most)? 2) Answer the same questions as in 1) assuming all the orders are for two dozen cookies. 3) Answer the same questions as in 1) assuming all the orders are for three dozen cookies. 4) Jerry and his roommate are considering whether to add a second oven that’s identical to the current one. If all the orders are for one dozen cookies, how much would adding a new oven increase the system capacity? Mock Exam The Production Process Questions Microsoft Word - EMBA 533 final exam 2023 - 1 - EMBA 533: Operations Management Final Exam Winter Quarter, 2023 Be sure to show all the relevant work (e.g. by including spreadsheet screenshots) to get full credits! Good luck! By submitting the exam, you acknowledge that you are a member of a learning community in the Foster School of Business that is committed to the academic standards of honesty, respect, and integrity, and that you adhered to these standards while completing this exam. You have neither received nor given help on any part of this exam. - 2 - PART I (30 points) Answer one of the following two questions. 1. As I mentioned many times in class, the following is my favorite graph for managing queueing systems. Use this graph to answer the following questions: (1) Explain the relationship between system utilization and delay. If possible, use an example to explain this tradeoff. (2) Explain the concept of “safety capacity:” a. What is safety capacity? b. What drives the need for safety capacity? (3) Of the three curves in the graph (marked as 1, 2, and 3 respectively): a. Which one is the most desirable, and why? b. What is the major factor that drives the difference between the 3 curves? c. What can the service provider do to go from 1 to 2 to 3 (i.e. along the direction of the arrow)? Give specific suggestions (if possible use examples). (4) Finally explain managerial insights that can be derived from this graph in terms of how to set the right capacity in managing a queueing system. It’s OK to repeat your parts of your answers to (1)-(3) above if you need to. - 3 - 2. This question concerns the “location pooling” strategy discussed in class. (1) Briefly explain how such a strategy works, and the benefit of such a strategy on inventory management and other aspects of supply chain. Now, think about the “Buy Online – Delivered from Store” approach (we discussed this in class as an example of omnichannel fulfillment). For example, Target fulfills a majority of its e- commerce orders by shipping merchandise from its US retail stores. (2) When an online order is received, what are the operational pros and cons of a) filling it from an e-commerce warehouse and b) filling it from a retailer store. If from a retail store, then which factors should be considered in deciding which retail store? Just a few weeks ago (Feb 2023), Target announced that it will invest $100 million to set up sortation centers to consolidate and process shipments from its retail stores to customer homes. (See a separate article posted on Canvas for more information.) (3) Use the discussion above in (2) to explain the benefits of using the sortation centers – specifically, which “Cons” of “deliver from store” can these sortation centers address? Add your original thoughts about how these sortation centers should be used most effectively. - 4 - PART II (30 points) Answer one of the following two questions. 3. To promote its reputation for fast service, Earl’s While-U-Wait Automotive Tune-up Shop promises to give a customer $40 credit if their car’s service has to wait more than 10 minutes to begin. Earl’s business hours are 8am – 6pm. For planning purposes, it is broken into two equal periods (8am–1pm, 1pm–6pm). In each period, customer arrivals are estimated to follow the Poisson