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Questions:

 

Q1.  A production operation is making 150 units of a product by engaging five workers for 300 hours. However, 40 percent of the units appear to have various quality problems, and the company decides to sell them as seconds at a price of £50 each when a normal unit is sold for £150. To improve the situation, several initiatives are proposed, including a scheme where, for every improvement, 50 percent will be given to workers and the other 50 percent will be held by the company. This results in a significant drop in defects as now only 10 units are faulty out of an output of 130 units.

a Compare the productivity after Bonus with the initial productivity. 

b) Determine the appropriate bonus per hour for the workers under the bonus scheme if the cost per piec e is £70 both before and after the scheme.

Q2.As the Cottrell Bicycle Co. of St. Louis completes plans for its new assembly line, it identifies 25 different tasks in the production process. VP of Operations Jonathan Cottrell now faces the job of balancing the line. He lists precedences and provides time estimates for each step based on work-sampling techniques. His goal is to produce 1,000 bicycles per standard 40-hour workweek.

Q3.Thomas Smith is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas’s fastest-moving inventory item has a daily demand of 24 units. The cost of each unit is £100, and the inventory carrying cost is £10 per unit per year. The average ordering cost is £30 per order. It takes about 5 days for an order to arrive, and there are 250 working days per year.

a) To minimize the cost, how many units should be ordered each time an order is placed? What is the total annual inventory cost, including the cost of the units?

b) Even if there is substantial uncertainty in the parameters in the EOQ-model, it is still quite a useful model. Discuss why.