Operation Management Homework Assignment: Solutions and Analysis

This document contains the solutions to an operation management assignment. The assignment covers a range of topics including linear programming for maximizing revenue in a garment manufacturing company, critical path analysis using CPM, probability calculations in PERT projects, cost analysis for different technologies, break-even analysis, make-or-buy decisions, learning curve calculations, and statistical process control. The solutions provide step-by-step calculations and explanations for each problem, including topics such as expected monetary value (EMV) and reorder points. The assignment assesses the student's understanding of key operation management concepts and their ability to apply these concepts to solve practical problems.

Running head: OPERATION MANAGEMENT
Operation Management
Name of the Student:
Name of the University:
Authors Note:

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OPERATION MANAGEMENT
Contents
Answer 1:.........................................................................................................................................2
Answer 2:.........................................................................................................................................2
Answer 3:.........................................................................................................................................2
Answer 4:.........................................................................................................................................2
Answer 5:.........................................................................................................................................2
Answer 6:.........................................................................................................................................2
Answer 7:.........................................................................................................................................3
Answer 8:.........................................................................................................................................3
Answer 9:.........................................................................................................................................5
Answer 10:.......................................................................................................................................5
Answer 11:.......................................................................................................................................5
Answer 12:.......................................................................................................................................6
Answer 13:.......................................................................................................................................6
Answer 14:.......................................................................................................................................6
Answer 15:.......................................................................................................................................6
Answer 16:.......................................................................................................................................6
Answer 17:.......................................................................................................................................6
Answer 18:.......................................................................................................................................6
Answer 19:.......................................................................................................................................7

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OPERATION MANAGEMENT
Answer 20:.......................................................................................................................................7

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OPERATION MANAGEMENT
Answer 1:
With the following material requirements and availability of materials the maximum amount of
revenue that the Garment manufacturing company can earn is when the sales mix will be as per
option (d). Thus, option (d) is correct with 375 pants and 250 jackets.
Answer 2:
The critical path for the project is BEHI hence, option (a) is the correct option. The expected
time to complete is 20 days in this path.
Answer 3:
In case a PERT project is likely to be completed in 45 +/- 10 weeks then the probability of the
project to likely complete on or before 40th week is 17%. Thus, option (a) is the correct option.
This is because the possibility of the project to complete in 35 weeks is 1/3rd (45 weeks -10
weeks) along with similar probability for the project to be completed in 45 weeks and 55 weeks
(45 +10 weeks). Hence, with 1/3 multiplying with 0.50 i.e. the probability of the project to be
completed between 35 to 40 weeks the probability of the project to be completed on or before
40th weke is (1/3 x 0.50) = 17%.
Answer 4:
In this case option d is the correct option, i.e. the expected completion time is 17 weeks and
standard deviation is 4 weeks. Hence, option (d) is the correct answer to the question.
Answer 5:
Option (a) is the correct option as activity requires 10 days. Hence, option (a) is the correct
option.

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OPERATION MANAGEMENT
Answer 6:
With 90% learning curve the 12th unit of X235 will be produced by the work in 51.41 minutes
thus, option (a) is the correct answer. The 12th unit will be produced in 51 minutes.
Answer 7:
The cost under different technology to produce 12,000 units per annum are calculated below.
Technology Fixed Cost in
million
Unit
Cost
Fixed
cost
Variable
costs
Total
costs ($)
T-1 $ 1.30 $
100.00
1300000 1200000 2500000
T-2 $ 1.50 $
85.00
1500000 1020000 2520000
T-3 $ 1.75 $
60.00
1750000 720000 2470000
T-4 $ 2.00 $
50.00
2000000 600000 2600000
T-5 $ 2.50 $
40.00
2500000 480000 2980000
T-6 $ 4.00 $ 4000000 180000 4180000

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OPERATION MANAGEMENT
15.00
Thus, the organization should use T-3 technology to reduce the overall cost of production. The
cost of production will be lowest if the organization uses T-3 technology hence, the organization
should use T-3 technology. Hence, option (a) is correct, i.e. TC3 is the correct option.
Answer 8:
Additional number of units to be sold to earn NOI of $75,000 is 1,670 units as can be seen from
the following calculations.
Selling price per unit 40
Less: Manufcaturing cost per unit 25
Contribution per unit 15
Number of units sold 20000
Contribution 300000
LessL Fixed costs 250000
Net operating income 50000
Number of units to be sold to earn $75000

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OPERATION MANAGEMENT
Contribution per unit 15
Fixed cost 250000
Add: Desirable NOI 75000
325000
Number of units to be sold 21666.67
Less: Already sold 20000
Additional number of units to be sold 1666.667
Additional number of units to be sold (rounded off to next 10) 1670
Hence, option (d) is the correct answer.
Answer 9:
In case 80,000 units the cost to make as well as cost to purchase these from outside, i.e.
outsource would be same with $9,000,000. Hence, option (d) is the correct option.
Answer 10:
In such case the NOI would be $7,0725,500 as against the current NOI of $5,000,000 thus, the
increase in NOI is expected to be $2,072,5000. This is an increase of 41.45% from $5,000,000.
Hence, the correct answer is option (f) with 41%.

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OPERATION MANAGEMENT
Answer 11:
Barbecue grill is not an input in barbecuing burger rather it is an equipment needed in barbecuing
all others are inputs used in barbecuing of burger hence, option (a) is the correct option.
Answer 12:
Fostering of continuous improvement is the meaning of the Japanese word Kaizen hence, option
(a) is the correct answer.
Answer 13:
Multiple R is 0.69 meaning there is no meaningful relationship between SAT and GPA hence,
option (a) is the correct option though it contains multiple R as 0.70. Hence, option (a) is
correct.
Answer 14:
In 3 sigma acceptable number of defects is 66,807 per million which is not present any of the
options hence, the highest amongst these options is 2700 defects in option (e) thus, the correct
answer is option (e).
Answer 15:
Option (a) is the correct option, i.e. binder should order when there are 1500 binders left in stock.
Hence, option (a) is the correct option.
Answer 16:
Activity F should be crashed by a week to reduce the project duration by 1 week hence, option
(b) is the correct option.

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OPERATION MANAGEMENT
Answer 17:
Option (c) is the correct option as PERT deal with activities which are not predictable and CPM
deals with activities which are predictable. Thus, option (c) is the right answer.
Answer 18:
Option (d) is the correct option as X-bar chart determines the Shift in the Process Mean and R-
bar chart determines the Spread of the Process Dispersion hence, option (d) is the right answer.
Answer 19:
Option (d) is the correct option as all other options have negative EMV hence, with EMV $0 it is
best to choose choice 4. Hence, option (d) is the correct option.
Answer 20:
Option (e) is the correct option as the reorder point or level is when there are 500 (5 x 100) units
of X-315 left in the stock hence, option (e) is the correct option.