University Operations Management Assignment: Solution Analysis

This assignment solution addresses key concepts in operations management, specifically focusing on production planning and demand management within a seasonal context. The solution begins with an analysis of a project's critical path, earliest and latest start times, and the calculation of expected completion time, including a discussion of how to determine a bid timeframe to minimize the risk of delay penalties. The assignment then transitions to a case study involving Lagoon Corp., a candle manufacturer facing seasonal demand fluctuations. The solution provides a demand management method to better utilize capacity, develops both a zero-inventory production plan and a plan utilizing inventory, and calculates the associated costs. The solution explores the trade-offs between regular time, overtime, and subcontracting costs, including inventory carrying costs. Finally, the solution provides a cost and reward trade-off analysis for crushing project time, identifying optimal strategies to reduce project duration and maximize profitability. The solution provides detailed calculations and analyses to illustrate the principles of operations management.

Running head: MANAGING OPERATIONS SYSTEM
Managing Operations System
Name of the Student:
Name of the University:
Authors Note:

1
MANAGING OPERATIONS SYSTEM
Answer 4:
Part a:
Part b:
Earliest start and finish time is 20 weeks with the following path:
A----C--F---H--I
Latest start and finish time is 43 weeks with the following path:
A---B--D---G--I
Part c:
Critical path is as following:
A----C--F---H--I
The total expected time to complete the project with above critical path is 30 weeks, i.e. as per
expected time.

2
MANAGING OPERATIONS SYSTEM
Part d:
In order to be 95% sure of not incurring delay penalty Kelly Inc. should specify (43 x 95%) = 41
weeks in the bid.
Part e:
The table below shows the calculation as to the cost and reward tradeoff for crush time. Based on
the following table let us calculate the optimum cost and time trade off.
Activity Normal
time
(weeks)
Crash
cost /
week ($)
Allowed
crush
weeks
Total cost
for crush
time ($)
Expected
reward
Net gain /
(loss)
A 6 10,000.
00
2 20,000.
00
10,000.
00
(10,000.0
0)
B 4,000.
00
1 4,000.
00
5,000.
00
1,000.
00
C 6,000.
00
2 12,000.
00
10,000.
00
(2,000.0
0)
D 11 3,500.
00
3 10,500.
00
15,000.
00
4,500.
00
E 3 1,000.
00
1 1,000.
00
5,000.
00
4,000.
00
F 6 2,000.
00
2 4,000.
00
10,000.
00
6,000.
00

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MANAGING OPERATIONS SYSTEM
G 2 10,000.
00
1 10,000.
00
5,000.
00
(5,000.0
0)
H 6 4,000.
00
1 4,000.
00
5,000.
00
1,000.
00
I 9 15,000.
00
3 45,000.
00
15,000.
00
(30,000.0
0)
As can be seen from the above that the optimum benefit to the organization would be to crush 2
weeks in activity F to make a net gain of $6,000. The total positive gain to the organization for
crush time would be $16,500 for crushing 8 weeks in Activity B, D, E, F and H as can be seen
from the above table.