MME40001 Engineering Management 2 Topic: Operations Management

Tutorial 10: Layout and Supply-chain management Chapter-09 & 11

Problem 1SOLUTION: From the Activity Matrix, C and D should be next to each other and A should be
next to C. The other relationships are minor by comparison. One possible solution is:
B A C D
with a distance of 10 feet between adjacent areas.

Computing the Load * Distance measure:

Load * Distance
A to B 7 * 10 70
A to C 193*10 1930
A to D 12*20 240
B to C 4*20 80
B to D 82*30 2460
C to D 222*10 2220
Total 7000

Further improvement is possible. Try analyzing the following layouts.

A C B D 7,730

A C D B 5,500

C A D B 7,570

Problem 2 SOLUTION: B and C should be adjacent, because they have the most trips. Traffic is next
heaviest between A and D, so they should be adjacent. Continuing in this fashion, F should be adjacent to D
and A should be next to F, but the latter two have already been placed. Finally, E should be placed next to F.
Thus, we are left with
(a) Heuristic solutions:
BCAD F E 46,040.
or
AD F E B C 44,440.
(Note: These are not the optimal solution.)
(b) Better layout:
AD F C B E 43,880.

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 1
Problem 3 SOLUTION:
This matrix includes movements in both directions:
M W D L G B Original layout - Random
M 125 75 0 50 60 assignment:
W 0 75 0 0
D 0 150 20 M W D
L 20 0 L G B
G 0
B 20,900

Here are two optimal layouts:

or

MovementDistance Calculations
M W: 125 20 2,500
=
M D: 75 40 3,000
=
M G: 50 20 1,000
=
M B: 60 20 1,200
=
W L: 75 20 1,500
=
D G: 150 20 3,000
=
D B: 20 20 400
=
L G: 20 20
= 400
13,000 = Minimum distance
movement for both
(symmetrical layouts)

Another possible solution to the layout re-designs:

G B L
D M W
13,300
Problem 4 SOLUTION:
(a) Takt time Minutes available per day/Units demanded per day
420/250 1.68 minutes
(b) Number of cross-trained employees (1.1 1.1 1.7 3.1 1.0)/1.68 8.0/1.68 4.76 ~ 5
(c) The cleaning operation is substantially longer than the others so it warrants special consideration to ensure
that a smooth flow can be maintained. A machine constrained task or lack of cross-training may
suggest that more traditional assembly line balancing techniques be used.

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 2
Problem 5 SOLUTION:
Performance Time Task Must Follow
Task (in minutes) This Task
A 1
B 1 A
C 2 A
D 1 C
E 3 C
F 1 C
G 1 D, E, F
H 2 B
I 1 G, H
13

200
Cycle time 3.33min
60
(a)

13 minutes
(b) Theoretical Efficiency 0.78
5 stations 3.33 minutes
or Efficiency 78% with a cycle time of 3.33. Multiple layouts with this efficiency exist.

13
Actual efficiency 0.867 or 86.7%
53
(c) Theoretical minimum number of ti 13
work stations 3.9 4
Cycle time 3.33

(d) Idle time 1 (at station 3) 1 (at station 5) 2 min per boat

(e) with a production time of 300 minutes per day:

13 minutes
(f Efficiency 0.867
3 stations 5 minutes
or Efficiency 86.7%. Multiple layouts with this efficiency exist.
Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 3
 (g) with a production time of 400 minutes per day:
400 minutes
Cycle time
60 units
6.67 minutes unit
ti 13
Minimum number of stations
Cycle time 6.675
1.95 or 2 workstations

13 minutes
Efficiency 0.649
3 stations 6.67 minutes
or Efficiency 64.9%. Multiple layouts with this efficiency exist.
13
Actual Efficiency 0.722 or 72.2%.
36

Problem 6 SOLUTION:

Company Donna Inc. Kay Corp.

1 2
2 2
2 4
2 3
2 3
1 2
2 2
12 .2 2.4 18 .2 3.6
Service
3 3
3 3
2 3
8 2 1.6 9 .2 1.8

Products
4 4
2 2
2 2
8 .4 3.2 8 .4 3.2
Sales
2 1
1 2
2 3
5 .2 1.0 6 .2 1.2
Total 8.2 9.8 higher rating

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 4
Company Donna Inc. Kay Corp.
2 2
2 2
2 4
2 3
2 3
2 2
2 2
14 .2 2.8 18 .2 3.6
Service
3 3
3 3
2 3
8 .2 1.6 9 .2 1.8
Products
4 4
2 2
2 2
8 .4 3.2 8 .4 3.2
Sales
2 2
2 2
2 3
6 .2 1.2 7 .2 1.4
Total: 8.8 10.0

Kay Corp. maintains a higher rating.

Problem 7 SOLUTION:
(a) Daily holding cost = (Annual holding cost Cost)/Days in year = (.3 $100,000)/365 = $82.20.
Difference in cost per day between shipping options = ($4,800 $3,800)/10 days = $100.
Since the daily holding cost ($82.20) is less than the daily cost of faster shipping with option b ($100), use
the slower shipping, option a.
OR
Total Cost Method:
Total Cost of Option-1 = $3,800 + 30 * (0.3*100,000) = $6,266
365
Total Cost of Option-2 = $4,800 + 20 * (0.3*100,000) = $6,444
365
Since the total cost for option-1 is lesser by $178, use slower shipping, Option-1.

(b) Daily holding cost = (Annual holding cost Cost)/Days in year = (.3 $100,000)/365 = $82.20.
Difference in cost per day between shipping options = ($4,000 $3,800)/10 days = $20.
Since the daily holding cost ($82.20) is more than the daily cost of faster shipping ($20), use the faster
shipping.
OR
Total Cost Method:
Total Cost of Option-1 = $3,800 + 30 * (0.3*100,000) = $6,266
365
Total Cost of Option-2 = $4,800 + 20 * (0.3*100,000) = $6,444
365
Total Cost of Option-3 = $4,000 + 20 * (0.3*100,000) = $5,644
365
Since the total cost for option-3 is the lowest, use faster shipping, Option-3.

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 5
Problem 8 SOLUTION:
(a) Daily holding cost = (Annual holding cost Cost)/Days in year = (.35 $250,000)/365 = $239.73.
Difference in cost per day between shipping options = $175.
Since the daily holding cost ($239.73) is more than the cost of faster shipping ($175), use the faster
subcontractor.

OR
Total Cost Method:
Total Cost of Option-1 = $X + 2 * (0.35*250,000) = $480 + X
365
Total Cost of Option-2 = $X + 1 * (0.35*250,000) + $175 = $415 + X
365
Since the total cost for option-2 is lesser by $65, use faster shipping, Option-2.

Problem 9 SOLUTION:
Cost via container ship:

(.40 * 75,000)
[24 * ] + 5,000 = (24 * 82.19) + 5,000 = 1,972.56 + 5,000 = $6,972.56
365

Cost via airfreight:

(.40 * 75,000)
[1* ] + 8,000 = (1* 82.19) + 8,000 = 82.19 + 8,000 = $8,082.19
365

Therefore, use the container ship as it has a lower total cost.

Problem 10 SOLUTION:
Cost of good sold / inventory investment = 24,000 / 1,000
= 24 (inventory turnover)

Total inventory investment/ Total assets = 1,000 / 16,000

= .0625 = 6.25% (percent of assets in inventory)

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 6