Revision

Business Department

FALL 2014-15
MID-TERM EXAM/REVISION

MGMT 405, Production Man.

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Section A/Multiple Choice-Example

1)
A)
B)
C)
D)

Production/Operations Management is
responsible for producing goods
responsible for providing services
system that create goods or services
often referred to as the core of scientific management

2)

Operations Management does not affect

A)
B)
C)
D)

The collective success or failure of companies POM

companies financial resources
Nations ability to compete internationally
Companies ability to compete

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Section A/Multiple Choice-Example

Revision

3)
Which of the following part indicates the three Basic
Functions?
A)
Finance, marketing and management
B)
Finance, human resources and management
C)
Marketing, operations and finance
D)
Operations, finance and scientific management
4)
A)
B)
C)
D)

The steps of the conversion of inputs into outputs are:

Input, process, transformation
Labor, control, goods
capital, land, service
Input, conversion process, output

5)
The operations function involves __________
A)
The transformation process of inputs into outputs
B)
Feedback control
C)
Value added process
D)
Only goods process
20 multiple choice questions are expected to ask in the exam....
MGMT 405, Production Man., 2013/14
2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Section B/type 1-Example- Productivity

Assume 40 hour weeks and an hourly wage of $12. Overhead is
1.5 times weekly labor cost. Material cost is $ 6 per pound.
(a) Compute the average multi-factor productivity measure for each
of the weeks shown.
(b)Calculate the productivity growth rates throughout the weeks.
(c) What do the productivity figures suggest? Draw the productivity
figures and briefly explain.
Week

Output (units)

Workers

30,000

33,600

32,200

35,400

Materials (lbs)
450
470
460
480
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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Example- Productivity
Overhead Material

Week

1
2
3
4

Output

Worker cost

(units)

12*40

30,000
33,600
32,200
35,400

2880
3360
3360
3840

Total

MFP

cost

s cost

cost

4320

2700

9900

3.03

5040

2820

11220

2.99

5040

2760

11160

2.89

5740

2880

12480

2.84

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Example- Productivity
Week 1- 12*40*6 =2880= worker cost
Week 1- 12*40*6 =2880* 1.5=4320= overhead cost
Week 1- 450*6 = 2700=material cost
Week 1- 2880+4320+2700=9900 total cost

Week 1-MFP=output (units)/

(labor+materials+overhead)
=30000/9900=
3.03 unit per dollar input

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Section B/Type2-Example-Forecast
A company records indicates that monthly sales for a twelve-month
period are as follows:.
Period
1
2
3
4
5
6
7
8
9
10
11
12

Sales
86
93
88
89
92
94
91
93
96
97
93
95
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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Example-Forecast
a)
Use a simple three-month moving average and single
exponential smoothing technique to find the next period employing
smoothing constant and 12. period forecast value are 0.5 and 94.28
respectively.
b)

Use a simple three-month moving average and single

exponential smoothing technique to find all periods.

c)

Use RMSE error model and decide which technique is better

explain the data (MA and ES).

d)
Plot the monthly data, three-month moving average
estimates as well as exponential smoothing estimates. Briefly
explain the patterns.
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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Example-Forecast
Sales
Period
86
1
93
2
88
3
89
4
92
5
94
6
91
7
93
8
96
9
97
10
93
11
95
12
Next period
MA03:
TT4= 88+93+86/3=89
TT13=95+93+97/3=95

MA03

ES(=0.5)

89
90
89.66667
91.66667
92.33333
92.66667
93.33333
95.33333
95.33333
95

86
86
89.5
88.75
88.875
90.4375
92.21875
91.60938
92.30469
94.15234
95.57617
94.28809
94.64404

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Example-Forecast

MA03:
TT4= 88+93+86/3=89
TT13=95+93+97/3=95

***ES(=0.5)
TTt = TT (t-1)+ (GT(t-1)-TT(t-1))
TT1= 86 (it is the average of series if it is not given)
TT2= 86+0.5(86-86)=86
TT3=86+0.5(93-86)=89.5
TT4=89.5+0.5(88-89.5)=88.75
TT13=94.29+0.5(95-94.29)=94.64
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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Example-Forecast
period
1
2
3
4
5

Sales

MA03

86
93
88
89
92

ES05

EMA03

SQEMA03

EES05

SQEES05

86

86

49

89.5

-1.5

2.25

89.00

88.75

0.25

0.0625

90.00

88.875

3.125

9.765625

89.67

90.4375

4.33

18.77778

3.5625

12.69141

91.67

92.21875

-0.67

0.444444

-1.21875

1.485352

92.33

91.60938

0.67

0.444444

1.390625

1.933838

92.67

92.30469

3.33

11.11111

3.6953125

13.65533

93.33

94.15234

3.67

13.44444

2.84765625

8.109146

95.33

95.57617

-2.33

5.444444

-2.576171875

6.636662

95.33
95

94.28809
94.64404

-0.33
10.67

0.111111
=53.77778

0.711914063
17.28808594

0.506822
=106.0967

94
6
7
8
9
10
11
12
13

91
93
96
97
93
95

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Example-Forecast

RMSE

(A - F )2
n

RMSE(MA03) = 2.44
RMSE(ES05) = 2.97
MA is better explain the pattern of the data than ES05 cause MA gives less
error compared to ES.

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Example-Forecast

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Section C/type 1-Example-Trend Analysis

Use the information in the following table
and construct the forecast equation.
Use time series regression to forecast the
petrol consumption (mn gallons) for the next
four year.
Compute
the
correlation
coefficient,
determination of coefficient and standard
deviation. Briefly explain
Draw the pattern for data as well as
forecasting periods. Briefly explain.
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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Example-Trend Analysis

YEAR

PETROLSAL
E(Y)

200 200
4
5 2006 2007 2008 2009 2010 2011

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Example-Trend Analysis
Trend PETROLSAL
Year (t)
ES (Y)
(t) SQ Y*t (y) SQ (t) SQ (Y) SQ
2004

2005

2006

12

16

2007

16

2008

25

2009

36

18

2010

49

35

25

2011
(sum)

64

24

36

22

204

109

74

1296

484

1.678

0.238

MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Example-Trend Analysis
Y9=1.678+0.238(9) = 3.83 in 2012
Y10=1.678+0.238(10) = 4.06 in 2013
Y11=1.678+0.238(11) = 4.30 in 2014
Y12=1.678+0.238(12) = 4.53 in 2015
Note: Petrol sales are expected to increase by 0.238 mn gallons per year.

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Example-Trend Analysis
Sxy = 1.36

Sxy is a measure of how historical data points have been

dispersed about the trend line. If it is large (reference
point in mean of the data) , the historical data points
have been spread widely about the trend line and if
otherway around, the data points have been grouped
tightly about the trend.

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Example-Trend Analysis
r=0.42
r lies between -1 and 1, -1 is strong negative whereas 1 is strong
positive. 0 means that there is no relationship between the two
variables (x and y). In this case, there is a strong positive
relationship between the two variables and if an increase in
independent variable, it will be a rise in dependent variable.

R2=0.18. It varies between 0 and 1.0 means that there is no

relationship between the two variables whereas 1 indicates that
there is a perfect relationship. 18.0% variation in dependent
variable can be explained by the variation happened in the
independent variable. It is worth to emphasize that 82% shows
unexplained part of the relationship.
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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Section C/type 2-Vogel and NWC

Use the relevant information in the following Table:

Determine the dispatch program between the factories and

stores.
Calculate individual cost
Calculate total minimum cost

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Section C/type 2-Vogel and NWC

Given a transportation problem wth the following costs,
supply, and demand, find the optimal solution:
To

(Cost)

From

$6

100

$5

180

$8

200

Demand

135

175

170

supply

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Section C/type 2-Vogel and NWC

To
From
A
B
C
Demand

(Cost)
1
2
3
$6
7
4
$ 5 3/175
6
$8
5
7
135 175 170
(1)
(2) (2)

supply
100
(2)
180
(2)
200
(2)
480\480

B 2 =175*3 =525
To
From
A
B
C
Demand

(Cost)
1
$6
$5
$8
135
(1)

3
4/100
6
7
170

supply
100
(2)
5
(1)
200
(1)

(2)

A 3 =100*4 =400
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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Section C/type 2-Vogel and NWC

To
From
B
C
Demand

(Cost)
1
3
5/5
6
130/ 8
7/70
130
70
(3)
(1)

supply
5
(1)
200
(1)

B 1 =5*5 =25
C 1 =130*8 =1040
C 3 =70*7 =490
Total= 2,480

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision

Revision

Section C/type 2-Vogel and NWC

To

(Cost)

From

supply

$ 6*100

100

$ 5 *35

3*145

180

$8

5 *30

7*170

200

Demand

135

A
B
B
C
C

175

170

1 =6*100=600
1 =5*35 =175
2 =3*145 =435
2 =5*30 =150
3 =7*170 =1190

Total= 2,550
MGMT 405, Production Man., 2013/14

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2014-15- Prof. Dr. Sami Fethi, EMU, Revision

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Thanks

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MGMT 405, Production Man., 2013/14

2014-15- Prof. Dr. Sami Fethi, EMU, Revision