Practice Problems Problem 1: A major drug store chain wishes to build a new warehouse to serve the whole Midwest. At the moment, it is looking at three possible locations. The factors, weights, and ratings being considered are given below: Ratings Factor Weights Peoria Des Moines Chicago Nearness to markets 20 4 7 5 Labor cost 5 8 8 4 Taxes 15 8 9 7 Nearness to suppliers 10 10 6 10 Which city should they choose? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 1: A major drug store chain wishes to build a new warehouse to serve the whole Midwest. At the moment, it is looking at three possible locations. The factors, weights, and ratings being considered are given below: Based upon the weights and rating, Des Moines should be chosen. Weighted Ratings Peoria Des Moines Chicago 80 140 100 40 40 20 120 135 105 100 60 100 Total 340 375 325 Ratings Factor Weights Peoria Des Moines Chicago Nearness to markets 20 4 7 5 Labor cost 5 8 8 4 Taxes 15 8 9 7 Nearness to suppliers 10 10 6 10 Which city should they choose? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 2: Balfour’s is considering building a plant in one of three possible locations. They have estimated the following parameters for each location: Location Fixed Cost Variable Cost Waco, Texas $300,000 $5.75 Tijuana, Mexico $800,000 $2.75 Fayetteville, Arkansas $100,000 $8.00 For what unit sales volume should they choose each location? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 2: Transition between Waco and Tijuana 300,000 + 5.75x = 800,000 + 2.75x 3x = 500,000 x = 166,000 Transition between Waco and Fayetteville 300,000 + 5.75x = 100,000 + 8.00x 2.25x = 200,000 x = 88,888 Problem 2: Balfour’s is considering building a plant in one of three possible locations. They have estimated the following parameters for each location: Location Fixed Cost Variable Cost Waco, Texas $300,000 $5.75 Tijuana, Mexico $800,000 $2.75 Fayetteville, Arkansas $100,000 $8.00 For what unit sales volume should they choose each location? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 2: Transition between Waco and Tijuana Locate in Fayetteville Transition between Waco and Tijuana 300,000 + 5.75x = 800,000 + 2.75x 3x = 500,000 x = 166,000 Transition between Waco and Fayetteville 300,000 + 5.75x = 100,000 + 8.00x 2.25x = 200,000 x = 88,888 Problem 2: Balfour’s is considering building a plant in one of three possible locations. They have estimated the following parameters for each location: Location Fixed Cost Variable Cost Waco, Texas $300,000 $5.75 Tijuana, Mexico $800,000 $2.75 Fayetteville, Arkansas $100,000 $8.00 For what unit sales volume should they choose each location? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 3: Our main distribution center in Phoenix, AZ is due to be replaced with a much larger, more modern facility that can handle the tremendous needs that have developed with the city’s growth. Fresh produce travels to the seven store locations several times a day making site selection critical for efficient distribution. Using the data in the following table, determine the map coordinates for the proposed new distribution center. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 3: Our main distribution center in Phoenix, AZ is due to be replaced with a much larger, more modern facility that can handle the tremendous needs that have developed with the city’s growth. Fresh produce travels to the seven store locations several times a day making site selection critical for efficient distribution. Using the data in the following table, determine the map coordinates for the proposed new distribution center. Truck Round Trips Store Locations Map Coordinates (x, y) per Day Mesa (10, 5) 3 Glendale (3, 8) 3 Camelback (4, 7) 2 Scottsdale (15, 10) 6 Apache Junction (13, 3) 5 Sun City (1, 12) 3 Pima (5, 5) 10 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 3: Cx = = = 7.97 Cy = = = 6.69 (10*3) + (3*3) + (4*2) + (15*6) + (13*5) + (1*3) + (5*10) 3 + 3 + 2 + 6 + 5 + 3 + 10 255 32 Cy = = = 6.69 (5*3) + (8*3) + (7*2) + (10*6) + (3*5) + (12*3) + (5*10) 214 Practice Problems Problem 3: Our main distribution center in Phoenix, AZ is due to be replaced with a much larger, more modern facility that can handle the tremendous needs that have developed with the city’s growth. Fresh produce travels to the seven store locations several times a day making site selection critical for efficient distribution. Using the data in the following table, determine the map coordinates for the proposed new distribution center. Truck Round Trips Store Locations Map Coordinates (x, y) per Day Mesa (10, 5) 3 Glendale (3, 8) 3 Camelback (4, 7) 2 Scottsdale (15, 10) 6 Apache Junction (13, 3) 5 Sun City (1, 12) 3 Pima (5, 5) 10 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 3: Cx = = = 7.97 Cy = = = 6.69 (10*3) + (3*3) + (4*2) + (15*6) + (13*5) + (1*3) + (5*10) 3 + 3 + 2 + 6 + 5 + 3 + 10 255 32 Cy = = = 6.69 (5*3) + (8*3) + (7*2) + (10*6) + (3*5) + (12*3) + (5*10) 214 Practice Problems Problem 3: Our main distribution center in Phoenix, AZ is due to be replaced with a much larger, more modern facility that can handle the tremendous needs that have developed with the city’s growth. Fresh produce travels to the seven store locations several times a day making site selection critical for efficient distribution. Using the data in the following table, determine the map coordinates for the proposed new distribution center. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 4: The following table gives the map coordinates and the shipping loads for a set of cities that we wish to connect though a central “hub.” Near what map coordinates should the hub be located? City Map Coordinate (x, y) Shipping Load A (5, 10) 5 B (6, 8) 10 C (4, 9) 15 D (9, 5) 5 E (7, 9) 15 F (3, 2) 10 G (2, 6) 5 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 4: Cx = = = 5.15 Cy = = = 7.31 (5*5) + (6*10) + (4*15) + (9*5) + (7*15) + (3*10) + (2*5) 5 + 10 + 15 + 5 + 15 + 10 + 5 355 65 Cy = = = 7.31 (10*5) + (8*10) + (9*15) + (5*5) + (9*15) + (2*10) + (6*5) 475 Problem 4: The following table gives the map coordinates and the shipping loads for a set of cities that we wish to connect though a central “hub.” Near what map coordinates should the hub be located? City Map Coordinate (x, y) Shipping Load A (5, 10) 5 B (6, 8) 10 C (4, 9) 15 D (9, 5) 5 E (7, 9) 15 F (3, 2) 10 G (2, 6) 5 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 4: Cx = = = 5.15 Cy = = = 7.31 (5*5) + (6*10) + (4*15) + (9*5) + (7*15) + (3*10) + (2*5) 5 + 10 + 15 + 5 + 15 + 10 + 5 355 65 Cy = = = 7.31 (10*5) + (8*10) + (9*15) + (5*5) + (9*15) + (2*10) + (6*5) 475 Problem 4: The following table gives the map coordinates and the shipping loads for a set of cities that we wish to connect though a central “hub.” Near what map coordinates should the hub be located? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 5: A company is planning on expanding and building a new plant in one of three countries in Middle or Eastern Europe. The general manager, Patricia Donegal, has decided to base her decision on six critical success factors: technology availability and support, availability and quality of public education, legal and regulatory aspects, social and cultural aspects, economic factors, and political stability. Using a rating system of 1 (least desirable) to 5 (most desirable) she has arrived at the following ratings (you may, of course, have different opinions). In which country should the plant be built? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 5: A company is planning on expanding and building a new plant in one of three countries in Middle or Eastern Europe. The general manager, Patricia Donegal, has decided to base her decision on six critical success factors: technology availability and support, availability and quality of public education, legal and regulatory aspects, social and cultural aspects, economic factors, and political stability. Using a rating system of 1 (least desirable) to 5 (most desirable) she has arrived at the following ratings (you may, of course, have different opinions). In which country should the plant be built? Critical Success Factors Turkey Serbia Slovakia Technology availability and support 4 3 4 Availability and quality of public education 4 4 3 Legal and regulatory aspects 2 4 5 Social and cultural aspects 5 3 4 Economic factors 4 3 3 Political stability 4 2 3 PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 5: A company is planning on expanding and building a new plant in one of three countries in Middle or Eastern Europe. The general manager, Patricia Donegal, has decided to base her decision on six critical success factors: technology availability and support, availability and quality of public education, legal and regulatory aspects, social and cultural aspects, economic factors, and political stability. Using a rating system of 1 (least desirable) to 5 (most desirable) she has arrived at the following ratings (you may, of course, have different opinions). In which country should the plant be built? Critical Success Factors Turkey Serbia Slovakia Technology availability and support 4 3 4 Availability and quality of public education 4 4 3 Legal and regulatory aspects 2 4 5 Social and cultural aspects 5 3 4 Economic factors 4 3 3 Political stability 4 2 3  = 23 19 22 Based upon her ratings of the critical success factors, Patricia should choose Turkey. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 6: Assume that Patricia decides to use the following weights for the critical success factors: Technology availability and support 0.3 Availability and quality of public education 0.2 Legal and regulatory aspects 0.1 Social and cultural aspects 0.1 Economic factors 0.1 Political stability 0.2 Would this change her decision? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 6: Assume that Patricia decides to use the following weights for the critical success factors: Technology availability and support 0.3 Availability and quality of public education 0.2 Legal and regulatory aspects 0.1 Social and cultural aspects 0.1 Economic factors 0.1 Political stability 0.2 Would this change her decision? Critical Success Factors Wgt Turkey Serbia Slovakia Technology availability and support 0.3 4 3 4 Availability and quality of public education 0.2 4 4 3 Legal and regulatory aspects 0.1 2 4 5 Social and cultural aspects 0.1 5 3 4 Economic factors 0.1 4 3 3 Political stability 0.2 4 2 3  = 23 19 22 1.2 0.8 0.2 0.5 0.4 3.9 0.9 0.3 3.1 0.6 3.6 In this case, use of the weighting factors does not change the recommendation. PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 7: Patricia’s advisors have suggested that Turkey and Slovakia might be better differentiated by either: doubling the number of critical success factors, or breaking down each of the existing critical success factors into smaller, more narrowly defined items, e.g., Availability and quality of public education might be broken into primary, secondary, and post-secondary education. How would you advise Ms. Donegal? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458

Practice Problems Problem 7: Doubling the number of critical success factors. There are two issues here. First, from a practical perspective there are a limited number of truly “critical” success factors – and these should be the ones presently being considered. Any additional factors should be of secondary or tertiary importance. Second, given the subjective nature of the rating process, adding additional factors would also increase the overall margin of error of the final ratings to a degree that may eliminate any gain in differentiation arising from the use of the additional factors. The use of a maximum of seven to nine critical success factors is usually appropriate. Given that one’s ability to estimate or rate an aggregate is usually better than one’s ability to estimate or rate the individual components of the aggregate, this approach is unlikely to provide much help. Problem 7: Patricia’s advisors have suggested that Turkey and Slovakia might be better differentiated by either: (a) doubling the number of critical success factors, or (b) breaking down each of the existing critical success factors into smaller, more narrowly defined items, e.g., Availability and quality of public education might be broken into primary, secondary, and post-secondary education. How would you advise Ms. Donegal? PowerPoint presentation to accompany Heizer/Render – Principles of Operations Management, 5e, and Operations Management, 7e © 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 07458