1. Giapetto's Woodcarving: The LP Model
max 3x1 + 2x2
subject to
2x1 + x2  (finishing hours)
x1 + x2  80 (carpentry hours)
x1  40 (demand for soldiers)
x1  0 (nonnegativity constraint)
x2  0 (nonnegativity constraint)
Where
x1 : number of soldiers produced each week
x2 : number of trains produced each week

2. Formulating an LP Define decision variables
Objective function-max or min
Constraints-explanation/label in words next to constraint
Non-negativity constraints

3. The Excel Model soldiers trains Total(objective) changing cells 20 60
soldiers
trains
Total(objective)
changing cells 20 60
profit 3 2
180
used
capacity
finishing 1
100
carpenter 80
demand 40
Filled in by Excel Solver

4. Questions What is the optimal product mix?
Is producing 30 soldiers and 30 trains feasible?
Which constraints are binding?
What is the optimal profit (or optimal objective function value)?

5. Process variability Measured by CV of inter-arrival and service times
Managing waiting
Is there a perpetual queue? If yes, add capacity
Is there a predictable queue? If yes, schedule capacity better or manage demand
Are there stochastic queues-always! Reduce variability through process design
If you can’t reduce waiting, manage perceived waiting through the psychology of waiting

6. Queue formula
A new shopping mall is considering setting up an information desk manned by one employee. Based upon information obtained from similar information desks, it is believed that people will arrive at the desk at a rate of 20 per hour. It takes an average of 2 minutes to answer a question. It is assumed that the arrivals follow a Poisson distribution and answer times are exponentially distributed.
What if service times are constant?
How many servers will I need if I want to ensure a given waiting time target?
If a customer cost of waiting and a per server staff cost is given, what is the optimal staff level?

7. EOQ? Costs? ROP? Inventory Turns?
A university bookstore sells MP3 players. Sales are 6400 units per year. The bookstore buys the players at 240 TL per unit. The cost of placing an order with the supplier is 30TL. Annual holding cost rate (or equivalently interest rate) is 25%. Lead time is 5 days.
What if I misestimated the demand by 40%?

8. A retail store selling apparel will order merchandise for the Christmas Season. A men’s overcoat from Hong Kong is expected to have a demand range from 100 to 400 overcoats, with probabilities that are as follows:
The total cost to the store would be 60€ per overcoat, and the retail price is estimated at 110€ per overcoat. Any overcoats left over after the christmas season are expected to be sold at 40€ each.
How many overcoats should thestore buy to maximize profits over the coming Christmas
season? Expected sales? Expected Profit? Expected left-overs?
Estimate of demand
Probability
100
0.10
200
0.40
300
400

9. Continuous review: ROP? ss? Average on hand inventory?
l = 3 weeks
 = 1.5 units per week
2 = 4 units per week
Target service level, CSL=95%

10. Quality Know what is TQM-continuous improvement
Difference between normal/common cause variability and assignable/abnormal variability
Process improvement implies a reduction in normal variability
Process control implies absence of assignable cause variability

11. Know how to Do a Pareto analysis
Fishbone diagram-main bone problem, 4 sub-bones: man, material, machine, method
Draw a histogram
Interpret a control chart

12. Control chart
The overall average on a process you are attempting to monitor is 50 units. The process standard deviation is Determine upper and lower control limits for an X-bar chart if you choose a sample size of 5.