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MGT 455 MODULE 5 PRACTICE PROBLEMS

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7.5 Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow:
7.7 Using the data in Problem 7.5, determine the best process for each of the following volumes: (1) 75,000, (2) 275,000, and (3) 375,000.
7.11 Tim Urban, owner/manager of Urban’s Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to Duffy’s Maid Service. Tim rents an average of 50 rooms for each of 365 nights (365 × 50 equals the total rooms rented for the year). Tim’s cost to clean a room is \$12.50. The Duffy’s Maid Service quote is \$18.50 per room plus a fixed cost of \$25,000 for sundry items such as uniforms with the motel’s name. Tim’s annual fixed cost for space, equipment, and supplies is \$61,000. Which is the preferred process for Tim, and why?
S7.3 If a plant has an effective capacity of 6,500 and an efficiency of 88%, what is the actual (planned) output?
S7.5 Material delays have routinely limited production of household sinks to 400 units per day. If the plant efficiency is 80%, what is the effective capacity?
S7.11 The three-station work cell illustrated in Figure S7.7 has a product that must go through one of the two machines at station 1 (they are parallel) before proceeding to station 2.
S7.15 A production process at Kenneth Day Manufacturing is shown in Figure S7.9. The drilling operation occurs separately from, and simultaneously with, the sawing and sanding operations. A product needs to go through only one of the three assembly operations (the operations are in parallel).
S7.28 James Lawson’s Bed and Breakfast, in a small historic Mississippi town, must decide how to subdivide (remodel) the large old home that will become its inn. There are three alternatives: Option A would modernize all baths and combine rooms, leaving the inn with four suites, each suitable for two to four adults. Option B would modernize only the second floor; the results would be six suites, four for two to four adults, two for two adults only. Option C (the status quo option) leaves all walls intact. In this case, there are eight rooms available, but only two are suitable for four adults, and four rooms will not have private baths. Below are the details of profit and demand patterns that will accompany each option:

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