BUSINESS : REAL MIDTERM EXAM WITH SOLUTIONS 2023

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Question One The XYZ Company supplies a component to several large automobile manufacturers. The parts that XYZ assembles into the finished components come from two sources: the XYZ molding department makes one very critical part, and the rest come from outside suppliers. The process flow diagram of the operation is shown below. In the molding shop, there are 11 machines capable of molding the one part done in-house, but historically one machine is always being maintained or repaired at any given time. Each machine requires a full-time operator who earns an hourly wage of $15, though only 50 minutes of a molding operator's typical hour is occupied with the tasks of loading, unloading, actively monitoring, and adjusting the machine. The machines can each produce 25 parts per hour. The workers will work overtime at a 50% wage premium. There are currently only 6 operators dedicated to molding this automobile component. An additional 4 operators are available from a labor pool within the company. In the final assembly shop, purchased parts and those molded in-house are assembled by 15 workers working an eight-hour shift on an assembly line that moves at the rate of 150 components per hour. Each assembly worker earns a wage of $10 per hour; though on average only 37.5 minutes of an assembly worker's typical hour is spent working directly on components. Management believes that they could hire 15 more workers for a second shift if necessary. The size of inventories represented in the figure depend on many factors, including the degree of synchronization in the scheduling that takes place in molding and in purchasing. It may be reasonable to assume that, in order to have uninterrupted final assembly, there are always some molded and purchased parts in inventory. Determine the rate of output (or capacity) of the component operation. Assume the department purchasing parts has virtually unlimited capacity, i.e., it can provide any reasonable number of parts each week. Determine the direct labor content, direct labor utilization and labor cost of the molding and assembly tasks. Efficiency = Actual Output/ Effective Capacity x 100% 90 percent Utilization = Actual Output/ Design Capacity x 100% 34 percent Question Two Daffy Dave’s Sub Shop makes custom submarine sandwiches to order. They are analyzing the processes at their shops. The general flow of the process is shown below. There is a separate person working at each of the steps in the process. 1 min per order 3 mins /order 4 mins/order 2 min/order Daffy Dave wants to figure out the following for a typical 8-hour work day. a. What is the current maximum output of the process? 48 orders per day b. If we add another person, where would we add him or her? What is the benefit? At steps three, for the reason that it takes a longer time of all steps. c. Is there a benefit if we can shift 1 minute from Bun and Meat to order taking? Assume we do not make change in part b above. There will be no benefit for the reason that step two will be compromised hence producing sub standards products. d. Is there a benefit if we shift 1 minute of work from Condiments to Bagging? Assume we do not make the changes in parts b and c above. There will be no benefit for the reason that step four will be compromised.

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