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HW01
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Key
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F08.doc
Page 1
MGMT 46000: HW 01
40 Points
Due: September 10, 2008
Write proper dimensions.
Question 1 (8 points)
Solve problem 4 at the end of chapter II on process analysis and draw the process flow diagrams for both
alternatives.
Solution:
Alternative 1
Alternative 2
10 projects in 8 hours (480 minutes) results
in 48 min. per project.
Part
a
Output / hr = 10 [projects] / 8 [Hrs]
= 1.25 [projects / Hr]
Productivity = 1.25 / 1
= 1.25 [projects / person Hr]
Bottleneck is at station 2.
Output / hr = 60 / 30 = 2 [projects / Hr]
Productivity = 2 / 2
= 1 [project / person Hr]
Part
b
To complete 1000 projects, it will
take 1000 / 1.25 = 800 hours.
Labor content for 1000 projects is
also 800 hours.
To complete 1000 projects, it will take
1000 / 2 = 500 hours.
Labor content for 1000 projects is 500x2
= 1000 hours.
Question 2 (6 points):
Part (a)
One insurance company claimed that it takes less than six months (on an average) to complete
the review of complex claims cases. They generally complete 400 complex cases per year. On a
particular day, they had 230 such pending cases. What is the average completion time in month? Is their
estimate of average time (6 months) reasonable?
[
3 points
]
Given: WIP = 230 [cases] and FR = 400 [cases / year]. Using Little’s formula,
Flow time = WIP / FR = 230 [cases] / 400 [cases / year] * 12 [months / year] = 6.9 months.
Therefore, the estimate appears reasonable.
Part (b)
“Inventory Turnover” is defined as the number of times that a company’s inventory has been
turned over (sold or replaced) per year. Suppose the inventory turnover for a company is 40. Suppose
this company has average inventory of $4.5 million (based on purchase price). How much “annual” profit
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This note was uploaded on 01/21/2011 for the course MGMT 46000 taught by Professor Panwalker during the Fall '08 term at Purdue University.
 Fall '08
 panwalker
 Management

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