Homework_1_-_Fall_11_-_KEY - SCM 372 Mfg Plng Control Fall...

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Homework 1 – KEY Fall 2011 Due 9/28/2011 SCORING: Each of the 5 questions is worth 2 points for a total of 10 points. Bonus question 6 allows a max possible score of 12. 1. Short answer essay questions from The Goal (no more than 4 sentences per answer please!) a. What is “The Goal” and why is it more important than the many other performance measures that people might think are the goal? The goal of the firm is to make money. Firms concentrate on meeting many other performance measures (e.g., efficiency, utilization, employment, inventory levels, cost-effective purchasing, etc.) but these should be viewed in light of whether they move the firm move toward the real goal. b. What are the three key operational measures to know whether you are moving toward the goal? The firm makes more money by increasing throughput, reducing inventory, and reducing operational expense. If throughput goes down, operational expenses go up, or inventory goes up, the company is moving away from the goal. c. How does Jonah’s definition of throughput differ from the conventional definition? As per Jonah, “Throughput is the rate at which the system generates money through sales .” Conventionally, operations people think of throughput as the production rate of a system, whether the end-products are sold or placed in Finished Goods Inventory. As Bob says “We’re manufacturing. We’ve got nothing to do with sales; that’s marketing.” Building up Finished Goods Inventory does not help the firm make money. The firm only makes money by selling those finished goods. Even though it helps factory efficiency, a firm doesn’t make more money by running at full capacity only to build inventories of items that may not sell. d. What two important phenomena does Alex illustrate via the ‘matchstick’ game that he invents on the scouting trip? In the matchstick game, Alex is modeling the two phenomena that Jonah tried to teach him – dependent events and statistical fluctuations. Dependent events – an event or series of events must take place before another can begin. In the matchstick game, the output of each boy depends upon the number of matches that are passed to them. Statistical fluctuations – information that varies from one instance to the next. In the matchstick game, the maximum number of matches to pass on is governed by the roll of the dice and can’t be predicted accurately. The combination of dependent events and statistical fluctuations result in lower throughput than predicted from a balanced system. Page 1 of 7
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Homework 1 – KEY Fall 2011 Due 9/28/2011 2. Various financial data for SunPath Manufacturing for 2009 & 2010 follow. 2009
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This note was uploaded on 12/28/2011 for the course SCM 372 taught by Professor Cook during the Fall '11 term at Michigan State University.

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Homework_1_-_Fall_11_-_KEY - SCM 372 Mfg Plng Control Fall...

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