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EMBA 533: Operations Management
Mock Exam
Be sure to show all the relevant work (e.g. by including spreadsheet screenshots) to
get full credits!
Good luck!
By submitting the exam, you acknowledge that you are a member of a
learning community in the Foster School of Business that is committed to the
academic standards of honesty, respect, and integrity, and that you adhered to these
standards while completing this exam. You have neither received nor given help on
any part of this exam.
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Part I (30 points) Pick one of the two following questions to answer:
1. A local pizzeria is facing severe competition and looking for measures to distinguish itself.
After going to a seminar on Service Management at the University of Worthington Business
School, the owner is considering offering a service guarantee. Specifically, from a survey, she
knows that customers would like to receive order delivery within 40 minutes of placing an order.
Therefore, “delivery within 40 minutes or $3 off” during rush hours sounds appealing. Before
offering it, the owner would like to perform a queueing analysis of the impact of such a guarantee.
From data collection, she believes
- during rush hours, customer order a
ivals follow Poisson distribution; on average an order
a
ives every 6 minutes
- almost all the orders are for one pizza only, so it’s safe to assume this
- although there are several steps in the entire production and delivery process, the pizza
dough maker is the bottleneck
- there is only one pizza maker; he spends an exponential amount of time making each pizza,
with an average of 4 minutes
- it’s safe to assume that all the other steps (e.g. baking, delivery) take a constant 15 minutes
Questions:
1) Assuming the demand remains unchanged, how much would such a service guarantee cost
per hour?
2) The owner hopes that the service guarantee will show customers that she is serious about
making speedy delivery, hence increase customer demand. If the guarantee is projected to
increase demand by 20%, should it be offered (assuming an average order gives $3 in
profit)?
(Hint: the MMm queueing spreadsheet gives you the probability of waiting longer than t in the
queue.)
2. The fruit platter is one of Bothell Airlines’ most popular meal items on its Seattle – Miami
flight. Due to FDA regulation, any onboard fresh food remaining at the end of each day must be
destroyed (spoilage).
Daily demand for the fruit platter on this plane can be approximated by a normal distribution
with a mean of 10 and a standard deviation of 2. Because it is random, it is possible on any given
day that the fruit platters can run out quickly or be left over at the end. Consider the following
facts:
- Bothell airlines sells the platter for $9 each and it costs $4 each.
- The salvage value of each remaining platter is zero.
- The airline estimates that if the platter is out of stock during a flight, about half of the
customers can be persuaded to purchase something else instead. The profit margin on that
“sometime else” is estimated to be $1.5 on average. The other half customers will choose
not to buy anything. We will ignore loss of customer goodwill for this analysis.
How many fruit platters would you recommend the airline to ca
y on this plane every day?
(Hint 1: to find “Cu,” consider how much profit the airline is losing on a customer who wants the
platter but it’s out of stock.
Hint 2: when using the spreadsheet, you can leave the r, c, s cells blank.)
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Part II (30 points) Pick one of the two following questions to answer:
3. Explain how pooling will improve the efficiency of a queueing system. Then list two potential
drawbacks in practice, and what can be done to address them. Please use an example if possible.
4. Explain what the bullwhip effect in a supply chain is. Then explain two possible causes of the
ullwhip effect, and what can be done to address them. Use examples if possible.
Part III (40 points) Je
y's Cookie Company
Je
y and his roommate are preparing to launch a cookie company in their on-campus
apartment to provide fresh cookies to hungry students late at night. The idea is to bake
fresh cookies to order, using any combination of ingredients that the buyer wants. The
cookies will be ready for pickup at the apartment.
Two factors distinguishes the new cookie company: 1) The cookies will be
completely fresh and made to order. 2) There will be a variety of ingredients available to
add to the basic dough, including chocolate chips, M&M's, chopped Heath bars, coconut,
walnuts, and raisins. Buyers will enter their orders online or in an app, and specify which
of these ingredients they want in their cookies.
The Production Process
Baking cookies is simple: place all the ingredients in a mixing bowl and mix them;
spoon the cookie dough onto a tray; put the cookies into the oven; bake them; take the tray
of cookies out of the oven; let the cookies cool; and, finally, take the cookies off the tray
and carefully pack them in a box. A detailed examination of the production process
follows. Je
y and his roommate have carefully timed the necessary operations.
• Order processing The first step is to take the orders, which are processed on a first-
come-first-served basis. Je
y has developed both an app and a website for taking orders.
• Mixing The next step is to place the specified ingredients in the electric mixer's
owl and turn on the mixer to mix the ingredients. The electric mixer can hold and mix
ingredients for up to three dozen cookies. Je
y then spoon the cookies, one dozen at a
time, onto a cookie tray. Adding the ingredients to the bowl and mixing takes 6 minutes,
egardless of how many cookies are being made in the batch. That is, to mix enough
dough and ingredients for three dozen cookies takes the same 6 minutes as for one dozen
cookies. However, spooning the cookies onto the tray takes 2 minutes per tray.
• Baking The next step, performed by Je
y’s roommate, is to put the cookies
in the oven and set the timer. The time to do this is negligible, and will be ignored in this
analysis. The cookies bake for 10 minutes. Because the oven only holds one tray, a second
dozen takes an additional 10 minutes to bake.
• Finishing Je
y’s roommate also performs the last steps of the process by first
emoving the cookies from the oven and putting them aside to cool for 5 minutes, then
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carefully packing them in a box and accepting payment. Removing the cookies from the
oven takes a negligible amount of time, but it must be done promptly. It takes 2 minutes
to pack each dozen and about 1 minute to accept payment for the order.
As experienced bakers know, a few simplifications were made in describing the actual
cookie production process. For example, the first batch of cookies for the night requires
preheating the oven. However, such complexities will be put aside for now. Begin your
analysis by developing a process flow diagram of the cookie-making process.
Questions
Given the wide variety of options and possibility for customization, assume that no two
orders are exactly the same. Hence different orders are always processed separately. (To answer
the following questions, you may find it better to draw a process diagram first.)
1) Assume all the orders are for one dozen cookies.
a. How long does it take to process a rush order of one dozen cookies, assuming that
no other cookies are cu
ently in process (i.e., what is the system flow time)?
. Where is the bottleneck? What is the system capacity (that is, how many cookies
can be made and sold each hour at the most)?
2) Answer the same questions as in 1) assuming all the orders are for two dozen cookies.
3) Answer the same questions as in 1) assuming all the orders are for three dozen cookies.
4) Je
y and his roommate are considering whether to add a second oven that’s identical to
the cu
ent one. If all the orders are for one dozen cookies, how much would adding a
new oven increase the system capacity?
Mock Exam
The Production Process
Questions
Microsoft Word - EMBA 533 final exam 2023
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EMBA 533: Operations Management
Final Exam
Winter Quarter, 2023
Be sure to show all the relevant work (e.g. by including spreadsheet screenshots) to
get full credits!
Good luck!
By submitting the exam, you acknowledge that you are a member of a
learning community in the Foster School of Business that is committed to the
academic standards of honesty, respect, and integrity, and that you adhered to these
standards while completing this exam. You have neither received nor given help on
any part of this exam.
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PART I (30 points) Answer one of the following two questions.
1. As I mentioned many times in class, the following is my favorite graph for managing
queueing systems.
Use this graph to answer the following questions:
(1) Explain the relationship between system utilization and delay. If possible, use an example
to explain this tradeoff.
(2) Explain the concept of “safety capacity:”
a. What is safety capacity?
. What drives the need for safety capacity?
(3) Of the three curves in the graph (marked as 1, 2, and 3 respectively):
a. Which one is the most desirable, and why?
. What is the major factor that drives the difference between the 3 curves?
c. What can the service provider do to go from 1 to 2 to 3 (i.e. along the direction of
the a
ow)? Give specific suggestions (if possible use examples).
(4) Finally explain managerial insights that can be derived from this graph in terms of how to
set the right capacity in managing a queueing system. It’s OK to repeat your parts of your
answers to XXXXXXXXXXabove if you need to.
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2. This question concerns the “location pooling” strategy discussed in class.
(1) Briefly explain how such a strategy works, and the benefit of such a strategy on inventory
management and other aspects of supply chain.
Now, think about the “Buy Online – Delivered from Store” approach (we discussed this in class
as an example of omnichannel fulfillment). For example, Target fulfills a majority of its e-
commerce orders by shipping merchandise from its US retail stores.
(2) When an online order is received, what are the operational pros and cons of a) filling it
from an e-commerce warehouse and b) filling it from a retailer store. If from a retail
store, then which factors should be considered in deciding which retail store?
Just a few weeks ago (Feb 2023), Target announced that it will invest $100 million to set up
sortation centers to consolidate and process shipments from its retail stores to customer homes.
(See a separate article posted on Canvas for more information.)
(3) Use the discussion above in (2) to explain the benefits of using the sortation centers –
specifically, which “Cons” of “deliver from store” can these sortation centers address?
Add your original thoughts about how these sortation centers should be used most
effectively.
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PART II (30 points) Answer one of the following two questions.
3. To promote its reputation for fast service, Earl’s While-U-Wait Automotive Tune-up
Shop promises to give a customer $40 credit if their car’s service has to wait more than 10
minutes to begin.
Earl’s business hours are 8am – 6pm. For planning purposes, it is
oken into two equal periods
(8am–1pm, 1pm–6pm). In each period, customer a
ivals are estimated to follow the Poisson