International American University

Kings College
architecting future
Kathmandu, Nepal





Operations Management & Supply Chain: Assignment 1
Submitted by:
Bikram prajapati
ID. No.: 13-S-3043
Submitted to:
Matthew Keogh

Date of Submission: Dec 1, 2013
Chapter 1
10: Describe each of these system: Craft production, mass production and lean production.
Craft production: craft production is used in earliest days of manufacturing of goods. In craft
production system highly skilled workers use simple flexible tools to produce the goods
according to customer specifications. It doesnt uses any specialized method to produce the
goods. It is somehow manual process and it is very slow, costly and time consuming. It is used to
produce small amount of goods and also increasing in volume it doesnt decrease the price of
goods such that there were no economics of scale.
Mass production: After an industrial revolution the companies are started to using the machine
and assemble line to produce huge amount of product. Mass production is system of production
in which low and semi-skilled workers use highly specialized equipment and often costly
machines to produce high volumes of standardize goods. This system is started by Ford
Company. They used highly specialized machine to produce the automobile. It efficiency is very
high and effective than the craft production system and also economies of scale plays an
important role while the goods are produce in huge amount.
Lean production: lean production is Japanese approach to management that focus on reducing
the wastages and it uses minimal amounts of resources i.e. space, machine, inventory and
workers to produce high volume of quality goods. Lean system use a highly skilled workforce
and flexible equipment to produce high quality goods than mass production. The highly skilled
workers will work in maintain and improving system and it tries to cut up cost by making the
business more efficient and responsive to market needs. JIT is one of the lean production system
using by Toyota Company in their system.
Chapter 2
Problem 2
Week Crew size Yards installed Productivity
1 4 960 240
2 3 702 234
3 4 968 242
4 2 500 250
5 3 696 232
6 2 500 250
The productivity is calculated as by the formula:
Productivity=
Crewsize
installed Yards

We can see that the productivity is high (250 yard installed) in two case. In both case the
productivity is high when the crew size is 2. So we should chose two people per crew.
Problem 4.
Given, Number of worker = 5
Output = 80 carts per hour, Salary = $ 10 per hour Machine cost= $ 40 per hour
When new system is installed then
Number of worker = 4, Output= 84 carts per hour, Equipment cost= $ 50 per hour

a.) Labor productivity is calculated by

Case Output Workers Labor productivity
Before 80 5 16
After 84 4 21

Productivity changes:

i.e. the productivity is increase by 31.25 % after installing the new equipment.
b.) Multifactor productivity is calculated by

Case Output Workers salary machine
cost
Multifactor
productivity
Before 80 5 50 40 0.89
After 84 4 40 50 0.93

Productivity change = 4.49%
The Multifactor Productivity is increase by 4.49 % after installing new equipment.





.


Chapter 3
Problem 1)
Month t Y t*Y
From Table we get n = 7, Et = 28, Et
2
= 140
50 .
) 28 ( 28 ) 140 ( 7
) 132 ( 28 ) 542 ( 7
) (
2 2
=

=


=
t t n
Y t tY n
b
86 . 16
7
) 28 ( 50 . 132
n
t b Y
a =

=

=
Feb
1 19 19
Mar
2 18 36
Apr
3 15 45
May
4 20 80
Jun
5 18 90
Jul
6 22 132
Aug
7 20 140
Total
28 132 542

For Sept., t = 8, and
The forecasts sales for September month is Y
t
= 16.86 + .50(8) = 20.86 units

2) The forecasts sales by the method of five month moving average is
Time (t) Month Sales (000) 5 month
1 Feb 19
2 Mar 18
3 Apr 15
4 May 20
5 Jun 18
6 Jul 22 18
7 Aug 20 18.6
8 Sep 19

I.e. 19
5
20 22 18 20 15
MA
5
=
+ + + +
= Unit
0
5
10
15
20
25
Feb Mar Apr May Jun Jul Aug
Trend Line
Series 1 Linear (Series 1)
3 :) Exponential smoothing technique with smoothing constant = 0.20
Forecast= f (old) + 0.2(actual- f (old))
Time
(t)
Month Sales
(000)
0.2
1 Feb 19 19
2 Mar 18 19
3 Apr 15 18.8
4 May 20 18.04
5 Jun 18 18.432
6 Jul 22 18.3456
7 Aug 20 19.07648

The forecast for September is 19.07 + .2 (20-19.07) = 19.26 Unit
4) The forecast according to nave method is 20 unit because in nave method last month sales
will be forecast for upcoming month.






5) The forecast unit by average weighted method is
Time (t) Month Sales (000) Weighted Forecast
1 Feb 19
2 Mar 18
3 Apr 15
4 May 20
5 Jun 18 0.1
6 Jul 22 0.3
7 Aug 20 0.6
8 Sep 20.4


The forecast for September month = 18*0.1 +22*0.3 + 20*0.6 = 20.4 unit
c. Probably 5 month moving average because the data appear to vary around an average of about
19 [18.86].
d. Sales are reflective of demand. To forecast about the future we need to have actual data that
has been sold because it helps to forecast us more accurately




Problem 4.
Week 1 2 3 4 5
Request 20 22 18 21 22

a. Nave method: the forecast for week 6: 22 requests
b. Four year moving average: the forecast for week 6: 75 . 20
4
22 21 18 22
=
+ + +
Request
c. Exponential smoothing with smoothing constant .30
Given F
2
= 20 Then
F
3
= 20 + .30(22 20) = 20.6
F
4
= 20.6 + .30(18 20.6) = 19.82
F
5
= 19.82 + .30(21 19.82) = 20.17
F
6
= 20.17 + .30(22 20.17) = 20.72
The forecast for week 6 is 20.72 request

Problem 6.
As we know the equation of linear trend line is given by: Y
t
= a + b*t where a= intercept and b=
slope
From graph a= 500 and b= 200/10= 20 Then t Y
t
20 500 =
Problem 8.
Period t New
account Y
t*Y t
2

Now
07 . 7
) 120 ( 120 ) 1240 ( 15
) 3762 ( 120 ) 32076 ( 15
) (
2 2
=

=


=
t t n
Y t tY n
b
23 . 194
15
) 120 ( 07 . 7 3762
=

=

=
n
t b Y
a
The linear trend equation given by: Y
t
= 194.23 +
7.07*t
Forecasted demand for periods 16 through 19 are given
by:
Y
16
= 194.23 + (7)*(16) = 307.37
Y
17
= 194.23 + (7)*(17) = 314.44
Y
18
= 194.23 + (7)*(18) = 321.51
Y
19
= 194.23 + (7)*(19) = 328.59
b. Initial Trend = 33 . 9
3
200 228
=

1 200 200 1
2 214 428 4
3 211 633 9
4 228 912 16
5 235 1,175 25
6 222 1,332 36
7 248 1,736 49
8 250 2,000 64
9 253 2,277 81
10 267 2,670 100
11 281 3,091 121
12 275 3,300 144
13 280 3,640 169
14 288 4,032 196
15 310 4,650 225
Total
120

3762

32076

1240

Problem 14.
Week
t
Passenger Y t*Y t
2

1 405 405 1
2 410 820 4
3 420 1260 9
4 415 1660 16
5 412 2060 25
6 420 2520 36
7 424 2968 49
8 433 3464 64
9 438 3942 81
10 440 4400 100
11 446 4906 121
12 451 5412 144
13 455 5915 169
14 464 6496 196
15 466 6990 225
16 474 7584 256
17 476 8092 289
18 482 8676 324
Total 171 7931 77570 2109

974 . 396
18
171
) 5933 . 4 (
18
7931
) (
593 . 4
8721
40059
) 171 ( ) 2109 )( 18 (
) 7931 )( 171 ( ) 77570 )( 18 (
) ( ) )( (
) )( ( ) )( (
2
2 2
=
|
.
|

\
|

|
.
|

\
|
=
|
|
.
|

\
|

|
|
.
|

\
|
=
= =

=



a
n
t
b
n
Y
a
b
t t n
Y t Y t n
b
i i
i i
i i i i

The trend line is Yt= 396.974 + 4.593*t
Forecasted demand for the next three weeks are:
Y
19
= 396.974 + (4.593)*(19) = 484.25
Y
20
= 396.974 + (4.593)*(20) = 488.84
Y
21
= 396.974 + (4.593)*(21) = 493.4




Problem 21.
Period Demand F1 e |e|
e
2

F2 e |e|
e
2

1 68 66 2 2 4 66 2 2 4
2 75 68 7 7 49 68 7 7 49
3 70 72 2 2 4 70 0 0 0
4 74 71 3 3 9 72 2 2 4
5 69 72 3 3 9 74 5 5 25
6 72 70 +
2
2 4 76 4 4 16
7 80 71 9 9 81 78 2 2 4
8 78 74 4 4 16 80 2 2 4
32 176 24 106
a. MAD F1: 32/8 = 4.0
MAD F2: 24/8 = 3.0 F2 appears to be more accurate because mean deviation
form trend line is low.
b. MSE F1: 176/7 = 25.14
MSE F2: 106/7 = 15.14 F2 appears to be more accurate because deviation from
mean is low in F2 than F1



Problem 25
a.
X = Price Y = Sales X*Y Y
2
X
2

6.00 200 1200.00 40,000 36.0000
6.50 190 1235.00 36,100 42.2500
6.75 188 1269.00 35,344 45.5625
7.00 180 1260.00 32,400 49.0000
7.25 170 1232.50 28,900 52.5625
7.50 162 1215.00 26,244 56.2500
8.00 160 1280.00 25,600 64.0000
8.25 155 1278.00 24,025 68.0625
8.50 156 1326.00 24,336 72.2500
8.75 148 1295.00 21,904 76.5625
9.00 140 1260.00 19,600 81.0000
9.25 133 1230.25 17,689 85.5625
Total 92.75 1982 15081 332142 729.06

By calculating we get
b= 19.51 and a= 315.98
The trend line is Y = 315.98 + 19.51 * X



2 2 2 2
) ( ) ( ) ( ) (
) )( ( ) (
y y n x x n
y x xy n
r


= = -.9849
b.
r = .9848. Implies a high, negative relationship between price and demand.
r
2
= (.9848)
2
= .97. It appears that approximately 97% of the variation in sales can be accounted
for by the price of our product. This indicates that price is a good predictor of sales.
Problem 31.
Year Sales(000) t*y t*t y*y forecast Error e*e
1 40.2 40.2 1 1616.04 39.79 0.41 0.1681
2 44.5 89 4 1980.25 43.8 0.7 0.49
3 48 144 9 2304 47.81 0.19 0.0361
4 52.3 209.2 16 2735.29 51.82 0.48 0.2304
5 55.8 279 25 3113.64 55.83 0.03 0.0009
6 57.1 342.6 36 3260.41 59.84 2.74 7.5076
0
50
100
150
200
250
0 2 4 6 8 10
Y

X VARIABLE 1
Regression Graph
Y Predicted Y
7 62.4 436.8 49 3893.76 63.85 1.45 2.1025
8 69 552 64 4761 67.86 1.14 1.2996
9 73.7 663.3 81 5431.69 71.87 1.83 3.3489
Total 503 2756.1 285 29096.08 502.47 8.97 15.1841

By calculating we get 78 . 35
) (
2 2
=


=
t t n
Y t tY n
b
And 01 . 4 =

=
n
t b Y
a
The regression line is Y= 35.78 + 4.08 *T now the forecast for Next five years are
given as

b. MSE = 15.15/8 = 1.8938, so s = 8938 . 1 = 1.376. Control limits are 0 2(1.376) = 0 2.75.
Year 10 11 12 13 14
Forecast 75.88 79.89 83.9 87.91 91.92
Year Sales Forecast Error
10 77.2 75.98 1.22
11 82.1 80.00 2.10
c. The
forecast is not in control; two of the last 5 points are outside of the limits.


Problem 33.
A
(sales)
F
(Forecas
t)
AF
(Error)
Cumulativ
e Error CE
|Error| E|Error| e
2
MA
D
TS=
CE/MAD
15 15 0 0 0 0 0 0 0
21 20 1 1 1 1 1 .5 2
23 25 2 1 2 3 4 1 1
30 30 0 1 0 3 0 .75 1.333
32 35 3 4 3 6 9 1.2 3.333
38 40 2 6 2 8 4 1.33
3
4.50
42 45 3 9 3 11 9 1.57
1
5.729
47 50 3 12 3 14 9 1.75 6.85

12 87.8 84.02 3.78
13 90.6 88.04 2.56
14 98.9 92.05 6.55

14 . 5
1 8
36
8
MSE
2
=

=
e
Then 267 . 2 14 . 5 s MSE s = = =
No, the forecast is not performing adequately. As you can see from the tracking signal values, we
overestimate the demand consistently. (Tracking signal values continue to get larger.)