Set of Mixed Practice Problems - Service

operations : 01

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1: Focus Cost

A restaurant is considering adding a new service. Customers can catch a trout

fish from the simulated mountain stream around the restaurant and cook it for
them. Operating the stream would cost $ 10,730 in fixed cost per year. Variable
costs associated with the fish feed etc. is $ 6.70 per trout.

The General Manager is of the opinion the firm should break even by selling
on an average 2 trout dinners per day i.e. 730 trout dinners per year.
The finance director feels they should make at least $ 2 per trout profit after
covering both variable and fixed cost
a) What should be the price they should bill the customer as per the General
Manager and as per the finance director
b) The regular BEP Graph is shown below for a sale of trout fish dish:

- FC per Cup of trout fish dish - TC per Cup of trout fish dish

- VC per Cup of trout fish dish and - SR per Cup of trout fish dish

Re draw the above graph where x axis remains unchanged whereas the y-axis is
changed to cost per trout fish dish or sales revenue per trout fish dish.

2. Learning Curve:

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The hotel has recruited new trainees for room upkeep. The trainees job is to
clean the room, change bed linen, and replace towels, toiletry etc. The trainees
data is recorded with respect to the time taken and average time taken per
room for each day computed. Last 10 days data read as follows:

day 1 day 2 day 3 day 4 day 5 day 6 day 7 day 8

day day 9
10
35 33 30 31 28 27 26 26 25 24.5
[The necessary Learning curve table is given in the end and you can
use table or excel for solution]

1) Establish Ms Mins learning rate to 2 decimal places, showing the basis

for arriving at the number. Hence estimate the time she will clock at
the end of 1 month ( assume she works 25 days out of 30 days in a
month).
2) The hotel has 12 rooms in each floor and need the cleaning to be
completed in 4 hours After how many days will Ms Min achieve for the
first time this target?
3) Why do you think it is advisable to calculate learning rate using
average time per room per day rather than the time taken for each
rooms?
4) By the end of 1 year with 300 days working, in the hotel which has 120
rooms , they plan to have 5 employees for this job ,each taking care of
24 rooms. Is this sufficient? Explain. ---------

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3: Focus Process Flow:

The line for assembling is a line for assembling pizzas. The trim line comprises of
13 work elements. The activities are:

Work element Time minutes Immediate

predecessor
A 1.6 NONE
B 0.4 NONE
C 1.6 NONE
D 1.5 A
E 0.7 A
F 0.5 E
G 0.8 B
H 1.4 C
I 1.4 D
J 1.4 F,G
K 0.5 H
L 1.0 J
M 0.8 I,K,L
a) Draw the precedence diagram and determine the key parameters of the
line viz. the process time, the bottleneck work element, the minimum
cycle time and the maximum output possible per hour from the line of
assembling pizza.
b) If now the new requirement that the targeted output should be to handle
output of 20 per hour ,determine the work station parameters. While
allocating take care that work element K & L are allotted to the same
station as they use same resource and H & J are not allotted to the same
station
While planning work allocation for the work stations assume
i. Largest task time as the principal tie breaker
ii. Largest number of following task as secondary tie breaker
iii. Random allocation if there is a tie after secondary tie breaker
c) What is the line efficiency and the maximum hourly output which can
actually be achieved?
a)

4: Location Planning:

The Burger Express company is locating a central kitchen that will provide semi
cooked burgers to their four store locations viz: Jurong with a daily volume of
1200 units; Changi, with a daily volume of 1600 units; Tao Payoh with a daily

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volume of 1750 units; and Woddlands, with a daily volume of 1950 units. The
locations are marked in the map with the grid below.

Woodlands

Jurong Tao Payoh

Changi

a) Do the relevant computation to determine the best location for the central
kitchen and mark its location on the map.

b) If the MD is keen on locating the kitchen at Changi, compute the load

distance factor for the proposed location and compare with Changi to
justify.

5: Yield Management:

A small drama theatre has a capacity of 80 seats. During the weekend due to
heavy rush the theatre takes phone bookings. The tickets are priced at $ 100.

It does happen that a customer who has done the booking fails to turn up and
they can do nothing about it as they are not accepting credit card payment. The
record of number of customer no shows are given below:

No-show 0 1 2 3 4 5 6

Probability .15 .20 .22 .18 .15 .05 .05

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To overcome this no show the theatre decides to do some overbooking. However
after over booking it does happen that at times customers with phone
reservation land up and no seat is available. When this results in turning away
disappointed customer, they provide a confirmed seat in next show with a 35%
discount.

a) What is the maximum overbooking they should take up?

b) How many reservations would you recommend for overbooking? Show the
relevant parameters you use for computing.

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6: Forecasting:

a) For the board meeting MD has provided the last 4 years sales data and
asked the 3 General Managers to forecast next year sale. The data
provided and the reply of the 3 GMs is tabulated below

Mont Units sold

h
1 150
2 145
3 160
4 180
5 220

1) GM 1 used 3monthly Moving average for prediction . Hence his

forecast for month 6 is expected to be ____________

2) GM 2 uses a weighted moving average giving 0.6, .3 and .1 weights.

What is his forecast of month 6?

3) GM 3 uses regression and gives the following information. I have

developed regression equation of 119.5 + 17.5 X and hence my
prediction is _________________

b) If for a seasonal gift item the festivities are the period of maximum sale.
The season for the product can be split into of 5 seasons as follows:
Year Season type : Sales
2011 Jan- Feb : Chinese New Year : X1
2011 Jul- Aug : Hari Raya : X2
2011 Sept- Oct: Deepavali : X3
2011 Nov- Dec : Christmas : X4
2011 Rest : X5
2012 Jan- Feb : Chinese New Year : X6
2012 Jul- Aug : Hari Raya : X7
2012 Sept- Oct: Deepavali : X8
2012 Nov- Dec : Christmas : X9
2012 Rest : X10

What will be the centered moving average you will use to measure the
seasonality X6

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