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accurate
work. If you only provide the final answers without showing your
computations, you will not be assigned a full score (or you will miss
the opportunity of receiving partial credit).

Problem 1: Efficiency, Utilization and Cycle Time (10 points)

You
have started a lawn mowing business and need to measure how your
business has been performing. You have determined that the standard time
to mow a half acre yard is 60 minutes. Your company’s theoretical
capacity is 27 yards per day and your company’s rated capacity is
19yards per day. Yesterday your company mowed 17 yards.

One of your employees, John, took 70 minutes to complete the last half acre yard he mowed. What was his efficiency? (2 points)

What was your company’s efficiency yesterday? (2 points)

What was your company’s utilization yesterday? (2 points)

You recorded the following times for one of your employees yesterday. Use this table to answer

questions d and e.

Step

Action

Standard Time (minutes)

1

Put gas in the lawn mower

2

2

Load mower into truck

2

3

Drive to customer’s house

20

4

Unload mower from truck

2

5

Mow customer’s lawn

60

6

Load mower into truck

2

7

Return to company

20

8

Unload mower from truck

2

Which step is the only value-added activity in this process? (2 points)

What is the Percent of Value Added Time for this process? (2 points)

Problem 2: Breakeven, Total Cost and Expected Value (9 points)

You
are planning to open a bakery that specializes in cupcakes. You know
the variable cost to make one cupcake is $0.50 and you expect to sell
them for $3.00 each. The location you are considering has a fixed cost
(rent, utilities, taxes, etc.) of $5,000 per month. You are unsure what
the demand for your cupcakes will be, but have done some market research
and estimated the following demand scenarios and probability of
eachlevel of demand.

Demand Level

Monthly Cupcakes Sold

Probability

Low Demand

1,500

30%

Medium Demand

5,000

50%

High Demand

12,000

20%

How many cupcakes do you need to sell each month to break even? (3 points)

What is the total monthly cost (fixed plus variable) for your bakery if there is low demand for cupcakes? (3 points)

What is the expected value of the total monthly cost for your bakery? (3points)

Problem 3: Theory of Constraints (6 points)

The manufacturing company you work for has a four step assembly process shown in the flow diagram below.

Process 1

Capacity =

60 units/hr

Process 2

Capacity =

70 units/hr

Process 3

Capacity =

80 units/hr

Process 4

Capacity =

40 units/hr

What is the maximum output this assembly process could produce in 8 hours? (2 points)

If the capacity of Process 3 is increased to 90 units/hour, how many units can be assembled in 8 hours? (2 points)

If the capacity of Process 4 is increased to 90 units/hour, how many units can be assembled in 8 hours?