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Module 2 – Homework Solutions

Posh Nails PN1. S1: 1min; S2: 8min; Dryer chair: 10min; S3: 4min Bottleneck: The dryer chair PN2. Flow rate/capacity = (1/10) / (1/8) = 8/10 = 0.8 PN3. (1+8+4)/(13 + (9+2+6)) = 3/30 = 0.433 PN4. Direct labor cost = wage rate per hour / flow rate per hour = $36 per hour / 6 customers per hour = $6 per customer

Butternut BN1. Use Little’s Law: 1296 skiers/hour*5/60 = 108 skiers

Tech Co. TC1. COGS = Revenue*(1-gross margin) $ 155,000,000*(1-0.29) = 110,050,000 COGS/Inventory = Inventory Turns 110,050,000/20,000,000 = 5.5 TC2. Annual Inventory cost of MP3s = Cost of MP3s sold*Inventory cost Assuming the margin for the MP3 player is the same as for the rest of the firm, the MP3 player is purchased for $35.50 Per unit Inventory cost of MP3s = Annual Inventory Cost of MP3s/Inventory Turns $35.50*.35/5.5 = $2.26

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Gamer Co. GC1.

Paper screening Design & Production Testing Focus group Final decision RESULT

Activity capacity (ideas/hr) 3/2 1 6/(2*8)=.375 1/2 1/3

Demand (ideas/hr) 25/5/8 25/5/8 *0.6 25/5/8 *0.6 25/5/8 *0.6*0.5 25/5/8 *0.6*0.5*0.35 25/5/8 *0.6*0.5*0.35*0.75

Implied utilization 41.7% 37.5% 100 % 37.5% 19.7%

This would be 25*0.6*0.5*0.35*0.75 = 1.97 ideas/week. ANSWER: __1.97 _

idea(s)/week

GC2. ANSWER: Testing .

GC3. At the testing stage, only 0.375 ideas/hour will make it through. So this means 0.375 * 0.5 * 0.35 * 0.75 = .049 ideas/hour or 1.96 ideas/week will be put into production. Note that this is the same as the unconstrained amount in question GC1 (no implied utilization exceeds 100%).

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