WSU 2016 Fall MgtOp 340 Operations Management Instructor: Aysajan MgtOp 340 – Operations Management (Section 2)
Problem Set 4 – Handwritten Section
(The online portion of the assignment is found in MyOMLab) Due: 1:35 PM Thursday, November 3rd, 2016 Show your work!
Don’t forget the 2 points for professionalism! (Do your work on this sheet of paper)
1. Consider a firm with a plant in the U.S. and the U.K. A U.K.-based shipper charges £0.50
per unit to ship between the two countries. Assume no taxes, and consider the following
data.
Weekly Demand
Weekly Capacity
Sales Price
Production Cost U.S.
13,000
18,000
\$30
\$7 U.K.
24,000
32,000
£25
£5
a) Suppose that the exchange rate is £1.00 = \$1.60. What is the best production and
distribution plan, i.e., how much should be made in each country, and how much
should be shipped between countries? (12 points) WSU 2016 Fall MgtOp 340 Operations Management Instructor: Aysajan
b) Given your plan in part a, what is the profit in each country (expressed in
dollars)? (8 points)
2. Consider a process with an upper spec limit of 69.5 grams, a lower spec limit of 62
grams, and a mean of 67 grams.
a) If the standard deviation is 1 gram, is the process “capable”? (4 points)
b) If the standard deviation is 2 grams, is the process “capable”? (4 points) WSU 2016 Fall MgtOp 340 Operations Management Instructor: Aysajan 3.Consider a normally distributed process that cuts wood with a “process center” of 18
inches and a standard deviation of 0.08 inches. The lower specification limit is 17.75
inches, and the upper specification limit is 18.18 inches. A piece of wood that is cut too
short must be scrapped at a cost of \$22.00. A piece of wood that is cut too long must be
re-cut by hand at a cost of \$4.50. The firm runs 20,000 pieces of wood through the
machine per day and works 350 days per year. What is the annual expected fixing cost of
this process? (20 points)