Case Study of Southwestern University

2. The survey could have been segmented by faculty, alumni, guests, and students for an added
perspective on quality.
3. The next step is to improve quality by beginning improvement with the high-frequency item on the
left of the Pareto chart for the open-ended negative responses (see Figure 2).





















Case Study of Rochester Manufacturing Corporation
1. As a production manager for RMC, what do you recommend? Why?
As production manager, you believe that the inherent advantages of an FMS should tilt the scales in
favor of FMS. Your management task should be easier and therefore better. Your task will be easier and
better because those parts of your workday that are related to scheduling, manpower, maintenance,
and housekeeping should require less direction and be easier to control. You would be inclined to ask
the numbers people to be sure they included all of these relatively minor shop floor issues in the
decision.
2. Prepare a case by a conservative plant manager for main-taining the status quo until the returns
are more obvious.
A conservative plant manager may well be the individual in the decision-making process who is asked
about the return on investment. ROI may be largely the plant managers responsibility. If the numbers
do not support change, then dont do it. Additionally, the trauma of change in layout, training, and
acceptance by workers contains numerous hidden costs. Consequently, the plant manager may have a
strong case for the status quo.
3. Prepare the case for an optimistic sales manager who suggests that you should move ahead with the
FMS now.
The optimistic sales managers case is that improved delivery time (i.e., improved throughput) and
improved quality may well yield a higher market share, which, if the company is already above
breakeven, is great for profitability, and hence ROI will be higher than projected (sales growth is not
typically included in ROI computations). Additionally, the management task is easier (i.e., fewer
machines to maintain, fewer people to supervise), and additional floor space will be available when
needed.









7.5

GPEs total cost = $3,100,000 = *($15 200,000) + $100,000]
FMSs total cost = $3,000,000 = *($14 200,000) + $200,000]
DMs total cost = $3,100,000 = *($13 200,000) + $500,000]




















7.11
Expected rooms rented: 50 365 = 18,250.
Current: Fixed cost = $61,000
Variable cost = $12.50
Outsourcing: Fixed cost = $25,000
Variable cost = $18.50
61,000 + (12.50)x = $25,000 + (18.50)x
36,000 = 6x
6,000 = x = crossover point in room nights
Since Susan expects to rent 18,250 rooms, she should not outsource the cleanup.

















5.5
A typical bill-of-material is shown here:
Bill of Material for a Pair of Glasses in a Case
Part Number Description Quantity
G1001 Sun Ban Large in Black Case 1
CBL101 Black Leather Case 1
BF101 Black Leather Front 1
BB101 Black Leather Back 1
BC101 Black Leather Pocket Clip 1
SBL101 Sun Ban Large Glasses 1
SFA101 Frame Assembly 1
SF101 Alloy Frame 1
RL101 Right Sun Ban Large Lens 1
LL101 Left Sun Ban Large Lens 1
LTA101 Left Temple AssemblyLarge 1
LT101 Left Temple 1
LTH101 Left Temple Hinge 1
LTE101 Left Temple Ear Pad 1
RTA101 Right Temple AssemblyLarge 1
RT101 Right Temple 1
RTH101 Right Temple Hinge 1
RTE101 Right Temple Ear Pad 1
S1001 Hinge Screws 2

(b) There are obviously a very large number of possibilities, Quiznos honey-
bacon-turkey club, regular size, uses a toasted 6 bun (white or wheat), two slices
of bacon, three ounces of smoked sliced turkey, 2 Tbsp. shredded lettuce, 1 Tbsp.
chopped onion, and 1/2 oz. honey-mustard sauce. It is wrapped in a 12 square
deli paper.

5.16

The modified decision tree and the new payoffs are shown. We have made a
second decision on those branches where the yield was only 59 per 100 and have
modified the payoffs by
adding the revenue and costs associated with the corrections of
5 units per 100. We then pruned those branches with the lowest payoff (which, in
both cases, was the branch labeled Do not correct). Here are the EMV
calculations:
EMV (Design A) = (0.9)($850, 000) +(0.1)($1,100, 000)
= $875, 000
EMV (Design B) = (0.8)($750, 000) +(0.2)($500, 000)
= $700, 000

Using the high payoff branches, we conclude that the expected monetary values
are $875,000 from Design A and $700,000 from Design B. Therefore, the decision
when King Electronics has the option of correcting 5 units per 100 is to correct
them and use Design A.