BUS473 Assignment #2
Question #1
A law firm specializes in the issuance of insurance policies covering large commercial real estate
projects. The projects fall into two categories, shopping centres and medical complexes. The typical
work involved in each transaction is predictable and repetitive. The time requirements (unit load) for
preparing a standard contract of each type are given in the table below. Also listed are the number of
professionals and the number of available hours per professional per day.
Unit Load (hrs)
Medical contract Number of
professionals Hours available/
Professional/day Paralegal 4 6 4 6 Tax lawyer
Senior partner 1
1 3
1 3
2 8
4 sh is
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m Unit Load (hrs)
Shopping contract Revenues for shopping and medical projects are $4,000 and $5,000 per project respectively. The only
costs are the fixed costs of operating the office of $500,000 per month. For the month of November the firm has generates 150 contracts, 75 of each. Assume that there are 20
work days in a month. a. What is the effective capacity of the process per day (# of contracts)?
b. Can the company process all 150 contracts in November? c. If the firm wishes to process all 150 contracts during November, how many professionals do
they need? d. Which type of project is more profitable? e. What is the contribution margin generated ($ per day) at the current product mix?
f. What is the profit at capacity at the current product mix? Th g. What is the value of hiring an extra paralegal at the current product mix? (Question from the text, “Managing Business Process Flows” by Anupindi et al) Question #2 A company has five branches, each producing several product that require the same four raw materials.
Currently each branch does the ordering for the raw materials needed on an individual basis. The
annual requirements of raw materials for each factory are shown in the table below.
Factory
A Raw Material #1
35,000 Raw Material #2
8,000 https://www.coursehero.com/file/12438581/Operations-Review-Questions/ Raw Material #3
22,500 Raw Material #4
36,000 B 23,000 11,000 27,600 29,500 C
D
E 18,750
55,000
42,000 13,500
9,000
12,500 18,500
20,000
14,000 47,600
53,400
41,000 The unit cost of the raw material varies depending on the quantity ordered. A table showing the unit
costs for different order quantities is shown below.
Raw Material #1 Raw Material #2 Raw Material #3 Raw Material #4 Unit cost Q Unit cost Q Unit cost Q Unit cost 0-3999 10.00 0-999 20.00 0-2499 8.00 0-2999 12.00 4000-5999 9.60 1000-2999 19.25 2500-3999 7.90 3000-4999 11.50 >6000 9.30 >3000 18.50 >4000 7.70 5000-6499
>6500 11.20
10.90 sh is
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m Q The holding cost rate (h + r) is 25%, and the order cost is $240 regardless of raw material ordered. a. What is the optimal order policy (order quantities for each raw material) under the current
system whereby each branch orders separately? What is the total annual cost of this policy
(holding + order + purchase costs)? b. What is the optimal order policy (order quantities for each raw material) if the com pany were
to centralize the ordering system? What is the total annual cost of this policy (holding + order + Th purchase costs)? https://www.coursehero.com/file/12438581/Operations-Review-Questions/ Powered by TCPDF (www.tcpdf.org)
