MGMT 189:

Operations Management

Sample Midterm Exam

Note: This sample midterm exam is designed for practice only and for demonstrating the format for the actual midterm exam. The actual midterm exam may contain more questions and may cover topics that are not tested in this sample midterm exam.

Instructions

1. This examination is open book and open notes.

2. Calculators are allowed but no Internet (except for your access to the course website for the exam) or no discussion with anyone else in any format within 24 hours when the exam is scheduled.

3. The examination consists of six questions.

4. Students have 120 minutes to complete this exam.

5. Write all your answers and the detailed calculation process in the space provided below each question.

6. In your calculation, if you need to make assumptions of your own, please state them clearly and make a brief justification. Note that the assumptions you make cannot be contradictory to the given problem setup.

Question 1

The management at BuyRite grocery stores wishes to estimate the amount of time that customers are spending, on average, in its stores and in a checkout line. The most obvious approach for determining this information is to simply record when a customer enters and exits the store. However, it is difficult to track the entering and exiting times of specific customers. We will look at the problem using an alternative approach. Over the past two weeks, the following data have been collected at BuyRite’s newest store during busy hours (this BuyRite is rather large and typically has 7 open checkout lines). For simplicity, let us assume that the overall capacity at checkout lines is higher than the arrival rate of customers into the store.

Average rate of customers entering store = 305 customers/hour

Average number of customers in store = 146 customers

Percentage of customers who do not make a purchase = 5%

Average number of customers in the checkout lines = 24 customers

As their consultant, you have been asked by BuyRite’s management to address the following questions:

(a) How much time on average does a customer spend in the store?

(b) How much time on average does a customer spend waiting?

Question 2

The following two sub questions (a) and (b) are independent from each other.

(a) The student recreation center at a large Midwestern university has a computerized stationary bicycle. During peak periods, students arrive to use that bicycle at the average rate of three per hour, Poisson distributed. Each person rides for an average of fifteen minutes, but riding times are exponentially distributed. Please answer the following questions:

(1) How many students would you expect to see waiting for the bicycle, assuming all who arrive wait?

(2) What percentage of time is the bicycle being used?    

(3) What is the probability that no one is using the bicycle? 

(4) What is the average time a student will spend waiting? 

(b) A direct-sale store takes both internet and phone orders. Internet orders come in every 15 minutes and phone orders arrive at a rate of 5 orders/hour. Regardless of the type of the orders, the packed merchandise (one order) is put on the truck and ready to be shipped in 7 hours. On average how many orders are in the store? How many of them are internet orders?

Question 3

A donut store is open 8 hours a day and sells two types of donuts – blueberry cake donut and chocolate frosted donut. On average the demand is 80 donuts per day for EACH type. The store has only one machine which makes both types, and once it starts, it produces one donut every 2 minutes for either type. The production alternates between the two types, i.e., a batch of one type is followed by a batch of the other. The setup time is 20 minutes for either type. Assume the same batch size all the time for both types.

Question 4

Bottleneck is Department B 

Utilization of Department E = 480/800 = 60%

Question 5

In year 2021, your company had COGS of $15,000, inventory of $7,000, sales of $32,000, accounts receivable of $5,000, and accounts payable of $3,000. From these figures, figure out how quickly your company turned the investment on goods/services into cash receipts in 2021.

Question 6

Katie’s Card Shop sells calendars with different Colonial pictures shown for each month. The once-a-year order for each year’s calendar arrives in September. From past experience, the September to March demand for the calendars can be approximated by a normal distribution with mean 300 and standard deviation 50. The calendars cost $2.50 each, and Katie sells them for $4 each.

(a) If Katie throws out all unsold calendars at the end of March (i.e., salvage value is zero), how many calendars should be ordered?

(b) If Katie reduces the calendar price to $1 at the end of March and can sell all leftover calendars at this price, how many calendars should be ordered?