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# Regression, Forecasting, Minimization

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1. Four alternative manufacturing processes are being considered for our company. The below information on the profitability of the four processes in three different demand levels is provided for your information in order to answer upper management's below listed questions.

Estimated levels of demand
Manufacturing process Low Medium High Exceptional
A. 700 750 850 900
B. 600 750 900 1,000
C. 450 800 950 1,100
D. 350 800 1,000 1,250

Probability .2 .3 .3 .2

a) What is the best manufacturing process according to each of these criteria?

1. Expected value
2. Maximum Payoff
3. Minimum Payoff

b) Which manufacturing process would you choose and explain why. Discuss the logic behind the use of the above methods for management in their decision process.

2. A company has a chain of 12 stores in a large city. Sales figures and profits for the stores are given in the following table. Obtain a regression line for the data and predict profit for a store assuming sales of \$10 million.

X Y
Sales Profits
\$7 \$.15
2 .10
6 .13
4 .15
14 .25
15 .27
16 .24
12 .20
14 .27
20 .44
15 .34
7 .17

3. A bakery uses 700 bags of flour per week and works 45 weeks per year. The flour costs \$25 per bag. Each time that and order is issued it will cost the bakery \$100. Carrying costs of the inventory are 15% of unit cost. Determine the economic order quantity, reorder point, and the average inventory for this bakery.

4. You work at a fast food establishment that has 20 customers per hour arriving following in an exponential arrival pattern and your store can service customers at a rate of 24 per hour.

a. What is the probability that no requests for assistance are in the system?
b. What is the average number of requests that will be waiting for service?
c. What is the average waiting time in minutes before service begins?

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#### Solution Summary

Four alternative manufacturing processes are being considered for our company. The below information on the profitability of the four processes in three different demand levels is provided for your information in order to answer upper management's below listed questions.

\$2.19

## Discuss: Business Analysis Topics

Hi, I need some assistance answering the following business analysis type questions.

1. What are the major differences between aggregate planning in manufacturing and aggregate planning in services?
2. How do facility location decisions differ for service facilities and manufacturing plants?
3. Distinguish between pure and mixed strategies in production planning.
4. What recent changes have caused supply chain management to gain importance?
5. Financial applications are divided into three areas. Describe each of these areas.
6. How would the needs of stakeholder groups be reflected in a performance measurement system?
7. In discussing characteristics of efficient plants, Goodson, developer of rapid plant assessments, suggests that numerous forklifts are a sign of poor space utilization. What do you think is behind this observation?
8. Which of the rules of re-engineering do you feel would be the most difficult to satisfy? Why?
9. Describe the differences between functional and innovative products.
10. What are the pros and cons of relocating a small or mid-sized manufacturing firm (that makes mature products) from the United States to Mexico in the post-NAFTA environment?
11. How is the seasonal index computed from a regression line analysis?
12. What is the logic in the least squares method of linear regression analysis?
13. What key technological features of SAP set it apart from conventional business accounting/planning/control software?
14. What are the main reasons why a large percentage of executives have negative feelings toward ERP software?
15. What strategies are used by supermarkets, airlines, hospitals, banks, and cereal manufacturers to influence demand?
16. Identify and discuss the most significant operations and supply management approach since 1960.
17. Discuss the basic differences between the mean absolute deviation and the standard deviation.
18. What motivations typically cause firms to initiate a facilities location or relation project?
19. Identify the typical processes in manufacturing firms. Discuss how the new product development process interacts with the traditional function in the firm.
20. Where do opportunities reside in improving supply chain operations and how has VSM helped to reveal these?

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