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Problem Case - Supply Chain

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Submitted By sophie31191
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PROBLEM 1: Old City Photographics

a) To determine if the process is supply or demand constrained, we need to compute the implied utilization of each operation.

Implied utilization is: (100% x 13 jobs/hr x 2min/job) / (60min/hr) = 0.43 for “Process Film” ((37%+19%) x 13 jobs/hr x 5min/job) / (60min/hr) = 0.61 for “Scan Film” ((44%+37%) x 13 jobs/hr x 4min/job) / (60min/hr) = 0.70 for “Take 6x4 Prints” (19% x 13 jobs/hr x 10min/job) / (60min/hr) = 0.41 for “Make Contact Print”

If the mix of jobs doesn’t change, we can affirm that this process is demand constrained since the implied utilization in each step is less than 1.

b)
The bottleneck is the resource that limits the capacity of the overall process; improving the bottleneck capacity improves the overall system capacity. So, to determine the maximum number of jobs, we need to identify the maximum number of jobs that can be handled by the bottleneck.

From the calculations above, we know that “Make 6x4 prints” will become the bottleneck once the process is capacity-constrained. The answer to our question will be given by the solution X to the equation considering the utilization of the bottleneck being 100%.
((44%+37%) x X jobs/hr x 4min/job) / (60min/hr) = 1
Re-arranging the equation yields X = (60min/hr) / (81% x 4min/job) = 18.5 jobs/hr.

Fixing the relative proportions of job types, the largest number of jobs per hour that OCP can handle is 18 jobs.

PROBLEM 2: Modern Active Marketing

To proceed with this problem, we need to calculate first the Critical Ratio (requiring the cost of underage and the cost of overage).
Cost of underage (Cu) = Cost of having one magazine too few = 1.50$ - 0.35$ = 1.15$
Cost of overage (Co) = Cost of having one magazine too many = 0.35$ + 0.05$ = 0.4$

Critical Ratio = Cu/(Co+Cu) = 1.15/1.55 = 0.74
According to

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