7.5 borges machine shop, inc., has a 1-year contract

7.5 Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three
alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow: Which process is best for this contract? 7.7 Using the data in Problem 7.5, determine the
best process for each of the following volumes: (1) 75,000, (2) 275,000, and (3) 375,000.

7.11 Tim Urban, owner/manager of Urban’s Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to Duffy’s Maid Service. Tim rents an
average of 50 rooms for each of 365 nights (365 x 50 equals the total rooms rented for the year). Tim’s cost to clean a room is $12.50. The Duffy’s Maid Service quote is $18.50 per room plus a fixed cost of $25,000 for sundry items such as uniforms with the
motel’s name. Tim’s annual fixed cost for space, equipment, and supplies is $61,000. Which is the preferred process for Tim, and why? S7.3 If a plant has an effective capacity of 6,500 and an efficiency of 88%, what is the actual (planned) output? S7.5 Material
delays have routinely limited production of household sinks to 400 units per day. If the plant efficiency is 80%, what is the effective capacity? S7.7 Southeastern Oklahoma State University’s business program has the facilities and faculty to handle an enrollment
of 2,000 new students per semester. However, in an effort to limit class sizes to a “reasonable” level (under 200, generally), Southeastern’s dean, Holly Lutze, placed a ceiling on enrollment of 1,500 new students. Although there was ample demand for business
courses last semester, conflicting schedules allowed only 1,450 new students to take business courses. What are the utilization and efficiency of this system? S7.11 The three-station work cell illustrated in Figure S7.7 has a product that must go through one
of the two machines at station 1 (they are parallel) before proceeding to station 2. a) What is the bottleneck time of the system? b) What is the bottleneck station of this work cell? c) What is the throughput time? d) If the firm operates 10 hours per day,
5 days per week, what is the weekly capacity of this work cell?

S7.15 A production process at Kenneth Day Manufacturing is shown in Figure S7.9. The drilling operation occurs separately from, and simultaneously with, the sawing and sanding operations. A product
needs to go through only one of the three assembly operations (the operations are in parallel). a) Which operation is the bottleneck? b) What is the bottleneck time? c) What is the throughput time of the overall system? d) If the firm operates 8 hours per
day, 20 days per month, what is the monthly capacity of the manufacturing process?

S7.28 James Lawson’s Bed and Breakfast, in a small historic Mississippi town, must decide how to subdivide (remodel) the large old home that will become its inn. There are three
alternatives: Option A would modernize all baths and combine rooms, leaving the inn with four suites, each suitable for two to four adults. Option B would modernize only the second floor; the results would be six suites, four for two to four adults, two for
two adults only. Option C (the status quo option) leaves all walls intact. In this case, there are eight rooms available, but only two are suitable for four adults, and four rooms will not have private baths. Below are the details of profit and demand patterns
that will accompany each option: Which option has the highest expected monetary value?

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