MSCI 432: Production and Service Operations Management, Winter 2010
Assignment # 1
Due by Thursday, January 28, 2010 in class, individual submissions
1. [3 marks] Read the article “Russia’s Factories Shift Gears” and pay attention to Gartung’s changes at
a. Using a bullet-point list, briefly summarize the changes, keeping in mind terminology used in the
class. Cite the text to support your points. (try to limit your answer to 120 words)
b. Comment on Gartung’s prediction regarding the fate of his competitors.
2. [4 marks] Retrieve the income statements and balance sheets of two publicly-traded firms from the
same industry for the three most recent years (different from those already discussed in the class).
Then, generate the 6 financial ratios mentioned in the class.
a. Generate and plot the inventory related measures/ratios of these firms.
b. Assess the inventory measures/ratios of each firm.
c. Contrast the two firms. Which stock were you to choose among the two based on these
Note: since you need to submit you work independently, it is highly unlikely your choice of firms will
coincide with that of another student.
3. [3 marks] A major oil company is consideri ng the optimal timing for the construction of new
refineries. From the past experience, each doubling of the size of a refinery at a single location results in
an increase in the construction co sts of about 68%. Furthermore, a plant size of 10,000 barrels per day
costs $6 million. Assume that the demand for the oil is increasing at a rate of 2 million barrels yearly
and the discount rate for the future costs is 15 percent.
a) Find the value of k and a assuming a relationship of the form f(y) = ky . Assume that y is in units of
barrels per day.
b) Determine the optimal timing of the plant additions and the optimal size of each plant.
c) Suppose that the largest single refinery that can be built with current technology is 15000 barrels per
day. Determine the optimal timing of plant additions and the optimal size of each plant in this case. (
Year = 365 days)
4. [20 marks] Shouldice Hospital Case Analysis
Learning Objectives: To apply process analysis methods and Little’s Law
To understand how OM can be applied to healthcare management problems
Purpose of the Analysis: To determine
of the current and the future Shouldice Hospital Question 1:[2 points]
Let’s say our purpose of the analysis is to determine the capacity of the Shouldice Hospital. Consider the
following linear flowchart:
Patient examinations, Surgery Recovery Healthy
orientation, etc individual
What are the resources needed for each of the above task?
Question 2 (Bottleneck analysis): [4 points]
What is the bottleneck of the Shouldice Hospital, and what is the weekly capacity rate of the hospital?
Make the following assumptions:
a) Assume that the resources are available on all seven days of the week.
b) Assume that each surgeon can operate on four patients per day, and there are 12 surgeons who work
at Shouldice hospital.
c) Each operation takes one hour. Assuming each of the five operating rooms can be used from 7:30 am
till 3:30 pm.
d) The Shouldice Hospital has 90 beds, and is committed to a three-day process.
e) Assume that all the other resources have sufficient capacity.
Question 3 (Actual throughput rate): [4 points]
Assume that there are no weekend (Saturday and Sunday) operations. Suppose the hospital admits
patients 30 patients per day on Sunday, Monday, Tuesday, Wednesday