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Seneca College *
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Course
2510
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
docx
Pages
3
Uploaded by fhruhieru
QUESTION 1. Hilton Yacht manufactures a line of family cruiser/racing sailboats. The boats are well
known for their quality, safety, and performance. Hilton hired Matthew Perry, a well-known sailboat
designer and racer, to design a new sailboat, the M33. The M33 will have advanced materials in the
hull and rigging to enhance the safety and performance of the boat and also to improve its overnight
comfort. Safety and comfort are the two most important boat-buying criteria of Hilton’s customers,
rated at 34% and 33% respectively, on a 100-point scale. The other two criteria are performance
(20%) and styling (13%). The overall length of the boat is about 33 feet; its two sleeping areas have
room for five or six people. Hilton projects a sales price of approximately $200,000 and estimates the
costs of manufacturing the M33 as shown in Table 1.
A team of engineers and sales managers studied the projected cost and identified how each component
of the planned boat contributed to satisfying customers’ criteria. The results of this study, based on
careful estimates, are shown in Table 2. For example, the estimates show that 30% of customers’
desire for safety is satisfied by the construction of the hull and keel, and another 30% by the standing
rig, and so on.
Required
1) Using the information in Table 2 developed by the team of engineers and sales managers, together
with the customer criteria, compute:
a) The importance index for each component of the sailboat
b) The cost index of each component
c) The value index of each component
QUESTION 2
Chemical Products Company (CPC) produces a variety of chemicals— primarily adhesives,
lubricants, and polymers—for industrial use by manufacturers to produce plastics and other
compounds. Don Leo, the production vice president, has been informed of a disturbing trend of
increasing customer complaints regarding late deliveries from the Canton, Kentucky, plant. The
Canton plant is one of the firm’s newest and most modern plants and is dedicated to the manufacture
of two products, Polymer 1 and Polymer 2. Don has downloaded some incomplete recent information
about the Canton plant onto his laptop; he plans to analyze the information in the hour or so he has
before his next meeting of the CPC executive committee. He is concerned that some comments will
be made about the problems at Canton, and he wants to have an idea of how to respond. Because CPC
views Polymer 1 and Polymer 2 as very promising in terms of both sales and profit potential, the news
of these problems is likely to spark some comment. The data downloaded by Don are as follows
No. of Hours Req. for
Each Product
No. of Hours
Activity
Polymer 1
Polymer 2
Available per Week
Filtering
2
4
320
Stripping
2
3
320
Reacting
3
5
320
Final filtering
2
1
160
Mixing
3
3
320
Other information:
Current sales demand
60
40
Selling price per unit
$145
$185
Don has sketched the following flow diagram for the Canton plant. He believes it is relatively
accurate because of his frequent contact with the plant.
Required
1. Which of the activities is the constraint?
2. Using the constraint identified in requirement 1, calculate the throughput margin per hour for each
product.
QUESTION 3. VIP-MD is a health maintenance organization (HMO) located in North Carolina.
Unlike the traditional fee-for-service model that determines the payment according to the actual
services used or costs incurred, VIP-MD receives a fixed, prepaid amount from subscribers. The per
member, per month rate (PMPM) is determined by estimating the health care cost per enrollee within
a geographic location. The average health care coverage in North Carolina costs $368 per month,
which is the same amount irrespective of the subscriber’s age. Because individuals are demanding
quality care at reasonable rates, VIP-MD must contain its costs to remain competitive. A major
competitor, National Physicians, entered the North Carolina market early in the current year with a
monthly premium of $325. VIP-MD wants to maintain its current market penetration and hopes to
increase the number of its enrollees in the current year. The latest data on the number of enrollees and
the associated costs follow:
Enrollment in current year
Projected
Enrollment next
year
Average Monthly
Cost in current
year
Age
1 to 4
45,688
48,977
$
11,147,872
5 to 14
82,456
84,663
10,059,632
15 to 19
95,873
95,887
8,436,824
20 to 24
66,246
67,882
9,539,424
25 to 34
133,496
132,554
26,432,208
35 to 44
166,876
175,446
38,882,108
45 to 54
85,496
90,889
22,741,936
55 to 64
99,624
101,923
28,691,712
65 to 74
156,288
161,559
49,518,144
75 to 84
67,895
72,465
33,432,760
85 years
and older
23,499
26,849
24,286,475
TOTAL
1,023,437
1,059,094
$263,169,095
Required
1. Calculate the target cost required for VIP-MD to maintain its current market share and profit per
enrollee in the current year.
2. Costs in the health care industry applicable to VIP-MD and National Physicians are expected to increase
by 7% in the coming year. VIP-MD is planning for the year ahead and is expecting all providers, including
VIP-MD and National Physicians, to increase their rates by $25 to $350. Calculate the new target cost
assuming again that VIP-MD wants to maintain the same profit per enrollee as in the current year.
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