Concept explainers
Videos
National Air Express
National Air is a competitive air-express firm with offices around the country. Frank Smith, the Chattanooga, Tennessee, station manager, is preparing his quarterly budget report, which will be presented at the Southeast regional meeting next week. He is very concerned about adding capital expense to the operation when business has not increased appreciably. This has been the worst first quarter he can remember: snowstorms, earthquakes, and bitter cold. He has asked Martha Lewis, field services supervisor, to help him review the available data and offer possible solutions.
Service Methods
National Air offers door-to-door overnight air-express delivery within the U.S. Smith and Lewis manage a fleet of 24 trucks to handle freight in the Chattanooga area. Routes are assigned by area, usually delineated by zip code boundaries, major streets, or key geographical features, such as the Tennessee River. Pickups are generally handled between 3:00 P.M. and 6:00 P.M., Monday through Friday. Driver routes are a combination of regularly
When the driver arrives at each pickup location, he or she provides supplies as necessary (an envelope or box if requested) and must receive a completed air waybill for each package. Because the industry is extremely competitive, a professional, courteous driver is essential to retaining customers. Therefore, Smith has always been concerned that drivers not rush a customer to complete his or her package and paperwork.
Budget Considerations
Smith and Lewis have found that they have been unable to meet their customers’ requests for a scheduled pickup on many occasions in the past quarter. Although, on average, drivers are not handling any more business, they are unable on some days to arrive at each location on time. Smith does not think he can justify increasing costs by $1, 200 per week for additional trucks and drivers while productivity (measured in shipments per truck/day) has remained flat. The company has established itself as the low-cost operator in the industry but has at the same time committed itself to offering quality service and value for its customers.
1. Is the productivity measure of shipments per day per truck still useful? Are there alternatives that might be effective?
Want to see the full answer?
Check out a sample textbook solution
Chapter 1 Solutions
Operations Management
- Create a minimum cost chase plan for the forecast shown in the table. There is no beginning inventory and regular production capacity is 350 units and costs $8 per unit. Overtime costs $19 and is limited to 50 units per month and subcontracting is limited to 100 units per month and costs $14 per unit. What is the total plan cost? Hint: In a chase production plan, production is changed each time period to match the demand. Use regular production, overtime, and subcontracting to create the plan. Month Forecast Regular Overtime Subcontracting January 250 February 400 March 500 April 350arrow_forwardThe table lists several goals that might be set by a restaurant chain. Indicate the level of each goal, with level 1 being the highest and level 4 being the lowest. We seek to expand by opening 150 new restaurant locations in the next 10 years. We seek to operate a chain of restaurants that prepares high-quality food on a timely basis for a reasonable price. We seek to provide a 14% or greater annualized return of investment for our shareholders. We seek to improve efficiency by implementing a new computerized payment system. Level 1 O O OO Level 2 O O O O Level 3 O O OO Level 4 O O O Oarrow_forwardcan you explain quarters 1-4arrow_forward
- Kraft Bakeries introduced in 2019 a new line of frozen apple pie. For 2019, sales by quarter were asfollows: 11,000 units, 16,000 units, 15,000 units, and 20,000 units. Because of aggressive marketing and promotion, the company expects that sales for each quarter of 2020 will be 25% higher thanthe respective quarter in 2019. The selling price per unit in 2020 is expected to be $4. What are theexpected sales, in units and dollars, for the second quarter of 2020? For the third quarter of 2020?arrow_forwardMavis and John have joined forces to start M&J Food Products, a processor of packaged shredded lettuce for institutional use. John has years of food processing experience, and Mavis has extensive commercial food preparation experience. The process will consist of opening crates of lettuce and then sorting, washing, slicing, preserving, and finally packaging the prepared lettuce. Together, with help from vendors, they think they can adequately estimate demand, fixed costs, revenues, and variable cost per 5-pound bag of lettuce. They think a largely manual process will have monthly fixed cost of $50,000and a variable cost of $2.50 per bag. They expect to sell 75,000 bags of lettuce per month. They expect to sell the shredded lettuce for $3.25 per 5-pound bag. John and Mavis has been contacted by a vendor to consider a more mechanized process. This new process will have monthly fixed cost of $125,000 per month with a variable cost of $1.75 per bag. Based on the above scenario: Should…arrow_forwardThe table below provides the aggregate plan of production by a firm. It is known that the firm uses a chase plan. The firm’s labor cost is $13/unit, hiring cost is $350 per unit of increase, and unit firing cost is $400 per unit of decrease in production. Given this information, what is the number in the cell with the question mark?arrow_forward
- Below are the point of SWOT Analysis that students and NGOs get from the fund-raising activities during Covid-19 pandemic that is to aid the people who are struggling during the Covid-19 pandemic. As we all know, the pandemic had affected our economy negatively resulting in thousands of individuals losing their source of income. For this, students are conducting fund-raising and donating the collection to a selected Non-Profit Organization (NGO). The fund then will be used to purchase daily necessities in the form of food, toiletries and many more to provide to the unfortunate people. 1) Please elaborate more from each of the point below in the column SWOT analysis for me to include in the report.arrow_forwardSales for the last quarter of the year were good, with tops sales at 3,400 units and pants sales at 3,200 units. Demand for the first quarter sales of next year is expected to decline by 8%. What is your forecast for the demand of tops and pants? Tops Sales Forecast: 0 ▲ ▼ Pants Sales Forecast: 0 ▲ ▼ Is there anything you could do to help minimize the effect of the projected decline in demand on sales?arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- 20. The Video Game Supply Company (VGS) is deciding whether to set next year's production at 2000, 2500, or 3000 games. Demand could be low, medium, or high. Using historical data, VGS estimates the probabilities as: 0.4 for low demand, 0.3 for medium demand, and 0.3 for high demand. The following profit payoff table (in $100s) has been developed. Demand Production Target Low Medium High 2000 games 2500 games 3000 games 1000 1200 1400 800 1500 1300 600 1700 1400 (a) [1] What is the maximax decision alternative? (b) [1] What is the maximin decision alternative? (c) [2] Determine the expected value of each alternative and indicate what should be the production target for next year based on expected value. (d) [1] Determine the expected value with perfect information about the states of nature. (e) [1] Determine the expected value of perfect information.arrow_forwardcan you answer this please?arrow_forward8.5 Morningside Nursing Home, a not-for-profit corporation, is estimating its corporate cost of capital. Its tax-exempt debt currently requires an interest rate of 6.2 percent, and its target capital structure calls for 60 percent debt financing and 40 percent tnequity (fund capital) financing. Its estimated cost of equity is 15.4 percent. What is Morningside’s corporate cost of capital?arrow_forward
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,