MBA 812 – Operations & Project Management Midterm
Examination
Spring 2024 Pace University Lubin School of Business
Prof Chris Madu
All work must be shown to qualify for partial credit. You should use Excel to answer all the
questions. All questions should be answered, and all work must be submitted using either Microsoft
Excel or Microsoft Word. Any other file submission such as pdf or picture files will not be accepted
and will not be graded. You can only submit one file for all the problems but use different sheets for
the problems and label the sheets with the appropriate problem number. Your file should be saved
with a file name that starts with your surname. Multiple submissions will not be accepted. All work
must be submitted through Classes. Due Date: March 21, 2023 by 12 pm. Please follow the
instructions as given.
1. The following data shows the three years of monthly lawn-maintenance expenses ($) for
a six-unit apartment house in southern Florida.
Month First Year Second Year Third Year
January 170 180 195
February 180 205 210
March 205 215 230
April 230 245 280
May 240 265 290
June 315 330 390
July 360 400 420
August 290 335 330
September 240 260 290
October 240 270 295
November 230 255 280
December 195 220 250
Use the trend projection model to forecast the monthly expenses for January through
December of the fourth year. Discuss the results of the trend projection model for this
problem.
2. The monthly sales for Yazici Batteries, Inc., are as shown in the table below.
Month Sales
January 17
February 21
March 19
April 23
May 18
June 16
July 20
August 18
September 22
October 20
November 15
December 22
a) Forecast January sales of the coming year using each of the following:
i. Naïve method
ii. 4-mth moving average
iii. Exponential smoothing using an alpha = 0.20
iv. A trend projection model
b) With the data given, which method would you recommend for this data set and why?
c) Discuss the trend projection model that you obtained for this data set.
3. Johnson Filtration, Inc. provides maintenance service for water filtration systems
throughout Southern Florida. Customers contact Johnson with requests for maintenance
service on their water filtration systems. To estimate service time and the service cost,
Johnson’s managers want to predict the repair time necessary for each maintenance
request. Hence, repair time in hours is the dependent variable. Repair time is believed to
be related to three factors: the number of months since the last maintenance service, the
type of repair problem (mechanical or electrical), and the repairperson who performs the
repair (Donna Newton or Bob Jones). Data for a sample of 10 service calls are reported in
the following table:
Repair Time Months Since Type of Repairperson
in Hours Last Service Repair
2.9 2 Electrical Donna Newton
3.0 6 Mechanical Donna Newton
4.8 8 Electrical Bob Jones
1.8 3 Mechanical Donna Newton
2.9 2 Electrical Donna Newton
4.9 7 Electrical Bob Jones
4.2 9 Mechanical Bob Jones
4.8 8 Mechanical Bob Jones
4.4 4 Electrical Bob Jones
4.5 6 Electrical Donna Newton
a. Develop the multiple regression equation to predict repair time, given the number of
months since the last maintenance service, the repairperson and the type of repair.
b. What are the interpretations of the estimated regression parameters?
c. What does the coefficient of determination tell you about this model?
4. Cress Electronic Products manufactures components used in the automotive industry.
Cress purchases parts for use in its manufacturing operation from a variety of different
suppliers. The annual demand is 5000 units, the ordering cost is $80 per order, and the
annual holding cost rate is 25%.
a. If the cost of the part is $20 per unit, what is the economic order quantity?
b. Assume 250 days of operation per year. If the lead time for an order is 12 days,
what is the reorder point?
c. What is the total cost of this inventory system.
d. Find the cycle time and the number of times an order will be placed in a year.
5. Keith Shoe Stores carries a basic black dress shoe for men that sells at an approximately
constant rate of 500 pairs of shoes every three months. Keith’s current buying policy is to
order 500 pairs each time an order is placed. It costs Keith $30 to place an order. The
annual holding cost rate is 20%. With the order quantity of 500, Keith obtains the shoes
at the lowest possible unit cost of $28 per pair. Other quantity discounts offered by the
manufacturer are as follows. What is the minimum cost order quantity for the shoes?
What are the annual savings of your inventory policy over the policy currently being used
by Keith?
Order Quantity Price per Pair
0 – 99 $36
100 - 199 $32
200 - 299 $30
300 or more $28
