Operations Management Exam Saturday, May 9th, 2015

OPERATIONS MANAGEMENT EXAM

prof. Alberto Portioli Staudacher
May 9th, 2015
EXERCISES (19 points)

Exercise 1 (8 points)

The Museum of Contemporary Art, in Milan, in view of the opening of the new exhibition dedicated to Magico
Triplete Nerazzurro, has decided to organize an inauguration evening open to the public where authorities,
personalities of the sport world and of the show business but also fans or simple curious people will be present.
The director has decided to sell a total of 500 tickets for the participation at the event. He is sure he can maximize
the profit of the event, which is obviously necessary to start to recover the huge investments done for the
preparation of the exhibition, by offering 2 different types of fees, a first one that is cheaper (200 /ticket) and a
second one that is more expensive (450 /ticket). The tickets of the cheaper fee will be sold until 30 before the
event, while the ones of the more expensive fee will be sold starting from 29 days before the event until the day
before it. The director knows that, theoretically, it would be possible to sell all tickets at the cheaper fee. The
demand of the tickets for the more expensive fee is distributed like a Gaussian with a mean of 150 and a
probability of 80% to sell a number of tickets between 110 and 190.
Museum of Contemporary Art organized a dinner for the night, which will be offered to all the participants of the
event, in two restaurants in Milan: customers that bought the full price ticket will receive an invite for the
prestigious Inter I love you restaurant and customers that bought discounted ticket will be expected in the
Milano nerazzurra pizzeria. The museum will communicate the number of reservations and it will pay the
restaurants 10 day before the event, 60 per person to the restaurant and 20 per person to the pizzeria.
The director of the exhibition has then decided that during the event will be offered to the customers with tickets
with the more expensive fee also the special cocktail Mou prepared for the occasion by the famous barman
Andrea Ranocchia. The payment of this special cocktail costs to the museum a total of 9 /person, which will be
paid out to the barman only after the event on the basis of the effective number of consumers. Also for the
customers who buy the cheaper ticket there will be the possibility to try the Mou, but with a cost of 10 /person,
and paying out this amount directly to the staff of the barman at the moment of the degustation.
During the inauguration it will be presented the book Bla Bla and the museum decided to give the possibility for
the participants of the event to buy it at 15. The contract between the museum and the publishing house provides
that the publishing supplies 500 books for all the participants and the museum will pay 10 for each sold book
and will return all unsold ones.
The director of museum foresees that 60% of people that participate to the event will buy the book.
Moreover, it has been calculated that 90% of the participants to the inauguration will bring home the fine
bookmark already entirely paid in advance by the museum to a publishing house 25 days before the event with a
cost of 6 /person expected.
Consider that to all the participants to the evening, regardless of the type of ticket bought, will be offered by the
museum a gadget (cost of 4 /gadget) paid 8 days before the event as well as a pen (cost of 4 /pen) paid 5 days
before the event. The Museum of Contemporary Art has fixed costs related to the event for a total of 60.000 .

Data interpolation is not requested. You can take the value that is closest to the one you desire.

Question 1) (3 points) Define how to allocate the number of tickets to be reserved for the different categories of
price (Protection Level).
Question 3) (2 points) Calculate with which probability the Museum of Contemporary Art will be able to make
with the event a profit higher than 40.000 . Consider as reference situation the one described in the previous
Question 1).
Question 2) (3 points) Define if and how the allocation of the tickets of the event changes if there is the
possibility to sell the seats that are remained empty (both because they have not be sold and because they are
linked to a no-show phenomenon) with a last minute fee with the special price of 120 the same day of the event,
knowing that in this way it would be possible to sell without problems all the ones offered. The no-show
phenomenon happens only for the cheaper tickets with a percentage of 15%. To the buyers of the last minute
ticket will be offered only a drink voucher in the near disco-pub Adriano & Co. instead of a dinner. The
museum will correspond to the disco-pub 8 for each cocktail effectively consumed.
Operations Management Exam Saturday, May 9th, 2015

Exercise 2 (11 points)

ZINGA-MA is a small enterprise that produces precision mechanical components for the robotics industry.
The company has to supply 400 units per day to its customers.
The production system is simple because company ZINGA-MA works only one product and the production
process is composed by 5 stages: milling, heat treatment, finishing, painting and chemical washing.
The pieces to be processed enter the production system and are first arranged in a single FIFO queue before the
milling department, which is composed by 3 parallels identical machines.
The 3 milling machines have an automatic quality control directly on board which is able to detect all defective
units. Scrapped units are 4% of the pieces that enter the whole production system.
Pieces that arent scrapped go to the heat treatment, where 4 identical machines, each one with its own specific
queue, work in parallel.
After the heat treatment, the pieces are transferred to finishing.
The worker who operates in the finishing stage is highly specialized and he is able to notice directly on the field
the presence of pieces with defects. If a piece has finishing defect it has to be reworked by the same finishing
machine that processed it. A piece can be reworked only once: after second finish manufacturing either the piece
is defect-free and moves to next stage or it is discarded. On average reworked pieces are 20% of processed pieces
and scrap pieces are 5% of processed pieces.
The production flow continues in the painting stage that is composed by only one operator that uses one advanced
painting machine.
The painting machine has an automatic quality control on board which detects all defective units.
Correct painted pieces are delivered to the customer; defective painted pieces must be reprocessed.
These pieces have to be cleaned in the chemical washing stage before be reinserted in the painting queue.
The chemical washing stage is composed only by a washing machine.
Because of the chemical washing a product can be painted only twice. On average 10% of pieces painted by
painting machine have to be painted a second time and ZINGA-MA, on average scrap, after the second painting,
is 2% of pieces processed by painting machine.
The good pieces which come out of painting machine are ready to be sent to the last packaging department, which
is not treated in the present exercise.
In the table below, the values of the service rate of the different resources. For these resources, we can assume the
arrival and the service rates follow a negative exponential distribution.

Process Service rate (1 resource)

Milling 175 pieces/day
Heat treatment 125 pieces/day
Finishing 600 pieces/day
Painting 500 pieces/day
Chemical washing 80 pieces/day

The enterprise works 8 hours/day.

Question 1) (3 points) Do the map of the production flow of the enterprise, highlighting all the significant
parameters and the main information that you consider important to include (included the number of pieces that
enter and come out of the system). In addition, create a table with all the relevant parameters for each stage
(Arrival rate, Service rate, Ro, Type of queue, Priority, Ws (in minutes)). You can consider as negligible the
time for the quality control check downstream of milling, finishing and painting stages.
Question 2) (3 points) Calculate the expected throughput time of the system as well as the throughput times for
each path (dont take into account scraps in the calculus of the expected throughput time of the system and of the
throughput times for each path).
Question 3) (2 points) During a day, how much time is chemical washing machine inactive?
Question 4) (2 points) Calculate the probability that a product which just joined one queue of the heat treatment
stage exits from same stage in less than 26 minutes.
Question 5) (2 points) Calculate in analytical way the impact on the expected throughput time if it is set a priority
rule in the finishing stage: pieces that have to be reworked have a higher priority than the others. (not-prehemptive
logic)