UNIVERSITY OF NEWCASTLE

GSBS6610 Operations and supply chain management

Tutorial 2

Associate Prof. Ramaswami Sridharan

Sunil Kumar Bula

3106954

Small facility

Do Nothing

Large facility

High 0.4

Low 0.6

High 0.4

Low 0.6

Sunil Kumar bula 3106954GSBS6610 Operations and Supply chain

Management

Tutorial 2

Based on chapter 4, lecture 2 and module 2

Answer 3. Capacity balance problems faced at

a. An airline Terminal: The passengers at an airport keep changing over the year or over a period of time. The airlines using the airport may expand their fleet to accommodate more passengers. In such cases the seating capacity may not balance the varying amount of passengers. Similarly, the waiting lounges, shopping area, toilets capacity balance faces problems when passengers vary. And to facilitate arrival and departures of all the flights, the number of gates or terminals faces problems. Expansion seems to a solution to this problem, but passengers increase in peak Holiday season only. Hence, expanded area may not be useful during off season.

b. A university computing lab: Balance can be achieved in the initial stages by estimating the number of students admitted to the university and the capacity of the lab. But the growth in the number of students joining each year varies. And, technology keeps changing every now and then. In such cases, capacity balance gets disturbed in a university lab. Students may become more and computers less!

c. A clothing manufacturer: If a huge order is placed by a customer and needs delivery in a short time, then the capacity balance is lost. The manufacturer might need to expand the factory and hire more staff to complete the order or he could get the employees to work more shifts.

Answer 4. The decision tree for Expando Inc is:

6 million 12 million

10 million

0 million

14 million

9 million 10 million

2

Sunil Kumar bula 3106954GSBS6610 Operations and Supply chain

Management

Alternative Calculation Value ($)

Small Factory (.4)*12 million + (.6)*10 million – 6 million 4.8 million

Large Factory (.4)*14 million + (.6)*10 million – 9 million 2.6 million

Do nothing 0 million

Hence from the above calculation, a small factory is the best alternative to generate profits.

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