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SCHOOL OF BUSINESS UNIVERSITY OF WINDSOR 73-331 Operations Management 1 Sample Test 1 Instructor: Dr. Kevin W. Li
Duration: 1 hour
Last Name:_________________________
Student No. ____
First Name:________________________ Note: This sample exam is for your practice and information only. The instructor reserves the right to include multiple choice problems in the midterm.
Instructions: 1. THIS SAMPLE EXAM PAPER INCLUDES 3 PAGES. YOU ARE RESPONSIBLE FOR ENSURING THAT YOUR COPY OF THE EXAM IS COMPLETE. BRING ANY DISCREPANCY TO THE ATTENTION OF YOUR INSTRUCTOR. 2. CHECK WHETHER YOU ARE GIVEN FORMULA SHEET. 3. USE OF CALCULATOR IS PERMITTED. 4. USE OF ANY ELECTRONIC DEVICE (CELL PHONE, PAGER) DURING THE EXAM IS NOT ALLOWED.
MAX. MARK Problem 1 Problem 2 Problem 3 Total 8 12 20 40
73-331-1&3 Sample Midterm
2
Name:________________________
1. Little Red introduced a new product in the market last year. Production cost of the first unit was $1,000. The management thinks that the new product has a learning rate of 85%. a. Calculate the production cost for the 10th unit and the 1000th unit of the new product. (3 marks)
b. (Ignore part a). Last year LittleRed was able to sell 2000 units. Their recorded unit production costs are as follows:
Unit Production Unit 100 400 900 1500 Cost ($) 335 245 200 185
Based on the above data calculate the learning rate of the new product at LittleRed. (5 marks)
2. An oil company believes that the cost of constructing new refineries obeys a relationship of the type f ( y ) = ky a , where y is measured in units of barrels per day and f ( y ) in millions of dollars. a. From the past experience, each doubling of the size of a refinery at a single location results in an increase in the construction costs of about 66 percent. Find the value of a . (2 marks) b. Ignore part a. Suppose If the discount rate for future costs is
22.50 percent, determine the optimal timing of plant additions using trial and error...