Compare how the corner-point and iso-profit line methods work for solving graphical problems.

Three students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to$2,000. Here are the rates of return on the students investment projects: Harry 5 percent, Ron 8 percent, Hermione 20 percent, a. If borrowing and lending is prohibited, so each student uses only personal saving to finance his or her own investment project, how much will each student have a year later when the project pays its return? b. Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate r. What would determine whether a student would choose to be a borrower or lender in this market? c. Among these three students, what would be the quantity of loanable funds supplied and quantity demanded at an interest rate of 7 percent? At 10 percent? d. At what interest rate would the loanable funds market among these three students be in equilibrium? At this interest rate, which student(s) would borrow and which student(s) would lend? e. At the equilibrium interest rate, how much does each student have a year later after the investment projects pay their return and loans have been repaid? Compare your answers to those you gave in part (a). Who benefits from the existence of the loanable funds market—the borrowers or the lenders? Is anyone worse off?

Supplier selection requires:

a) supplier evaluation and effective third-party logistics.

b) supplier development and logistics.

c) negotiations, supplier evaluation, supplier development, and contracts.

d) an integrated supply chain.

e) inventory and supply chain management.

The term vertical integration means to:

a) develop the ability to produce products that complement or supplement the original product.

b) produce goods or services previously purchased.

c) develop the ability to produce the specified good more efficiently.

d) all of the above.

Dana Johnson Corp, is considering adding a fourth plant to its three existing facilities in Decatur, Minneapolis, and Carbondale. Both St. Louis and East St. Louis are being considered. Evaluating only the transportation costs per unit as shown in the table, decide which site is best.

The three process regions in a process-chain-network diagram are:

a) manufacture, supplier, customer

b) direct and surrogate, customer, provider

c) independent, dependent, customer interaction

d) direct interaction, surrogate interaction, independent processing

What are the sources of energy the foodservice industry uses?

Decision trees use:

a) probabilities.

b) payoffs.

c) logic.

d) options.

c) all of the above.

Good airline scheduling is essential to delivering outstanding customer service with high plane utilization rates. Airlines must schedule pilots, flight attendants, aircraft, baggage handlers, customer service agents, and ramp crews. At Alaska Airlines, it all begins with seasonal flight schedules that are developed 330 days in advance. Revenue and marketing goals drive the potential routing decisions, but thousands of constraints impact these schedules. Using SABRE scheduling optimizer software, Alaska considers the number of planes available, seat capacity, ranges, crew availability, union contracts that dictate hours that crews can fly, and maintenance regulations that regularly take planes out of service, just to name a few. Alaska's scheduling department sends preliminary schedules to the human resources, maintenance, operations, customer service, marketing, and other departments for feedback before finalizing flight schedules.

Alaska Airlines' historic mission is to serve its extremely loyal customer base in the remote and unreachable small towns in Alaska. Serving many airports in Alaska is especially complex because the airline requires its pilots to have special skills to deal with extremely adverse weather, tight mountain passes, and short runways. Some airports lack full-time TSA agents or strong ground support and may not even be open 24 hours per day. In some cases, runways are not plowed because the village plow is busy clearing the roads for school buses. Navigational technology developed by Alaska Airlines has significantly reduced weather-related cancelled flights as Alaska can now land where many other carriers cannot. After the SABRE optimizer schedules thousands of flights, scheduling activity turns to the next step: crew optimizing. The crew optimizer (Alaska uses Jeppersen software developed by Boeing and based on linear programming) attempts to eliminate unnecessary layovers and crew idle time while adhering to FAA and union restrictions. Alaska leads the industry in pilot "hard time" (i.e., the amount of time a pilot is being paid when passengers are actually being moved). After the crew requirements for every flight are determined, the $3.000$ flight attendants and $1.500$ pilots rank their preferred routings on a monthly basis. Personnel are assigned to each flight using seniority and feasibility. Interestingly, not every pilot or flight attendant always bids on the Hawaii routes (about $20 \%$ of all flights), the long-haul East Coast routes, or the Mexico flights. Some prefer the flying challenge of the "milk run" flights to Ketchikan, Sitka, Juneau, Fairbanks, Anchorage, and back to Seattle, which are in keeping with the culture and contact with local residents.

As an airline that accentuates risk taking and empowers employees to think "out of the box," Alaska recently decided to experiment with a schedule change on its Seattle-to-Chicago route. Given crew restrictions on flying hours per day, the flight had previously included a crew layover in Chicago. When a company analyst documented the feasibility of running the same crew on the two 4-hour legs of the round trip (which implied an extremely tight turnaround schedule in Chicago), his data indicated that on $98.7 \%$ of the round trip flights, the crew would not "time out." His boss gave the go-ahead.

Why is scheduling for Alaska more complex than for other airlines?

The Collector's Choice Inc. (CCI), a luxury car import company, has an old warehouse at the Port of Miami, Florida, where it temporarily stores expensive sports cars and automotive parts that arrive from Europe. This summer, CCI has noticed that the termite infestation in the warehouse has escalated to a point where tenting cannot be postponed anymore. (Tenting is the process of wrapping a building inside a huge tent that is subsequently filled with a poisonous gas capable of killing most forms of life inside, including insects, plants, pets, and human beings.) CCI's pest control company's contract specifies a to-do list of pre-tenting tasks, which include:

• Turning off all air-conditioning units and opening all windows of the warehouse
• Turning off all internal and external lights, including those operating on a timer
• Pruning all outdoor vegetation at least $18 "$ away from the warehouse
• Soaking the soil around the warehouse on the first day of tenting The requirement of opening all windows is particularly worrisome to CCI because it means turning off the alarm system, leaving the warehouse vulnerable to burglary for 48 hours - the required amount of time for the poisonous gas to do its job. Therefore, Alex Ferrari, the warehouse manager, is thinking about hiring a security company to monitor the facility during that period. CCl's property insurance deductible is $\$ 25,000$, and Alex is assuming that if thieves are willing to enter a building full of poisonous gas to steal something, they would certainly take more than $\$ 25,000$ worth of parts or even an entire car!

After making a few phone calls, Alex gets in touch with ProGuard, a trustworthy local security company that charges $\$ 150$ per hour to have a security guard stationed outside their warehouse. The city of Miami police records indicate that about $30 \%$ of businesses that left their facilities unattended during tenting reported stolen property in the past 3 years. Although Alex thinks ProGuard's prices are reasonable, and having a guard outside the warehouse would certainly help, he is still not sure whether it is worth spending the extra money. After all, ProGuard's contract does not guarantee the protection it provides is infallible. In fact, an analysis of the company's records indicates that $3 \%$ of their clients were burglarized over the past 3 years. (Despite this figure, ProGuard is still the best security company in the area.)

Create a decision tree analysis to help decide whether Alex Ferrari should hire ProGuard's services.

Automobiles arrive at the drive-through window at the downtown Baton Rouge, Louisiana, post office at the rate of 4 every 10 minutes. The average service time is 2 minutes. The Poisson distribution is appropriate for the arrival rate and service times are negative exponentially distributed.

What is the average time a car is in the queue?

With the growth of Hard Rock Cafe - from one pub in London in 1971 to more than 145 restaurants in 60 countries today-came a corporatewide demand for better forecasting. Hard Rock uses long-range forecasting in setting a capacity plan and intermediate-term forecasting for locking in contracts for leather goods (used in jackets) and for such food items as beef, chicken, and pork. Its short-term sales forecasts are conducted each month, by cafe, and then aggregated for a headquarters view.

The heart of the sales forecasting system is the point-of-sale (POS) system, which, in effect, captures transaction data on nearly every person who walks through a cafe's door. The sale of each entrée represents one customer; the entrée sales data are transmitted daily to the Orlando corporate headquarters' database. There, the financial team, headed by Todd Lindsey, begins the forecast process. Lindsey forecasts monthly guest counts, retail sales, banquet sales, and concert sales (if applicable) at each cafe. The general managers of individual cafes tap into the same database to prepare a daily forecast for their sites. A cafe manager pulls up prior years' sales for that day, adding information from the local Chamber of Commerce or Tourist Board on upcoming events such as a major convention, sporting event, or concert in the city where the cafe is located. The daily forecast is further broken into hourly sales, which drives employee scheduling. An hourly forecast of $\$ 5,500$ in sales translates into 19 workstations, which are further broken down into a specific number of waitstaff, hosts, bartenders, and kitchen staff. Computerized scheduling software plugs in people based on their availability. Variances between forecast and actual sales are then examined to see why errors occurred. Hard Rock doesn't limit its use of forecasting tools to sales. To evaluate managers and set bonuses, a 3-year weighted moving average is applied to cafe sales. If cafe general managers exceed their targets, a bonus is computed. Todd Lindsey, at corporate headquarters, applies weights of $40 \%$ to the most recent year's sales, $40 \%$ to the year before, and $20 \%$ to sales 2 years ago in reaching his moving average.

An even more sophisticated application of statistics is found in Hard Rock's menu planning. Using multiple regression, managers can compute the impact on demand of other menu items if the price of one item is changed. For example, if the price of a cheeseburger increases from $\$ 7.99$ to $\$ 8.99$. Hard Rock can predict the effect this will have on sales of chicken sandwiches, pork sandwiches, and salads. Managers do the same analysis on menu placement, with the center section driving higher sales volumes. When an item such as a hamburger is moved off the center to one of the side flaps, the corresponding effect on related items, say french fries, is determined.

What is the role of the POS system in forecasting at Hard Rock?

Where a constraint crosses the vertical or horizontal axis, the quantity is fairly obvious. How does one go about finding the quantity coordinates where two constraints cross, not at an axis?

Calls arrive at Lynn Ann Fish's hotel switchboard at a rate of 2 per minute. The average time to handle each is 20 seconds. There is only one switchboard operator at the current time. The Poisson and negative exponential distributions appear to be relevant in this situation.

What is the average time that a customer must wait before reaching the operator?