UNIVERSITY OF COLOIUBO, SRI LANKAFACULT'Y OF MANAGEIVTENT AND FINANCEPostgraduate & Mid-career Development Unit

Master of Business Administration (MBA) Semester II FirsGhalf Examination - October, 201 I

MBA 538 - Operations Management

' Three (03) Hours

Answer Five (0$ Questions in all, selec:ting at least pgg$il question from each part.All questions carry equal marks.Answers to part- [ and part- II should be written in separate answer books and handed over tosupervisor separately.Notes on both sides of A4 size paper are allorved.This paper consist of 07 questions on 05 printed pages

Fart -I

f. i. Traditionally cost is the perforrnanse measure of operations. Horvever, presently the cost isnot adequate to measure the success of operaticns. What are the other importantperformance objectives to be achieved in operations?Discuss what Operations Management toois and techniques you would use to achieve theseobjectives.

(09 marks)

ii. A company is trying to decide whether to buy a part from supplier, produce the part whileusing manual assembly, or prodnce the part rvithin an automated assembly system. Here aredata on which decision is made:

Buy

250,000 250.000Rs.00 Rs. 750.000Rs.10.50 Rs.8 .95

Produce-Manuai--llr"e*!ry---

Produce-automatedAssembl

Annual volume of

Variable cost oer unit

\a. Based on this data, which alternative u,ould you propose as the best one?b. At what annual volume of the part would the company be indifferent to buying the part

or producing the part with automatecl assembly?(l I marks)

(Total20 Marks)

7. i. Why should operations managers give emphasis on job enrichment and socio-technicalapproaches to job design?

(07 marks)

ii. A work study officer practices the following method to estimate standard time for sewingoperations in job design. Five operators are assigned to carr-v out the operation to bemeasured. Each operator performs the task ten times. Then mean operation time is takenand other allowances are added to get the standard time. What arc the shortcomings of thisapproach? How do you improve this approach to obtain better estimate on standard timeof the operations?

(07 marks)

iii. Explain briefly the importanbe of ergonomic (human factors) considerations in job design.(06 marks)

(Total20 Marks)

3. i. Describe various demand forecasting options available in the following situations:(a) Long range forecasting for a new product. (04 marks)

(b) Short-range forecasting for an established product. (04 marks)

ii.ZYX Apparels Pvt. Ltd. produces ladies..iackets for the European market. The ordersreceived by the company for years 2007 and 2008 are as follows.

Period(in 2007)

Order Qurrntity( '000s)Period

(in 2008)Order Quantity

( '000s)Jan- MarApr- JuneJuly - SepOct - Dec

45.02s.a28.536.s

Jan- MarApr- JuneJuly - SepOct - Dec

43.526.430.037.0

Management of the company expects that thethan that of 2008 due to economic crisis in thefour quarters ofyear 2049.

total sales volume in2009 will be 20% lessEurope. Forecast the order quantities for the

(12 marks)(Totnl20 Marks)

4, i. What are the factors to be considered in selecting locations for the following institutions?

a. A garment factoryb. An internet cafec. An international school

(05 marks)

ii. State two techniques that you would use in selecting plant location? Explain whatdifficulties you may face in using these techniques.

(04 arks)

ii. An assembly line is to be designecl to operate 7 '/z hours per day and supply a steadydemand of 300 units per day. T'he tasl: and their perfbrmance times are shown in thefollowins table.

Task Prececling Task I Ferformance Time| (secon4-{-

A L 60B

_t__ 40C A 45D A 10E B l 30F (- l rnl____- "G p-- | !gH E L 50

F__ __l ___ 2a __l

J c ___L__ ?s _:

K r{ ,J l 20L I .K 25

Draw the precedence diagramWhat is the cycle time?Assisn the tasks into r,vorkstations to give an efficient line.

i. Total Quality Management ('IQM), Just In Time (JIT), Kaizen andorganizational practices developed in thc recent past. Select two of them andthey contribute to organizational perfbrmance.

a,b.c .

(03 marks)(01 mark)

(05 marks)(Total20 Marks)

55 are thediscuss how

(10 marks)

t.

ii. Delivery speed and dependability are two kev cornpetitive priorities in the present businessworld. Explain hou, Enterprise Resource Pianning (EI{P) system helps to achieve thesecompetitive priorities. (10 marks)

(Total20 Marks)

firt-II

6. i. Raw material S has an annual unifoim demand of 500 units. Cost of placing an order isconstant and it is estimated as $5. The nraterial holding cost of S is estimated as $2 per unitper year. Calculate the EOQ of material S fcr a constant lead time. It is assumed that the costof material S remains constant over the 1rcriod and all the demands are satisfied within theperiod. What is the total annrul cost at EOQ?

(04 arks)

ii. Discuss the evolution of ERP {iom the concept of MRP.(03 arks)

iii. A product P has a lead time of 3 days to assemble it. f he sub-assemblies used for this areone unit of Q and two units of R. The rnanufacturing lead times of Q and R are 2 days andI day respectively. lt is required to consume 5 units of raw material S to manufacture asingle unit of Q while the rnanufacturing of one unit of R needs one unit of T. Thepurchasing lead time of S and 'f are 2 days each. Draw the product tree structure of theproduct P indicating the quantity requirement and lead tirnes for each item.

(04 marks)

iv. What do you understand from the term 'Modular IIOM'? Identify a modular BOM exists inthe product structure drawn for P in the above question.

(02 arks)

v. There is demand fbr 53 units of product P above in period 8. T'he on hand quantities of theitems are given in the table beiow:

The lot size or order quantity fcrr items P, Q and R are the same as net requirements,rvhile the lot size fcrr S is to be taken as the EOQ calculated in the first part of thisquestion and T is 75 units. What should be the size of the orders for each item and whenshould the orders.be released?

(07 marks)

(Total20 Marks)

7. i. Discuss briefly with examples how Dell Computers achieved a successful supply chainmanagement practices with near to zero inventory levels.

(03 marks)

0n hand Quant

P a R S Tity J J l 5 25 l0 )

Descgp!!94_Sales turnoverCost of soods sold

ii. When a supply chain evaluation team of an organization wanted to analyses the practice inthe past year, the finance rnanager of the firm provided the following data to the team'

Amount in USD6.300.0005.400.000

900,000450,000450"000200.000

_---

250,00050.000

The firm had its own distribution centre and the average finished goods available last yearwas USD280,000. The firm had USD750,000 wofth of fixed assets. The average rawmaterial stocks available last year was 1JSD350,000. There were some finished goods at thefactory which had an average value of {JSD200,000. The long term debt of the firm wasUSD300,000. The productiorl floor had an average WIP value of USD500,000. Assuming 50business weeks were for the past year, express total inventory as, '

o Weeks of supplyo Inventory turnover

iii. What are objectives of scheduling in a shop floor environment? How aprofessional can measure the performance of scheduling?

iv. The following list ofjobs in a shop floor includes estimates of'their required times'

Job Required Time(Days)

Days to DeliveryPromise

SlackTime

8 7 52 6 6 4aJ t0 9 I4 9 -7 (Late) 11) a 7 46 I -8 (l.ate) 9

z

(06 marks)shop floor

(05marks)

Use the Shortest Processing Timeschedule and calculate the mean flow

to schedule these jobs. Tabulate the(05marks)

(Total20 Marks)

(SPT) ruletime.