/ .UNIVERSITY OF COLOMBO, SRI LANKA

FACULTY OF MANAGEMENT AND FINANCE

Postgraduate & Mid-career Development Unit

Master of Business Administration -(Semester II First-half) Examination- July 2012

MBA 538 - Operations Management

Three (03) Hours

Answer Any Five(05) Questions

Aaswers for PART -I and PART - nsltould be giveDiDseparate allSWerbook

PART -I

QuesnoD 1

1. One of the challenges faced by managers of modem organizations is to achieve highquality of goods or services they produce while keeping the cost low. Use costs of qualityto explain how to achieve both high quality and low cost.

(to Marks)

ii. Total Quality Management (TQM) is a broader concept than quality control. How do youdifferentiate an organization adopting TQM from a traditional organization?

( to Marks)(Total 20 Marks)

QltestiOD 2

i. Harvey Bakeryproduces different varieties of cake for the local market. They have arelatively stable demand for its products throughout the year. It isestimated that they need1200 kg of wheat flourin each month. The cost of placing an order is estimated at Rs. 150and the annual holding cost is estimated at 300.10of the value of the product. Harveypresently purchases 500kg of flour at a time at a price of Rs. 90 per kg. What is the annualsavings for Harvey if they adopt Economic Order Quantity (EOQ) model?

. . i2lJC Q D(EOQ formula IS Q = --!!.. and TC =- C

H + - CoCH 2 Q

Q. is the EOQ when D is the annual demand and TC is the total inventory cost, Co is theordering cost per order and CHis the holding cost.)

(10 Marks)

I

iii.

iv.

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ii. When an organization adopts JIT it reducesinventory levels. Once the inventory levels are

reduced, some of the problems of the organization that were hidden beneath the inventorywill come into the surface. What are the problems that may be hidden beneath theinventory? What the solutions for these problems?

(10 Marks)(Total 20 Marks)

QUestiOD 3

I. Concurrent design approach is more effective in designing new products than sequentialapproach? Explain these two approaches. Why the.earlier approach is better than the latterone?

(10 Marks)

ii. Operations management activities of an organization are based on the competitive prioritiesof that organization. Elaborate this statement by selecting a suitable organization in SriLanka.

(J0 Marks)(Total 20 marks)

PART-II

i.

Question 4

Define the term' Advanced Planning and Scheduling' (APS). Discuss at least three keydifferences of APS comparing with MRP II.

(04 marks)

ii. Explain why APS is important in any typical Enterprise Resource Planning (ERP) systems.(03 marks)

ERP with APS would greatly help companies to add values to customer service. However,transportation management is also plays a major role here. In this context, explain themajor cost components to be trade off when making transportation decisions.

(03 marks)

. A transport manager of a transformer manufacturing company has following data to choosea transportation media out of two alternatives available. Workout the cost components anddecide the best alternative.Annualdemand . =365,000transformersCost per transformer = $100Current order size = 2,000 transformersSafety stock carried = 30010of demand during delivery lead timeHolding cost = 15%of the cost of the transformerLeadtime =4 daysTransit time = 3 days

2

I

Alternatives Capacity (Q) I Number

I

Transport Cost I SofTransfonners

I

Vehicle A -I 1,000 ! 18,000I

I

Vehicle B

I

750 -I 10,000

Task Task Time I (Seconds) hnmediate PredecessorsA 20 -B 7 AC 20 BD 22 BE 15 CF 10 DG 16 E,FH 8 G

(10 marks)(Total 20 Marks)

Question 5

i. Differentiate aggregate planning from Master Production Schedule.(04 Marks)

ii. List the input and output of Aggregate Planning. (04 Marks)

(

iii. A factory employs a pennanent workforce that is capable of providing a nonnal capacity of350 units per month. In addition to the nonnal capacity 50 units can be produced by usingovertime. The variable cost of carrying stock is Rs. 200 per unit per month. The opportunitycost of lost sales (unmet demand) is estimated to be Rs. 500 per unit. There is an additionalcost of Rs. lOOper unit under overtime production. The demand pattern for first half of yearis given in the following table.

PeriodDemand (Units

A constant workforce planning strategy bas been proposed to produce a constant quantity of350 units per period under nonnal production. For a given level of production plan you areexpected to tabulate the average stock and lost sales for each period. You may plan over timeproduction if required. What is the total cost of the plan?

(12 Marks)(Total 20 Marks)

Question 6

i. What is the objective of assembly line balancing? What are the main consequences you mayexpect if an assembly line is not balanced properly?

(04 Marks)ii. The following tasks are to be perfonned on an assembly line:

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The workday is seven hours long. Demand for completed product is 750 per day.

(a) Draw the precedence diagram(04 Marks)

(b) What is the workstation cycle time?(02 Marks)

(02 Marks)(c) What is the theoretical number of workstations?

(d) Balance the line using a technique. Clearly explain the technique used to balance theline.

(06 Marks)

(e) What is the efficiency of the balanced line?(02 Marks)

(Total 20 Marks)

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