om assignment 2-roll no 64

7/30/2019 Om Assignment 2-Roll No 64

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(OM_MA2) Sanjiv Kamra, Div: B, Roll No. 64

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Question 1:

a. What are the characteristics of Services and give examples.

Service operations management concerns the design, planning, direction and control of all

the facilities, processes and required activities to transform labour, capital, materials,energy, and skills into performance and delivery of service. Good service organisationperforms the operations functions of planning, scheduling, equipment operation, qualitycontrol, record keeping, and human resource management for maintaining efficientusefulness. This takes place while ensuring that the quality of the service is both high andconsistent.

CHARACTERISTICS OF SERVICES

The services have unique characteristics which make them different from that of goods.The most common characteristics of services are:

Intangibility.Inseparability.Perish ability.Variability

Intangibility Services are activities performed by the provider, unlike physical products theycannot be seen, tasted, felt, heard or smelt before they are consumed. Since, servicesare not tangibles, they do not have features that appeal to the customers senses, theirevaluation, unlike goods, is not possible before actual purchase and consumption. Themarketer of service cannot rely on product-based clues that the buyer generallyemploys in alternative evaluation prior to purchase. So, as a result of this, the servicesare not known to the customer before they take them. The service provider has tofollow certain things to improve the confidence of the client:The provider can try to increase the tangibility of services. For example, by displayinga plastic or a clay model showing patients an expected state after a plastic surgery.The provider can emphasize on the benefits of the service rather than just describingthe features.Not all the service product has similar intangibility. Some services are highlyintangible, while the others are low i.e. the goods (or the tangible component) in theservice product may vary from low to high.For example: Teaching, Consulting, Legal advices are services which have almost niltangible components; While restaurants, fast food centers, hotels and hospitals offerservices in which their services are combined with product (tangible objective) , suchas food in restaurants, or medicines in hospitals etc.

Inseparability Services are typically produced and consumed simultaneously. Incase of physicalgoods, they are manufactured into products, distributed through multiple resellers, andconsumed later. But, incase of services, it cannot be separated from the serviceprovider. Thus, the service provider would become a part of a service.

For example: Taxi operator drives taxi, and the passenger uses it. The presence of taxidriver is essential to provide the service. The services cannot be produced now for


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consumption at a later stage / time. This produces a new dimension to servicemarketing. The physical presence of customer is essential in services. For example: touse the services of an airline, hotel, doctor, etc a customer must be physically present.Inseparability of production and consumption increases the importance of the qualityin services. Therefore, service marketers not only need to develop task-related,

technical competence of service personnel , but also , require a great input of skilledpersonnel to improve their marketing and inter personal skills.

Perishability

Services are deeds, performance or act whose consumption take place simultaneously;they tend to perish me the absence of consumption. Hence, services cannot be stored.The services go waste if they are not consumed simultaneously i.e. value of serviceexists at the point when it is required.The perishable character of services adds to the service marketers problems. Theinability of service sector to regulate supply with the changes in demand; poses manyquality management problems. Hence, service quality level deteriorates during peak hours in restaurants, banks, transportation etc. This is a challenge for a servicemarketer. Therefore, a marketer should effectively utilize the capacity withoutdeteriorating the quality to meet the demand.

Variability Services are highly variable, as they depend on the service provider, and where andwhen they are provided. Service marketers face a problem in standardizing theirservice, as it varies with experienced hand, customer, time and firm. Service buyersare aware of this variability. So, the service firms should make an effort to deliverhigh and consistent quality in their service; and this is attained by selecting good andqualified personnel for rendering the service


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Question 1:

b. Explain Process Selection types and list differences between Intermittent andContinuous Operations with examples

Types of production system

The types of production system are depicted in the following image.

The types of production system are grouped under two categories viz.,

1. Intermittent production system, and2. Continuous production system.


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Intermittent production system

Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed)intervals (time gaps).

In the intermittent production system, goods are produced based on customer's orders. Thesegoods are produced on a small scale. The flow of production is intermittent (irregular). Inother words, the flow of production is not continuous. In this system, large varieties of products are produced. These products are of different sizes. The design of these productsgoes on changing. It keeps changing according to the design and size of the product.Therefore, this system is very flexible.

Following chart highlights the concept of an intermittent production system.

Following are examples on the intermittent production system. Please refer above chart whilereading examples given below.

1. The work of a goldsmith is purely based on the frequency of his customer's orders. Thegoldsmith makes goods (ornaments) on a small-scale basis as per his customer'srequirements. Here, ornaments are not done on a continuous basis.

2. Similarly, the work of a tailor is also based on the number of orders he gets from hiscustomers. The clothes are stitched for every customer independently by the tailor as perone's measurement and size. Goods (stitched clothes) are made on a limited scale and isproportional to the number of orders received from customers. Here, stitching is not doneon a continuous basis.


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The features of an intermittent production system are depicted below.

The characteristics of an intermittent production system are listed as follows:

1. The flow of production is not continuous. It is intermittent.2. Wide varieties of products are produced.3. The volume of production is small.4. General purpose machines are used. These machines can be used to produce different types

of products.5. The sequence of operation goes on changing as per the design of the product.6. The quantity, size, shape, design, etc. of the product depends on the customer's orders.

The types of intermittent production system include:

1. Project production flows,2. Jobbing production flows, and3. Batch production flows.


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Continuous production system

Continuous means something that operates constantly without any irregularities or frequenthalts.

In the continuous production system, goods are produced constantly as per demand forecast.Goods are produced on a large scale for stocking and selling. They are not produced oncustomer's orders. Here, the inputs and outputs are standardized along with the productionprocess and sequence.

Following chart highlights the concept of a continuous production system.

Following are examples on the continuous production system. Please refer above chart whilereading examples given below.

1. The production system of a food industry is purely based on the demand forecast. Here, alarge-scale production of food takes place. It is also a continuous production.

2. Similarly, the production and processing system of a fuel industry is also purely based on,demand forecast. Crude oil and other raw sources are processed continuously on a largescale to yield usable form of fuel and compensate global energy demand.


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The features of a continuous production system are depicted below.

The characteristics of a continuous production system are listed as follows:

1. The flow of production is continuous. It is not intermittent.2. The products are standardized.3. The products are produced on predetermined quality standards.4. The products are produced in anticipation of demand.5. Standardized routing sheets and schedules are prepared.

The types of continuous production system include:

1. Mass production flows, and2. Process production flows


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Question 1:

C. There is guest house in Mumbai suburb and it has a capacity of 20 rooms where 3 can beaccommodated in each room and other basic residing facilities. Currently the overalloccupancy is low. You are to provide capacity plan for the owner.

1. Increase more number of beds by reducing facilities like cupboard to jointwith bed.

2. Common T.V. room rather than individual room.3. Flexible table which can be offered to the customer on bed itself for dinning.4. Optimum Utilization of every square feet of room.5. Experience staff with crowd handling experience.6. Common bathroom and refreshment.7. If possible converting room into dormitory in order to increase capacity of

beds.8. For forecasting qualitative measures such as executive opinions, delphi

method, use of subjective opinions of experts.9. Decision Tree can be used to decide the best alternatives.10. Considering competitors facility and taking decision accordingly.11. Identifying, Developing and considering the alternatives of the capacity need

would be applied.


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Question 2:

a. Draw Process Flow Analysis diagram for buying movie tickets in multiplex complexconsisting of 4 cinema halls.


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DECISION TREE

TICKETS

BOOKING

BUY ONE TICKET GET 1 TICKET

FREE ONLY FOR VODAFONE

CUSTOMERS

weekda s

Vodafonetuesday

weekends

Morning show

Evening show

Buy ticket at half rate9:00 am to 12:00pm

Tickets are available at

normal rate

Morningshow

Evening show

Buy tickets at normal

rate

Buy tickets at double

rate

ACTIONTAKEN

TIMINGS


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operator

Enter id andpassword 1.1

loginOperator details

1.2

Movie

updation

1.3

ticketing

Movie

details

Ticket

details

Multiplex

Manage

Systemoperator

Customer

operator

Movie de tails

No. of seats

Ticketcollection

Report

Movie info. Ticket info.


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Movie Updating Process


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ONLINE BOOKING


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Question 2:

b. Why business have moved from individual Functions execution towards ProcessEngineering. Illustrate with examples

End -to- end business processes : Processes that totally fulfill a defined external customerneed.Business process reengineering : The philosophy that recommends the redesign of processesto fulfill defined external customer needs.

Different characteristics of operations processes: Volume : repeatability, systemization. Variety : Standardization, flexible Variation : variation in demand Visibility : process exposure

Front office: The high visibility part of an operationBack office : The low visibility part of an operation

Activities that apply to all types of operation: Understanding the operations strategic objectives Developing an operations strategy for the organization Designing an operations strategy for the organization Planning and controlling the operation Improving the performance of the operation The broad responsibilities of operations management

Why is operations management important Reduce costs Increase revenue Reduce the amount of investment Provide the basis for future innovation

More profitability!

Operations management: Operations strategy

Improvement Planning and control Design

Operations strategy: The operations strategic objectives The operations competitive role and position Improvement Operations strategy Elimination of waste. Involvement of staff in the operation. The drive for continuous improvement.


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Four stages of operations contribution:1. Internal neutrality (avoiding making mistakes)2. External neutrality (trying to implement best practice) 3. Internally supportive (providing a credible strategy)

4. Externally supportive (innovative, creative and proactive, one step ahead competitors)

Five basic performance objectives: (can be added value) Quality Speed (time between requesting and receiving) Dependability Flexibility Cost (advantage)

The seven forms of waste:

Over-production Waiting time Transport Process Inventory Motion Defectives

The 5Ss:

1. Sort: Eliminate what is not needed and keep what is needed.2. Straighten: Position things in such a way that they can be easily reached whenever

they are needed.3. Shine: Keep things clean and tidy; no refuse or dirt in the work area4. Standardize: Maintain cleanliness and order perpetual neatness5. Sustain: Develop a commitment and pride in keeping to standards.


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Question 2:

c. What are the factors (in bullets) that you consider for location for the followingbusinesses:-

1. Starbucks coffee outlets2. Gold & Diamond jewellery manufacturing3. Ford cars from manufacturing factory to distribution outlets

Starbucks coffee outlets

Cost of rent. Corner of a busy street The interior, obviously the space has to be a suitable enough place in

which one can conduct business without sacrificing quality. The next factor that must be considered is the exterior. Is it neat and

clean? Does the building need a paint job? Are the windows polished?Would your signs be visible from the road?

Two-thirds of consumers, and three in four 16-24-year-olds, buy coffeeand other hot drinks.

Cost of transportation should be cheap. Inventory and stock should be sufficient. As starbucks is premium coffee chain and no price war with CCD and

barista, location should be targeting upper class. A large seating area, a kitchen, space for internet access and a

performance area. Legal lease/rent agreement and clear title commercial property Permission from local authority. Food standards and legal food authorities should be verified The publication covers key areas on serving food including

contamination, cleaning, chilling, cooking, management and keeping afood diary

Job and business licenses should be available on that property Good physical labour is available in surroundings. Different area wont be any issues with competition .


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space and equipment to accommodate 28 employees. With the chase aggregate plan,

however, the company needs space and equipment for 48 people.

Hybrid Strategies

Build-up inventory ahead of rising demand and use backorders to level extreme peaks Layoff or furlough workers during lulls Subcontract production or hire temporary workers to cover short-term peaks Reassign workers to preventive maintenance during lulls Any combination of options is possible. Because of the number of options you can

combine in a hybrid plan, you need to evaluate your companys current situation andlimit the options you choose from.


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b. What are the advantages & disadvantages of using ERP?

Advantages of ERP (Enterprise Resource Planning) System:

1. Complete visibility into all the important processes across various departments of anorganization (especially for senior management personnel).

2. Automatic and coherent work-flow from one department / function to another to ensuresmooth transition/ completion of processes.

3. A unified and single reporting system to analyze the statistics/ numbers/ status etc in real-time, across all the functions / departments.

4. Since same software is used across all departments this can avoid individualdepartments having to buy and maintain their own software systems.

5. Certain ERP vendors can extend their ERP systems to provide Business Intelligence functionalities as well.

6. Advanced e-commerce integration is possible with ERP systems that can handle web-based order tracking/ processing.

7. There are various modules in an ERP system like Finance/ Accounts, Human ResourceManagement, Manufacturing, Marketing / Sales, Supply Chain / Warehouse Management,CRM, Project Management, etc.

8. Since ERP is a modular software system, its possible to implement either a few modules(or) many modules based on the requirements of an organization. If more modulesimplemented, the integration between various departments might be better.

9. Single Database is implemented on the back-end to store all the information required bythe ERP system and that enables centralized storage / back-up of all enterprise data.

10. ERP systems are more secure as centralized security policies can be applied to them andall the transactions happening via the ERP systems can be tracked.

11. ERP systems provide visibility and hence enable better/ faster collaboration across all

the departments.

12. It is possible to integrate other systems (like bar-code reader, for example) to the ERPsystem through an API (Application Programing Interface).

13. ERP systems make it easier for order tracking, inventory tracking, revenue tracking, salesforecasting and related activities.

14. ERP systems are a boon for managing globally dispersed enterprise companies.


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Disadvantages of ERP (Enterprise Resource Planning) Systems:

1. The cost of ERP Software, planning, customization, configuration, testing,implementation, etc is too high.

2. ERP deployments take 1-3 years to get completed and fully functional.

3. Too little customization may not integrate the ERP system with the business process &too much customization may slow down the project and make it difficult to upgrade.

4. The cost savings/ payback may not be realized immediately after the ERP implementation& it is quite difficult to measure the same.

5. The participation of users is very important for successful implementation of ERPprojects So, exhaustive user training and simple user interface might be critical. But ERPsystems are generally difficult to use (and learn).

6. There maybe additional indirect costs like new IT infrastructure, upgrading the WANlinks, etc.

7. Migration of existing data to the new ERP systems is always difficult to achieve as withintegrating ERP systems with other stand alone software systems.

8. ERP implementations are difficult to achieve in decentralized organizations withdisparate business processes and systems.

9. Once an ERP systems is implemented it becomes asingle vendor lock-in

for furtherupgrades, customizations etc.


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c. Explain terms like Reorder, safety stock, EoQ, Break even Analysis with examples

Reorder level: Reorder level (or reorder point) is the inventory level at which a companywould place a new order or start a new manufacturing run.

Reorder Level = Lead Time in Days Daily Average Usage

Lead time is the time it takes the supplier or the manufacturing process to provide the orderedunits.

Daily average usage is the number of units used each day.

If a business is holding a safety stock to act as buffer if daily usage accelerates the reorderlevel would increase by the level of safety stock.

Reorder Level = Lead Time in Days Daily Average Usage + Safety Stock

Example: ABC Ltd. is a retailer of footwear. It sells 500 units of one of a famous branddaily. Its supplier takes a week to deliver the order.

The inventory manager should place an order before the inventories drop below 3,500 units(500 units of daily usage multiplied with 7 days of lead time) in order to avoid a stock-out.

Safety Stock: Safety stock is the stock held by a company in excess of its requirement forthe lead time. Companies hold safety stock to guard against stock out. Safety stock iscalculated using the following formula:

Safety Stock = (Maximum Daily Usage Average Daily Usage) Lead Time

Example:

ABC Ltd. is engaged in production of tires. It purchases rims from DEL Ltd. an externalsupplier. DEL Ltd. takes 10 days in manufacturing and delivering an order. ABC's requires10,000 units of rims. Its ordering cost is $1,000 per order and its carrying costs are $3 perunit per year. The maximum usage per day could be 50 per day. Calculate economic orderquantity, reorder level and safety stock.

Solution

EOQ = SQRT (2 Annual Demand Ordering Cost Per Unit / Carrying Cost Per Unit)

Maximum daily usage is 50 units and average daily usage is 27.4 (10,000 annual demand 365 days).

Safety Stock = (50-27.4) 10 = 226 units.

Reorder Level = Safety Stock + Average Daily Usage Lead Time

Reorder Level = 226 units + 27.4 units 10 = 500 units.


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Break Even Analysis: The break-even point is the point at which revenues equalexpenses. In investing, the break-even point is the point at which gains equal losses. Thebasic idea behind break-even point is to calculate the point at which revenues begin to exceedcosts.

The first step is to separate a company's costs in to those that are variable and those that arefixed. Fixed costs are costs that do not change with the quantity of output. Examples of Fixedcost include rent, insurance premiums, or loan payments. Variable costs are costs that changewith the quantity of output. They are zero when production is zero. Examples of commonvariable costs include labour directly involved in a company's manufacturing process and rawmaterials.

Setting a Prices critical to your breakeven analysis; you can't calculate likely revenues if youdon't know what the unit price will be. Unit price refers to the amount you plan to charge

customers to buy a single unit of your product. Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs)

This calculation will let you know how many units of a product you'll need to sell to break even. Once you've reached that point, you've recovered all costs associated with producingyour product (both variable and fixed).

Above the breakeven point, every additional unit sold increases profit by the amount of theunit contribution margin, which is defined as the amount each unit contributes to covering

fixed costs and increasing profits. As an equation, this is defined as:

Unit Contribution Margin = Sales Price - Variable Costs


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d. Why seasonal variations to be considered in Forecasting? A seasonal pattern is any pattern that regularly repeats itself and is of a constant

length. Such seasonality exists when the variable we are trying to forecast is inuenced

by seasonal factors such as the quarter or month of the year or day of the week. Examples are a retail operation with high sales during November and December

or a restaurant with peak sales on Fridays and Saturdays. One factor that can signicant ly impact sales is the weather. In the past, there was little companies could do to plan for weather problems.

However, new businesses have sprung up to help companies use weather data topredict consumer behavior and manage weather risk. It could be as simple aspredicting a hot summer, a cold winter, or an early spring. This type of information can help companies move the right inventories to areas where

consumers will be more likely to buy them.Eg: Paralytics Inc. is a company that helps businesses use weather data to make their business

plans. Its clients include Gillettes Duracell Batteries, Home Depot, and Wal -Mart. In oneexample, Paralytics helped Duracell move a large number of batteries to areas expecting to behit by hurricanes during the hurricane season. Although using weather data does not replacetraditional forecasting methods, it is one additional tool that can help companies improvetheir forecasting and planning. Forecasting demand at ski resorts such as Snowshoe, HolidayValley, and Seven Springs can be very challenging because data are highly seasonal. Multipleseasonal factors need to be considered, including the month of the year, day of the week, and

holidays and long weekends, in addition to considering the weather forecast. Historical dataare used to develop the indexes for these seasons. In addition, the ski industry has beenexperiencing an upward trend over the past years, particularly with the growth of snowboarding. A simple way to make forecasts in this industry is to forecast the trend andthen make adjustments based on developed seasonal indexes.

om assignment 2-roll no 64

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