Operations Management (MB241) : January 2004

Section B : Problems/ Caselet (50 Marks)
• This section consists of questions with serial number 1 – 5.
• Answer all questions.
• Marks are indicated against each question.
• Detailed workings/ explanations should form part of your answer.
• Do not spend more than 110 - 120 minutes on Section B.
1. Fine Build Homes Ltd. purchases glass doors from a nearby dealer for Rs.1,000 per unit. It expects to use about
8,000 units during the coming year. The company estimates the ordering cost as Rs.50 per order and Rs.10 per unit
for carrying and storage costs. The dealer has promised Fine Build Homes Ltd. with immediate delivery of any
reasonable quantity.
You are required to:
a. Find the most economical quantity for Fine Build Homes Ltd. to order.
b. The number of orders per year that should be placed.
c. The total annual cost associated with ordering, carrying and purchasing the EOQ amount.
(4 + 1 + 2 = 7 marks) <>
2. There are five jobs which have been assigned letters A, B, C, D and E in the order they arrived on the shop floor
i.e., job A arrived first, job B second and so on. The time remaining (number of days until due) and work
remaining (number of days) are shown in the following table:
You are required to sequence the given jobs by using the following priority rules:
a. First in, first serve.
b. Earliest due date.
c. Shortest processing time.
d. Longest processing time.
e. Critical ratio.
(1 + 1 + 1 + 1 + 2 = 6 marks) <>
3. B. C. Roy and Sons have recently bagged a contract from the Railways for construction of a tunnel. They have
decided to use Networking technique to schedule the various activities so that the project is completed on time.
Following are the activities, times and sequences required.
You are required to:
a. Draw the network diagram.
b. Determine the critical path.
(5 + 7 = 12 marks) <>
Job No. of days until due No. of days of work remaining
A 7 6
B 4 5
C 8 7
D 10 3
E 2 2
Activity Immediate Predecessor Time (Weeks)
A Nil 7
B A 2
C A 8
D C 3
E B, D 5
F D 4
G E, F 8
Caselet
Read the caselet carefully and answer the questions below:
4. Comment on the circumstances that led GM to adopt CAD/CAM/CAE solutions.
(8 marks) <>
5. What do you think were the various physical benefits that might have accrued to GM after adopting
CAD/CAM/CAE software? Briefly describe them.
(8 marks) <>
6. What other initiatives could have been taken by GM to overcome the manufacturing inefficiencies, than adopting
only CAD/CAM/CAE software? Enumerate.
(9 marks) <>
General Motors: The CAD/CAM/CAE Journey
Introduction
General Motors Corp., the world’s largest vehicle manufacturer, employs 342,000 people globally in its core
automotive business and subsidiaries. Founded in 1908, GM has been the global automotive sales leader since 1931.
GM today has manufacturing operations in 32 countries and its vehicles are sold in more than 190 countries. In 2002,
GM sold more than 8.6 million cars and trucks, nearly 15 percent of the global vehicle market. GM’s global
headquarters is at the GM Renaissance Center in Detroit, Michigan.
GM’s popular cars and trucks include Chevrolet, Pontiac, Buick, Oldsmobile, Cadillac, GMC, Saturn, Hummer, Saab,
Opel, Vauxhall and Holden. The company markets its parts and accessories through GM Service Parts Operations under
the brands of GM, GM Goodwrench and ACDelco. GM also has its presence in vehicle communications and
information services segments through OnStar. OnStar is an industry leader offering services like personalized
assistance; hands-free, voice-activated access to cellular phones and Internet-based information. These services are
available on many company’s cars and trucks.
Hughes Electronics Corp., GM Locomotive Group and Allison Transmission Division are GM’s major subsidiaries.
However, General Motors Corp. and its subsidiary Hughes Electronics Corp. announced on April 9, 2003, that GM
intended to split off Hughes, and simultaneously sell GM’s 19.9 percent economic interest in Hughes to News Corp. To
facilitate growth across the world, GM has strategic alliances with Fuji Heavy Industries Ltd., Suzuki Motor Corp., Fiat
AutoSpA and Isuzu Motors Ltd. It also has vehicle ventures with Toyota Motor Corp. and Renault SA, and technical
collaborations with Toyota Motor Corp. and Honda Motor Co. GM has managed to build a huge loyal customer base
over the decades and has gone from strength to strength, retaining its world leader crown.
Manufacturing Process at GM
The first cars manufactured were constructed individually and a single person assembled all the parts together.
However, with the advent of the conveyor-belt based assembly line technique in 1913-14 (at a Ford Plant), car
manufacturing became much more efficient. Under this technique, a car moved along a belt as it was being built.
Instead of all workers working on a single car, they added parts to the car as it moved along the belt. This made the
manufacturing process faster and cheaper.
GM also adopted the assembly line technique. The manufacturing process was categorized into powertrain, metal
fabrication and assembly. Powertrain, also called drivetrain, describes all of a vehicle’s components that produce power
and transmit power to the wheels – the engine, transmission, transfer case, driveshafts, axle shafts and wheel hubs.
Manufacturing Inefficiencies
GM’s cost of production in terms of time and labour was more than any other automaker in the world. GM reportedly
used outdated procedures in many of its production processes. For instance, an assembly plant in Canada followed a
manual, repetitive procedure for loading tyres on the wheels. The probability of errors was very high in this procedure.
If an error occurred, the entire assembly line was stopped for a few minutes to load the correct tyres. This wasted time
was very invaluable as two to three cars could be built in that time since the assembly cycle time was 80 seconds per
vehicle.
Moreover, there was no coordination between the design, engineering and manufacturing functions of the company.
These functions were spread across the company’s five automobile divisions. The company felt that its production
process was extremely long. Designers and engineers seemed to be duplicating their efforts as a vehicle moved from the
concept to the production stage. Due to the long and complex process, the company was not able to make modifications
at a later stage. The lack of coordination between the various manufacturing functions resulted in long vehicle
development process times and assembly times and slow response to market requirements. Toyota’s time-to-market was
twice as fast as that of GM throughout the 1980s and early 1990s. Ford Motor Co., which was half of GM in size, was
believed to be much more productive. Thus, despite being the world’s largest car manufacturer, GM earned the dubious
reputation of being one of the most inefficient automakers.
To overcome these problems and to survive in the intensely competitive global automobile industry, GM realized it
would have to replace its manual, paper-based design process with computerized electronic systems. Jack Smith, who
took over as the CEO in the early 1990s, initiated a restructuring program to increase the coordination between the
various manufacturing functions.
Adopting CAD/CAM/CAE
In 1996, as part of the restructuring program, GM entered into an agreement with Unigraphics Solutions to use its
CAD/CAM/CAE software, Unigraphics. In 1999, GM signed a three-year contract with the company as a follow-up to
the 1996 agreement. The agreement included the endorsement of Unigraphics’ Internet-centric Product Data
Management (PDM) application, iMAN. The new US$139 million software and services contract was believed to be the
world’s largest collaborative engineering network. The new software enabled GM’s worldwide product teams to
simultaneously access a lot of digital vehicle information. The global CAD/CAM system was used to maintain
consistent processes and integrate various systems.
GM used the new system to model large, complex assemblies as parametrically controlled systems. In a parametrically
controlled system, a single modification in a component is automatically propagated throughout the assembly. In the
Unigraphics software suite, this functionality was enabled with the help of the UGWAVE technology. UGWAVE
allowed GM to expand its CAD/CAM/CAE functionality and reduce vehicle development time.
In September 1999, GM completed upgrading its CAD/CAM and PDM software in all its 9,200 engineering
workstations. Unigraphics allowed sharing and updating of data and files to all the design teams, simultaneously around
the world. This made GM one of the few automakers who synchronized files in ‘real’ time on vehicle development
process.
GM started deriving many physical benefits from its modern state-of-the-art manufacturing practices. But what the
company seemed to be most happy about were the positive reports from industry observers. Though it had a long way to
go before it could shed the tag of being of one of the most inefficient automakers, the CAD/CAM initiatives seemed to
have laid a strong foundation for GM’s journey towards manufacturing excellence.
END OF SECTION B
Section C : Applied Theory (20 Marks)
• This section consists of questions with serial number 7 - 8.
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 -30 minutes on Section C.
7. A manufacturing organization is not satisfied with the traditional Supply Chain Management model, which has
focused on integrating the organization’s immediate suppliers, the manufacturing/processing within the
organization and the organization’s immediate customers. It has decided to go beyond, to look at the customer’s
customer and the supplier’s supplier. For this purpose, it has made the choice of implementing Electronic Supply
Chain Management (ESCM), the latest buzzword.
What is Electronic Supply Chain Management (ESCM)? What are the possible advantages that will be derived by
the organization in implementing Electronic Supply Chain Management (ESCM)?
(10 marks) <>
8. An automobile manufacturing company wants to adopt JIT manufacturing to eliminate wastages in its production
processes, since it is losing out on valuable time-to-market compared to its competitors.
As Operations Manager of the company, you have been asked to identify the wastages using JIT principles. Lay
down these wastages and briefly describe them.
Suggested Answers
Operations Management (MB241) : January 2004
(10 marks) <>
END OF SECTION C
END OF QUESTION PAPER