Operations Management (MB241) : April 2006

Operations Management (MB241) : April 2006

Section A : Basic Concepts (30 Marks)
• This section consists of questions with serial number 1 - 30.
• Answer all questions.
• Each question carries one mark.
• Maximum time for answering Section A is 30 Minutes.
1. It enables firms to develop and sustain a clear linkage between the company’s overall market and
manufacturing strategies and the contribution and potential of their suppliers.
(a) Enterprise Resource Planning (ERP)
(b) Materials Requirement Planning (MRP)
(c) Supply Chain Management (SCM)
(d) Business Process Engineering (BPR)
(e) Master Production Schedule (MPS).
< Answer >
2. Which of the following belongs to the causal models of forecasting techniques?
(a) Historical Analogy (b) Market Research
(c) Exponential smoothing (d) Weighted moving average
(e) Regression analysis.
< Answer >
3. Which among the following belongs to the function of controlling?
(a) Establish provisions of union contracts
(b) Encourage pride in performing as expected
(c) Establish personnel policies
(d) Establish employment contracts
(e) Issue job assignments and instructions.
< Answer >
4. Which of the following does not constitute an assumptions made in linear programming models?
(a) Probability (b) Proportionality (c) Additivity
(d) Divisibility (e) Certainty.
< Answer >
5. Which of the following does not constitute the elements of operations strategy?
(a) Designing the production system
(b) Product/Service design and development
(c) Technology selection and process development
(d) Facility planning
(e) Marketing.
< Answer >
6. For a product ‘Xena’, selling price, variable cost and fixed cost are Rs.45, Rs.40 and Rs.1,00,000
respectively. At the sales of Rs.11,25,000, the profit is
(a) Rs.25,000 (b) Rs.30,000 (c) Rs.40,000
(d) Rs.45,000 (e) Rs.50,000.
< Answer >
7. Which of the following belong to the factors affecting the location decisions?
I. Site Cost.
II. Availability of raw materials.
III. Recreational facilities.
IV. Market proximity.
(a) (I), (II) and (III) above (b) (I), (II) and (IV) above
(c) (I), (III) and (IV) above (d) (II), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.
< Answer >
8. A firm achieved sales of 1000 units in the month of May when the forecast was for 900 units. The
estimated sales for the month of June for a smoothing constant of 0.1, are
(a) 850 units (b) 870 units (c) 890 units (d) 910 units (e) 930 units.
< Answer >
2
9. LMN limited produces 50,000 units of Lamda. Fixed cost is Rs.50,000, Variable cost per unit Rs.5.
Selling price per unit is Rs.10. Then Break Even point occurs at
(a) 5,000 units (b) 10,000 units (c) 15,000 units
(d) 20,000 units (e) 25,000 units.
< Answer >
10. If the efficiency of the balance of an assembly line is 80%, the sum of the task times is 80 seconds and
the cycle time is 20 seconds. Then the actual number of workstations are
(a) 2 (b) 4 (c) 5 (d) 6 (e) 8.
< Answer >
11. Which of the following is a reason for holding raw materials as inventory?
(a) Larger shipments can result in reduced incoming freight costs and material handling cost
(b) Production of products as and when the customers demand can be uneconomical
(c) Backlogs in customer orders may not always be allowed
(d) Maintaining them result in higher levels of production and lower production costs
(e) Products can be shown to customers.
< Answer >
12. Identify from the following, the type of facility layout, in which, all the similar equipment or functions
are grouped together and the workers are highly skilled.
(a) Product Layout
(b) Process Layout
(c) Grouping Technology Layout
(d) Fixed Position Layout
(e) Hybrid Layout.
< Answer >
13. A large production organization has different departments and each of these departments’ processes
require different types of special equipment. Which of the following maintenance practices would be
most suitable for this company?
(a) Centralized maintenance (b) Decentralized maintenance
(c) Contract maintenance (d) Group maintenance
(e) Predictive maintenance.
< Answer >
14. Which of the following does not constitute a monetary benefit motivation of worker?
(a) Piece rate system (b) Standard hour wage system
(c) Gain sharing system (d) Title
(e) Bonus system.
< Answer >
15. Which of the following does not constitute uses of Predetermined Motion Time Studies (PMTS)?
(a) Developing Standards (b) Control Marking
(c) Benchmarking (d) Performance Evaluation
(e) Motivating employees.
< Answer >
16. Which of the following is a system output for Materials Requirement Planning?
(a) Master Production Schedule (b) Change Report
(c) Bill of Materials File (d) Inventory Records File
(e) Rough-Cut Capacity Plan.
< Answer >
17. Which of the following departments is not included in the raw material handling function?
(a) Warehouses (b) Shipping (c) Maintenance
(d) Production (e) Purchasing.
< Answer >
18. Which of the following is not a feature of Just-in-Time (JIT) purchasing system?
(a) Administrative efficiency
(b) Improved quality
(c) More responsiveness to customer needs
(d) Production improvements
(e) Increased capital requirements.
< Answer >
19. The documents that empower the purchase department to procure a specific quantity of inventory items
required within a specific period are known as
(a) Planned orders (b) Order releases (c) Primary reports
(d) Performance reports (e) Exception reports.
< Answer >
3
20. The robots which are capable of perceiving the environmental conditions of the workplace through
tactile or visual perception or both and can make necessary and suitable decisions by using on-board are
known as
(a) Numerical control robots (b) Intelligent robots
(c) Playback robots (d) Fixed sequence robots
(e) Variable-Sequence robots.
< Answer >
21. Which of the following does not constitute business drivers in supply chain performance?
(a) Inventory (b) Transportation (c) Facilities
(d) Information (e) Production.
< Answer >
22. The sequence of operations and processes to be followed in order to produce a particular product is
known as
(a) Loading (b) Routing (c) Dispatching
(d) Producing (e) Integrating.
< Answer >
23. The system which uses three types of cards to initiate material transactions is known as
(a) Kanban System (b) JIT System (c) ABC analysis
(d) FSN Analysis (e) VED Analysis.
< Answer >
24. The approach in which employees are given some freedom in choosing their start time but they must
work each day for eight hours is known as
(a) Flextime (b) Flex tour (c) Staggered times
(d) Compressed time (e) Past time.
< Answer >
25. The minimum amount of time in which an activity can be completed is known as
(a) Pessimistic time (b) Most likely time
(c) Expected time (d) Optimistic time (e) Critical time.
< Answer >
26. Which of the following belongs to the primary applications of work sampling?
(a) Developing Standards (b) Control and Auditing
(c) Time standards (d) Bench marking
(e) Performance evaluation.
< Answer >
27. For an activity Optimistic Time, Pessimistic Time and Most Likely Time are 6 days, 12 days and 9 days
respectively. Then the expected time for the activity is
(a) 6 days (b) 7 days (c) 8 days (d) 9 days (e) 10 days.
< Answer >
28. The aspect that is related to the reputation of the firm that manufactures the product is known as
(a) Durability (b) Perceived Quality (c) Conformance
(d) Serviceability (c) Aesthetics.
< Answer >
29. Which of the following systems allows both sidetracking and backtracking in the product flow route?
(a) Discrete Unit Manufacturing
(b) Process Manufacturing
(c) Delivery of Services using a Product Focussed Production System
(d) Process Focussed Design
(e) Product Focussed Design.
< Answer >
30. Which of the following techniques of work measurement analyzes the work by taking a number of
random observations to see the relative frequency with which various elemental activities take place?
(a) Historical Analysis (b) Work sampling
(c) Pre-determined motion times (d) Standard data
(e) Time study.
< Answer >
END OF SECTION A
4
Section B : Problems/Caselet (50 Marks)
• This section consists of questions with serial number 1 – 7.
• Answer all questions.
• Marks are indicated against each question.
• Detailed workings/explanation should form part of your answer.
• Do not spend more than 110 - 120 minutes on Section B.
1. Jyothi Works Limited has three manufacturing facilities located at Aurangabad, Nagpur and Nasik. Its warehouses
are at Pune, Ahmednagar and Solapur. The following table shows the transportation cost per unit in rupees.
W1(Pune) W2(Ahmednagar) W3(Solapur) Supply
F1(Aurangabad) 12 8 9 200
F2(Nagpur) 16 13 5 150
F3(Nasik) 8 15 13 175
Demand 250 175 100 525
You are required to compute the transportation cost using Vogel’s Approximation Method.
(10 marks) < Answer >
2. Tarun automobiles specializes in repairing imported vehicles. Usually the vehicles come for general service,
specific repair works and small repair works. Currently there are 5 vehicles in the garage. The order of arrival of
vehicles is Chevy, Hummer, Land Rover, Pajero and Kia. The servicing time and due time are given below in the
table.
Vehicle Servicing time (hours) Due time (hours hence)
Chevy (C) 4 6
Hummer (H) 5 7
Land Rover (L) 3 4
Pajero (P) 2 3
Kia (K) 1 2
You are required to develop the order in which these vehicles are to be serviced by using the following
dispatching rules:
• Earliest Due Date
• Longest Process Time
• Shortest Processing Time
• First in First Serve
• Slack Time Remaining
(10 marks) < Answer >
3. The following information represents the number of credit cards issued and the number of salesman employed by
Bhavya Agencies.
Month 1 2 3 4 5 6 7 8
Number of salesmen employed 3 4 6 9 7 5 8 5
Number of credit card issues 150 165 220 275 255 215 245 200
You are required to find the number of salesman to achieve 300 credit card issues.
(5 marks) < Answer >
4. Satish Technologies manufactures mobile chargers and supplies them to large number mobile phone
manufacturers. The quality department daily takes 70 units for quality checks. They are divided into 10 lots of
sample size 7 each. The means of the output of the chargers of ten samples are given below.
Sample 1 2 3 4 5 6 7 8 9 10
R 5 4 2 3 6 8 9 6 3 1
5
X 50 55 48 49 51 52 53.5 51 47 56
The values A2, D3 and D4 are 0.42, 0.08 and 1.92 respectively.
You are required to check whether the process is under control.
(5 marks) < Answer >
Caselet
Read the caselet carefully and answer the following questions:
5. Which would have been a better option for Malhotra – opening the fast food section at a new location or at the
same location as given in this case? Justify your answer.
(7 marks) < Answer >
6. Which operational factor plays major role in establishing and running a restaurant?
(6 marks) < Answer >
7. Should the selection of the supplier be totally based on the least price offered? Justify your answer.
(7 marks) < Answer >
Mr. Raj Malhotra (Malhotra) took over a small family-owned restaurant and fast food center from his father. It was
situated at one of the key shopping areas in Bangalore. The restaurant was opened way back in 1960 and was one of the
landmarks in the city. Malhotra took over the operations from his father in 2001. His father was instrumental in
improving and maintaining the position of the restaurant in the city. It was considered as a place where people could get
good food to eat at a reasonable price. As the restaurant was old, it had a nostalgic appeal to it.
When Malhotra took over the restaurant, he knew that the nostalgic factor and old world charm of the place might
attract few people but he also had to find ways to attract new customers. One option was to offer customers a wider
choice in the menu. Thus, he included fast food item like burgers, pizzas etc., in the menu. But he didn't want the
nostalgia associated with the restaurant be lost with these new additions. So he decided to separate the two and
expanded at the same location, a new fast food section. In this section, he adopted the self-service approach to minimize
the cost of operations. As the people who came to the fast food section were very cost conscious, the food had to be
priced low. Hence, it was necessary to keep the cost of operations low. Around fifty percent of the people who come to
the fast food section asked for parcels. Out of the remaining customers, most of them ate quickly and leave and only a
few sat there and had meals. But it was difficult to determine the number of people eating at a particular time. This
made it difficult to decide on its capacity. As the fast food section was an expansion of the old restaurant, the proprietor
did not have much space. Therefore, it was difficult for him to decide on the number of chairs and tables to be kept. He
did not want the customers eating there to face any problems in seating arrangements.
Malhotra was also aware that in any service organization, the customers perception of the service was important.
Satisfied customers were the best form of advertising that a service organization could count on. So he ensured that the
ingredients they used in the preparation of food were fresh and of good quality. The restaurant used to procure various
food items from one supplier. However, Malhotra felt that overdependence on one supplier was not good for the
business in the long run. Accordingly, he consulted his father and made him aware of the problems that could be faced
if he used a single supplier. His father told him that changing suppliers was not a good idea. In the business, the
relationship between and commitment of buyer and supplier is essential for the growth and survival of the business. But
Malhotra was not convinced. Therefore, he decided to make the change and started the search for new suppliers who
could give him better value. Some suppliers were willing to supply the required items at a lower price than the present
supplier.
Once the supplies started coming in from the new suppliers, there were occasional problem with the quality of items
supplied and delivery dates. Malhotra was unhappy with new suppliers and decided to go back to the previous suppliers.
END OF SECTION B
Section C : Applied Theory (20 Marks)
• This section consists of questions with serial number 8 - 9.
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 -30 minutes on section C.
8. Radiant Automobiles has hired a new operations manager in order to prop up its pet project, a new car for Indian
6
consumers that costs less than Rs.1.5 lakh. Discuss the two major skills the operations manager should possess to
perform these tasks competently.
(10 marks) < Answer >
9. Expert systems are becoming more sophisticated and powerful and finding new application areas in manufacturing
and services. Explain how expert systems can be used in both manufacturing and service systems.
(10 marks) < Answer >
END OF SECTION C
END OF QUESTION PAPER
7
Suggested Answers
Operations Management (MB241) : April 2006
Section A : Basic Concepts
1. Answer : (c)
Reason: As the market strategy states the company’s goals, objectives, tactics and the barriers to
achieve market success, the SCM strategy states the appropriate elements required for the
company to develop and sustain a supply chain adequate for supporting the company’s
marketing and manufacturing strategies.
< TOP >
2. Answer : (e)
Reason: Historical Analogy and market research belong to qualitative models exponential smoothing
and weighted moving average belongs to time series methods. Regression analysis belongs to
causal model.
< TOP >
3. Answer : (b)
Reason: a, c, d, and e belong to the functions of Directing, whereas encourage pride in performing as
expected is a function of controlling.
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4. Answer : (a)
Reason: The assumptions made in linear programming models are as follows Proportionality,
Additivity, Divisibility and Certainty.
< TOP >
5. Answer : (e)
Reason: a, b, c and d are the elements of operations strategy.
< TOP >
6. Answer : (a)
Reason: Sales = 11,25,000
In units =
11, 25, 000 25, 000
45
=
Sales 11,25,000
Variable cost
(25,000 × 40) 10,00,000
Contribution 1,25,000
Fixed cost 1,00,000
Profit 25,000
< TOP >
7. Answer : (b)
Reason: Recreational facilities is not a factor. I, II and III are the factors affecting locational decision.
< TOP >
8. Answer : (d)
Reason: FJune = α DMay + (1 – α) FMay
= 0.1 × 1000 + (1 – 0.1)900
= 100 + 810 = 910 units.
< TOP >
9. Answer : (b)
Reason: Contribution per unit = Selling price per unit – Variable cost per unit
= 10 – 5 = Rs.5
Break – Even – Point BEP = 5
50,000
Contribution perunit
FixedCost =
= 10,000 units.
< TOP >
10. Answer : (c)
Reason: Efficiency =
T
Na ×C
0.80=
80
Na × 20
Na =
80
5Work stations
0.80 20
=
× .
< TOP >
8
11. Answer : (a)
Reason: All the b, c, d, and e are the reasons for holding finished goods as inventory,
< TOP >
12. Answer : (b)
Reason: Product Layout, also called Flow-shop Layout, is designed to accommodate only a few, mostly
one or two, standardized products and process designs.
Process Layout, also called Functional Layout or Job-shop Layout, is the type of facility
layout, in which, all the similar equipment or functions are grouped together and the workers
are highly skilled.
Grouping Technology Layout, also called Cellular Manufacturing Layout, is the type of facility
layout, in which, dissimilar machines are grouped into cells, and the cells function somewhat
like a Product Layout island dedicated to a limited range of products within a larger Job-shop
or Process Layout.
Fixed Position Layout is used when the product is bulky, large, heavy or fragile and remains
stationary at one location.
Hybrid Layout is a combination of different types of layouts. For example, a plant may have
basically adopted a Process Layout, but one section of it could be using a Product Layout or
Assembly Line.
< TOP >
13. Answer : (b)
Reason: As each of the departments requires different process equipment, there is no scale effect or
synergy of maintaining all departments from a centralized place. It is better if the system is
decentralized i.e., each of these departments would have its own maintenance division.
< TOP >
14. Answer : (d)
Reason: Title is a non-monetary benefit whereas others are monetary benefits.
< TOP >
15. Answer : (e)
Reason: Motivating employees is not a use of PMTS. Rest of the alternatives are uses of PMTS.
< TOP >
16. Answer : (b)
Reason: Many MRP systems yield the following five types of information as output:
1. Schedule of Planned Order Releases
2. Authorized Order Releases
3. Change Reports
4. Control Reports
5. Planning Reports
Change Reports are originated to revise the Purchase Orders, whenever the Orders are not
achieved in time.
Master Production Schedule (MPS) is a schedule that shows how many products must be
produced according to customer orders and demand forecasts on a weekly basis. It is a more
detailed level of planning that disaggregates the product groups into individual products and
indicates when they will be produced.
Bills of Material File consists of complete list of all end products, the structure(assemblies,
subassemblies, parts and raw materials) of products, and the quantity of each item required for
each higher-level item in the product hierarchy.
Inventory Records File is a computerized file with a complete record of each material held in
inventory. It contains all the information on inventory levels – levels at the beginning of the
planning horizon and the details of the expected arrivals of inventory during the period.
Rough-Cut Capacity Plan examines feasibility of Master Production Schedule (MPS) in terms
of capacity. It involves breakdown of an organization’s product mix and then consolidating the
capacity requirements of these more detailed plans.
< TOP >
17. Answer : (c)
Reason: Along with the above departments Receiving, Finished goods inventory and distribution
centres are also included in material handling department.
< TOP >
18. Answer : (e)
Reason: There shall be reduced capital requirements.
< TOP >
19. Answer : (b)
Reason: Order releases are the documents for making purchases.
< TOP >
9
20. Answer : (b)
Reason: The robots which are capable of perceiving the environmental conditions of the workplace
through tactile or visual perception or both and can make necessary and suitable decisions by
using on-board are known as Intelligent Robots.
< TOP >
21. Answer : (e)
Reason: Inventory, transportation, facilities and information constitute, business drivers of supply chain
performance.
< TOP >
22. Answer : (b)
Reason: Routing is the sequence of operations and processes to be followed in order to produce a
particular product.
< TOP >
23. Answer : (a)
Reason: The three cards used are production authorization, vender ant conveyance authorization.
< TOP >
24. Answer : (b)
Reason: An approach in which employees are given some freedom in choosing their start time but they
must work each day for eight hours is known as Flextour.
< TOP >
25. Answer : (d)
Reason: The minimum amount of time in which and activity can be completed is known as Optimistic
Time.
< TOP >
26. Answer : (c)
Reason: Three primary applications of work sampling are:
(i) Ratio delay
(ii) Performance measurement
(iii) Time standards.
< TOP >
27. Answer : (d)
Reason: Expected time te =
o m p t 4t t
6
+ +
Where to = Optimistic Time
Tp = Pessimistic Time
Tm = Most Likely Time
Te =
6 4 9 12 6 36 12 54 9
6 6 6
+ × + + +
= = =
< TOP >
28. Answer : (b)
Reason: The aspect that is related to the reputation of the firm that manufactures the product is known
as Perceived Quality.
< TOP >
10
29. Answer : (d)
Reason: In Process Focussed Design, similar equipment or functions are grouped together. In this type
of design, products flow through the facilities on irregular paths. This system allows both
backtracking and sidetracking in the product flow route.
Discrete Unit Manufacturing refers to the production of distinct products like radio or
television sets. These products can be made in batches, and the system can be shifted to
produce other products in similar batches.
Process Manufacturing involves the movement of materials between operations such as
screening, crushing, storing, mixing, blending, fermenting, evaporating, distilling etc. It is
widely applied in cement, plastic, paper, chemical, steel and brewing industries.
In Delivery of Services using a Product Focussed Production System, services are administered
to customers while they move in a queue or in a linear route. Services delivered by waiters in
restaurants make use of this system.
Product Focussed Design is mostly used in production departments that are organized
according to the type of product or service being produced. Equipment or work processes are
arranged according to the progressive steps by which the product is made. The products or
services tend to flow along direct linear paths without backtracking or sidetracking in the
product flow route.
< TOP >
30. Answer : (b)
Reason: Work sampling, is a technique of analyzing work by taking a number of observations, usually,
at random, to see the relative frequency with which various elemental activities take place. The
percentage of total observations a workers is attending a particular activity approximates the
percentage of total work time spent in that activity.
< TOP >
Section B : Problems/Caselet
1. The procedure to find an optimal solution for the problem with the help of Vogel approximation method is given
below.
Step 1: Compute the penalty for each row and column of the transportation problem. The penalty for the first
row is 9 – 8 = 1, second row: 13 – 5 = 8, third row : 13 – 8 = 5.
Similarly, penalties for the columns
First column: 12 – 8 = 4, Second column: 13 – 8 = 5, Third column:9 – 5 = 4
Step 2: Identify the row or column with the largest penalty value. (Here the second row is with the highest
penalty 8). Assign the maximum possible value to the cell with the least cost in row two. i.e., 100 to cell (F2,
W3). After assigning if the demand or supply for that row or column is zero, the row or column is eliminated
from further consideration.
W1 W2 W3 Supply Penalty
F1 12 8 9 200 1
F2 16 13 5(100) 150 8
F3 8 15 13 175 5
Demand 250 175 100
Penalty 4 5 4
Step 3: Again identify the penalty for the remaining rows and columns. The highest penalty is for the row F3 i.e.,
7. The least cost in this row is in the cell (F3, W1) and the maximum value that can be assigned to this row is 175.
W1 W2 Supply Penalty
F1 12 8 200 4
F2 16 13 50 3
F3 8(175) 15 175 7
Demand 250 175
Penalty 4 5
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has the maximum penalty. Assign maximum possible value to cell F1W2 the cell with least cost in the column W2
i.e., 175.
W1 W2 Supply Penalty
F1 12 8(175) 200 4
F2 16 13 50 3
Demand 75 175
Penalty 4 5
Step 5: Assign the remaining supply and demand values to cell F1W1 (i.e., 25) and F2W1 (i.e., 50).
W1 W2 W3 Supply Penalty
F1 12(25) 8(175) 9 200
F2 16(50) 13 5(100) 150
F3 8(175) 15 13 175
Demand 250 175 100
Penalty 4
The total cost of initial basic feasible solution is obtained when all the demand center requirements are met and
supply is exhausted.
So, the initial basic feasible solution is
12 × 25 + 16 × 50 + 8 × 175 +8 × 175 + 5 × 100 = Rs.4,400.
< TOP >
2. i. Earliest Due Date Schedule:
The order of jobs according to their earliest due date is, K – P – L – C – H
Job sequence Servicing time Due time Flow time Delay
K 1 2 0 + 1 = 1 0
P 2 3 1 + 2 = 3 0
L 3 4 3 + 3 = 6 2
C 4 6 6 + 4 = 10 4
H 5 7 10 + 5 = 15 8
The average delay for the job is (0 + 0 + 2 + 4 + 8) / 5 = 2.8 hrs
ii. Longest Processing Time Schedule:
The order of jobs according to their longest processing time is, H – C – L – P – K
Job Sequence Servicing time Due time Flow time Delay
H 5 7 0 + 5 = 5 0
C 4 6 5 + 4 = 9 3
L 3 4 9 + 3 = 12 8
P 2 3 12 + 2 = 14 11
K 1 2 14 + 1 = 15 13
The average delay for the job is (3 + 8 + 11 + 13) / 5 = 7 hrs
iii. Shortest Processing Time Schedule:
The order of jobs according to their longest processing time is, K – P – L – C – H
Job Sequence Servicing time Due time Flow time Delay
K 1 2 0 + 1 = 1 0
P 2 3 1 + 2 = 3 0
L 3 4 3 + 3 = 6 2
C 4 6 6 + 4 = 10 4
H 5 7 10 + 5 = 15 8
The average delay for the job is (0 + 0 + 2 + 4 + 8) / 5 = 2.8 hrs
iv. First In First Serve Schedule:
The arrival order of vehicle is, C – H – L – P – K
12
Job Sequence Servicing time Due time Flow time Delay
C 4 6 0 + 4 = 4 0
H 5 7 4 + 5 = 9 2
L 3 4 9 + 3 = 12 8
P 2 3 12 + 2 = 14 11
K 1 2 14 + 1 = 15 13
The average delay for the job is (2 + 8 + 11 + 13) / 5 = 6.8 hrs
v. Slack Time Remaining Schedule:
The order of jobs according to their slack time remaining are
Job Sequence Servicing time Due time Flow time Delay
K 1 2 0 + 1 = 1 0
P 2 3 1 + 2 = 3 0
L 3 4 3 + 3 = 6 2
C 4 6 6 + 4 = 10 4
H 5 7 10 + 5 = 15 8
The average delay for the job is (2 + 4 + 8) / 5 = 2.8 hrs.
< TOP >
3. Here number of salesmen is the independent variable and number of credit card issued is dependent variable.
The data fits the linear equation
Y= a+bX
In order to form the liner equation we have to calculate the values of constants a and b.
Value of ‘a’ ca n be calculated using the equation
( ) ( )( )
2 ( )2
n XY X Y
b
n( X ) X
′ −
=
−
Σ Σ Σ
Σ Σ
A = Y − bX
Y X XY X2
3 150 450 22500
4 165 660 27225
6 220 1320 48400
9 275 2475 75625
7 255 1785 65025
5 215 1075 46225
8 245 1960 60025
5 200 1000 40000
47 1725 10725 38025
X 1725 / 8 215.6
Y 47/8 5.875
= =
= =
Substituting the value of ΣX = 1725, ΣY = 47 and ΣXY =10725,
ΣX2 =385025 X and Y in the equation for b and a
We get
b = 0.0452
a=–3.866
Next in order to find the number of salesmen required for achieving a sales of 300 credit cards in a month.
Y = a +bX
13
Y = –3.86 + 0.0452 × 300 = 9.7 = 10
As number of salesmen cannot be fractional, the value is rounded off 10.
So to achieve sales of 300 cards 10 salesmen have to be employed.
< TOP >
4. The control limits for x charts are
χ = x/n = 51.25
R = r/n = 47/10 = 4.7
For the sample size of seven, the values of A2, D3 and D4 are 0.42, 0.08 and 1.92 respectively.
UCL = χ + A2 × R = 51.25 + 4.7 × 0.42 = 53.2
LCL = χ – A2 × R = 51.25 – 4.7 × 0.42 = 51.2
The control limits for range charts are
UCL = D3 × R = 0.08 × 4.7 = 0.376
UCL = D4 × R = 1.92 × 4.7 = 9.024.
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Caselet
5. The option of opening a new fast food section at the current location was better because the location was situated
in an important shopping area and the demand for the services was high.
• Using the same location would allow Malhotra to share many common resources. For instance, the
transportation costs involved in getting food supplies and other items like fuel, etc. could be shared between
the two facilities.
• Two facilities at the same place would allow Malhotra to provide customer with more options. Customers
coming to the restaurant initially had a limited choice with respect to the food items they were offered.
Therefore, with the new fast food restaurant, customers would have more option to choose from.
• If a situation arose whereby the demand in one section was higher than the space available, the other section
could be used to accommodate the crowd. Cross utilization of capacity would improve the space or other
facility utilization. It would also help provide better services to the customers.
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6. One of the most difficult aspects in the planning of a restaurant is the determination of its capacity. As the
demand fluctuates, capacity decisions are generally difficult to make. For instance, in this case, the capacity
requirement would be high during evening and during launch time and on holidays. If the restaurant decides to
maintain capacity (seating facility, servers, cooks, etc.) on the basis of its highest requirement, then on most
occasions, the restaurant would end up with idle capacity. So, most restaurants make a tradeoff between cost and
waiting time. Their objective is to minimize both the costs involved in providing service and the customer
waiting time. To effectively handle a part of this problem, many restaurants have adopted self-service concepts in
addition to normal service. They have also separated the parcel counters or the take away facilities.
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7. Though price plays a critical role in the selection of a supplier, it should not be the only deciding factor. If two
suppliers meet every requirement of the organization, then the supplier can be selected on the basis of the least
cost offered. However, this rarely happens. Therefore, cost should not be the only criteria for selecting a supplier.
Sometimes, suppliers are able to supply at lower costs because of the low quality material used in producing their
output. Other factors such as whether the supplier will be able to supply at the right time in the right quantity and
of the expect quality should also be looked while selecting a supplier. In addition, the supplier’s past records
should also be verified and his current customers can be approached to get their feedback on his performance. If
the supplier is able to offer lower prices because of efficient production processes and the use of the latest
technology, he can be short-listed. As mentioned in the case, it is necessary to develop a long-term relationship
with the supplier. Hence, his relationship with his old customers should also be examined before finalizing him.
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Section C: Applied Theory
8. Generally an operations manager supervises the activities of workers involved in the production. In order to
perform his tasks competently, the operations manager should be competent both in the technical aspects of ,the
production process and behavioral aspect of dealing with the workers.
Technical Competence
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Operations managers can supervise the activities of the workers only when they are aware of the technical
aspects of the tasks carried out by the workers. In this case, the operations manager should be aware of the
production tasks involved in making a cars. He also needs basic understanding of the technology with which the
production system works, and requires adequate knowledge of the activities that have to be managed. With an
awareness of the technical aspects, the manager would be able to understand the problems faced by the workers
and also would be able to identify areas where significant improvement can be made to increase the efficiency
and effectiveness of the operations.
Behavioral Competence
Production activities involve participation of the group of workers. Each worker in the group is different from the
other and the operations manager should be competent enough to understand the behavior of each individual and
group as a whole. A good operations manager should have behavioral competence - the ability to work with
other people. The operations manager must therefore consider the social as well as the physical aspects of
workplace and workers. Since managers work through others, their work necessarily involves a .great deal of
interpersonal contact. It is important for the operations manager to understand the requirements of the workers in
their jobs and take steps to make sure that workers are motivated and feel comfortable while performing their
duties.
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9. The expert systems are becoming more sophisticated and powerful. As a result, they are able to handle more
complex situations. These systems supplement human knowledge by providing solutions for problems or
suggesting the right alternative while executing processes.
Expert systems have found many uses in manufacturing. The application areas include design, scheduling,
quality control, diagnosis, process control, monitoring, etc. During the design stage, expert systems can help the
designers refine the design and suggest alternatives to a d{:sign attribute. Expert systems can easily adjust to
changes in conditions and generate a more appropriate schedule. With constantly changing demand situation in
the market, human beings cannot respond quickly to such changing demand. These expert systems may not be
stand alone systems; they work in conjunction with the normal scheduling systems.
Expert systems help organizations in quality control through the analysis and evaluation of the test data. They
also help in diagnosing the problem areas by identifying discrepancies. Many advanced expert systems many
even suggest solutions in such conditions.
Expert systems have found applications in service sector like healthcare, legal services, stock broking, etc.
Expert systems in the healthcare field help doctors diagnose a disease by analyzing the systems and suggest a
possible course of treatment. Expert systems have also found applications in the legal profession where they
provide the users the legal advice.
Many financial organizations use decision support system (DSS) or expert systems in their operations. These
systems have the ability to analyze input and provide solutions by matching the available information with the
pattern in its database. One of the most promising developments in this field is the use of ‘neural network’
approach to build an expert system, which lets the software literally learn from example and experience. Neural
network is a group of processing elements that learns from experience and does not operate on the basis of
programming. These networks are useful in pattern recognition, generalization and trend projection. Several
banks today are using the neural network program to detect credit card frauds. It is also being used by some
leading investment banks to track stock price patterns and predict their movements.
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