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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 high

quality of goods or services they produce while keeping the cost low. Use costs of quality
to 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 you
differentiate 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 a
relatively stable demand for its products throughout the year. It isestimated that they need
1200 kg of wheat flourin each month. The cost of placing an order is estimated at Rs. 150
and the annual holding cost is estimated at 300.10of the value of the product. Harvey
presently purchases 500kg of flour at a time at a price of Rs. 90 per kg. What is the annual
savings for Harvey if they adopt Economic Order Quantity (EOQ) model?
Q
D
--!!..
and
TC =- CH + - Co
(EOQ formula .IS Q = i2lJC

CH

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

Co is the
(10 Marks)

'!"
\

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 inventory
will come into the surface. What are the problems that may be hidden beneath the
inventory? What the solutions for these problems?

ii.

(10 Marks)
(Total 20 Marks)
QUestiOD 3

I.

Concurrent design approach is more effective in designing new products than sequential
approach? Explain these two approaches. Why the.earlier approach is better than the latter
one?
(10 Marks)

ii.

Operations management activities of an organization are based on the competitive priorities

of that organization. Elaborate this statement by selecting a suitable organization in Sri
Lanka.
(J0 Marks)
(Total 20 marks)
PART-II

Question 4

i.

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

ii.

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

iii.

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 the
major cost components to be trade off when making transportation decisions.
(03 marks)

iv.

. A transport manager of a transformer manufacturing company has following data to choose

a transportation media out of two alternatives available. Workout the cost components and
decide the best alternative.

Annualdemand

= 365,000transformers

Cost per transformer = $100

Current order size
= 2,000 transformers
Safety stock carried = 30010of demand during delivery lead time
Holding cost
= 15% of the cost of the transformer

Leadtime

= 4 days

Transit time

= 3 days
2

Alternatives

Transport Cost I S

Capacity (Q) I Number

ofTransfonners
I

Vehicle A

-I

1,000

Vehicle B
I

-I

750

18,000

10,000

(10 marks)
(Total 20 Marks)

Question 5
i. Differentiate aggregate planning from Master Production Schedule.
(04 Marks)
(04 Marks)

ii. List the input and output of Aggregate Planning.

iii. A factory employs a pennanent workforce that is capable of providing a nonnal capacity of
350 units per month. In addition to the nonnal capacity 50 units can be produced by using
overtime. The variable cost of carrying stock is Rs. 200 per unit per month. The opportunity
cost of lost sales (unmet demand) is estimated to be Rs. 500 per unit. There is an additional
cost of Rs. lOOper unit under overtime production. The demand pattern for first half of year
is given in the following table.
Period
Demand (Units
A constant workforce planning strategy bas been proposed to produce a constant quantity of
350 units per period under nonnal production. For a given level of production plan you are
expected to tabulate the average stock and lost sales for each period. You may plan over time
production 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 may
expect if an assembly line is not balanced properly?

(04 Marks)
ii.

The following tasks are to be perfonned on an assembly line:

Task Task Time I (Seconds)
20
A
7
B
C
20
22
D
15
E
10
F
G
16
8
H
3

hnmediate Predecessors

A
B
B
C
D
E,F
G

/'

\
The workday is seven hours long. Demand for completed product is 750 per day.
(04 Marks)
(a) Draw the precedence diagram
(02 Marks)

(b) What is the workstation cycle time?

(c) What is the theoretical number of workstations?

(02 Marks)

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

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

(02 Marks)
(Total 20 Marks)

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