Operation Management

Q1.A Ans: Management and organizational behavior is concerned with the formulation of corporate strategic policy. Operations Management is concerned with the operations strategy, which specifies how the firm will employ its production capabilities to support its corporate strategy.

Q1.B Ans: Lasik Vision aimed to gain competitive edge in the eye surgery industry by offering the lowest prices with marginal profits based on high volume of operations performed. In addition, the company was aggressive in its advertising campaign. Prices were brought down from the initial cost of $5,000 to $1,598 for both eyes. Henderson focused on efficiency, productivity and growth. He believed that mass volume with low margins is the way to fortune. In order to achieve all this, he pushed for the reengineering of the traditional model of the refractive surgery. Using the conventional trade-off model, we noticed that cost was fundamentally cut down at the expense of other manufacturing capabilities. Reducing the number of employees, trying not to use expensive equipment and cutting out optometrists from the process were undertaken to cut down costs.

Q2.A Ans: Project control involves schedule, budget, and scope. Focus solely on the critical path to the exclusion of these other aspects is not a good idea. Nor is it a good idea to ignore "noncritical" paths that could become critical. The project manager needs to have a good understanding of the network of dependencies among schedule tasks and resources. Such a dependency network can help the project manager identify the critical chain of resources that determines the project duration. Once that is done, the project manager

can monitor project buffers to learn which schedule segments are in need of risk-reduction effort.

Q2.B Ans: If a process is an Italic ;"> bottleneck preventing shipment of more product to paying customers, making sure that it is not waiting for work would be a priority. Efficiency can be improved by having enough pending work to make sure the bottleneck process is never "starved." Anywhere else in the plant, WIP ties up working capital to no positive bottom-line effect. It also masks process problems that cause rework, adds to handling costs, and raises the general level of chaos in the factory. Q3.A Ans: Numerical control or numerically controlled (NC) machine tools are machines that are automatically operated by commands encoded on a digital medium. NC machines were first developed soon after World War II and made it possible for large quantities of the desired components to be very precisely and efficiently produced (machined) in a reliable repetitive manner. These early machines were often fed instructions which were punched onto paper tape or Hollerith cards, although Mylar (or polyester) tapes became popular because of their high durability and quality. In the 1960s, NC machines largely gave way to CNC, or computer numerical control, machines. (GE had its NC 550 workhorse for many years until they came out with their first CNC (model 1050) in August 1974.)

Machining centers are versatile machines that are capable of performing many diverse, automated machining operations. They have the capacity to replace a several single-function machines and are well-suited to high volume, continuous production runs. Machining centers can manage a wide dimensional variety and can be set up

to machine parts of extraordinary complexity if required. Naturally, high precision is a given.

Q3.B Ans: Generally, a moving bottleneck is caused by batch sizes that are too large. What happens is that a large batch scheduled on a machine or resource which-on the average has excess capacity-prevents other products from being completed that also need the same resource. This interrupts the flow and starves downstream resources. From their perspective looking upstream, they see that particular resource as the bottleneck. However, days or weeks later, because of the product mix, this apparent bottleneck will disappear. Another large batch size somewhere else in the system will appear which does the same thing, i.e., starves downstream operations. Drum Buffer Rope... Metaphoric example to understand the flow of a supply chain. A concept of increasing throughput by adjusting buffers by a rope and controlling speed by a drum. Like members of a mountaineering team who climb a mountain on the rope, a drum and rope are used for an analogy of management tools when soldiers march or boy scouts hike. This troop analogy was first applied to a production line by Ford Motor Co., Ltd. who connected production processes of an automobile assembly line by conveyer belts. Then, Mr. Taiichi Ohno of Toyota Motor Corporation introduced a rope called "KANBAN". Both of the concepts brought an innovation in company management and had a great impact on economic growth. As in an example of boy scouts hiking, those who are bottlenecks are positioned at the beginning and a rope is used for subordinating (synchronizing) the speed of followers with that of the bottleneck persons. This enables preventing the march (work-in-process inventory) from expanding. In other words, to eliminate work-in-process inventory is to reduce costs. Also, in preventing the front ones of the bottleneck group who determine the marching speed of the entire team from slowing down, a rope

plays an important role as a buffer to absorb the changes in the marching speed of the front ones of the bottleneck group. A drum plays a role of conveying the information about the speed of the slowest bottleneck persons to everyone in the group and cheering up the bottleneck persons to raise their speed up. When the rope is stretched out to the limit, it is necessary to impose a constraint on those who tied to the rope so that they will not be able to raise the speed any further. In some cases, work needs to suspend when the buffer reaches the limit. Similarly, the team may sometimes need to stop. If the drum is beaten at the speed of the first person of the team, an interval with the following persons will get wider and wider. In that case, the inventory level will increase and throughput will decrease. If the drum is beaten at the speed of the last person of the team, i.e. the team marches at the speed of the inventory, the inventory level will decrease and throughput will increase as the speed of demand increases. The pull-type system means to beat a drum at the speed of the last person, which corresponds to as demand-driven pull type supply chain management. Q4.A Ans: Yes data integrity is a very big issue for the industry and it control how correct the data is by detecting the errors. This is because today the organizations are in a much more fierce competition than before; they have to compete on a global level instead of a local one. This means that to gain an understanding of this diverserange of customers and to spot opportunities that may give the firm an advantage over the other, firm constantly collect data and use it to make economic decisions. If the data lacks integrity then it may result in losses for the company and lost opportunities. If we talk about the industry then all the firms within an industry are in competition with each other for the same segment of the market. A decision made on data that lacks integrity can result in big time losses that may even drive them out of the business. Q4.B Ans: Safety stock defines the minimum level of inventory that the MRP system will seek to maintain. In the absence of other requirements (or after other requirements are fulfilled), if inventory falls below the safety stock level, the MRP system should generate orders sufficient to maintain safety

stock at the specified level. In practice the level of safety stock should be set to accommodate - unplanned orders (as from Development Engineering) or other deviations from the master schedule - delays in receiving materiel from suppliers - mismatch between physical inventory and computer records.

Q5.A Ans: In process inventory is the inventory which is still in the work-in-process and not considered as a finished or completed inventory. Safety stock inventory is the inventory held for offsetting the demand forecasts. It is the inventory which is held when the demand exceeds the expectations. On the other hand, the seasonal inventory is the additions which are made in the safety stock inventory to support predicable variability due to the repeatable season. Companies make seasonal inventories in the period of low demands to meet the periods of the high demand.

Q5.B Ans: The basic controllable variables of a production planning include utilization,employment of production resources, work force level, production lot size and sequencing of production runs. The four major costs include production cost, setup cost, equipment installment cost, inventory holding cost, processing cost etc.

Q6.A Ans: Control Charts Statistical process control was developed as a feedback system that aids in preventing defects rather than allowing defects to occur. One element of a process control system is control charts. Dr. Walter Shewhart defined the concept of common and special cause variation during the 1920s at Bell Laboratories. He developed a tool that he called the control chart, which could graphically depict variation. This control chart, could also distinguish

the two types of variation from each other, thus allowing for the elimination of special causes and the reduction of common cause variation. There are several types of variables data and attributes data control charts. This section will discuss the different types of control charts, the applications of each control chart, and the interpretation of the data. Types of Control Charts Variables data are quantitative data that can be measured. Some examples are the diameter of a bearing or the thickness of a newly minted coin. Variables data are usually represented as X-bar and R-charts and X-bar and s-charts. X-bar and R-charts The principal types of control charts used to analyze variables data are X-bar and R-charts. X-bar and R-charts are used in conjunction with each other. The measurements describe a process characteristic and are reported in small subgroups of constant sizes (usually two to five measurements per subgroup). Construction and use of these types of charts typically involve the following steps: Select the size, frequency, and number of subgroups. Assemble the data for the periods of interest. Calculate the average (X-bar) and the range R of each subgroup. Plot the averages and ranges on the control charts. Calculate the central line control limits; plot them on the control chart. Study the charts for stability and/or trends.

Q6.B

Ans: THE FOLLOWING ARE THE OCCUPATIONS, WHERE THE ENDING IS A DOMINANT ELEMENT IN EVALUATING SUCCESS. 1.project management. [timliness-cost-specification] 2.procurement management. [cost -timliness-savings] 3.supply chain management. [efficiency-effectiveness-cost-customer satisfaction] 4.sales management. [sales results-gross profit -customer satisfaction] 5.research & development management. [cost -results-innovations] 6.product management. [cost-results-innovations] 7.interior decoration management. [cost-innovations-customer satisfaction] 8. Retail management. [Sales results-gross profit -customer satisfaction] 9. Farm management. [cost-output] 10.engineering management [cost - results - innovations]

Q6.C Ans: Little's law was proved by John Little in 1961. His results apply to any system and systems within a system. For example, in a bank, the customer line may be one subsystem, and each of the tellers is another subsystem, and the result can be applied to each one system as well as the whole

system. It suggests that the long term average number of customers in a system N, should be equal to the long term arrival rate , multiplied by the long term avg. Time that customer spends in the system T.