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UNIVERSITY OF COLOMBO, SRI LANKA

FACULTY OF MANAGEMENT AND FINANCE
Postgraduate& Mid-career Development Unit
- August,2008
(Semester
II -First-half)Examination
Administration
Masterof Business
MBA 538- OperationsManagement)
Three(03)Hours
fromeachPart
Answerfive (05)questions
in all selecting
at leasttwoquestions
Answers
to PART-i andPART- ii shouldbewrittenin two separate
answerbooksand
handed
to
over thesupervisor
separately.

Ql.
i.

providing
"Productis a bundle of goodsand services" Commenton this statement
examplesto strengthenyour answer.
(6 marks)

ll.

Make-to,stock and make-to-order are two product strategies followed by

manufacturers.What are the market conditions satisfied under these product
strategies?
(7 marks)

lll.

"OperationsManagementdecisionsare not limited to operationaldecisions,but they

includestrategicas well astacticaldecisions".Explainthis statement.
(7 marks)
(Total20 Marks)

Q2.
Explainhowthefollowingfactorsaffectprocessselection.
a. productqualitY
b. productvarietY
c. productionvolume

i.

(5 marks)

planning.
Differentiatestrategiccapacityplanningandmediumterm capacity

ll.

(5 marks)

llt.

facility becauseof
XYZ Machiningcompanyhasdecidedto modernizeits production
are be.ing
increased competition. Three alternative production technologies
Numerical
(CM)'
consideredfor this purpose namely: Cellulir Manufacturing
(FMS).
controlledmachines(Nci ano a FlexibleManufacturingSystem
costs for threealtemativesaregivenin the followingTable.

Variablecostper unit (Rs.

productionwould the
a. Based on the annual cost, at what volume of annual
companybe indifferentbetween
CM andNC productiontechnologies'
i.
and FMS productiontechnologies'
NC
ii.
(6 marks)
would
b. If annualproductionvolumeis 15,000units,which productiontechnologY
you recommendto the comPanY?
(4 marks)
(Total20 Marks)

Q3.
i.

ll.

modelsused in
Fixed order quantity model and fixed period model are two major
which situations
inventorycontrol. Briefly explainthesetwo modelsand discussin
they areused.
(6 marks)
the
Whatare the purposesof safetystock?How will the use of safetystock affect
EOQ?

(4 marks)

ll l.

plan inventoriesfor
A maintenancedepartmentof a manufacturingplant needsto
point and the order
frequentlyusedmaintenancepart, abearing.cunently, Re-order
demandper
quantitybf tn" part are being consideredby the department.Average
week ii l5 unitsof bearingsandaverageleadtime is 5 weeks.

demandduring
undera policyof carrying50 percentof expected
The plantoperates
Ordering
all itemsin thesameclassasthisbearing.
leadiime ai safetystockacross
costis Rs.1000perorderandholdingcostis Rs.25peryearperitem.Determine:

,/
,

level
a. Re-order

(5 marks)

b. EconomicOrder QuantitY.

(5 marks)
(Total20 Marks)

Q4.
i.

Briefly explainhow followingtoolscanbe usedfor quality improvement.

a. Paretoanalysis
b. Fishbone(causeandeffect)diagram

(2marks)

c. Scatterplot

lt.

(2marks)

(2marks)

"Final qualityof a productis determinedby both

Conformance".Explainthis statement.

'Qualityof Design'and 'Qualityof

(7 marks)

iii.

Explainhow work studyis usedto improveproductivity.

(Tmarks)
(Total20 Marks)

PART ii

Qs.
i.

DescribetheDelphimethodof forecasting.
(4 marks)

ii.

methodto a demandpattern in your

List the stepsinvolvedin choosinga forecasting
organization.
(5 marks)

iii.

Historicaldemandof a productof a companyfor the last9 yearsis givenbelow:

6

Year

Demand

44

5 2 50 54 5 5 5 5 60

(units)

56 62

of the
patternfor the.abovedata' find the equation
a. Assuminga lineartrend line
line.

(6 marks)

the
b. Usingthe equationfoundin (a)' forecast

demandfor yearl0 andyearl lmarks)

year l0 and 1l ' if simple3 yearperiodmoving

assumptions'
uu"rug"methodis used?Stateall your
(3 marks)

the
c . What would be the forecastfor

(Total20 Marks)

Q6.
i.ExplainthebenefitsofMaterialRequirementPlanning(MRP)System'
(5 marks)

ii. What arethe inputsandoutputsof MRP

system?
(4 marks)

Q is madeof
threeunitsof R' Sub-assembly
iii. ProductP is madeof two unitsof Q and
R is madeof two unitsof S andfour
J;;;;ly
oneunir of S andtwo unitsof T. Other
U areasfollows:
unitt of U. Leadtime of P,Q,R,S,Tand
P:0lweek,Q=02weeks,R=03weeks,S:02weeks,T=0lweek,andU:O3weeks.
structure)
a. Draw the bill of material(producttree

(4 marks)

schedule
thel0th week, developa planning
b. If, 100 units of P are neededin
Current
quantity'
should b; orderedand in what
showing *t.n.u.tt-itern
=
=
units'T
50
=
R 30 units'S
=
areas follows:P 20 unit'' Q +0 units'
inventories

= 100units,U= 900units'

(TMarks)
(Total20Marks)

Q7.
I
t.

"Transportationdecisionsshouldnot be purely madebasedon transportation cost

alone".Validatethe statementwith vour arsument.
(4 marks)

ii.

Discusshow you canminimizefreightcostin transportation.

(4 marks)

ii.

A firm hasan annualdemandof 1,095,000

waterpumpsof one variety.Average
costof the pump is $90. A safetystockof 25% of the demandduring deliveryleadtime is maintainedby the firm. Inventoryholding cost per year for the pump has
beenestimatedas l2o/o.The logistic managerof the firm has four alternativesto
signa contractto managethe transportation
next year.
The following table showsthe capacityof eachtransportationalternatives,annual
transportation
cost,lead-timeandtransittimes.
,

jl

Caoaciw/

Alternative lNumberof Pumps

'.

Annualtiinsport Lead-Time TransitTime/

Cost/ $
lDays
Days

AltimativeA ,
.Alternative
B i

2,500

20,000

43

1,750

t7,ooo

32

Alternativei

l,ooo

12,000

4,000

15,500

Alternative
D
(a)

Calculatethe costcomponents
andtabulatethe results.

(b)" Selectthe best alternativeto be signedwith contractor.(Assume365 days

for a year.
(12 Marks)
(Total20 Marks)

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