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27/5/2015

FinalExamination
TotalmarksinFinalExam100marks

MME40001Engineering
Management2

Finalexamcontributesto30%ofsubjectmarks
Topassthesubject
Achieve45marks inthefinalexam
+Achieve35%inassessmentsworth15%ormore+
Aggregatemarkof50%(Coursework+FinalExam)

FinalSubjectReview
Sem1,2015

ONLYSELECTEDFORMULAEareincludedintheFORMULA
SHEET,andthattoonotadirectone

FinalExamination

FinalExamination

Contains10sections
1st

sectionMCQs 10questions
2nd to6th section(5sections) Operations
Managementquestions
7th section Legalconceptsquestions
8th to10th section(3sections) Financeand
Accountingquestions

Overalldivisionofmarksbytopics
10%
~50%
~10%
~30%

TotalmarksinFinalExam100%
Achieve45%inthefinalexamtopassthesubject
Achieve35%inallassessmentsworth15%ormore
Aggregatemarktopassthesubjectis50%(Coursework+FinalExam)

OperationsManagement
Legalconcepts
Micro&MacroEconomics,Innovation&
creativity,Entrepreneurship,Marketing
FinanceandAccounting

~55%
~10%
~5%
~30%

Overalldivisionofmarksbytype
Theorybasedvs.Calculationbased
~20%
~80%

27/5/2015

FinanceandAccounting
ConcentrateonTutorials

FinanceandAccounting
BalanceSheetandIncomeStatement
IdentifytherelevantitemstoincludeinBalanceSheetand
IncomeStatement.
Transactionsoftheyearifgiven revisetheappropriate
itemsinbalancesheetandincomestatement.
Owingsthatarestillduebytheendoftheyear include
thoseintothebalancesheet(accruals)andIncome
statement(expenses).
FinallyprepareaVerticalFormatBalanceSheetanda
IncomeStatementfortheyearending.

PreparationofBalanceSheetandIncome
Statement
ProjectInvestmentDecisions(capitalinvestment
decisions)
BreakevenanalysisandFullCosting

FinanceandAccounting

Liabilities

Assets

BalanceSheet(statementoffinancialposition)

FORMULArelatingtothiswillnotbeprovidedintheFINALEXAM

FinanceandAccounting
Eg

TRANSACTION
Cashpurchaseofcomputer

(a)

Purchasedinventoryoncredit

(b)

Receivedpaymentfromdebtors

(c)

Paidcreditors

(d)

Withdrewcashforpersonaluse

ASSET
Equipment
CashatBank

LIABILITY

OWNERSCAPITAL*

Inventory Creditors
CashatBank
Debtors
CashatBank Creditors
CashatBank Ownersequity

(e)

Paidrentsandratesinadvance

CashatBank
Prepayments

(f)

Purchasedfurnitureoncredit

Furniture Creditors

(g)

Soldinventoryoncredit

Debtors
Inventory

(h)

Barrowedmoneyfromlenders
orbankforbusinessuse

CashatBank longtermloan

27/5/2015

FinanceandAccounting
BalanceSheet(verticalformat)

FinanceandAccounting

FinanceandAccounting
BalanceSheet(horizontalformat)

FinanceandAccounting

IncomeStatement(statementoffinancial
performance)
CurrentLiability

Sales CostofSales=GrossProfit
Grossprofit+otherincome otherexpenses=Netprofit

CurrentAsset

Netprofitfigureisalwaysafterinterestexpensesandincometaxexpenses(if
informationareavailable)

CurrentAsset

Note:onlyrevenuesearnedandexpensesincurredfortherelevantperiodare
showninanincomestatement(notnecessarilycashreceivedandcashpaid)

CurrentLiability

Depreciationperyear=(assetcost residualvalue)/usefullifeinyears
Accumulateddepreciation=totaldepreciatedamountoftheasset

FORMULArelatingtothiswillnotbeprovidedintheFINALEXAM

27/5/2015

FinanceandAccounting

FinanceandAccounting
Transactions
Salesoncredittotaled$179,000(cost$89,000).

Format
ofan
Income
Statement

Cashsalestotaled$54,000(cost$25,000).
Inventorytotaling$67,000wasboughtoncredit.
Inventorytotaling$8,000wasboughtoncash.
Theownerswithdrewcapitalintheformofcashof$20,000.
Receiptsfromtradedebtorstotaled$178,000
Paymentstotradecreditorstotaled$71,000.

Assets
Inventory89k
Debtors179k
Inventory25k
Cash54k
Inventory67k
Inventory8k
cash8k
Cash20k
Cash178k
Debtors178k
Cash71k

Cash25k
Prepayments
5k
Ratesonthepremiseswerepaidduringtheyearfortheperiod1January Cash1.7k
2006to31March2006,$500andfortheperiod1April2006to31March Prepayments
0.3k
2007,$1,200.

Premiseswererentedatanannualrentalof$20,000.Duringtheyear,
rentof$25,000waspaidtotheownerofpremises.

Adeliveryvehiclewasboughton1January2006for$13,000.Thisis
expectedtobeusedinthebusinessforfouryearsandthentobesoldfor
$3,000.

FinanceandAccounting
Transactions
Premiseswererentedatanannualrentalof$20,000.Duringtheyear,
rentof$25,000waspaidtotheownerofpremises.

Liabilities/OE

rateexpense
1.4k

Adeliveryvehiclewasboughton1January2006for$13,000.Thisis
expectedtobeusedinthebusinessforfouryearsandthentobesoldfor
$3,000.

Deprecia on
expense2.5k

Wagestotaling$36,700werepaidduringtheyear.Attheendoftheyear, Cash36.7k
thebusinessowed$860ofwagesforthelastweekoftheyear.

Accruals
0.86k

Wages
(36.7+0.86)k

Electricitybillsforthefirstthreequartersoftheyearwerepaidtotaling$ Cash1.82k
1,820.After31December2006,butbeforetheaccountshadbeen
finalizedfortheyear,thebillforthelastquarterarrivedshowingacharge
of$690.

Accruals
0.69k

Electricity
(1.82+0.69)k

Vehiclerunningexpensespaidtotaled$16,200.

Cash16.2k

Income
sales179k

Expenses
costof sales89k

sales54k

costof sales25k

Creditors
67k

OE20k
(withdrawal)

Creditors
71k

rentexpense
20k

rateexpense
1.4k

Deprecia on
expense2.5k

FinanceandAccounting

Assets
Cash25k
Prepayments
5k
Ratesonthepremiseswerepaidduringtheyearfortheperiod1January Cash1.7k
2006to31March2006,$500andfortheperiod1April2006to31March Prepayments
2007,$1,200.
0.3k
Cash13k
vehicle 13k
depreciation2.5k

Income

Cash13k
vehicle 13k
depreciation2.5k

Liabilities/OE

Expenses
rentexpense
20k

expense 16.2k

ProjectInvestmentDecisions(capitalinvestment
decisions)
Identifyrelevantcashinflowsandoutflowsi.e.initial
outlayofmoney,profitseachyears,expenseseach
year,etc.
Understandthedifferencebetweenannualnetcashflows
andnetprofits

DonotconsiderPASTandFUTUREcosts.Onlyinclude
coststhatoccurduringtheconcernedperiod.
Taxinformation,ifgiven,mustbeincluded

27/5/2015

FinanceandAccounting
ProjectInvestmentDecisions(capital
investmentdecisions)
CalculatingNPVwiththediscountfactortable.
CalculatingIRRusinginterpolation
Alwaysincludeadescriptivedecisionbasedon
calculatedNPVandIRRasthefinalNotetoyour
answer.i.e.Whethertotakeuptheproject,Isit
goingtobeprofitable,etc.

FinanceandAccounting
Breakevenanalysis

FinanceandAccounting
BreakevenanalysisandFullCosting
Fixedcostvs.Variablecost
CalculatingBreakevenPointandContribution
MarginofsafetyandLevelofactivitytogaintarget
profits
Directcostvs.Indirectcost(overheads)
JobCosting Apportioningafairshareofindirect
costtoeachjob.

OperationsManagement
IntroductiontoOM&Productivity:
Majorfunctionsofanyorganization
DifferencebetweenGoods&Services.
ProductivityVariables
CalculatingProductivity
SingleFactorProductivityorLaborproductivity
MultiFactorProductivity(expressedinunits/dollar)

Ex.contributionperlaborhour
contributionpermachinehour

Alwaysremember outputinthenumerator
Denominator eithertotallaborhour(singlefactor)or
labor+material+energy+etc intermsofdollars(multifactor)
Matchtheunitoftime(perhourorperdayorperweek)

NewtrendsandchallengesinOM
IndirectderivationFORMULAwillbeprovidedintheFINALEXAM

27/5/2015

OperationsManagement
OperationStrategyinGlobalEnvironment:
TangibleandIntangiblereasonstoglobalize
StrategiesforCompetitiveAdvantage
StrategicdifferencesofGoodsvs.Servicesbased
on10decisionareas
Issuesinoperationstrategies,productlifecycle,
keysuccessfactor(KSF)andcorecompetencies
FourInternationalOperationStrategies

OperationsManagement
DesignofGoodsandServices:
Productlifecycleandstrategies,productbyvalue
analysis
Newproductopportunitiesandproductdevelopment
system
IssuesforProductDevelopment
TimeBasedCompetition
Internalvs.Externaldevelopmentstrategiesfornew
productdevelopment
Documentsforproductdefinitionandproduction
ServiceDesignandDocuments
Developingadecisiontree EMVcalculations
Costbased minofEMVs
Revenuebased maxofEMVs

OperationsManagement
Process,LocationandLayout:

FOCUSONTUTORIALS
FourProcessStrategies
CrossOverCharts
Processanalysisanddesigntools
MethodsforEvaluatingLocationAlternatives
Factorratingmethod,locationalbreakevenanalysis,
centerofgravitymethod.

Layoutstrategies Types&Objectives
Improving/designingprocesslayout(tutorial)
Processlayoutdesign,workcellbalancing,assemblyline
balancing

OperationsManagement
Processstrategies:
Processfocusvs.productfocusvs.repetitive(modular)
vs.masscustomization

Crossoverpoints(breakevenanalysis):
Pointatwhichtotalcostequalsbetweentwodifferent
process/locationstrategies
Settingimaginaryvolume(v)equatingtotalcost>>fixedcost+
(vx variablecostperunit)
Ifvolumeisgiven,thencalculatingthetotalcostfordifferent
process/locationstrategiesandselectingtheleastcostoption.

Abletosolvetheproblembothgraphicallyand
analytically

IndirectderivationFORMULAwillbeprovidedintheFINALEXAM

27/5/2015

OperationsManagement

OperationsManagement
Locationstrategies:
MethodsforEvaluatingLocationAlternatives

1000+5.X=500+15.X
10X=500
X=50
Whichprocessischeapforactivitiesbelow50?
ANS:Theonewithlowfixedcost
Theprocesswithhighfixedcostwillalwaysbecheaper
forlargervolumes

OperationsManagement
LayoutStrategy:

OperationsManagement
SupplychainandInventoryManagement:

Designinganoptimumlayout>>costoflayout>>
volumeofactivityxtraveldistance(expressedindollars)
Checkforimportantproximitiesandplacethemadjacent
improvedlayout>>reducedcostoflayout
AssemblylinebalancingandWorkcellbalancing
Takt timeandcycletimes>>totalavailabletime/totalunitsto
produce
AONnetworks
NumberofworkersorNumberofworkstations>>total
operationtimeperunit/takt timeorcycletime
Theoreticalefficiencyvs.achievedefficiency
Efficiency =

Locationalbreakevenanalysis totalcost>>fixed
cost+(volumex variablecostperunit)
Factorratingmethod>>weightsandscoresaregiven,
calculateweightedscore(weightxscore)>sumof
weightedscoreforalocation>selectmaxvalue.
Centerofgravitymethod>>expectedvolumeof
activityand(X,Y)coordinatearegiven.Numeratoris
coordinatesmultipliedbyrespectivevolumeof
activityandDenominatorissumofvolumeof
activities

Total operation time per unit

SupplyChaindecisions Impactonthethree
strategiesforcompetitiveadvantage
SupplychainRisks andsupplychainStrategies
VenderevaluationandEvaluatingshipping
alternatives
FunctionsofInventoryORreasonstohold
inventory
InventoryModelsforIndependentdemand
BasicEconomicorderquantitymodel(EOQ),Productionorder
quantitymodel(POQ),andQuantityDiscountmodel(QD)
Probabilisticmodel&Safetystock

(Actual number of workstations) x (Largest cycle time achieved)

27/5/2015

OperationsManagement
InventoryManagement:

OperationsManagement
InventoryManagement:

InventoryModelsforIndependentdemand

EOQ
Optimalorder
quantity

BasicEOQ(EconomicorderQuantity)Model
ReorderPoint(ROP)=dxL(dailydemandxLeadtime)
Numberoforders(N)=D/Q*
Numberofdaysbetweenorders=365daysornumberof
workingdays/N
Averageinventory=Max.Inventory/2
Dailydemand(d)=annualdemand(D)/numberofworking
daysor365days

Q* =

2DS
H

POQ
2DS
Q*p = H (1- d/p)

Maximum
Inventory

Q*

Q*p(1 d/p)

Average
Inventory

Q*/2

Q*p(1 d/p)
2
(D/Q*p)S

SetupCost

(D/Q*)S

Numberoforders(orsetups)*setupcost

HoldingCost

(Q*/2)H

TotalCost of
Inventory
management
=
Setupcost+
Holdingcost
+(product
costforQD)

(Q*p(1d/p)/2)H

Q* =

AverageInventory*Holdingcostperunitperyear

IndirectderivationFORMULAwillbeprovidedintheFINALEXAM

FOCUSONTUTORIALS
Developingproductstructure,Timephased
productstructure,BOM,Grossmaterial
requirementplanandNetmaterialrequirement
plan
Improvingreliabilityandenhancingmaintenance
Determiningsystemsreliability(inseriesorwith
redundantcomponents)
Preventivevs.breakdown(repair)maintenance

H = IP

IndirectderivationFORMULAwillnotbeprovidedintheFINALEXAM

OperationsManagement
MaterialRequirementPlanandMaintenance:

2DS
IP

OperationsManagement
ManagingQualityandJIT,TPS&lean
operations:
CostsofQualityandTQMconcepts
ToolsforTQM FOCUSONDIAGRAMS
Paretocharts,Fishbone(fourMs)diagram,Histogram

JITanditsrelationtoQuality
DefineJIT,concernsandimplications
DefineTPSandLeanoperations
CalculatingKanban's sizeandnumber

27/5/2015

LegalConcepts

Creativity,Innovationand
Entrepreneurship

ContractsandTenderprocess:
Essentialelementsofacontract
Requirementsofanenforceablecontract
Classificationofcontracts(impliedvs.explicit,
unilateralvs.bilateral,void,voidable,etc)
PromissoryEstoppel,EquitableEstoppeland
QuantumMeruit.

CreativityTechniques
Incrementalvs.RadicalInnovation.Typeswithin
eachcategory
Processmodelofcreativity,innovationand
entrepreneurship
Resourcebasedtheoryonentrepreneurship.
Attributesoftheseresourcesforcompetitive
advantage.

MicroandMacroEconomics
Marketing
Microvs.MacroEconomics
DemandandSupply MarketEquilibrium
Macroeconomy concerns.Inflation,Recession
andDepression
PoliciestoinfluenceMacroeconomy
NicheandTargetMarketing
IdentifyingCustomersandCustomerloyalty
programs