8/4/2019 MGT410-

Operations
Management

ALLIANCE UNIVERSITY - EPGDM

 1. Briefly mention the challenges and opportunities face by the Operations Managers’ in the
current scenario. (5 Marks)

There are multiple challenges that operations managers face daily; Technology, globalization,
sustainability, ethical conduct, workforce diversity, system design etc;

Few are explained below:

Globalization: Globalization has changed the way companies do business and manage their operations.
With advance in communication and transportation, we have passed from the era of huge regional
factories with large labor forces and tight community ties to an era of borderless marketplace.” Value
chains now span across many continents. Operation managers must continue to find better ways to
manage and improve the global value chain to compete against competitors

Technology: Technology has been one of the most important influences on the growth and development
of operation managers as technology continues to revolve, om needs to find ways to leverage and
exploit it.

Ethical conduct: Firms which do not adhere to ethical standards and social responsibilities are not
accepted by the society. It is therefore a challenge for managers to define the relationship with social
environment.

Below mentioned are few of the opportunities faced by operation managers to understand operations
as they contribute to the success of an organization.

• Decision making
• Problem solving
• Access to technological knowledge
• Performance Measurements

2. Explain the recent technologies used in product and service design. (5 Marks)

Recent technologies used in products and services are FMEA , CAD , CAM , PDM , PLM etc

• Failure Mode and Effect Analysis (FMEA) is recognized as a powerful tool for planning and
improving quality and reliability during product development
• CAD is used for product design and CAM is used for manufacturing process design. Both are
computer drawing boards able to calculate strengths and capacity factors, predict stress
points, predict mean time between failures, and offer other faster functions that previously
required significant time.
• PDM is a department-based system for managing documents It is generally used for only
one department, engineering, whereas PLM is the cross-organizational enterprise platform
for managing products and processes. PLM is the central hub for all information relating to
product creation and use. The PLM system manages all processes required to design, make,
and support products. One big difference between PDM and PLM is for multi-site operation.
PDM tools are departmental in nature. By design, they deal with file-level issues. PLM is a
database, not a file manager. PLM has built-in sharing mechanisms for data at a much more
granular level than PDM.
3. Michael’s Engineering, Inc. manufactures components for the ever-changing notebook
computer business. He is considering moving from a small custom design facility to an operation
capable of much more rapid design of components. This means that Michael must consider upgrading
his CAD equipment. Option 1 is to purchase two new desktop CAD systems at $100,000 each. Option 2
is to purchase an integrated system and the related server at $500,000. Michael’s sales manager has
estimated that if the market for notebook computers continues to expand, sales over the life of either
system will be $1,000,000. He places the odds of this happening at 40%. He thinks the likelihood of the
market having already peaked to be 60% and future sales to be only $700,000. What do you suggest
Michael do and what is the EMV of this decision? ( 10 Marks)

.4 High Demand 1000000-

200000= 800000
320000+30000
=620000 Desktop
.6 Low demand 700000-
. 200000=500000

.4 High Demand 1000000-

*40% 500000=500000
Integrated
200000+120000 +
.6 Low demand 700000-
=320000 500000=200000

The EMV for the desktop systems is $620,000 vs. $320,000 for the integrated system. Therefore,
Michael should purchase the desktop systems.
4. Medanalysis, Inc., provides medical laboratory services to patients of Health Providers, a
group of 10 family practice doctors associated with a new health maintenance program. Managers are
interested in forecasting the number of blood analysis requests per week. Recent publicity about the
damaging effects of cholesterol on the heart has caused a national increase in requests for standard
blood tests. The arrivals over the last 16 weeks are given below.

Week Arrivals
1 28
2 27
3 44
4 37
5 35
6 53
7 38
8 57
9 61
10 39
11 55
12 54
13 52
14 60
15 60
16 75

a. Calculate the forecast for the next period using

a) Naive,
b) Moving average (considering 3 period) and
c) Exponential smoothing ( alpha as 0.4).

b. Calculate the next three period forecast using linear regression method.

c. Use forecast accuracy methods (MAD, MSE, MAPE and tracking signal) for the all the methods
and suggest the method of forecasting for the above data.

*** Note that only for the data for which you have both Actual and Forecast are known, we can
calculate the forecast accuracy. 10 M

Answer:

Naïve method: 75

Moving age method: 65

Forecast Exponential method:64.25

Linear Regression: 28.5+2.334X

Week 17-28 arrivals

Week 18-71 arrivals

Week 19-73 arrivals

Forecast methods Naïve method Moving Ae Exponential Linear

method Method Regression
MAD 9.8 7.62 8.61 6.44
MSE 164.5 96.65 124.86 59.98
MAPE 20.32 14.26 16.53 13.75
Tracking Signal 4.8 8.36 10.52 0.45

From the above tabular column, we can conclude that exponential method is the suitable method of
forecasting