CONFIDENTIAL UNIVERSITI KUALA LUMPUR Institute of Product Design and Manufacturing FINAL EXAMINATION JANUARY 2013 SESSION SUBJECT CODE : PBB 23203/ PPB 26304 SUBJECT TITLE : PRODUCTION AND OPERATION MANAGEMENT LEVEL DEGREE TIME / DURATION : 2.00 pm —5.00 pm (3 HOURS ) DATE 15 MAY 2013 INSTRUCTIONS TO CANDIDATES 4. Please read CAREFULLY the instructions given in the question paper. 2. This question paper has information printed on both sides of the paper. 3. This question paper consists of THREE (3) sections; Section A, B and Section C. 4, Answer ALL questions in Section A and C. For Section B, answer any TWO (2) questions. 5. Please write your answer on the OMR form and answer booklet provided. ‘THERE ARE 10 PAGES OF QUESTIONS, EXCLUDING THIS PAGE.séNuary 2013 CONFIDENTIAL, ‘SECTION A (Total: 20 marks) MULTIPLE CHOICE QUESTIONS INSTRUCTION: Answer ALL questions. Please use the answer booklet provided. 1. Operations management is concerned with ‘A. __ the design of the firm's production systems 8. _ the operation of the firm's production systems C. the improvement of the firm's production systems D. Aand B are correct 2. Potential risks associated with globalization include ‘A. supply chain logistics B. cultural differences C. _ loss of capabllties D. cost competitiveness 3. if a firm produced 5000 units of product last month using RM15000 of energy and RM35000 of labor then its multifactor productivity measure for energy and labor inputs would be A. 10.00 units per RM spent B. 0,333 units per RM spent C. 0.143 units per RM spent D. 0.100 units per RM spent 4. Characteristics of a product or service thet allow it to be considered for purchase are known as. A. order qualifiers B. order winners C. core competencies D. competitive priorities PBB23203/PPB26304 PRODUCTION AND OPERATIONS MANAGEMENT 1JANUARY 2013 CONFIDENTIAL 5, Products and services that are made to customer specification in response to customer orders are known as A. 8 c. D. mass produced items make-to-stock items batch production items make-to-order items, 6. What can organization do to decrease the breakeven point? A. B. c. D. Increase the selling price of the end item Decrease the Variable Costs - Buy cheaper materials, decrease employee wages Decrease the Fixed Costs A, Band C are correct 7. The following are the reasons for ERP failure EXCEPT A B. c. D. lack of top management commitment Jack of proper training lack of advertisement lack of customer order 8. The following are the elements of a process flow chart EXCEPT A. B. D. operationitask storage/queue ‘outsourcing decision point 9, Benchmarking is a comparison of company’s performance in certain areas with world- class companies or competitors. The key measurement criteria is A B. c. D. Good and services Equipment Factory size Storage capacity PBB23203/PP26304 PRODUCTION AND OPERATIONS MANAGEMENT 2JANUARY 2013 10, Which of the following is NOT a major trade agreement? A WTO BAFTA Cc. APEC D. MATTA CONFIDENTIAL 14, Value Chain is referred to relationship and the transformation process to add value to. the product among ‘A. Supplier- Customer - Competitor B. Supplier — Company - Government C. Customer — Company - Government D, Customer-Company — Supplier 42, JIT system is becoming more popular in service sector. The best example of JIT in service industry can be observed in ‘A. Supermarket chain B. Grocery shop Cc. School D, Banking 13. Which of the following is NOT a mark of a good layout in manufacturing: A. straight line flow pattern (or adaptation) B. _ predictable production time C. bottleneck operations D. work stations close together parts is referred to as: A. Process layout B. Product layout C. Group technology/cellular layout D. Fixed-position layout PIBR23203/PP826304 PRODUCTION AND OPERATIONS MANAGEMENT 14, A layout which groups dissimilar machines into a work center to process a variety ofJANUARY 2013, CONFIDENTIAG, 45, 16. 7. 18. 19. 20. Which of the following change is NOT a major production strategy variable associated with production planning and smoothing? A. production rate B. inventory level C. work force size D. price of the product Which of the following is a mixed strategy for absorbing demand fluctuations? ‘A. altering the production rate by changing the size of the labor force using subcontracting to meet peak fluctuations in demand using overtime, inventory, and subcontracting 998 keeping the work force and production rate constant, and allowing fluctuations in the inventory level Inventory is used to ‘A. maintain independence of operations B. _ meet variation in product demand C. _ allow flexibility in production scheduling D. all of the above The reason for low level coding in MRP is to A. show the relative importance of component items B. _ make it easier for the computer to search ©. _ show the offset lead times in perspective D. facilitate updating transactions easily One of the key requirements for installing an MRP system is A. EOQ. B. low-cost items C. accurate forecasts D. identifiable dependent demand in-process inventory The three major inputs to an MRP system are the; ‘A. MPS, inventory status record, and the BOM B.__ bill of materials, inventory status record, and production structure record C. shop order, work orders, and reschedule notices D. on hand, on order, and lead time PBB23203/PPR26304 PRODUCTION AND OPERATIONS MANAGEMENT 4JANUARY 2013 CONFIDENTIAL SECTION B (Total: 50 marks) INSTRUCTION: Answer any TWO (2) questions. Please use the answer booklet provided. Question 1 a) As manager of The Gorgeous Fitness, Dania is constantly trying new initiatives to keep her clients fit. Recent studies show that using several different cardio regimens for short periods of time is more effective than an expected period of time is more effective than an extended period of time on one type of equipment. Dania has taken some of the existing cardio equipment and arranged them in a line as follows: stationary bike, treadmill, stair stepper. Clients would select this part of the gym for cardio “circuit training," spending 18 minutes at each piece of equipment for a total cardio workout time of 45 minutes, if the reliability of the bike is 96%, the treadmill is 95%, and the stair stepper is 92%, what is the probability that a client can complete his or her workout uninterrupted by faulty equipment? [2 marks] il.Dania has added a second cardio “line” for circuit training with the same type of equipment as the first line. This equipment, however, is older with reliabilities of 80% each. If only one client were using the cardio circuit training section of the gym, the second line could be used as a backup for faulty equipment. What is the revised probability of completing a workout uninterrupted? [4 marks} b) The Sibu Airport in Sarawak serves corporate aircraft. tt has a single runway and one air traffic controller to land planes. It takes an airplane 8 minutes fo land and clear runaway (exponentially distributed). Planes arrive at the airport at the rate of 8 per hour (Poisson distributed). i. Determine the average number of planes that will stack up waiting to land. [2 marks] ji, Find the average time a plane must wait in line before it can land. [2 marks] Calculate the average time it takes a plane to clear the runway once it has notified the airport that itis in the vicinity and wants to land. [2 marks} 'PBB23203/PPB26304 PRODUCTION AND OPERATIONS MANAGEMENT 5JANUARY 2013 CONFIDENTIAL iv. International air traffic controller rules say an air traffic controller can, on the average, land planes maximum of 45 minutes out of every hour. There must be 15 minutes of idle time available to relieve the tension. Wil this airport have to hire an extra air traffic controller? [2 marks] ©) _Nadias a chain of cash and carry supermarket wants to expand operations in Malaysia ‘The management is proposing a few locations for the 4 new supermarkets. After several studies made, they finally decided to build the supermarkets at locations indicated by X and Y coordinates and the estimated annual sales for these 3 locations are presented in Table 1. [Location —S—«| X coordinate Y Coordinate ‘(| Forecasted sales (Millions of RM) K 15 100 125 B 50 75 3.00 fe 450 i 300 2.75 D 200 360 1.50 Table 7 Assuming the volume of product to be delivered is proportionately to sales; propose the coordinates for central disirioution warehouse to minimize the transportation costs. [11 marks} PBB23203/PP 26304 PRODUCTION AND OPERATIONS MANAGEMENT 6JANUARY 2013 CONFIDENTIAL Question 2 a) Explain the differences between a process flowchart and a worker-machine chart and what they are designed to achieve. [10 marks} b) _Anaz Industries maintains production facilities in several locations around the globe. Average monthly cost data and output levels are as follows. i.Calculate the labor productivity of each facility. [5 marks] ji. Caleulate the multifactor productivity of each facility, [5 marks} ‘Anaz needed to close one of the plants, which one would you choose? [5 marks] Units (in 00s) A B c D Finished goods 10000} 12000 5000 8000 Work-in-progress 4000 (z 2200 | 3000) 6000 Costs (in 00s) A 8 ¢€ D Labor costs $2,500 | $800 Ht Material costs $2,000 | $2,500 Energy costs $1,200 | $800 | Transportation costs | $250 | $2,500 | $2,000 | $5,000 Overhead costs $7,200 | $3,000 | $2,500 | $500 PBB23203/PPB26304 PRODUCTION AND OPERATIONS MANAGEMENT 7JANUARY 2013, CONFIDENTIAL, Question 3 Complete the following MRP matrix for item X: [ttem: x tLe: 0 PERIOD. a ima [TP2P3]4 Ts] ez] s [GrossRequirements SS 20 | 30 | 50 | 50 | 60 | 90 | 40 | 60 | Scheduled Receipts Projected on Hand 40 | Net Requirements Planned Order Receipts | Planned Order Releases Ordering cost: $100 Holding cost: $1 a) Compute in what periods should orders be released and what should be the size of those orders? [15 marks] b) Evaluate how would your answer change if the cost of ordering item X were $100, the cost of carrying were $2 a week and the POQ lot sizing technique were used? [8 marks] ©) Determine which lot sizing technique yields the lowest total cost? [2 marks] PBB23203/PPB26304 PRODUCTION AND OPERATIONS MANAGEMENT 8JANUARY 2013 CONFIDENTIAL SECTION C - (Total: 30 marks) INSTRUCTION: Answer ALL questions. Please use the answer booklet provided. CASE STUDY Rumaisha is opening a new sport outlet at Taman Shamelin Cheras. Demand for a newly designed sport shoes are overwhelming, and the sales figures are expected to reach 6000 pairs per year. Each order placed costs RM25; the annual cost to carry the items in inventory is RMG,00 each. The outlet operates 50 weeks per year. The order lead-time for the shoes from the factory is 2 weeks. Develop the company’s plan for the optimal order size, total inventory cost, number of orders per year and time between order per year. [15 marks} Few weeks ago, the company has been offered a particular material it uses according to the following discount pricing schedule provided by the supplier. The company uses 700 of the ‘components annually, the annual carrying cost is $14 per unit and the ordering cost Is $275. 1-199 $65 200-599 59 600+ 56 Determine the amount the firm should order. [15 marks} END OF QUESTIONS PIBB23203/PPB26304 PRODUCTION AND OPERATIONS MANAGEMENT 9JANUARY 2013 CONFIDENTIAL, APPENDIX A ae ‘Maximum inventory level = of-4) P. 24 pp 2 'PBIB23203/PPB26304 PRODUCTION AND OPERATIONS MANAGEMENT 10