Ma. Angelica V.

Cruz

160797

4Th Year BSBA – 10:30 am – 12:00 pm

OPERATIONS MANAGEMENT FINAL EXAM

1. Identify the Annual and Daily Demand of Kimchi (10 pts)

Indicator % Value
Population 100.00% 1,500,000.00
Age 50.00% 750,000.00
Class 20.00% 150,000.00
Market Size 35.00% 52,500.00
Willingness to try 80.00% 42,000.00
Willingness to buy 100.00% 42,000.00
Frequency of Purchase 100.00% 42,000.00

Total Annual Demand 42,000.00

Total Daily Demand 168
2. For Total Quality Management: (25 pts)

a) Create a Pareto Chart of the problems and explain the results using the Pareto Principle

Probelm Frequency of Occurrence Cumulative Percent

Excessive Production of Gas Concentration (CO2 and Ammonia) 55 55 47.01%
Excessive Lactic Acid concentration 24 79 67.52%
Presence of Unrelated Organisms 23 102 87.18%
Temperature of Kimchi fermentation exceeds 5 degrees Celsius 15 117 100.00%
total 117
The Pareto chart is used to focus on the 80% of the defects or problem and less prioritize the 20% of the
defects or problem. In relation to that, the Kimchi Corporation should focus on 80% of the defects occur
during the production process in a year. There are 23 defects on Presence of Unrelated Organisms with
a cumulative percentage of 87.18%. There are also 24 defects regarding the excessive lactic acid
concentration with a cumulative percentage of 67.52%. Moreover, there are 55 defects on excessive
production of gas with a cumulative percentage of 47.01%. The company must focus on the following
defects; Presence of Unrelated Organisms and excessive lactic acid and production of gas . Therefore,
the remaining 20% will not be prioritized as much as the other as temperature of kimchi fermentation
exceeds to 5 degrees having a cumulative percentage of 100%
b) Construct Ishikawa Diagrams and explain each of the possible problems using 6Ms, identify at least 2
problems for each problems.
c) Based on the results, what conclusions can you draw from it?

To guarantee the quality of kimchi, it must consider some factors such as maintaining a clean
environment and good hygiene practices, carefully following the steps, and monitoring temperatures to
foster growth Weissella species, Lactobacillus species, and other bacteria contributing to the
fermentation process. During preparation, proper sanitation practices must be followed to prevent
contamination by spoilage or harmful microorganisms. This includes proper hand washing as well as
using clean equipment, utensils, and surfaces throughout all preparation steps.
3) Given the Bill of Materials, conduct the following: (30 pts)
ABC Analysis

Percent of
Item Stock Annual Annual
Analysis Percent of no of Volume Units Annual Peso Peso
Code items Units Quantity Cost Volume Volume Class
KMC-CAB 0.4518072289 63,000.00 1.5 150.00 $9,450,000.00 29.81% A
KMC-SAL 0.1506024096 21,000.00 0.5 265.00 $5,565,000.00 17.56% B
KMC-GRF 0.006024096386 840.00 0.02 120.00 $100,800.00 0.32% C
KMC-RAD 0.1506024096 21,000.00 0.5 280.00 $5,880,000.00 18.55% A
KMC-PEP 0.1506024096 21,000.00 0.5 400.00 $8,400,000.00 26.50% A
KMC-FSS 0.01506024096 2,100.00 0.05 596.00 $1,251,600.00 3.95% B
KMC-ONI 0.07530120482 10,500.00 0.25 100.00 $1,050,000.00 3.31% C
TOTAL 1 139,440.00 3.32 $31,697,400.00

Arranged Format of ABC Analysis

Item
Stock Annual Volume Units Annual Peso Percent of Annual
Code Item Name Units Cost Volume Peso Volume Class
KMC-CAB Napa Cabbage 63,000.00 150.00 9,450,000.00 29.81% A
Korean Pepper
KMC- PEP Flakes 21,000.00 400.00 8,400,000.00 26.50% A
KMC-RAD Korean Radish 21,000.00 280.00 5,880,000.00 18.55% A
KMC-SAL Kosher Salts 21,000.00 265.00 5,565,000.00 17.56% B
Fermented
KMC-FSS Salted Shrimp 2,100 596.00 1,251,600.00 3.95% B
KMC-ONI Onion 10,500 100.00 1,050,000.00 3.31% C
Glutinous Rice
KMC-GRF Flour 840 120.00 100,800.00 0.32% C
total 139,440.00 31,697,400.00

CYCLE COUNTING
Item
Class Quantity Cycle Counting policy Number of items counter per day
105,000.0
A 0 21 5000
B 23,100.00 63 366.6666667
C 11,340 125 90.72
139,440.0
Total 0

4) For the Location Decision, which of the following given location is considered as the best given the
key success factors? Why? (5 pts)

Weigh S:
Key Success Factors t S: Imus Sta.Rosa WS: Imus WS: Sta. Rosa
Traffic Conditions 0.35 80 75 28 26.25
Accessibility of Raw Materials 0.2 73 86 14.6 17.2
Labor Conditions 0.15 82 79 12.3 11.85
Size - Cost Ratio of the warehouse 0.3 76 87 22.8 26.1
total 1 77.7 81.4

5) Given the Projected Cost of Doing the Business, identify the following costs: (30 pts)

a) Production Cost

PRODUCTION
COST
RAW Materials 31,697,400.00
Direct Labor 2,405,000.00
MFTG OH 930,188.30
total 35,032,588.30

b) Holding Cost
HOLDING COST Cost
Rent 1,560,000.00
Security Gaurds 9,080.00
CCT System 3,535.00
Budget for defects 6,715.26
Trainings and Seminars 50,000.00
Total 1,629,330.26

c) Setup and Ordering Cost

SET UP COST Cost

Processing Fees 25,000.00
3rd Part Seminars 120,000.00
Tellecommunicatio
n 2,000.00 (24,000 /12)
Washer and Salter 1,300,000.00
Total 1,447,000.00

Excel Computations

Raw Materials
KMC-CAB 63,000.00 150 9,450,000.00
KMC-SAL 21,000.00 265 5,565,000.00
KMC-GRF 840.00 120 100,800.00
KMC-RAD 21,000.00 280 5,880,000.00
KMC-PEP 21,000.00 400 8,400,000.00
KMC-FSS 2,100.00 596 1,251,600.00
KMC-ONI 10,500.00 100 1,050,000.00
TOTAL annual peso
demand 31,697,400.00

Direct Labor

Food Technicial 390,000.00

Cutter and Mixer 1,300,000.00

Packaging
Personnel 585,000.00

Shipping Personnel 130,000.00

TOTAL 2,405,000.00
Manufacturing
Overhead
Utilities 875,000

Electricity 50,000

Water 5,188.30 10 years service value

total 930,188.30

6) For Inventory Management, Identify the following for EACH Raw material: (50 pts)

 Economic Order Quantity

 Annual Holding Cost
 Annual Setup Cost
 Production Cost
 Expected Number of Orders (N)
 Expected Time Between Orders (T)
 Reorder Point (ROP)