Candidate No.

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S. K. PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES

PRODUCTION AND OPERATIONS MANAGEMENT (CC 206)
MID TERM EXAMINATION
MBA I Semester II Marks: 60
Time: 9.30 to 11.30 Date: 13/04/2019
Instructions:
1. This paper has FIVE questions.
2. Your answer should be precise and to the point.
3. Give examples and make diagrams wherever necessary.
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Question 1 Answer the following: [12]

A. Med-Tech labs is a facility that provides medical tests for patients, ranging from analyzing
blood samples to performing MRI. Average cost to patients is Rs. 60 per patient. Labor costs
average Rs. 15 per patient, materials costs are Rs. 20 per patient, and overhead costs are
averaged at Rs. 20 per patient.
(a) What is the multifactor productivity ratio for Med-Tech?
(b) If the average lab worker spends three hours for each patient, what is the labor
productivity ratio?

B. Eliminating waste is a vital part of JIT. Identify some sources of waste and discuss how they
may be eliminated.

OR

B. Briefly describe the seven tools of quality control. Are some more important than others?
Would you recommend using these tools separately or together? Give some examples of
tools that could be used together.

Question 2 Answer the following: [12]

A. Write a note on advantages and disadvantages of MRP.
B. Why is group technology more important in the present manufacturing scenario? Briefly
explain with an example.

OR

A. Differentiate between process focus and product focus strategies.

B. Explain the importance of respect for people in JIT.

Question 3 Answer the following: [12]

A. Give some examples of automation. How has automation changed the production process?
B. Consider the following data on locating a new facility which has to serve 5 different
existing facilities. The coordinates of the existing facilities are (30, 20), (40, 50), (30, 30),
(15, 30) and (20, 40). The number of tons of material transported per year from
the new facility to each of the existing facilities is given below. Find the optional X and Y
coordinates of the new facility.
Existing facility
1 2 3 4 5
 New facility 1000 980 1500 2000 1750
OR

A. Explain any 6 determinants of service quality?

B. Let us assume that a new medical facility, Health-care, is to be located in Delhi. The
location factors, weights, and scores (1 = poor, 5 = excellent) for two potential sites are
shown in the following table. What is the weighted score for these sites? Which is the
best location?
Scores
Location factor Weight
Location 1 Location 2 Location 3
Facility utilization 25 3 5 7
Total patient km per month 25 4 3 1
Average time per emergency trip 25 3 6 3
Land and construction costs 15 1 2 2
Employee preferences 10 5 3 5

Question 4 Answer the following: [12]

A. Potential locations X, Y and Z have the cost structures shown below. The ABC company
has a demand of 1,30,000 units of a new product. Three potential locations X, Y and Z
having following cost structures shown are available. Select which location is to be
selected and also identify the volume ranges where each location is suited?
Location X Y Z
Fixed Cost Rs. 1,50,000 3,50,000 9,50,000
Variable cost Rs. 10 Rs. 8 Rs. 6
OR
A. Ms. Shah of Shah’s Custom Tailoring is considering expanding her growing business. The
question is whether to expand with a bigger facility than she needs or with a small facility,
knowing that she will have to reconsider expanding in three years. Ms. Shah has estimated
the following chances for demand:
• The likelihood of demand being high is 0.50.
• The likelihood of demand being low is 0.50.
She has also estimated profits for each alternative:
• Large expansion has an estimated profitability of either Rs. 2,00,000 or Rs.1,00,000
depending on whether demand turns out to be high or low.
• Small expansion has a profitability of Rs. 80,000, assuming that demand is low.
• Small expansion with an occurrence of high demand would require considering whether to
expand further. If the business expands at that point, the profitability is expected to be
Rs.1,20,000. If it does not expand further, the profitability is expected to be Rs.70,000.
Draw a decision tree and solve it. What should Ms. Shah’s Custom Tailoring do?

Question 5 Answer the following: [12]

Describe the nature of operations management and explain the important operations-related
decisions taken in the following organizations:
i) SBI
ii) College Canteen
iii) Maruti Suzuki
Med-Tech labs is a facility that provides medical tests and evaluations for patients, ranging from analyzing blood
samples to performing magnetic resonance imaging (MRI). Average cost to patients is $60 per patient. Labor
costs average $15 per patient, materials costs are $20 per patient, and overhead costs are averaged at $20 per
patient.

What is the multifactor productivity ratio for Med-Tech? Multifactor productivity = 1.09.

(Round your answer to 2 decimal places, the tolerance is +/-0.01)

What does your finding mean?

The multifactor productivity number tells us that the lab is charging about 9% the expenses of labor, materials,
and overhead.

(Round your answer to 0 decimal places, the tolerance is +/-1)

If the average lab worker spends three hours for each patient, what is the labor productivity ratio? Labor
productivity = $20 per hour.

Explanation:

Multifactor productivity = $60/($15+$20+$20) = 1.09   

This number tells us that the lab is charging a bit more than 9% over the expenses of labor, materials, and
overhead.

Labor productivity = $60/3 hours = $20 per hour

Solve for the crossover between X and Y:

10X+ 150,000 = 8X + 350,000 2X = 200,000 X = 100,000 units
Solve for the crossover between Y and Z:
8X + 350,000 = 6X + 950,000 2X = 600,000 X = 300,000 units
Therefore, at a volume of 1,30,000 units, Y is the appropriate strategy. From the graph we can interpret that
location X is suitable up to 100,000 units, location Y is suitable up to between 100,000 to 300,000 units and
location Z is suitable if the demand is more than 300,000 units.
BEP chart