University of Strathclyde Graduate School of Business MASTER OF BUSINESS ADMINISTRATION OPERATIONS MANAGEMENT

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Restricted Open book exam Attempt ALL Questions in Section A and ONE Question from Section B Section A 1. A Service company has decided to maintain its range of services that it offers the public and at the same time invest in IT so that costs can be reduced. Indicate which direction this company is moving within Schmenner’s Service-Process Matrix. (5) 2. Pressure for productivity increases in the service sector is rising. Outline briefly with a few key points, what you think might be the implications for the cost of service products, variety of services available and the quality of service products. (5) 3. A company has been classified as a service shop. Assuming that you have never visited this organisation, what characteristics has the classification revealed? Include the description of a typical organisation of this type in order to enhance your answer. (5) 4. Goldratt, in explaining his Theory of Constraints, suggests that the sum of the optimals is not the optimal of the sum. Explain how he suggests that we might take advantage of this situation. (5) 5. The annual demand for a product is 110,000 units. The order cost is $3,000 for a single order. The cost of the item is $120 and the holding cost has been calculated at 25% of the cost of the item to carry it in stock for one year. What quantity would you advise they order? (5) 6. A well-designed conversion process operates as closed loop system. Explain what a closed loop system is and why it is used. Give some examples from you own experience to illustrate your answer. (5)

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The diagram should include inputs. What do you consider to be the major challenges facing Operations Managers in the 21st century? Illustrate your answer with examples from your experience. In the study of job design we encountered the term Division of Labour. Explain what is meant by the term concurrent engineering. (5) 8. (5) 10. Examples from your experience can be used to support your answer. Include the rational of why it is better than traditional approaches to product development.7. Illustrate your answer with examples from your experience. 2 . Briefly discuss the advantages of creating a process that includes highly divided jobs. Draw a diagram illustrating the conversion process that is present in a good quality restaurant. (5) Continued/…. conversion activities. (5) 9. methods of feedback and outputs (products).

(b) How would you suggest they identify (categorise) the individual businesses and align suitable processes and KPI’s (20) How would you advise they cope with the trade-offs that may be inherent in their business? (20) 1. Also.Section B (Attempt only one Case Study) Case Study 1: McPatna’s Indian Cuisine (Reference Appendix 1) Overview of the case: McPatna’s is a family owned business that produces excellent Indian food products. Read the full case study in Appendix 1 and then answer the following questions: 1.(a) How would you help the family develop an operations strategy? (10) 1. Assume that the family has engaged you as an independent operations consultant to give them personal advice. 3 . The company offers a wide range of products and serves a numbers of different markets.(c) Continued/…. The business is currently expanding rapidly while at the same time they are experiencing increasing complexity in the variety of products offered to the market and the internal food processes managed internally. handling customer orders and invoicing is becoming too great a management challenge for the three family members who currently run the business. Although beyond the advice you might offer the family also intends to employ a professional manger to help the company expand and take advantage of the business opportunities being offered.

Case Study 2: Unique Autos (Reference Appendix 2) Overview of the case: You are a management consultant employed by Steve Mullen. Read the full case study in Appendix 2 and then answer the following questions: 2.(a) Describe the operational problems that you see facing the company. (20) 2. 4 . He has asked what operational advice you would give to help implement his strategic vision and ensure a successful ongoing operation.(b) Outline the solutions you would implement explaining how these will lead to greater efficiency. to help the company restructure its operations. (30) Continued/…. the Managing Director of Unique Auto’s.

there are around 10. pickles and pastes to daily meals prepared for consumption within 1 week of issue and pre-cooked meals that are supplied to orders received from a national supermarket chain. a recent customer survey only rated them number two in terms of quality. the company is considering expansion but unsure of which aspect of their business should be expanded first. the United States and Canada.000 vacancies to fill. Quality has begun to suffer. The orders for pre cooked meals in particular are experiencing en explosion in variety. and competition between restaurants for the best chefs is intense. The current annual growth rate in sales value is over 50%. including the UK.Case Study – McPatna’s Indian Cuisine The amount of Indian food eaten in Britain is considerable. All related to the retired owner.000 restaurants serving more than two million meals every week. curry pastes. Japan.5 billion a year. Two older ladies and a younger son. chutneys. McPatna’s has grown to become a successful brand. all of the family members have agreed that there is too much work for them and additional expertise should be sought probably by employing a professional manager. The industry is worth more than £2. a qualified accountant manages the financial aspects of the business and the older ladies (both in their late sixties) manage everything else from ordering supplies to shipping orders. pickles and pappadums distributed to more than 14 countries worldwide. With over 150 people working for the company in a single factory site. Once the name McPatna was synonymous with the best Indian cuisine. Continued/…. New Zealand. Although the Academy of Asian Culinary Arts at Thames Valley University took their first students in 1999. Australia. The business is run on a day to day basis by three family members. McPatna’s. Orders vary from overseas orders for items that are not perishable such as chutney’s. made worse due to a shortage of suitable courses in local colleges. Europe. Established in Scotland in 1989. Currently there are over 20. Recently an initiative is being considered to introduce fish and chips and curry both as fast food restaurants and delivery vans. The younger son Raju. In conversations with the bank they have been informed that they should not try to expand the business as a whole but having have been requested to analyse their business and provide an plan expansion based on phases with financial targets set as gates before the next phase can be started. The company is beginning to experience shortages of chefs with sufficient knowledge. is a family owned business that has grown considerably since its inception. With award-winning cooking sauces. The company is beginning to experience trade-offs between the range of products and services provided and their ability to meet demand. Recently. 5 .Appendix 1 . The company has 6 local restaurants and produces pre-prepared chilled curries from supermarkets. In 2006.

Continued/…. Recently orders were lost because delivery service was very poor and there have been issues raised by an environmental officer of the cleanliness of the freezer facilities. 6 .Other problems seem to be managing staff and sharing staff among a number of competing processes. improve services and deliver quality image. The family have decided firstly to appoint an operations consultant who will advise then on how to develop an operations strategy and help them focus resources among the competing and diverse products and markets. The consultant has also been asked to help develop a business plan and a logical step by step guide as to how they should reorganise their facilities.

Most of the other manufacturing operations are also carried out on site using a suite of dated general purpose machines where the skill of the operator is the factor that determines the outcome of the job. Due to the fixed nature of the Prestige fee any cost savings from increased manufacturing efficiency are kept by Unique. The Manufacturing Site The Assembly Building is in good shape structurally and the utility provision is also good however there is no room for expansion and Unique are reluctant to relocate due to their dependence on skilled local labor. These IT packages are generally underused as they are outdated. The key to the success of the volume selling strategy is therefore to produce the cars at as low a cost as possible taking best advantage of economies of scale. Originally a family-run business the company has enjoyed some success and recently went public. success has been built on robust design and quality construction of specialized motor cars for the top-end market. The Current Production Process The site is well equipped with up to date machinery and tooling for metalwork and manufacturing of structural components and body work including a state of the art automobile painting facility. recognizing the sales potential. a larger manufacturer of quality cars.is unable to cope with growing demand. The operational challenge now facing Steve is to transform Unique from a lowvolume to a high-volume manufacturer of the Sceptre Product.Appendix 2: Unique Autos Unique Autos Ltd designs and manufactures niche-market sports cars. In addition Prestige Autos. The company has sufficient capital to spend on this restructuring due to money raised during the flotation. Continued/…. This means manufacture of the car structure and body work is relatively efficient. has decided that the time has come to alter the scale of the operation seeing the alliance with Prestige as a way to gain the marketing and selling capability that Unique lack. Finance & Contract Unique have a healthy profit margin on the Sceptre currently however Prestige will take a fixed fee from each sale so reducing profit for Unique. The company’s main product the ‘Sceptre Sport’ has become increasingly popular and the production facility originally set-up for low-volume custom build . The IT Infrastructure is poor with capability limited to some discrete packages that support some elements of the production process. not user friendly and were never integrated properly with the process. Due to these factors the MD of Unique. To this point. Steve Mullen. has offered to market and sell the Sceptre through its network of showrooms. 7 .

It is recognized that this is extremely inefficient as a specialist manufacturer with the latest synthetic molding machinery could do this at a vastly reduced cost. Engine build is not seen as the core competence of Unique and it has been suggested previously that this should be subcontracted to a specialist assembler. The production engineering department is small and the manufacturing processes are poorly structured. Material shortages are frequently quoted as reasons for delay. when production has stopped due the unavailability of a key worker. However due to the lack of process planning the supervisor often is unaware of the detail of certain tasks and some are forgotten. The workforce are not organized in teams and wait for the supervisors to allocate tasks on a daily basis. End of Paper 8 . Material control in general is poor with only basic IT support. The factory is not unionized. In addition the workers frequently work slowly to make life easy for themselves. This is a labor intensive task that is poorly supported by tooling and machines. These skilled workers carry out all the tasks within the production process leading to a large proportion of a skilled-man’s time being taken up doing what can be considered unskilled jobs. plastic parts) is done in-house. All internal upholstery is carried out on site by skilled fabricators however workers with this skill-set are hard to come by and shortage of labor in this area frequently leads to production delays. Workforce All of the workforce in the manufacturing unit are skilled with the majority expert at metalworking. Manufacture of all synthetics (e. They are very well paid by industry standards and the wage burden is a constant source of irritation for the company Financial Controller. There are some jobs in the factory that are only familiar to a small number of workers and there are frequent instances. Management Structure An operations manager is responsible for the production process supported by supervisors that are in charge of a specific part of the production line. A large department of material controllers are required to keep the production line supplied with materials. usually by hand or by general purpose machine.Engines are assembled in house from bought-in components. assembly work and painting. usually around holiday times. In addition the number of components required to make an engine is large and there are often delays due to the lateness of components.g.

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