Operations Management

Mid Term
Instructions:
1. Read and follow the instructions carefully. Not following instructions will attract penalty.
2. Kindly follow the instructions given by PGP office in the quiz announcement email.
3. Copying and plagiarism in part or full, exchanging ideas or solution with other students will
be severely punished as per PGP policy.
4. The test is for 90 minutes.
5. Make any necessary assumptions, and state them clearly.
6. You need to show the steps clearly. Screenshots and excel sheets without formulas are
deemed invalid.
7. You are encouraged to refer to the course text book during the exam for formulae and data
where required.
8. Submit all the files you have used (Excel workbook and Word document) in Moodle within
the time stipulated.
9. The files should be named as
 <Roll-No>_OM_Quiz_Report.docx
 <Roll-No>_OM_Quiz_Working.xlsx

Scenario 1

‘Awesome biscuits’ is a biscuit company. The main ingredient used in making biscuits, the refined
wheat flour, though not all healthy, is the one which gives the taste to the biscuits and gives the
required shelf life. On average, they use 5000 kg of flour every month. The holding cost per kg per
year is 6% of the price. It takes Rs 1500/- for the truck to deliver the flour every time an order is
placed.

The procurement of flour is up for revision. The supplier of the flour has sent the following
quotation.

Quantity Price / Kg
<7000 kg 50
7000-10000 kg 45
>10000 42

Question 1: [10 points]

How should Awesome biscuits plan their procurement?

Awesome biscuits offer many variations, by adding topping ingredients to the biscuit mix. These
versions are made to order. The following table gives the details.

Type Topping Ingredients Average Demand SD

(Kg per month)
Crunchy Cashew Cashews 1000 100
Delicious Dry fruits Cashews and Badam 500 60
Heavenly Combi Butter, Cashews and Badam 400 80

50 gm of every topping ingredient is added for every kg of biscuits. The lead time to procure each of
the topping ingredients is given below.

Topping Ingredient Lead time

Cashews 8 weeks
Badam 8 weeks
Butter 6 weeks

Question 2: [10 points]

Calculate the safety stock to be carried by Awesome biscuits of each topping ingredients, if it wants
to satisfy the customers 99% of time.
Scenario 2

NUHM is organising a vaccination drive for children. They have an insight from history that the
parents will bring their children for vaccination if their utility is positive as per the equation given
below.

Utility=10−4 .5∗Lq
Where Lq is the number of people in the queue. The time to administer the vaccine is exponentially
distributed with a mean of 1.75 min if one nurse is administering the vaccine, where as it will be 60%
of the time, if two nurses are handling the administration. The number of arrivals of parents with
children to be vaccinated in an hour follow Poisson distribution with mean 45.

Question 3: [10 points]

How would you design the queue system for the vaccination drive?