SUPPLEMENTARY ONLINE SUMMATIVE ASSESSMENT

PROGRAMME Advanced Diploma in Business Management

MODULE Operations Management in Supply Chain

INTAKE January 2022

YEAR ONE (1)

DATE 09 January 2023

TOTAL MARKS 100

SECTION A [40 MARKS]

Read the article below and answer the questions that follow.

Tesla Supplier CATL Weighs Sites for $5 Billion Battery Plant

Chinese battery mailer considering Mexico, US and Canada sites Plant

to have 80 gwh annual capacity, supply multiple firms.

A display by CATL at World Intelligent Connected Vehicles Conference in Beijing. Photo by VCG/Getty Images

By Gabrielle Coppola, Edward Ludlow, and Maya Averbuch March 19, 2022

China’s Contemporary Amperex Technology Co. Ltd., the world’s biggest maker of batteries for electric vehicles, is considering
sites across North America for a massive $5 billion plant to supply customers including Tesla Inc.

The company aims to build a factory capable of producing as much as 80 gigawatt-hours of batteries a year, according to people
familiar with the matter. The facility would eventually employ as many as 10,000 workers, said the people, who asked not to be
named discussing private information.

Executives from CATL flew to Mexico earlier this month for meetings, the people said. The company is also considering sites
in the U.S. and Canada, but has concerns over the availability of labour and other trade issues.

A spokesman for CATL in China declined to comment on the expansion into North America, the planned investment and
evaluation of sites. Backed by China’s strategic push into electric cars, CATL is riding a boom in demand for EVs as countries
work to reduce carbon emissions and consumers embrace cleaner cars. The company, which completed an initial public offering
in 2018, has about a 30% share of the global EV battery market.

A manufacturing footprint in North America will be crucial for Ningde, Fujian-based CATL to avoid costly trade tariffs while
supplying Tesla and other automakers. The company has used its massive scale in China, which has the most cell
manufacturing and metal refining capacity in the world, to lower costs for customers globally while spending heavily on research
and development.
An expanded presence in North America could unsettle U.S. officials who are keen on supporting domestic suppliers. President
Joe Biden is allocating billions to cultivate the U.S. battery supply chain and wean the auto industry off its reliance on China,
but those efforts will take years to come to fruition.

Global automakers from Ford Motor Co. to Volkswagen AG are electrifying their vehicle line-ups, creating unprecedented
demand for batteries. Carmakers’ production plans have helped send prices of metals like nickel, cobalt and lithium soaring,
prompting Tesla to announce last October it was switching to lithium iron phosphate batteries for short-range vehicles to offset
pricing pressures.

Cheap, Stable

Lithium iron phosphate, or LFP, batteries are cheaper and more stable than alternatives, but often provide shorter range
because they lack energy density -- though that is quickly changing. CATL dominates the market for LFP batteries, and Tesla
already uses LFP cells supplied by CATL at its Shanghai factory.

CATL’s new North American plant would produce a mix of nickel-manganese-cobalt and LFP cells, and supply both Tesla and
other automakers, two people familiar with the matter said. Tesla’s Elon Musk said in January that battery supplies would
become a limiting factor once the chip crisis subsides. To prepare for the crunch, Tesla is making its own 4680 battery cells in
Fremont, California, and widening its supply circle beyond long-time partner Panasonic as it seeks to ramp up sales and
prepares to open plants in Austin, Texas, and Berlin.

Panasonic also is scouting for a U.S. manufacturing site, Bloomberg reported earlier this month. The company makes 4680
cells for Tesla and supplies the automaker’s gigafactory in Reno, Nevada.

CATL has 145 gigawatt-hours of battery manufacturing capacity online and has announced or is in the process of building
another 579 by 2026, according to data compiled by BloombergNEF. The manufacturer also counts auto giants Daimler Truck
Holding AG, BMW, Stellantis NV and BAIC Motor Corp among its customers around the world.

Source: https://www.bloomberg.com/news/articles/2022-03-19/tesla-supplier-catl-weighs-sites-for-5-billion-battery-
plant? srnd=premium-africa

Answer ALL the questions in this section.

QUESTION 1 (20 Marks)

Considering that fact that the location decisions transcend national borders and that CATL intends to supply electric vehicle
manufacturers across North America, critically discuss the main considerations and factors that would influence the sequence
of locational analysis. Highlight the following in your discussion, (1) country decision; (2) region and community decision; and
(3) site decision.

QUESTION 2
2.1 Critically discuss how Slack and Lewis’s (2008) four perspectives of operations strategy can be used (10 marks)
to develop a fit-for-purpose operations strategy for CATL’s new North American electric vehicle (EV)
battery factory. Assume that a U.S.-based location has been chosen for the EV battery plant.

2.2
Assuming that you are an operations analyst at CATL with responsibility for the analysis of the possible
sites across North American Continent (i.e., Mexico, U.S., and Canada), answer the following
questions:
2.2.1 Specify any FOUR (4) methods or techniques that you could use to evaluate the alternative sites across (4 marks)
North America for its $5 billion electric vehicle battery plant.
2.2.2 Suppose that the initial analysis identified three plausible locations in the U.S. for final consideration, (6 marks)
critically discuss how a locational cost-volume analysis can be used to evaluate the
three location alternatives.

SECTION B [60 Marks]

Answer ALL the questions in this section.

QUESTION 3

Study the information provided below and answer the questions that follow.

3.1 A small South African furniture enterprise manufactured 1000 school desks per day during June 2021,
consuming the following resources:

1. Labour: 20 employees each working 8 hours per day for 25 days @ R60.00 per hour

2. Materials: 25 days at R10 000 per day

3. Machine rental: 25 days at R1000.00 per day

4. Energy and capital cost: R150 000 during June 2021 REQUIRED:

Using the information provided above, answer the following questions:

3.1.1 What is the labour productivity per Rand? (Round off answers to 3 decimal places). (4 marks)

3.1.2 What is the multifactor productivity per Rand? (Round off answers to 3 decimal places). (5 marks)

3.1.3 (5 marks)
If the output is increased such that 1 200 desks are manufactured per day using the same resources,
except energy and capital cost which increases by 10%, what is the new multifactor productivity per
Rand? (Round off answers to 3 decimal places).

3.2 (6 marks)
Despite the increasing servitization of the global economy, the service sector continue to experience
slower growth in productivity. Discuss the possible reasons why productivity of the service sector has
proven difficult to improve.
QUESTION 4
4.1 Discuss ANY FOUR (4) functions of inventory in the operations of a firm.. (4 marks)

4.2 Study the information below and answer the questions that follow.

Focus Retail Inc. has projected to sell 4 000 000 bottles of a popular brand of South African wine during the 2022 financial
year. It costs Focus Retail Inc. R1 000 to place an order. Focus Retail Inc. purchases each bottle of the wine for R100 and the
carrying cost per bottle of wine is R1.40 per year. The consignment of the wine is received at Focus Retail’s distribution centre
3 days after the placement of an order.

4.2.1 Determine the economic order quantity of the bottles of wine. (6 marks)

4.2.2 Calculate the number of orders expected to be placed in the year 2022. (3 marks)

(3 marks)
4.2.3 Assuming that Focus Retail Inc. operates on every single day in the year 2022, determine the reorder point in
terms of bottles of wine (ignore the safety stock).

4.2.4 Calculate the total ordering costs and total carrying costs of the bottles of wine for the 2022 year. (4 marks)
QUESTION 5

Study the information provided below and answer the questions that follow.

5.1 The data in the table below represents the actual quarterly sales and forecast quarterly sales of a brand of laptops
at Topview Inc. during 2021, and the respective forecast errors.

Period Actual Sales Forecast Sales Error Error squared Percentage error

Quarter 1 80 60 20 400 0.25

Quarter 2 100 80 20 400 0.20

Quarter 3 105 95 10 100 0.095

Quarter 4 90 75 15 225 0.167

Using the above information above, calculate the following:

5.1.1 Mean absolute deviation (3 marks)

5.1.2 Mean squared error. (3 marks)

5.1.3 Mean absolute percentage error. (3 marks)

5.2 The data below represents the monthly units of an important inventory item purchased by a retailer during
2021.

1 2 3 4 5 6 7 8 9 10 11 12

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales 51 55 54 57 50 68 66 59 67 69 75 73

5.2.1 Use a regression (i.e., trend) analysis to estimate the relationship between time and sales. (7 marks)

5.2.2 Using the equation obtained in question 5.2.1 above, forecast the sales for the first four months of next year. (4 marks)

END OF PAPER