SPECIAL TAKE HOME ONLINE SUMMATIVE ASSESSMENT

Bachelor of Commerce in Supply Chain Management

Bachelor of Commerce in Financial Management

PROGRAMME
Bachelor of Commerce in Entrepreneurship

MODULE Operations Management in Supply Chain

INTAKE January 2021
DATE 29 November 2021
TOTAL MARKS 100
OSA [100 Marks]

Read the following case study and answer ALL the questions that follow

Plant Loading and Dispatch Planning at PCC Company

The PCC is a company that is engaged in the production and sale of cement. It sells cement through its distribution network
to the building and construction industry, concrete product manufacturers, and retail outlets, such as builders, merchants,
hardware stores, and DIY centres. The company also exports cement to other African countries and the Indian Ocean
islands. PPC is the leading supplier of cement in Southern Africa, with eight manufacturing facilities and three milling depots
in South Africa, Botswana and Zimbabwe. These facilities are capable of producing more than seven million tons of cement
products each year. Currently the company produces different types of products – all produced by first producing three
types of Portland cement. Portland cement is the most common type of cement in the world used as a basic ingredient of
concrete, mortar, stucco, and most non-specialty grout. The three types of cement produced by the company are: Ordinary
Portland Cement (OPC), Pozzolanic Portland Cement (PPC) and Sulphate Resisting Portland cement (SRC). Of these, SRC
is produced only for one customer, that too in a very small quantity. Virtually it is OPC and PPC which account for almost
100% of the sales. Packing is done in two ways – paper packing and high-density polyethylene (HDPE). Company sells
cement under different PCs in any given month. About 1000 stockists, on an average, place orders for different product
combinations with the company. There are two types of transactions, namely, the trade and the non-trade. Under trade, the
customers (stockists) are allowed to purchase material on credit. Credit is not allowed in non-trade. Trade accounts for
about 75% of the sales volume, the balance being non-trade. The orders are received from stockists daily. The branch
offices of the company receive these orders and compile them. Complete information regarding the stockists such as
stockist code, location (state, district and location codes), point of delivery, freight etc., is maintained in the company’s
database. When products are supplied to stockists, it involves cost of production, freight, handling charges, tax, discounts
and price. Production cost consists of two components, namely, overhead costs and variable costs.

Management Decisions

The company faces the problem of deciding on where to produce what products and which plants should serve which
orders. Also, the company has to decide on the mode of supplies. These decisions have to be made for every month. The
large number of stockists, large number of product combinations and the number of transport options (modes of transport)
make the problem extremely complex. Even to understand whether the decisions made are optimal or how far they are from
optimality, one needs an effective approach to the problem. With this in view, the company decided to develop a decision
support system that would help them in not only making optimal decisions but also in analysing various decisions made
from the view point of optimality. This would provide them a good management information system. For the purpose of
making decisions optimally, the company decided to take the contribution as the objective function. Contribution is not profit
in full sense because it does not include the overheads component of the production cost. As the overhead costs are
anyway unavoidable and more or less fixed for each plant, therefore, management decided to use contribution for the
objective function.

Answer ALL the questions in this section.

Question One

1.1 Assume you work at the PCC branch in Cape Town and you are trying to convince the HR and (15 marks)
Corporate Social Initiative (CSI) manager to consider a community development programme that
would entail sponsoring five prospective candidates from the local high school to study towards an
Operations Management qualification at any of the universities in Cape Town. Proffer a robust
argument outlining the importance of an operations Management qualification.

1.2 PCC achieves its organisational goals by grouping its employees into different functional areas. (15 marks)
Based on your understanding of Operations Management, discuss these functional areas and their
relationships in relation to the case study.
Question Two

2.1 Assume that you have just been appointed as an Operations Manager at PCC and one of your (24 marks)
responsibilities is to oversee the production of the following types of cements, produced by the
firm, Ordinary Portland Cement (OPC), Pozzolanic Portland Cement (PPC) and Sulphate Resisting
Portland cement (SRC). Provide a discussion of what you would consider as the inputs for the
production process.

2.2 Operations management is concerned with both the manufacturing and service industry. (6 marks)
Manufacturers such as PCC utilise operations management to produce a tangible good, while
service providers utilise operations management to produce a service. Explain your understanding
of what goods and services are, by comparing and contrasting both.

Question Three (20 Marks)

As an operations manager, you have been invited to a board meeting to discuss the company`s operations strategy.
Present to the board, a discussion outlining the different phases of the role operations plays with regards to a firm`s
competitiveness.

Question Four

4.1 As the operations manager at PCC you have been tasked with calculating one-day productivity of (10 marks)
three of your employees in order to determine the recipient of the “employee of the day” prize. Your
first employee is Luke, the second is Gregory and the last is John. All three have worked an over
time of 12 hours for the day in question. Luke has worked to produce 412 cements, Gregory 188
and John 625.. Calculate the productivity for all three employees and indicate who the most
productive employee is.

4.2 The company’s branch in Cape Town Produces 100 00000 bags of cement a day, the total man- (6 marks)
hours of all of its 753 employees equal to 6024, the Machinery cost is estimated at 2000 and the
material cost is 230000. Step by step Calculate the Multi-Factor Productivity for the company.

4.3 Assume that in the next board meeting you will be expected to provide the productivity growth rate (4 marks)
for 2021. The productivity index for 2021 is 83 and the productivity index for 2020 was 79. Provide
the productivity growth rate for 2021 showing relevant calculations.