EXAM QUESTIONS, MODEL ANSWERS AND BAD ANSWERS

1.

a. In simple statements, discuss what operation management is and how it is practiced. (Mention some of the ten decision areas of operation management) Poor answer Operations management is the process of carrying production activities to ensure efficiency lead to maximum output, maximum profitability and minimum cost. Operation management is done to ensure customer satisfaction, employment efficient use of resources, use of best practices, meeting social responsibility, safe environment operations. 1pt Model answer Operations management is a discipline that involves activities that relate to the creation of goods and services through the transformation of inputs to outputs. To create goods and services all organizations perform three functions. These functions are necessary not only for production but also for the organizations survival. These functions are marketing, which generates the demand, production and operations, which creates the products or services and finance and accounting, which tracks how well the org. is doing, pays the bills and collects the money. Good managers perform the basic functions of the management process which consist of planning, organizing, staffing, leading and controlling. Operations managers apply this management process to the decisions that they make in the OM function. These ten decisions of OM include service and product design, quality management, process and capacity design, location, layout design and job design. 4pts b. Abraham Cudjoe, the local auto mechanic, finds that it usually takes him 2 hours to diagnose and fix a typical problem. What is his daily productivity (assume an 8 hour day)? Ans. Current productivity = 8 hours per day = 4 problems per day 2 hours per problem

Mr. Cudjoe believes he can purchase a small computer trouble-shooting device, which will allow him to find and fix a problem in the incredible (at least to his customers!) time of 1 hour. He will, however, have to spend an extra hour each morning adjusting the computerized diagnostic device. What will be the impact on his productivity if he purchases the device? Ans. Productivity with computer = 7 hours per day = 7 problems per day 1 hour per problem

7 4 3 Productivity improves 75% = = 4 4

.75

Abraham Cudjoe is president of CLAD Manufacturing, a producer of tricycle and bicycle tires. Abraham makes 1000 tires a day with the following resources: Labour Raw material Energy Capital
i.

400 hours per day @ 12.50 per hour 20,000 pounds per day@ $ 1 per pound $5,000 per day $10,000 per day

What is the labor productivity per labor-hour for these tires? labor productivity = units produced /inputs used labor productivity = 1000tyres/ 400hrs. = 2.5 tyres/hr

ii.

What is the multifactor productivity for these tires? Multifactor productivity = = = output Total inputs 1000tyres $5,000 + $20,000 + $5,000 + $10,000 0.025 tyre/$

iii.

What is the change in multifactor productivity if Abraham reduces the energy bill by $1000 without cutting production or changing any of the other inputs. How do you calculate this?

c. Explain why quality should be better by following the TQM concept rather than in a system that depends on final inspection. Model Ans. TQ M is the management of an entire organization so that it excels in all aspects of products and services that are important to the customer. Inspection is a means of ensuring that an operation is producing at the quality level expected. By the definitions given, it can be seen that a system that follow TQM and ensure that there is management commitment to have companywide continuous improvement in quality is better than a system that checks to see of goods and services meet specifications at the end of the process. Moreover even a 100% inspection will not guarantee that good products are rejected and bad products are passed.
2

a. If every forecasting method is prone to error, then what is the rational of forecasting?

Bad ans.

Rational of forecasting is to enable an organization make prediction of its operations into the future. Thus guide the organization in its decision making purposes. This is done through the availability of past data. In that case if available data is prone to errors, forecasting prouded would not be accurate and can lead to wrong decisions. That notwithstanding, forecasting still remains a force in decision making since not forecasting means you are not planning and any organization not planning is planning to fail.
Ans.

Forecasting is the art and science of predicting future events. There are two main types: quantitative, which involves the use of historical data and projecting them into the future with some sort of mathematical model and qualitative, which may be a subjective or intuitive prediction. All types of forecasts are seldom perfect because of the level of uncertainty that exist in predicting for the future. Given these facts, the practice of not making any forecast would have been sensible but this is not so because if a business does not forecast, it is the same as shooting a dart blindfolded or starting a journey and not knowing where one is headed or will end up. Forecast is the only estimate of demand until actual demand becomes known and forecast of demand drive decisions in all areas of a business.
5 marks

b. Compare and contrast qualitative and quantitative forecasting methods. Is any one of them superior? Model ans

Qualitative and quantitative forecasting methods are two general approaches to forecasting. Qualitative forecasting techniques are based on such factors as the decision makers intuition, emotions, personal experiences and value system in reaching a forecast. This is usually subjective because the result of such forecasting process cannot be duplicated with different forecasters. It is usually used in situations where there is no historical data available or there is a high degree of uncertainty such as forecasting for the long term. Quantitative forecasting techniques involve the use of historical data and projecting them into the future with some sort of mathematical model. This is termed objective because the results can be duplicated using the same data and mathematical model. It is usually used to forecast for the short and medium term.

Both types of forecasting techniques are useful in certain situations and therefore none of them is better than the other. Their use depends on the situation at hand. 5 marks
c. Exponential smoothing is used to forecast automobile battery sales. Two value of examined, and

Evaluate the accuracy of each smoothing constant.

are

= 0.8 = 0.5. Which is preferable? (Assume the forecast for January was 22 batteries.) Actual sales are given in the following table
Month Actua Foreca l st Batte ry Sales Januar y 20 22

Februa 21 ry March April May June Model answer Month 15 14 13 16

Actual Battery Sales

Rounded Absolute Forecast with Deviation a =0.8 with a =0.8 22 20 21 16 2 1 6 2

Rounded Forecast with a =0.5 22 21 21 18

Absolute Deviation with a =0.5 2 0 6 4

January February March April

20 21 15 14

May June

13 16

14 13

1 3

16 14.5

3 1.5

S = 15 2.56

S = 16 2.95

SE

3.5

3.9

On the basis of this analysis, a smoothing constant of = 0.8 is preferred to that of = 0.5 because it has a smaller MAD 10 marks
3

a. What advantages are there for establishing time standard by using standard data rather than by doing individual time studies?

b.

The data in the following table represent time-study observations for an assembly process. On the basis of these observations, find the standard time for the process. Assume a 10% allowance factor. Element Performance Rating 1 100% 2 90% 3 115% 4 100% 1 1.5 2.3 1.7 3.5 Observation (minutes per cycle) 2 3 4 1.6 1.4 1.5 2.5 2.1 2.2 1.9 1.9 1.4 3.6 3.6 3.6 5 1.5 2.4 1.6 3.2

c. The preliminary work sample of an operation indicates the following: Number of times operator is working 60 Number of times operator is idle 40 Total number of preliminary observations 100 What is the required sample size for a work sampling study with a 95% confidence level and 4% precision? 20 pts.