Operations assignment

Section-A

                                                                (Short Answer Questions)                             

 

1.       Define operations management ? Describe Frederick Winslow Taylor's shop management approach.

2.       Define operating decision.  Give an example of an operating decision for:  a. a computer center,  b. a university, and  c. a manufacturer.

3.       Assume that a dollar could buy 125 yen and two years later a dollar could only buy 150 yen.  If the only factor considered was the change in exchange rates, would the price of a Japanese product sold in the U.S. go up or down in this period?  By what percentage would the price change?

4.       Define and describe:

a. positioning of the production system in manufacturing and in services  b. outsourcing  c. process and technology plans  d. strategic allocation of resources  e. facility planning.

Section-B

                                                                (Long Answer Questions)                             

 

1.       The Bi-State Trucking Company, a local deliverer of freight in Durham, North Carolina, has been experiencing customer complaints about late deliveries. Bi-State's management strives for an average delivery of local freight in 24 hours. Weekly samples of 20 customers are taken and exhibit an average range of 3.5 hours. Bi-State's management thinks this is about right.

                a.     Compute 3s control limits for

                b.     Plot these sample means on a 3s control chart for : 23.4, 24.5, 23.9, 25.6, 26.5, 23.8, 23.7, 24.1, 25.1, 24.9

                c.     Is management's target of an average 24-hour delivery being met?

 

 

2.       The expected daily output for an assembly line is 500 units. The assembly line operates for a period of 420 minutes a day. Balance the assembly line and calculate cycle time and efficiency of the assembly line.

Task	Preceding Activity	Task Time (sec)
A	-	45
B	A	11
C	B	9
D	-	50
E	D	15
F	C	12
G	C	12
H	E	12
I	E	12
J	F,G,H,I	8
k	J	9
Total		195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. Explain about different forecasting techniques used in times series analysis?

 

Section-C

                                                                (Caselets/Situational Questions)                             

 

C.1. Phelps Petroleum Refining Corporation converts crude oil to refined petroleum products. The key process in its refinery is the cracking unit. This process heats the crude, drives off the refined products at different temperatures, and collects and cools the refined products. The present cracking unit is about 20 years old, is relatively inefficient, and costs much to maintain each year. Two competing proposals are being considered for its replacement.

 

The first proposal is for a low-cost economy cracking unit. This unit will produce refined products at 94 percent yield; in other words, 94 percent of the crude actually ends up in refined products and 6 percent is lost. The unit has semiautomatic controls and requires some degree of worker monitoring. The unit must be shut down, flushed out, and its controls calibrated before it can be changed to crudes with vastly different characteristics; thus the amount of refined products that can be produced each year is reduced. The type of construction used in the unit will require a moderate amount of annual maintenance.

 

The second proposal is for a high-cost quality cracking unit with 98 percent yield. The unit has fully automatic controls and requires only a small amount of worker monitoring. Because of its control system and type of holding vessels, the unit can easily be shifted to crudes with other characteristics. The construction used in manufacturing the unit minimizes the amount of annual maintenance.

               

These estimates have been developed for the two units:

 

                                                                                                                                   Economy                            Quality

                                                                                                                                    Cracking                            Cracking

                                                                                                                                        Unit                                    Unit

                Annual volume (millions of gallons)

                   First year                                                                                                        50                                         60

                   Second year                                                                                                    60                                         70

                   Later years                                                                                                      70                                         80

                Annual fixed costs                                                                                           $140,000                         $1,650,000

                Average variable cost per gallon                                                                         $.372                                    $.360

 

 

Questions for Discussion:

 

1. If the sales price of the refined products averages $.425 per gallon at the cracking unit, which process would be preferred in each year?

2. At what annual volume of refined products would Phelps be indifferent between the two processes if the only consideration were economic analysis?

3. What other considerations would affect this decision?

 

 

C.2. The GP Group is a global trading and shipping company based in Bangkok. A family firm, it was established 125 years ago in Burma and comprises over 20 companies worldwide, specializing (amongst many other things) in commodity trading, ship chartering and ship management. Kirit Shah, the Chief Executive Officer and owner of the Group, explains the size of their trading operations:

 

'We charter about 200 ships a year, so at any given time we have 20 or 30 ships somewhere in the chain between loading, sailing and discharging.'

 

One key capability of the Group is filling ships by consolidating cargoes. Mr Shah explains:

 

'We consolidate lots of small buyers into filling as large a vessel as possible. Let me give an example. Take soya bean meal for India. A typical Indian seller is capable of delivering between 500 and 1000 tons. However, the ship is going to load 20 000 tons, so we put together a dozen or so sellers and five to seven buyers at its destination. So what we have effectively done is consolidate a region's supply and consolidate a destination's demand. We manage this by having our own facilities at the port. We have our own warehousing, we have our own berths, and we carry it on our chartered ships. All the cargo is consolidated at our warehouse in the port and we ship it only when it is ready in terms of quantity and quality. That way we have been able to control shipments better than other traders. It takes a great deal of planning to have a shipment ready by a certain date.

 

 From experience we know we have to "call forward" (give notice for) the goods from different sellers at different times. For some suppliers you have to call forward the goods 30 days, others 15 days or 10 days, depending on how well organized they are. We have to make sure the shipment goes on time because there are large penalties for lateness. This is not easy because we are dealing with originators and purchasers from around the world.'

 

The GP Group also helps suppliers in developing countries to meet the exacting standards imposed by many buyers.

 

'The quality of goods such as rice is set by the purchaser, usually in a developed country. However, it is very difficult for a poor farmer, 600 miles from a port, to meet those standards,' explains Mr Shah. 'So we try to help producers to do this. What typically happens in less developed countries is that sellers have to be very careful about how much they spend. As a result they have a tolerance for imperfection. But purchasers, such as a large Japanese food company, always want things 100 per cent right. So, for example, when packing the rice, the supplier may use 100-gram polypropylene bags when he should have used 110-gram bags, just to save 15 cents a ton. Instead of double stitching the bags he single stitches them, again saving 15 cents a ton. When printing the bags he did not use fast enough colours, so with multiple handling those marks are erased; once again he saved 15 cents. The problem is that a buyer would readily pay $300 for top quality rice.

 

But for the same quality rice from India or Indonesia, Vietnam, parts of Africa or parts of the former Soviet Union, he will only pay $270, 10 per cent less. Why? Because although it is good rice, when he buys from India he buys a whole horde of uncertainties. Will the shipment be on time? Will every bag be perfect? The markings correct? The bags stitched correctly and the weight of each bag correct? These uncertainties add to my selling cost, so generally I have to sell at a discount. Also, I have to handle it more and spend more money at the destination putting things right. As a result the seller might get $30 a ton less for something on which he had tried to save 50 cents.

 

This is an area in which we believe our company helps. We charge our buyers $280 for the rice. Some buyers will pay this when they have experienced the product, our delivery and reliability, because we control the port and the warehouse and we have people in the chain supervising at various stages, which all costs a little money. But, they will pay us $10 above the market price. This allows me to pay $5 to my supplier not to take the shortcuts and it allows me to make $5. This is how I can add value to the supply chain.'

 

Questions:-

1.         What are the important tasks which the GP Group has to get right if it wants to maintain the performance of its 'consolidating' business?

2.         How does the GP Group add value to each stage of the rice supply?

 

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