MG202: Operations Management
Faculty of Business & Economics
School of Management & Public Administration
FINAL EXAM
SEMESTER 2 2020
PRINT MODE
Duration of Test: 3 hours and 10 minutes
Reading Time: 10 minutes
Writing Time: 180 minutes
Instructions:
1. This exam has three (3) sections:
a. Section A: 20 marks
b. Section B: 55 marks
c. Section C: 25 marks
2. Answer all questions in Section B and C. There are choices in Section A. Write your
answers in the answer booklet provided.
4. For each new question, begin answering on a new page.
5. This exam paper has a cover page and 5 pages of questions.
6. This is a closed book exam.
7. No materials are allowed in the exam hall except for calculators and writing stationery.
8. This exam is worth 50% of your overall mark. The minimum passing final exam mark is
20/50.
1
Section A: Short Answer Questions (20 marks)
Answer any 4 of the following short answer questions.
1) List and discuss four ways through which productivity could be increased in an
organization of your choice. (5 marks)
2) List and discuss briefly four costs of quality. (5 marks)
3) List and discuss four types of risks faced by organisations from the Pacific Island
Countries while managing supply chains. (5 marks)
4) Write the formula for the basic EOQ model. (5 marks)
5) List and discuss 3 ways businesses can achieve competitive advantage in an organization
of your choice. (5 marks)
Section B: Calculations
Question 1: Productivity (20 marks)
The following table shows data on the average number of customers processed by several
bank service units each day. The hourly wage rate is $25, the overhead rate is 2.0 times labor
cost, and material cost is $5 per customer.
Unit
Employee
Customers Processed/Day
A
4
36
B
5
40
C
6
60
D
4
20
a) Compute multifactor productivity for each unit. Use an 8-hour day for multifactor
productivity. (10 marks)
b) What does each of your calculations on multifactor productivity tell you? (10 marks)
2
Question 2: Project Management (20 marks)
The City Council of Bhootnagar has decided to build a botanical garden and picnic area in the
heart of the city for the recreation of its citizens. The precedence table for all activities
required to construct this area successfully is given below.
Code
Activity
Description
Time
(hours)
20
Immediate
Predecessor(s)
None
A
Planning
B
Purchasing
Find location; determine
resource requirements
Requisition of lumber and sand 60
C
Excavation
Dig and grade
100
Planning
D
Sawing
30
Purchasing
E
Placement
20
F
Assembly
Saw lumber into appropriate
sizes
Position lumber in correct
locations
Nail lumber together
10
Sawing,
excavation
Placement
G
Infill
20
Assembly
H
Out-fill
Put sand in and under
equipment
Put dirt around equipment
10
Assembly
I
Decoration
Put grass all over the garden,
landscape, paint
30
Infill, out-fill
Planning
a) Draw an AON network (with all labels) for the construction project. (10 marks)
b) Draw a Gantt Chart. (5 marks)
c) What is the minimum duration of the project. (5 marks)
3
Question 3: Forecasting (15 marks)
Bulumakau Uasivi sells fresh goat meat. Monthly sales for a 7-month period are as follows:
Month
Feb
Mar
Apr
May Jun
Sales (kg)
180
168
159
175
Jul
190 205
Aug
180
Forecast sales for September using each of the following approaches:
1) Naive Forecasting (1 mark)
2) Weighted Moving Averages using 0.6, 0.4 and 0.2 as weights (3 marks)
3) Exponential Smoothing with a smoothing constant of 0.6, assuming a February forecast
of 175kg (8 marks)
4) Discuss when and why you would use trend-adjusted exponential smoothing to forecast.
(2 marks)
5) Which method do you consider the least appropriate? Why? (1 mark)
4
Section C: Case Study – Quality Components (25 marks)
Quality Components (QC) is an electronics component manufacturer that has been located
in Singapore since 1991, supplying original equipment manufacturers (OEMs) with quality
components. In the past few years, Quality Components has experienced increasing
pressure from other manufacturers located in other countries. In Singapore, while labor
remains quite inexpensive, there has been a relatively steady increase in labor costs. In
addition, utility costs - most notably water and energy costs - have led the firm to
contemplate moving operations elsewhere in Asia in an attempt to make the firm more
competitive. Quality Components remains profitable, but margins have shrunk, and
management is interested in ensuring that the firm remains competitive against other
component manufacturers in the medium- to long-term.
A senior management team has formed a committee to reach a decision regarding possible
relocation. The committee has identified two additional locations as possible candidates for
relocation: Hong Kong (People’s Republic of China - PRC) and Kuching (Malaysia). Hong
Kong’s main attractions stem from the fact that since 1997, when its sovereignty was
transferred back to the PRC, labor costs decreased as access to labor increased. Hong Kong
enjoys a large seaport and good transportation infrastructure, and this is important for
moving in raw materials and moving out finished components to customers. Presently, the
customers are geographically dispersed, making access to a seaport important in delivering
products to customers. Senior management believes that an increasing number of OEMs
will move to the PRC in the next few years, as has been the case over the past decade. This
will only increase the attractiveness of relocating the manufacturing facility to Hong Kong.
Kuching is located in the Malaysian province of Sarawak, on the island of Borneo. It is the
fourth-largest city in Malaysia and home to a population of around 65,000. Several points
make Kuching attractive to the relocation committee. First, relocation here would provide
access to natural resources and other production inputs. Second, the transportation
infrastructure is good, and the city hosts a deep sea port for moving raw materials in and
finished goods out. However, the port is not as large or accessible as those of Hong Kong or
Singapore, and several committee members have expressed concern about the frequency of
ship visits to Kuching. If the port does not receive regular service from container ships,
transportation costs to ship components to OEMs will increase. Finally, another selling point
is that labor is relatively stable and inexpensive in Malaysia.
The committee has contacted the government of Singapore to elicit possible incentives to
not relocate to another country. Singapore is offering a five-year exemption on taxes for
Quality Components if the plant remains in Singapore. The government will also assist by
partially subsidizing labor, water, and energy costs for five years. Committee members
realize that the Singapore plant which has been operating for years, has already been
amortized, and opening a new plant would require additional capital costs. That said,
5
opening a new factory would also provide an opportunity to upgrade production equipment
to more productive and energy-efficient alternatives.
Questions
1) How many locations does QC have to choose from? (2 marks)
2) List the strengths and weaknesses of each of these locations? (9 marks)
3) Which 2 locations make the choice difficult. (4 marks)
4) Which is the best location and why? (10 marks)
-- The End --
6