TUNKU ABDUL RAHMAN UNIVERSITY OF MANAGEMENT AND TECHNOLOGY
FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS
ACADEMIC YEAR 2023/2024
JANUARY EXAMINATION
BBDM2153 OPERATIONS MANAGEMENT
MONDAY, 15 JANUARY 2024
TIME: 9.00 AM – 11.00 AM (2 HOURS)
BACHELOR OF BUSINESS (HONOURS) IN BUSINESS ANALYTICS
BACHELOR OF BUSINESS (HONOURS) IN HUMAN RESOURCE MANAGEMENT
BACHELOR OF BUSINESS (HONOURS) IN INTERNATIONAL BUSINESS
BACHELOR OF BUSINESS (HONOURS) IN LOGISTICS AND SUPPLY CHAIN MANAGEMENT
BACHELOR OF BUSINESS (HONOURS) IN MARKETING
BACHELOR OF BUSINESS ADMINISTRATION (HONOURS)
BACHELOR OF BUSINESS (HONOURS) INTERNATIONAL BUSINESS MANAGEMENT
BACHELOR OF BUSINESS (HONOURS) ACCOUNTING AND FINANCE
Instructions to Candidates:
This paper is divided into TWO (2) sections:
SECTION A: Answer ONE (1) compulsory case study question.
(40 marks)
SECTION B: Answer ALL questions.
(60 marks)
This question paper consists of 4 questions on 5 printed pages.
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BBDM2153 OPERATIONS MANAGEMENT
SECTION A (40 marks)
Answer ONE (1) compulsory case study question.
Question 1
How did Malaysian budget carrier MYAirline fail so quickly
The suspension of operations on Thursday, (Oct 12, 2023) by Malaysian budget carrier MYAirline,
which was launched less than a year ago, should provide an important lesson for regulators in Malaysia
as well as throughout Southeast Asia.
The suspension was abruptly announced by the airline at about 5.30am, only 45 minutes before the first
of 40 MYAirline flights scheduled on Oct 12, 2023 were supposed to depart. Hundreds of unsuspecting
passengers arrived at Kuala Lumpur International Airport Terminal 2, where almost all MYAirline
routes originate, to find closed check-in desks. The government stated it also did not receive any prior
notification.
Future flights to another 125,000 passengers had been sold under tickets valued at more than RM20
million (US$4.2 million) that will now not be honoured. MYAirline had carried almost 2 million
passengers on nine domestic and two international routes since commencing operations on Dec 1, 2022.
It had captured about a 10 per cent share of Malaysia’s domestic market, which currently consists of
about 2 million passengers per month.
MYAirline had nine second-hand aircraft with commitments for several more. Just a few months ago,
management was raving about plans for ordering at least 100 new aircraft and an initial public offering.
The suspension was not a surprise for industry followers as the airline had financial issues for several
months, sparking concerns with suppliers and employees. MYAirline was behind in paying salaries,
airport fees and many other items. It had been trying to secure new investors for the last few months
with a last-ditch attempt failing on Oct 11,2023 when a deal with a potential white knight fell through.
It is hard to imagine how regulators did not realise MYAirline was in financial distress.
In Malaysia, the Malaysia Aviation Commission (Mavcom) regulates economic matters and ensures
airlines are financially fit while the Civil Aviation Authority of Malaysia (CAAM) is responsible for
making sure an airline meets technical requirements, including safety. While it is not unusual for an
airline to cease operations, particularly a start-up airline, it is unusual for regulators not to be aware of
airlines’ financial issues, and not to hold regular discussions with struggling airlines.
The Malaysia government immediately expressed its disappointment, with Transport Minister Anthony
Loke calling MYAirline irresponsible and stating that “Mavcom was caught completely off guard”.
However, a regulator should be regularly monitoring an airline’s health and not relying on it to
voluntarily discuss its problems. Mavcom initially awarded MYAirline an air service licence in
November 2022, essentially concluding it had sufficient capital, sound shareholders and a viable
business strategy. It is questionable whether MYAirline met these requirements, and prior to its launch,
many industry observers thought its business plan were unrealistic. The biggest flaw in the business
plan was a misguided assumption that AirAsia was in a weak state following the pandemic, leaving a
void in the market.
AirAsia, which has an over 50 per cent share of Malaysia’s domestic market, is not as financially strong
as prior to the pandemic, but was still able to fight back. A weak gorilla is still a gorilla. AirAsia dumped
fares and capacity on all MYAirline routes - which should not be a surprise as this is how AirAsia also
responded to new competition prior to the pandemic. AirAsia was not making money on any of the 11
routes that MYAirline operated - despite load factors of virtually 100 per cent - but it was able to crosssubsidise due to profits on non-overlapping routes.
This question paper consists of 4 questions on 5 printed pages.
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BBDM2153 OPERATIONS MANAGEMENT
Question 1 (Continued)
The AirAsia strategy worked and MYAirline was extremely unprofitable as its airfares were too low to
cover costs. MYAirline’s initial tranche of capital, which it thought would be sufficient for at least one
year, ended up running out after only six months. Over the last few months MYAirline realised its
domestic operation was bleeding and was trying to pivot to the international market.
MYAirline cut two of its nine domestic routes earlier this month and was working on launching several
new scheduled international routes, including Chiang Mai, Da Nang, Ho Chi Minh City, Medan and
Phuket. It was also working on launching charter flights to Bangladesh, China and Saudi Arabia.
However, the pivot required significant investment and the airline ran out of time. MYAirline also failed
to secure slots at some of the international airports it was targeting for several months, including
Singapore.Even if MYAirline had secured the capital to implement a new business plan, it would have
been an uphill battle given intense aviation competition in Malaysia and regionally.
Ultimately, Malaysia’s market is simply not large enough for more than three main competitors. In
addition to the AirAsia Group, Malaysia Airlines Group and Batik Air Malaysia (formerly known as
Malindo Air) are well established, leaving little room for new entrants. However, there always seems
to be a steady stream of entrepreneurs wanting to start an airline, not realising how much capital is
required and how difficult it is to achieve profitability.
Source: CAN best news website. (2023, October, 17). How did Malaysian budget carrier MYAirline
fail so quickly. Retrieved 2023, November, 01 from https://www.channelnewsasia.com/
commentary/malaysia-myairline-budget-carrier-suspend-operations-lessons-collapse-3849096
Required:
(a)
Discuss FOUR (4) reasons from the case above why MYAirline’s operations management fail.
(12 marks)
(b)
Based on the case above, discuss how does AirAsia implement its operations management
strategy to overcome MYAirline’s business plan.
(6 marks)
(c)
Based on the case above, discuss what MYAirline did on its operations management when it
realises the domestic operations were bleeding.
(6 marks)
(d)
Airline is in service industry. Explain EIGHT (8) determinants of service quality that these
airlines should provide.
(16 marks)
[Total: 40 marks]
This question paper consists of 4 questions on 5 printed pages.
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BBDM2153 OPERATIONS MANAGEMENT
SECTION B (60 marks)
Answer ALL questions.
Question 2
(a)
Describe the appropriate sequencing jobs techniques based on the below criteria.
(i)
As an account operations manager, you have many jobs assignments to compete in a
week. If you have six short processing time assignments and four long processing time
assignments to complete in a week, which sequencing techniques will you use to clear
these jobs soonest possible?
(4 marks)
(ii)
To treat customer with fairness in service industry.
(4 marks)
(b)
Describe with an example the process design when “customer-as-participant”.
(c)
Explain FOUR (4) operations management strategies on the product life cycle of a new product
design:
(i)
Growth stage; and
(ii)
Maturity stage.
This question paper consists of 4 questions on 5 printed pages.
(4 marks)
(4 marks)
(4 marks)
[Total: 20 marks]
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BBDM2153 OPERATIONS MANAGEMENT
Question 3
(a)
You are an operations manager of a local famous restaurant in Kuala Lumpur. The booking for
the dinner table during festival session are over whelming and had been determined, but you
have limited number of kitchen helpers and serving employees. Based on this scenario, explain
which method of aggregate planning strategy you would adopt for cost savings.
(5 marks)
(b)
A manufacturer wanted to speed up its production process to reduce the cost of production.
Three options are being considered:

First option is to recruit professionals’ manpower in the production plants. If this
option succeeded and it is favourable, it will yield an income of RM 140,000 and if it
is unfavourable, it will incur a loss of RM25,000.

Second option is to invest into advanced computerised system in the production plants.
If it is favourable, it will earn an income of RM180,000 and if it is unfavourable, it will
incur a loss of RM45,000.

Third option is to sub-contract part of the process to sub-contractor for its production.
If it is favourable, it will yield an income of RM80,000 and if it is unfavourable, it will
incur a loss of RM50,000.

In the favourable situation, the probability is 0.3 and unfavuorable is 0.7 for all the
three options.
You are required to:
(i)
Evaluate the three options in decision tree concept.
(9 marks)
(ii)
Based on the answer in Question 3(b) (i), select with reason the best decision based on
Expected Monetary Value (EMV) criteria.
(3 marks)
(iii)
Support with a tree diagram.
(3 marks)
[Total: 20 marks]
Question 4
(a)
Explain why it is important for a company to conduct cycle counting procedures in inventory
control system.
(10 marks)
(b)
A manufacturing company has 12,000 items of inventory, comprises of 1,200 “A” items, 5,500
“B” items and 5,300 “C” items.
The company implemented a policy to count “A” items every month, “B” items every quarter
and “C” items every six months. The number of working days in a month is 25.
Calculate the total number of items to be counted per day. Round your answer to the nearest
whole number.
(10 marks)
[Total: 20marks]
This question paper consists of 4 questions on 5 printed pages.