JUNE 2011 EXAMINATION
OM01
OPERATIONS MANAGEMENT
Time: Three Hours
Maximum Marks: 100
Note:
1.
The paper is divided into three sections: Section A, Section B and Section C.
2.
There are seven questions in Section A of 10 marks each. Attempt any four.
3.
Section B has 5 questions of 15 marks each. Attempt any three.
All the questions of Section C (Case Study) are compulsory. This section is of 15 marks
Marks will be awarded for right procedure also in numerical questions.
Section – A
10 marks each
1.
Describe the value driven approach to Operation Management. Relate it to Core Process
Model
2.
Explain the decision areas of Operations Managers at different levels, illustrating typical
decision questions and challenges giving some examples.
3.
What do you mean by concurrent engineering approach? Explain with some examples.
4.
What do you understand by Flexible manufacturing systems? How is Computer-aided
Design software useful for it?
5.
Write a short note on the different models used in Facility Planning.
6.
Explain four basic types of Facility Layouts. Enumerate key properties/ desirable features
of a good layout.
7.
Explain various possible types of Capacity Expansion Strategies, using industry
examples.
Section - B
8.
15 marks each
Describe in detail, using a flow diagram, the New Product Development Process. Explain
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two types of fast to market activities.
9.
What is the purpose of Aggregate Planning? How is this process different for services?
10.
Explain the concept of Lean Manufacturing ? What are the conditions for successfully
implementing the Lean Manufacturing concept in manufacturing.
11.
Monthly demand for a product is 200 units, the cost of storage is 2% of the unit cost and
the cost of ordering is Rs.350/-. The unit cost for the product is based on the quantity
order placed at a time which is as follows:
< 500units
500 ≤ Q < 750 units
≥ 750 units
Rs. 10/unit
Rs. 9.25/ unit
Rs. 8.75/ unit
Explain the quantity the firm should order each time which will minimize the total cost
for the firm.
12.
Write a note on Service Quality Measurement. Enumerate some hard (quantifiable) and
soft (intangible) standards of service quality measurement, giving some industry
examples like airlines, hotels, etc.
Section – C Case Study (Compulsory)
15 marks
Case Study
With revenues of Rs 16.65 billion for 2001-02, Philips India Ltd (PIL) had established itself as a
leading manufacturer of consumer electronics and electrical goods in India. A subsidiary of the
Holland-based Philips NV, PIL has dominated the Indian consumer electronics and lighting
industry for more than six decades.
PIL, with a product portfolio of audio systems, color televisions (CTVs), loudspeakers, printed
circuit boards, various kinds of lamps, electronic components and electro-medical apparatus, had
acquired considerable popularity and loyalty among Indian customers. PIL was established as
Philips Electricals Co. (India) Ltd. in 1930 by Philips NV as a wholly-owned subsidiary.
The company's name was changed to PIL in September 1956 and it was converted into a public
limited company in October 1957. After being initially involved only in trading, PIL set up
manufacturing facilities in several product lines. PIL commenced lamp manufacturing in 1938 in
Kolkata and followed it up by establishing a radio factory in 1948. It set up an electronics
components unit at Loni, near Pune, Maharashtra in 1959. It began producing electronic
measuring equipments at the Kalwa factory in Maharashtra in 1963. The company subsequently
ventured into telecommunication equipment manufacturing at a unit in Kolkata.
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During the 1980s, Foreign Exchange Regulation Act (FERA) regulations forced PIL to bring
down the foreign share holding to 40%. Philips NV directed PIL to change its name to Peico
Electronics & Electricals (Peico). However, Peico was allowed to sell its products under the
'Philips' brand. In May 1982, Peico acquired the Kolkata-based Electric Light Manufacturing
Industries (ELMI) and made it a 100% subsidiary. In 1988-89, Peico recorded its first ever pretax loss of Rs 170 million, largely due to poor management and overstaffing. However, cost
cutting, organizational restructuring and sale of real estate enabled it to post profits in the next
two years. In 1993, its foreign equity stake was raised to 51% and the name was changed back to
PIL.
By the late 1990s, PIL had five manufacturing units situated in Salt Lake, Kolkata (for CTVs),
Pimpri (near Pune for audio products and industrial lighting), Kalwa (near Thane for electrical
lighting), Kota (in Rajasthan for picture tubes) and Loni (in Maharashtra for electronic
components).
In 1997, Philips NV restructured its business portfolios and processes worldwide. This had wideranging consequences for PIL's operations. The company examined the long-term viability and
profitability of electronic weighing, plastic and metal ware businesses and critically reviewed
manufacturing processes of the consumer electronics business, specifically the TV business, to
cut costs and improve flexibility.
Measures to this effect were put in place. In 1998, Philips NV increased its holding in its
subsidiary Punjab Anand Lamp Industries (PALI) from 39.96% to 51%. With PIL holding
around 28.8% in PALI's expanded capital, the joint holding of the Philips group in the company
increased to 79.8%.
In the late 1990s, the CTV market was characterized by intense competition and unprecedented
price erosion. In an attempt to improve cash flows and bring down inventories, the company
restructured its CTV manufacturing process.
PIL decided to leave the relatively low value adding manufacturing processes such as final
assembly and testing to supplier-partners who were close to the marketplace. These supplierpartners not only had much lower cost-structures, they were also far more flexible. By having
several supplier-partners in different parts of the country, PIL was able to reach out to customers
in the shortest possible time and with very low inventory in the pipeline. In June 1997, PIL
shifted the final component assembly process for CTVs out of its at Salt Lake factory to three
new assembling centers in West Bengal, Punjab and Uttar Pradesh, to keep the assembling unit
of the final product as close to the customer as possible.
PIL also started outsourcing low value components from local players, while concentrating on
the production of high-value items...
PIL scrutinized the best SCM practices across the world and carefully studied the SCM models
of successful companies such as Dell Computers. The company decided to use the Supply Chain
Operation Reference (SCOR) SCM model for restructuring its supply chain. According to the
model, a supply chain is broken down into four different processes - planning, sourcing, making
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and delivering. These four processes are supported by a set of performance metrics, such as
customer service, costs, flexibility, and assets. Using this framework, PIL worked out a
mechanism to assess itself on a 'process map,' which it referred to as the 'maturity grid'.
As PIL benefited in many ways from the revamped SCM practices. Transit time was reduced to
7 days and goods were handled only 5 times. As against a first quarter working capital of Rs 500
million for 2000, the figure was only Rs 200 million in 2001. Significantly, supply chain costs
were reduced by 26% in 2001. A majority of these savings were due to the savings in
transportation and warehousing. PIL could reduce warehousing costs because of the direct
dispatch model, in which there were no grouping centers...
Questions:
(5 Marks each)
1. What does this case relate to? Explain the background of the theme of the case study.
2. Explore the benefits reaped by the company as a result of focusing on the value chain
efficiencies through SCM.
3. What was the contribution of SCM to the company's survival and competitive advantage
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