PRODUCTION AND OPERATIONS MANAGEMENT IIBM EXAM ANSWER

PRODUCTION AND OPERATIONS MANAGEMENT IIBM EXAM ANSWER

Production and Operations Management

Section A: Objective Type & Short Questions (30 marks)
Part one:

Multiple choice:
I.The purpose of the transportation approach for locational analysis is to minimize (1)
a) Total costs
b) Total shipping costs
c) Total variable costs
d) Total fixed costs

Ans: b) Total shipping costs

II. Which of the following would not generally be a motive for a firm to hold inventories? To (1)
e) Take advantage of quantity discounts
f) Minimize holding costs
g) Reduce stock out risks
h) Decouple production from distribution

Ans: f) Minimize holding costs

III. Which of the following are assignable cause? (1)
a. Large variations in hardness of material
b. Tool wear
c. Errors in setting
d. All of the above

Ans: d. All of the above

IV. Like roots of a tree, ________of organization is hidden from direct view.
(1)
a. Goodwill
b. Core competence
c. Higher management
d. Capital investment

Ans: b. Core competence

V.Inadequate production capacity ultimately leads to (1)
a. Poor quality
b. Poor Customer Service
c. Poor inventory control
d. All of the above

Ans: b. Poor Customer Service

VI. Limitations of Traditional cost accounting are (1)

 a. Assumes factory as an isolated entity

b. It measures only the cost of producing

c. Both (A) and (B)

d. None of the above

Ans: c. Both (A) and (B)

VII. Business is rated on which dimensions
(1)
a. Market attractiveness
b. Business strength
c. Both (A) and (B)
d. None of the above

Ans: c. Both (A) and (B)

VIII. How does ‘structure’ reduce external uncertainty arising out of human behavior (1)
a. Research and planning
b. Forecasting
c. Both (A) and (B)
d. None of the above

Ans: c. Both (A) and (B)

IX. Objective of Work Study is to improve _______ (1)
a. Cycle time
b. Productivity
c. Production
d. All of the above

Ans: b. Productivity

X. Which of the following are activities of corrective maintenance? (1)
a. Overhauling
b. Emergency repairs
c. Modifications and improvements
d. All of the above

Ans: d. All of the above

Part Two:

1. What are the dimensions of quality? (5)

Dimensions of quality are

 Performance

Does the product or service do what it is supposed to do, within its defined tolerances?

Performance is often a source of contention between customers and suppliers, particularly when deliverables are not adequately defined within specifications.

The performance of a product often influences profitability or reputation of the end-user. As such, many contracts or specifications include damages related to inadequate performance.

Features

Does the product or services possess all of the features specified, or required for its intended purpose?

While this dimension may seem obvious, performance specifications rarely define the features required in a product. Thus, it’s important that suppliers designing product or services from performance specifications are familiar with its intended uses, and maintain close relationships with the end-users.

Reliability

Will the product consistently perform within specifications?

Reliability may be closely related to performance. For instance, a product specification may define parameters for up-time, or acceptable failure rates.

Reliability is a major contributor to brand or company image, and is considered a fundamental dimension of quality by most end-users.

 Conformance

Does the product or service conform to the specification?

If it’s developed based on a performance specification, does it perform as specified? If it’s developed based on a design specification, does it possess all of the features defined?

Durability

How long will the product perform or last, and under what conditions?

Durability is closely related to warranty. Requirements for product durability are often included within procurement contracts and specifications.

For instance, fighter aircraft procured to operate from aircraft carriers include design criteria intended to improve their durability in the demanding naval environment.

 Serviceability

Is the product relatively easy to maintain and repair?

As end users become more focused on Total Cost of Ownership than simple procurement costs, serviceability (as well as reliability) is becoming an increasingly important dimension of quality and criteria for product selection.

 Aesthetics

The way a product looks is important to end-users. The aesthetic properties of a product contribute to a company’s or brand’s identity. Faults or defects in a product that diminish its aesthetic properties, even those that do not reduce or alter other dimensions of quality, are often cause for rejection.

 Perception

Perception is reality. The product or service may possess adequate or even superior dimensions of quality, but still fall victim to negative customer or public perceptions.

As an example, a high quality product may get the reputation for being low quality based on poor service by installation or field technicians. If the product is not installed or maintained properly, and fails as a result, the failure is often associated with the product’s quality rather than the quality of the service it receives.

2. What is Quality? (5)

Quality  is about making organisations perform for their stakeholders – from improving products, services, systems and processes, to making sure that the whole organisation is fit and effective.

Managing quality means constantly pursuing excellence: making sure that what your organisation does is fit for purpose, and not only stays that way, but keeps improving.

There's a lot more to managing quality than just manufacturing widgets without any defects or getting trains to run on time – although those things are certainly part of the picture.

What qualifies as an acceptable level of quality for your organisation is ultimately a question for your stakeholders. And by stakeholders, we mean anyone who has an interest in the success of what your organisation does.

Customers will be the most important group of stakeholders for the majority of businesses, but investors, employees, suppliers and members of our wider society are stakeholders too. Delivering an acceptable level of quality in your organisation means knowing who your stakeholders are, understanding what their needs are and meeting those needs (or even better, exceeding expectations), both now and in the future.

The CQI believes this comes down to three things: strong governance to define the organisation's aims and translate them into action, robust systems of assurance to make sure things stay on track and a culture of improvement to keep getting better.

3. What is Materials Planning? (5)

Material Planning is the scientific method of planning and determining the requirements of consumables, raw materials, spare parts and other miscellaneous materials essential for the production plan implementation. This plan forms a sub- component of the overall organizational plan, hence it is always derived from the overall organizational plan. It essentially carries out the process of forecasting and planning of procurement of materials.

There are two major factors influencing the material planning, they are:

• Macro factors: These include factors such as business cycles, import and export p [policies, price trends, credit policy and other global factors.

• Micro factors: These factors include the internal organization factors such as production plan, investments, corporate policies, inventory holding. Other essential factors such as the time of procurement, working capital, acceptable inventory levels, delegation of power seasonality also influence the material planning.

Material Planning can be carried out by:

• Requirement based on past consumption

• Material Resource Planning (MRP): MRP starts with the production plan of the concerned manufacturing. Once the annual production plan is determined, the material requirement is calculated by detailed analysis of materials not in use, the ones not in use and requiring procurement, lead time of procurement etc.

4. Need for Inventory Management - Why do Companies hold inventories? (5)

In simple terms, inventory management is a set of all those processes which you utilize to oversee and organize your goods or materials in your facility.

A component of Supply Chain Management, inventory management supervises the flow of goods from manufacturers to warehouses and from these facilities to Point of Sale. It involves a retailer seeking to acquire and maintain a proper merchandise assortment while Managing orders, logistics, returns, and related costs are kept in check.

It is crucial for an organization today to understand its inventory to achieve both efficient and fast operations, that too, at an affordable cost. An effective management of inventory helps in reducing costs which further keeps accounts and finances in check. From a customer’s point of view, it helps you to provide better customer services through fast delivery and low shipping charges, hence, meeting customer expectations.

Here’s how inventory management solution can help you achieve these benefits

Atrill, McLaney, Harvey and Jenner (2003) identify four key reasons why companies hold inventories:

• Firstly, companies ‘stockpile’ their goods to avoid the effect shortages might have on customer good will. This could influence the said customer to source his/her needs from elsewhere, usually at the expense lost sales.
• Secondly, by holding an inventory, the company is actually hedging against the possibility of future price increases.
• Thirdly, companies that hold goods inventories above a normal level are better suited to ‘ride out’ market fluctuations based on irregular or seasonal demand, thus avoiding lost production or supply.
• Fourthly, companies maintain inventories for strategic reasons. For example, the use of quantity discounts to promote greater customer goodwill and help the turnover of stock being held.

Nevertheless, as Atrill and McLaney point out, there are significant costs attached to holding inventories, namely storage and handling costs, financing costs, costs associated with theft, obsolescence and damage and last, but not least, opportunity costs of investing money in the form of a particular good vis-à-vis other investment options.

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