MS 53 Production and Operation Management Previous Exam Paper
MBA - Master of Business Administration
Note: This paper consists of two Section A and B. Attempt any three questions from Section A. Section B is compulsory. All questions carry equal marks.
1. What is Wilson cot size formula? Derive the optimal order quantity (Q3) and mansion the assumptions thereof.
2. Explain why quality should be better by following the TQM concept than in a system that depends on final inspection.
3. Capacity will be modified in response to demand. Demand will be modified in response to capacity. Which of these two statements is correct? Why?
4. Assembly of a certain product consists of eleven operations. The operation times and precedence requirements are given in the table below:
| Operation Number | Duration | Immediate Preceding Operation (s) |
| 1 | 0.4 | –– |
| 2 | 0.7 | – |
| 3 | 0.5 | 1,2 |
| 4 | 0.7 | 3 |
| 5 | 0.4 | –– |
| 6 | 0.2 | 4,5 |
| 7 | 0.1 | 6 |
| 8 | 0.3 | 7 |
| 9 | 0.4 | –– |
| 10 | 0.5 | 8,9 |
| 11 | 0.6 | 10 |
Draw the precedence diagram and assign operations to workstations on the line without violating precedence relations and without exceeding the cycle time. Also calculate the line efficiency and balance today.
The designed output is 6500 units/week.
The company operates for 5 days per week, three shifts per day, 8-hours shift each day and at 90 per cent efficiency.
5. Demand for part no. IC-250 was 250 in April, 150 in May and 150 in June. The forecast for April was 150 units with a smoothing constant of 0.2 and using first order exponential smoothing. What is the July forecast? Is 0.2 a good choice as a smoothing constant?
SECTION B
6. Read the case carefully and answer the questions at the end of the case.
Nartha Thompson, who has worked in restaurants for 20 years, opened her first short-order "Mom and Pop" café 12 years ago. She is regarded in her community as an excellent small businessperson. In 1985 she sold her small café and went to work as a professional manager for a fast-food hamburger franchise. In 1987 she resigned and opened Martha's Original Burger Queen. Martha's salary is 25 percent higher than the one she earned as a professional manager. In 1987 her Burger Queen broke even in 1988 it had a net profit after taxes of $10,000 Martha then opened two more restaurants in the same city. The results of all three restaurants are summarized in the accompanying comprehensive report (on page 5).
Martha states her strategy: "My Restaurant concept is to copy fast-food chains such as McDonalds, Burger King, and Jack-in-the-Box. I've tried patties, soybean burgers, breakfast, and larger sandwiches to increase dollar sales per customer. I believe that I should expand rapidly just as those chains seem to be doing, yet maintain a personable, local operations staff and a homey atmosphere. But I seem to have less efficient operations than we did when I managed for a chain. I think my layout is good, as is my food quality. I can't buy in buy in larger volumes, but I for try to turn over my inventory at least weekly. I believe in women employees, especially in management positions. I hire Caucasians African-Americans, and Mexican-Americans, so on one can say I/m prejudiced."
Martha's response to net income difficulties at the second and third restaurants is, "I need to open more restaurants to spread out my fixed costs. Expansion of operations is my strategy, but I'm finding financing hard to come by now."
| Martha’s Original Restaurant:MBQ1 | MBQ2 | MBQ3 | ||||
| 1989 | 1990 | 1989 | 1990 | 1989 | 1990 | |
| Sales Summary | ||||||
| Revenues | $3,30,000 | $370,000 | $2,10,000 | $200,000 | $170,000 | $150,000 |
| Number of Customers | 132,000 | 130,000 | 91,000 | 90,000 | 85,000 | 85,000 |
| Revenues | $2.50 | $2.84 | $2.30 | $2.22 | $2.00 | $1.76 |
| Expenses Salary | ||||||
| Equipment depreciation | $16,500 | $16,500 | $10,500 | $10,500 | $8,500 | $8,500 |
| Building lease | 33,000 | 33,000 | 21,000 | 21,000 | 17,000 | 17,000 |
| Operations:Food | 82,500 | 83,400 | 52,500 | 52,500 | 42,500 | 51,000 |
| Labour | 115,500 | 129,000 | 73,500 | 73,500 | 68,000 | 68,000 |
| Suppliers | 16,000 | 18,000 | 10,000 | 10,000 | 8,500 | 8,500 |
| Overhead | 17,00 | 17,000 | 11,000 | 11,000 | 8,500 | 8,500 |
Gross margin and administrative costs
| Advertising | 15,000 | 15,000 | 12,000 | 12,000 | 9,000 | 9,000 |
| Administration | 18,000 | 18,000 | 9,000 | 9,000 | 8,000 | 8,000 |
| Advertising | 15,000 | 15,000 | 12,000 | 12,000 | 9,000 | 9,000 |
| Administration | 18,000 | 18,000 | 9,000 | 9,000 | 8,000 | 8,000 |
Net income (loss) before taxes
| $16,500 | $40,100 | $10,500 | $500 | –0– | $28,500 |
Case Questions:
1. Set forth what you believe is a good overall business strategy for Martha. Specify an operations strategy that is consistent with the overall strategy.
2. Examining the comprehensive report, does the data support the idea that Martha needs a change in operations strategy? If so, which data?
