BUS002 Operations Management Tools and Concepts

BUS002 Operations Management Tools and Concepts

Question:

1 Assess key factors influencing effective management of operations

2 Evaluate the fundamental concepts, tools and techniques of operations management

3 Apply operations management tools and techniques to business problems

4 Approach and manage data and information, problem solving and decision making effectively

5 Analyse data and information using relevant operations management tools and concepts

6 Apply analytical and problem-solving skills to decision problems in business management

Assessment instructions for students 

Q1. (20%) A production operation is making 150 units of a product by engaging five workers for 300 hours. However, 40 percent of the units appear to have various quality problems, and the company decides to sell them as seconds at a price of £50 each when a normal unit is sold for £150. To improve the situation, several initiatives are proposed, including a scheme where, for every improvement, 50 percent will be given to workers and the other 50 percent will be held by the company. This results in a significant drop in defects as now only 10 units are faulty out of an output of 130 units.

  1. Compare the productivity after Bonus with the initial productivity. (10%)
  2. Determine the appropriate bonus per hour for the workers under the bonus scheme if the cost per piec e is £70 both before and after the scheme. (10%)

Q2. (20%) As the Cottrell Bicycle Co. of St. Louis completes plans for its new assembly line, it identifies 25 different tasks in the production process. VP of Operations Jonathan Cottrell now faces the job of balancing the line. He lists precedences and provides time estimates for each step based on work-sampling techniques. His goal is to produce 1,000 bicycles per standard 40-hour workweek.

  1. Balance this operation using shortest operation time rule and compute the efficiency of the line. (10%)
  2. Discuss how this balance could be improved. Is it possible to improve this balance to 100%? (10%)

Q3. (20%) Thomas Smith is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas’s fastest-moving inventory item has a daily demand of 24 units. The cost of each unit is £100, and the inventory carrying cost is £10 per unit per year. The average ordering cost is £30 per order. It takes about 5 days for an order to arrive, and there are 250 working days per year.

  1. To minimize the cost, how many units should be ordered each time an order is placed? What is the total annual inventory cost, including the cost of the units? (10%)
  2. Even if there is substantial uncertainty in the parameters in the EOQ-model, it is still quite a useful model. Discuss why. (10%)

Q4. (20%) Emery Pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. Emery uses 200 pounds per month of the chemical, estimates the holding cost to be £3.33 (because of spoilage), and estimates order costs to be £10 per order. The cost schedules of four suppliers are as follows:

  1. What quantity should be ordered, and which supplier should be used? (10%)
  2. Discuss factor(s) should be considered besides total cost. (10%)

Q5. (20%) A process considered to be in control measures an ingredient in ounces. A quality inspector took 10 samples, each with 5 observations as follows:

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