ASSIGNMENT– TERM 3.

MGT - 410 : OPERATION MANAGEMENT

NAME: ULLAS KOBBAJJI

PR NO: 1801016190205

1. Briefly mention the challenges and opportunities face by the Operations Managers’
in the current scenario. (5 Marks)

Ans:
There are multiple challenges that operations managers face on a daily basis;
The following five are the major challenges
Globalization
Globalization defined as: “a process of interaction and integration among the people,
companies, and governments of different nations.” It is driven by a reduction in trade barriers,
advancements in information technology, and transportation technology. Operation
managers face competition from the company across the street, as well as, from across the
country and across the world. Tishta Bachoo, Accounting Professor at Curtin University in
Australia, explains that companies who compete with others abroad will have to improve
quality while lowering prices to remain competitive. This falls on the operations manager as
he or she is the one who “engages in the four functions of planning, organizing, leading, and
controlling to ensure that the product or service remains competitive in the market.”

Sustainability
Business operational sustainability defines as a “method of evaluating whether a business can
maintain existing practices without putting future resources at risk.” When discussing the
concept of sustainability, it is often referred to as the Three Pillars of sustainability which are
social, environmental, and economic. Operations managers must concern themselves with
the outcomes of each of the pillars including how their work affects safety, welfare,
communities, the environment and economic sustainability.
Effective operations managers must implement best practices with a concern for all three
pillars of sustainability. They also need to initiate and verify corrective action when any
outcome of one of the three pillars becomes jeopardized.
Ethical Conduct
Ethics is defined as a subset of business ethics that is “meant to ensure that the production
function and/or activities are not damaging to either the consumer or the society.” In
particular organizations should consider the effects new technologies, defective services,
animal testing and business deals have on people, safety, and the environment.

Unethical behaviour has significantly contributed to the demise of successful corporations

like Enron, Tyco, and many varied firms doing business on Wall Street. Being ethical across all
business functions such as accounting, human resource management, marketing and sales,
and production are clearly within the purview of the operations manager. Unethical
behaviour, regardless of its origin, becomes a stain on the company as a whole.

Effective Communication
Being consistent and effective when communicating can be difficult anyone in any position
within an organization. The challenge for the operations manager is to be able to
communicate effectively with all internal and external stakeholders. Whether they are talking
to someone on the factory floor, or in the boardroom, they must be able to effectively
communicate their message as well as process the messages being directed to them.
Mastering oral, written, and non-verbal communication is integral to making day-to-day
operations run smoothly. Effective and efficient communication is also necessary for building
employee morale and deepening trust with management. Operations managers who take the
time to be self-reflective, the initiative to be authentic, and the effort to work on their
communication skills are bound to be both productive and successful. The development of
these skills is frequently the most requested of upper level management of their new and
mid-level managers and required to be successful in any company.

System Design
In Key Issues in Operations, the relationship between system design and operational
management, the main theme is that organizations must develop systems capable of
“producing quality goods and services in demanded quantities in acceptable time frames.”
Designing the system, planning the system, and managing the system present a wide variety
of challenges to even the most savvy operations managers.
 2. Explain the recent technologies used in product and service design. (5 Marks)
Ans:
Technology used in production and Process design:
1. The use of CAD (computer aided design) CAM (computer aided manufacture) allow
products to be designed and manufactured more quickly and accurately.
2. Engineering Simulation - Computer modelling and simulations allow designers to test
designs for functionality before investing in tool up for production. “Better-faster-
cheaper” is the modern catchphrase and engineering simulation plays a vital role in
achieving this goal in product development. Computer-aided engineering (CAE) is
being used and increasingly adopted by companies from multiple industries,
including automotive, aerospace, consumer goods, electronics, energy, HVAC, civil
engineering, and heavy equipment.This technology enables the user to virtually test,
analyse, and optimize products early in the design process by using numerical
analysis. CFD and FEA save both time and money while helping improve the end
product significantly.
3. 3D Printing - Rapid Prototyping (3D printing) allow designers to make models or
prototypes of designs quickly - Product designers, engineers, and manufacturers have
started to adopt 3D printing in their work process. Becoming increasingly affordable,
3D printers enable the generation of cost-efficient physical prototypes of products
early in the design process and ensure more refined end products.
3D printed models are also useful in communicating the design intent to
manufacturers, who can better determine the costs and identify potential issues that
may arise during the manufacturing process. In this way, it is possible to clarify any
questions that may be apparent when interpreting the CAD models.
4. Smart Products - In manufacturing settings robot allow products to be manufactured
more quickly and without the need for people completing the tasks involved in
manufacture. Mechanical products are not just mechanical anymore. In most cases,
they include electronic parts or software. With the emergence of the Internet of
Things (IoT), the entire mechanical world is evolving. From consumer goods like
watches, home appliances or automobiles to industrial products, such as valves or
HVAC equipment, products are becoming smarter and technology-dependent. It’s
time to build bridges between departments and create interdisciplinary
teams. Industry 4.0 is coming.
5. Globalization and Product Design - It’s no secret that there is a tendency towards a
globalized world. To achieve scale economies, companies need to leverage their
product development investments by delivering their products to every available
market.When talking about manufacturing, the fact that companies perform mass
production in factories located in developing countries is already old news. Global
cooperation in product design is not only a new trend but a very productive one. With
the constant pressure for innovation that the market is putting on companies,
globalization can help meet the demands for quality and aesthetic innovation through
collaboration and optimized use of resources.
6. Cloud Computing - Scientists, engineers, marketers, and researchers are all talking
about the emergence of cloud-based solutions. Cloud computing allows people to
access applications through the Internet, as the alternative to downloading and
installing the applications on their physical computers or servers. Cloud-based
services offer flexibility, automatic updates, enhanced collaboration, time and cost
savings, and minimal upfront investments. Software as a Service (SaaS), described as
the online delivery of a program suite, also needs mentioning when talking about the
top trends in product design. SaaS proposes this concept: rather than buying a license
for an application, one can rent it only for what is needed, while being hosted on the
developer’s servers.

3. Michael’s Engineering, Inc. manufactures components for the ever-changing

notebook computer business. He is considering moving from a small custom design
facility to an operation capable of much more rapid design of components. This
means that Michael must consider upgrading his CAD equipment. Option 1 is to
purchase two new desktop CAD systems at $100,000 each. Option 2 is to purchase
an integrated system and the related server at $500,000. Michael’s sales manager
has estimated that if the market for notebook computers continues to expand, sales
over the life of either system will be $1,000,000. He places the odds of this
happening at 40%. He thinks the likelihood of the market having already peaked to
be 60% and future sales to be only $700,000. What do you suggest Michael do and
what is the EMV of this decision? ( 10 Marks)
Ans:

The EMV for the desktop systems is $620,000 vs. $320,000 for the integrated system.
Therefore, Michael should purchase the desktop systems.

4. Medanalysis, Inc., provides medical laboratory services to patients of Health

Providers, a group of 10 family practice doctors associated with a new health
maintenance program. Managers are interested in forecasting the number of blood
analysis requests per week. Recent publicity about the damaging effects of
cholesterol on the heart has caused a national increase in requests for standard
blood tests. The arrivals over the last 16 weeks are given below.

Week Arrivals
1 28
2 27
3 44
4 37
5 35
6 53
7 38
8 57
9 61
10 39
11 55
12 54
13 52
14 60
15 60
16 75

a. Calculate the forecast for the next period using

a. Naive,
b. Moving average (considering 3 period) and
c. Exponential smoothing (alpha as 0.4).

b. Calculate the next three period forecast using linear regression method.

c. Use forecast accuracy methods (MAD, MSE, MAPE and tracking signal) for the all the
methods and suggest the method of forecasting for the above data.
 Naïve Method Moving average Method Exponential smoothing Method

Exponential
Arrivals Moving smoothing
Week Error (Error/ Error (Error/ Error (Error/
(A) Naïve average (alpha as
Error Error2 Actual) Error Error2 Actual) Error Error2 Actual)
(F) (considering 0.4)
x 100 x 100 x 100
3 Week)
(A-F) (A-F) 0.4 (A-F)
1 28 28
2 27 28 -1 1 1 3.70 28.00 -1.00 1.00 1.00 3.70
3 44 27 17 17 289 38.64 27.60 16.40 16.40 268.96 37.27
4 37 44 -7 7 49 18.92 33.00 4.00 4.00 16.00 10.81 34.16 2.84 2.84 8.07 7.68
5 35 37 -2 2 4 5.71 36.00 -1.00 1.00 1.00 2.86 35.30 -0.30 0.30 0.09 0.85
6 53 35 18 18 324 33.96 38.67 14.33 14.33 205.44 27.04 35.18 17.82 17.82 317.64 33.63
7 38 53 -15 15 225 39.47 41.67 -3.67 3.67 13.44 9.65 42.31 -4.31 4.31 18.55 11.33
8 57 38 19 19 361 33.33 42.00 15.00 15.00 225.00 26.32 40.58 16.42 16.42 269.49 28.80
9 61 57 4 4 16 6.56 49.33 11.67 11.67 136.11 19.13 47.15 13.85 13.85 191.81 22.70
- -
10 39
61 -22 22 484 56.41 52.00 13.00 13.00 169.00 33.33 52.69 13.69 13.69 187.42 35.10
11 55 39 16 16 256 29.09 52.33 2.67 2.67 7.11 4.85 47.21 7.79 7.79 60.62 14.16
12 54 55 -1 1 1 1.85 51.67 2.33 2.33 5.44 4.32 50.33 3.67 3.67 13.48 6.80
13 52 54 -2 2 4 3.85 49.33 2.67 2.67 7.11 5.13 51.80 0.20 0.20 0.04 0.39
14 60 52 8 8 64 13.33 53.67 6.33 6.33 40.11 10.56 51.88 8.12 8.12 65.96 13.54
15 60 60 0 0 0 0.00 55.33 4.67 4.67 21.78 7.78 55.13 4.87 4.87 23.75 8.12
16 75 60 15 15 225 20.00 57.33 17.67 17.67 312.11 23.56 57.08 17.92 17.92 321.26 23.90
17 65.00 0.00 64.25
Sum 47 147.00 2303.00 304.83 Sum 63.67 99.00 1159.67 185.32 Sum 90.61 129.20 1748.13 247.97
MAD MSE MAPE MAD MSE MAPE MAD MSE MAPE
n=15 n-1=14 n=15 n=13 n-1=12 n=13 n=15 n-1=14 n=15
9.80 16.07 20.32 7.62 26.01 14.26 8.61 22.95 16.53
 Running Sum of
Fore Casting Method MAD Tracking Signal
Forecasted Error
Naïve 47.00 9.80 4.80
Moving Average 63.67 7.62 8.36
Exponential Smoothing 90.61 8.61 10.52

From the above it is clear that Tracking Value of the NAÏVE method of forecasting is < 6.
Hence it is suggested to use NAÏVE method for forecasting above set of values.

Linear regression method:

Week
Arrivals (Y) x2 XY
(X)
1 28 1 28
2 27 4 54
3 44 9 132
4 37 16 148
5 35 25 175
6 53 36 318
7 38 49 266
8 57 64 456
9 61 81 549
10 39 100 390
11 55 121 605
12 54 144 648
13 52 169 676
14 60 196 840
15 60 225 900
16 75 256 1200
SUM 136 775 1496 7385

X Bar = Sum(X)/16 = 8.50

Y Bar = Sum (Y)/16 = 48.44
n = 16
b = 2.35
a = Y–bX
a = 48.44-2.35(8.50)
a = 28.47

Y = a+bX
Y = 28.47+2.35X

17th Week Forecast = 28.47 + 2.35 x 17 = 68.42

18th Week Forecast = 28.47 + 2.35 x 18 = 70.77
19th Week Forecast = 28.47 + 2.35 x 19 73.12