Course Code: MG202

Course Title: OPERATIONS MANAGEMENT

Faculty of Business and Economic
School of Management and Public Administration

FINAL EXAM
Semester 1 2016

FACE TO FACE Mode

Duration of Test: 3 hour & 10 minutes

Reading Time: 10 minutes

Writing Time: 3 Hours

Instructions:

This exam paper has 3 sections and all questions are to be answered in the answer
booklet provided

The exam is 50% of overall mark

Number of pages: Cover page and 6 pages of Questions

Closed Book Exam

SECTION A: CASE STUDY (20 MARKS- ANSWER ALL
QUESTIONS)

The product strategies of Temsa global

Published: 23, March 2015

Temsa as a global corporation is well known in the Middle East region and in parts of the European
market. The company core business is focused on manufacturing high end and utility based buses. To
some extent the company and its product have been noted to be very innovative in terms of their
designs, user-ability. Starting its operation since the early 1980s, Temsa Global today has come a long
way to mark a place of itself in the international market. A study of the company and its analysis shows
that the company product strategies during the 1980s and 2009 are totally different from one another.

As the case it is, during the early part of 1980s that is to say precisely since 1984 the company first made
its entry in the market as licensor to Mitsubishi Motors, a global auto manufacturing giants based in
Japan. However it was only after 2009 that the company took its step forward towards its global
operation management that also brought its foothold in the market in the Middle East region and in
parts of the European market. (Temsa Global , 2009 )

Speaking of the company from the strategic point of view, it is observed that innovation and design
capabilities have been the benchmark for the company to progress. Being a global automotive
manufacturing company it requires high-end manufacturing capabilities and innovation to make its mark
in the market felt Temsa and its management. Further analysis of the report available with the company
shows that it was part of Temsa futuristic outlook towards its operational expertise. The company since
2009 has been in the right course of strategic formulation to make its presence on a global arena.
(Temsa Global , 2009 )

This is true given that competitions in the market are ripe enough. For that reason Temsa launches its
new brand identity through its hybrid buses that run on CNG in 2009 that changed the course for the
company and its operations globally. (Global, 2009) What we learnt is that Temsa produces mainly light
trucks, buses and mini-buses from its manufacturing units and factories based in Turkey. However, a
gradual shift to the company operation process and manufacturing capabilities was following the year
2009, when the company acquired development design capabilities which given the shift in its product
strategy.

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Questions

1. What organizational changes are required to support the shift in strategy at Temsa Global?
(5 Marks)

2. What are the possible advantages of investing in the R&D centre for advanced
technologies?

(5 Marks)

3. Discuss the implications considering the changing perceptions and demands of consumers.

(5 Marks)

4. What should be the focus of Temsa Global in supporting its market - driven product strategy
and customized designs?

(5 Marks)

SECTION B: SHORT ANSWERS (20 MARKS- ANSWER

ALL QUESTIONS)
1. What are the five reasons productivity is difficult to improve in the service sector?
Explain with examples
(5 Marks)
2. Explain the term “Bath tub curve”.

(5 Marks)

3. What are the 7 tools of TQM

(5 Marks)

4. List factors other than globalization which affect the location decision

(5 Marks)

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SECTION C: CALCULATIONS (60 MARKS- ANSWER ALL
QUESTIONS)
Question 1: Forecasting (10 Marks)

Weekly sales of ten-grain bread at the local organic food market are in the table below.

Week Sales
1 415
2 389
3 420
4 382
5 410
6 432
7 405
8 421

Based on this data calculate the following:

1. Forecast week 9 using Naïve method

(1 Mark)
2. Forecast week 9 using a five-week moving average.
(2 Marks)
3. Forecast week 9 using weighted average and weights are given as 0.4,0.3,0.2,& 0.1

(2 Marks)

4. Forecast week 9 using trend equation

(5 Marks)

Question 2: Productivity (10 Marks)

Gangaram's Ceramics spent $4000 on a new kiln last year, in the belief that it would cut energy usage
25% over the old kiln. This kiln is an oven that turns "green ware" into finished pottery. Gangaram is
concerned that the new kiln requires extra labour hours for its operation. The production details are
shown in the table below:

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 2014 2015
Production (finished units) 4000 4000
Green ware (pounds) 5000 5000
Labour (hrs) 350 375
Capital ($) 15000 19000
Energy (kwh) 3000 2600

Calculate the following:

a. Labour productivity for 2014 and 2015

(2 Marks)
b. Capital Productivity for 2014 and 2015

(2 Marks)

c. Energy Productivity for 2014 and 2015

(2 Marks)

d. Explain to Gangaram about the new kiln he bought last year. What is the effect?

(4 Marks)

Question 3: Supply Chain (10 Marks)

Maria and Sia (M&S)Investments( shown in table below) wishes to compare its inventory turnover to
those of industry leaders,(PA industries) who have turnover of about 13 times per year and 8% of their
assets invested in inventory.

M&K ($) PA industries($)

Net Revenue 27,500 16,500
Costs of sales 21,500 13,500
Inventory 1,250 1,000
Total assets 16,600 8,600

a. What is M&S”s inventory turnover? (2 marks)

b. What is M&S’s per cent of assets committed to inventory? (2 marks)
c. What is PA”s inventory turnover? (2 marks)
d. What is M&S’s per cent of assets committed to inventory? ( 2 marks)
e. How does M&K’s performance compare to PA’s (2 marks)

Page 5 of 7
Question 4: Project Management (10 Marks)

A network consists of the following list. Times are given in weeks.

Activity Preceding Duration

A --- 9
B A 2
C A 12
D A 5
E B 6
F B 8
G C,F 3
H D 2
I H 8
J G 16
K E,J 2

a. Draw the network diagram. (2.5 Marks )

b. Which activities form the critical path? (2.5 Marks )

c. How much slack exists at activities A and F? (2.5 Marks )

d. What is the duration of the critical path? (2.5 Marks )

Question 5: Inventory Management (10 Marks)

Ilisibeta's Ra Machine Shop uses 2,500 brackets during the course of a year. These brackets are
purchased from a supplier from Sigatoka, 90 miles away from the shop. The following
information is known about the brackets.

Annual demand 2,500

Holding cost per bracket per

year $1.50

Order cost per order $18.75

Lead time 2 days

Working days per year 250

Page 6 of 7
 a. Given the above information, what would be the economic order quantity (EOQ)?
(2 Marks)

b. Given the EOQ, what would be the average inventory? What would be the annual
inventory hold cost?
(2 Marks)

c. Given the EOQ, how many orders would be made each year? What would be the annual
order cost?
(2 Marks)

d. Given the EOQ, what is the total annual inventory cost?

(2 Marks)

e. What is the time between orders?

(2 Marks)

Question 6: Reliability

a. A simple electrical motor has three components: windings, armature, and housing. These
three components have reliabilities of .9998, .9992, and .9999. There is no possibility of
redundant parts.

What is the reliability of the motor? (5 Marks)

b. Which product design below has the higher system reliability?

(5 Marks)

THE END
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