ZCMA6062

OPERATIONS MANAGEMENT AND DECISION ANALYSIS

FINAL TEST: SEM 2 SESSION 2021/2022

INSTRUCTION: Please answer all the 10 questions.

(Each question consists of 10 marks)

1) Define operations management. Will your definition accommodate both

manufacturing and service operations? Why are organizations becoming
more global? (10 marks)

Operation management is the planning, organization, implementation, and

control of the operation process, and is a general term for various management
tasks closely related to product production and service creation. From another
perspective, operations management can also refer to the design, operation,
evaluation, and improvement of the systems that produce and deliver the
company's main products and services. With the rise of the service industry, the
concept of production has been further expanded, gradually accommodating the
non-manufacturing service industry, including not only the manufacture of
tangible products, but also the provision of intangible services. Implementing
effective operations management is increasingly important. Faced with global
competitive pressures, business executives urgently need to have a solid
understanding of some of the fundamental relationships and concepts of
operations management, and more importantly, they must know how to apply this
knowledge to maximize quality and productivity.
Modern operations management covers an ever-increasing range. The scope
of modern operations has expanded from traditional manufacturing businesses to
non-manufacturing businesses. Its research content is not limited to the planning,
organization, and control of the production process, but expanded to include the
formulation of operational strategies, operational system design and operational
system operation and other levels of content. The operation strategy, new
product development, product design, procurement and supply, manufacturing,
product distribution and after-sales service are regarded as a complete "value
chain" and integrated management is carried out. With the intensification of the
global economic integration trend, "global operation" has become an important
subject of modern enterprise operation. Therefore, global operation has
increasingly become a new hot spot in operations science.
Flexibility of the operating system. Diversification and high efficiency of
production and operation are contradictory. Therefore, under the premise of
diversification of production and operation, striving to do a good job in specialized
production and operation and realizing the organic unity of diversification and
specialization is also the direction pursued by modern operation. To achieve this,
we strive to promote the flexible operation system in modern operation practice.
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 For example, concurrent engineering, rapid prototyping, virtual manufacturing
technology, CAD/CAM technology, modular technology, etc. in product design,
CNC machine tools, flexible manufacturing units, group technology, etc. in
product manufacturing. Supply chain management has become an important part
of operations management. Enterprises began to dedicate themselves to the
rationalization and optimization of logistics, information flow and capital flow in
the entire supply chain and formed alliances with enterprises in the supply chain
to cope with the increasingly fierce market competition.

2) Identify and explain the four basic global operations strategies. Give an
example of each strategy. State two examples of cultural and ethical
issues that face operations managers in a global environment. (10
marks)

The four basic global operations strategies: international strategy,

multinational localization strategy, globalization strategy and transnational
strategy.
The differences are as follows:
The characteristics of international strategy: the function of product
development remains in the home country, while the manufacturing and
marketing functions are established in the host country. The enterprise
headquarters generally strictly control the decision-making power of product
and market strategy. Just like Intel and AMD, the chips made by these
companies are sold all over the world. However, the adaptability of
international strategy is relatively poor, and the cost is relatively high.
The characteristics of multinational localization strategy: transfer the
products and skills developed by their own countries to foreign markets and
engage in production and business activities in important national markets to
meet the personalized needs of all regions, so they are highly adaptable; For
example, Tesla and the cars they made, it has not only set up factories
locally, but also set up a series of sales points and provide after-sales
maintenance services. The cost structure is high.
The characteristics of globalization strategy: promote standardized
products and services to the world market and carry out production and
business activities in more favorable countries, forming an experience curve
and economies of scale. Companies using this strategy generally rely on a
large number of people to assemble and produce products. For example,
most mobile phone manufacturers such as Apple and Samsung, they choose
to set up factories in places with relatively cheap labor to reduce costs, such
as China and Vietnam. Of course, this also includes the production of daily
necessities such as clothing. Low cost and poor adaptability.
The characteristics of transnational strategy: the formation of cost-
effectiveness and location efficiency based on experience, the transfer of
special competitiveness within the enterprise, while paying attention to the
needs of the local market, is the combination of multinational localization
strategy and globalization strategy. For example, Unilever uses standardized
packaging and advertising throughout Europe, while respecting national
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 differences in distribution channels and brand awareness and maintaining a
certain degree of localization.
In the process of global operation, there are often crises caused by cultural
and moral conflicts, which have often occurred in enterprises spread by
culture in recent years. For example, when making game products, game
companies will always inadvertently conflict with the culture of the selling
region, such as Call of Duty from Activation, one mission named "No
Russian", which has caused serious dissatisfaction among the people of
Russia, so the game is banned from sale in Russia. On the issue of ethics, to
reduce the pollution caused by emissions, many large factories choose to set
up branches in some underdeveloped countries and regions. For example, in
2019, Formosa Plastics factory set up branches in Vietnam, which caused
irreversible environmental pollution to the local area. Representatives of more
than 7000 Vietnamese victims accused the steel plant invested by Formosa
Plastics of polluting the local marine environment and causing a lot of losses
in the Taipei District Court, Claim compensation of NT $140.27 million

3) How can global operations improve the supply chain? How do global
operations attract new markets? What is the difference between a firm's
mission and its strategy? (10 marks)

As the pandemic hits, the current market volatility is too great for any
company to control, but leaders can take some initial steps to protect
themselves through supply chain optimization best practices. Strengthening
relationships, increasing awareness of current events, and adding safeguards
can all play a role in securing operations. For companies looking to make a
big impact in the short term, here are seven optimizations to try.
1. Mapping the supply chain: Consider creating a robust supply chain
visualization. Show how goods move, where data is going, and what physically
and digitally connects each point. You may discover new avenues or
limitations, unnecessary duplication of work, or advantages such as optimizing
warehouse locations.
2. Integrate data and documents: One of the first core areas is corporate
documentation. Look for tools that support data capture and validation in
standard documents such as invoices, bills of lading, service level agreements
(SLAs), terminal receipts, and more. Build a single repository to help you track
everything your shipment uses. Where possible, strive to integrate the
enterprise's tracking and partner systems so that everyone starts working from
the latest status and information.
3. Strengthen existing relationships: The purpose of this practice is to
open up lines of communication and start discussions on ways to be mutually
beneficial in each transaction. Companies are more likely to give you additional
support, capacity, and wiggle room during peak periods when businesses are
better partners during off-peak periods.
4. Get extra space early: Increasing on-hand inventory can help avoid
stock-outs and out-of-stocks. Secure or build additional space early to
accommodate increased inventory. It will protect order fulfillment and provide
more lead times for the entire supply chain of the business.
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 5. Create realistic choices: Protect operations through supply chain
optimization practices that focus on diversity and alternatives. Bring more
carrier and regional support to keep cargo moving. Experiment with different
warehouses or 3PLs for your business' sales channels to determine what
works best. Adding partners removes many single points of failure, allowing
the business to continue operating as the market becomes complex. This
protects customers and partners throughout the supply chain by ensuring
operations do not come to a standstill.
6. Develop a test plan: Today's supply chain relies on a plethora of systems
and tools to function effectively. Therefore, any changes in these aspects can
affect a company's overall supply chain optimization efforts. Work with the
enterprise's partners and internal IT teams to develop a plan to test changes,
track implementation, and evaluate results. Set metrics and KPIs for tools and
new partners.
7. Continue to analyze and adapt: Supply chain optimization is never truly
over. While other tips can help businesses take initial steps or move projects
further, businesses need a team to review operations consistently. Assign
analyst roles and tasks to ensure the business is constantly reviewing the
entire supply chain and any improvements you make.

And how do global operations attract new markets? Global expansion may
face a series of difficulties, but this is not a reason to delay the
internationalization of your business. In today's highly competitive business
environment, global expansion is becoming an important part of organizational
development strategy. How to expand the new market can start from these five
points:
1. Keep a light footprint: many companies begin to postpone infrastructure
investment or hard costs until their overseas businesses mature. This is a
good way to justify the cost and ensure the company's long-term return on
investment. However, the time should not be too long; Human capital is
priceless. Strong local staff can evaluate the market penetration plan every
day, identify untapped opportunities, and adjust if necessary. The key to
recruitment is to be light and flexible, but to balance risk reduction. Employing
international contractors often carries great risks. If you are unwilling / unable
to establish a legal entity in China, please consider using international PEO to
work globally.
2.Adopt a clear product strategy: develop "leading" products and
encourage you to expand to new countries and regions. Test your product in
target countries to ensure success and determine whether adjustments are
needed. Please note that if a product thrives at home, don't think it will do
better overseas. And use employees in overseas markets to monitor new
developments, keep in touch with decision makers, and identify opportunities.
3. Income growth, reinvestment, repetition: choose an international
market and introduce your standard products or services in places with low
competition. This will help to release additional revenue for reinvestment in
products at home and continue to gain market share. Take a lean approach to
help you stop external sources of capital and increase your assets. This is a
very important strategy when loans and funds are scarce.
4. Partners: before starting your global expansion plan, please make sure to
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 work with first-class companies, whose focus is to identify warning signals and
understand potential risks. Rely on partners - whether they are local to you or
your target country. Whether you hire local lawyers for protection or
consultants for advice, you will avoid serious pain points in the future.
5. Be proactive, not reactive: global expansion is the main hallmark of any
business plan. Establishing an entity / entering another country is a long-term
plan. Therefore, you should take a proactive attitude when entering new
markets. Do your research and ensure that your entire team is aligned with this
long-term strategic plan.

What is the difference between a firm's mission and its strategy? In fact,
mission is the role and responsibility that enterprises should play in social
progress and socio-economic development. It refers to the fundamental nature
and reasons for the existence of enterprises, explains the business areas and
business ideas of enterprises, and provides a basis for the establishment of
enterprise goals and strategies. Strategy means that enterprises choose
suitable business fields and products according to environmental changes and
their own resources and strength, form their own core competitiveness, and
win in the competition through differentiation. It includes competitive strategy,
marketing strategy, development strategy, brand strategy, financing strategy,
technology development strategy, talent development strategy, resource
development strategy, etc. Mission is the company's mission, which is
higher than the concept of the company's vision. Strategy is under the
mission. Before formulating strategies, enterprises must first determine
their mission.

4) Identify the ten determinants of service quality. Describe five of them in

a sentence or two each. What is the difference between conforming
quality and target-oriented quality? (10 marks)

Ten determinants of service quality

Understanding – It involves knowing customers by making more efforts to
understand the customer's requirements and wants.
Tangibles – It encompasses the physical evidence of the service.
Security – It is the liberty from doubts or danger risks.
Credibility – It is nothing but honesty, believability, and trustworthiness.
Communication – It is the process where the customers are informed in their
own understandable language as well as it encompasses listening to
customers. Communication means that the business must make several
adjustments for various customers that in turn results in increasing the
sophistication level with a well-educated customer as well as speaking.
Courtesy – It involves friendly attitude as well as nature of personal
politeness.
Access – It involves availability as well as easy method of contact.
Competence – It means possessing the needed skills and knowledge for the
purpose of performing the services.
Reliability – It involves dependability and performance consistency.
Reliability means that the service is done correctly the very initial time by the
business, and it also means that the business honors its premises.
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 Responsiveness – It means the willingness of a worker for the sake of
providing service. Responsiveness encompasses timeliness of service.

5) The definition of quality management has evolved from "quality by

inspection" toward "delivering competitive advantage to the firm."
Discuss the various definitions of quality management and described
their applications. (10 marks)

6) As the firm strategies vary from low-cost to response to differentiation, how

does this impact the criteria used for selection of a supply-chain strategy?
What are the special requirements of supply-chain systems in global
environments? Identify the reasons for making in the make-or-buy
decision. (10 marks)

7) What is the fundamental distinction between design capacity and

effective capacity? Provide a brief example. Distinguish between
utilization and efficiency. Why is the capacity decision important?
(10 marks)

8) How do service facility location decisions differ from industrial location

decisions in terms of the techniques used to analyze them? What kinds
of location decisions are appropriate for use of crossover analysis?
Write a brief paragraph explaining how crossover analysis (break-even
analysis) can assist an operations manager choose among alternative
sites in making a location decision. (10 marks)

9) What is the purpose of aggregate planning? Describe some demand

and capacity options for implementing plans. If a service firm were to
attempt a pure level strategy for aggregate planning, should its level of
output be at average demand, peak demand, or minimum demand?
(10 marks)

10) What conditions make yield management of interest? How does

aggregate planning in services differ from aggregate planning in
manufacturing? How does "yield management" impact the aggregate
plan? (10 marks)

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END OF QUESTIONS