PGDM (2017-19) Term-II: End Term Examination - Operations Management - I

PGDM (2017-19) Term – II
END-TERM EXAMINATION
Operations Management - I
Time: 2 hours Maximum Marks: 40

Mode: Closed Book Weightage: 40%
INSTRUCTIONS:
1. ALL QUESTIONS CARRIES EQUAL MARKS (10*4 = 40)
2. ANSWER ANY FOUR (4) QUESTIONS
3. USE OF SCIENTIFIC CALCULATOR IS PERMITTED
Q 1 a) A specific forecasting model was used to forecast demand for a product. The corresponding
demand in units are shown below. Use exponential smoothing method forecast the demand for all
months using α = 0.3. Use the MAD and RSFE technique to evaluate the accuracy of the
forecasting model. (3+ 2 Marks)
Month Actual Demand
October 700
November 760
December 780
January 790
February 850
March 950
Q 1 b) Chicken Palace periodically offers carryout five-piece chicken dinners at special prices. Let
Y be the number of dinners sold and X be the price. Based on the historical observations and
calculations in the following table, determine the regression equation, correlation coefficient, and
coefficient of determination. How many dinners can Chicken Palace expect to sell at $3.00 each?
(5 Marks)
Observation Price (X) Dinners Sold (Y)
1 $ 2.70 760
2 $ 3.50 510
3 $ 2.00 980
4 $ 4.20 250
5 $ 3.10 320
6 $ 4.05 480
PGDM (2017-19) Term-II: End Term Examination – Operations Management - I

Q 2) Best Vision is revamping its assembly lines to improve efficiency. As shown below, there
are 10 steps to assembling a television set. Best Vision wants this assembly line to produce 120
televisions in a 40-hours work week.
Task Precedence Time (minutes)
A -- 8
B A 4
C A 7
D A 3
E B 7
F C, E 11
G D 2
H G 8
I F, H 5
J I 7
a) Construct a precedence diagram. (1 mark)

b) What is the cycle time? ( 1 mark)
c) Determine the minimum number of workstations. (1 mark)
d) Assign tasks to workstations using longest-task-time heuristic. (4 marks)
e) What is the line efficiency? ( 1 mark)
f) If demand for television is reduced to 100 sets per 40 hours week, rebalance the line and
recalculate its efficiency? (2 marks)
Q 3 a) The Davis national drugstore chain prefers to operate one outlet in a town that has four
major market segments. The number of potential customers in each segment along with the
coordinates are as follows:
Market Location Location Number of
Segment Coordinate (X) Coordinate (Y) customers
1 2 18 2,000
2 15 17 600
3 2 2 1,500
4 14 2 2,400
a) Which would is the best location by the center-of –gravity method? ( 3 marks)
b) If after five years half the customer from segment 4 are expected to move segment 2,
where should the drugstore shift, assume the same criteria adopted? ( 2 marks)

Q 3 b) Productivity can be measured in a variety of ways, such as by labor, capital, energy, material
usage, and so on. At Modern Lumber, Inc, Art Binley, president and producer of apple crates sold
to growers, has been able, with his current equipment, to produce 240 crates per 100 logs. He
currently purchases 100 logs per day, and each log requires 3 labor- hours to process. He believes
that he can hire a professional buyer, who can buy a better- quality log at the same cost. In this
case, he can increase his production to 260 crates per 100 logs. His labor-hours will increase by 8
hours per day. What will be the impact on productivity (measured in crates per labor hour) if the
buyer is hired? (5 Marks)
Q 4 a) The Avon Bicycle Co. has scheduled the production of following bicycles this month.
TYPE WEEK
I II III IV
A 50 100 195 150
B 15 30 65 45
C 20 40 80 60
Two critical work centers for producing these bikes are welding and assembly. Welding
has an efficiency of 95% and utilization of 90% and Assembly has an efficiency of
90% and utilization of 92%. The time required in hours by each bike in two work
centers is as follows:
TYPE WELDING ASSEMBLY
A 0.20 0.18
B 0.15 0.15
C 0.07 0.10
Assume 40 hours/week for each work center. Calculate the utilized capacity; effective
capacity; and load percent per work center per week. (1+2+2=5 marks)

Q 4 b) LaVilla is a village in the Italian Alps.. Given its enormous popularity among Swiss,
Germany, Austrian and Italian skiers, all of its beds are always booked in the winter season and
there are, on average, 1,200 skiers in the village. On average, skiers stay in LaVilla for 10 days.
a) How many new skiers are arriving –on average-in LaVilla every day? (2 marks)
b) A study done by the largest hotel in the village has shown that skiers spend on average $50
per person on the first day and $30 per person on each additional day in local restaurants.
The study also forecast that- due to increase hotel prices- the average length to stay for the
2003/2004 season will be reduced to five days. What will be the percentage change in
revenues of local restaurants compared to last year (when skiers still stayed for 10 days)?
Assume that hotels continue to be fully booked! ( 3 marks)
Q 5 a) Suppose a company has consider to place four departments for a newly designed facility
using the data in the following tables. Assume the reverse distance are the same. We assume that
the departments require equal area. The initial location shown in the grid.
A B
C D
Table: Load Matrix

A B C D
A - 3 7 4
B - 6 5
C - 2
D -
Table: Distance matrix

A B C D
A - 1 1 2
B - 2 1
C - 1
D
a) Find a suitable layout that minimize load distance. ( 4 marks)

b) Compute the minimum distance.( 1 marks)

Q 5 b) The owner of Old-Fashioned Berry Pies, is completing adding a new line of pies, which
will require leasing new equipment for a monthly payment of $6,000. Variable costs would be $2
per pie and pies would retail for $7 each.
a) How many pies must be sold in order to break even? (1 mark)
b) What would the profit (loss) be if 1,000 pies are made and sold in a month? (2 marks)
c) How many pies must be sold to realize a profit of $4,000? (1 mark)
d) If 2,000 can be sold and a profit target is $5,000, what price should be charged per pie? (1
mark)
Q 6) Consider a process consisting of five resources that are operated eight hours per day. The
process works on three different products A, B and C:
Resource Number of Activity time for Activity time for Activity time for
workers A (min./unit) B (min./unit) C (min./unit)
1 2 5 5 5
2 2 3 4 5
3 1 15 0 0
4 1 0 3 3
5 2 6 6 6
Demand for the three different products is as follows: Product A, 40 unit per day; Product B, 50
unit per day; Product C 60 unit per day.
a) What is the bottleneck? ( 3 marks)
b) What is the flow rate for each flow unit assuming that demand must be served in the mix
described above ( i.e. for every four units of A, there are five units of B and six units of
C) ? ( 7 marks)


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PGDM (2017-19) Term – II

Time: 2 hours Maximum Marks: 40

PGDM (2017-19) Term-II: End Term Examination – Operations Management - I

a) Construct a precedence diagram. (1 mark)

PGDM (2017-19) Term-II: End Term Examination – Operations Management - I

PGDM (2017-19) Term-II: End Term Examination – Operations Management - I

Table: Load Matrix

Table: Distance matrix

a) Find a suitable layout that minimize load distance. ( 4 marks)

PGDM (2017-19) Term-II: End Term Examination – Operations Management - I

PGDM (2017-19) Term-II: End Term Examination – Operations Management - I

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