Instructions To Participants:: Compulsory Question
Instructions To Participants:: Compulsory Question
Instructions To Participants:: Compulsory Question
GHAZIABAD
Post-Graduate Diploma in Management – Full Time
(Batch 2021 – 23)
End Term Exam: I (Take Home Exam)
Subject: Operations Management (OM)
Faculty Name: Profs Nikunj Kumar Jain / Sachin Modgil / Kampan
Mukherjee/ Kaustov Chakraborty/ Namrata Sharma / Ankur
Chauhan
Exam Date: 01.10.2021 Section : ALL
Time: 2:30 Minutes Maximum marks : 40
Instructions to participants:
● Question 1 is compulsory of 10 marks.
● Attempt any three questions (10*3=30 marks) from questions 2 to 7.
● Total four questions (1 compulsory and 3 optional) to be attempted.
● Please state your assumptions clearly before attempting the problems.
● Write interpretations to problems in the word file. Numerical calculations/diagrams/
figures may be submitted in excel sheet or as the image (screenshot) of the same in
the word file.
Compulsory question
1.
a. It is a common saying that the only thing certain about a forecast is that it will be wrong.
Comment on the same with the help of an example?
b. A firm is faced with the attractive situation in which it can obtain immediate delivery of an
item it stocks for retail sale. The firm has therefore not bothered to order the item in any
systematic way. However, recently profits have been squeezed due to increasing competitive
pressures, and the firm has retained a management consultant to study its inventory
management. The consultant has determined that the various costs associated with making an
order for the item stocked are approximately $70 per order. She has also determined that the
costs of carrying the item in inventory amount to approximately $27 per unit per year
(primarily direct storage costs and forgone profit on investment in inventory). Demand for the
item is reasonably constant over time, and the forecast is for 16,500 units per year. When an
order is placed for the item, the entire order is immediately delivered to the firm by the
supplier. The firm operates 6 days a week plus a few Sundays, or approximately 320 days per
year. Determine the following:
a. If, during a typical peak hour operation, the restaurant is able to take 144 orders,
what is the maximum permissible cycle time for the assembly workstations?
b. If the restaurant desires to set a target of the above cycle time, what is the minimum
number of workstations they should have at the assembly?
c. Design the assembly with the minimum number of workstations
d. For the final design that you have made, compute the average utilization of
workstations.
[10 marks]
3. An organization is using the exponential smoothening method for preparing short-term
forecasts for its product with an alpha value (or Smoothing constant) of 0.20. However, it
is not clear if the forecasts obtained from the system are reliable enough. It is also not
clear what the most appropriate measure is for assessing the forecast accuracy. Perform
the following exercises using Table given below and suggest a suitable course of action
for the organization:
(a) Test the proposed forecasting tool by considering MAD and MAPE from July to
December with same parameter.
(b) Suppose you decide to change the value of α ¿ 0.50. How will this impact forecasting
accuracy?
(c) On the other hand, if you replace the exponential smoothening model with a 3-period
moving average model, will the forecasting accuracy improve?
[10 marks]
4.
a. The Great North Woods Clothing Company sells specialty outdoor clothing through its
catalogue. A quality problem that generates customer complaints occurs when a warehouse
employee fills an order with the wrong items. The company has decided to implement a
process control plan by inspecting the ordered items after they have been obtained from the
warehouse and before they have been packaged. The company has taken 30 samples (during
a 30-day period), each for 100 orders, and recorded the number of “defective” orders in each
sample, as follows:
Construct a p-chart for the company that describes 99.74% of the random variation in the
process, and indicate if the process seems to be out of control at any time
b. A manufacturing plant produces parts and components for ventilation and air conditioning
industry. One particular product is 6-inch metal hollow tube. The target diameter is 6 inch
exactly, with an acceptable tolerance of ± 0.3 inches. Anything produced outside of
specifications is considered defective. The supervisor for this product has data showing that
the actual diameter of finished product is 5.99 inches with a standard deviation of 0.01
inches. (i) What is the current capability index of this process?
(ii) Through better training of employees and investment in equipment upgrades, the
company could produce output with a mean diameter equal to the target and a standard
deviation of 0.005 inches. What would the process capability index be if this were happen?
[10
marks]
5. XYZ (P) Ltd specializes in constructing quality homes in the city of Bangalore. XYZ is
known for timely completion of its projects. Consider one of the projects of XYZ. Table,
shown in below, lists the activities their precedence relationship with other activities and
their duration. Construct a network for the project, clearly depicting the activities and
their interrelationships.
Construct the network for this project and determine the critical path and the project duration.
[10
marks]
The overtime (OT) premium is estimated to be INR 20 per hour while undertime (UT)
costs are 50 percent of the OT premium. The cost of carrying inventory is INR 15 per
hour per month and the backordering/shortage costs are 200 percent of inventory carrying
costs. The company can subcontract capacity from a reputed vendor and the additional
cost related to subcontracting is INR 25 per hour of capacity. Evaluate the following
alternatives for AOP:
OR
(ii) Maintain a production level of 31,000 hours per month and use OT/UT alternatives to
chase the demand.
7. Assume that Product Z is made of two units of A and four units of B. A is made of three
units of C and three of D. D is made of two units of E.
Lead times for purchase or fabrication of each unit to final assembly are: Z takes two
weeks; A, B, C, and D take one week each; and E takes three weeks. Fifty units of
product Z are required in Period 10. (Assume that there is currently no inventory on hand
of any of these items.)