Mgt613 VU Midterm Current Papers Fall 2011 of Virtual University of Paksitan (www.vusolutions.com) Question No: 41 (Marks: 5)
Why some multinational corporations feel that globalization is not a good option?
The western worlds call these the disadvantages of Globalization, if an organization
decides to pack up its business and leave a host company.
Disadvantages to Globalization
The common disadvantages which lead to a MNC forgoing globalization includes.
Handing over proprietary Technology to host countries.
Poor Employee (Managers and worker) skills.
Slow customer response time.
Effective communication between interfaces difficult
Managing Global Operations
When organizations become global they often end up paying a heavy price in terms of managing complex managerial issues and challenges.
Host Country Norms and Customs.
Unfamiliar laws and regulations.
Question No: 42 (Marks: 5)
Do you perceive that operation management and operation research are the same concepts?
NO both concepts are different from each other; we can elaborate both in the following manner:
Operations management is an area of management concerned with overseeing, designing, and redesigning business operations in
the production of goods and/or services. It involves the responsibility of ensuring that business operations are efficient in
terms of using as little resources as needed, and effective in terms of meeting customer requirements. It is concerned with
managing the process that converts inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods
The relationship of operations management to senior management in commercial contexts can be compared to the relationship of
line officers to the highest-level senior officers in military science. The highest-level officers shape the strategy and
revise it over time, while the line officers make tactical decisions in support of carrying out the strategy.
Operations research (also referred to as decision science or management science) is an interdisciplinary mathematical science
that focuses on the effective use of technology by organizations. In contrast, many other science & engineering disciplines
focus on technology giving secondary considerations to its use.
Employing techniques from other mathematical sciences — such as mathematical modeling, statistical analysis, and mathematical
optimization — operations research arrives at optimal or near-optimal solutions to complex decision-making problems.
Because of its emphasis on human-technology interaction and because of its focus on practical applications, operations
research has overlap with other disciplines, notably industrial engineering and management science, and draws on psychology
and organization science. Operations Research is often concerned with determining the maximum (of profit, performance, or
yield) or minimum (of loss, risk, or cost) of some real-world objective.
Question No: 29 (Marks: 3)
Write down at least three ways of improving reliability of a system.
We should develop the ability to understand the importance of reliability and at
the same time identify the ways in which Reliability can be improved in the following
1. Component design: Parts of a car
2. Production/assembly techniques: No reworks also fool proof assembly.
3. Testing: for trouble free final product
4. Redundancy/backups: not possible all the time but common remedy.
5. Preventive maintenance procedures
6. User education (operating manuals)
7. System design (we will discuss in later chapters, a senior management issue, but
indicative that reliability is always considered VIP)
8. Research & Development (R&D) : Organized efforts to increase scientific
knowledge or product innovation & may involve:
Question No: 30 (Marks: 3)
What qualities does a successful job design contain?
A successful Job Design must have the following qualities
1. Carried out by experienced personnel who have the necessary training and
2. Consistent with the goals of the organization.
4. Understood and agreed by both management and employees.
5. Shared with the new employees.
6. Factors that affect Job Design
Question No: 32 (Marks: 5)
"Standardization plays an important role in product design". How will you describe
Standardization is the extent to which there is an absence of variety in a product,
service or process. Standardized products are immediately available to customers. You
go to a market and request for a charger for your cellular phone, the shopkeeper would
ask for the model, make and deliver you as special product which is made by your cell
phone company or by an independent manufacturer, who provides a standardized
Question No: 29 (Marks: 3)
What are the reasons that support the use of process layout?
1. Product layouts are used to achieve a smooth and rapid flow of large volumes of goods
and customers through a system.
2. The work is divided into a series of standardized tasks, permitting specialization of
both labor and equipment.
3. The large volumes handled by these systems make it pertinent and necessary to
invest in equipment and job design.
4. Layouts should be arranged to make the best use of technological processing abilities
to fulfill the requirements of both product and services.
5. In manufacturing environments the lines are referred to as production lines or assembly
lines, depending on the type of activity involved.
6. In services side, the word line may or may not be used like Healthcare/Hospital
Services line, Carwash (absence of word line here) or Cafeteria Line.
7. Without standardization, many of the benefits of the repetitive processing are lost.
8. Product Layouts achieve a high degree of labor and equipment utilization, which tends
to offset their high equipment costs.
9. Operations are so closely tied up that a mechanical failure or high absenteeism (rains)
would increase vulnerability of the Systems.
10. We can prevent breakdowns if we religiously follow preventive maintenance
schedules, inspection and replacement of worn parts.
Question No: 30 (Marks: 3)
Suppose you are the operations manager of a manufacturing firm, why would you
perceive concurrent engineering as a suitable approach with reference to product
Concurrent engineering is the bringing together of engineering design and
manufacturing personnel early in the design phase.
Why Suitable Approach to product Design:
Manufacturing Personnel are able to identify production capabilities and
capacities .They have thus the opportunity to inform the design group about the
suitability of certain materials on the flipsides the designer would know the
suitability of certain designs in aiding in cost reduction and quality improvement
in production/assembly process.
Early opportunities for design or procurement of critical tooling, some of which
might have long lead times. This can result in a major shortening of the product
development process, which should be a key competitive advantage.
Early consideration of the Technical Feasibility of a particular design or a portion
of a design. Again this can avoid serious problems during production. The
emphasis can be on problem resolution instead of conflict resolution.
Question No: 31 (Marks: 5)
Which process system would you suggest for the following business/industry?
French restaurants (Job Shop Process)
Heavy equipment (Batch Flow Process)
Sugar refinery (Continuous Flow Process)
Automobile assembly (Product layout)
Commercial printer (Job Shop Process)
Question No: 32 (Marks: 5)
In some organizations capacity planning takes place very regularly and in some it
takes place seldom. What are the factors that influence the frequency of capacity
FACTORS INFLUENCE THE FREQUENCY OF CAPACITY PLANNING:
1. Capacity strategy for long-term demand which focus on demand patterns and takes into
account growth rate and variability
2. Facilities that focus on cost of building and operating
3. Technological changes relate to rate and direction of technology changes
4. Behavior of competitors
5. Availability of capital and other inputs
Question No: 29 (Marks: 3)
Write down the characteristics of well designed service system?
1. A well designed system should be well versed with organization vision & mission.
2. It should cost effective
3. User friendly & sustainable.
4. It should have ability to make effective link between front & backend operations.
5. Accommodation of variable changes in future.
6. Simple requirements & handling few customer at every customer centre.
Question No: 30 (Marks: 3)
What qualities does a successful job design contain?
A successful job design contains following qualities.
1. Carried out by experience personal who have necessary training & background.
2. Consistent with goals of organization
3. Shared with new employees
5. Understood & agreed by both management & employees
6. Factors that affect job design.
Question No: 31 (Marks: 5)
Suppose you want to estimate the time required to perform a certain task by the two
employees. One employee's study yielded a mean of 6.4 minutes and standard
deviation of 2.1 minutes with 95% confidence Interval. Other employee's study
yielded a mean of 2.1 minutes and standard deviation of 6.4 minutes with confidence
interval of 95%. Now how many observations you will need if desired maximum
error is 10% of sample mean? (z= 1.96) Do both the employees have same number
Standard Deviation = S = 2.1mint.
= [(1.96) (2.1)/ (0.1) (6.4)] 2
Standard Deviation = S = 6.4mint.
= [(1.96) (6.4)/ (0.1) (2.1)] 2
Question No: 32 (Marks: 5)
In some organizations capacity planning takes place very regularly and in some it
takes place seldom. What are the factors that influence the frequency of capacity
FACTORS INFLUENCE THE FREQUENCY OF CAPACITY PLANNING:
1. Capacity strategy for long-term demand which focus on demand patterns and takes into
account growth rate and variability
2. Facilities that focus on cost of building and operating
3. Technological changes relate to rate and direction of technology changes
4. Behavior of competitors
5. Availability of capital and other inputs
Question No: 41 (Marks: 5)
What are some of the reasons that do not favor the use of process layout?
1. Creates dull, repetitive jobs.
2. Poorly skilled workers may not maintain equipment or quality of output of service.
3. Fairly inflexible to changes in volume.
4. Highly susceptible to shutdowns.
5. Needs preventive maintenance.
6. Individual incentive plans are impractical
Question No: 41 (Marks: 5)
Operations management does not work in isolation within an organization. How
would you relate marketing, finance and other functions to operations function?
Functions with in an Organization
The Operations function consists of all activities that are directly related to
production of a good or service.
Operations function exist in services like healthcare, Police, Traffic,
transportation, consultancy, food handling, restaurants etc.
Operations function forms the core of all businesses.
Value addition refers to conversion of raw materials to finished goods or services.
Value added often refers to the difference between the cost of the raw material
and the price of the finished good.
The revenues from selling goods is used in betterment of existing product or
service or R &D, investment in new facilities and equipments
Weeding out or eliminating non value adding operations. E.g. Storage of goods
which have been produced ahead of scheduled production, increases storage and
inventory costs. reducing storage cost would reduce transformation cost and thus
Marketing relates to selling of a good or service of the organization through
advertising and pricing decisions.
Marketing department assesses the customer's needs and communicate it to the
operations people on short term and design people on the long term basis.
Operations people need information about demand over a short range in order
to purchase raw materials or manage inventory or schedule production
plan where as the design people need information to redesign or simply
sign new products or services.
Marketing provides valuable information about the competitors customers needs
and communicate it to the operations people on short term and design people on
The finance function focuses on activities that relate to securing resources at
favorable prices and then allocating these resources through out the organization.
Finance and Operation Personnel exchange information and expertise in the
Economic analysis of investment proposal
Question No: 42 (Marks: 5)
Calculate the exponential smoothing forecasts from the following data for the 6th
period with constant (alpha) 0.40.
FORMULAE: Ft = Ft -1 + a (At-1 – Ft-1)
Ft = Coming timer period forecasting value
Ft-1 = 1 Past time forecasting value
a = Alpha Smoothing constant
At-1 = 1 Past time actual occurrence
Ft = Ft -1 + a (At-1 – Ft-1)
Ft = Ft -1 + a (At-1 – Ft-1)
Ft = Ft -1 + a (At-1 – Ft-1)
Ft = Ft -1 + a (At-1 – Ft-1)
Ft = Ft -1 + a (At-1 – Ft-1)
Ft= 59.2 + 0.40 (58 – 59.2)
Ft = Ft -1 + a (At-1 – Ft-1)
Ft= 59.008 + 0.40 (64 – 59.008)
Ft= 59.008 + 0.40 (4.992)
Question No: 29 (Marks: 3)
How many multiple plant strategies are used in a company having multiple
manufacturing facilities?
Mostly following are the below given multiple manufacturing facilities are used
With combination in plant strategies;
• Market area plant strategy
Question No: 30 (Marks: 3)
What are the key steps involved in formulating a capacity planning strategy?
Following are the key steps involved in formulating a capacity planning strategy;
Steps for formulating a Capacity Planning Strategy
1. Estimate future capacity requirements
2. Evaluate existing capacity
4. Conduct financial analysis
5. Assess key qualitative issues
6. Select one alternative
7. Implement alternative chosen
Question No: 31 (Marks: 5)
Suppose you are the operations manager of ABC Corporation. To develop
competence in business operations, you have to decide either to rely on the facilities
available in-house or outsource.What are some of the factors you would base the
Following are the factors which are available to us in order to decide whether to develop
a competence in house or outsource competent organization to supply that product,
service or particular expertise.
1. Available capacity if an organization has the equipment, necessary skills and
time, it often makes sense to produce an item or perform a service in house. The
additional costs would be relatively small compared with those required to buy
items or subcontract them.
2. Expertise. If a firm lacks the expertise to do a job satisfactorily, buying might be
a reasonable alternative.
3. Quality considerations. Firms that specialize can usually offer higher quality
than an organization can attain itself. Conversely, special quality requirements or
the ability to closely monitor quality may cause an organization to perform a job
4. Nature of demand. When demand for an item is high and steady, the
organization is often better off doing the work itself. However, wide fluctuations
in demand or small orders are usually better handled by specialists, who are able
to combine orders from multiple sources, which results in higher volume and tend
to offset individual buyer fluctuation.
5. Cost. Any cost savings achieved from buying or making must be weighed against
the preceding factors. Cost savings might come from the item itself or from
transportation cost savings.
6. Risk. Outsourcing or buying the services carries risk; often companies retain
flexibility by carrying out certain critical activities in house and repetitive menial
activities through outsourcing.
Question No: 41 (Marks: 5)
Alternatives Possible future demand
Small facility 10,000 8,000
Medium facility 12,000 20,000
Large facility 18,000 15,000
Calculate Maximax, Laplace and Minimax regret?
Choose the Best maximum Value for MAXIMAX approach which is 20,000
Small facility = 10000+8000=18000/2 =9000
Medium facility = 12000+20000 = 32000/2 = 16000
Large facility = 18000+15000 = 33000/2= 16500
So the Best Possible average is 16500 Laplace.
The minimum Amount is Rs. 8000
Question No: 42 (Marks: 5)
Suppose you are working as an operation manager in an automobile company. Your
company wants to move its manufacturing plant from one location to other location.
What factors will affect the location decision according to your point of view?
Factors Affecting Location Decisions
The process of determining a geographic site for firms operations takes into
account both manufacturing and marketing aspects. We just focus on the
manufacturing aspects as it's more closely related to Operations Management
Favorable Labor Climate
Proximity of Suppliers and Resources.
Proximity to the Parent Company's facilities.
Utilities, Taxes and Real estate costs.
Other factors ( expansion, construction costs, and location near the highway or
Question No: 41 (Marks: 5)
How would you reveal the usefulness of naive forecasts?
Naive forecasting (NF) techniques are quantitative forecasting tools that use only
the historical data of the variable being forecasted in the analysis. Therefore, all
other influences that may impact on the variable are excluded from the analysis
NF provides a convenient way to generate quick and easy forecasts for the short
Forecast is not affected by environment.
The forecast will miss turning points.
Question No: 41 (Marks: 5)
ABC Corporation has planned to purchase a new machine. Total annual fixed cost
is Rs. 15,000: variable cost is Rs. 5 per unit and revenue is Rs. 7 per unit.
•What would be the break even point?
•What would be the breakeven point if variable cost gets increased by 10%, revenue
decreased by 10% and fixed remains same?
Q=Fixed Cost/ Revenue – Variable Cost
Q = Fixed Cost/ Revenue – Variable Cost
Question No: 42 (Marks: 5)
What is demand management? Explain its various factors?
Demand management is the process of cutting cost by influencing the quantity
and/or specification of the products and services you are procuring.
The following are the Factors of Demand Management:
Finished Goods/Services
