Operations Management


Examination – January Semester 2019

Managing Operations

Friday, 24 May 2019 4:00 pm – 6:00 pm ____________________________________________________________________________________

Time allowed: 2 hours ____________________________________________________________________________________


1. This examination contains FOUR (4) questions and comprises FIVE (5) printed pages (including cover page and Appendix A).

2. You must answer ALL questions.

3. All answers must be written in the answer book.

4. This is a closed-book examination.

At the end of the examination

Please ensure that you have written your examination number on each answer book


Failure to do so will mean that your work cannot be identified.

If you have used more than one answer book, please tie them together with the string




LOG202 Copyright © 2019 Singapore University of Social Sciences (SUSS) Page 2 of 5 Examination – January Semester 2019

You must answer ALL the questions. (Total 100 marks)

Question 1

(a) Choose a company that you work for or one that you are very familiar with. The company can be one that provides goods or services to its customers.

Explain the different processes involved in its Operation and Supply Chain

Management (OSCM).

(8 marks)

(b) Explain the characteristics of efficient and agile supply chains. Discuss whether a supply chain can be efficient and agile at the same time.

(8 marks)

(c) HOMIE food manufacturing company needs to make capacity decisions to produce a new product line to export to the regional market. As chief operations

officer of this company, you are considering three options in the face of

considerable uncertainties over the next four years:

Option 1: Build a new factory,

– New site cost is $6 million, – Payoffs: Strong demand = $12 million; Weak demand= $10


Option 2: Expand at current site,

– Expanding current site cost is $9 million, – Payoffs: strong growth = $14 million; weak growth = $10 million.

Option 3: Do nothing. Not constructing a new factory or expanding at the

current site would result in no additional revenue being generated

because the current facility is not able to produce the new product


Use decision tree technique to help HOMIE in evaluating the capacity

alternatives. Assume the probability of demand being strong is 40%. (Note that

you need to construct the decision tree in your answer.)

(9 marks)

Question 2

(a) Describe any four (4) competitive dimensions of a firm. Comment on the trade- offs involved and provide one example.

(8 marks)

LOG202 Copyright © 2019 Singapore University of Social Sciences (SUSS) Page 3 of 5 Examination – January Semester 2019

(b) A bakery produces 10,000 loaves of bread each week. The cost of its existing baking machine is $8,000 and will remain productive for 4 years. The labour

cost per year is $20,000. Assume there are 52 weeks in a year.

Calculate the productivity measure of “units of output per dollar of input”

averaged over the four-year period.

(4 marks)

As the bakery manager, you are deciding whether to purchase a higher-end

baking machine that costs $15,000, with an operating life of 5 years. It would

reduce labour costs to $10,000 per year. Relate how you can apply productivity

concept to decide whether you should consider purchasing this machine. Show

the calculations.

(4 marks)

(c) Many companies have chosen to outsource some of its operations and supply chain management activities to external service providers.

Discuss the reasons why companies decide to outsource some of its activities.

(9 marks)

Question 3

(a) You are the operations manager of a company that is producing goods as well as providing value-added services. Offer your views on the considerations that

need to be taken into account in Aggregate Planning (or Sales and Production

Planning) in the company. Your discussion should address the following issues:

 Basic controllable variables and four major costs of a production plan

 Major differences between aggregate planning in manufacturing and aggregate planning in services

 Choice of an appropriate time horizon for the aggregate plan (10 marks)

(b) The table below shows the most recent 4 months of demand for an electronics appliance at Best Denki.

Month Actual Demand

1 30

2 32

3 38

4 40

As the person-in-charge of demand forecasting at Best Denki, apply the:

(i) Single exponential smoothing model with α = 0.4 to calculate the forecast for the 5th month, assuming that the forecast for Month 1 was

34. (Use two decimal points and do not round your forecasted values.)

(5 marks)

LOG202 Copyright © 2019 Singapore University of Social Sciences (SUSS) Page 4 of 5 Examination – January Semester 2019

(ii) Simple linear regression to construct the regression equation and calculate the forecast for the 5th month.

(10 marks)

Question 4

(a) TECHASIA, a Singapore-based mobile phone company, has developed a new mobile phone that distinguishes itself as a gaming smartphone in the market.

How can TECHASIA apply the six-phase generic product development process

to develop the new product?

(8 marks)

(b) ShopAsia is an established e-commerce business. The company uses a continuous review system for its inventory management system and has been

using ABC classification to differentiate the wide range of fashion items that it

keeps in stock. As the new head of ShopAsia’s online retail arm, your

responsibility is to ensure the reorder quantities for the various items sold via

the online channel are correctly established. You started by examining the data

of the items that are classified as ‘A’ items based on the company’s records.

Assume demand occurs 365 days per year and the characteristics of one such

‘A’ item are as follows:

Demand (D) = 2,400 sets per year (Assume 365-day year)

Ordering or setup cost (S) = $5 per order

Holding cost (H) = $4 per unit per year

Lead time (L) = 7 days

Standard deviation of daily demand = 4 units per day

Service probability = 98%

(i) What is the purpose of the ABC classification? What are the main categories?

(5 marks)

(ii) What is the role of safety stock in addressing demand uncertainty? (3 marks)

(iii) Examine the inventory situation of ShopAsia by calculating the following:

 EOQ for this item

 Desired safety stock

 Reorder point (9 marks)


LOG202 Copyright © 2019 Singapore University of Social Sciences (SUSS) Page 5 of 5 Examination – January Semester 2019

Appendix A: Formula sheet

Z = 1.18 when desired service level is 88%

Z = 1.28 when desired service level is 90%

Z = 1.64 when desired service level is 95%

Z = 2.05 when desired service level is 98%

Z = 2.33 when desired service level is 99%

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