EXAMS OFFICE USE ONLY

University of the Witwatersrand, Johannesburg Course or topic No(s) MECN3014

Course or topic name(s) Paper Number & title

Operations Management

Examination/Test* to be held during month(s) of

November 2012

Year of Study (Arts & Science leave blank)

THIRD

Degree/Diplomas for which this course is prescribed

BSc (Eng) Industrial

Faculty/ies presenting candidates

ENGINEERING AND THE BUILT ENVIRONMENT MR D. HARTMANN MS T. HATTINGH ( X 77337)

Internal examiner(s) and telephone extensions

External examiner(s)

MS. H. NEL

Special materials required

1 MAP

Time allowance

Course Nos.

MECN3014

Hours

Instructions to candidates

ANSWER FIVE OUT OF THE SIX QUESTIONS ONLY

Internal Examiners or Heads of Department are requested to sign the declaration overleaf.

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! Question 1: Location Decisions (1.1) You work for a company which manufactures high tech water purification systems for municipalities. You currently have the following customer base as shown below. Due to the size, you can ship only one item at a time. Calculate the centre of gravity for your operations. Consult the map for grid references. Indicate the centre of gravity clearly on the map provided. Please fill in your student number on the map and hand it in with your answer book. Town / City Bloemfontein Durban Southbroom Port Shepstone Bizana Demand (annual) 2364 503 1118 676 1792 (10 Marks) (1.2) Discuss where you would construct your facility. Answer this question in point-form. Paragraphed answers will not be marked. (5 Marks) (1.3) If your company should expand its services into the Eastern Cape, and lose your Freestate operations in the next five years, would that change your answer in 2? Answer this question in point-form. Paragraphed answers will not be marked.

(5 Marks) (TOTAL: 20 Marks)

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! Question 2: Inventory

Your organisation manufactures high tech water purification systems at your facility in Nababeep. One of the key components for this system is a microcontroller which you source from Taiwan. Because the supplier sells relatively few microcontrollers in South Africa, they have a sliding cost scale depending on the volume purchased.

(2.1)

Briefly discuss why it is an economically viable idea for a company to offer bulk or volume discounts, relate your answer to the electronics supplier in this example. (5 marks)

(2.2)

The supplier was kind enough to fax you the below price schedule: Unit Price R 45.00 each R 43.20 each R 42.75 each Order Quantity 100 1000 2000 +

Using the quantity discount model, determine the optimal number of items to order. Assume that your ordering cost is R 441.00 per order, that your holding costs amount to 20 % of inventory value and that your annual demand is for 5 000 microcontrollers. You may make the assumption that no depletion occurs over the period of restocking. (12 Marks) (2.3) Discuss the risks implicit in the strategy you have identified in 2.2 (3 Marks) (TOTAL: 20 Marks)

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! Question 3: Supply Chain

(3.1.1) Apple-computers have outsourced the manufacture of many of the critical components for the iPhone, the iPad, and several of their desktop and laptop models to a Taiwanese firm Foxcon. Foxcon incidentally also produces many of the critical components of Samsung devices such as the Galaxy and others. Briefly discuss the desirability and the risks of such an approach. (5 Marks) (3.1.2) Mention the aspects which Apple (and Samsung) would have had to consider prior to deciding to outsource this manufacture rather than making these components in house. Answer this question in point form. (5 Marks) (3.2) Consider the following table showing supply chain costs as a percentage of sales price (excluding taxes). Select two industries and discuss how supply chain costs are potential drivers for conflict and could negatively impact on global peace and security. Industry Automobile Beverages Chemical Food Lumber Metals Paper Petroleum % of sales price 67 % 52 % 62 % 60 % 61 % 65 % 55 % 79 % (5 Marks)

(3.3)

Compare a many suppliers to a few suppliers approach. Explain what the philosophy in both cases is, in which event would a company use which approach and what are the drivers for making this decision. Comment on the type of relationship a company is likely to have with suppliers in both classes. Answer this question in the form of a table, with the headings many suppliers and few suppliers. (5 Marks) (TOTAL: 20 Marks)

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! Question 4: SPC

(4.1)

A new large scale training and conference venue is committed to the ultimate customer service experience and wishes to make use of statistical process control to track, analyse and improve the various aspects of their service offering. As a starting point they are focusing on meals served during the day. They conducted a ten day survey by submitting a simple questionnaire to 1,200 delegates per day. Of the 1,200 issued questionnaires, 1,000 responses were returned each day. The results are tabulated below:

Day 1 2 3 4 5 6 7 8 9 10

Number of unsatisfactory meals 74 42 64 80 40 50 65 70 40 75

Use an appropriate statistical processing technique and a confidence interval of 95.5 % to analyse and provide recommendations to the venue to ensure that their process is in control. (12 marks)

(4.2)

Your company uses a catalyst injection system for your counter top production line. Your process engineering department has conducted experiments and determined that the mean is 8.01 grams with a standard deviation of 0.03 grams. Your specifications are = 8.0 grams and ! = 0.04 grams. Discuss what can you conclude about the capability of the process and the probability of the process producing defects? (8 marks) (TOTAL: 20 Marks)

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!

Question 5: Forecasting

The following table represents sales revenue for a large utility company for 1999 through 2009. A revenue forecast is required for 2010-2013. Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Revenue (Millions) R 4,865.9 R 5,067.4 R 5,515.6 R 5,728.8 R 5,497.7 R 5,197.7 R 5,094.4 R 5,108.8 R 5,550.6 R 5,738.9 R 5,860.0

(5.1)

Consider the data and carefully select an appropriate forecasting technique indicating your reasons for selecting this technique. (4 Marks) Select the data to use and forecast revenue for the period 2010-2013 using the appropriate technique selected in 5.1 (8 Marks)

(5.2)

(5.3)

Discuss any shortcomings of using your selected technique. (4 Marks)

(5.4)

Explain what methods you could use to measure the accuracy of your forecast over time. (4 Marks) (TOTAL: 20 Marks)

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! Question 6: ERP/MRP

Many companies take customer orders via websites. The Ford Motor Company is considering implementing an online ordering system for their Ford Explorer sport utility vehicle. Consider and discuss the following: (6.1) Using the online system, what information would you need to collect from the customer and what information could be given to the customer regarding the order? (4 marks) (6.2) How could this information be used within Ford to ensure a high quality product and service delivery? (6 Marks) (6.3) What major issues would you need to ensure were addressed prior to implementing the system? (6 Marks) (6.4) If the project is successful and customers use the web interface as a preferred ordering method over negotiating with a dealer, what could be the long term implications for the Ford Motor Company? (4 marks) (TOTAL: 20 Marks)

[TOTAL MARKS FOR THIS EXAM: 100 MARKS]

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