Outeursreg voorbehou / Copyright reserved

Departement Bedryfs- en Sisteemingenieurswese

Department of Industrial and Systems Engineering

Semester Test 2
May 2023

Module code and subject name: BOB 310 - Operational Management

Date: 24th May 2023
Duration:90 minutes

Lecturer: Prof. Olufemi Adetunji

External Examiner: Dr Makoena Sebatjane

• Answer ALL the questions.

• Since question papers are to be submitted, you may write the answer to any of the
questions on the pages of the question paper.
• Please Note: All questions do not carry the same marks.
• This paper has 6 pages, including the formula sheet.

Marks: 100
Section 1 [22 marks]

In this section, there are two sets of questions. In the first set, you are to select the only option
that best answers each question. In the second set, you are to select the two options that best
answer each question.

For each of the following questions, select the most appropriate option for 1 mark each.

1. Which of the following is least likely to be included in order costs?

a. processing vendor invoices for payment
b. moving delivered goods to temporary storage
c. inspecting incoming goods for quantity
d. taking an inventory to determine how much is needed
e. storage of delivered goods
2. Scheduling pertains to:
a. hiring workers
b. process selection
c. buying machinery
d. timing the use of specific resources
e. determining the lowest cost
3. Which of the following is the last step of capacity/scheduling activities?
a. product planning
b. process planning
c. capacity planning
d. aggregate planning
e. scheduling
1
 4. Which of the following is not usually a characteristic of successful high-volume systems?
a. smooth workflow through the system
b. customized output
c. rapid repair of breakdowns
d. minimal quality problems
e. reliable supply schedules
5. Which of the following interactions with vendors would potentially lead to inventory
reductions?
a. reduce lead times
b. increase safety stock
c. less frequent purchases
d. larger batch quantities
e. longer order intervals
6. The EDD priority rule usually does well with regard to _______.
a. Cost
b. Lateness
c. Overtime
d. Waste
e. Makespan

For each of the following questions, select the two most appropriate options for 2 marks each.

1. Which of the following are NOT true about the assumptions of the basic EOQ model?
a. Item is not perishable
b. Demand is variable
c. Production rate is constant
d. Only one item is considered
e. Replenishment is instantaneous
2. If the optimal EOQ of a system becomes doubled, which of the following might have
happened?
a. The ordering cost quadrupled
b. The ordering cost is halved
c. The demand is doubled
d. The holding cost is cut into a quarter
e. The holding cost is halved
3. The two most important characteristics needed for aligning product features and the process
used to make the product are
a. The extent of automation desired
b. The level of efficiency operated
c. The number of varieties required
d. The extent of policy constraint
e. The volume of product to push
4. Which of the following features would be characteristic of a system used to make bread?
a. Estimating the cost of production is routine
b. The procedure for scheduling is routine
c. Equipment used are general purpose
d. Work in-process inventory is high
e. The level of skill needed by labour is high

2
 5. Which of the following are true of finite scheduling?
a. Loading means setting up the machine needed to do the job
b. Scheduling means allocating jobs to resources that will do the jobs
c. Sequencing means determining the order in which work will be done
d. Allocation means determining when a job will be done by a resource
e. Loading, sequencing and scheduling are part of production activity control
6. Which of the following are true about capacity planning?
a. Building a new warehouse falls within Rough Cut Capacity Planning functions
b. Resource Requirement Planning is usually strategic in nature
c. Rough Cut Capacity Planning considers current job shop load
d. Capacity Requirement Planning does not consider current job shop load
e. Sequencing is part of shop floor control activities
7. Which of the following are true about a product introduced by a company after it has
transitioned into the maturity phase
a. The margin on the product is wide
b. It behaves like a functional product
c. The demand for the product is highly variable
d. The product generates a lot of cash for the business
e. There are few competitors in the market
8. Which of the following statements are correct in the implementation of 3R in sustainable
design?
a. Value Engineering is at the heart of the “Re-use” in 3R
b. End of Life program is the same thing as life cycle assessment
c. Remanufacturing means harvesting parts for reuse in another product
d. Design for disassembly is a technique used for Remanufacturing
e. ISO 14000 provides the standard for Cradle to Grave Assessment

Section 2 [29 marks]

Answer each of the following questions in short sentence paragraphs.

1. State which queue discipline you would prefer to implement to address the following issues
in your organisation, and provide motivation for your choice:
a. Your company wishes to shorten their sales to cash cycle in the short term so that
they can improve their liquidity position. (3 marks)
b. Your company makes money from volume sales, and you need to improve the
throughput of your plant to boost your production output before the financial year end
(3 marks).

2. You are designing the operational processes of a hospital. One of their processes is booking
the patients-doctor appointment. For this process, the current practice is a centralised
system by which all patients call in to book appointment with specific doctors, and there are
call takers that check the doctors’ schedules and book the prospective patients against the
doctors.
a. Show where you would place the current procedure on the product/service-process
matrix. (2 marks)
b. State what new practice you may introduce to the appointment process to improve its
efficiency, and hence, how it might shift on the product/service-process matrix. (4
marks)

3
 c. State what changes you expect from the behaviour of the appointment booking
system after you change the practice in terms of the following:
i. type of process technology/processing equipment required;
ii. type of staff skill required;
iii. level of standardisation of product/service offering;
iv. cost of operating the system. (8 marks)

3. The Quality Function Deployment (QFD) model makes use of 6 or more matrices that are
arranged in to a structure called the Hour of Quality. There are 8 matrices in the House of
quality shown in Figure 1, and they have been numbered 1 to 8. Using the numbers to
identify the matrices, identify which matrix is used for each of the following, and explain how
such is done in one or two sentences ONLY.
a. To investigate how each of the possible engineering solutions address each of the
customer requirements; (3 marks)
b. To ensure that the engineering solutions complement one another properly; (3 marks)
c. To prioritise each of the suggested engineering solutions so that the ones that are
most promising are first considered for implementation. (3 marks)

Figure 1: House of Quality showing 8 matrices of QFD

4
Section 3 [49 marks]

Freshers Pty Ltd. processes and packages have fillets in their Pretoria plant. They procure hake to
be processed from a farm in Midrand that is 45km from their Pretoria plant. A shipment of hake
from Midrand is used up in a single production run. The demand for hake fillet is normally
distributed with a mean and a standard deviation of 750kg and 160kg respectively per day, and
their target service level is 98%. The cold storage truck that brings hake from Midrand charges
R5/km. Freshers has to place their orders 8 days ahead of the delivery date. Since the truck
returns empty after delivery, Freshers is also liable for the cost of returning the truck to its pickup
point. Freshers is funded by a bank and obtains fund at an interest rate of 18% per annum of funds
borrowed. They also insure their products at a premium of 15% per annum of value insured.

Freshers’ plant has a capacity to process 10,000kg of fillets per week. When the fillet is not sold
immediately, Freshers refrigerates it at a cost of 16 cents per kg per day. For each run of Freshers’
production, they need about 3-manhours to set up the machine and they pay R800 per labour hour.
The final cost of producing 1 kg of hake fillet is R200.

You may assume that there are 6 days in a week, 4 weeks in a month, or 12 months in a year for
all the time conversion you need to make in this question. Currently, they process enough fillets to
last a month before the cycle repeats.

a. Determine the optimal fillet batch size and cycle time. (14 marks)
b. Calculate the annual optimal cost of the inventory system. (4 marks)
c. Estimate the optimal safety stock to keep and the appropriate re-order point. (13 marks)
d. What is the annual cost of operating the current ordering policy and how much are they
losing as a result of the current policy? (6 marks)
e. Sketch the quantity-time graph of the optimal inventory system. (12 marks)