Operations

Management
Sample Questions :

Q1 : Explain and Compare a) Time-function chart/map

and b) Process chart. Also, draw charts of each type with
essential details

Time-Function Mapping

A second tool for process analysis and design is a

modified flowchart with time added on
the horizontal axis. Such charts are sometimes
called time-function mapping, or process
mapping. With time-function mapping, nodes
indicate the activities, and the arrows indicate
the flow direction, with time on the horizontal
axis. This type of analysis allows users to identify
and eliminate waste such as extra steps,
duplication, and delay. Figure 7.4 shows the use
of process mapping before and after process
improvement at American National Can
Company. In this example, substantial reduction
in waiting time and process improvement in order
processing contributed to a savings of 46 days.

Process Charts

The third tool is the process chart . Process charts use

symbols, time, and distance to provide an
objective and structured way to analyze and
record the activities that make up a process. 1
They allow us to focus on value-added activities.
For instance, the process chart shown in Figure
7.5, which includes the present method of
hamburger assembly at a fast-food restaurant,
includes a value-added line to help us distinguish Time-Function Mapping (Process Mapping) for a Product
between value-added activities and waste. Requiring Printing and Extruding Operations at American
Identifying all value-added operations (as National Can Company
opposed to inspection, storage, delay, and
transportation, which add no value) allows us to This technique clearly shows that waiting and order
determine the percent of value added to total processing contributed substantially to the 46 days that can be
activities. We can see from the computation at eliminated in
the bottom of Figure that the percentage of value
added in this case is 85.7%. this operation.
 Locational Cost–Volume Analysis
Locational cost–volume analysis is a technique for making an
economic comparison of location alternatives. By identifying fixed
Process Chart Showing a Hamburger Assembly Process at a and variable costs and graphing them for each location, we can
Fast-Food Restaurant determine which one provides the lowest cost. Locational cost–
volume analysis can be done mathematically or graphically. The
graphic approach has the advantage of providing the range of volume
over which each location is preferable.

The three steps to locational cost–volume analysis are as follows:

Q2 :
1. Determine the fixed and variable cost for each location.
Explain Factor Rating method and Locational Cost
2. Plot the costs for each location, with costs on the vertical axis of
Volume method for locating manufacturing facility. Also,
the graph and annual volume on the horizontal axis.
write the equations and draw diagrams.
3. Select the location that has the lowest total cost for the expected
production volume

The Factor-Rating Method

There are many factors, both qualitative and
quantitative, to consider in choosing a location.
Some of these factors are more important than
others, so managers can use weightings to make
the decision process more objective. The factor-
rating method is popular because a wide variety of
factors, from education to recreation to labor
skills, can be objectively included. Figure 8.1
listed a few of the many factors that affect
location decisions.

The factor-rating has six steps:

1. Develop a list of relevant factors called key
success factors.
2. Assign a weight to each factor to reflect its
relative importance in the company’s objectives.
3. Develop a scale for each factor (for example, 1
to 10 or 1 to 100 points). Formula :
4. Have management score each location for each Total Cost = Fixed Cost + Variable Cost x Volume
factor, using the scale in Step 3.
5. Multiply the score by the weights for each
factor and total the score for each location.
Eg : Three locations: Athens, Brussels and Lisbon.
6. Make a recommendation based on the
maximum point score, considering the results of Selling price = $120.
other quantitative approaches as well.
Expected volume = 2,000 units.
Total Cost = Fixed Cost + Variable Cost x Volume (car manufacturing, retail, or any other industry
= Fixed Cost + Variable Cost x 2,000 of your choice).

Firms achieve missions in three conceptual ways:

(1) differentiation, (2) cost leadership, and (3)
response. This means operations managers are
called on to deliver goods and services that are
(1) better , or at least different, (2) cheaper , and
(3) more responsive . Operations managers
translate these strategic concepts into tangible tasks
to be accomplished. Any one or combination of
these three strategic concepts can generate a
system that has a unique advantage over
competitors.

Differentiation and Cost leadership through

Operations
1. Competing on Product design
2. Competing on Mass customisation
3. Completing on Quality
4. Competing on Response
5. Competing on Cost
6. Competing on Project Management
7. Competing on ……

Low-cost leadership entails achieving maximum value as

defined by your customer. It requires examining
each of the 10 OM decisions in a relentless effort
to drive down costs while meeting customer
expectations of value. A low-cost strategy does
not imply low value or low quality.

Q3 :
Describe five or more ways in which a company Industry Differentiation Low Cost
can use operations to contribute to company’s
cost leadership strategy; use a specific example Ordinary
Courier DHL, FedEx, Speed Post
post
Credit cards Diners, American Express SBI, ICICI managing operations in different stages of Product Life
Hotel Taj, Westin Ginger cycle.

Cars Mercedes, Rolls Royce, Ciaz Nano, Alto

Mobile GoldVish Le Million, Vertu,
Micromax Product Life Cycles
phones iPhone

Watches Rolex Timex Most products have a limited and even

Groceries ITC Patanjali predictable life cycle, companies must constantly
be looking for new products to design, develop,
Cosmetics Lakme Patanjali and take to market.

Product’s life is divided into four phases. Those

Eg : phases are introduction, growth, maturity, and
Airlines: decline. Product life cycles may be a matter of a
few days (a concert t-shirt), months (seasonal
fashions), years (Madden NFL football video
game), or decades (Boeing 737). Typically a firm
has a negative cash flow while it develops a
product. When the product is successful, those
losses may be recovered. Eventually, the
successful product may yield a profit prior to its
decline. However, the profit is fleeting—hence,
the constant demand for new products.

 Fly Hub and spoke, instead of connecting

the cities directly.
 Single type of aircraft.
 Use of cheaper airports, outside the city.
 No in-flight food.
 No check-in baggage.
 No boarding pass.
 …

Introductory Phase Because products in the

introductory phase are still being “finetuned”
for the market, as are their production
techniques, they may warrant unusual
expenditures for (1) research, (2) product
development, (3) process modification and
enhancement, and (4) supplier development. For
example, when the iPhone was first introduced,
the features desired by the public were still being
determined. At the same time, operations
Q4 :
managers were still groping for the best
Explain the concept of Product Life Cycle, draw Product manufacturing techniques.
Life Cycle diagram, and identify the challenges in
Growth Phase In the growth phase, product design
has begun to stabilize, and effective forecasting Decline Phase Management may need to be
of capacity requirements is necessary. Adding ruthless with those products whose life cycle is at
capacity or enhancing existing an end. Dying products are typically poor
capacity to accommodate the increase in product products in which to invest resources and
demand may be necessary. managerial talent. Unless dying products make
some unique contribution to the firm’s reputation
Maturity Phase By the time a product is mature, or its product line or can be sold with an
competitors are established. So high volume, unusually high contribution, their production
innovative production may be appropriate. should be terminated
Improved cost control, reduction in options, and
a paring down of the product line may be
effective or necessary for profitability and market Challenges:
share.

Challenges :
 Increase capacity
Introduction :

• Frequent product and process design changes Maturity :

 Short production runs
 High production costs  Poor time to change image, price, or quality
 Limited models  Competitive costs become critical
 Attention to quality  Defend market position
 Long production runs
Growth :  Product improvement and cost cutting
 Product and
 process reliability Decline :
 Competitive product  Cost control
 improvements and  Overcapacity in the industry
 options  Prune line to eliminate items not returning good
margin

Q5 : Compare Process layout and Product

layout, and draw neat layouts of each type of
layout
Process-Oriented
Layout
A process-oriented layout can simultaneously handle a
wide variety of products or services. This is the
traditional way to support a product
differentiation strategy. It is most efficient when
making products with different requirements or
when handling customers, patients, or clients
with different needs. A process-oriented layout is
typically the low-volume, high-variety strategy

 Process layout- Similar activities done at one

place. Product-Oriented
Layout
 Machinery and workers are flexible, and
grouped according to the operation/function.
 Routings of jobs are not fixed, depends on the Product-oriented layouts are organized around
order (or patient). products or families of similar high-volume, low-
 Process layout is used when volumes are low variety products. Repetitive production and
volume and there are many variations in continuous production, which are discussed, use
product design, process requirements, order product layouts. The assumptions are that:
quantities, such as in job shops, furniture,
garments, printing. 1. Volume is adequate for high equipment
 Flow of work is varied; Work flow not utilization
balanced; Capacity required depends on 2. Product demand is stable enough to justify high
product mix; Throughput times are long; investment in specialized equipment
Production Activity Control is a major and 3. Product is standardized or approaching a phase
complex activity. of its life cycle that justifies investment in
Need to arrange work centers so as to minimize specialized equipment
the costs of material handling 4. Supplies of raw materials and components are
adequate and of uniform quality (adequately
standardized) to ensure that they will work with
the specialized equipment

 Repetitive and Product-Oriented Layouts are

organized around products.
 Special purpose machines are used; machines
are arranged in the sequence of operation.
 Product layout is used when volumes are high
and variety of outputs is low such as in the
manufacturing of automobiles, home
appliances, cement, bottled milk.
 Flow of work is smooth; Throughput times are
In this job-shop environment, each product or short; Production Activity Control is simple.
each small group of products undergoes a  Need to balance the production line.
different sequence of operations. A product or
small order is produced by moving it from one
department to another in the sequence required Two types of a product-oriented layout are
for that product. A good example of the process- fabrication and assembly lines.
oriented layout is a hospital or clinic
The fabrication line builds components, such as
automobile tires or metal parts for a refrigerator,
on a series of machines, while an assembly line
puts the fabricated parts together at a series of
workstations.
The main advantages of product-oriented layout 1.Take the units required (demand or production
are: rate) per day and divide them into the productive
1. The low variable cost per unit usually time available per day (in minutes or seconds).
associated with high-volume, standardized This operation gives us what is called the cycle time
products 3 —namely, the maximum time allowed at each
2. Low material-handling costs workstation if the production rate is to be
3. Reduced work-in-process inventories achieved:
4. Easier training and supervision
5. Rapid throughput Cycle time = Production time available per day /
Units required per day
The disadvantages of product layout are:
1. The high volume required because of the large 2. Calculate the theoretical minimum number of
investment needed to establish the process workstations. This is the total task-duration time
2. Work stoppage at any one point can tie up the (the time it takes to make the product) divided
whole operation by the cycle time. Fractions are rounded to the
3. The process flexibility necessary for a variety of next higher whole number:
products and production rates can be a challenge
Minimum number of workstations = Time for all
tasks / Cycle time

Q6: where n is the number of assembly tasks.

Factory manager of a home appliances company 3. Balance the line by assigning specific assembly
is concerned about unbalanced work on the TV tasks to each workstation. An efficient balance is
assembly line. The assembly line has 10 activities one that will complete the required assembly,
and it takes 20 minutes to assemble a TV. follow the specified sequence, and keep the idle
time at each workstation to a minimum. A formal
Describe the steps to balance the assembly line.
procedure for doing this is the following:
The current daily requirement is 560 TVs. Show a. Identify a master list of tasks.
all calculations and draw appropriate network b. Eliminate those tasks that have been assigned.
diagram, layout, etc. c. Eliminate those tasks whose precedence
relationship has not been satisfied.
d. Eliminate those tasks for which inadequate
Assembly line balancing objective is to minimize time is available at the workstation.
work imbalance on the assembly line while e. Use one of the line-balancing “heuristics”
meeting required output. described in
 Starts with the precedence relationships
 Determine cycle time.
 Calculate theoretical minimum number of
workstations.
Balance the line by assigning specific
tasks to workstations.
 the times for each element measured, adjusted for
unusual influence for each element:

Average observed time = Sum of the times

recorded to perform each element / Number of
observations

= 1.5 , 2.3 , 1.7 , 3.5

6. Determine performance rating (work pace) and

then compute the normal time for each element.

Manager can test several of these heuristics to see Normal time = Average observed time *
which generates the “best” solution—that is, the Performance rating factor
smallest number of workstations and highest
efficiency. Remember, however, that although = 1.5 , 2.07, 2.04, 3.5
heuristics provide solutions, they do not
guarantee an optimal solution. The performance rating adjusts the average
observed time to what a trained worker could
expect to accomplish working at a normal pace.
Q7:
7. Add the normal times for each element to
A hotel housekeeper was observed five times on develop a total normal time for the task.
each of four task elements, as shown in the
Total Normal time = 9.1
following table. On the basis of these
observations, find the standard time for the 8. Compute the standard time . This adjustment to
process. Assume a 10% allowance factor. Show the total normal time provides for allowances
all calculations. such as personal needs, unavoidable work delays ,
Performanc Observations (minutes per and worker fatigue :
Element e Rating cycle)
(%) 1 2 3 4 5 Standard time = Total normal time / (1 -
Check minibar 100 1.5 1. 1.4 1.5 1.5 Allowance factor)
6
Make one bed 90 2.3 2. 2.1 2.2 2.4 = 9.1 / (1-10%) = 10.1
5
Vacuum flour 120 1.7 1. 1.9 1.4 1.6
9 Averag
Clean bath 100 3.5 3. 3.6 3.6 3.2 No of Sum of the e Norm
6 observatio time observ al
ns recorded ed time time
1.Define the task to be studied (after methods
analysis has been conducted). 5 7.5 1.5 1.5
2. Divide the task into precise elements (parts of
5 11.5 2.3 2.07
a task that often take no more than a few 5 8.5 1.7 2.04
seconds). 5 17.5 3.5 3.5
Total normal
3. Decide how many times to measure the task time 9.1
(the number of job cycles or samples needed). Standard
time 10.1
4. Time and record elemental times and ratings of
performance.

5. Compute the average observed (actual) time.

The average observed time is the arithmetic mean of
 3 —namely, the maximum time allowed at each
workstation if the production rate is to be
achieved:

Cycle time = Production time available per day /

Units required per day

Additional Notes: 2. Calculate the theoretical minimum number of

workstations. This is the total task-duration time
(the time it takes to make the product) divided
Chapter 9.
by the cycle time. Fractions are rounded to the
Assembly line balancing : next higher whole number:

Example 3 Minimum number of workstations = Time for all

DEVELOPING A PRECEDENCE DIAGRAM FOR tasks / Cycle time
AN ASSEMBLY LINE
Boeing wants to develop a precedence diagram where n is the number of assembly tasks.
for an electrostatic wing component that requires
a total 3. Balance the line by assigning specific assembly
assembly time of 65 minutes. tasks to each workstation. An efficient balance is
APPROACH c Staff gather tasks, assembly times, one that will complete the required assembly,
and sequence requirements for the component follow the specified sequence, and keep the idle
time at each workstation to a minimum. A formal
procedure for doing this is the following:
a. Identify a master list of tasks.
b. Eliminate those tasks that have been assigned.
c. Eliminate those tasks whose precedence
relationship has not been satisfied.
d. Eliminate those tasks for which inadequate
time is available at the workstation.
e. Use one of the line-balancing “heuristics”
described in

BALANCING THE ASSEMBLY LINE

Example 4
On the basis of the precedence diagram and
activity times given in Example 3 , Boeing
determines that there are 480 productive
minutes of work available per day. Furthermore,
the production schedule requires that 40 units of
the wing component be completed as output
from the assembly line each day. It now wants to
group the tasks into workstations.

Following the three steps above, we compute the

cycle time using Equation (9-4) and minimum
Once we have constructed a precedence chart
number of workstations using Equation (9-5) ,
summarizing the sequences and performance
and we assign tasks to workstations—in this case
times, we turn to the job of grouping tasks into
using the most following tasks heuristic.
job stations so that we can meet the specified
production rate. This process involves three
Cycle time = Production time available per day /
steps:
Units required per day
1.Take the units required (demand or production
Cycle time (in minutes) =480 minutes / 40 units
rate) per day and divide them into the productive
= 12 minutes>unit
time available per day (in minutes or seconds).
This operation gives us what is called the cycle time
Minimum number of workstations = Total task
time / Cycle time
= 65 / 12
= 5.42, or 6 stations

Figure 9.13 shows one solution that does not

violate the sequence requirements and that
groups tasks into six one-person stations. To
obtain this solution, activities with the most
following tasks were moved into workstations to
use as much of the available cycle time of 12
minutes as possible. The first workstation
consumes 10 minutes and has an idle time of 2
minutes

This is a reasonably well-balanced assembly line.

The second and third workstations use 11
minutes. The fourth workstation groups three
small tasks and balances perfectly at 12 minutes.
The fifth has 1 minute of idle time, and the sixth
(consisting of tasks G and I) has 2 minutes of
idle time per cycle. Total idle time for this
solution is 7 minutes per cycle.