INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

EXECUTIVE POST GRADUATE PROGRAMMES

EPGP-13 (Section B)

End-Term Examination

Operations Management

Instructor: Prof. Debadyuti Das

Duration: 2 Hours Open/Closed Book Exam Max.Marks: 50

Instructions:
Answer script submission to be made as either type in Word Document or Paper-Pen/Scan
format and upload on Moodle. Students are also allowed to use Excel.

You are required to answer five questions in all taking Two from Section A and Three from
Section B. All questions carry equal marks.

Section A
Answer any TWO questions

1. (a) What is the competitive strategy of Wal-Mart which has enabled it to successfully
position itself in the competitive landscape? What is the competitive strategy of Seven-
Eleven-Japan? Compare and contrast the operations strategies adopted by Wal-Mart and
Seven-Eleven-Japan.
(b) Could a criterion be an order winner in one market and order qualifier another market?
Justify with suitable example/s.
(8+2 = 10)
2. (a) The decision with regard to the process strategy adopted by a firm and its facility
layout is inherently interlinked. Justify the statement by taking one example from a multi-
specialty hospital and another example from a fast food restaurant namely Subway.
(b) Why do some of the organizations opt for cellular layout?
(8+2 = 10)

3. (a) A fast-food restaurant is planning to introduce a new healthy and tasty diet which is
targeted towards the young population. You are required to apply the concept of Quality
Function Deployment for designing this new diet.
(b) In recent past, Toyota had to recall a few of its products from the market. What were
different elements of the cost of quality involved in recalling the products from the point of
view of Toyota?
(7+3 = 10)

4. (a) Despite Toyota having shared its philosophy and the practices of lean operations with
numerous organizations across the globe, most of the organizations have not been able to
successfully replicate the practices of lean operations. What could be the possible reasons
behind the same? Answer in brief.
(b) Suppose a commercial bank wants to introduce a lean system in its operations.
Suggest a suitable roadmap for the same in brief.
(c) What kind of aggregate planning strategies are normally adopted by an automobile
organization like Maruti Suzuki Ltd.?
(4+4+2 = 10)

Section B
Answer any THREE questions
5. (a) A company currently has 200 units of a product on hand that it orders every two
weeks when the salesperson visits the premises. Demand for the product averages 20
units per day with a standard deviation of 5 units. Lead time for the product to arrive is 7
days. Management has a goal of 95% probability of not stocking out for this product. The
salesperson is due to come late this afternoon when 180 units are left in stock (assuming
 that 20 units are sold today). How many units should be ordered? (1 week = 7 days)
[Consider the value of Z corresponding to 95% service level = 1.645]

(b) The weekly requirement of furnace oil in a foundry has a mean of 3000 litres and a
standard deviation of 900 litres. A litre of furnace oil costs Rs. 400 and the carrying costs are
estimated at 25 percent. If the foundry uses a continuous review system of inventory control
with a desired service level of 90 percent, then
(i) What will be the reorder point and safety stock for furnace oil, if the lead time for
supply is 1 week? (Consider the value of Z corresponding to 90% service level =
1.28)
(ii) If the reorder point is left unchanged when there is a 5 percent increase in the mean
demand, how will it affect the service level?
(5+5 = 10)

6. An electrical appliance is to be assembled on a production flow line. The total job is

divided into 12 rational discrete elements which cannot be split further. The IE
department has time estimates for these elements as tabulated below. The demand is
forecasted to be 120,000 units per year at 50 weeks/year and 40 hours/week.
Elements Time in minutes Predecessor element(s)
A 0.2 -
B 0.4 -
C 0.7 A
D 0.1 A, B
E 0.3 B
F 0.11 C
G 0.32 C
H 0.6 C, D
I 0.27 F, G, H
J 0.38 E
K 0.5 I, J
L 0.12 K
 i. Draw the precedence diagram
ii. What is the required cycle time to meet the forecasted annual demand of 120,000 units?
iii. What would be the minimum number of workstations?
iv. Assign tasks to workstations based on the longest task time. Show it through a
demarcation in the precedence diagram.
v. What is the line efficiency thus achieved? What is the balance delay of the line by virtue
of this balancing?
(10)
7. (a) Using samples of 200 credit card statements, an auditor found the following:
Sample 1 2 3 4
Number with errors 4 2 5 9
i) What is your estimate of the mean and SD of the sampling distribution of
fractions defective for samples of this size?
ii) What control limits would give you an alpha risk of 0.03 for this process?
(Consider two-tail distribution of the normal curve)

(b) A process filling small bottles with baby formula has a target of 3 ounces with a tolerance of
0.15 ounce. Two hundred bottles from the process were sampled. The results showed that the
average amount of formula placed in the bottles to be 3.042 ounces. The standard deviation of
the amounts was 0.034 ounce. Determine the value of Cpk.
(6+4 = 10)

8. (a) A job in an insurance office involves telephone conversation with policy holders. The
office manager estimates that half of the employee’s time is spent on the telephone. How
many observations are needed in a work sampling study to estimate that time percentage
to within 6% and have confidence of 98%? (Consider two-tail distribution of the normal
curve. The value of Z = 2.33)
(b) A retail store of Samsung mobile phones has recorded the monthly sales of a particular model
of mobile phone for the last six months of 2020 as follows:

Month Sales Month Sales

Jan 74 April 86
Feb 68 May 94
Mar 78 June 102

(i) If a 3-period weighted moving average method is employed in the above data set and
a weight of 0.30, 0.30 and 0.40 is progressively attached to the said data from the first
period to the latest period, what would be the forecast demand in July in this case?
(ii) If a smoothing constant (α) of 0.5 is considered in the above sales data, what would
be the forecast sales of mobile phone in July, if exponential smoothing method is
applied? Assume the initial level (LO) to be the average over the last six months sales
data.
(4+6 = 10)