Operations Management - Assignment Example

Running Head: OPERATIONS MANAGEMENT Operations Management [The of the will appear here] [The of the id will appear here] [Thename of the course will appear here] [The name of the course number will appear here] Q1) Nick’s Race Jackets (30 marks) Calculate the labour productivity (in £ per hour) and multifactor productivity ratio (of output value to input value) for a month’s manufacture. Labour Productivity: Output/ Input Output= (20 defective × 0/defective) + (80 jackets × 250/garments) =£20,000 Labor Hours of Input= 100 × 10= 1,000 Labour Productivity= £20,000/1,000 hours= £20/hour Multifactor Productivity= Value of Output/ Value of Input Value of Output= (20 defective × 0/defective) + (80 jackets × 250/garments) =£20,000 Value of Input= Labour+ Materials + Overhead Labour= 160 × 10= £1,600 Material Cost= 40 × 100 =£4,000 Overhead= £4,000 Value of Input= Labour+ Materials + Overhead 1,600 + 4,000+ 4,000 =9,600 Multifactor Productivity= 20,000/ 9600 = 2.08 After some study, Nick is considering three options to improve the multifactor productivity ratio. i. Increase the sales price by 10%. The increases would be 250 × 10/100= £25 Thus, the new price of the jackets would be 250+25= £275 Thus, Multifactor Productivity= Value of Output/ Value of Input Value of Output= (20 defective × 0/defective) + (80 jackets × 275/garments) =£22,000 Value of Input= Labour+ Materials + Overhead Labour= 160 × 10= £1,600 Material Cost= 40 × 100 =£4,000 Overhead= £4,000 Value of Input= Labour+ Materials + Overhead 1,600 + 4,000+ 4,000 =9,600 Multifactor Productivity= 22,000/ 9600 = 2.29 ii. Improve quality so that only 10% are defective. Improvement in quality would impact the value of output here. Multifactor Productivity= Value of Output/ Value of Input Value of Output= (10 defective × 0/defective) + (90 jackets × 250/garments) =£22,500 Value of Input= Labour+ Materials + Overhead Labour= 160 × 10= £1,600 Material Cost= 40 × 100 =£4,000 Overhead= £4,000 Value of Input= Labour+ Materials + Overhead 1,600 + 4,000+ 4,000 =9,600 Multifactor Productivity= 22,500/ 9600 = 2.34 iii. Reduce labour, material, and overhead costs by 10%. Reduction in labour, material and overhead costs will impact the value of impact and would have no impact on the value of output. Multifactor Productivity= Value of Output/ Value of Input Value of Output= (10 defective × 0/defective) + (80 jackets × 250/garments) =£20,000 Value of Input= Labour+ Materials + Overhead Before Labour= 160 × 10= £1,600, After the reduction, labour costs would be reduced by 1,600 × 10/100= 160 The revised costs of labour would be 1,600-160= 1440 Material Cost= 40 × 100 =£4,000 After the reduction, material costs would be reduced by 4,000 × 10/100= 400 The revised costs of materials would be 4,000-400= 3600 Overhead= £4,000 After the reduction, overhead costs would be reduced by 4,000 × 10/100= 400 The revised overhead costs would be 4,000-400= 3600 Thus, Value of Input= Labour+ Materials + Overhead 1,440 + 3,600+ 3,600 =8,640 Multifactor Productivity= 20,000/ 8640 = 2.31 Which option has the greatest impact on the multifactor productivity measure? Of the three options that Nick is considering, the best option is to improve the quality of the products. This is because it results in the highest multifactor productivity and the goal is to maximize productivity within the organization. The second best option is to decrease overhead costs and the last option that Nick should consider is to increase the sales prices of his jackets. Use this example to discuss the significance of Operations Management to this (or any) business. You are likely to draw on all concepts studied in this module so far. The importance of Operations Management in any firm is to increase the productivity of the organization. The way of achieving this is to either lower the costs of the business or to increase the prices. While increasing the sales price of products is a viable option, but productivity can be better improved by reducing the value of input within the business. It can also be reduced by allowing the business to improve on its processes by reducing the wastage and improving quality of the product (Krajewski, Ritzman, & Malhotra, 2009). Q2) The Pert Mustang (30 marks) Competitive Priority Process Consideration Cost To cover the costs of the activity within the estimated budget of $70,000 including the $50,000 already spent on the purchase of the car Quality To restore the car to mint condition while considering that the car would be used as a show piece so that quality is reflected on face value Flexibility Customization of the cars should be done according to the requirement of the customer; this including repairing the car, providing necessary information and arranging for parts. Delivery To ensure that the Shelby Mustang acquired by the owner is restored within the time frame of 45 days. a) Construct a table containing the project activities using the letter assigned to each activity in the case study; the time estimates; and the precedence relationships. Activity Time Estimate Precedence Relationship A 2 B 30 A C 10 A D 7 A E 1 F 1 E G 4 F H 6 F I 1 F J 3 I K 5 I L 1 1,D M 3 E N 1 K,L O 1 H,J P 4 N,O Q 1 C R 1 G,P S 4 R,Q T 7 B,S U 1 S,M V 2 T,U Draw a network diagram for the project. You may use figure 2.4 as an example of what is required (latest / earliest start / finish times). Determine the activities on the Critical Path, and the estimated Slack time for each activity. Activities on Critical Path are A, B, T, V. Prepare a project budget showing the cost of each activity and the total for the project. Answer the following questions: Project Budget Week Budget ($) Week 1 3510 Week 2 4,090 Week 3 3,100 Week 4 1,800 Week 5 1,00 Week 6 0 Week 7 3,128 Week 8 1,287 Week 9 500 Can the project be completed within the allocated budget (left after buying the car) of £20,000? As calculated above, the total cost of the budget would amount to be $ 18,100, which is within the limits of the allocated budget. Discuss whether the project will require more than £3,600 in any one week? Identify how to resolve any issues found. The project will not require more than $3,600 in nay one week. Question 3 Refer to the closeness matrix and use the rectilinear distance to calculate the weighted distance (wd) score. Department Pair Closeness Factor Distance Weighted Distance 1,2 8 3 24 1,3 3 1 3 1,5 9 1 9 1,6 5 2 10 2,4 3 1 3 3,5 8 2 16 3,6 9 3 27 4,6 3 2 6 5,6 3 1 3 The weighted distance (wd) score is 101 Exchange the positions of the tool crib and inspection areas, and re-calculate the wd score. Department Pair Closeness Factor Distance Weighted Distance 1,2 8 3 24 1,3 3 1 3 1,5 9 2 18 1,6 5 1 5 2,4 3 1 3 3,5 8 3 24 3,6 9 2 18 4,6 3 1 3 5,6 3 1 3 The weighted distance (wd) score remains 101 Use trial and error to find a particularly good block plan. Due to excessive relocation costs, shipping and receiving (department 3) must remain in its current location. Recalculate the wd score for your final version. Using Trial and Error, a particularly good block plan for Al Marakeb Machine Company would be: 3 6 4 5 1 2 Using this plan, the wd score would be 57 as computed in the following manner: 8(l) + 3(2) + 9(l) + 5(l) + 3(l) + 8(l) + 9(l) + 3(l) + 3(2)] = 57 Question 4 Prepare a Tally Sheet (or checklist) for the different reasons for rejection. Reasons for Rejection Tally Poor electrolyte coverage IIII IIII II Improper lamination IIII I Low copper plating IIII IIII IIII IIII IIII I Plating separation IIII Improper etching II Develop a Pareto Chart to identify the more significant types of rejection. Examine the causes of the most significant type of defect, using a Cause and Effect diagram. Discuss Process Structure in Manufacturing (Chapter 3) in relation to this business. You are likely to consider the Product-Process Matrix. For any business, including Clarion Limited, operations management includes selecting the best process for the manufacturing of the products. For these, four types of process are available including job process, line process, batch process and continuous flow process. The difference between these processes depends of the variations of three elements, these being volume, product design and process. When an organization focuses too much on volume, it has to compromise on its product design and process and vice versa when an organization focuses on the other two elements (Krajewski, Ritzman, & Malhotra, 2009). When an organization focuses on job process, it makes products on order. It provides a great deal of customization for its customers and thus the products developed are not monotonous. A great deal of attention is given to detail and complexity of the product. The workforce in this case is trained to deal with customization in the original products and bids are taken for the products (Krajewski, Ritzman, & Malhotra, 2009). When on organization focuses on batch process, it creates products through an assembly line. Batch process is the most common type of manufacturing process which is also followed as Clarion Limited. Products are produced as batches and as one batch ends, another batch starts which is not always similar to the old batch. Thus, a small degree of customization occurs in the case of batch process (Krajewski, Ritzman, & Malhotra, 2009). In continuous flow process, products are continuously being produced without any difference. Products are standardized and are produced in high volumes. There is rigidity in this process. Most of the work in such cases is automated and workers are trained as robots without requiring any kind of creative output of specific skills from them (Krajewski, Ritzman, & Malhotra, 2009). Line process is an amalgamation of batch and continuous process. A high volume of goods are produced in a line assembly where the resources are aligned to the needs of the product. In this case, specialized training is required to handle the products and the manufacturing (Krajewski, Ritzman, & Malhotra, 2009). The process adopted by an organization is greatly dependant on the needs of the organization. In the case of Clarion Limited, since the objective is to improve the quality of the products, it would be advisable to use batch process to improve on the quality of the products. References Krajewski, L.J., Ritzman, L.P. & Malhotra, M.K. 2009. Operations Management – Processes and Supply chains, 9th Ed. (Global). US: Pearson. Read More