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Final Term Subjective



JULY 2011


What are the reasons that support the use of process layout? (3 M)

Process layout:- A Layout that can handle varied processing requirements

Reasons to support process lay out

  • High rate of output.
  • Low unit cost.
  • Labor specialization.
  • Low material handling cost.
  • High utilization of labor and equipment.
  • Established routing and scheduling.


Distinguish between independent and dependent demand with respect to inventory management.  (3 M)

Dependent Demand

  • Demand for raw materials, component parts, and subassemblies used to make a finished product
  • Both the amount of demand and the date required depend on the production schedule

Independent Demand

  • Any demand that is not used to meet a production schedule is called independent demand
  • Examples of independent demand: finished goods; retail and distributor inventories; service inventories; maintenance, repair, and operating (MRO) inventories


Mr. Ali takes 2 vitamin tablets per day. After ordering he receives tablets after 4 days. At what minimum quantity he should order the tablets. Give complete calculation.       (3 M)

 Usage = 2 vitamins a day

Lead time = 4 days

ROP = Usage × Lead time

Reorder Point = 2 x 4 = 8


Objectives of queuing analysis   (3 M)

Queuing theory: Mathematical approach to the analysis of waiting lines.

  • Goal of queuing analysis is to minimize the sum of two costs Customer waiting costs and Service capacity costs.
  • Waiting lines are non-value added occurrences

Queuing Analysis

Organizations carry out queuing analysis to ensure that they are able to balance the service levels with costs which the organization can incur. The ultimate goal of queuing analysis is to minimize the sum of two costs that is the service capacity cost (represented on x axis) and customer waiting costs.



Why Pakistan has low productivity compared to other countries? Discuss factors. (5 M)

The low productivity in Pakistan is a result of the following factors:

  • Overregulation of subsidies has increased costs, price risks and uncertainty. Government intervenes in labor, land, and credit markets. Pakistan has inadequate infrastructure and services. The overuse and miss use of resources is causing making problem in this regards .
  • Illiteracy, low level and mal formed education is also a big hindrance in enhancing the level of productivity
  • General socio-economic backwardness, slow progress in implementing reforms and inadequate or inefficient finance and marketing services and delay in taking corrective measures.
  • Inconsistent government policy. Governmental subsidies and taxes often changed without notice for short term political ends.
  • Unemployment and low productivity of labor.
  • Adoption of modern practices and use of technology is inadequate, hampered by ignorance of such practices, is resulting in high costs low productivity
  • Overpopulation is the main cause and acting like a trigger for this.


How can you judge effectiveness of inventory management? (5 M)

An Inventory Management System would be called Effective if it is able to fulfill the following requirements.

  1. A system to keep track of inventory
  2. A reliable forecast of demand
  3. Knowledge of lead times
  4. Reasonable estimates of:

a. Holding costs

b. Ordering costs

c. Shortage costs

  1. A classification system.


What are the various measures, an operation manager needs to consider while evaluating the existing or proposed service system? (5 M)

Characteristics of Well Designed Service Systems

  • A well designed service system should be consistent with the organization’s vision as well as mission. It should be user friendly, robust, easy to sustain, cost effective and should bring value to customers.
  • A good and well design should create an effective linkage between back operations and front operations. It should aim for a single unifying theme. It should ensure reliability and high quality.
  • An operations manager often faces challenge of a poor service design. The reasons of a poor service design include variable requirements, difficult to describe requirements, high volume of customer contact.
  • These challenges can be overcome easily with the aid of defining a standardized requirement that would be addressed by the service, make simpler requirements and handle only limited number of customers at each service station or outlet.


Project life cycle (5 Marks)

The Project Life Cycle comprises of a new concept idea for a unique activity which is then evaluated through feasibility reports, planned with certain sequence of activities, execution of activities and terminated after the project has been completed or shelved due to certain unavoidable. What is important is to note that all stages of Project Life Cycle are administered and handled by competent Project Management team or Project Managers.

Models help the managers in work. Explain statement. (5 or 3 Marks)

Models Are Beneficial and effective to an Operations Manager primarily because of the following reasons

 Easy to use, less expensive

 require users to organize

 Systematic approach to problem solving

 Increase understanding of the problem

 Enable “what if” questions

 Specific objectives

 Consistent tool

 Power of mathematics

 Standardized format

JIT in Health care (5 Marks)

Just-in-time (JIT): At the intra organization level, JIT forms a healthy alliance between the management and the workforce; all this contributes in elimination of waste. JIT A highly coordinated processing system in which goods move through the system, and services are performed, just as they are needed. As operations managers we should remember this point onwards that

  • JIT is also known as lean production
  • JIT is the true pull (demand) system
  • JIT operates with very little “fat”

Types of Inventories (5 or 3 Marks

The five common types of inventories are:

  1. Raw materials & purchased parts.
  2. Partially completed goods called work in progress.
  3. Finished-goods inventories:

a. (manufacturing firms) or

b. merchandise, (retail stores)

  1. Goods-in-transit to warehouses or customers
  2. Replacement parts, tools, & supplies


Effectiveness of MRP           3
Low levels of in-process inventories

Ability to track material requirements

Ability to evaluate capacity requirements

Means of allocating production time


Role of internet in increasing productivity   3
Use of Internet/Extranet especially for the services side, even though there are knowledge base applications available for the manufacturing side as well but primarily it has the been the services side which has been able to exploit the resourcefulness of the Internet.


Role of inventory file records in MRP         3
Material Requirements Planning (MRP) is software focusing on production planning and inventory control system used to manage manufacturing processes.

An MRP system is intended to simultaneously meet three objectives:

  1. Ensure materials and products are available for production and delivery to customers.
  2. Maintain the lowest possible level of inventory.
  3. Plan manufacturing activities, delivery schedules and purchasing activities.


What is loading & ideal characteristics of loading   3
Loading involves assigning jobs to work centers and to various machines in the work centers. If a job can be processed on only one machine, no difficulty is presented.

However, if a job can be loaded on multiple work centers or machines, and there are multiple jobs to process, the assignment process becomes more complicated. The scheduler needs some way to assign jobs to the centers in such a way that processing and setups are minimized along with idle time and throughput time.

Two approaches are used for loading work centers: infinite loading and finite loading.

With infinite loading jobs are assigned to work centers without regard for capacity of the work center. Priority rules are appropriate for use under the infinite loading approach.

Jobs are loaded at work centers according to the chosen priority rule. This is known as vertical loading.

Problems arise when two or more jobs are to be processed and there are a number of work centers capable of performing the required work. Managers often seek an arrangement that will minimize processing and setup costs, minimize idle time among work centers, or minimize job completion time. In contrast, horizontal loading involves loading the job that has the highest priority on all work centers it will require, then the job with the next highest priority, and so on. Horizontal loading is based on finite loading.



Bills of material diagram was given & we had to ascertain inventory requirements Overtime & slack is better than lay-off explain    5


Standardization role in Product Design                    (5)
The design side needs to adhere to certain guidelines which can ensure that the organization is able to achieve its organizational strategy. These guidelines are often form the vary basis of an organizations design strategy and indicates the importance of standardization in the design of a product or service.

  1. Produce designs that are consistent with the goals of the company. An economical upscale model automobile design if replaced with a luxurious model can invite a small number of customers and may loose the existing stronger customer base.
  2. Give customers the value they expect .Reliability, safety, endurance, aesthetic and quality dimensions are what the customers are looking for.
  3. Make health and safety a primary concern .Green Rickshaws seen functioning on the roads these days are a result of taking care of health and safety of the users as well as those who operate them.
  4. Consider potential harm to the environment .A new product should be as a primary guideline should be better than the existing one and should aid in the protection of environment. A number of automobile manufacturers are using hybrid models or cars where as its expected that steam operated cars may be available in 5 years.


Advantages of Scheduling                      (5)
Benefits of Scheduling

Scheduling: Establishing the timing of the use of equipment, facilities and human activities in an organization

  • Effective scheduling can yield
  • Cost savings
  • Increases in product

The benefits of product scheduling include

  • Process change-over reduction
  • Inventory reduction,
  • Reduced scheduling effort
  • Increased production efficiency
  • Labor load leveling
  • Accurate delivery date quotes
  • Real time information


Components of MRP             (5)
Material requirements planning (MRP): Computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials.

MPR Inputs

MRP has three Inputs

  1. Master Schedule Plan
  2. Bill of Materials
  3. Inventor Records
    • Master schedule: One of three primary inputs in MRP; states which end items are to be produced, when these are needed, and in what quantities.
    • Cumulative lead time: The sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly.
    • Bill of materials (BOM): One of the three primary inputs of MRP; a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product.


Output of Aggregate Planning                       (5)

  • Total cost of a plan
  • Projected levels of inventory
  • Inventory
  • Output
  • Employment
  • Subcontracting
  • Backordering


JIT is a true Pull System, Explain                 (3)
Just in time is a ‘pull’ system of production, so actual orders provide a signal for when a product should be manufactured. Demand-pull enables a firm to produce only what is required, in the correct quantity and at the correct time. This means that stock levels of raw materials, components, work in progress and finished goods can be kept to a minimum. This requires a carefully planned scheduling and flow of resources through the production process.


Problems in supply chain management?                   (3)
Supply Chain: The sequence of organization’s facilities, functions, and activities that are involved in producing and delivering a product or service.

Possible Drawbacks or problems

  • Traffic congestion Increased costs
  • May not be feasible
  • May need absorb functions
  • Less variety
  • Loss of control
  • Less variety



Find EOQ, if Annual demand = 200, Ordering Cost = 10, Carrying Cost = 6                    (3)
Annual demand = D = 200  

Ordering cost = S = 10

Carrying cost = H = 6

EOQ = Sq Root of (2 DS)/H

= Sq Root of 2(200) (10)/6

= sq root of 666.66



Activities performed by R & D in an organization?                         (3)

R&D: refers to the Research and Development departments or divisions which generate new ideas for the existing products or services or simply new ideas for new products or services. Research & Development (R&D) is the organized efforts to increase scientific knowledge or product innovation & may involve:

  • Basic Research advances knowledge about a subject without near-term expectations of commercial applications.
  • Applied Research achieves commercial applications.
  • Development converts results of applied research into commercial applications.


Question No: 50    ( Marks: 3 )

Compute slack time for each of the following activities in the following table:




















Answer No:50




















Question No: 51    ( Marks: 5 )

 Local distributor of a manufacturing concern expects to sell 9000 machines approximately. He derives at the EOQ of 300 machines per year and operates 275 days a year. You are required (i) to calculate the number of times the store will reorder and (ii) the length of an order cycle.

D = 900 Machines

EOQ = Q0 = 300 Machines

No of the days distributor operates = 275


(i) No of time store will reorder = D/Q0

                                                = 9000/300 = 30 times


(ii) The length of order cycle      = Q0/D

                                                = 300/9000 = 0.0333 of a year = 0.0333x275 = 9.1575 days   


What do you know about single card in Kanban system? Marks: 3

Single-Card Kanban System

  • Each container must have a card.
  • Assembly always withdraws from fabrication (pull system).
  • Containers cannot be moved without a kanban
  • Containers should contain the same number of parts.
  • Only good parts are passed along.
  • Production should not exceed authorization.


Write Characteristics of Finite source in queuing model Marks: 5

Queuing theory: Mathematical approach to the analysis of waiting lines.


System Characteristics of Finite source in queuing model

  1. Population Source

a. Infinite source: customer arrivals are unrestricted

b. Finite source: number of potential customers is limited

  1. Number of observers (channels)
  2. Arrival and services patterns
  3. Queue discipline (order o services)


How internet is useful for the productivity of organization. Marks:3

The Internet has a lot of characteristics that can be utilized to improve productivity. Just to name a few, there are no time or space limitations for accessing the Internet, finding information can be easy and efficient, and it is possible to transfer various kinds of information in electronic form. Properties like these have led to totally new markets, business models, and processes.


What are the factors of Quality assurance sampling? Marks:3

Achieving Service Quality: Service Quality can be achieved by making use of the following strategies

  • Cost of Quality
  • Service Process Control
  • Statistical Process Control
  • Unconditional Service Guarantee


What do you know about single card in Kanban system? Marks:3

Single-Card Kanban System

1. Each container must have a card.

2. Assembly always withdraws from fabrication (pull system).

3. Containers cannot be moved without a kanban.

4. Containers should contain the same number of parts.

5. Only good parts are passed along.

6. Production should not exceed authorization.


Write capacity planning inputs and outputs. Marks:5

The necessary inputs are:

1. Planned order releases for MRP

2. The current shop load

3. Routing information

4. Job times

Outputs include load reports for each work center


Write Characteristics of Finite source in queing model Marks:  5

Queuing Models: Infinite-Source

1. Single channel, exponential service time

2. Single channel, constant service time

3. Multiple channels, exponential service time

4. Multiple priority service, exponential service time


Find estimated time and standard deviation from the activity table. Marks:5

(answer: handout page 202)


Write any three benefits of JIT (just in time) inventory system? 3

  1. Reduced inventory levels
  2. High quality
  3. Flexibility
  4. Reduced lead times
  5. Increased productivity


What is scheduling? Scheduling services 3

Scheduling is an important tool for manufacturing and service industries where it can have a major impact on the productivity of a process. In manufacturing, the purpose of scheduling is to minimize the production time and costs, by telling a production facility what to make, when, with which staff, and on which equipment. Similarly, scheduling in service industries, such as airlines and public transport, aim to maximize the efficiency of the operation and reduce costs.


What are the Benefits of electronic purchasing? 5

• Meets immediate requirements

• Enables fast time to market ethos

• Next day delivery

• Right goods, first time is essential

• Ideal for low cost, high volume transactions


How services contribute in the growth of an economy? 5

Service enterprises are organizations that facilitate the production and distribution of goods, support other firms in meeting their goals, and add value to our personal lives.


What is queuing analysis? And what are its uses for waiting lines? 5

Queuing theory: Mathematical approach to the analysis of waiting lines.

  1. Goal of queuing analysis is to minimize the sum of two costs Customer waiting costs and Service capacity costs.
  2. Waiting lines are non-value added occurrences


Numerical from KANBAN (5 Marks)

We can mathematically construct the Kanban Formula, if we designate the following alphabets

N = Total number of containers (Or Kanban Cards)

D = Planned usage rate of using work center

T = Average waiting time for replenishment of parts plus average production time for a container of parts

X = Policy variable set by management possible inefficiency in the system often called Alpha

C = Capacity of a standard container

K= DT (1+X) / C


Judgmental forecasting features 3 marks

  • Judgmental Forecasts rely solely on judgment and opinion to make forecasts.
  • In the absence of enough time, it is easy to use qualitative type of forecast.
  • In case of changing external environment economic and political conditions, organizations may use judgmental forecasts.
  • When introducing new products, services, new features, new packaging, and judgmental forecasts are used in preference over quantitative techniques.


Reasons to (Produce in-House or Outsource) Make or Buy

There are 6 reasons which are available to us in order to decide whether to develop a competence in house or hire an outside competent organization to supply that product, service or particular expertise. The latter requires that the outsourcer to be honest, ethical, competent. It also requires that outsourcing contract should be flexible yet pragmatic and carry proper levels of services.

  1. Available capacity if an organization has the equipment, necessary skills and time, it   often makes sense to produce an item or perform a service in house. The additional costs would be relatively small compared with those required to buy items or subcontract them.
  2. Expertise. If a firm lacks the expertise to do a job satisfactorily, buying might be a reasonable alternative.
  3. Quality considerations. Firms that specialize can usually offer higher quality than an organization can attain itself. Conversely, special quality requirements or the ability to closely monitor quality may cause an organization to perform a job itself.
  4. Nature of demand. When demand for an item is high and steady, the organization is often better off doing the work itself. However, wide fluctuations in demand or small orders are usually better handled by specialists, who are able to combine orders from multiple sources, which results in higher volume and tend to offset individual buyer fluctuation.
  5. Cost. Any cost savings achieved from buying or making must be weighed against the preceding factors. Cost savings might come from the item itself or from transportation cost savings. If there are fixed costs associated with making an item that cannot be reallocated if the item is purchased, that has to be recognized in cost analysis.
  6. Risk. Outsourcing or buying the services carries risk; often companies retain flexibility by carrying out certain critical activities in house and repetitive menial activities through outsourcing.


Importance of Supply Chain Management

Supply Chain: The sequence of organization’s facilities, functions, and activities that are involved in producing and delivering a product or service.

Need for Supply Chain Management

  1. Improve operations
  2. Increasing levels of outsourcing
  3. Increasing transportation costs
  4. Competitive pressures
  5. Increasing globalization
  6. Increasing importance of e-commerce
  7. Complexity of supply chains
  8. Manage inventories

Benefits of Supply Chain Management

  1. Lower inventories
  2. Higher productivity
  3. Greater agility
  4. Shorter lead times
  5. Higher profits
  6. Greater customer loyalty


Responsibilities of operation manager 3 marks

Operation manager is the person who is responsible for the complete operation in the company and accountable for the performance. Operation manager should have complete control over the operation he performs and he is accountable and must report mostly to the president of the company.

Responsibilities of Operation Manager

Each operation manager has got a performance goal, his responsibility to do end to end planning and objective is to achieve performance goal and to develop productivity and improve quality standards for the company.

  1. Should have skills to train the associates, staffs and make sure they are executing the plan properly.
  2. 2. Make sure to deliver higher quality standards by planning and execution.
  3. Responsibility of an operation manager to analyze sales and plan the deliverables according to it
  4. He/she must travel frequently and meet clients.
  5. Reporting must be done on a frequent basis.
  6. Responsibility to have higher level of communication and ensure the team is performing level in the operation.
  7. Skills required
  8. Just an bachelor’s degree is enough for this job. To work in a big company at least he/she must need 3 years or above experience. Good analytical and problem solving skills are very necessary for this job. Excellent leadership skills are required for this job. Ability to work under deadlines is a must for this job.


Reorder determinist 3 marks

When to Reorder with EOQ Ordering

Reorder Point - When the quantity on hand of an item drops to this amount, the item is reordered.

Safety Stock - Stock that is held in excess of expected demand due to variable demand rate and/or lead time.

Service Level - Probability that demand will not exceed supply during lead time.


Waiting lines, FCFS and EDD with examples 5 marks

Waiting Line (Queuing) Models have been used extensively in service operations scheduling because:

  • Demand patterns are irregular or random
  • Service times vary among customers
  • Managers try to strike a balance between efficiently utilizing resources and keeping customer satisfaction high.

First-come, first-served (FCFS) rule: The customer who arrives first and is at the head of the line has the highest priority. Other possible rules are shortest processing time (SPT) and earliest due date (EDD): Jobs are processed according to due date, earliest due date first.

FCFS is perceived as being fair by all parties, a preemptive discipline is also perceived as reasonable if the priority nature of the later arrival is understood by all parties. Earliest due-date rule minimizes the number of late customers.


Application of lean manufacturing 3 marks

  1. Lean Healthcare Systems
  2. Lean Software Manufacturing
  3. Systems Engineering
  4. Lean Systems in Defense Industry


Question No: 57 ( Marks: 3 )

Explain the basic purpose of acceptance sampling?

Acceptance sampling is an important form of inspection applied to lots or batches of items before or after a process, to judge conformance with predetermined standards.

A point to remember is that the main purpose of acceptance sampling is to decide whether or not the lot is likely to be acceptable, not to estimate the quality of the lot.


Question No: 58 ( Marks: 3 )

Briefly discuss Part-Period Model with the help of an example?

Part-Period Model represents an attempt to balance set up and holding costs. The part period term refers to holding part or parts over a number of periods, e.g. if a business holds 20 parts for 3 periods this would be a 20 X 3= 60 parts period.


Question No: 59 ( Marks: 3 )

Compute slack time for each of the following activities in the following table:


















Slack Time = LS-ES


Question No: 60 ( Marks: 3)

For what purpose the transportation method is used?

Transportation Method is a quantitative approach that can help solve multiple facility location problems.

It is used to determine the allocation pattern that can be used to minimize the cost of shipping products from two or more plants or sources of supply to two or more warehouses or destinations.

  • Based on Linear Programming.
  • It does not solve all the problems of the multiple facility location.
  • It only finds the best shipping pattern between plants and warehouses for a particular set of plant locations with a given capacity.
  • The Operations manager or logistics analyst must try a variety of location-capacity combinations and use this to find the optimal distribution for each alternative.
  • Distribution costs (variable shipping and possible variable production costs) are important inputs in evaluating a particular location allocation combination.
  • Investments costs and other fixed costs are also considered.
  • Qualitative factors (like land and construction cost against annual profits) are also included in the analysis for each location capacity combination.


Question No: 61 (Marks: 5)

You are employed as an operations manager in ABC Company. At some stage you make an analysis of the changes in product design. What analysis you carry out to feel this change? Also elaborate its different procedures

Methods analysis deals with analyzing how a job gets done, begins with overall analysis and then moves to specific details like changes in tools and equipment, Changes in product design or new products, Changes in materials or procedures and other factors (e.g. accidents, quality problems)

Methods Analysis Procedure is simple and effective and does the following

  • Identifies the operation to be studied
  • Gets employee input
  • Studies and documents the current method
  • Analyzes the job
  • Proposes new methods
  • Installs new methods
  • Follow-ups to ensure improvements have been achieved


Question No: 62 ( Marks: 5 )

As operations of a manufacturing concern, you are required to carry out aggregate planning. What inputs you require for aggregate planning?

Aggregate Planning Inputs


  1. Workforce
  2. Facilities

Demand forecast


  1. Subcontracting
  2. Overtime
  3. Inventory levels
  4. Back orders


  1. Inventory carrying
  2. Back orders
  3. Hiring/firing
  4. Overtime
  5. Inventory changes
  6. Subcontracting


Question No: 63 ( Marks: 5 )

EDI is beneficial for organization. Elaborate some of the rewards of EDI to an organization.

Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention.

Electronic Data Interchange gives an organization the following benefits and advantages.

1. Increased productivity

2. Reduction of paperwork

3. Lead time and inventory reduction

4. Facilitation of just-in-time systems

5. Electronic transfer of funds

6. Improved control of operations

7. Reduction in clerical labor

8. Increased accuracy


Question No: 64 ( Marks: 5 )

What are the various assumptions an operations manager needs to consider for implementing priority rules? Deterministic

1. The set of jobs is known, no new jobs arrive after processing begins and no jobs are cancelled.

2. Setup time is deterministic

3. Processing times are deterministic rather than variables.

4. There will be no interruptions in processing such as machine breakdowns, accidents or worker illnesses.


Annual ordering cost

Ordering costs: Costs of ordering and receiving Inventory, these are the actual costs that vary with the actual placement of the order.


Companies cost reduction activities

Cost reduction can be achieved through reduction, elimination, modification of manufacturing activity. Through in depth analysis the best and least cost path is adopted for each activity.

Focuses on in-house procedures and processes at this stage, the company will do a functional analysis of every department to determine where efficiencies can be improved.

In a manufacturing plant the cost of production will be evaluated. In a non-profit, the value of service offered will be compared to the cost of the service to determine if it should be continued. Purchasing departments will evaluate inventory levels. The cost of selling will be broken down into activities.

Allah bless you bhai for share...


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