operations management

Zjnon
timer Asked: Jun 26th, 2018

Question Description

QUESTION FOUR

a) Briefly Explain five (5) variables that an Operations Manager can manipulate to meet short to medium term capacity requirements. [5 Marks]

b) The Good and Rich Candy company makes a variety of candies in three factories worldwide. Its line of chocolate candies exhibits a highly seasonal demand pattern, with peaks during winter months (for the holiday season and valentine’s day) and valleys during summer months (when chocolate tends to melt and customers are watching their weight). Given the following costs and quarterly sales forecast, determine whether a level production or chase demand production strategy would more economically meet the demand for chocolate candies.


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School of Business BSP 236 –Operations Management Assignment one Due 28th June 2018 Time: 17:00 QUESTION ONE Pazed Power Company is trying to forecast electricity demand for 2018. The Company wants to take the Pazed power plant out of service for maintenance when demand is low in 2018. After the shutdown performance maintenance, getting the plant back on the line takes two weeks. The utility has enough other generating capacity to satisfy 1700 megawatts (MW) of demand while the Pazed power plant is out of service. The table below shows fortnight (2 weeks) peak demand (in MW) for the past five years covering periods from August to November. The dates indicate the end of a two-week period; for example 31-Aug. indicates a two week period ending on 31st August etc. YEAR 2010 2011 2012 2013 2014 31-Aug 3970 4070 3750 4500 4580 FORTNIGHTLY PEAK POWER DEMANDS (MW) 14-Sep 30-Sep 14-Oct 31-Oct 3350 2350 2370 2870 4020 2220 2270 2720 3870 2850 2420 3050 3650 2870 2650 2570 3670 2820 2650 2770 14-Nov 3300 3570 3200 2700 2970 a) Determine the seasonal indices for each time period. [5 Marks] b) Use Seasonalised time series to determine the period and demand in the year 2018 when the Pazed plant will be scheduled for maintenance. [15 Marks] c) Briefly discuss the Delphi qualitative methods of forecasting. [5 Marks] Total 25 marks QUESTION TWO The Gross Domestic Product (GDP) in Zambia expanded 7.30 percent in 2012 from the previous year. GDP Annual Growth Rate in Zambia is reported by the Bank of Zambia. Historically, from 1961 until 2012, Zambia GDP Annual Growth Rate averaged 2.78 percent reaching an all-time high of 16.65 percent in December of 1965 and a record low of -8.63 percent in December of 1994. However, widespread poverty, mainly caused by fast population growth and systemic youth unemployment, remains Zambia’s main economic challenge. Below is a chart with historical data for GDP Annual Growth Rate in Zambia in the years 2000 to 2012. Required: a) Estimate the Zambia’s GDP growth for the years 2005 to 2012 using the following methods. i. 5 year moving average [5 marks] ii. Exponential smoothing with a smoothing constant of 0.2 [6 marks] b) Using an appropriate measure of accuracy, recommend which method should be adopted. [10 marks] c) Forecast for the GDP growth rate in the year 2013 using your recommended method. [4 marks] Total 25 marks QUESTION THREE a) Zambia has an oil refinery at Ndola, one of the very few such refineries in Africa located inland. This country also imports refined petroleum products from other countries, especially South Africa. Petroleum products supply 37% of the country’s commercial energy needs, the balance being provided by hydroelectricity and coal. The volume of crude oil for petroleum products has declined during the past few years due to high crude prices on the international market and poor performance of the economy. British Petroleum (BP) Ltd, distributor of fuel across the country has been experiencing shortages, while on other times; the company incurred very high storage cost. The Managing Director of the Lusaka Depot Ignorance Bututu, has engaged your consulting firm to help them manage their operations. This distribution depot operates 300 days per year. Customers demand an average of 17,000 gallons of fuel daily. BP orders fuel from the refinery that is several kilometers away. BP Ltd manages to deliver fuel to the Lusaka fueling station at a rate of 44,000 gallons per day. The cost of ordering is on average $1,500 per order, and the annual carrying cost rate 30% of the acquisition cost of $5.00 per gallon. Help BP Ltd in the analysis of the following issues; i. How many gallons of fuel should Lusaka order each time? [5 marks] ii. iii. How many orders per year should be expected? [5 marks] If the current order quantity is 150,000 gallons, what would be resulting savings from your recommendation? [5 marks] b) Emery Pharmaceuticals uses an unstable chemical compound that must be kept at in an environment where both temperature and humidity can be controlled. Emery uses 800 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $50 per order. The cost schedules of two suppliers are as follows: Vendor 1 Quantity 1-499 500-999 1000+ Vendor 2 Price/lb ($) Quantity Price/lb ($) 17.00 1-399 17.10 16.75 400-799 16.85 16.50 800-1199 16.60 1200+ 16.25 i) What quantity should be ordered, and which supplier should be used? [10 Marks] Total 25 marks QUESTION FOUR a) Briefly Explain five (5) variables that an Operations Manager can manipulate to meet short to medium term capacity requirements. [5 Marks] b) The Good and Rich Candy company makes a variety of candies in three factories worldwide. Its line of chocolate candies exhibits a highly seasonal demand pattern, with peaks during winter months (for the holiday season and valentine’s day) and valleys during summer months (when chocolate tends to melt and customers are watching their weight). Given the following costs and quarterly sales forecast, determine whether a level production or chase demand production strategy would more economically meet the demand for chocolate candies. Quarter Sales forecast (Kg) Spring Summer Fall winter 80,000 50,000 120,000 150,000 Costs Hiring cost K100 per worker Firing cost K500 per worker Inventory carrying cost K0.50/kg per quarter Production per employee 1000 kg per quarter Beginning workforce 100 workers [20 Marks] TOTAL: 25 MARKS END OF ASSIGNMENT ONE
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