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Leadstar Collage of Management and Leadership

Faculty of Business and Leadership

Graduate Department of Business Administration

Tutor Marked Project Assignment (TMA) FOR OPERATION

MANAGEMENT (MBA-511):

SUBMITTED TO: Leadstar College of Management and

Leadership

PREPARED BY: MULUGETA EJIGU ASRES

FEBURARY 2015

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PART 1 MULTIPLE CHOICE ITEM

1. C

2. A

3. A

4. C

5. D

6. C

7. D

8. B

9. D

10. C

11. D

12. A

TMA 02 ESSAY TYPE QUESTION

1. Dessie hospital – This hospital is working for transforming physiological state of customer.

Input- Customer the input for this hospital. Hospitals are transforming their physiological state of
the customer.

Input -

- Patient’s is their input that has to be transformed.

Resources

- Doctors and nurses and other related affair.

- Diagnosis and laboratories

Transformation process

- Diagnostic care.

– Therapeutic process

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– Treatment of patient.
– Changing the physiological condition, felling and behavior of patients.

Out put

-health patient

- Cured or treated patients. - The customers that are getting out of their illness or
disease.

2. Four competitive dimensions

Cost – if organization is competing on price then it’s essential that it keeps cost base lower than
the competition and it is also important for a strategy of providing a product to a market niche,
which competitor cannot provide.

Time – the time delay or speed of operation can be measured as the time between customers
request for, a product/service and then receiving that product/service.

Quality – quality both the quality of the product/service itself and quality of the process that
delivers the product/services.

Flexibility – is needed so the organization can adapt to changing customer needs interims of
product range and varying demand and cope with capacity short falls due to equipment
breakdown or component shortages.

3.Difference’s

Ethiopian air lines

- Have intangible output like transported passengers and freight.

- Direct customer contact.
- Have jobs that use more labor and less equipment.
- Frequent customer participation in the conversion process
- Elementary methods for measuring conversion activities and resource consumption.

Methara sugar factory

- Have tangible outputs like sugar and molasses.

- Have an output customers consume overtime.
- Useless labor than Ethiopian airlines and more equipment.
- Little customer contact.
- No customer participation in production.
- Sophisticated methods for measuring production activities and resource consumption.

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Similarities

- Both create mission statements and a vision for new the organization will be run and
perceived by customers.
- Both have customer contact they differ by the degree of contact.
- Both have used equipment and labor.
- Both have transformation process.

4. TABLE 1.1 Historical summary of operations management

Date Contribution CONTRIBUTORS

1776 Specialization of labour in manufacturing Adam Smith
1799 Interchangeable parts, cost accounting Eli Whitney and others
1832 Division of labour by skill; assignment of jobs by skill; Charles Babbage
basics of time study
1900 Scientific management time study and work study Frederick W. Taylor
developed; dividing planning and doing of work
1900 Motion of study of jobs Frank B. Gilbreth
1901 Scheduling techniques for employees, machines jobs in Henry L. Gantt
Manufacturing
1915 Economic lot sizes for inventory control F.W. Harris
1927 Human relations; the Hawthorne studies Elton Mayo
1931 Statistical inference applied to product quality: quality W.A. Shewart
control charts
1935 Statistical sampling applied to quality control: inspection H.F. Dodge & H.G. Roming
sampling plans
1940 Operations research applications in World War II P.M. Blacker and others.
1946 Digital computer John Mauchlly and J.P. Eckert

1947 Linear programming G.B. Dantzig, Williams &

5. 1. Job shop

Advantages

- A lot of flexibility of operation

- Generally no automation is used
- Low risk of loss to the factory adapting
- Due to flexibility, there is no chance of failure of factory due to reduction in demand
- Requires less money and easy to start
- Less or no management problem because of very small work force

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Disadvantages
- For handling different types of jobs, only workers with multiple skills are needed this
increases the labor cost.
- Low equipment utilization
- As the raw materials are purchased in less quantity, the cost of materials procurement
is less
1. batch
Advantage
- It need general purpose machine having high production rate.
- If the demand for one product decrease then production rate for another product may
be increased, thus the risk of loss is very less.
- Most suitable for computer aided manufacturing (CAM).
Disadvantage
- It need specially designed jigs and fixtures
- The benefits of discount due to large lot purchasing are not possible.
2. Continuous production

Advantage

- It gives better quality, large volume but less Varity of products.

- Wastage is minimum
- As the thus raw materials are purchased on large scale, higher margin of profit can be
made on purchase
- Only a few skilled, and many skilled workers are required.
Disadvantage

- As thus type of production is on the large scale, it can’t fulfill individual tests.
- Most of the workers handle only a particular operation repetitively, which can
make them monotonous.
- During the period of less demand, heavy losses on invested capital may take
place.

6. a. Modular design is forms of standardization in which component parts are subdivide in to

modules that are easily replaced or interchanged.

It allows;

- Easier diagnosis and remedy of failures.

- Easier repair and replacement
- Simplification of manufacturing and assembly
E.g. midroc construction

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b. Design for disassembly- design focuses on facilitating the disassembly in a logical and
exact reverse sequential manner to the assembly methods and sequence.

c. Robust design- design that result in products or services that can function over a broad
range of condition. The idea is to have consistent, safe and reliable operation with no excuse for
environmental characteristics.

Ex; Ambassador Tailor Company producing product for local and foreign such as export
standard for local market only

7. Mass customization, - is the ability to produce and distribute what are perceived to be
customized goods and services within a high volume or mass market.

Firm achieve mass customization by following levels of customization.

- Customer contact – this is where a product or service is tailored to individual needs.

Eg; hair cut.
- Adaptive – a standard product is customized to individual need through the use of
options. Eg; car
- Presentation – standard products are presented differently to different customers.
E.g. packaging.

8. New product development has four steps.

1. Generating ideas.

- Ideas for new product and services should be sought from a variety of sources including
market research, customer view point, the organization resource and development
(R&D) department if one exists, competitors or relevant development in new
technology.

e.g. Hawaii companies because of the increasing demand for smart phone users but the cost
for smart phone are high generating the idea of producing smart phone with low cost

2. Product screening - consist of market analysis, economic analysis and technical analysis.

- Market analysis consists of evaluating the product concept with potential customers
through interviews, focus groups and other data collection method. Ex; evaluating the
needs of about low cost smart with potential customers by some sample.
- Economic analysis – consists of developing estimates of production and demand cost
and comparing them with estimates of demand. Ex; low cost smart phone producing is
economically feasible to exist within compatible environment.

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-Technical analysis – consist of determining whether technical capability to manufacture the

product. Ex; for Hawaii Company to produce low cost smart phone have appropriate
machinery and scales of employees

3. Preliminary design – product concept that pass feasibility stages inter preliminary design.
The specification of components of the package requires a product service structure
which describes the relationship between the components and a bill of material. Ex;
-arrange the components for smart phone with the sequence of activities

4. Final design – involves the prototype to test preliminary design until a final design can be
chosen. Ex; Hawaii company uses computer guided design for low cost smart phone and
finally design this product.

9. 1.Concurrent engineering – contributes to the design effort provide work throughout the
design process as a team.

- Manufacturing personals are able to identify production capabilities and capacities.

- Early opportunities for design or procurement of critical tooling.

- Creates a data base for manufacturing information on product specialization.

- Early consideration of technical feasibility of a particular design.

- Long standing existing boundaries between design and manufacturing can be difficult to
overcome.

- There must be extra communication and flexibility if the process is to work.

E.g. many constructions companies

2. Traditional approach to product design.

- Design process when work is undertaken separately with in functional areas such as
engineering and operations.

- Have a problem with the cost and time involved in bringing the product to the market.

- Time is wasted when each stage in design process waits for the previous stage to finish
completely before commence.

- There may be lack of communication between functional areas involved in different

stage of design

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10. Proximity to suppliers and raw material.

- Bulky and perusable products manufacturing companies are located near to the source
of raw material.

- The volume and bulky of raw material involved in operation such as steel production
means that a location decision will tend to favor areas near to supplier, take as an
example Ethiopian steal and engineering corporation found Debreziet located where
many steal suppliers found.

Proximity to labor

It is always preferable to locate the plant in the area where skilled, semi-skilled and un skilled
labor are available

 It is desirable to have no labor problem

Eg1-combolcha textile factory locating its plant where many un skilled labor

Eg2-tecno mobile companies located its plant in A.A which can get skilled
labor

Proximity good high ways

Availability of suitable land and land cost
–In the communities and countries that are interested in attracting new plants,
land may be offered at a reduced price or at no cost, which may influence some
plants to locate there

Adequate water supply-water is necessary for almost all kinds of plants. However
some plants heavily depend on water supply for example –Gilgel gibe hydroelectric
power plant

Nearness to an existing plant- It is advisable to keep new plant reasonable close to the
parent plant. Eg-bisheftu truck assembly plant to close to Ethiopian steel engineering
corporations

 Proximity to markets/customers.
Plant should be located to nearer to the customers market.
E.g.; Mugger cement factory found around Addis Ababa located nearer to the market
where in the place that have many construction and many markets to local and abroad.
Because of high transportation costs of heavy or bulky material also lead to locating close
to customers.

- For many services organization in particular the location of the facility must be
convenient for the potential customers, e.g. Barbary, laundry, restaurants, hospitals and

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drug store. Taking Dessie hospital is located in Dessie town which is found in the area for
most of people can address, like Afar regional state people, south and north Wollo zone
people.

11 1. Design capacity –is the maximum output rate or service capacity an operation,
process or facility

 Measuring capacity; when measuring capacity it must be considered that capacity is not
fixed but is available that is dependent on a number of factors such as product mix
processed by the operation and machine set up requirements
 Product mix- when the product mix can change than it can be more useful to
measure capacity interims of input measure which provides some indication of
potential output. Also for planning purpose when demand is stated in output terms
it is necessary to convert in put measures to an estimated output measure.
 Machine setup- when a machine can be breakdown of above the level of capacity
which is available due to un planned occurrences effective capacity is a move
realistic measure.

12 Capacity- comprise the resources to serve customers, process information or make

products and is a mix of people, system and facilities needed to meet the service or
products involved

Capacity decisions –should be taken by firstly

1. Identifying capacity requirements
2. Evaluating the alternative capacity plans

1. Identifying capacity requirements

This stage consist of both estimating future customs demand but also determining
current capacity levels to that demand

1.1 Measuring demand

 In capacity planning context business planning process is driven by two

elements the company strategy and forecast of demand for product services
the organization is offering to the market
 Demand forecast should express demand requirements interims of capacity
constraint applicable to the organization. This could be machine hour or
workers hour as appropriate
 Organization must developed forecasts of the level of demand they should be
prepared to meet and also demand forecasts should permit the operation

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manager to ensure that enough capacity is available to meet demand at a

particular time, whilst minimizing the cost of employing too much capacity
for demand needs

2 Evaluating capacity plans- the organization ability to reconcile capacity with demand will be
dependent on the amount of flexibility it possesses

 Flexible facilities allow organization to adapt to changing customer needs interims

of product range and varying demand and to cope with capacity shortfalls due to
equipment breakdown or component failure

Methods for reconciles capacity and demand

1. Level capacity- this approach fixes capacity at a constant level throughout

the planning period regardless of fluctuation in forecast demand. This means
production is set at a fixed rate, usually meet average demand and inventory
is used to absorb variation in demand
2. Chase demand – this strategy seeks to change production capacity to much
the demand pattern over time. Capacity can be altered by various policies
such as changing the amount of part-time staff, changing the amount of staff
available through over time working, changing equipment level and sub-
contracting. This strategy is costly in terms of costs of changing staffing
levels and overtime payments
3. Demand management – while the level capacity and chase demand strategies
aim to adjust capacity to much demand, the demand management strategy
attempts to adjust demand to meet capacity. There are many ways this can be
done, but most will involve altering the marketing mix and will require co-
ordination with marketing function

Demand management strategies

 Varying the price-during period of low demand price discount can be used to
stimulate the demand level and during high demand the capacity price could be
increased
 Provide increasing marketing effort to product lines with excess capacity
 Use advertising to increase sales during low demand periods
 Use existing process to develop alternative product during low demand periods
 Offer instant delivery of product during low demand periods
 Use an appointment system to level out demand
13 There are four basic layout

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1. Process layout –are used when there is large varityping in the products or services being
delivered Eg –super markets

-hospitals

-department store

-component manufacture

2. Production layout –also known as line layout

- It refers to the arrangement of the resource around the product or service

E.g. - Car assembly

- Self-service cafes

- Car renting

3. Hybrid layout are crated from placing together resource which service a subset of the total
range of product or service

E.g. – custom manufacture

- Maternity unit in a hospital

- Cafeteria with multiple service area
- In service a call layout could involve an insurance organization organized by types claim
E.g.- car, home, travel

4. Fixed position layout – the product or service can’t be moved and so the
transforming process must takes place at the location of product creation or service
delivery
E.g. -Construction sites such as – Buildings or
- Large ships
- Air craft manufacture and
- Full service restaurants

14. Agile manufacturing – aim to respond quickly to market demand in order to retain
current markets and gain new market share.

 As a strategy agile manufacturing can be seen to embrace uncertainty in markets

and achieve competitive advantage by the flexibility and speed of their response
to them.
 The focus of agile manufacturing has moved from an individual organization to
supply chins in which several companies work together.
 Agile manufacturing emphasizing the need for an organization to be able to
switch frequently from one market driven objectives to another.

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 Agile manufacturing emphasis on reducing 3 critical lead times such as, time-to-
market, time-to-serve, time-to-react.
 Agile manufacturing supply chains are any to be shorter and demand driven in
order to overcome lead time gap. It’s have the following benefits;
- Visibility
- Flexibility
- Predictability
- Scalability;
-Companies’ uses agile manufacturing method beyond the decoupling
point -Surge demand is met by more flexible (or agile process)

Lean manufacturing– developed by massively successful Toyota production system,

focusing on the removal of all forms of waste from a system.

-Emphasizing efficiency.
-This approach aim to meet demand instantly, deliver perfect quality and
eliminate waste in all it forms.

The key elements in lean manufacturing are-

 Eliminate waste –ohno (1988) classified of wastes, the priority should be to

those wastes, only then to cut.
 Involvement of everyone – some organization views the lean approach as
consisting almost exclusively of waste elimination. Lean aims to create a
new culture in which all employees are encouraged to contribute to
improvement efforts through generating ideas.
 Continuous improvement – lean uses continuous improvement over time, it
is needed because customer’s views are continually changing and standards
are rising.
 Companies use lean manufacturing methods up to the decoupling unit.
 Base demand can be met using lean to maximize efficiency.

15. Factors to be consider in efficient layout by:-

 Types of industry.
 Production system.
 Types of product.
 Volume of production.
 Types of manufacturing process.

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 Types of industry - different kind of industry is arising in this time like

synthetic process, analytic process based, conditioning process based, and
extractive based industry.
 Types of production system -
- Continuous production.
- Job shop production.
- Barter production.
 Types of product– whether the product is heavy and light, large or small,
liquid or solid.
 Volume of production– whether the production is small quantity or in lots or
batches or in huge quantity (mass production).

16.Ergonomics of commercial bank of Ethiopia

Human engineering is as follows:-

 Junior officer – newly recruited working to the organization up to 1 year

working as an assistant.
 Customer service officer –or tellers who accept money and give the money
for customer. Have two classifications.
a. Maker and
b. Checker.
Maker:- a – front office maker – directly contact to customer.
b – Back office maker - doesn’t have direct customer contact and
Working on non cash transaction.
Checker:- a – Back office checker – working as an authorized for back
office
Work which cannot touch cash transaction.
b – Front office checker – assigned to work for authorize front
office maker transaction.

 Accountant – found in bank office working on suspense, settlement,

suspensions transaction, financial reports and salary for employees.
 Controller – working as auditor and auditing every transaction in the bank.
 Senior customer service – officer (cash) – chief casher who control the vault
of the bank.

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 Customer service manager – in most branches working as operation

managers well as marketing manager.
 Manager – highest supervisory who control and responsible for the whole
banks inputs and outputs.

Abilities of bank

- Have high skilled man power.

- Have many branches and districts.
- Have high degree of trustworthy and acceptance.
- Have a greater asset compared to other bank in our country.
- Gives variety of service.
- Paying better salary compared with most of our firms.
- Give high priority to customer service delivery and interest.

Limitations

- High limitation of following procedures.

- High bureaucracy.
- Imposing greater work on employees for front office.
- Not connecting all branches with online system.
- Assigning works not on workers interest and qualification.
- Gives priority to experience for promotion.
- Have not consistent procedure for work changing without pilot study.
- Doesn’t investigate the interest and service what customer getting and
their desire.
- The banks have a limitation of a good leader.

17.Employ empowerment – means different things in different organization,

based on culture and work design. However, empowerment is based on the
concepts of job enlargement and job enrichment.

 Job enlargement – changing the scope of job include a greater portion

of the horizontal process. E.g. a bank teller not only handles deposits
and disbursements, but also distributes traveler cheeks and sells
certificates of deposit.

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 Job enrichment – increasing the depth of the job to include

responsibilities that have traditionally been carried out at a higher
level of the organization. E.g. the teller also has the authority to help
client of fill out a lean application, and to determine whether or not to
approve the lean.

Employee empowerment also means giving up some of the power traditionally

held by management, which means managers also must take on new roles,
knowledge and responsibilities.

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18. Time standard is determined in the work measurement by setting time

standard in structured manner permits the use of benchmarks against which to
measure a range of variables such as; a cost of the product and share of work
between team members. The time needed to perform each work element can be
determined by the use of historical data, work sampling or most usually time study.

a. Time study – the use of statistical techniques to arrive at a standard time for
performing on cycle of repetitive job. E.g. assume car manufacturer two
department preparations and fabrication, to produce car what time is taken in
fabrication among the worker select a sample and set a standard time for
accomplishing a given task.

b. Predetermined motion time - these provides generic times for standard micro
motion such as; reach, move, and release and which are common to many jobs. e.g.
before the introducing a given task determined what time is needed for the task to
move another process and to reach finished product.

c. Work sampling – a method for determining the proportion of time a worker or

machine spends on various activities and as such can be very useful in job redesign
and estimating levels of worker output.E.g. Assume bank teller who work in the
front office select a sample how much time it takes to cash deposit and calculating
the minutes to set standard.

19. An operation manager comes across two types of compensation, working for
any service or manufacturing based organization.
- in incentive systems the following must be considered
- bonus – cash or stock options
- Profit sharing – profits for distribution to employees
- Fain sharing – rewards for improvements
- Incentive plans based on production rates
-Knowledge based systems – reward for knowledge or skills.
20. Design capacity – is the maximum output rate or service capacity an operation,
process, or facility.

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Effective capacity – which refers to design capacity minus allowances such as

personal time, maintenance, and scrap.

E.g. use the following data to determine the efficiency;

- Design capacity = 50 trucks/day

- Effective capacity = 40 trucks/day
- Actual output = 36 units/day
actual output
Efficiency ¿ effective capacity x 100 %

36 unit /day
Effective capacity¿ 40 unit /day x 100 %

= 90%

actual output
Utilization ¿
design c apacity
x 100 %

36unit /day
Design capacity¿ 50unit /day x 100 %

= 72%

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