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OPM 530- GROUP ASSIGNMENT 2018
802
INTRODUCTION
TO
OPERATION MANAGEMENT
OPM 530
EXAMINATION : DECEMBER 2014
Presented by:
PYQ DECEMBER 2014
Introduction
Siti Norain Bt Kamarudin
2017922097
SITI NORAIN KAMARUDIN
2017922097
Nur Syazana Suhaila Binti Mohd Rizal
2017647296
Shahira Shaharudin
2016994717
Shahira Shaharudin
2016994717
ADIBAH BINTI ARIFF
2016160007
Name, Title
Nur Asyikin Binti Azemi
2016797045
Question 1
a) Briefly explain the responsibilities of all functions in business in organizing to produce goods and services
- Operations management (OM) is the business function responsible for managing the process of creation of goods and services
- It involves planning, organizing, coordinating, and controlling all the resources needed to produce a company’s goods and services
- Operations management is the central core function of every company
c) Explain the three (3) competitive advantages that can be achieved through operation
b) Discuss at least (3) challenges in operations management
The three (3) challenges in operation management are:
i. Global focus
ii. Sustainability
iii. Mass customization
Question (b)
The challenges
i. Global focus
- Market has become global, due to the reduction in communication and transportation costs.
- Resources such as raw materials, talents and labour become increasingly global
- Economic growth and industrial development contributed to the rapid growth of the global atmosphere .
- Operation manager constantly faced with the challenge of innovation in generating and producing ideas, equipment and goods
ii. Sustainability
- Customer prefer product that are environmentally safe .
- Operation manager ensure that the material and processes used in production are ecologically sustainable.
- The product must be recyclable, biodegradable and environmentally-friendly
iii. Mass customization
- It has to cater for various demands from different types of customers.
- Operation manager has to be creative and innovative in designing new product for a target market .
- The aim is to produce customized products according to demands which satisfy the customers
c) Explain the three (3) competitive advantages that can be achieved through operation
Question (c)
three (3) competitive advantages are :-
I. Differentiation strategy
II. Cost of Leadership strategy
III. Response strategy
competitive advantage
I. Differentiation strategy
- Aimed at producing unique products and services .
- Price-insensitive consumers are the consumers whose buying decision not influenced by price changes, but other factors. The more unique the products, the greater their potential to achieve higher return are.
- As long as no competitor can match a particular product, a company has the opportunity to continue making profits.
- Successful differentiation strategy enables the firm to charge a higher price for its products.
II. Cost of Leadership strategy
- Aims to offer customers products or services at lower prices compared to competitors.
- Most effective in four instances which is when the market is made up of buyers who are sensitive to price, when there are not much differences between products in the market, when product differentiation does not affect the choice of the customers and when the customers have significant bargaining power.
- Basic idea behind cost leadership is to increase market share and sales, as well as reduce competition by removing competitors from market.
III. Response strategy
- Providing customers with flexible, reliable and quick services.
- Flexible response refer to ability to adapt to change in a marketplace such as trends in design and fluctuation in demand.
- Reliability of scheduling refer to generating competitive advantages through providing end users with reliable services.
- Quickness refers to the speed in new product development or design ,fast production and speedy delivery
Question 2
QUESTION 2
- Must make sure that in the production process they have to reduce the use of production resources.
- To reduce energy consumption is by introducing production process that uses gas or solar energy to replace the use of oil for example vehicle that using hybrid technology.
- Logistic includes shipping, warehouse and inventor.
- While the product moves through the supply chain, operations manager has to find routes and delivery network as it help to reduce cost of production.
- For instance, using delivery systems such as truck and big lorry can save the cost of transportation as well as time.
a) Define sustainability from the operations management perspective
- Refers to a meeting the needs of the present generation without compromising the ability of future generations to meet their own need. It’s more to going green that include employees, customers, community and company reputation.
B)Briefly explained the concept of Reduce, Reuse and Recycle for sustainability.
- Reduce emphasizes on reducing wastage of resources and cost to suppliers, logistics systems and consumer.
- In designing a product, the designeer must design a product that saves energy and use less material.
- Manufacturee able to reduce costs of raw materials, while the user can save the usage cost as the product is an energy – saving product.
- Reuse is when the product is being used more than once, especially in a different way or after repossessing and reclaiming for the different purpose.
- Using recyclable or used materials will save the materials costs, reducing materials waste and environmental impact.
- Recycling is a way to manage waste materials once they have been generated if they can’t be reused and makes waste into new goods or products.
- Effective recycling required to separate waste according to different materials so that they can be recycled efficiently.
- This involve turning the old material into a new version of the same thing or into something completely different.
- Applied the 3’Rs concept in the production process which is Reuse, Reduce and Recycle.
- When designing a product it will determine the types of raw materials used, quality, material cost production process, packaging and logistics system.
- Designing a product that saves energy and use less material will able to reduce the cost of raw materials while user can save costs as the product is energy-saving products.
- Reuse method will help to save the cost of production for an organizational product.
C) Discuss the strategy used by an operation managers as product through their life cycle
make sure that in the production process they have to reduce the use of production resources. Production resources such energy, water usage and environmental contamination. In an effort to reduce energy consumption in the production process is by introducing production process that uses gas or solar energy to replace the use of oil for example vehicle that using hybrid technology.
Logistic is part of the life cycle of a product. Logistic includes shipping, warehouse and inventor.
While the product moves through the supply chain, operations manager has to find routes and delivery network as it help to reduce cost of production. For instance, using delivery systems such as truck and big lorry can save the cost of transportation as well as time.
a) Define quality from manufacturing based perspective
b) Describe two (2) ways profitability can be improved through quality
Question 3
c) Discuss with example the implications of Quality to a company
a) Quality is determined by how closely products meet the desired specifications and standards. Manufacturing engineering will establish the specifications of a product. The closer the product confirms with the specifications, the better the quality of the said product.
a) Quality is determined by how closely products meet the desired specifications and standards. Manufacturing engineering will establish the specifications of a product. The closer the product confirms with the specifications, the better the quality of the said product.
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
Important of Quality
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
i) Quality products and services will portray a good image of the company, whereas products of inferior quality and poor services will reflect badly on the company in the eyes of customers
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
ii) Quality products will enhances the reputation of the companies and enable them to compete in the global market. This is because only high-quality products can compete and survive in the global market.
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
C) i) Reliability
Refer to the ability of a company to provide its services dependably, accurately and consistently. This also performing its services right the first time. High-quality service operators always keep their promises to customers.
For example, KTM Komuter trains always depart and arrive on time.
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
ii) Responsiveness
Refer to the readiness or willingness of a company’s personnel to assist customer and provide prompt service. Thus, quality services means being responsive during customers’ time of need.
When customer calls, for example, the customer service staff will ensure that the phone call is answered immediately.
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
iii) Competence
Competence means that a company’s staff possess the skills and knowledge required to perform their job.
For example, bank credit officers should be able to attend to and process loan applications well.
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
iv) Access
Access refers to approachability and ease of contact.
For example, the business premises is conveniently located for customers and vendors.
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
v) Security
Security refers to providing services that do not expose customers to danger or risk, are financially secure and provide confidentiality. Customers should not feel worries when dealing with the company.
b) Quality can be considered a competitor weapon for companies. Improved quality enables companies to increase profits through an increase a sales and a reduction of cost.
Highly – quality products and services also have better chance of gaining market share and can be priced higher compared to those of low quality.
Question 4 :
Location
Decisions
Question 4
a) Identify and explain five (5) major factors that affect location decisions :
Five Major Factors that affect location decision is :
i) Proximity to market or customer
- A busines that is closer to its customer is most preferred, especially for a service-oriented organization. Customer want to buy products or services which are easily accessible. The proximity is to ensure that the customer's need are incorporated into products being developed and built.
ii) Proximity to supplier
- Being located close to supplier indicates that the firm is near raw or source of materials for ease during production. It also helps reducing organization production cost : E.g : i.e cost of transportation
iii) Labour supply
-Organization that require a lot of labour normally choose a location that has high availability of labour, particularly skilled labour.
-The purpose is to reduce cost of hiring and training such as transportation and interview cost due to high availability of labour.
iv) Availability of facilities
-Facilities such as telecommunication important to ensure organizations stay connected with supplier, customer and government
-E.g : Access to internet connection, telephones and facsimile (fax)
v) Goverment incentives
-Incentives such as subsidies or tax inducements, are provided by the government in some areas. This benefit helps organization's production
b) Pak Irwan is the owner of a local coffee shop based in Meru, Klang.
Over the years the reputation of the coffee shop has increased and
the owner plans to open his first branch in Banting. Pak Irwan has
rated six factors as a basis for evaluation and assigned appropriate
weight on each factor for all possible locations:
Question 1
i) Identify the best location based on the total weighted score
- Based on the total weighted score, the best location is Kg. Sawah which record the highest weighted score, 73.5
Answer 1
- Calculation : Factor x Weight = Total Weight Scores
Kachong : (0.2x80 = 16) + (0.15x70= 10.5)+ (0.15x60= 9) + (0.1x80 = 8) + (0.1x60= 6) + (0.3x60=18) = 67.5
Kg Sawah : (0.2x80=16) + (0.15x100=15)+ (0.15x70=10.5) + (0.1x60=6) + (0.1x80=8) + (0.3x90=18) = 73.5
Taman Gembira : (0.2x100=20) + (0.15x80=12)+ (0.15x30=4.5) + (0.1x10=1) + (0.1x90=9) + (0.3x50=15) = 61.5
Question 2
ii) Determine whether the result will change if the score for Surrounding Area for Taman Gembira is reset to 60
Answer 2
- No, taman gembira still record the lowest weighted score, 66.55
- Calculation :
(0.2x100=20) + (0.15x80=12)+ (0.15x30=4.5) + (0.1x60=6) + (0.1x90=9) + (0.3x50=15) = 66.5
Question 3
iii) Calculate the minimum rating that Kanchong need to have for Land and
Constructions Cost in order to increase its ranking
Answer
Step 1 : Rank the location. The lowest total cost is to be given the highest ranking
Step 2 : Convert Rating into Numerical Values for kanchong
2x2 = 4
Question 5
a) Explain four (4) sourcing strategies
Question 5
a) 1
1) Having many suppliers
- Operations manager has more options to choose from
- Purchases are influenced by who offers the lowest prices
- This strategy plays one supplier against another and places the burden of meeting the buyers demands on the supplier
- Suppliers aggressively compete with one another
- This approach holds the supplier responsible for maintaining the necessary technology, expertise and forecasting abilities as well as cost, quality and delivery efficiencies
2) Having few suppliers
- A buyer is better off forming a long term relationship with a few dedicated suppliers
- Using few suppliers can create value by allowing suppliers to have economies of scale and a learning curve that yields both lower transaction costs and lower production costs
- This strategy also encourages those suppliers to provide design innovations and technological expertise such as the just-in-time (JIT) programme, and be willing to help the company by offering their technology efficiencies to the buyers
a) 2
3) Establishing Kiretsu networks
- Kiretsu is a Japanese term that describes the supplier as part of the company coalition.
- This strategy is used among a few suppliers in a vertical integration.
- Members of kiretsu are assured long-term relationships and are therefore expected to collaborate as partners, provide technical expertise and stable quality production to the manufacturer
a) 3
a) 4
4) Forming virtual companies
- Rely on a variety of good, stable supplier relationships to provide services on demand.
- Suppliers may provide a variety of services, manufacturing components, conducing tests or distributing products.
- The relationships may be short or long term and may include true partners, collaborators or simply able suppliers.
- Traditional virtual organizations= license the manufacture so there is low overhead, remains flexible and can respond rapidly to the market
- Contemporary virtual=uses modules to assemble its own brand, specify their components hire a contract manufacturer
Question 5
b) Briefly explain any five (5) supply risks and mitigation tactics
5 (b)
1) Delivery Failures
Risk Reduction Tactics:
- Use multiple suppliers, effective contracts with penalties, subcontractors on retainer, pre-planning
- ex. Mcdonalds planned its supply chain 6 years before its opening in Russia every supply chain is closely monitored to ensure strong links
b) 1
2) Quality Issues
Risk Reduction tactics:
- Careful supplier selection, training certification, and monitoring
- EX. Darden Restaurants has placed extensive controls including third party audits on supplier processes and logistics to ensure constant monitoring and reduction of risk
b) 2
3) Shipping and Logistics Problems
b) 3
Risk Reduction Tactics:
- Multiple/redundant transprotation modes and warehouses, secure packaging, effective contracts with penalties
- Ex. Walmart, with its own tricking fleet and numerous distribution centers located throughout the US finds alternative origins and delivery routes bypassing problem areas
4) Information Loss or Misuse
b) 4
Risk Reduction Tactics:
- Redundant databases, secure IT systems, training of supply chain partners on the proper interpretations and uses of information
- EX. Boeing utilizes a state of the art international communication system that transmits engineering, scheduling, and logistics data to Boeing facilities and suppliers worldwide
5) Economic Problems
Risk Reduction Tactics:
- Hedging to combat echange rate risk, purchasing contracts that address price fluctuations
- Ex. Honda and Nissan are moving more manufacturing out of Japan as the exchange rate for the yen makes Japanese made autos more expensive