Objective of opm

Om is one of three major functions of any organization, we want to study

how people organize themselves for productive enterprise
(1) to produce product and service that meet the standard at minimum cost
(2) to understand what operations managers do
(3) to enhance productivity through effiency of production process.
(4) to be an effective producer
(5) to utilized labor, material, equipment efficienly.
(6) to adapt for future survival
Generating new product (sources)
1. understanding the customers ( contoh ketupat segera)
2. economic change ( buat product ikut kemampuan rakyat)
3. technological change ( camera dalam henset, kenderaan ada wifi)
4. political and legal change ( undg2 baru, eg GST, ada software untuk kira
gst)
5. sociological and demographic change ( produk kpop (socio) kerete kecil
( demo)
Issues for product design
1. robust design
- product that design so small variations in production or assembly do not
adversely affect the product.
- result in lower cost and high quality
2. modular design
-product designed in easily segmented components
-adds flexibility to both production and marketing
- improves ability to satisfy customer requirements.

3. computer aid design

-using computer to design product and prepare engineering documentation
- shorter development cycle, improves accuracy, lower cost.
- information and designs can be deployed worldwide.

4. Computer aided manufacturing

- utilizing specialized computers and program to control manufacturing
equipment.
-often driven by CAD system.
5. value analysis
- focused on design improvement during production
- improvement of product more economically and less environmental impact.
Sustainability ( corporate social responsibility)
How products and services affect people and the environment
Stakeholders have strong opinions about environmental, social, and ethical
issues
Doing what right can be beneficial to all stakeholders
Corporate social responsibility (CSR)
Types of layout
(1) office layout
- position workers, their equipment , and spaces to provide for movement of
information
(2) retail layout
- allocates shelf space and responses to customer behavior
(3) warehouse layout
- addresses trade-offs between space and material handling

(4) Fixed-position layout

-addresses the layout requirements of large, bulky projects such as ships and
buildings
(5) process-oriented layout
- deals with low volume, high variety production.

Explain the three competitive advantages that can be achieved

through operations. (10 marks)
i

Competing on differentiation
Differentiation is the distinguishing the offering of an
organization in a way that the customer perceives as adding
value. It is concerned with providing uniqueness. A firms
opportunities for creating uniqueness are not located within a
particular function or activity but can arise in virtually everything
the firm does. Indeed, differentiate should be thought of as going
beyond both physical characteristics and service attributes to
encompass everything about the products or services that
influence the potential value to the customer.

ii

Competing on cost
- Low cost leadership is achieving maximum value as perceived
by the customer. One drive of a low cost strategy is a facility that
is effectively utilized. Identify the optimum size (and investment)
allows firm to spread overhead cost, providing a cost advantage.
For instance, Walmart continues to pursue its low cost strategy
with superstores, open 24 hours a day. For 20 years, it has
successfully grabbed market share. Walmart has driven down
store overhead costs, shrinkage, and distribution cost.
- Low cost leadership entails achieving maximum value as
defined by your customer. It requires examining each of the 10
OM decisions in a relentless effort to drive down cost while
meeting customer expectation of value. A low cost strategy does
not imply low value or low quality.

iii

Response
- To define response as including the entire range of values
related to timely product development and delivery, as well as
reliable scheduling and flexible performance. Response is often
thought of as flexible response, but it also refers to reliable and
quick response.

a) Discuss at least three challenges in operation managements.

(7 marks)
i. Global focus
- The rapid decline in communication and transportation cost has
made market global. Similarly, resources in the form of capital,
materials, talent, labor are also new global. As a result, countries
throughout the world are contributing to globalization as they vie
for economic growth. Operations managers are rapidly seeking
creative design, efficient production, and high quality goods via
international collaborations.
ii.
Rapid product development
- Technology combined with rapid international communication of
news, entertainment, and lifestyle is dramatically chopping away
at the life span of products. OM is answering with new
managements structures, enhanced collaboration, digital
technology, and creative alliances that are more responsive and
effective.
Iii

Sustainability.
The operations managers continuing battle to improve productivity s concerned
with designing products and processes that are ecologically sustainable. This
means designing green product and packaging that minimize resource use, can be
recycled or reused, and are generally environmentally friendly

i) Rapid product development

Rapid international communication of news, entertainment, and lifestyles is
dramatically chopping away at the life span of products. Operations managers are
responding with management structures, technology. And alliances (partnership)
that are more responsive and effective.
ii) Mass customization
Once managers recognize the world as the marketplace, the cultural and
individual differences become quite obvious. In a world where consumers are

increasingly aware of innovation and options, substantial pressure is placed on firms

to respond. An operations managers are responding with creative product design
and flexible production processes that cater to the individual whims of consumers.
The goal is to produce customized products, whenever and wherever needed.
iii) Supply-chain partnering
Shorter product life cycles, demanding customers, and fast changes in
technology, material, and processes require supply-chain partners to be more in
tune with the needs of end users. And because suppliers can contribute unique
expertise, operations managers are outsourcing and building long-term partnerships
with critical players in the supply chain

a) Define sustainability from the operations management

perspective. (2 marks)
- Sustainability means the meeting the needs of the present without
comprising the ability of future generations to meet their needs.
b) Briefly explain the concept of Reduce, Reuse, and Recycle for
sustainability. (6 marks)
i.
Reduces = To use fewer resources in the first place. It takes
resources to manufacture, transport, and dispose of products,
so reduction minimizes the use of new resources.
ii.
Reuse = Use materials more than once in their original form
instead of throwing them away after each use. Reuse keeps
new resources from being used for a while longer and old
resources from entering the waste stream.
iii.
Recycle = Converting waste materials into new products,
changing them from their original form by physical and
chemical processes. although recycling use energy, it helps to
prevent new resources from being used and old materials
from entering the waste stream.
c) Discuss the strategy used by an operations manager as
products move through their life cycle.
(12 marks)

i) Introductory stage
During this stage, the product is new and may not work well. In other words there
are still flaws in the product or some of the product features desired by the
customers were still being determined. Production people may still need to find the
best production techniques that would minimize the production cost.
ii) Growth stage
During this stage products had gained market acceptance and sales may grow
rapidly. The production capacity may have to be increased to accommodate for the
increased sales.
iii) Maturity phase
Sales continue to grow but at a declining rate because of many competing
products are already available in the marketplace. Product innovation at this stage
may be necessary. Companies may have to add new features or redesign the
existing products to stay competitive. The price of the product must be also
reasonably priced to ensure profitability and market share.
iv) Decline stage
At this stage to survive companies must create new products to replace the dying
products. Decline phase does not happen to all products, some products such as
scissors, nail clippers, combs has been around for a long time and may stay forever.
Unless the quality of existing products is improved, the demand for the products will
die out.

a) Identify and explain five major factors that affect location

decision. (10 marks)
Political Stability - Companies that locate facilities in international
locations might benefit from a cost perspective; however, an
unstable local government that puts smooth operations at risk is
a deterrent to choosing to locate there. Some international
locales, however, benefit from a free trade zone with the U.S.,
saving companies duties on the goods they import back to the
U.S.
Labor - A facility requires labor to run. Management staff might
relocate from other areas, but on the ground workers are sourced
locally. A facility close enough to a municipality with a healthy
supply of labor to operate it is a must.
Cost - The cost of relocating facilities to the site is a major factor
in determining the acceptability of a location. Cost can involve
tailoring existing buildings to fit your operations or building an
operation from scratch. Land may be cheap, but to make it
workable might be expensive.
Proximity to competitors (clustering) - often driven by resources
such as natural, information, capital, talent. Found in both
manufacturing and service industries.
Layout - The physical layout of the facility location will determine
whether future expansion can include adding more facility
buildings and enlarging manufacturing space within the site.
Whether buildings and manufacturing lines must be created by
scratch or they are already existing on-site with minimal
renovations is also a consideration
a Discuss any five (5) differences between goods and services.
(10m)

Services
Produced
and
consumed
simultaneously.
For example, beauty salon
produces a haircut that is
consumed as it is produced.

Goods
Product can usually be kept in
inventory.
For example, beauty cares
products that can be kept and
sold in the future.

High customer interactions:

It is often what the customer is
paying for.
(for
example,
consulting,
education).
Often knowledge based:
Legal, education, and medical
services are hard to automate.
Services dispersed:
Service may occur at retail
store, local office, house call, or
via internet.
Quality
may
be
hard
to
evaluate:
Consulting,
education
and
medical services.

Limited customer interactions:

It is limited in customer
involvement in production.

Standard tangible product

tends to make automation
feasible.
Product typically produced at
a fixed facility.

Many aspects of quality for

tangible products are easy to
evaluate (strength of a bolt).

a Discuss any four (4) important factors to be considered when

considering a location for a bakery. (8m)

Labor productivity
This factor is important when bakery is deciding which location labor has a lower
wages demand. However, lower wages is not the only consideration. Labors
productivity is also need to be included into the consideration. For example, Shah Alam
has been chosen as the main bakery distribution centre in Malaysia. This may be
explained by using the labor productivity. As example, say there are choices which are
Kuala Lumpur and Shah Alam. Bakery needs to pay RM25 to each worker of 25 Canon
productions in Kuala Lumpur, while worker in Shah Alam requires RM25 for 30 Canon
productions.

Cost
It includes tangible and intangible. Tangible are easily measured costs such as utilities,
labor, materials and taxes. The bakery needs to consider these costs in order to select
the distribution location. Some countries required higher tangible cost while some do
not. When the location of the bakery located at the industrial areas in Malaysia, it
allows the bakery to get the raw material easily and enjoys a much lower taxes rate.
While for intangible it is less easy to quantify and include education, public
transportation, community and quality-of-life. Educational quality of the area needs to
be qualified to reduce the lost and educational costs. Higher educational quality means
higher ability to produce higher quality products.

Proximity to markets

Proximity to markets refers to the range and gap of the station with the market. The
closer gap can let the market keep in touch. A clever and responsive marketing
campaign can get your bakery business up and running in no time. This can be done by
advertising before opened the doors with a letter-box drop or pamphlets delivered in
local neighborhoods. When initially open for business, use special offer coupons or
provide samples of your breads and pastries to encourage higher sales and plenty of
returning customers.

Proximity to suppliers
The bakery needs to have proximity to suppliers to ensure well operation. This includes
well transportation system to ensure that the raw material to be restocked in order to
make sure that the production will go smooth and to ensure the products can be
distributed to every branch.

a Layout is one of the key decisions that determine the long-run

efficiency of operations. In order to achieve efficiency, operations
manager should consider many factors. Elaborate any four (4)
requirements of a good layout. (8m)
i

Material handling equipment

Managers must decide about equipment to be used, including conveyors, cranes,
automated storage and retrieval systems, and automatic carts to deliver and store
material.

ii

Capacity and space requirements

Only when personnel, machines, and equipment requirements are known can managers
proceed with layout and provide space for each component.

iii

Environment and aesthetics

Layout concerns often require decisions about windows, planters, and height of
partitions to facilitate air flow, reduce noise, and provide privacy.

iv

Cost of moving between various work areas

There may be unique considerations related to moving materials or to the importance of
having certain areas next to each other. . For example, moving molten steel is
more difficult than moving cold steel.

a Explain five (5) aggregate planning strategies in manufacturing

company. (10m)
i

Use inventories to absorb changes in demand

Increase inventory in low demand periods to meet high demand in

the future. Shortages may mean lost sales due to long lead times and
poor customer service.
ii

Accommodate changes by varying workforce size

Training and separation costs for hiring and laying off workers. New
workers may have lower productivity and laying off workers may lower
morale and productivity.

iii

Use part-timers, overtime, or idle time to absorb changes

Allows constant workforce. May be difficult to meet large increases in
demand. Overtime can be costly and may drive down productivity, but
absorbing idle time may be difficult.

iv

Use subcontractors and maintain a stable workforce

Temporary measure during periods of peak demand and it may be
costly. Assuring quality and timely delivery may be difficult.

Change prices or other factors to influence demand

Use advertising or promotion to increase demand in low periods.
Attempt to shift demand to slow periods.

a ) Describe four (4) types of inventory. (8m)

Types
Raw material

Explanation
Purchased but not processed.
It can be used to decouple suppliers from
the production process.

Work-in-process

Undergone some change but not completed.

A function of cycle time for a product

Maintenance/rep
air/
operating (MRO)

Necessary to keep machinery and processes

productive.
Exist because the need and timing for
maintenance and repair of some equipment
are unknown.

Finished goods

Completed product awaiting shipment.

May be inventoried because of future
customer demands are unknown.

a Differentiate five (5) characteristics of good and services

Goods
Tangible: the seat itself
Low customer interaction
Consistent product definition
Similar product produced
Product can kept in inventory

Services
Intangible: ride in airline seat
High customer interaction
Inconsistent product definition
Unique production
Produced
and
consumed
simultaneously

a Briefly explain five (5) tools that help a manager to analyze

and design process
i Flowchart
- It is a schematic or drawing of the movement of material,
product or people
- Such charts can help understanding, analysis, and
communication of process
ii

iii

Time function mapping

- Nodes indicate the activities and the arrows indicate the flow
direction, with time on the horizontal axis.
- Allows users to identify and eliminate waste such as extra
steps, duplication, and delay
Value-stream mapping
- The idea is to start with customer and understand the
production process, and extends the analysis back to
suppliers
- Value-stream mapping takes into account not only the
process, but also management decisions and information
systems that support the process.

iv

Process chart
- Use symbols, time, and distance to provide an objective and
structured way to analyze and record the activities that makes
up process.

Service blueprinting
- It is a process analysis technique that focuses on the
customer and providers interaction with the customer.

a Explain four (4) types of inventory

i Raw material inventory

Materials that are usually purchased but have yet to enter

manufacturing process.
Work- in- process inventory
Products or components that are no longer raw materials but have
yet to become finished products.
Maintenance/ repair/ operating inventory
Maintenance, repair, and operating materials necessary to keep
machinery and process productive.
Finished- goods inventory
An end item ready to be sold, but still asset on companys books.

ii
iii
iv
-

a) Define Total Quality Management (TQM).

Total Quality Management (TQM) is the management of an entire organization so that it
excels in all aspect of products and services that are important to customer.
b) Briefly describe four (4) costs of quality.
i.
Prevention costs
Costs that are associated with reducing the potential for defective parts or
services. Examples: training, quality improvement programs.
ii.

Appraisal costs
Costs that are related to evaluating products, parts, and services. Examples:
testing, labs, nspectors.

iii.

Internal failure costs

Costs that are result from production of defective parts or services before delivery
to customers. Examples: rework, scrap, downtime.

iv.

External failure costs

Costs that are occur after delivery of defective parts or services. Examples:
rework, returned goods, liabilities, lost goodwill.

c) Discuss four (4) tools of TQM with an aid of a diagram each.

i.
Check sheet
Any kind of a form that is designed for recording data. In many cases, the
recording is done so the patterns are easily seen while the data are being taken.

ii.

Scatter diagram
Shows the relationship between two measurements. Example is the positive
relationship between length of a service call and the number of trips a repair
person makes back to the truck for parts.

iii.

Cause-and-Effect diagram
A tool that identifies process elements (causes) that might effect an outcome.

iv.

Histogram
Shows the range of values of a measurement and frequency with which each
occurs. They show the most frequently occuring readings as well as the variations
in measurements.