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Mast er of Busi ness Admi ni st r at i on Gener al

Cohor t : MBAG/09/PT-Aug
Ex ami nat i ons f or 2009/2010 Semest er I I
/2010 Semest er I

MODULE: PRODUCTION AND OPERATIONS
MANAGEMENT

MODULE CODE: MBA 1410

Duration: 3 Hours

Reading time: 15 Minutes

Instructions to Candidates:

1. This paper consists of sections A and B.
2. Section A is compulsory.
3. Answer any two questi ons from section B.
4. Always start a new question on a fresh page.
5. Graph paper will be provided.
6. Total marks: 100.


This question paper contains 5 questions and 11 pages.
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SECTI ON A: COMPULSORY

QUESTION 1: (50 MARKS)

Read the case carefully and then answer the questions which follow.
Where there is a will there is a way!
Rajiv Sharma returned to Mauritius in 1985, after having graduated in paint
technology at the prestigious Bombay University Department of Chemical
Technology and after having worked for five years as a paint technologist at Asian
paints Ltd, the Asian giant. His search for an appropriate job being unsuccessful, he
decided to start a small plant with the help of his father and younger brother J atin.

The location of any plant being crucial, the location was carefully chosen. The choice
fell on a building situated at the industrial zone at Coromandel, only fifteen minutes
from the harbour. Multicolor Ltd was incorporated in J une 1985. The equipment was
imported from India and assembled by Rajiv himself. Raw materials were also
imported. Production started in December 1986.
The case discusses the processes involved in paint manufacturing and the
challenges which the organization faced during its short existence.

Paint manufacturing does not involve sophisticated technology. The ingredients are
imported and stored. The raw materials are all accompanied by a certificate of
analysis. From the very beginning Rajiv chose reputed suppliers. The formulations
were all Rajivs own developments. He spent hours in his laboratory and wont
finalize any formulation unless and until he was absolutely sure of the performance
of the product. It is no wonder then that he kept the post of Technical Director up to
this day. The production personnel and laboratory staff were carefully chosen and
trained in order to have the required competence.


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Planning of production is done in advance, taking into consideration sales forecast
and stock level of the various products. The production for the following week is
finalized during the Friday production meeting, always chaired by Rajiv. The
production supervisor is issued a job card for each lot of product to be produced. The
job card indicates the name of product, the lot number, the ingredients to be used,
their amounts, the order of mixing, production instructions and tests to be carried.
The main production equipment are mixers (mounted on wheels) and electrically
operated. On the previous day the production supervisor sends the materials request
to the store. They are issued from the store and placed on a pallet and are well
identified. The production operator adds the materials one by one into the mixer and
ticks each item as same is added. Any discrepancies are readily identified and the
supervisor informed and prompt action taken. Mixing takes place as needed.
Specimens are taken after the mixing is completed and a label Awaiting testing is
displayed on it. If the product meets the requirements the above label is replaced by
QC release. The mixer is then moved by a forklift to the packing area. A transfer to
packing note accompanies any product released to packing. The materials are
packed following a packing plan already available with the packing supervisor. The
product is packed in containers of 20 L, 5L, 2L and 1 L. The packed products are
placed on pallets and transferred to the finished product store. Here also a transfer
note accompanies the transfer. Transfer of ownership is acknowledged. Also all data
are entered on the computer system in real time. The other core activity, Sales and
marketing, is under the responsibility of J atin. After one lot is over the same
equipment is used to prepare another lot of the same product or after cleaning,
another product.

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One of the biggest buyers of paints is the Government. Multicolor Ltd was unable to
compete on equal footing with the other players in the market, as it did not meet one
requirement its products were not having the product certification mark issued by
the Mauritius Standards Bureau (MSB). Rajiv set about to set things right. Quality
plans were written and implemented and applications made to MSB in order to
obtain the licences. The quality of the products were such that they passed all the
tests at the first attempt and the organization obtained the product certification
licences for the three main products : Emulsion paint, Road marking paint and High
gloss enamel paint in 2001. Ever since it could obtain several tenders from
government.

In 2002 Rajiv thought the time was ripe to embark on a Quality Improvement project.
His aim was to obtain the numerous benefits which the standard ISO 9001:2000
offers to any organization implementing it. He sent his Quality Assurance manager to
follow a five-day course at MSB. Together they established, documented and
implemented a Quality Management System. In May 2003 the organization was
certified to ISO 9001: 2000.

Mauritius being a small market, J atin was sent to prospect the neighbouring islands
and African countries. The trip was highly successful. Firm orders were obtained
from Seychelles and Mozambique. The first container left Multicolor Ltd for the
Seychelles in J uly 2004. The organisations exports have ever since kept on
increasing. Regarding the local market, Rajiv realized one local reality, i.e ethnic
marketing. Most of the big construction companies were white-owned companies
and it was not easy for an Indo Mauritian to deal with them. He recruited Miss Valerie
Hugues as Sales manager and was surprised of the inroad made ever since in this
highly competitive and difficult segment.

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Laws regarding the protection of the environment were tightened in the last decade.
Multicolor Ltd had to review its formulations containing lead and other toxic
chemicals. This was not an easy task. Rajiv spent sleepless nights but managed to
do so. He wanted to go further and implemented ISO 14 001 Environment
management system in his organization. He hoped to be certified to this standard by
December 2010.

The world recession of 2008 dealt a serious blow to the organization. The
construction industry stagnated both in Mauritius and abroad. The organization
started making losses. The whole operations system had to be reviewed. Rajiv
decided to downsize and concentrate only on core activities and to outsource
support activities. Things did improve and the organization returned back to
profitability for the first quarter of 2010.
(Written by B. Abacousnac for the MBA exams 2010)

Answer al l the questions below, based on the case.

(a) With reference to examples from the case, differentiate between transformed
resources and transforming resources. (4 marks)

(b) Discuss the benefits which an organization can obtain with the Implementation of
ISO 9001: 2000. (8 marks)

(c) The success or failure of a firm is often attributed to its location. Discuss the
factors to be considered in the location of a plant like Multicolor Ltd.
(7 marks)

(d) (i) According to you which production system the plant, discussed in the case,
belongs to ? J ustify your answer. (5 marks)

(ii)Discuss the main characteristics of the production system identified in (i).
(5 marks)
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(e) An organization is impacted continuously by external factors and handling these
offers the main challenges to operations managers.

(i) Discuss the external factors which had had an impact on Multicolor Ltd.
(6 marks)

(ii) What were its responses to these factors? (6 marks)

(iii)Did Multicolor Ltd succeed in meeting these challenges? J ustify your answer.
(2 marks)

(f) (i) Why should an organization control outsourced processes ? (3 marks)

(ii)Which processes an organization could outsource and which ones it should not
outsource? J ustify your answer (4 marks)

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SECTI ON B: ANSWER ANY TWO QUESTI ONS

QUESTION 2: (25 MARKS)

(a) You have been newly appointed as the Quality Assurance manager of Nice
garments Ltd. Your first assignment is to put in place a Quality planning and
control system. Discuss the various stages involved in the development and
implementation of a Quality planning and control system. (8 marks)

(b) Ideally one would want to control everything and everywhere. However it is
recommended to control only the critical points in the production chain. Identify
and discuss the critical points in a production chain where checking should take
place. (6 marks)

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(c) In an aluminium sheet manufacturing plant, inspection of the finished product is
carried out at regular intervals. Samples are taken and number of defects per
square metre of sheet is given in the table below.

Number of defects Sample No. Number of defects
1 4 11 2
2 3 12 4
3 7 13 5
4 6 14 7
5 2 15 3
6 1 16 4
7 8 17 2
8 7 18 1
9 9 19 7
10 4 20 8

(i) Calculate the value of the central line, upper control limit and lower control limit
for a C-control chart. (Use any appropriate formula) (6 marks)

(ii) Draw the control chart on graph paper (3 marks)

(iii)Is the system under control? Explain your answer (2 marks)

QUESTION 3: (25 MARKS)

(a) With reference to examples you are familiar with, explain the terms dependent
and independent demand. (6 marks)

(b) Discuss the factors determining the sequencing of jobs. (6 marks)

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(c) A workshop consists of two work centres, welding and polishing. The job has to
be processed by each work centre: welding first and then polishing. There are
eight jobs to be processed by each work centre.
The processing times for each job through each work centre are given below.

(i) Using J ohnsons rule, sequence the jobs, explaining each step. (7 marks)

(ii) Draw a bar chart to depict the sequence of jobs. (6 marks)

Time for each job to be processed (minutes)
J OB WELDING POLISHING
A 45 66
B 37 71
C 53 59
D 65 61
E 48 38
F 39 55
G 72 44
H 83 81

QUESTION 4: (25 MARKS)

(a) It is often believed that many of the ills of modern organizations can be attributed
to the large amount of stocks kept. Eliminate the stocks will also eliminate the ills.
Yet many organizations still keep stocks. Explain why organizations keep stocks
of both raw materials and finished goods. (6 marks)

(b) The adoption of J ust-in-time stock management has been unsuccessful in many
organizations due to the absence of certain essential conditions. Discuss the
essential conditions to be present for the successful implementation of J ust-in-
time stock management. (8 marks)

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(c) The demand per month for a component is 400 units. The storage space cost per
unit per year is Rs 25. The cost for ordering the component is Rs 48 per order.
Each unit of the spare part costs Rs 250 and interest rate is at 12%.

(i) Calculate the economic order quantity. (3 marks)

(ii) Find the total cost. (4 marks)

(iii) A supplier made an offer of a discounted price of Rs 230 per unit if orders in
lot sizes of 600 are passed. Should this offer be accepted or not? (4 marks)

QUESTION 5: (25 MARKS)

(a) It is important to understand the environment in which projects are undertaken.
Discuss why this is so? (3 marks)

(b) Discuss the different stages involved in project management. (8 marks)

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(c) An organization is going to carry out the redesign of a product and its packaging.
The following activities have been identified with their associated duration and
precedence relationships.
Activity
code
Activity Duration ( days ) Activity in first
column must be
completed before
the one below can
start
A Redesign product 7 C
B Redesign packaging 3 D
C Order and receive components for
product
4 E
D Order and receive materials for
packaging
4 F
E Cut materials for product 1 G
F Assemble product 2 G
G Make up packaging 2 H
H Package redesigned product 7 J
I Test market redesigned product 4 K
J Revise redesigned product 2 K
K Revise redesigned packaging 2

(i) Draw a network for the above project. (4 marks)

(ii) Calculate the earliest start time, earliest finish time, latest start time (8 marks)
and latest finish time and float for each activity.

(iii)Identify the critical path and calculate the project completion time. (2 marks)


***END OF QUESTION PAPER***