Southville International School and Colleges

Las Pinas City Metro Manila

MBA POM

FINAL EXAMINATION
December 14, 2019
Rules:
1. Read carefully the problems or questions and answers them carefully.
2. Only use calculator in computing. No smart phone or computer and internet.
3. Finish the examination in 3 hours.
4. Good luck.

Problem 1

Joanna French is currently working a total of 12 hours per day to produce 240 dolls. She
thinks that by changing the paint used for the facial features and fingernails that she can
increase her rate to 360 dolls per day. Total material cost for each doll is approximately
$3.50; she has to invest $20 in the necessary supplies (expendables) per day; energy costs
are assumed to be only $4.00 per day; and she thinks she should be making $10 per hour
for her time. Viewing this from a total (multifactor) productivity perspective, what is her
productivity at present and with the new paint?
Problem 2
Mance Fraily, the Production Manager at Ralts Mills Corporation, can currently expect
his operation to produce 1000 square yards of fabric for each ton of raw cotton. Each ton
of raw cotton requires 5 labor hours to process. He believes that he can buy better quality
raw cotton, which will enable him to produce 1,200 square yards per ton of raw cotton
with the same labor hours.
What will be the impact on productivity (measured in square meter per labor-hour) if he
purchases the higher quality raw cotton?
Problem 3

General Motors Corporation

For years, General Motors dabbled with the idea of becoming a truly global business.
While the firm exported its cars to several other countries and had a few plants outside
the U.S., it remained predominantly a North American enterprise. Just a few years ago,
for example, 80% of the firm’s vehicles were made in North America. Cars made
elsewhere were often retreads of older GM models no longer in demand in its domestic
market. GM’s older South American plants, for example, were still churning out Chevy
Chevettes well into the 1990s.

All has changed dramatically in recent years, since GM made a bold and public
commitment to becoming a global automaker. New products are being designed and
manufactured in other countries, and GM is striving aggressively to reach a goal of
having 50% of its capacity outside of North America. At the center of this effort is an
innovative approach to designing and manufacturing its automobiles in the four corners
of the world.

General Motors is essentially emulating its Japanese rival, Toyota. Through a series of
partnerships and alliances, GM has gained important insights into the payoffs that Toyota
has achieved through its strategies of plant standardization and lean manufacturing. At
Toyota, a change in a car being made in Japan can easily be replicated throughout other
Toyota plants around the world, and Toyota is the acknowledged master and pioneer in
rapid design, exceptional quality, supply-chain management, and productivity.
In contrast, U.S. automakers have traditionally designed each automobile factory as a
unique and autonomous facility. While this sometimes makes a given plant especially
productive—because it was designed for one specific purpose—it also constrains
flexibility and makes it more difficult to transfer new technologies and methods between
factories.

GM is now using Toyota’s strategy in its newest factories, located in Argentina, Poland,
and China. (Completion of a fourth plant in Thailand has been postponed because of the
Asian currency crisis.) The plants look so much alike that a visiting GM executive might
forget which country she or he is in. This strategy allows GM to launch global products,
such as a new “world car,” more easily. Equally as important, if one factory develops a
glitch or problem, it might easily be solved by simply calling one of the others. Similarly,
if a manager at one factory discovers a new way of achieving a productivity gain, this
information can be easily passed on and implemented in the other factories.

GM’s new factories have been designed with flexibility and efficiency in mind. Each
factory can be easily expanded should demand warrant higher production. Each is

constructed in a large U shape so that suppliers can deliver component parts and
accessories directly to the assembly lines, cutting down on warehouse costs and
improving productivity.

But while the plants are as similar to one another as possible, GM also found it necessary
to make adjustments in each to meet unique conditions in each country. In China, for
example, managing the plant’s just-in-time inventory system will present unique
challenges, for suppliers will be delivering many parts on carts and bicycles due to that
country’s poor road system. Despite such minor accommodations to local conditions, GM
nonetheless believes that its standardized plants will cut its production costs substantially
and allow it to succeed in the world’s emerging markets.

Questions
1. What are the advantages and disadvantages of General Motors’ strategy for
operations?

2. In which businesses is this strategy appropriate, and in which businesses might it

be less appropriate?

3. What operations management decisions are illustrated in this case?

Problem 4

Republic Electrical Company is a local company engaged in the manufacturing of

commercial switches. A commercial switch from the United States design is rated at 600
volts and 10 amperes at a cost of $128. This switch was designed to protect $8,000 worth
of equipment. Breakdown of the cost into functional areas revealed the following:

Electrical $ 18
 Mechanical 12
Case and Cover 50
Labor and Overhead 48

TOTAL $128

As a product manager of REC and using the principles and concepts of new products and
services, discuss what you will do in order to reduce the cost of manufacture.
Problem 5

Matthew Yachts, Inc.

Matthew Yachts, located in Montauk, Long Island, manufactured sailing yachts of all
descriptions. The company had begun by building custom-designed yachts for a largely
New York-based clientele. Custom-designed yachts still accounted for three-fifths of
Matthew’s unit sales and four-fifths of its dollar sales and earnings. Over the years, as
Matthew Yachts’ reputation for quality design and workmanship spread, sales broadened
to cover the entire eastern seaboard.

In an effort to capitalize on this increased recognition and to secure a piece of the fastest
growing market in sailing, Matthew Yachts began manufacturing a new standard, fixed-
design craft. Matthew attacked only the high end of this market, as the boat measured 37
feet long. Nevertheless, even this end of the market was more price-sensitive and less
conscious of performance than Matthew Yacht’s custom-design customers were.

All of the company’s yachts were manufactured at the Montauk plant and shared the
same equipment and skilled labor force. Custom designs were given priority in
scheduling, and the new boat was rotated into the schedule only when demand slackened.
As sales of the fixed-design boat increased, however, scheduling the new boat on a
regular basis became necessary.

Matthew Yachts were built basically from the bottom up. Fabricating hulls was the first
step. Increasingly, fiberglass hulls were demanded for their speed and easy maintenance.
Afterward came the below-deck woodworking, followed by the fiberglass and
woodworking on the deck itself. The masts were turned and drilled separately. Masts and
hull were then joined and the finish work completed.
Over the past year, as the fixed-design craft continued its steady increase in sales, costs
and deliveries began to slide precipitously, especially on the fixed-design yachts. During
this period, when push came to shove, construction of the fixed-design craft always
yielded time and resources to the higher-profit-margin custom designs. As a result, many
fixed-design yachts were strewn around the yard in various stages of construction.
Moreover, space in the existing shipyard was becoming scarce, and a plant expansion of
one sort or another appeared inevitable.

Questions
Should Matthew Yachts, Inc. stay in the business of building standard, fixed-
design yachts?

If Matthew Yachts does so, how should it continue?

Problem 6

San Andres Corporation

San Andres Corporation, a bottling company is deciding to locate a new sales office. Two
choices have been identified—Site A and Site B. The sales office will carry all the
available bottle sizes and flavors and will sell as wholesale to grocery stores and
restaurants.

Both sites were evaluated using five location factors, i. e. supply of labor, union relations,
community attitudes, government regulations, and quality of life. These factors were
given the following weights: 15, 5, 5, 5, and 10 respectively.

Shown below is the summary of the evaluation results:

Factor Site A Site B

Supply of Labor Very Good Excellent

Union Relations Good Fair
Community Attitudes Excellent Very Good
Government Relations Poor Good
Quality of Life Very Good Good

Assume the following scores are used: Excellent-10, Very Good-8, Good-6, Fair-4, and
Poor-2
Where should the sales office be located?

Problem 7
Discuss the importance of total quality in:
a) Manufacturing Operation
b) Government Services
c) Product Design and Development
d) Transportation Systems