BBDM2153 – Operations Management

Tutorial 1
Answer - Chap. 1

1. How to differentiate between goods and services that a company provides?

Goods Services

 Tangible product  Intangible product

 Consistent product definition  Inconsistent product definition
 Production usually separate from consumption  Often unique
 Long lead time  Produced and consumed at same time
 Can be inventoried  Short lead time
 Low customer interaction  Frequently dispersed
 Capital intensive  High customer interaction
 Quality is objectively determined  Often knowledge-based
 Quality is subjectively determined

2. Define Operations Management.

 Is managing the set of activities that create value in the form of goods and services by
transforming inputs into outputs
 The management of an organization’s production system, which converts inputs into the
organization’s products or services.

3. Why should one study operations management? Discuss.

 OM is one of three major functions of any organization à study how people organize
themselves for productive enterprise
 We want (and need) to know how goods and services are produced à esp. with effective
and efficient in costs, production, etc.
 We want to understand what operations managers do à have better understanding.
 OM is such a costly part of an organization à help reduce cost in every area.

4. Operations management is such a costly part of an organisation, discuss the three (3)
strategic options for a firm in operations management.

a) Marketing option – firm without a good marketing team are not able to make the
firm successful. Marketing generates the demand, or at least takes the order for a
product or service (nothing happens until there is a sale).
b) Finance/accounting option –A good marketing team without the control of the
finance and accounting will also cause the downfall of the organisation. Therefore,
finance and accounting is necessary for an organisation to tracks how well the
organisation is doing, pays the bills and collects the money.

(c) Production/Operation option –An efficient operation team can manage the
organisation well in attainting its profitability by proper control on its costs other
than creates, produces and delivers the product. This option not only yields the

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 BBDM2153 – Operations Management

Tutorial 1
5. Provide some reasons on the difficulties to improve the productivity in the service sector.

a) Many services are labor intensive

b) Services are individually (personally) processed (eg.: the customer is paying for that
service—the hair cut)
c) An intellectual task performed by professionals
d) Often difficult to mechanize and automate
e) Often difficult to evaluate for quality.

6. Discuss the new challenges to operations management.

 From local and national focus to global focus.

 From batch shipments to Just In Time (JIT).
 Low bid purchasing to supply-chain partnering.
 Lengthly product development rapid product development, alliances.
 Standard product to mass customisation.
 Job specialisation to empowered employees, teams.

7. Discuss the steps involved in the Frederick Taylor’s shop system or management approach.

 Determine the skills, strength, and learning ability for each worker
 Set standard output per worker for each task using stopwatch studies
 Use work method or tools à use instruction cards, routing sequences, and material
specifications to coordinate the works
 Have selection and training for workers, esp. to promote the workers or to improve the
works
 Use incentive pay systems to increase efficiency and motivate

8. In the evolution of operations management since the Industrial Revolution, there are FOUR
(4) significant emphasizes in operations. Discuss these emphasizes.

• Cost focus – prior to 1980 – until mass production era

• Quality focus – 1980 – 1995 – JIT & lean production era
• Customization focus – after 1995 to 2005 – mass customization era
• Globalization focus – after 2005 to 2020 – globalization era.

9. Lake Swam Seafood makes 500 wooden packing boxes for fresh seafood per day, working in
two 10-hour shifts. Due to increased demand, plant managers have decided to operate three
8-hour shifts instead. The plant is now able to produce 650 boxes per day.
a) Calculate the company’s productivity before the change in work rules and after the
change.

Before change in work rules

Productivity = 500 /20

= 25 boxes/hr

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 BBDM2153 – Operations Management

Tutorial 1
After change

Productivity = 650 / 24
= 27.08 boxes/ hr

b) What is the percentage increase in productivity?

27.08 – 25 = 2.08 /25
= 8.3%

c) If production is increase to 700 boxes per day, what is the new productivity?
Productivity = 700 / 24
= 29.167 boxes/hr

10. Carbondale Casting produces cast bronze valves on a 10-person assembly line. On a recent
day, 160 valves were produced during an 8-hour shift.
a) Calculate the labor productivity of the line.

Productivity = 160 valves / 10 person x 8 hour shift

= 160 / 80

= 2 valves per hour

b) John Goodale, the manager at Carbondale, changed the layout and was able to
increase production to 180 units per 8-hour shift. What is the new labor productivity
per labor-hour?

Productivity = 180 valves / 10 person x 8 hour shift

= 180 /80

= 2.25 valves per hour

c) What is the percentage of productivity increase?

2.25 – 2 = 0.25 / 2

=12.5%