Group-Six

Bangladesh University of Professionals

Faculty of Business Studies
MBA (Professional) Program
May-Aug 2020 (Group-Six)
OMT 8601-Production and Operations Management

Mid-Term, Total Mark-30, Time: 1 Hour and 10 mins

Instructions:
 This is an individual Quiz.
 Each group will have separate question.
 You are allowed to use all available resources.
 Group Leader will collect all the individual answer scripts and submit to the CR.
 You will have extra 5 minutes time to organise your answer script and send it to Group
leader.
 Late submission will be penalised accordingly.

Question No. 1 (12)

A cable manufacturing company produces two types of cables from same raw materials; wire
and plastic resins. To produce one meter first type cable 100 gm resin and 0.3 kg wire are
required. Whereas, 150 gm resin and 0.4 kg wire are required to produce one meter of the
second type cable. Cost of resin and wire is $80/Kg and $100/Kg respectively. The company can
produce 60000 meter first type and 40000 meter second type cable per month by using 200
labours. Average wage of each labour is $600 per day, and overhead cost is 3 million dollar per
month. To set up the machine 60 million dollar is invested on it. Life of the machine is 5 years.
Price of the first and second type cable is $300/meter and $350/meter respectively. Consider 25
working days make a month.

Compute labour, material, overhead, machine and all-factor productivity for Second type cable
(in every possible way) and interpret the result. (Compute the productivity in yearly basis)

Question No. 2 (6)

What type of forecasting technique that would be most appropriate for predicting the following
and why; briefly explain: (Hints: Provide your answer with the pattern of the technique like
time-series with upward trend technique)

a. The impact of pandemic in human behaviour.

b. Trend of cycling in Bangladesh.
c. The demand of Mother’s Day greeting cards physically.
ANS:
A Judgmental Forecasts
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B. Time-series Forecasting

C.

Question No. 3 (6)

Briefly explain the inventory counting system with example. What are the advantages and
disadvantages of those inventory counting system?

Ans: Inventory counting systems are technology solutions that integrate all aspects of an
organization’s inventory tasks, including shipping, purchasing, receiving, warehouse storage, and
turnover, tracking, and reordering. While there is some debate about the differences between
inventory management and inventory counting, the truth is that a good inventory counting
system does it all by taking a holistic approach to inventory and empowering organizations to
utilize lean practices to optimize productivity and efficiency along the supply chain while having
the right inventory at the right locations to meet customer expectations.
There are two different types of inventory counting systems available today: perpetual inventory
systems and periodic inventory systems. Within those systems, two main types of inventory
management systems – barcode systems and radio frequency identification (RFID) systems –
used to support the overall inventory counting process:
 Main Inventory Counting System Types:
 Perpetual Inventory System
 Periodic Inventory System
 Types of Inventory Management Systems within Inventory Counting Systems:
 Barcode System
 Radio Frequency Identification (RFID) System
Inventory counting systems help you track inventory and provide you with the data you need to
count and manage it. No matter which type of inventory counting system you choose, make sure
that it includes a system for identifying inventory items and their information including barcode
labels or asset tags; hardware tools for scanning barcode labels or RFID tags; a central database
for all inventory in addition to the ability to analyse data, generate reports, and forecast demand;
and processes for labelling, documenting, and reporting inventory along with a proven inventory
methodology like just-in-time, ABC analysis, first-in, or first out (FIFO), or last-in-first-out
(LIFO).
 Periodic System – Under this system a physical count of the items in inventory is
made at periodic intervals (e.g. – weekly, monthly) to determine how much to
order.
 Many small retailers use this approach.
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 An advantage of this system is that orders for many items occur at the
same time and helps to save ordering and shipping cost.
 One of the major disadvantage is the shortages between review periods.
 Perpetual Inventory System – This system keeps track of removals from inventory
on a continuous basis, so the system can provide information on the current level
of inventory for each item.
 An obvious advantage is continuous monitoring of inventory withdrawals.
Also helps to order optimum quantity.
 One disadvantage of this system is added cost of record keeping.

Barcode Inventory Systems

Inventory management systems using barcode technology are more accurate and efficient than
those using manual processes. When used as part of an overall inventory counting system,
barcode systems update inventory levels automatically when workers scan them with a barcode
scanner or mobile device. The benefits of using barcoding in your inventory management
processes are numerous and include:
 Accurate records of all inventory transactions
 Eliminating time-consuming data errors that occur frequently with manual or paper
systems
 Eliminating manual data entry mistakes
 Ease and speed of scanning
 Updates on-hand inventory automatically
 Record transaction histories and easily determine minimum levels and reorder quantities
 Streamline documentation and reporting
 Rapid return on investment (ROI)
 Facilitate the movement of inventory within warehouses and between multiple locations
and from receiving to picking, packing, and shipping
Radio Frequency Identification (RFID) Inventory Systems

Radio frequency identification (RFID) inventory systems use active and passive technology to
manage inventory movements. Active RFID technology uses fixed tag readers throughout the
warehouse; RFID tags pass the reader, and the movement is recorded in the inventory
management software. For this reason, active systems work best for organizations that require
real-time inventory tracking or where inventory security has been an issue. Passive RFID
technology, on the other hand, requires the use of handheld readers to monitor inventory
movement. When a tag is read, the data is recorded by the inventory management software.
RFID technology has a reading range of approximately 40 feet with passive technology and 300
feet with active technology.

RFID inventory management systems have some associated challenges. First, RFID tags are far
more expensive than barcode labels; thus, they typically are used for higher value goods. RFID
tags also have been known to have interference issues, especially when tags are used in
environments with a lot of metal or liquids. It also costs a great deal to transition to RFID
equipment, and your suppliers, customers, and transportation companies need to have the
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required equipment as well. Additionally, RFID tags carry more data than barcode labels, which
means your system and servers can become bogged down with too much information.
When choosing an inventory counting system for your organization, you first should decide
whether a perpetual inventory system or periodic inventory system is best suited to your needs.
Then, choose a barcode system or RFID system to use in conjunction with your inventory
counting system for a complete solution that will enable you to have visibility into your
inventory for improved accuracy in scanning, tracking, recording, and reporting inventory
movement.

Question No. 4 (6)

A large law firm uses an average of 40 boxes of copier a day. The firm operates 260 days a year.
Storage and handling costs for the paper are $30 a year per box, and it costs approximately $50
to order and receive a shipment of paper.
a. What is the EOQ?
b. How many times per year does the store reorder?
c. What is the length of an order cycle?
d. What is the total cost if the EOQ quantity is ordered?

Ans:

a. D=40*260=10400 per year,H=$30 per box per year,S=$50

EOQ (Q)=√ { 2 DS /H }
10400∗50
√ 30 )
(
2

186.19

B. number of order per year D/Q=10400/186=56 Times

C. length of an order cycle = 260/56=4.64/5days

D. total ordering cost=QH/2+DS/Q =186*30/2+10400*50/186=2790+2795.7

=5585.7
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