Distance Learning Centre

Ahmadu Bello University

Masters in Business Administration
2019 January Semester Examination (Group 1- weekend)
Course- BUAD 802 Production and operations Management
INSTRUCTIONS: Answer any three (3) questions
All questions carry equal marks (10 marks) Time allowed: 2 Hours.

1. a. A key task of the operations function must be to ensure that it provides quality goods

and services to both its internal and external customers. If the perceived quality gap is

such that customers’ perceptions of the product or service fail to match their expectations,

then the reasons lie in other gaps. State and explain these gaps (8 marks)

b. Explain the term, conformance to specification. (2 marks)

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2. A furniture dealer deals in only two items–tables and chairs. He has N50,000 to invest
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and has storage space of at most 60 pieces. A table costs N2500 and a chair N500. He

estimates that from the sale of one table, he can make a profit of N250 and that from the

sale of one chair a profit of N75. He wants to know how many tables and chairs he

should buy from the available money so as to maximize his total profit, assuming that he

can sell all the items which he buys. You are required to:

a. Formulate a mathematical linear programming problem 2 marks

b. Solve the linear programming presented above showing clearly the feasible region

(graphically) 6 marks

c. Calculate the maximum profit 2 marks

 3. AHMIS NIG LTD is an indigenous company dealing in oil and gas marketing. The

company desire to locate a new Gas filling station in Abuja. Two sites have been

proposed and the location factors, factor rating and scores for the two potential sites are

shown in the following table.

Scores
Location factor Factor rating
Maitama Nyanya
Gas users’ density 8 3 5
Proximity to supplies 5 4 3
Security 6 4 5
Transportation and access to highway 3 1 2
Government policy 5 5 3

a. Which is the best location based on factor rating method? 5 marks

b. Suggest to AHMIS Nigeria limited other five location factors they should consider in

locating the new gas filling station. 5 marks

4. The data about annual requirement, ordering cost and holding cost of material of PZ

company is given as: Annual requirement: 2,400 units, Ordering cost: $10 per order

Holding cost: $0.30 per unit. You are required to compute

a. The Economic order quantity (EOQ) 4 marks

b. Number of orders per year 2 marks

c. Annual ordering cost 2 marks

d. Annual holding cost 2 marks

5. Explain the following forecasting methods: (10 marks)

a. Panel Consensus:

b. Historical Analogy

c. Delphi Method:

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