FINAL ONLINE SUMMATIVE ASSESSMENT

Bachelor of Commerce Honours in Supply Chain Management

PROGRAMME
Postgraduate Diploma in Business Management

MODULE Operations Management

YEAR ONE (1)
INTAKE January 2023
DATE 12 July 2023
 SECTION A [40 MARKS]

Read the case study below and answer ALL the questions that follow
DURBAN PORT GRADUALLY RESTARTS OPERATIONS AFTER FLOODS

South Africa’s logistics group Transnet gradually resumed operations at its Durban port on Wednesday morning after severe
flooding in KwaZulu-Natal province, which resulted in port operations being suspended as a precautionary measure. The
country’s department of public enterprises (DPE) said it is working with Transnet and stakeholders, including the KwaZulu-
Natal provincial government, eThekwini municipality and the country’s power utility Eskom to stabilise operations at the port.
Priority interventions include repairing Bayhead Road, which is the main access to the container terminals at the port and
Island View, and investigating alternative access roads into the port while a section that was washed away at the outfall of the
Umhlathuzana canal into the port is being repaired.

“Shipping is expected to resume once safety has been established for marine craft and vessel navigation,” DPE said in a
statement. “As a precautionary measure, operations across the terminals have been temporarily stopped. A command center
has been set up with Transnet National Ports Authority, the operators and our customers to monitor the activities. Before full
operations can resume, we will need to ensure that all the necessary safety inspections have been conducted,” added
Transnet spokeswoman Ayanda Shezi.

Meanwhile, Transnet is carrying out ongoing assessments on the rail network in Durban and its surrounds to determine the
extent of damage before any train services into and out of the port can resume. The North Coast, South Coast and mainline
from Durban to Pietermaritzburg remain closed. There has been no damage to the pipeline’s infrastructure, and fuel supply
will continue into the inland market. Transnet’s operations in Richards Bay have not been suspended, but the “terminals are
operating less efficiently, with challenges experienced in handling wet cargo,” the statement said. The heaviest rainfall in at
least six decades in KwaZulu-Natal has claimed more than 300 lives, damaged roads, interrupted port operations, and
washed away houses. The head of South Africa’s national disaster management centre Mmaphaka Tau has declared the
flood-stricken province a disaster, enabling the government to provide relief funding for the reconstruction of the area.

Extracted from: https://www.bloomberg.com/news/articles/2022-04-24/largest-s-african-port-gradually-resumed-operation-

after-floods?leadSource=uverify%20wall

QUESTION 1
1.1 Considering the case study provided, examine the implications of flooding to the operations of Durban
(15 marks)
Port and suggest measures that can be adopted by Transnet to minimise future flooding occurrences.
1.2 The Group CEO of Transnet Portia Derby has indicated that there is a need for the organisation to adopt (15 marks)
a new operations strategy to withstand the changing market environment.

In light of this, critically discuss what an operations strategy entails and highlight the factors that need to be
taken into account when setting up the strategy. Your response should make use of relevant examples.

1.3 In the context of Transnet motivate why the organisation should have a functional operations (10 marks)
management division.
 SECTION B [60 MARKS]

Answer ANY THREE (3) questions in this section

QUESTION 2 (20 Marks)

TTCA Furniture a manufacturing company working on a 4-hour week makes 100 chairs. The sales price is R70 each and
the company has the following costs:
Direct materials R700
Direct labour R300
Overhead R500

2.1 Calculate the productivity of the company. (4 marks)

2.2 What will be the new productivity if the company decides to make 135 chairs per week? (4 marks)
2.3 If the company decides to improve productivity through materials cost reduction only, by how much (6 marks)
should these costs be reduced to achieve a 10% increase in total productivity?
2.4 If the company repeats the same exercise as in (c) above but through labour cost reduction only, by how (6 marks)
much should these costs be reduced to achieve at 10% increase in total productivity?

QUESTION 3 (20 Marks)

Maxpro uses the ZX-81 chip in some of its laptop computers. The prices for the chip during the past 12 months were as
follows:
Month Price per Chip Month Price per Chip
January R1.80 July 1.80
February 1.67 August 1.83
March 1.70 September 1.70
April 1.85 October 1.65
May 1.90 November 1.70
June 1.87 December 1.75

3.1 Use a 2-month moving average on all the data and plot the averages and the prices (4 marks)
3.2 Use a 3- month moving average and add the 3-month plot to the graph created in Part (3.1). (4 marks)
3.3 Which is better (using the mean absolute deviation) the two-month average over the three-month (6 marks)
average?
3.4 Compute the forecast for each month using exponential smoothing with an initial forecast for January of
R1.80. Use smoothing constant of 0.1 and then 0.3 and finally 0.5. Using MAD which smoothing
(6 marks)
constant is the be best
 QUESTION 4 (20 Marks)

4.1 Lupane State University’s business program has the facilities and faculty to handle an enrolment of 2000
new students per semester. However, in an effort to limit class sizes to a reasonable level under 200 handle (8 marks)
an enrolment of 2000 new students per semester (generally).

Lupane State University dean placed a ceiling one enrolment of 1500 new students although there was
ample demand for business courses last year conflicting schedules allowed only 1450 new students to

take business courses. Calculate the utilisation and efficiency off the system.

4.2 Under ideal conditions, a service bay at a Fast Lube can save 6 cars per hour. The effective capacity and (8 marks)
efficiency of the Fast Lube service bay are known to be 5.5 and 0.880, respectively. What is the minimum
number of service bays Fast Lube needs to achieve an anticipated servicing of 200 cars per 8-hour day.

4.3 Suggest measures that can be adopted by Lupane State University to improve their efficiency. (4 marks)

QUESTION 5 (20 Marks)

‘Although organisations in the manufacturing sector usually carry more inventory than service firms, effective inventory
management is nonetheless important to both manufacturers and service organisations’ (Heizer and Render, 2021).
Considering this statement examine the functions of inventory and advise operations managers on how they can determine
the right inventory to hold at any given time.

END OF PAPER