Production And Operations Management Question Paper

Production And Operations Management

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2010/2011
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BMS 401:
PRODUCTION AND OPERATIONS MANAGEMENT
DATE: Wednesday 24TH NOVEMBER 2010

TIME: 2.00P.M. – 4.00P.M.

INSTRUCTIONS: Attempt question ONE and any OTHER TWO Questions
1.
(a)
Describe the core beliefs of the JIT philosophy.

(5 Marks)

(b)
Explain why capacity planning is important to a business.
(5 Marks)

(c)
Explain the consequences of poor location decision to a business. (5 Marks)

(d)
Distinguish between standardization, simplification and specialization. (3 Marks)

(e)
Detail the short-term and long-term benefits and difficulties brought about by

automation in industry.

(6 Marks)

(f)
Two recent college graduates, Mary and Sue, have decided to open a bagel shop

name Mary & Sue Bagels. Their first decision is whether they should make the

bagels on-site or buy the bagels from a local bakery. They make the following

analysis:

?
If they buy from the local bakery, they will need new airtight containers in which
to store the bagels delivered from the bakery. The fixed cost for buying and
maintaining these containers is Sh100,000 annually.
?
The bakery has accepted to sell the bagels to Mary and Sue at Sh40.
?
If they make the bagels in-house, they will need a small kitchen with a fixed cost
of Sh1,500,000 annually and a variable cost per bagel of Sh15.
?
They believe they will be able to sell six million bagels in the first year of
operation.
(i)
Should Mary & Sue make or buy the bagels?

(3 Marks)
(ii)
If Mary & Sue are uncertain as to demand for bagels next year, at what
point will they be indifferent between buying and making the bagels?

(3 Marks)

Page 1of 2

2.
(a)
Briefly explain the requirements of a good system of material control. (8 Marks)

(b)
Last week, employees at Bluegill produced forty-six chairs after working a total

of 200 hours. Of the forty-six chairs produced, 12 were damaged due to a

problem with new sanding machine. The damaged chairs can be discounted and

sold for Sh25 each. The undamaged chairs are sold to a department store retail

chain for Sh70 each. What was the labor productivity ratio for last week? If

labor productivity was Sh15 in sales per hour the previous week, what was the

change in labor productivity?
3.
(a)
Define the term product design and explain its relationship to the business

strategy.

(4 Marks)
(b)
Topha Souvenirs Limited sells lovely handmade table cloths at its Market Street

store. These tablecloths cost Topha Sh.15 each. Customers want to buy the

tablecloths at a rate of 240 per week. The company operates 52 weeks per year.

Topha estimates the ordering costs at Sh.50 annual holding costs are estimated at

20% of the unit cost. If the lead time is two weeks:

(i)
Calculate the economic order quantity.

(6 Marks)

(ii)
Calculate the total annual cost using the EOQ.
(6 Marks)
(iii) Determine the reorder point.

(4 Marks)

4.
(a)
Describe the TQM philosophy and identify its major characteristics. (8 Marks)

(b)
Identify the four types of facility layouts and outline their characteristics.(12 Mks)
5.
(a)
Three bottling machines at Cocoa Fizz are being evaluated for their capability:

Bottling Machine

Standard Deviation

A

0.05

B

0.1

C

0.2

If specifications are set between 15.8 and 16.2 ounces, determine which of the

machines are capable of producing within specifications.
(10 Marks)

(b)
Explain what is meant by competitive priority and describe the four categories of

competitive priorities available.

(10 Marks)

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