FINAL EXAMINATION

City Graduate School

Course :
MPOM7103
OPERATIONS MANAGEMENT

Date :

Time :

Duration :

Module Lecturer : Associate Prof Dr Simon CM Kwong

Total marks : 100 marks (worth 40%)

Instructions to candidates:

1. Print your name and student number on the Examination Paper AND Answer Book

2. Answer questions according to the instruction for each section

3. Do not detach any portion of the examination paper

4. Begin writing, as indicated, after the reading time has ended

5. All questions to be answered in the answer booklet.

DO NOT REMOVE ANY PART OF THIS EXAMINATION PAPER FROM THE

EXAMINATION ROOM

Student ID : ___________________________________________________

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Lecturer : ___________________________________________________
Date : Course : MPOM7103 OPERATIONS MANAGEMENT

Section A – Essay Questions (Total marks = 60)

Answer ALL the questions

1) Fundamental rethinking and radical redesign of business processes are essential in the
current economic climate with the Covid19 pandemic. Be as complete as time permits.
Explain the meaning of process reengineering and how can it be applied to a major
process with which you are familiar. (Total marks = 10)

2) Process analysis is the action of conducting a review and gaining an understanding of

business processes. It involves reviewing the components of a process, including
inputs, outputs, procedures, controls, actors, applications, data, technologies and their
interactions to produce results. Explain the six-step blueprint for process analysis and
what are the basic requirements for each step? (Total marks = 10)

3) Typically, an inference is made about the portion of overall work time spent on

an activity, based on the percent of observations that relate to that activity. In contrast
to the work-sampling method, the time-and-motion technique uses an observer to
record exactly how much time is being devoted to each task. Compare and contrast the
method of time study to the method of work sampling. What are the strengths and
limitations of each, and for which applications are they best suited? (Total marks = 10)

4) A manager of a company producing computer chips knows that in the early stages of
production for a new product, the expenditures exceed receipts, whereas in the latter
stages, the reverse is true. Give an explanation for this phenomenon.
(Total marks = 10)

5) In a TQM effort, all members of an organization participate in improving processes,

products, services, and the culture in which they work. Why is employee empowerment
important in a total quality management program? (Total marks = 10)

6) The capacity cushion is the amount of spare capacity a business has expressed as a

percentage of the total capacity. The capacity can refer to any business activity such as
production capacity, staff capacity planning, web hosting etc. Consider the factors that
should be considered when selecting the appropriate capacity cushion? How does the
choice of capacity cushion relate to other decisions in operations management? To
other functional areas? (Total marks = 10)

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Section B - Case Study (Total marks = 40)

Answer ALL the questions

Product Development Risks

Small medium-sized enterprises (SMEs) are known to contribute to any countries‟

economic growth. To ensure their survival in a competitive market, SMEs need to
have the ability to innovate and develop new products. Prompt decisions making
therefore needed to innovate and produce new products to reach market first before
their competitors. However, due to their size as well as financial and human
resources constraints, SMEs face obstacles and huge challenges. Therefore, one of
the major aspects of developing a successful new product is managing risks. Risk can
have either a positive or negative impact on new product performance. It is crucial for
companies to manage risks in order to achieve the desired new product development
(NPD) performance without compromising quality. Four main types of risk may affect
NPD performance: technology, market, operational and financial risks are discuss
pertaining to NPD performance.

In order to succeed, SMEs must take risks to launch new products speedily and
successfully. Therefore there is a need to take strategic action to mitigate and avoid
risks through risk management when developing new products. It is therefore vital for
SMEs to have the ability to assess, diagnose and manage risk in the NPD process.
Thus, exploratory study of the existing literature have identified four main categories
of risks which affect new product development performance namely: technology,
market, organizational and financial risks. According to Hollman and Mohammad-
Zadeh, the first step in the risk management process should be carried out
continuously and systematically by identifying possible sources of loss, and therefore
risks. The above research findings had also helped SMEs to carry out the initial stage
of risk management process through risk identification. Having obtained the research
guidance from the research done your organization is keen to develop new ideas that
were put forward by your young and energetic researchers in your organization.

You have the opportunity to invest RM 10 billion for your organization to develop a jet
engine for commercial aircrafts. The development plan will span over 5 years. The
final product costing RM 500 million / unit could reach a sales potential of eventually
making RM 250 billion for the organization. The new engine can be placed in service
5 years from now, but only if it qualifies four years from now for certification clearing
commercial use and only if it meets America’s Federal Aviation Administration’s (FAA)
ever tightening standards for noise reduction. Certification also has to be obtained
from the Malaysian Director General of Civil Aviation (DGCA). There is competition
from world-class manufacturers like Pratt and Whitney and Rolls Royce who are
developing competing engines with a long successful track record. If you decide to
proceed with the project, you must also determine where the new engines will be
produced and develop the manufacturing facilities. If you decline to proceed, your
organization could invest its resources elsewhere and based on its track record for
successful products developed in the past it could get attractive returns.

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Question A. (Total marks = 20)

Explore your options dealing with this proposal.

Question B. (Total marks = 20)

In case of lengthy product design and development time, examine the kinds of risks
that the organization will be exposed to.

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SECTION A

Question 1:
Business Reengineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary measures of
performance, such as cost, quality, service, and speed. Business process reengineering (BPR)
is an approach used to improve organizational performance by increasing the efficiency and
effectiveness of processes that exist across the organization. In addition to the redesigning of
business processes, it also involves the redesigning of associated systems and organizational
structures. Usually, reasons like new market opportunities, increasing competition, poor
financial performance, and decreasing market share trigger the need for a business process
transformation.
BPR involves the analysis and transformation of several major components of a business.
These include,
 Strategy
 Organization
 Process
 Technology
 Culture
BPR includes three phases; analysis phase, design phase, and implementation phase. It is also
referred to as business process redesign, business process change management, and business
transformation.
Implementation Amid Pandemic
Reengineering a process focuses on redesigning a process as a whole which includes
fundamentally rethinking how the organizational work should be done in order to achieve
dramatic improvement. That’s what differentiates BPR from process improvement which only
focuses on functional or incremental improvement. Reengineering might not be appropriate in
all situations, especially if your processes only require optimization and if your organization is
not looking to undergo dramatic change. In such a case, you can opt for a process
improvement technique.
Step 1: Set the vision and business goals

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This is where the senior management needs to identify the business situation; customer
expectations, competition, opportunities, etc. This will make it easier to understand the need
for change and create a clear vision of where the company needs to be in the future. Then
clarify the objectives in both qualitative and quantitative terms.
Step 2: Establish a competent team
The team you select needs to be cross-functional because expertise and perceptions from all
levels of the organization are necessary to minimize the chances of failure. It should be the
responsibility of the top management to have a clear vision of the activities that need to be
carried out and provide strategic direction. You also need to have an operational manager who
knows the ins and outs of the processes. It is equally important to have the right engineers with
different expertise from various fields to make the team complete.
At this stage, it is important to have the goals and strategies outlined properly. You can also
carry out surveys and benchmarking activities to identify customer needs and analyze the
competition. In this step, it’s also necessary to communicate the business case for change and
the objectives of the project to the rest of the employees. This will encourage their feedback as
well and help them get ready for what’s to come.
Step 3: Understand the current process
In this step, you need to select the process(es) that you will be redesigning. Such processes
that are broken, cross-functional, value-adding, have bottlenecks or have high-impact on the
organization, etc. can be prioritized. Once you select them, map them out using flowcharts or
process maps to analyse them thoroughly to identify the gaps, inefficiencies, blockers, etc.
Then define the right KPIs for the processes in order to monitor that the process has gained the
desired effect once you implement them.
Step 4: Redesign the process
Keeping your vision in mind, redesign a new process that effectively overcomes the
inefficiencies of the previous process. Here you will create a future-state map that highlights
the solutions you have identified for the issues of the current state process.
Step 5: Implement the reengineered process
Once the process has been redesigned, you can run a small test to see how it works by
monitoring with the KPIs you have defined earlier. This will allow you to make necessary

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adjustments to the process before implementing it company-wide. If the new process works
better than the current one, you can implement it on a larger scale.

Question 2

The six steps are identified opportunities, define scope, document process, evaluate
performance, redesign process, and implement changes.

Step 1: identify opportunities (suggestion system) – In order to identify opportunities,

managers must pay particular attention to four core processes: supplier relationship, new
service/product development, order fulfillment, and customer relationship. Other ways to
identify opportunities are by looking at strategic issues and by asking employees.

Step 2: define the scope – establishes the boundaries of the process to be analyzed. 

Step 3: document the process (list of process inputs)–Once scope is established the analyst
should document the process by developing a list of the process inputs, suppliers, customers,
and listing in sequence the different steps that the process consists of.

Step 4: evaluate performance (metrics) – It is important to have good performance measures to

evaluate a process for clues on how to improve it. 

Step 5: redesign the process - A careful analysis of the process and its performance on the
selected metrics should uncover disconnects, or graphs, between actual and desired
performance.

Step 6: implement changes – implementation is more than developing a plan and buy-in from
all constituents. Many processes have been redesigned effectively, but never get implemented. 

Question 3
Time Study is the analysis of a specific job by a qualified worker in an effort to find the most
efficient method in terms of time and effort. Time Study measures the time necessary for a job
or task to be completed using the best method.

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Time study can be performed by the following methods, depending upon the accuracy re-
quired:
1. Stop Watch Method
2. Time Recording Machine, and
3. Motion Picture Camera.
1. Stop Watch Method:
Stop watch used for time study purpose should be very accurate and preferably graduated in
decimals so that it can record even up to 0.01 minute. It has two hands. Large hand revolves at
a speed of one revolution per minute and its dial is divided into 100 divisions. The small hand
revolves at a speed of one revolution in 30 minutes. Dial for this small hand is graduated in
such a way that it enables to read up to one minute.
2 Time Recording Machine:
This type of machine has a paper tape, which rotates on two rollers at uniform speed. This
paper tape is graduated in such a way that it gives timings in fraction of minutes. Readings can
be seen and recorded through a slit provided in the casing of equipment’s. By using this
machine, some errors of the stop-watch method are eliminated.
3 Motion Picture Camera:
This camera as already explained is used in micro-motion study. The utility of micro motion
study has already been described in the ‘Motion Study’. This camera is driven at constant
speed of several ranges. Because of constant speed, time taken by each film can be calculated.
Thus, by knowing the number of films covered by one operational element, the exact time can
be found.
The advantages of time study are the applications to which time standards are put.
 to plan future production and
 to evaluate performance of workers or of the production system as a whole.
The followings are the limitations of time study
 Standards cannot be established by this technique on jobs which are not well defined.
 In situations where it is difficult to define quality precisely standards and production
incentives may cause deterioration in quality levels.

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 It is not possible to maintain standards where piece rate system of wage payment
exists.
 Labour unions may oppose the application of time study where they are strong.
 Time study is applicable only where the work is visible. So it can be applied only in
manual job and for thinking portions of the job.
 Only specific type of jobs which have identifiable starting and ending points can be
timed accurately.

Work sampling is a method in which a large number of instantaneous observations are made at
random time intervals over a period of time or a group of machines, workers or
processes/operations. Each observation records what is happening at that instant and the
percentage of observations recorded for a particular activity or delay/idleness is a measure of
the percentage of time during which that activity or delay/idleness occurs”.
Work sampling is a highly useful method to solve variety of problems in various types of
activities involving groups of machines, processes or people. With the expansion and growth
of industrial plants/ enterprises it has become increasingly difficult for executives/managers to
collect information and facts about what goes on in their manufacturing sections.
Advantages of Work Sampling:
 It is a cheaper technique than time study and production study.
 Only one analyst can perform work sampling study of many activities.
 Observers does not require much training.
 It is more useful in non-repetitive and indirect jobs.
 Many operations or activities which are impractical or costly to measure by time study
can readily be measured by work sampling.
 Observations may be made over a period of days or weeks thus decreasing the change
of day to day or week to week variations.
 Observations are made at random intervals depicting the usual routine of the worker as
against continuous observations of a worker for a long time in time study which may
not reveal his usual routine (being conscious of being observed).
 The work sampling may be interrupted at any time without affecting these results.

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 The study can be made with pre assigned degree of reliability.

 The study is less tiring and less tedious.
 It is less time consuming.
 As the study is spread over a number days, it is likely to be more representative and is
less affected by day to day variations.

Limitations of Work Sampling:

 Compared to time study, the statistical approach of work sampling study is difficult to
be understood by worker.
 The operators may not understand value of sample size and accuracy etc.
 It is not economical for the study of jobs of short duration or operators and machines,
spread or located over wide area.
 The worker may change his work patterns on the sight of work sampling observer and
try to look more productive, resulting incorrect information which are meaningless.

Question 4
Learning curve analysis is developed as a tool to estimate the recurring costs in an assembly or
production process. Two predominant theories on learning curves include: Unit Theory and
Cumulative Average Theory. According to the learning curve theory, the direct labour costs will be
exceeding the average in the early stages of production, whereas the reverse will be true in the latter
stages. Pricing is often predicted on average costs.

Question 5
The basic philosophy of total quality management is to involve every employee in the
organization along with its suppliers and distributers to improve quality and thus enhance
customer satisfaction. Employee involvement is very important in any T.Q.M initiative, as it is
a system wherein employees are encouraged to use their expertise and knowledge to suggest
methods for improvements in their work areas. These suggestions could relate to
improvements in the job, the product, the work atmosphere or the company as a whole. Many
companies have ventured into a participation-style of management by involving employees in
the problem solving and decision-making processes. While the actual practice of employee

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empowerment varies across organizations, empowerment is based on the concept of job

enlargement and job enrichment. Job enrichment involves increasing the depth of the job to
include responsibilities that have traditionally been carried out at higher levels of the
organization.
Empowered employees are given ownership of the processes they are responsible for and the
products or services generated by those services. Organizations may empower their employees
by encouraging them to set their own goals, judge their own performance and take
responsibility for their actions. Empowerment builds confidence in workers by showing them
that the company has confidence in their ability to make decision on their own. Empowered
employees take pride in their work and the resulting products or services produced by it. It
helps generate a commitment to the organization and develop a sense of pride. It presents an
opportunity to employees to develop them and advance their careers. It allows employees to
use their skills and talents to the maximum, and hence promotes the spirit of self -
determination.

Question 6
The appropriate size of the capacity cushion varies by industry. Large cushions are necessary
when future demand is uncertain, resource flexibility is low, product mix changes, uncertainty
exists regarding suppliers, and employee absenteeism and penalty costs for overtime and
subcontracting exist. Small-capacity cushions reduce costs and expose problems in the system.
Capacity cushions are linked to competitive priorities, quality management, capital intensity,
resource flexibility, inventory, scheduling, and location. Obviously, many of these decisions
cut across functional boundaries.

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SECTION B

Question 1
My line of action would be to decline the project. Besides I could still invest my resources
elsewhere and get attractive returns. Pushing through with the development of a jet engine for
commercial aircrafts can be a threat for my company. If I would just look to the potential sales
which is 250 billion, surely, I will proceed with the project, since 250 billion is a big sum of
money. But there are lots of drawbacks with this project. What if the engine won’t pass the
certifications needed? The 5 years development and long product design will just go to waste.
There are possible “what ifs” in this project so I’ll definitely decline.

Question 2
Just like any business, product development has many types of risk. There are market-based
risks such as commercial viability, consumer acceptance, competitors, and the product
introduction window timing. There are organizational risks like availability of funding,
availability of management sponsorship, staff loading, and capability of project management.
There are risks associated with building your product, including the technical and logistical
capabilities of your supply chain and manufacturing partners, as well as the business stability
of each.
Introducing new technologies too quickly can put companies ahead of the market and, as a
result, products flop or have slowly starts. Being late is just as risky. Markets now come and
go quickly. Assuming market windows have been correctly gauged, and enabling new
technologies have been introduced early enough into the pipeline to provide enough
development time to achieve commercial volumes, managing the execution of technology
readiness becomes paramount. Specific technical risks vary greatly by domain and discipline,
but they all share one thing in common: The goal is to make money from them. Technology
roadmaps identify when a technology is to be available, but do not help to assure it will be
available on time.
Without delving into detail on this giant body of knowledge, but staying consistent with the
earlier late 1900s vs. today benchmarks, the supply-chain impact on new product designs has
now tripled. It is not uncommon to see 70% or more of product costs come from suppliers

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these days, versus 5 to 20% in the late 1900s. For better or worse, supply chain risk is a key
risk for product and portfolio development.

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