Aom4801 Assignment No.3 Year 2021 Suggested Solutions

AOM4801 ASSIGNMENT 3
YEAR 2021
Advanced Operations Management

, TABLE OF CONTENTS

3.1. CAPACITY MANAGEMENT ........................................................................................................ 4
3.1.1. Describe the different types of capacity expansion strategies and recommend a
suitable strategy for Eskom to follow in light of their capacity related problem. Justify your
chosen strategy by means of an analysis of that strategies risks and benefits. ............................... 4
3.1.2. Over both short- and long-term horizons, organisations must anticipate a growth or
decline in demand and plan for appropriate capacity levels accordingly. Differentiate between
short- and long-term capacity planning and explain the trade-offs which will nfluence decision
making in these two different types of capacity planning. .................................................................... 6
3.1.3. “Capacity can be viewed in two ways, as the maximum rate of outpour per unit of time,
or as units of resource availability”. With reference to capacity as viewed in a movie-theatre, a
hospital and an amusement park, demonstrate your understanding of the above statement. ...... 7
3.1.4. As the assistant manager of a restaurant, how many waiters will you require given the
following information for Saturday night’s dinner menu? ..................................................................... 7
3.2. MANAGING INVENTORIES IN SUPPLY CHAINS................................................................... 8
3.2.3. Demonstrate your understanding of the following terms by elaborating on each of them
(3 marks available in total) and then grouping/categorising them (3 marks). ................................... 9
3.2.4. There are trade-offs to organisations carrying either too much or too little inventory.
Analyse these trade-offs. ........................................................................................................................ 11
3.3. SUPPLY CHAIN MANAGEMENT AND LOGISTICS ............................................................ 12
3.3.1. “Supply chain managers typically balance customer requirements as well as internal
supply chain efficiencies”. With the aid of one internal supply chain metric and one external (i.e.,
customer related) supply chain metric, justify this statement. ........................................................... 12
3.3.2. The bullwhip effect results from a phenomenon in which inventories exhibit wild swings
up and down, resulting in increased costs and reduced service to customers. ............................. 13
a) On the basis of your understanding of the origin of the bullwhip effect, describe a typical
solution that would resolve this issue.................................................................................................... 13
b) Provide a motivation as to why the solution you have provided would resolve the issue. ....... 13
3.3.3. Motivate for the application of manufactured goods recovery and reverse logistics in
making a supply chain more sustainable. ............................................................................................ 14
3.4. RESOURCE MANAGEMENT .................................................................................................... 15
3.4.1. “Aggregate planning and disaggregation in manufacturing organisations differ
substantially from aggregate planning and disaggregation in service organisations”. Do you
agree with this statement? Justify your answer................................................................................... 15
3.4.2. Provide an argument for or against adopting a chase strategy for a major airline call-
centre. 16
3.4.3. Assume you have been approached by an operations manager who seeks advice in
terms of which of the three lot-sizing rules should be used to achieve the best economic trade-

, offs? With reference to the trade-offs of the different lot-sizing rules, provide the operations
manager with comprehensive advice. ................................................................................................... 17
3.4.4. Consider the MRP schedule below. Redraw and complete the MRP schedule in your
answer document. .................................................................................................................................... 18
3.5. OPERATIONS SCHEDULING AND SEQUENCING ............................................................. 19
3.5.1. Differentiate between the shortest-processing-time (SPT) and earliest-due-date (EDD)
sequencing rules respectively and describe the context in which you would use each rule.
Motivate your answer. ............................................................................................................................. 19
3.5.2. Define the concepts of scheduling and sequencing. How do they differ and how are
they similar? .............................................................................................................................................. 20
3.5.3. Scheduling affects customer service and costs. Analyse this statement and provide an
appropriate example to support your analysis. .................................................................................... 21
3.5.4. A custom furniture manufacturer has five jobs waiting for processing as follows: ......... 21
4. References ........................................................................................................................................ 22