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2018-19 EXAMINATIONS

PART II (Second Year, Final Year)

MSCI 231 Introduction to Operations Management

CLOSED BOOK EXAMINATION

2 HOURS

This paper consists of three questions. All questions carry equal marks. Answer any two of these for full marks. If you attempt an answer to all three only two will be marked.

You may use a calculator and a standard dictionary.

There is a formula sheet at the end of this paper.

Complete the details required on thefront sheet of your answer booklet now. Do not turn over this page until told to do so.

Question 1

An operator of a tram service in a large city is concerned about the capacity and punctuality of its service on a particular line where it crosses several busy main roads. It is concerned about over-  crowding on its trams and the problem that, at certain times, passengers are being stopped from   boarding over-crowded trams, and are complaining to local politicians.

On one route, trams call every 6 minutes at a stop outside a main station and then travel to the city centre. The following table shows, for one hour during the peak period, the number ofpassengers  arriving at the stop in the interval between successive trams. It also shows the capacity of the trams arriving at this stop. They arrive empty from the main depot and there are three sizes of tram.

Exhibit 1: Passenger arrivals and tram capacity

Time

18:06

18:12

18:18

18:24

18:30

18:36

18:42

18:48

18:54

19:00

Passengers arriving

250

243

239

157

176

160

199

182

154

184

Tram capacity

150

150

150

250

250

250

250

200

200

200

a) Assuming that no passengers were left waiting by the tram that preceded the first (at 18:06), how many passengers will be prevented from boarding the tram at 18:30, and what is the largest number of passengers prevented from boarding during the hour? (20% of the mark)

b) What is the maximum time any passenger will have to wait due to overcrowding during this hour?  You can assume (i) there is no particular discipline in the crowd of waiting passengers that means the  first to arrive will be the first to board but (ii) anyone prevented from boarding a tram is always preferred for the next tram. (20% of the mark)

c) If you cannot assume anyone prevented from boarding a tram is always preferred for the next tram, what is the maximum time any passenger will have to wait due to overcrowding? (20% of the mark)    In practice the larger tram units, with a capacity of 250 passengers, were often delayed in coming        from the depot to the first point at which they picked up passengers. In a sample of 80 trams over the   period of a week it was found that the maximum time of arrival ahead of the schedule was 4 minutes   and the maximum lateness behind schedule was 12 minutes. On average, trams were 1.5 minutes late. The standard deviation over lateness was 2.8 minutes.

d) What is the maximum lateness that the company can set and publish as a standard if it is to achieve an upper process capability index of 2.0, and what is the status of its process if it sets the standard at    the maximum lateness it measured? (20% of the mark)

e)  Discuss briefly how well the standard definition of quality as Consistent conformance to customer expectations’ could apply in the context of a tram operator. (20% of the mark)

Question 2

The operator of a tram service in a large city runs a maintenance depot where it has to store spare tram wheels in order to replace worn or broken wheels on its trams. Wheels are ordered in batches of 40 from the supplier on the first day of every calendar month. The operations director is concerned about the high level of stock in the depot, and the length of time some wheels are remaining in stock and becoming corroded. It costs about £10 per wheel to hold stock for one year. But the operations director is also concerned about the cost of administration at the depot, including the time that staff     spend on placing orders. For example, it costs about £50 to place every order, whether this is for a single, small item or a large batch of large items.

a) If the tram operator is using all the wheels it orders in a year, what is the optimal size of each order and how many times per annum are orders being unnecessarily placed? (20% of the mark)

b) Assuming a constant rate of usage of the wheels over the year, by how much does the current annual cost based on monthly orders exceed the optimal annual cost? (20% of the mark)

c) Which of the five principal reasons for holding inventory are relevant to the depot’s stocks of  wheels, and in what way does this suggest that using Economic Order Quantity calculations might be a mistake? (20% of the mark)

d) Concern with excess inventory has led the operations director of the tram operating company to take a renewed interest in the Toyota Production System – and considering whether it could be relevant to tram operations generally, not just the maintenance depot. Outline the elements of the  Toyota Production System. (20% of the mark)

e) Give an example of how the line-stop’ authority principle might be applied in a mass transportation service such as a tram operator, and identify the risk of applying the principle in this case. (20% of the mark)

Question 3

The operator of a tram service in a large city is concerned about the derailment risk at one particular point in the tram network. It has decided to undertake a project to revise the track layout and the table below shows the main activities that will be needed. It also indicates the pre-requisite activities, and estimates of activity duration in terms of most likely, best and worst times, in weeks.

Exhibit 2: Track layout revision activities

Activity

Pre-requisite activities

Minimum

duration

Most likely duration

Maximum

duration

A

Remove old track

1

2

2

B

Repair damaged surface A

2

2

2

C

Clear kerbs etc

1

1

3

D

Remove pavement C

1

3

4

E

Lay new pavement D

3

5

7

F

Prepare track bed B, D

4

5

9

G

Lay new track

F

4

7

8

H

Static testing

G

1

1

2

I

Traffic testing

G

2

4

5

a) Find the critical path and the minimum project duration based on the means of the duration estimates. (20% of the mark)

b) During the project, the company carrying it out was required to report progress as an earned value  analysis at the end of each week. If the project were given a budget of £1.6 M, and at week 5 it reported that about 15% of the work had been completed, and that it had spent £0.38M, what were the schedule and cost variances at this point? Use your value for the mean project duration rounded to the nearest whole week. (20% of the mark)

c) In lectures we looked at the critique of managing projects by techniques like Earned Value  Analysis in an interview with the CEO of a firm that developed new sonar equipment. What was the critique, and is it as relevant to a project changing a track layout as it is to a project developing new sonar products? (20% of the mark)

Shortly after carrying out this work the tram operator became aware of the Croydon incident: ‘Seven people were killed and a further 51 injured when [a] tram derailed in Croydon, south  London, as it entered a sharp bend at almost four times the speed limit. Analysis of the on-     board data recorder shows the regular service brake was not applied until around 2.5 seconds before the tram reached a 20km/h (13mph) speed limit sign at the Sandilands curve where the accident occurred at 6.07am on November 9 last year. Its speed decreased from 49mph to       46mph by the time it passed the sign. The hazard brake was not used’ (The Telegraph, 20       February 2017).

The company commissioned a risk assessment, and the diagram below shows the event tree for         safeguards and recovery actions if a derailment happened, following the normal conventions of  annotating branches with probabilities. It has assumed that the probability of a derailment is 1 in 200

per year. The UK regulator has a standard risk acceptance criterion which states that the probability of accidents killing 50 or more should be less than 1 in 5000 per year.

Exhibit 4: Event treefor safeguards and recovery actions applying after a derailment

Initiating               Stabilising              Impact                    Driver speed       Evacuation             Fatalities

event                     system                    protection             control                 procedure

0.7                                                                                                                       0

0.3 0.9 0 0.1 0.9 0

0.1 0.6 10 0.4 50

d) Find the probabilities of scenarios in which there are fatalities, and determine whether risk in this system is acceptable. (20% of the mark)

e) It is sometimes said that the effective management of risk requires  ‘A joint feeling of doubt and hope’ (Vogus et al, 2014). Briefly explain why. (20% of the mark)

EXAMINATION FORMULAE SHEET

Inventory Analysis

Economic order quantity EOQ = , Economic batch quantity EBQ = Total annual cost CT = + , or +

where P = annual production rate, D = annual demand, CH = the stock holding cost

C0 = set up cost or order cost, Q = EBQ or EOQ

Capacity Management

Efficiency = actual output / effective capacity; Utilisation = actual output / design capacity

Project Planning and Control

Mean duration given pessimistic (tp), optimistic (to) and most likely (tl) estimates = (to + 4tl + tp)/6

Variance of duration given pessimistic (tp) and optimistic (to) estimates = (tp - to) /36

Given ACWP (Actual cost of work performed), BCWP (Budgeted cost of work performed), BCWS (Budgeted cost of work scheduled):

Cost variance = BCWP ACWP, Schedule variance = BCWP BCWS

Statistical Process Control

Process capability Cp = (UTL LTL)/6s, Cpu = (UTL m)/3s, Cpl = (m LTL)/3s where s = standard

deviation, m = mean

UCL/LCL(means) = X ± A2 R , UCL/LCL(ranges) = D4 R , D3 R where A2, D3 and D4 are given by:

N

2

3

4

5

6

7

8

9

10

12

14

16

18

20

A2

1.880

1.023

0.729

0.577

0.483

0.419

0.373

0.337

0.308

0.266

0.235

0.212

0.194

0.180


D3

0

0

0

0

0

0.076

0.136

0.184

0.223

0.284

0.329

0.364

0.392

0.414


D4

3.267

2.575

2.282

2.115

2.004

1.924

1.864

1.816

1.777

1.716

1.671

1.636

1.608

1.586