QUESTION FOUR Explain five (5) variables that an Operations Manager can manipula
ID: 400296 • Letter: Q
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QUESTION FOUR Explain five (5) variables that an Operations Manager can manipulate to meet short to medium term capacity requirements a) [10 Mtarks) b) Tiyendepamodzi advertising is a national agency that provides advertising services to mass merchandising retailers. The firm's services fall into three categories: television, print media and radio. Tiyendepamodzi is planning its workforce for next year and estimates that for each sales Kwacha made, 0.002 hour of employee time is required. The forecast of next year's sales for each category is: Advertising Sales (X10,000) CategoryrQuarter 3" Quarter Quarter Television K4200 Print Media K3700 Radio K5000 K3500 K1500 K5200 K5000 K2000 K4000 K3500 K1000 K1500 If there are 2000 hours per year for each employee (spread equally across the compute the total number of employees needed in each quarter. S Marks Two aggregate plans are now being evaluated by Tiyendepamodzi advertising: Level Capacity with backlog and Matching demand. It costs Tiyendepamodzi advertising K200 for every Kwacha of sales on any category of advertising backlogged (delayed for completion at a later date) for one quarter. If it costs Tiyendepamodzi advertising K2, 500,000 to hire and train an employee and K4, 500,000 to lay off an employee and the beginning of backlog in the first quarter is zero, which plan exhibits the least cost? Assume that quarterly demand pattern repeats from year to year. [10 Marks] i. year) i.Explanation / Answer
(a) The five variables that can be maniputated by an operations manager are
(i) Variation of manpower ( Hiring or layoff) to meet the demand as it comes.
(b) Subcontracting - It is also called contract manufacturing, where an outside agency can be engaged to make the required items for limited period at a price.
(c) Using overtime of existing manpower - The existing manpower can be used to generate surplus work hours to meet the demand.
(d) Renting / Purchasing of machinery and equipments - When existing infrastructure is not good enough to meet the short term high demand, additional machines and equipments may be purchased /hired. This can be done alongside hiring of workers
(e) Outsourcing some functions to outside agencies. This action involves otusourcing certain activities that are secondary in nature or are not the core competency of the organisation to the outside agencies and use the saved manpower and efforts in meeting the new requirements.
(b) Total sales in terms of Kwacha per year
TV = 18400 x10000
Print Media =15700x10000
Radio = 6000x10000
Total = 401000000
Total employee time needed = 0.002 hours per Kwacha
Time needed = 401000000x0.002 = 802000 hours
Number of workers needed = 802000/2000 = 401
By using level capacity method, the Kwacha generated every quarter will be the average of total requirements
(i) Time available in first quarter =401x500 =200500
Kwacha generated = 200500/0.002 =10025 x10K
Surplus =10025-9400 =625x10K
(ii) Second quarter -Kwacha generated = 10025x10K
Requirements =10000x10K
Surplus = 125x10K
Net surplus = 750x10K
(iii) Third quarter -Kwacha generated = 10025x10K
Requirements= 12200x10K
Backlog = 12200x10K -750x10K -10025x10K = 1425x10K
(iv) Fourth quarter Kwacha generated =8500x10K
Which will be met by the capacity
Total backlog = 1425x10k
Expense of the plan = 200x1425x10K = 285000x10K
Plan II
Workers needed for Q1 = 9400x10Kx0.002 /500 = 376
Workers needed for Q2 =10000x10Kx0,002 /500 =400
Workers needed for Q3 = 12200x10Kx0.002/500 = 488
Workers needed fo Q4 =8500x10Kx0.002/500 = 340
Workers to be hired = 24+88 =112
Workers to be fired = 148
Hiring cost = 112x250 x10K = 28000x10K
Firing cost = 148x450x10K =66600x10K
Total cost of plan = 94600x10k
Plan II is more attractive than plan A as it has lower cost.
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