Production and Operations
Management – Answer Key
SECTION A – (10 x 2 = 20 marks)
1. 1. Write short note on optimal capacity:
Optimal capacity is the level of output at which average cost per unit is minimized. It
balances the utilization of resources without overburdening the system.
2. 2. Define capacity planning:
Capacity planning is the process of determining the production capacity needed by an
organization to meet changing demands for its products.
3. 3. How can capacity planning be improved?
Capacity planning can be improved through demand forecasting, better scheduling, use
of simulation models, and capacity utilization analysis.
4. 4. What do you mean by capacity?
Capacity refers to the maximum output that an organization can produce under normal
conditions.
5. 5. What are the stages of production planning and control?
The stages include routing, scheduling, dispatching, and follow-up.
6. 6. What is lot sizing in the MRP system?
Lot sizing is the process of determining the order quantity for production or purchases
in Material Requirements Planning (MRP).
7. 7. How do you calculate aggregate production?
Aggregate production is calculated by summing the planned production quantities
across all products or services over a specific time horizon.
8. 8. Mention the five principles of lean manufacturing:
1. Identify value 2. Map the value stream 3. Create flow 4. Establish pull 5. Seek
perfection
9. 9. What do you mean by JIT?
Just-In-Time (JIT) is a production strategy that strives to reduce in-process inventory
and associated carrying costs by receiving goods only as they are needed.
10. 10. What is quality management process?
It is a set of procedures that ensure that products and services meet customer
expectations and regulatory requirements.
SECTION B – (5 x 5 = 25 marks)
11. (a) Objectives of production management
- To produce goods and services of the right quality
- To produce in the right quantity
- To ensure timely production
- To optimize resource utilization
- To reduce cost
11. (b) Historical development of production management
- Pre-industrial era: Craft production
- Industrial revolution: Mechanization
- Scientific management: Frederick Taylor
- Post-WWII: Quality and efficiency focus
- Modern era: Automation and lean systems
12. (a) Required qualities of a work study man
- Analytical skills
- Observational skills
- Communication skills
- Knowledge of production methods
- Objectivity
12. (b) Characteristics and advantages of plant layout
- Logical arrangement of machines
- Efficient workflow
- Minimum material handling
- Safety and comfort
- Flexibility for expansion
13. (a) Objectives of plant layout
- Maximize utilization of space and equipment
- Reduce material handling cost
- Ensure worker safety and convenience
- Improve supervision
- Provide flexibility
13. (b) Principal objectives of production planning and control
- Efficient use of resources
- Minimum inventory levels
- Timely delivery
- Cost reduction
- Adaptability to changes
14. (a) Importance of aggregate planning
- Balances demand and capacity
- Minimizes production costs
- Improves customer service
- Helps in inventory management
- Supports strategic planning
14. (b) Information requirements of production planning department
- Demand forecasts
- Inventory status
- Production capacity
- Lead times
- Resource availability
15. (a) Traditional method vs. Just-in-time
Traditional: Push system, high inventory, fixed schedules
JIT: Pull system, low inventory, flexible and responsive
15. (b) Limitations of forecasting methods
- Forecasting is based on assumptions
- Can be inaccurate due to external factors
- Limited by data quality
- Short-term forecasts may miss trends
SECTION C – (3 x 10 = 30 marks)
11. 16. Functions and importance of operations management
**Functions:** Planning, organizing, directing, and controlling production
**Importance:** Increases efficiency, improves product quality, reduces cost, ensures
timely delivery, enhances customer satisfaction
12. 17. Define capacity planning. What factors would you consider in planning?
**Definition:** As earlier stated.
**Factors:**
- Forecasted demand
- Resource availability
- Technology
- Financial constraints
- Market trends
13. 18. Material planning techniques
- **Direct materials:** EOQ, JIT, MRP
- **Indirect materials:** ABC analysis, VED analysis, two-bin system
14. 19. Principles of master production schedule (MPS)
**Principles:** Based on actual customer orders and forecasts, Maintains balance
between demand and production, Coordinates sales, production, and inventory
**Uses/Importance/Functions:** Helps in meeting delivery schedules, Guides capacity
planning, Supports inventory control
15. 20. Principles and drawbacks of lean manufacturing
**Principles:** Identify value, Map the value stream, Create flow, Establish pull, Seek
perfection
**Drawbacks:** Requires cultural change, Vulnerable to supply disruptions, High initial
implementation cost, Not suitable for all types of production
