MBO Specimen Exam Questions – Outline Answers/Guidelines These are outline answers suggesting some of the points you might wish to discuss. In most cases they are not intended to be complete ‘model’ answers.

1. a) Quality – doing things right Speed – doing thing quickly Dependability – doing things on time, keeping promises Flexibility – being able to change (several dimensions to this) Cost – doing it cheaply (but still considering the other objectives) b)You will have covered this in the assignment (for one organisation). There are plenty of examples in the book that illustrate how each objective can mean different things to different types of operations e.g. banks, airlines, car manufacturers.

2. a) (See chapter 5 of the book)
Manufacturing process types are project, job, batch, mass, continuous. Service process types are professional, service shop, mass service. Need to discuss the characteristics of each type and the relationship to volume and variety. (it is not necessary to draw this diagram!! It is just here as a means of explaining things)

b) Need to describe each layout type and its relationship to process types. This is not a perfect relationship (see below – it is not necessary to draw this diagram!! It is just here as a means of explaining things)

3. (a) Advantages of single sourcing and multi-sourcing include:
Advantages of Single Sourcing
Advantages of Multi-Sourcing
Stronger relationship between parties, leading to greater commitment to success.
Reduces risk of loss of supply from single supplier.
Opportunities for savings due to economies of scale with larger order quantities.
Can be used to reduce price by encouraging competition between suppliers.
Facilitates better communication and reduces administration overhead.
Provides more flexibility in meeting changes in demand.
Easier to maintain confidential terms of business.
A range of suppliers can give access to a wider knowledge about goods and services.

(b) Answer should explain each level of co-operation/integration: Market relationship – simply a transaction between supplier and purchaser. Flexible. Enables competition between suppliers. Strategic partnership – likely to be more long-term; organisations work together and share information; allows closer co-ordination and control of quality. Virtual organisation – involves electronic exchange of information; makes it easier to outsource supply-chain activities to third parties. E-commerce systems can eliminate stages within the traditional supply chain e.g retailer and wholesaler omitted as producer deals directly with end customer. Vertical integration – an organisation takes ownership of other organisations within the supply chain. Can be backward (organisation owns upstream elements) or forward (organisation owns downstream elements).
4.
(a) Answer should mention that: (i) buffer stock (or safety stock) is stock that is carried in order to compensate for uncertainties in the level of demand and uncertainties in supply due to suppliers not being able to guarantee lead times. (ii) lead time is the time that elapses between an order being placed and the goods arriving from the supplier. Variable lead time means the lead time is uncertain. (iii) re-order level is the level to which the stock of an item drops before an order is placed for more stock. It is usually set at a level such that the organisation (just) has enough stock to last until the order arrives. Re-order point refers to the time that the order is placed. (iv) economic order quantity represents the optimum amount of stock to order each time an order is placed. The quantity is such that the annual cost of ordering and holding the stock is minimised.
b) D = 52*500 = 26000 C = £135 H = £20*15% = £3 EOQ = √[2*135*26000/3] = 1530 Re-order level = expected lead time demand + safety stock expected lead time demand = 2*500 = 1000 units sd of lead time demand = 25*√2 = 35.3 safety stock = 2.33/35.3 = 82 units