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MBA (OPERATIONS MANAGEMENT)

SEMESTER 3

OM 0010 - OPERATIONS MANAGEMENT - 4 CREDITS

(BOOK ID B1232)

ASSIGNMENT 60 MARKS

Note: Answer all questions. Kindly note that answers for 10 marks questions should be

Approximately of 400 words. Each question is followed by evaluation scheme.

Fully solved only rs 500/sem or rs 100/question paper , smu solved

assignment available for mba ( I,IInd, IIIrd ,IVth sem) summer 2013

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Q1 It is the job of operations managers to convince the stakeholders that the investment in plant and equipment is

going to enhance the value of the investments already held by them in the organization. Explain some of the

concepts that can be considered in analyzing the investment. (ROI; EBIT; ROA; cash flow; EVA- 5 X2 marks =10

marks) 10 marks

Answer.

Investment analyzing concepts:

ROI- In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return

is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount o

money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or ne

income/loss. The money invested may be referred to as the asset,capital, principal, or the cost basis of the

investment. ROI is usually expressed as a percentage. ROI is a measure of cash generated by or lost due to the

investment

EBIT- In accounting and finance, earnings before interest and taxes (EBIT), also called operating profit or operating

income is a measure of a firm's profit that excludes interest and income tax expenses. It is the difference between

operating revenues and operating expenses. When a firm does not have non-operating income, then operating

income is sometimes used as a synonym for EBIT and operating profit.

EBIT = Revenue Operating expenses (OPEX) + Non-operating income

Operating income = Revenue Operating expenses

ROA- The return on assets (ROA) percentage shows how profitable a company's assets are in generating revenue.

ROA can be computed as:

This number tells you what the company can do with what it has, i.e. how many dollars of earnings they derive from

each dollar of assets they control. It's a useful number for comparing competing companies in the same industry. The

number will vary widely across different industries.

Cash Flow-Cash flow is the movement ofmoney into or out of a business, project, or financial product. It is usually

measured during a specified, limited period of time. Measurement of cash flow can be used for calculating other

parameters that give information on a company's value and situation.

Cash flow notion is based loosely on cash flow statement accounting standards. It's flexible as it can refer to time

intervals spanning over past-future.

http://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Interesthttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Cost_basishttps://en.wikipedia.org/wiki/Accountancyhttps://en.wikipedia.org/wiki/Earningshttps://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Non-operating_incomehttps://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Revenuehttps://en.wikipedia.org/wiki/Operating_expensehttps://en.wikipedia.org/wiki/Non-operating_incomehttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Cashhttp://en.wikipedia.org/wiki/Cashhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Non-operating_incomehttps://en.wikipedia.org/wiki/Operating_expensehttps://en.wikipedia.org/wiki/Revenuehttps://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Non-operating_incomehttps://en.wikipedia.org/wiki/Profit_(accounting)https://en.wikipedia.org/wiki/Earningshttps://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Cost_basishttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Interesthttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Finance

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EVA- Economic Value Added or EVA is an estimate of a firm's economic profit being the value created in excess o

the required return of the company's investors (being shareholders and debt holders). Quite simply, EVA is the profit

earned by the firm less the cost of financing the firm's capital.

EVA calculation:

EVA = net operating profit after taxes a capital charge [the residual income method]

EVA = (r-c) capital[the spread method, or excess return method]

Where, r = rate of return, and

c = cost of capital, or the Weighted Average Cost of Capital (WACC).

Q2 Explain the regional factors that affect location decision. (Location of raw materials; Location of markets; Labou

factors; Climate andtaxes - 4 X 2.5 marks= 10 marks) 10 marks

Answer:Location of raw materials: Firms producing goods, and even firms producing services, need various material

to develop products that they can sell. Some firms need natural resources: a manufacturing sector like lumber needs

Q3 Explain the nine fundamental propositions about organisational effectiveness. (Explanation of 9 fundamenta

propositions 9 marks; conclusion 1 mark) 10 marks

Answer:

9 fundamental propositions:

1.

Q5 Discuss the Independent demand item techniques. (Reorder point (or Perpetual) Model 5 marks; Periodic

review models 5marks) 10 marks

Answer: The two types of demand are Independent Demand and Dependant Demand for inventories.

Independent Demand

Q6 Explain the types of failures that occur in operations. (Design failures; Facilities failures; Staff failures; Supplier

failures - 4 X 2.5marks = 10 marks) 10 marks

Answer: At its simplest failure is when something does not work as it should do. If the shop assistant who sells you an

item of clothing fails to inform you of the fact that it should be dry cleaned, it is technically a failure. Different types

of failures ocuures in operation as: design failures, facilities failures, staff failures, supplier failures.

1. Design failures

The overall design of an operation can prove to be the root cause of failure. In its design stage an operation might look

fine on paper; only when it has to cope with real circumstances might inadequacies become evident. Some design

Fully solved only rs 500/sem or rs 100/question paper , smu solvedassignment available for mba ( I,IInd, IIIrd ,IVth sem) summer 2013

call us on 08273413412, or mail us computeroperator4@gmail.com

http://en.wikipedia.org/wiki/Economic_profithttp://en.wikipedia.org/wiki/Required_rate_of_returnhttp://en.wikipedia.org/wiki/Types_of_companieshttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Types_of_companieshttp://en.wikipedia.org/wiki/Required_rate_of_returnhttp://en.wikipedia.org/wiki/Economic_profit