INDIAN INSTITUTE OF MANAGEMENT Operations Management II End-Term Examination, PGP I, PGP-ABM I, & FPM I Apri !

, "##$% &'## a'm' - !"(## noon P)EASE *EAD +A*EFU)),( 1. 2. 3. . $. &. The duration of the examination is 3 hours. This is an open book, open notes examination. Be brief and precise. State assumptions, if any, clearly and provide a brief justification. !or obtainin" full credit, clearly sho# all your supportin" #ork. Total marks % &' The examination consists of five pa"es (includin" this cover pa"e).

-.estion No' * ** *** *0

Topi/ +arnavati ,olice -ity .ospital The /ap Stores Simplex 1n"ineerin"

0eig1t 2Mar3s4 13 1$ 22 1'

S.ggested Time 2min.tes4 ' ' &' 2$

I 5arna6ati Po i/e Department 2!7 Mar3s4 *n the last fe# months, +arnavati ,olice 2epartment is tryin" to put a brave face a"ainst the char"es of increasin" rate of crime committed a"ainst #omen in the city. 3hile preparin" for a media statement, the police commissioner suddenly remembered that they have been #orkin" on a project alon" #ith an 4/5 called 2*2* for last fe# years. This 4/5 has reco"ni6ed that not all crimes and offences are reported7 people do not #ant to become involved, are too embarrassed to make a police report, or consider the offences too small to report, amon" other reasons. Because of this, every month, 2*2* contacts a random sample of 3''' #omen in the city for data on crime. The respondents are "uaranteed anonymity. Summary data collected of last years is presented in the Table belo#. The commissioner has a hunch that the crime rate is up in the #inter months.
Mont1 <an.ar= Fe>r.ar= Mar/1 Apri Ma= <.ne <. = A.g.st Septem>er O/to>er No6em>er De/em>er "##8 2: 1$ 9 2' 2 12 13 1 & 2 13 "##9 28 19 1$ 2 2 & 13 9 1 1$ 23 11 +rime In/idents "##: "##; 29 : 19 9 $ 1 12 12 23 1' 13 A6erage 1& 1 .2$ 1 .$ 1 .9$ 1'.9$ 1 .9$ :.$ 13.2$ 1$.2$ 1$.2$ 12 *ange 2$ 2 2' 19 1: : 11 2 19 2 2

2 11 1 3 2' 2 13 19 2& 11

(a) 3hat comments can you make re"ardin" the crime rate; Specifically, #hat is your assessment of the crime a"ainst #omen in +arnavati and the commissioner<s hunch; To be reasonably certain in your conclusions, select a 8$= confidence level. (1' marks) (b) .o# #ould your conclusions chan"e if you had to be 88= confident; (3 marks) II +it= ?ospita 2+?4 2!9 mar3s4 The medical>sur"ical department in -ity .ospital (-.) occupies ei"ht floors. -. desires to schedule a complete shutdo#n of one floor for maintenance, #hich #ill re?uire t#o #eeks. The maintenance needs to be done #ithin the next ei"ht #eeks. 2emand for hospital beds are measured in patient>days. @ patient #ho stays six days consumes six patient>days. 1ach floor of -. can provide up to 1'' patient>days per #eek. The demand forecast (in patient>days) for the next fe# #eeks is sho#n in the table belo#. 5f course, a patient>day may not be inventoried, but can be backlo""ed #ithin limits, since '= of the patients are admitted for elective procedures, #hich can be delayed. 3eek 2emand (patient>days) 1 9'' 2 :'' 3 1''' 9'' $ 9'' & :'' 9 &'' : 9''

1xperience has sho#n that the efficiency of servicin" patients is reduced #hen backlo" of patient> days is lo#. @s a result of mismatches bet#een the schedules of physicians, patients and operatin"

rooms empty beds are unlikely to be filled #hen the backlo" of patient>days is lo#. @s a "uide, each floor can service1'' patient>days in a #eek (i.e, produce up to its capacity) if the avera"e backlo" for the #eek is at least $' patient>days per floor (i.e., avera"e backlo" of '' patient>days is needed to assure full utili6ation of the hospital capacity). 3hen the avera"e backlo" is bet#een one and $' patient>days per floor only 8$ patient days can be serviced per floor. (The avera"e backlo" for the #eek is the be"innin">of>the>#eek backlo" plus the endin">of the>#eek backlo" divided by t#o.) 3hen there is no backlo", no more than 8' patient>days can be serviced per #eek per floor. The present backlo" is $'' patient>days, #hich is considered ?uite hi"h. The current plan is to shut do#n the floor ri"ht after the peak demand, so that it #ould be closed in #eeks and $. (a) 1valuate the current plan. Aou may find it useful to develop the detailed plan sho#in" clearly the backlo" and the number of patient>days service each #eek under the current proposal. -learly state the criteria you are usin" to evaluate the plan, #ith brief justification. (& marks) (b) Suppose that the demand forecast for #eek 8 is 9'' patient>days. .o# many patient>days can be serviced in #eek 8 under the current plan. (3 marks) (c) Su""est an improved plan and evaluate your alternative. (& marks) III T1e Gap Stores 2"" mar3s4 The /ap Stores (T/S) has started sellin" throu"h its online channel alon" #ith its retails stores. Bana"ement has to decide #hich products to carry at the retail stores and #hich ones to carry at its central #arehouse to be sold only throu"h its online channel. T/S currently has 8'' retail stores in the CS@. *n this problem you #ill examine the viability of movin" a popular brand of cashmere s#eaters from the retail to the online channel. -ashmere s#eaters are sold in four colors. 1ach s#eater costs D1''. *nventory holdin" cost for T/S is estimated to be 2$= per year. The mean #eekly demand at the retail store level for each stock keepin" unit (sku) defined by color is $' units. The standard deviation of the #eekly demand is 2$ units. 2emand for cashmere s#eaters does not exhibit any seasonality. *nventory at the retail stores is mana"ed independently for each sku usin" continuous revie# policy. The company policy is to maintain a cycle service level of 8$= for each item carried in inventory. The inventory system parameters for cashmere s#eaters are summari6ed belo#7 5rder ?uantity7 2'' units Eead time7 #eeks, constant 5nline channel demand is serviced throu"h inventory maintained at T/S<s central #arehouse. *nventory policy at the central #arehouse is consistent #ith the company policy F continuous revie# system #ith cycle service level of 8$=. @nn Geardon, 0, (online) expects that the replenishment lot si6e for cashmere s#eaters #ould be about 1'',''' units. The lead time is expected to be unchan"ed at four #eeks. (a) Should T/S continue to sell cashmere s#eaters throu"h its retail stores or move the product to online channel; ,lease provide a detailed ?uantitative analysis based on data provided above in support of your recommendation. 3hat other factors #ould you consider in makin" the decision; (1' marks) (b) 1namored by the HpostponementI strate"y of Benetton that #as presented at a Supply -hain Bana"ement seminar she recently attended, @nn came up #ith a ne# idea. This involved procurin" s#eaters in "ray and dyein" the "arments in response to demand. @nn #as sure that she could setup a modern dyein" facility close to the central #arehouse #ith a moderate investment of about D1 million. She also felt that "arment dyein" and delivery could be mana"ed #ithin the four #eeks promised to the customer, provided ade?uate inventory of "ray "arments #as maintained. She estimated that the mar"inal cost of additional operations

#ould be no more than D1.'' per unit. *n order to ensure availability of "ray stock @nn #as considerin" revisin" the service tar"et from current 8$= cycle service level to a fill rate of 88.8=. The procurement lot si6e #ould be maintained at 1'','''. .o# #ould you modify your decision in (a) based on this additional option. @"ain, be sure to provide sound ?uantitative justification in support of your recommendation. (8 marks) (c) Bore "enerally, #hat are the demand and supply characteristics that make some products more attractive for on>line channel vis>J>vis the traditional retail store; (3 marks) I@ Simp ex Engineering & Fo.ndr= 0or3s P6t' )td' 2!# Mar3s4 ,lease have a look at the accompanyin" advertisement that appeared in Ket#in"s, !ebruary 2'':. *n ans#erin" the ?uestions belo#, please make sure that you provide ade?uate justification for your responses. (a) 3hat is the basis of competition for Simplex and ho# #ould classify its operations > identify the type of the industryL process; (2 marks) (b) 3hat are the operations terms that you observe in the ad; 2o they make sense here; .o#; Briefly describe three principles L tools that you have studied in the course that may be useful in mana"in" Simplex<s operations. ($ marks) (c) *dentify three 5B concepts (that you studied), #hich you think are not applicable in such industries; (3 marks)