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UOW BUSINESS STUDIES STUDENT CONFERENCES, 2017

© MOHAN DHALL

PLC SYDNEY

An Overview of Operations

2016 HSC

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6 A global business has adopted a strategy which aims to lower the average cost of its product by increasing output. What is this strategy called?

(A) Outsourcing(B) Global pricing(C) Global sourcing(D) Economies of scale

8 A business plans to increase its stock to be ready for the grand opening of five new stores. This shows the interdependence between which business functions?

(A) Operations and finance(B) Operations and marketing(C) Finance and human resources(D) Human resources and marketing

9 Which performance objective measures how well a product meets the prescribed design specifications?

(A) Cost(B) Flexibility(C) Quality(D) Speed

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2016 HSC

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Question 23 (10 marks)

Heather owns a financial planning business with offices in four countries, including Australia.

(a) Heather outsources the cleaning of her Sydney office. Explain ONE advantage of this strategy. 2

(b) Heather also outsources all her financial record keeping. Explain TWO disadvantages of this strategy. 4


A fruit shop has experienced strong growth in its sales of fresh organic fruit since it started to sell online.

(a) Discuss ONE possible method of inventory management for this business. 4

(b) Explain why corporate social responsibility should be a key concern in operations management for this business. 3


With reference to a business you have studied, analyse the relationship between cost and quality in the operations of the business. 6

2016 HSC

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Evaluate the response of operations management to external influences.

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2013 HSC

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1 Which business function transforms raw materials and resources into finished goods or products?

(A)Finance

(B) Human resources

(C) Marketing

(D)Operations

Role of Operations Management

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� Strategic role of operations management

Operations is intrinsically and intricately linked with each of the the other key business functions. Management perspectives to solving operations issues and problems are important. For example, cost is crucial:

� Cost leadership� Two aspects apply

� Efficiency – cost-minimisation� Note the relationship between supply costs and cost leadership� Delivering product to the market in a price-competitive manner

• Note the cost implications of: • Standardisation and customisation• Goods and services

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Influences on Operations

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Each of the following as: an opportunity and also a threat

� Globalisation� LEGO, Apple, Google, Samsung

� Technology� LEGO, Black Milk Clothing, Tencent,

� Quality expectationsMercedes Benz, Rodd and Gunn, Tiffany and Co

� Cost-based competition� Amazon, Aldi, Walmart, TATA Motors

� Government policies� Multigate, Samsung (washing machines)

� Legal regulation� 7-Eleven, CommInsure

� Environmental sustainability� MooGoo

� Legal regulation� Nanna’s Blueberries, Reckitt Benckiser

� Environmental sustainability� Westpac and Unilever and Oxfam

Influences on Operations

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Corporate social responsibility (CSR)

� The business dilemma: � What is the purpose of business?� What is the nature and effect of compliance?

� The difference between legal compliance and ethical responsibility – Including environmental sustainability and social responsibility

2015 HSC Q1The term compliance costs refers to expenses associated with meeting

(A) competitor prices.(B) legal requirements.(C) consumer demands.(D) supplier constraints.

Case studies: CommInsure, 7-Eleven

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Operations Processes

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An overview of the processes

Operations processes and transforming factors

• Influence of the 4V’s

• Sequencing and scheduling

processing activities

• Role of technology in

processing

• Plant and office layout

• Monitoring, controlling and

improving processes

Inputs into the

transformation process:

WHAT INPUTS• Labour, raw materials,

energy, information,

technologies

• Transformed resources

• Material, information

customers

• Transforming resources

• Human resources, facilities

Outputs:Final goods and services that

are sold to markets:

(intermediate and consumer)

• Customer service

• Warranties

Past HSC Questions

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2015 HSC – Q5

Which of the following includes two examples of transforming resources?

(A) Facilities and customers(B) Materials and customers(C) Facilities and human resources(D) Materials and human resources

2013 HSC – Q17Which of the following combinations would result in the lowest production cost per unit?

(A) Limited customer contact, limited product variety and low volume(B) Limited customer contact, limited product variety and high volume(C) Extensive customer contact, extensive product variety and low volume(D) Extensive customer contact, extensive product variety and high volume

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Sequencing (what order)

and scheduling (when and for how long):

� Process and resource management tools

� Gantt charts, critical path analysis (CPA)

Past Questions

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2013 Q8

What does a critical path identify?

(A) The lowest cost path to complete all tasks in a project

(B) The highest cost path to complete all tasks in a project

(C) The longest time required to complete all tasks in a project

(D) The shortest time required to complete all tasks in a project

2015 Q18

Which of the following would be the focus of a business aiming to reduce expenses?

(A) Changing task design

(B) Differentiating its product

(C) Establishing cost leadership

(D) Developing quality expectations

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2015 HSC

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What is the length of the critical path for this project?

(A) 9 days(B) 14 days(C) 18 days(D) 27 days

If activity EC is delayed and takes 6 days, by how long will the project be delayed?(A) 0 days(B) 3 days(C) 6 days(D) 17 days


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• Customer service� Operations processes - implications� Outsourcing

• Warranties� A quantitative (measurable) assessment of operations processes� Effect on inputs and processes

Case studies � Recall of Samsung phones – exploding batteries� The recall of 8.1 million Toyotas following slipping mats and sticky

accelerators being linked to 19 accident deaths. Honda recalled 437,000 vehicles due to faulty airbags. VW (Skoda and Audi) did a mass recall on the basis of accelerators losing power causing fatal accidents too. But the Australian recall came MANY months after a recall elsewhere.

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2012 HSC and 2014 HSC

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2 A factory manager is deciding the best order in which to complete tasks. Which operations process is being carried out?

(A) Monitoring

(B) Scheduling

(C) Sequencing

(D) Task design

18 A Gantt chart for Sam’s Chocolate Shop is shown.

Jan Feb March April May June

Obtain lease and refit shop

Purchase stock

Select and train staff

Advertising campaign

Commence trading

2012 HSC and 2013 HSC

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7 In winter, the number of beach lifeguards employed by a local council is reduced. What has influenced the transformation process in this situation?

(A) Variation in demand(B) Variation in visibility(C) Variety(D) Volume

14 Which of the following includes two examples of transforming resources?

(A) Materials and energy(B) Information and customers(C) Task design and technology(D) Human resources and facilities

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Operations Strategies

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Performance objectives (all quantifiable)ALIGN TO FINANCIAL GOALS and MARKETING OBJECTIVES

� Quality� design quality, service quality and consistency, quality standards and conformance rates

� Speed� The notion of ‘lead times’ is relevant. This implies supply chain management controls, flexible

processing (in response to demand) and reduction of processing and delivery bottlenecks

� Dependability� Flexibility

� Market responsiveness and service customisability

� Customisation� Both goods and service providers aim to standardise their operations as far as possible. The proportion

of standardisation is linked with cost savings

� Cost� Cost leadership (expense minimisation) and therefore low-cost delivery of product to markets is most

likely to maximise profitability

New product or service design and development� Involves research and development (R&D), product design, product/market testing,

product refinement/adjustment, delivery to market and ongoing adaptation.

Past Questions

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18HSC 2014 Q5 Which of the following are all examples of operations performance objectives?

(A) Choice, flexibility, profit, speed(B) Cost, dependability, quality, speed(C) Customisation, flexibility, profit, quality(D) Choice, customisation, dependability, profit

HSC 2015 Q9A business wants to minimise the volume of its waste. Which performance objective is the business trying to achieve?

(A) Cost(B) Customisation(C) Flexibility(D) Speed

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Operations Strategies

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Supply chain management (SCM)

� Logistics (note in order of processes this should be dealt with LAST)� Involves distribution (channels)

� Involves transportation modes

� The role, if any, or warehousing

� E-commerce� E-procurement (B2B)

� E-tailing (B2C)

� Global sourcing� Global web

� Make-or-buy and vertical integration

2012 and 2013 HSC

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11 Which of the following is an essential aspect of logistics?

(A) Undertaking a skills audit(B) Checking the quality of all output(C) Materials handling and packaging(D) The creation of a budget for new machinery

5 A company’s policy is to purchase from lowestcost suppliers regardless of their location.

What is this policy an example of?

(A) Global sourcing(B) Global branding(C) Economies of scale(D) Research and development

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Operations strategies

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Outsourcing (the most underrated strategy and most widely used)� Advantages

� Cost saving/efficiency� Increased ability to process – functional/capacity increases = growth� Flexibility� Through Service Level Agreements (SLA’s) – specified standards� Access to process/knowledge experts� Strategic benefits (eg British Airways ticketing with WNS)

� Disadvantages� Possible loss of privacy� Cost of outsourcing� Negotiating SLA’s� Loss of control of business processes� Cost of organisational redesign� Loss of corporate memory

Case studies: Nanna’s Blueberries and Hep A, Mattel and Apple – breaches to SLA’s..?

Insourcing trend – cosourcing:Interactive and Flight Centre Travel Group (FCTG)


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Inventory management (stock management)

� Advantages and disadvantages of holding stock� Warehousing and attendant costs (leasing, rent or interest,

security, insurance, refigeration/air temp and quality controls, logistics management)

� JIT and the interaction between the holding of stock and distributing stock (they are NOTmutually exclusive)

� LIFO (last-in-first-out), FIFO (first-in-first-out)� Inventory costing techniques

� JIT (just-in-time)� Assumptions: Periodic period (rather than perpetual), matching

principle is CRUCIAL

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Past HSC Questions

© Mohan Dhall 2017

232015 Q8Which of the following is the best method for managing the stock of fresh milk in a supermarket?

(A) Just-in-time(B) First-in-last-out(C) Last-in-first-out(D) First-in-first-out

2013 Q18A business is experiencing increasing costs for its stock over time. It is seeking to maximise its profit for the current financial period. Which strategy should it adopt to value its inventory?

(A) Firstinfirstout(B) Justincase(C) Justintime(D) Lastinfirstout

2014 Q7A car assembly plant had to shut down operations for a day because tyres had not been delivered.

What inventory management strategy at the car assembly plant may have caused this situation?(A) Just-in-case(B) Just-in-time(C) First-in-first-out(D) Last-in-first-out


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Quality management

� International quality principles (ISOs)� Dynamic NOT static processes

� TQM: Product excellence and Sigma Six: Process excellence

� Both are old…and new again

� Control (QC)� Predetermined quality - random sampling

� Assurance (QA)� Pre-determined quality standards

� International Standards Organisation (ISOs)

� Improvement (QI)� Continuous not discontinuous

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Overcoming resistance to change

� Financial costs* � purchasing new equipment

� redundancy payments

� retraining

� reorganising plant layout

� Inertia� Psychological resistance to change

� Case studies

� David Jones and e-commerce, News Limited and Fairfax

* Note the implied bias towards manufacturing

2014 HSC

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2014 HSC - Question 21 (10 marks)

(a) Explain why managers may be resistant to change. 4

(b) Analyse the use of sequencing and scheduling to improve business operations.6

2015 HSC - Question 23 (8 marks)

North Coast Manufacturing makes customised furniture for its clients.

(a) How could technology influence the transformation process at North CoastManufacturing? 2

(b) North Coast Manufacturing is currently planning a new factory. Explain TWO factors that it should consider when designing the process layout. 4

(c) Recommend a method of monitoring the effectiveness of the process layout.2

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� Global factors

� Global sourcing:� K-Mart and Bunnings

� Testrite

� Economies of scale:� CostCo, Walmart, Aldi

� Scanning and learning: � Ladbrokes and Tom Waterhouse

� Research and development (R&D)� Case study: CSL

2014 HSC

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15 What is the most likely result of a business achieving economies of scale?

(A) Greater flexibility

(B) Higher sales price per unit

(C) Greater efficiencies in production

(D) Higher average costs of production

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HSC 2013 - Q23 (9 marks)

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Casey owns and operates an independent discountfuel and convenience store.

(a) Outline ONE way that ecommerce could assist Caseywith supply chain management. 2

(b) Explain ONE performance objective that is relevant tothe operations function of the business. 3

(c) Is supply chain management important to Casey’s

business? Justify your answer. 4

HSC 2012 –Report

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Sunshine Fruit Juices employs 100 people in its Queensland factory andsupplies juice to large supermarket chains in Asia and North America.Customers have recently complained that the product has beendamaged and bottles have been wrongly labelled. An increase inindustrial disputes has also occurred due to a number of recentworkplace accidents and demands from employees for higher wages.

You have been employed by Sunshine Fruit Juices to preparea report for management on the issues outlined above. Inyour report, recommend strategies for human resources andoperations that the firm could implement to improve itsbusiness performance.

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2014 HSC Report

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Emu Uniform Manufacturers Pty Ltd are a successful business based in NSW. Theycurrently supply a range of school, sport and work uniforms to a large number ofcustomers throughout Australia. They are known for their outstanding customer serviceand high quality products.

Sales have been increasing for many years and they have recently received a large long-term contract to supply uniforms to a major company.

This will require them to significantly expand their output. To do this, the business willhave to outsource overseas or spend $5 million to expand its existing factory in NSW.

You have been hired as a consultant to write a report to the management. In your report:

� recommend a source of finance for the factory expansion� discuss outsourcing overseas compared with the factory expansion� explain the global factors that need to be considered if they decide to use outsourcing

as an operations strategy.

HSC questions - Section IV

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2015 HSC Extended Response


Evaluate the importance of operations strategies in achieving competitive advantage.

2013 HSC Extended Response


Assess strategies that management may use to respond to influences on operations.

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