Maryland International College

School of Graduate Studies

COURSE: OPRATIONAL MANAGEMENT

GROUP ASSIGNMENT

NAME ID NO

ABIYOT KEFALE…………………………………MBA/003/2016

NIGUSU ……………………………………………MBA/039/2016

AMARE GENETU…………………………………..MBA/007/2016

Submitted to: Dr

Submitted date JUN 2025

Q 1) Types of Plant Layouts

1) Process Layout (Functional Layout)

Grouping similar processes or functions together.

Characteristics: Machines and equipment performing similar tasks are placed in the same area
(e.g., all lathes in one section, welding in another).

Suitable for job shops or batch production where products vary in design and sequence of
operations.

Advantages: Flexibility in production.

Better utilization of machines and workers.

Easier supervision of specialized processes.

Disadvantages:-High material handling costs due to irregular flow.

Longer production time due to backtracking.

Requires more floor space.

Product Layout (Line Layout)

Arranging machines and equipment in the sequence of operations for a specific product.

Characteristics: Used in mass production or assembly lines (e.g., automobile manufacturing).

Workstations are arranged in a linear or U-shaped flow.

Advantages:-Smooth and continuous workflow.

Reduced material handling and transportation time.

Lower work-in-progress inventory.

Disadvantages:-Inflexible for product changes.

High initial investment.

Breakdown of one machine can halt the entire line.

Fixed Position Layout (Static Layout) Keeping the product stationary while resources (men,
machines, tools) are brought to it.

Characteristics:Used for bulky or heavy products like ships, aircraft, and large machinery.

Workers and equipment move to the product location.

Advantages: No need to move the product.

Suitable for customized, large-scale production.

Disadvantages

High labor and equipment movement costs.

Space utilization may be inefficient.

Scheduling and coordination challenges.

4) Combination Layout (Hybrid Layout)

Focus Combining features of process and product layouts.

Characteristics: Used in industries where both variety and volume are important (e.g., furniture
manufacturing, some chemical plants).

Certain stages follow a product layout, while others follow a process layout.

Advantages:-Balances flexibility and efficiency.

Optimizes space and resource utilization.

Disadvantages:-Complex to design and manage.

May require higher initial costs.

5) Cellular Manufacturing Layout (Group Technology Layout

Grouping machines into cells that can produce similar parts or products.

Characteristics:-Combines elements of process and product layouts.

Each cell is dedicated to a family of parts requiring similar processing.

Advantages:-Reduces material handling and setup time.

Improves workflow and reduces lead time.

Disadvantages:-Requires careful planning and part classification.

May not be suitable for low-volume production.

6) Flexible Manufacturing System (FMS) Layout

Automated and adaptable production system for varying product types.

Characteristics:-Uses CNC machines, robots, and automated guided vehicles (AGVs).

Computer-controlled production for quick changeovers.

Advantage:-High flexibility and efficiency.

Reduced labor costs and improved precision.

Disadvantages:-Extremely high initial and maintenance costs.

Requires skilled personnel.

Q2) When to Use PERT vs. CPM in Project Management

Both PERT (Program Evaluation and Review Technique) and CPM (Critical Path Method)
are project management tools used for scheduling and controlling complex projects. However,
they are suited for different scenarios based on their unique characteristics.

Key Differences Between PERT and CPM

Feature PERT CPM

Cost & time trade-off

Focus Time-oriented (probabilistic)
(deterministic)

Time Three-time estimates (Optimistic,

Single time estimate
Estimates Pessimistic, Most Likely)
 Construction, manufacturing,
Best For Research, R&D, uncertain projects
repetitive projects

Less flexible, assumes fixed

Flexibility Handles uncertainty well
durations

Yes, with focus on cost

Critical Path Yes, but with probability analysis
optimization

When to Use PERT Instead of CPM

High Uncertainty in Task Durations

PERT is ideal when project activities have unpredictable durations (e.g., research projects,
software development, and space missions).

It uses three-time estimates (Optimistic, Pessimistic, Most likely) to calculate expected time
and account for variability.

Non-Repetitive or First-Time Projects

If the project is unique (e.g., launching a new product, scientific experiments), PERT helps
model uncertainties better than CPM.

Need for Probability-Based Scheduling

PERT provides probabilistic time estimates and calculates the likelihood of meeting deadlines,
which is useful in risk management.

Projects Where Time is More Critical than Cost

PERT focuses on minimizing project duration rather than cost optimization (unlike CPM,
which balances time and cost).

When to Use CPM Instead of PERT

Well-Defined, Repetitive Projects

CPM is better for projects with predictable task durations (e.g., construction, manufacturing,
event planning).

Cost-Sensitive Projects

CPM includes crashing (cost-time trade-offs) to reduce project duration at extra cost, making it
ideal for budget-controlled projects.

Clear Task Dependencies

If activities have fixed durations and dependencies, CPM’s critical path analysis helps identify
the longest path and manage delays.

Projects with Fixed Deadlines

CPM is preferred when deadlines are strict, and managers need to optimize schedules and
resources efficiently.

Use PERT when dealing with uncertainty, R&D, or first-time projects where time estimates
are variable.

Use CPM for well-structured, repetitive projects with fixed durations and a focus on cost
optimization.

Q 3) The statement “The firm has to take into consideration both the
technology of production and the social aspects of the work environment”
reflects a balanced and holistic view of organizational management. Here's a
detailed commentary:

1. Importance of Technology in Production

Modern firms operate in a competitive and fast-changing environment. Technology plays a

crucial role in:

Efficiency and Productivity: Advanced tools and automation reduce time and costs.

Quality Improvement: Modern machines ensure consistency and precision.

Innovation: Technological capabilities drive product and process innovation.

Competitiveness: Firms using up-to-date technology can stay ahead of competitors

Focusing only on technology without considering human factors can backfire.

2. Social Aspects of the Work Environment

While machines and systems are important, humans are still central to any organization. Social
aspects include:

Employee Well-being: Job satisfaction, mental health, and work-life balance are key for long-
term performance.

Team Dynamics: Collaboration, communication, and conflict management affect productivity.

Organizational Culture: A positive culture improves morale and reduces turnover.

Motivation and Engagement: Workers who feel valued contribute more creatively and
efficiently.

3. Integration of Both Aspects

An ideal firm integrates technology with human-centered policies, for example:

Training employees to adapt to new technologies.

Designing ergonomic workplaces to reduce strain.

Involving workers in decision-making about technological changes.

Encouraging teamwork alongside automation

Generally Technology enhances productivity, but people operate and maintain that
technology. Ignoring either side—technological or social—can lead to inefficiencies, low
morale, or even failure. Therefore, firms should aim for a balanced strategy that embraces
innovation while creating a supportive and engaging work environment.

Q 4) Total Quality Management (TQM), audits are essential tools used to assess,
improve, and ensure adherence to quality standards across all areas of an organization. Different
types of audits help monitor processes, systems, and performance to ensure continuous
improvement. Here are the main types of audits involved in TQM, along with examples:

1. Internal Audit (First-Party Audit)

Definition: Conducted by the organization's own staff to assess the effectiveness of internal
processes and TQM practices.

Purpose: To evaluate compliance with internal procedures and policies.

Identify areas for improvement before external reviews.

Example: A manufacturing company may conduct an internal audit of its production line to
ensure all workers are following quality control procedures as outlined in the TQM manual.

2. External Audit (Second or Third-Party Audit)

Definition: Performed by external entities—either customers (second party) or certification

bodies (third party).

Purpose: Verify compliance with quality standards (e.g., ISO 9001).

Satisfy customer or regulatory requirements.

Example: An ISO 9001 certification body audits a company to determine if it meets the
international standards for quality management systems.

3. Product Audit

Definition: Focuses on the quality of a specific product or batch of products.Purpose: Ensure

products meet quality specifications and customer expectations. Identify defects or non-
conformities

Example: Inspecting a random sample of smartphones from a production batch to verify screen
quality, battery life, and software performance.

4. Process Audit

Definition: Examines the effectiveness and efficiency of a specific process.

Purpose: Determine whether the process is functioning as intended.

Identify opportunities to reduce waste or errors.

Example: Auditing the packaging process in a food company to ensure hygienic practices and
labeling accuracy are followed.
5. System Audit

Definition: A comprehensive review of the entire quality management system (QMS).

Purpose: Assess the overall implementation of TQM principles.

Identify gaps in the QMS structure.

Example: Evaluating how various departments (HR, production, finance) integrate TQM into
their functions and whether the quality objectives are aligned with the company’s strategic goals.

6. Compliance Audit

Definition: Ensures adherence to laws, regulations, standards, or contractual obligations.

Purpose: Avoid legal penalties or compliance risks.

Prove accountability to external stakeholders.

Example: Auditing a pharmaceutical firm to ensure it complies with Good Manufacturing

Practices (GMP) as mandated by regulatory authorities.

7. Supplier Audit

Definition: Conducted on suppliers to evaluate their ability to deliver quality goods and services
Ensure supplier quality aligns with company standards.

Example:A car manufacturer audits a parts supplier to confirm they meet the required quality and
delivery timelines for engine components.

Generally each type of audit in TQM serves a specific role in supporting continuous
improvement, ensuring compliance, and promoting customer satisfaction. By regularly
performing these audits, organizations can systematically identify weaknesses, apply corrective
actions, and maintain a culture of quality across all operations.

Q 5) Here are short notes on each of the given terms:

(a) Economic Order Quantity (EOQ)

Definition: EOQ is the ideal order quantity a company should purchase to minimize the total
costs of inventory, including ordering and holding costs.
Formula:

Where:

D = Demand

S = Ordering cost per order

H = Holding cost per unit per year

Example: If ordering cost is high, ordering in larger batches may be more economical.

(b) Bill of Materials (BOM)

Definition: A BOM is a detailed list of all the raw materials, components, and sub-assemblies
needed to manufacture a finished product.

Types:

Single-level BOM – only lists immediate components.

Multi-level BOM – includes components and sub-components.

Example: A bicycle BOM might include tires, frame, gears, seat, and handles.

(c) Cellular Layout

Definition: A production layout in which machines are grouped into cells, each capable of
producing a family of similar products.

Advantages: Reduces material movement.

Shortens production time.

Improves quality control.

Example: A cell in an electronics factory may produce all types of circuit boards using shared
processes.
(d) Operating Characteristic (OC) Curve

Definition: A graph that shows the probability of accepting a lot given the actual quality level of
the lot.

Purpose: Used in acceptance sampling to assess sampling plan effectiveness.

Helps balance risk between producers and consumers.

Example: A steep OC curve implies high discrimination between good and bad lots.

(e) Job Enlargement

Definition: Increasing the number of tasks in a job to reduce monotony and increase employee
motivation. Its Difference from Job Enrichment.
Job enlargement adds variety without changing responsibility level, whereas enrichment adds
more authority or control. Example: A data entry clerk may also be asked to verify data before
entering it.

(f) Flexibility in Manufacturing

Definition: The ability of a production system to adapt to changes such as product variety,
volume, or design without significant cost or delay.

Types: Product Flexibility: Ability to switch between different products.

Volume Flexibility: Ability to change output levels.

Routing Flexibility: Ability to use different paths to produce a product.

Example: A car plant that can switch between SUV and sedan models based on demand.

Q 6) Part II. Company Abyssinia Bank (Bank of Abyssinia – BOA)

in Ethiopia
A Review of Abyssinia Bank (BOA)

6.1. Introduction

Abyssinia Bank, established in 1996, is one of the oldest and most respected private commercial
banks in Ethiopia. Headquartered in Addis Ababa, BOA has rapidly expanded its presence
across the country, with hundreds of branches and millions of customers. It offers a wide range
of financial services, including savings and current accounts, loans, trade finance, mobile and
internet banking, and international banking services. The bank plays a vital role in Ethiopia’s
financial inclusion, economic development, and technological transformation of the banking
sector.

6.2. Product / Services

The bank provides a broad mix of financial services rather than physical products. These
services include:

Retail banking (personal accounts, loans, debit cards)

Corporate banking (business loans, trade services)

Digital banking (mobile banking app, ATM, internet banking)

Diaspora banking (accounts and investment for Ethiopians abroad)

International banking (SWIFT transfers, Forex services)

a. What created the opportunity for the services?

Ethiopia’s economic liberalization and banking sector reforms in the 1990s.

Rising demand for modern banking among citizens and businesses.

The need for safe, secure, and accessible financial services.

Technological advancements and increasing mobile phone usage.

b. Do you make or buy your product/service?

BOA delivers services directly through its staff, IT systems, and banking infrastructure.
However, some services are purchased, such as:

Software solutions (from local and international vendors)

ATM hardware and core banking systems

Outsourced security and maintenance services

c. What issues are involved in service design?

Security: Cybersecurity and fraud prevention are major concerns.

Accessibility: Designing user-friendly digital platforms for all customer groups.

Regulation: Compliance with National Bank of Ethiopia (NBE) regulations.

Service quality: Ensuring consistent service across urban and rural branches.

Environmental: Moving toward paperless banking to reduce environmental impact.

6.3. Supply-Chain Management

In banking, supply chain involves IT infrastructure, physical materials, human resources,

and service providers.

a. What is the supply chain strategy for BOA?

BOA focuses on a hybrid strategy:

Efficiency in operations and cost

Resilience and flexibility in technology and services

Focus on customer-centric delivery through branches and digital platforms

b. How is vendor selection/purchasing handled?

Through competitive procurement processes.

Evaluation based on cost, quality, reliability, and technical capacity.

For IT systems and services, vendor experience and scalability are crucial.

c. How is the supply chain managed?

Procurement teams manage sourcing of computers, ATMs, stationery, etc.

IT teams manage the acquisition and implementation of banking software.

Logistics manages distribution of physical assets (cards, machines, documents) to branches.

d. Materials Management / Distribution

Physical supplies like checkbooks, debit cards, and forms are stored centrally and distributed
to branches.

IT equipment is installed and maintained in all branches.

Digital services reduce the need for physical materials.

e. Is e-commerce applied in any form?

Yes, BOA uses e-banking services, which are forms of e-commerce:

Mobile Banking (BOA Mobile App)

Internet Banking

Card Services (Visa, MasterCard for online transactions)

SMS Banking and Push Notifications

Online customer service portals

Recommendation:
To enhance e-commerce services, BOA can:

Expand to merchant digital payment solutions (like QR payment systems).

Develop online loan applications and automated approval systems.

Integrate with e-government services for online payments.

Conclusion: Abyssinia Bank is a strong example of a financial institution balancing tradition

with innovation. By offering a wide range of services and adopting digital transformation, BOA
continues to meet the growing demands of Ethiopia's economy. With continued focus on service
quality, secure digital platforms, and strategic supply chain management, the bank is well-
positioned for future growth.