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Assignment #: 1
Subject: Introduction to Operations Management
Student Name:
Student ID:
Class : Spring 2020 Quarter: 2 Group: B
Assignment Due Date: 25-06-2020

Answer: 1
(1 – a) : Six operations sub-functions for computer spare parts manufacturing
firms are :-
 Facilities layout.
 Material control.
 Fabrication.
 Production control.
 Maintenance.
 Job Scheduling.

(1 – b) : Six operations sub-functions for touristic transportation company are :-

 Reservation.
 Crew Scheduling.
 Communications.
 Dispatching.
 Maintenance.
 Organizing.

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(1 – C) : Six operations sub-functions for Medium sized clinic are :-
 Preservation facilities.
 Purchasing equipment.
 Manage health service.
 Communication.
 Managing staff.
 Ensuring safety.

(1 – d ) : Six operations sub-functions for car repair facilities are :-

 Material control.
 Facilities layout.
 Quality control.
 Communication.
 Maintenance services.
 Testing and reporting.

Answer: 2
( 1 – a ) : Some input and output for computer spare parts manufacturing firms
Inputs Outputs
Capital C.P.U
Material RAM
Equipment H.D.D
Facilities Body Case
labor Screen
Knowledge
Energy

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( 1 – b ) : Some input and output for touristic transportation company
Inputs Outputs
Capital Reservation
Material Transportation
Equipment
Facilities
labor
Knowledge
Energy

( 1 – C ) : Some input and output for Medium sized clinic are :-

Inputs Outputs
Capital Medical care services.
Material Awareness.
Equipment
Facilities
Staff
Knowledge
Energy

( 1 – d ) : Some input and output for car repair facilities are :-

Inputs Outputs
Capital Care repair.
Material Car care services.
Equipment
Facilities
Staff
Knowledge
Energy

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Answer: 3
Economies of scope
Economies of scope are cost advantages that result when firms provide a variety
of products rather than specializing in the production or delivery of a single
product or service. Economies of scope also exist if a firm can produce a given
level of output of each product line more cheaply than a combination of separate
firms, each producing a single product at the given output level. Economies of
scope can arise from the sharing or joint utilization of inputs and lead to
reductions in unit costs. Scope economies are frequently documented in the
business literature and have been found to exist in countries, electronic-based
B2B (business-to-business) providers, home healthcare, banking, publishing,
distribution, and telecommunications.
Some application for the Economies of scope are:-
1 - Selling greater diversity of products
A traditional pub selling beer, is an excellent position to diversify and sell related
goods. Rather than just sell beer, modern pubs are increasingly diversifying into
selling all day breakfast, coffee and offering wifi. This is a logical response to
declining demand for beer. In this case, the main advantage is the existing
infrastructure of supply chains and retail premises.

2 - Customization of products
A larger company is able to offer a wider choice of custom products. Rather than
just producing off-the-peg models, a firm can produce a greater range of products
to cater to every taste and preference. For example, Trek bicycles offer a bike
builder. These means when choosing to buy a bike, you can decide what
components to put on and what color you like. This ability to choose colors and
choice of components is a unique selling point and makes the bike more attractive
to customers. This kind of product differentiation is increasingly important in
more competitive markets.

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3 – 3D printing
Technology like 3d printing offers potential for firms to offer increasingly
customized products. Rather than just print an ornament, the customer can
specific colors, shapes and features.

4 - Starbucks instant coffee

Starbucks has a strong brand name for coffee retail on the high street. It took the
decision to produce an instant coffee – making use of its own financial resources
and brand name. This is an economy of scope, as it is greater variety of coffee.
Interestingly some asked whether it was a good idea because instant coffee is an
anathema for serious coffee connoisseurs, and it could harm its brand image for
high quality coffee.

5 - Using brand name to enter different markets

A large supermarket like Tesco or Sainsbury’s can use its powerful brand name to
enter a completely different market to groceries – selling financial services, credit
cards, insurance and banking. The firm makes use of its brand name, customer
data and regular contact with potential customers to diversify into becoming a
much more encompassing firm.

6 - Dairy farmer
A farmer keeps cows and sells both the freshly collected milk and the butter made
from it directly on the market. For this reason, he also runs a small factory and
several large refrigerated storage rooms. The market is already saturated with
these products. In order to increase his sales, he also chooses to produce cheese.
He has the raw material for this anyway, and he can also use the storage rooms
for the new product in his range. He also has his own stand at a market and can
sell cheese there. The farmer can therefore establish an additional product on the
market without having to bear the full cost of a completely independent product.

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7 - Shampoo manufacturer

Let’s imagine a company that makes shampoo. It is mainly women that buy its
product. In order to offer a male buyer group their own product, it decides to
launch a customized product on the market, within the sense of gender
marketing. The actual recipe of the product is not changed. The company only
adds a different fragrance. The packaging is also completely different. It then
takes other marketing measures, driven by the already experienced employees.
The new product is distributed through the same drugstores as the old product.
The company can therefore benefit from several economies of scope: there is no
need to buy new machinery and research for a new recipe is also unnecessary.
Since the new product consists largely of raw materials which the company buys
anyway, a better price can be achieved due to volume discounts. This way, the
company enables a secondary exploitation of several factors, makes savings in
purchasing at the same time and can strengthen sales through a new target
group. In this example, the company makes excellent use of economies of scope.

Answer: 4
Knowledge economy 
A knowledge economy is an economy in which the production of goods and
services is based primarily upon knowledge-intensive activities. In knowledge
economy, a large portion of economic growth and employment is a result of
knowledge-intensive activities. A knowledge-intensive activity involves the
collection, analysis, and synthesis of information. Success in a knowledge
economy requires a commitment of both workers and firms to continually learn
and to increase their skills and expertise, which will foster innovation. Examples of
knowledge-based organizations include education institutions; media;
professional firms providing information-based services like medicine, accounting,
finance, engineering, and law; and scientific and technological research
companies.

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The increasing growth of the knowledge economy is part of a larger shift away
from production of tangible goods in developed countries towards intangible or
informational goods.

In traditional models of economic activity, the main factors of production

are Land, labor, capital, entrepreneur. A  Knowledge-based economy is important
for widening the scope of labor from producing goods on an assembly line to
greater flexibility in design, manufacture and implementation of business ideas.

Growth of knowledge economy

Innovation and knowledge have always been important to the economy, but
some economists argue that in the past few decades the modern economy is
becoming more knowledge-based. This is shown by the rise in high-tech
industries, the growth of the service sector, rise in self-employment and an
increase in the number of patents.

Importance of a knowledge economy

Can help business be more efficient, dynamic and innovative.
 Enables product innovation and customization.
 Greater role for human capital. Firms need to attract and retain workers
adapted to the new mode of economy.
 To enhance knowledge distribution and benefit from new working practices
collaborative networks can help.
 New growth theories emphasize the potential for human capital and
increasing knowledge to provide new sources of economic growth and high
levels of productivity.
 Potentially greater demand for skilled labor.

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