Production and Operations
Operations questions test how goods and services are produced, how capacity and inventory are planned, and how quality is measured and improved.
Production systems and layout
Process types run from job shop (one-off, customized) through batch to mass production and continuous flow (high volume, rigid). Layouts follow: process layout groups similar equipment for job shops, product layout arranges work in sequence for assembly lines, fixed-position keeps the product in place for ships or buildings, and cellular layout groups equipment into small families. CAD aids design, CAM and robotics aid manufacture, and flexible manufacturing and lean systems trade scale economies for variety.
Productivity and capacity
Productivity = output ÷ input. Partial measures use one input such as labor hours; multifactor measures combine inputs. Capacity is maximum sustainable output, and utilization = actual output ÷ capacity. Bottlenecks cap system throughput, so expanding a non-bottleneck adds nothing.
Inventory
Inventory buffers variability but costs money to hold. EOQ balances ordering cost against carrying cost. JIT delivers small lots just before use, cutting inventory but demanding reliable suppliers. ABC classification manages the few high-value A items most tightly. Carrying costs include storage, insurance, taxes, obsolescence, and opportunity cost.
Quality and scheduling
TQM is customer-focused, employee-involved, and continuously improving through plan-do-check-act. Six Sigma targets no more than 3.4 defects per million opportunities using DMAIC. Control charts separate common-cause variation from assignable variation. ISO 9000 certifies a documented quality management system, not product quality itself. Gantt charts track time; PERT and CPM networks show dependencies and the critical path, with PERT using optimistic, most likely, and pessimistic estimates.
Worked example
Annual demand is 10,000 units, ordering cost is $40 per order, and annual carrying cost is $2 per unit. EOQ = the square root of (2 × 10,000 × 40 ÷ 2) = the square root of 400,000, about 632 units per order. At that quantity ordering and carrying costs balance, so ordering all 10,000 at once saves order costs but inflates carrying costs far more.
Traps
Confusing JIT with the EOQ formula answer; treating ISO 9000 as a defect standard; calling Six Sigma a 3.4 percent defect rate; and assuming the busiest machine, rather than the bottleneck, sets capacity.