Operations Management June 2026
Q.1: A leading bicycle manufacturer is experiencing an unexpected surge in demand for its newly launched electric bikes due to favorable government incentives. The company currently produces 10,000 units daily but must increase output over the next six months while facing limited warehouse space and constrained resources. The operations manager must modify production schedules and allocate resources carefully to avoid costly last-minute changes, maintain lean inventory, and prevent shortages or overproduction.
Identify three specific actions the operations manager should take in adjusting the production schedule and resource allocation for the next six months. Provide justification for each action based on operational efficiency and inventory control.
Answer:
Introduction:
A large influx or surge in demand for an electric bike is a challenge and an opportunity for this manufacturer. A higher volume of demand will increase the company's sales and market share. Still, it will also create challenges with existing manufacturing systems, storage, and resource constraints. Currently, this business produces about 10,000 units a day. To fulfill the anticipated demand increase over the next six months, this manufacturer must carefully modify its production plan and resource allocation to create a more stable system of production. If the operations manager does not plan adequately for this situation, production overages may occur leading to large amounts of excess or redundant inventory, higher holding fees (costs), and shortages that might create customer dissatisfaction. The operations manager will need to utilize a systemized and effective process to manage an efficient flow through production while employing lean inventory practices. Forecasting future demand, utilizing resources in an optimum manner, and aligning production schedules and processes with "real-time" requirements are the primary goals of the operations manager.
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Q.2 (A): A startup is finalizing sourcing decisions for its family-sized kitchen appliance. It must choose between a single high-quality manufacturer offering reliability and branding benefits, and multiple smaller suppliers that reduce dependency risk but increase coordination complexity. With tight margins and strict launch timelines, the sourcing decision is critical to both risk management and profitability.
Choose either single sourcing or multiple sourcing as the preferred strategy for the startup. Provide three specific points to justify your choice based on risk management and profitability considerations.
Answer:
Introduction:
When launching a family-sized kitchen appliance, a new company must consider its sourcing strategy (also known as sourcing method) very carefully due to the impact of that decision on the overall cost structure for the product as well as risks associated with executing the launch.
In particular, when making a source choice in selecting between single source and multiple source; there are pros and cons associated with each method with regards to reliability, coordination, flexibility and buyers' skill during negotiations. For this reason, determining the 'best' sourcing strategy is critical to the start-up's already razor-thin margins and stringent timelines for launching the new family-sized kitchen appliance in the market.
Out of the potential sourcing strategies available for the start-up, single sourcing appears to make the most sense due to increased levels of quality control, improved supplier relationships and greater efficiencies in operations, thus resulting in a higher level of profitability and lower levels of execution risk associated with the new family-sized kitchen appliance's launch phase.
Q.2 (B): A leading pharmaceutical company has been producing drugs using an intermittent flow system to handle varying demand and customization. With a new high-demand drug nearing commercialization, top management is considering shifting to a continuous flow system to improve volume and consistency. However, concerns exist regarding flexibility, setup costs, and vulnerability to disruptions.
As an operations consultant, recommend whether the company should shift to a continuous flow system for this new drug. Provide three specific points to justify your recommendation based on production efficiency, flexibility, and risk considerations.
Answer:
Introduction:
A pharmaceutical manufacturer applies an intermittent production method by way of batch production. This method has helped them manage variable volume of drugs produced and continued to produce customized order drug types. After the announcement of a new prescription drug that will have a very high quantity of sales that will remain steady during its length of time, it is necessary for the manufacturer to evaluate a different way of producing their product.
A Continuous Flow Production System (CFPS) is designed for standard types of drugs produced in large quantities, thus can greatly reduce costs while increasing productivity, efficiency and quality. While this manufacturer's concern is over high initial cost of set up and limited flexible production capacity, the characteristics of producing a high volume and stable demand drug support the transition to a continuous flow production system.