Operations Management midterm workshop

HUM 4404 · Tuesday 10 November 2026, 2 PM to 3 PM · built from Question Bank 1 for a complete beginner

Start here: no background needed

Operations management = how a business makes its product or service, cheaply and on time. Every example below uses a bakery.

Words you need

WordPlain meaningBakery example
DemandHow much customers wantCustomers want 300 loaves on Friday
ForecastYour guess of future demand"Next Friday we expect 310"
ActualWhat really happenedWe really sold 320
ErrorActual − forecast320 − 310 = 10 loaves off
CapacityThe most you can makeThe oven can bake 100 loaves a day
UtilisationHow much of the full capacity you usedBaked 64 of 100 = 64%
EfficiencyHow much of the realistic capacity you usedBaked 64 of a realistic 80 = 80%
Fixed costCost that stays the same however much you makeShop rent
Variable costCost for each unit you makeFlour for one loaf
Break-evenUnits to sell before you stop losing moneySell 10,000 loaves to cover rent
InventoryStock kept for laterFrozen dough in the freezer
Holding costCost of keeping stockFreezer electricity
Aggregate planMonth-by-month plan for workers and output (3 to 18 months)How many bakers for each month of the year
Level planMake the same amount every monthBake 250 a day all year, freeze the extra
Chase planMake exactly what is demanded; hire or lay offHire extra bakers for Ramadan
SchedulingDeciding which job goes firstWedding cake before birthday cake?
Flow timeWhen a job is finished, counted from nowCake ready 7 hours from now
TardinessHow late a job is (0 if on time)Due at 5 h, ready at 7 h = 2 h late
BottleneckThe slowest step, which limits everythingOne slow oven holds up four fast mixers

Maths symbols you will see

SymbolRead it as
Σ"add them all up". Σy = add every demand number
nhow many periods (days, months) there are
xthe period number: day 1, 2, 3…
ythe demand in that period
x̄, ȳthe average of x, the average of y
A, FA = actual, F = forecast
α"alpha": a number between 0 and 1 that sets how much the newest month counts
|e|the error with its minus sign removed (|−5| = 5)
⌈ ⌉round up to the next whole number (64.3 → 65)

Question bank → topic → CLO → tab

Bank questionWhat it asksModuleCLOLearn it in
MCQ 1 to 6OM objective, functions, evolution, strategy, productivity, transformationICLO1Foundations
Blanks 1 to 3Forecasting: demand · judgement · cyclical / randomIICLO2Forecasting
Blanks 4 to 6Aggregate planning: capacity · subcontracting · costIIICLO3Aggregate planning
True/false 1 to 3Scheduling traps: F · T · TIIICLO3Scheduling
Descriptive Q1 to Q35-mark cases: factory, hospital, defectsICLO1Written answers
Numerical Q2Least squares line (newspaper / water)IICLO2Forecasting
Numerical Q3Chase hiring and layoff cost (Al Saleem / NPI)IIICLO3Aggregate planning
Numerical Q4Blank in the bank. Likely forecast errors or capacityIICLO2Forecasting, Capacity
Numerical Q5 (a)Johnson's rule, two machinesIIICLO3Scheduling
Numerical Q5 (b)EDD / SPT mean flow time and tardinessIIICLO3Scheduling
CLO1 · Module IUnderstand why operations matter to a firm.
CLO2 · Module IIMake decisions on forecasting and capacity.
CLO3 · Module IIIBuild short-run plans: aggregate planning and scheduling.
Not on the midtermCLO4 supply chain and CLO5 quality/lean come after the midterm.

Mapped from Question Bank 1 MT and the HUM 4404 teaching plan (midterm = Modules 1 to 3, CLO1 to CLO3).

What's on the midterm

Modules 1 to 3Intro, forecasting and capacity, planning and scheduling
30 marksLearning outcomes CLO1 to CLO3
1 hourTue 10 Nov, 2 PM

Topics by likelihood

TopicLikelihoodTab
Least squares · chase cost · Johnson · EDD/SPTCertainForecasting, Aggregate, Scheduling
MCQ, blanks, true/false, case essayCertainFoundations, Written answers
Forecast errors (MAD, MSE, MAPE) · moving average · smoothingVery likelyForecasting
Utilisation, efficiency, break-even, make or buyVery likelyCapacity
Level vs mixed vs chase costVery likelyAggregate
PPC, capacity factors, planning optionsLikely (theory)Foundations, Capacity
Trend smoothing, seasonal index, tracking signalPossibleForecasting
TOC, supply chain, TQM, leanNot on midtermSkip

Rough split of the 30 marks

An estimate from the bank layout and the teaching plan; it isn't published anywhere.

Bank Q4 is blankLikely one of: forecast-error comparison, capacity/break-even, or level vs chase. The mock has all three.

Study plan: Monday afternoon to Tuesday noon

Exam Tuesday 2 PM. Study stops at 12 noon Tuesday. Short breaks between blocks.

WhenDoDone when
Mon 1:30 to 4What's coming → Foundations → Forecasting (least squares, moving average, smoothing)Formulas for b, a, F(t) from memory
Mon 4:30 to 7Forecast errors (port table) → CapacityMAD 10.31 · break-even 10,000
Mon 8 to 10:30Aggregate planning → SchedulingAl Saleem $27,400 · Johnson 180 min
Mon 10:30 to 11:30Written answers + one pass of recall drills, then sleepMost cards without flipping
Tue 7 to 8Mock under 60 minPaper finished
Tue 8 to 10:30Mark the mock, redo wrong numericals, ask Claude to quiz weak spots, recall drills againWeak topics fixed
Tue 10:30 to 12Cheat sheet · one of each numerical · stop at noonEvery recipe clean
Tue 12 to 2Eat, rest, reach the hall early. No new topicsSeated by 1:50

In the exam hour

Stuck?Ask Claude: "quiz me on capacity", "new Johnson problem, mark my answer", "find my mistake" (paste your table).

Foundations

Operations management = turning inputs into goods and services efficiently.

OM jobs (right answers)

Production planning & controlCapacityLayoutQualityInventorySchedulingMaintenanceSupply chain

Not OM (MCQ traps)

AdvertisingTax collectionPublic relationsRecruitment only

How OM evolved

  1. Craft
  2. Industrial revolution
  3. Taylor: time study
  4. Ford: assembly line
  5. Toyota: TQM, JIT, lean
  6. Now: automation, data, Industry 4.0

PPC: the planning ladder (links the whole midterm)

YearsCapacity planningfacility size, equipment
6 to 18 monthsAggregate planningworkforce, inventory, subcontract
WeeksMaster schedulewhich model, how many
Hours to daysSchedulingjob order on machines

PPC stages: plan → operate → control (feedback against plan).

Productivity

Productivity = Output / Input Labour: 1,200 units / 300 h = 4 per hour Multifactor: (1,200 × $25) / $12,000 = 2.5

Operations strategy

Align operations with business goals. Compete on:

CostQualityDeliveryFlexibility

GoodsServices
Tangible?YesNo
Can store?Yes, inventoryNo, made and used at once
Customer involved?RarelyOften
Easy version: productivity

How much you get out for what you put in. A baker makes 1,200 loaves in 300 hours.

Productivity = Output ÷ Input
  1. Output = what was made: 1,200 loaves
  2. Input = what was used: 300 hours
  3. Divide: 1,200 ÷ 300 = 4 loaves per hour
TrapProductivity is output ÷ input, never the reverse.

Forecasting

Estimate future demand so staff, material and machines are ready in time.

Which method?

Four patterns inside demand data

Least squares: fit a straight line

b = (nΣxy − ΣxΣy) / (nΣx² − (Σx)²) a = ȳ − b·x̄ y = a + bx x = 1…7 → Σx = 28, Σx² = 140, x̄ = 4
Easy version: least squares (bank Q2)

Draw the best straight line through past demand, then extend it to guess the future. Line: y = a + bx, where b = growth per day and a = starting level.

b = (n×Σxy − Σx×Σy) ÷ (n×Σx² − (Σx)²)    a = ȳ − b×x̄
  1. Make a table: x (day 1 to 7), y (demand), x×y, x². Add each column.
  2. For 7 days these never change: n = 7, Σx = 28, Σx² = 140, x̄ = 4, so the bottom line is always 7×140 − 28² = 196
  3. Newspaper: Σy = 1,648, Σxy = 7,798 → b = (7×7,798 − 28×1,648) ÷ 196 = 43.07
  4. ȳ = 1,648 ÷ 7 = 235.43 → a = 235.43 − 43.07×4 = 63.14
  5. Answer: y = 63.14 + 43.07x. Day 8 forecast: put x = 8 → 407.7
Worked: both bank questions

Moving averages lag behind a trend

MethodFormulaUse when
Naivenext = last actualquick baseline
Moving averageΣ last n ÷ nno trend
Weighted MAΣ (w × A) ÷ Σ wrecent data matters more
Easy version: moving average

Forecast = average of the last few actual values. A 3-month average uses the last 3.

Next forecast = (sum of last n actuals) ÷ n
  1. Pick the last n actuals, e.g. 120, 132, 128
  2. Add them: 380
  3. Divide by n: 380 ÷ 3 = 126.67
  4. Weighted: multiply each by its weight, add, divide by the total of the weights
Worked: shed sales

Exponential smoothing: α sets the reaction speed

F(t) = F(t−1) + α × (A(t−1) − F(t−1)) 142 + 0.2 × (153 − 142) = 144.2 high α = reacts fast · low α = stable demand
Easy version: exponential smoothing

New forecast = old forecast, nudged towards what really happened. α decides the size of the nudge.

New forecast = Old forecast + α × (Actual − Old forecast)
  1. Old forecast 142, actual 153, α = 0.2
  2. Miss = 153 − 142 = 11
  3. Nudge = 0.2 × 11 = 2.2
  4. New forecast = 142 + 2.2 = 144.2

Forecast errors: smaller wins

MeasureFormulaTells you
MADΣ|A − F| ÷ naverage miss, in units
MSEΣ(A − F)² ÷ npunishes big misses
RMSE√MSEMSE back in units
MAPEΣ(100|A − F| ÷ A) ÷ naverage miss as %
Worked: Port of Baltimore error tables
Easy version: MAD, MSE, MAPE

They all measure how wrong a forecast was. The method with the smaller number is better.

Error = Actual − Forecast  ·  MAD = average of |error|  ·  MSE = average of error²  ·  MAPE = average of (|error| ÷ actual × 100)
  1. For every period: error = actual − forecast
  2. MAD: drop minus signs, add, divide by number of periods
  3. MSE: square each error, add, divide
  4. MAPE: |error| ÷ actual × 100 for each, add, divide
  5. Port example (α = 0.1): MAD 10.31, MSE 190.82, MAPE 5.59%
TrapsError = actual − forecast · MAPE divides by actual · count only periods that have a forecast.
Possible extras: trend smoothing, seasonal index, regression, tracking signal
Trend smoothing: F = αA + (1−α)(F + T) T = β(F − Fold) + (1−β)T FIT = F + T Seasonal index = season average ÷ overall average Associative = least squares with a cause as x; r from −1 to +1; r² = share explained Tracking signal = Σ errors ÷ MAD (outside limits = biased forecast)

Capacity

Capacity = the most a unit can produce. Match it to forecast demand.

Three capacities, two ratios

Utilisation = actual ÷ design = 64 ÷ 100 = 64%
Efficiency = actual ÷ effective = 64 ÷ 80 = 80%
Easy version: the three capacities

Design = the most possible in a perfect world. Effective = the most possible after normal breaks, cleaning and maintenance. Actual = what really came out.

Utilisation = Actual ÷ Design × 100    Efficiency = Actual ÷ Effective × 100
  1. Find the three numbers: design 100, effective 80, actual 64
  2. Utilisation = 64 ÷ 100 = 64%
  3. Efficiency = 64 ÷ 80 = 80%
  4. Check: efficiency is always the bigger one
Worked: cars and pumps (slides)

Break-even: where revenue meets cost

Break-even units = Fixed cost ÷ (Price − Variable cost) BEP = F ÷ (P − V) = 20,000 ÷ (3 − 1) = 10,000 units
Easy version: break-even

Each unit sold leaves (price − variable cost) to pay the fixed cost. Break-even = how many units it takes to pay it all.

  1. Fixed cost F = 20,000 (rent), price P = 3, variable cost V = 1
  2. Each unit leaves 3 − 1 = 2 towards rent
  3. Units needed = 20,000 ÷ 2 = 10,000 units

Make or buy

MakeBuy
Cost at 1,000 units20,000 + 10 × 1,000 = AED 30,00027 × 1,000 = AED 27,000 ✓
Switch point20,000 ÷ (27 − 10) = 1,177 units; above it, make
Easy version: make or buy

Make = pay fixed cost + your cost per unit. Buy = pay the supplier price per unit. Pick the cheaper total.

Make cost = F + V × N    Buy cost = Price × N
  1. Make: 20,000 + 10 × 1,000 = AED 30,000
  2. Buy: 27 × 1,000 = AED 27,000
  3. Buy is cheaper at 1,000 units

Bottleneck: the slowest step sets the pace

Machines needed

hours needed ÷ hours per machine 5,800 ÷ (250 × 8) = 2.9 → 3

What lowers effective capacity

LayoutSkillsQualityShifts policySchedulingSupplyRegulations

Easy version: machines needed

Total hours of work ÷ hours one machine can give in a year. Always round up, you cannot buy part of a machine.

Machines = Hours needed ÷ Hours per machine, round up
  1. Hours needed = 5,800
  2. One machine: 250 days × 8 h = 2,000 h
  3. 5,800 ÷ 2,000 = 2.9 → 3 machines
TrapUtilisation ÷ design, efficiency ÷ effective. Efficiency is always the bigger %.

Aggregate planning

Medium-term plan (3 to 18 months): meet forecast demand at the lowest total cost.
StrategyHowMain cost
LevelSame output every month; stock absorbs swingsHolding inventory
ChaseOutput = demand; hire and fire every monthHiring + layoff
MixedMix: steady core + subcontract or overtimeSubcontract / overtime
Easy version: level vs chase

Level: make the same amount each month; extra goes into stock, so you pay holding cost. Chase: make exactly what is demanded each month; you pay to hire and lay off.

Level cost = total stock carried × holding cost    Chase cost = hires × hire cost + layoffs × layoff cost
  1. Level: output per month = total demand ÷ number of months
  2. Chase: workers each month = demand ÷ output per worker (round up)
  3. Compare the two totals. The smaller one is the better plan

Same demand, three plans (roofing supplier, units per month)

Worked: roofing plans and Example 5

Chase recipe (bank Q3)

StepDo
1Output per worker per month (Al Saleem: 2 × working days)
2Month 1 need = demand − opening stock; later months = demand
3Workers = need ÷ output per worker, round up
4Up from last month → hire · down → lay off
5Hires × hire cost + layoffs × layoff cost
Easy version: Al Saleem, April only

Do this for every month, then add up.

Workers needed = (Demand − Opening stock) ÷ (Output per worker per day × Working days), round up
  1. Output per worker in April = 2 sets × 21 days = 42
  2. April need = 3,400 − 700 opening stock = 2,700
  3. Workers = 2,700 ÷ 42 = 64.29 → 65
  4. We have 60, so hire 5 → 5 × $300 = $1,500
  5. Repeat each month (no opening stock after April). Total = $27,400
Worked: Al Saleem ($27,400) and NPI ($22,400)

Capacity options (react)

InventoryHire / lay offOvertimePart-timeSubcontract

Demand options (influence)

Price / promotionBackordersCounter-seasonal products

TrapsOpening stock only in month 1 · output per worker changes with working days · say whether you rounded workers.

Scheduling

Choose the order of jobs to cut waiting, lateness and total time.
TermFormula
Flow timerunning total of processing times
Mean flow timeΣ flow ÷ n
Tardinessmax(0, finish − due)
Makespantime to finish all jobs

One machine: pick a rule

RuleOrder byBest for
FCFSarrivalfairness
SPTshortest job firstlowest mean flow time
EDDearliest due datelateness
LPTlongest job firstrarely best
Easy version: EDD / SPT (bank Q5)

Put jobs in order by a rule, then see when each finishes and how late it is. EDD = earliest due date first. SPT = shortest job first.

Flow time = running total of job times  ·  Tardiness = Flow time − Due (0 if negative)  ·  Mean = Total ÷ Number of jobs
  1. Sort jobs by the rule (EDD: by due time; SPT: by job time)
  2. Flow time: keep adding job times. TV2 10 h → 10, then TV1 7 h → 17…
  3. Tardiness: flow − due. TV1: 17 − 15 = 2 h late. If negative, write 0
  4. Mean flow time = sum of flow times ÷ jobs. Average tardiness = sum of tardiness ÷ jobs
Worked: TV shop (EDD) and garage (SPT)

Two machines: Johnson's rule

Easy version: Johnson's rule (bank Q5)

Two machines in a row (lathe, then grinder). Find the job order that finishes everything soonest.

Smallest time on Machine 1 → goes as early as possible · smallest on Machine 2 → as late as possible
  1. List all times. Find the single smallest number in the table
  2. If it is on Machine 1, put that job in the first free slot. If on Machine 2, the last free slot
  3. Cross that job out. Repeat until all are placed
  4. Bank set 1: smallest is C = 9 on M2 → C goes last; then D = 12 on M1 → D goes first…
  5. Draw the timeline: Machine 2 starts a job only when Machine 1 has finished it. Last finish = minimum total time
Worked: both bank sets step by step

Tricky true/false

StatementWhy
Least idle time always gives least total timeF"always": bad order can still waste time
Job order affects waiting and completion timeTsee the chart above
Machine fully busy but jobs lateTTV shop: busy all along, 7 of 8 late

5-mark case answers

One frame for every case: define → 3 or 4 levers → result.
CaseLevers (action → effect)Result
Factory
costs, breakdowns, late
Preventive maintenance → less downtime
Planning + sequencing → on-time delivery
Lean → less scrap and waiting
Inventory control → lower holding cost
Lower cost per unit, higher productivity
Hospital
waits, shortages
Capacity matched to arrivals
Rosters built on demand
Reorder points for medicine
Online booking, e-records
Shorter waits, happier patients
Defects
competition, complaints
Process mapping, root cause
Automation (CNC, robots)
SPC charts, TQM
Operator training
Fewer defects, more competitive

Interactive solvers

Type any numbers from a past paper or the mock and the page shows each step. Use them to check your own working, not to replace it; the exam wants the table on paper.

Least squares

Chase strategy

Johnson's rule

Priority rules (FCFS, SPT, EDD, LPT)

Forecast methods and errors (MA, weighted MA, exponential smoothing)

Capacity and break-even

Level against chase (workers per period)

Recall drills

Tap a card to see the answer. Say the answer out loud before you tap. Go through the deck three times; on the third pass you should not need to tap.

Mock exam: 60 minutes, 30 marks

Built from the bank's layout and the topics the teaching plan and slides add. The real paper will be shorter. Part E has one question for every topic that could fill the blank Q4, so treat E2 to E4 as a choice of two if you are short of time.

Part A: multiple choice (1 mark each)

  1. Which of these is an input to a transformation process? (a) Customer satisfaction (b) Raw material (c) Finished car (d) Profit
  2. A firm makes 900 units with 150 labour hours. Labour productivity is (a) 0.17 (b) 6 (c) 750 (d) 1,050 units per hour
  3. Aggregate planning normally covers (a) 1 to 7 days (b) 3 to 18 months (c) 5 to 10 years (d) one shift
  4. Utilisation is actual output divided by (a) effective capacity (b) design capacity (c) demand (d) inventory
  5. Which error measure is expressed as a percentage? (a) MAD (b) MSE (c) RMSE (d) MAPE
  6. Which rule gives the lowest mean flow time on a single machine? (a) FCFS (b) EDD (c) SPT (d) LPT

Part B: fill in the blanks (1 mark each)

  1. The Delphi method is a __________ forecasting technique.
  2. In exponential smoothing, α is called the __________ constant.
  3. The operation with the lowest capacity in a sequence is the __________.
  4. Under a chase strategy the main costs are hiring and __________.
  5. Tardiness is never __________.

Part C: true or false (1 mark each)

  1. On a single machine, changing the job order changes the makespan.
  2. Efficiency can never be lower than utilisation for the same output.
  3. A larger n in a moving average makes the forecast react faster to change.
  4. Opening inventory reduces the production needed in the first month of a chase plan.

Part D: short case (5 marks)

A restaurant chain has long queues at lunch, food waste at night, and staff who are idle in the afternoon. Explain how capacity, workforce scheduling, inventory and technology decisions can fix this.

Part E: numericals

E1. Daily demand for a coffee kiosk over seven days was 98, 110, 131, 140, 162, 175, 190. Derive the least-squares linear forecast equation and forecast day 8.

E2. Monthly demand was 120, 132, 128, 141, 150, 146. For months 4 to 6, compare a 3-month moving average with exponential smoothing (α = 0.3, forecast for month 1 = 118) using MAD and MSE. Which method is better?

E3. A bottling line has a design capacity of 1,200 bottles a shift and an effective capacity of 1,000. Last shift it filled 850. Find utilisation and efficiency. A new product has fixed cost AED 45,000, price AED 12 and variable cost AED 7 per unit: find the break-even volume.

E4. Quarterly demand is 60,000, 90,000, 150,000 and 100,000 units. One worker makes 1,000 units a quarter and the firm starts with 100 workers. Hiring costs $200, firing $400, and holding $0.40 per unit per quarter. Compare a level plan with a chase plan.

E5. Six jobs pass through machine 1 then machine 2 (hours). P: 8, 6. Q: 5, 10. R: 12, 3. S: 4, 11. T: 9, 8. U: 7, 9. Find the Johnson sequence and the minimum total time.

E6. Six jobs A to F have processing times 6, 2, 8, 3, 9, 4 days and due dates 10, 6, 18, 8, 25, 12. Compare FCFS, SPT and EDD on mean flow time and average tardiness.

Show answers

Answer key

A: 1 (b), 2 (b) 900/150 = 6, 3 (b), 4 (b), 5 (d), 6 (c).

B: 1 qualitative, 2 smoothing, 3 bottleneck, 4 layoff (firing), 5 negative.

C: 1 False, the machine runs all jobs back to back whatever the order. 2 True, effective capacity is never above design capacity, so dividing by it gives the larger percentage. 3 False, a larger n smooths more and reacts more slowly. 4 True.

D: Use the hospital frame: capacity (more counters and tables at lunch), workforce (split shifts, fewer staff mid-afternoon), inventory (forecast-based prep, smaller evening batches, first-in-first-out), technology (online pre-orders, kitchen display, sales data to forecast). Close on shorter queues, less waste, lower labour cost.

One-page cheat sheet

BasicsOM turns inputs into outputs efficiently. Inputs → transformation → outputs. Productivity = output ÷ input. Operations strategy lines up operations with business goals. Priorities: cost, quality, delivery, flexibility.
ForecastingQualitative: expert opinion, experience, judgment (Delphi). Time series parts: trend, seasonality, cyclical, random.
b = (nΣxy − ΣxΣy)/(nΣx² − (Σx)²) a = ȳ − b·x̄ y = a + bx
x = 1..7: Σx = 28, Σx² = 140, x̄ = 4. In words: b = growth per day, a = starting level, y = forecast.
Aggregate planningMedium term (3 to 18 months). Balance demand with capacity at minimum cost. Decisions: workforce, inventory, production rate, overtime, subcontracting. Chase: workers = ⌈net demand ÷ output per worker⌉. Month 1 net = demand − opening stock. Hire if up, lay off if down.
Johnson's ruleSmallest time left: on M1, place first; on M2, place last. Cross out, repeat. M2 start = max(M1 finish, M2 free). Makespan = last M2 finish.
Priority rulesSPT lowest mean flow time. EDD good for lateness. Flow = running total. Tardiness = max(0, C − due). Mean = total ÷ n. Single machine: makespan same for every rule.
Smoothing and errors
MA = Σ last n / n WMA = Σ w·A / Σ w F(t) = F(t−1) + α(A − F) MAD = Σ|e|/n MSE = Σe²/n RMSE = √MSE MAPE = Σ(100|e|/A)/n
e = actual − forecast. Low α for stable demand. Smaller error = better method.
CapacityUtilisation = actual ÷ design. Efficiency = actual ÷ effective. Machines = hours needed ÷ hours per machine, round up. BEP = F ÷ (P − V). Make or buy: compare F + V·N with price·N. Bottleneck = slowest step sets output.
Plan costingLevel: one rate = total ÷ periods; cost = Σ ending inventory × holding. Mixed: level at minimum need, subcontract the rest. Chase: hire/fire every period. PPC: capacity (years) → aggregate (6 to 18 months) → MPS (weeks) → scheduling (days).
Bank answers