QUESTION TWO As an operations management intern at a Limpopo-based company, HGK Holdings, your role is to assist the operations analyst with reconfiguring a brownfield project at HGK’s industrial estate in the Limpopo province, code-named LPCHP1. The reconfiguration involves the installation of an advanced biomass unit which generates electrical and thermal energy by burning wood pellets produced as a by-product of the wood processing industry in the province. The process is commonly called cogeneration or CHP (combined heat and power) and it is expected to save cost and increase operational efficiency at HGK Holdings. The electrical and thermal energy generated is expected to be utilised in the operations of HGK Holdings. REQUIRED: Answer each of the following questions: 2.1. With the aid of an appropriately labelled Input-Transformation-Output diagram, comprehensively discuss the transformation process underpinning the operations of LP-CHP1. In your discussion, highlight the transformed and transforming inputs involved in the operations, as well as the output and the feedback processes. 2.2. On the basis of the following assumptions, answer the questions which follow: • the biomass generator is designed to use 225 000 bags of wood pellets annually and it costs R24 to place an order for the wood pallets. • the holding cost per bag of wood pellets is 10% of the purchase price of a bag of wood pellets. Each bag of wood pellets is purchased at R12. • these costs are expected to remain constant for the foreseeable future. 2.2.1 Calculate the Economic Order Quantity of the wood pellets. 2.2.2. Calculate the number of orders to be placed per year. 2.3. As part of your assessment of the viability of the LP-CHP1 project, you decided to ascertain the volume of wood pellets produced by the wood processing industry in the Limpopo province. Your aim is to determine whether the wood processing industry in the Limpopo province has the capacity to meet the requirements of the biomass unit. Table 1, below, depicts the volume of wood pellets produced across the province for the 2019 fiscal year. Table 1: Volume of wood pellets produced across the Limpopo province Year Monthly volume (tonnes) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 21 23 34 37 40 51 54 50 48 36 39 42 REQUIRED: Using the data provided in Table 1, answer each of the following questions: 2.3.1. Calculate the three-month weighted moving average using weights of 0.6, 0.3, and 0.1 (largest weight to most recent data) for period 4 – 13 (Round off forecast value to one decimal place). 2.3.2. On the same graph, plot the actual and the three-month weighted moving average forecast. 2.3.3. Comment briefly, but meaningfully, on the graph plotted in question 2.3.2 and its implications. Additional information: 1. For detailed discussion on Strategy, key success factors, core competencies, competitive advantages, etc. you are encouraged to consult:
QUESTION TWO
As an operations management intern at a Limpopo-based company, HGK Holdings, your role is to assist the operations
analyst with reconfiguring a brownfield project at HGK’s industrial estate in the Limpopo province, code-named LPCHP1. The reconfiguration involves the installation of an advanced biomass unit which generates electrical and
thermal energy by burning wood pellets produced as a by-product of the wood processing industry in the province.
The process is commonly called cogeneration or CHP (combined heat and power) and it is expected to save cost and
increase operational efficiency at HGK Holdings. The electrical and thermal energy generated is expected to be utilised
in the operations of HGK Holdings.
REQUIRED:
Answer each of the following questions:
2.1. With the aid of an appropriately labelled Input-Transformation-Output diagram, comprehensively discuss the
transformation process underpinning the operations of LP-CHP1. In your discussion, highlight the transformed
and transforming inputs involved in the operations, as well as the output and the feedback processes.
2.2. On the basis of the following assumptions, answer the questions which follow:
• the biomass generator is designed to use 225 000 bags of wood pellets annually and it costs R24 to place
an order for the wood pallets.
• the holding cost per bag of wood pellets is 10% of the purchase price of a bag of wood pellets. Each bag
of wood pellets is purchased at R12.
• these costs are expected to remain constant for the foreseeable future.
2.2.1 Calculate the Economic Order Quantity of the wood pellets.
2.2.2. Calculate the number of orders to be placed per year.
2.3. As part of your assessment of the viability of the LP-CHP1 project, you decided to ascertain the volume of wood
pellets produced by the wood processing industry in the Limpopo province. Your aim is to determine whether
the wood processing industry in the Limpopo province has the capacity to meet the requirements of the biomass
unit. Table 1, below, depicts the volume of wood pellets produced across the province for the 2019 fiscal year.
Table 1: Volume of wood pellets produced across the Limpopo province
Year Monthly volume (tonnes)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019 21 23 34 37 40 51 54 50 48 36 39 42
REQUIRED:
Using the data provided in Table 1, answer each of the following questions:
2.3.1. Calculate the three-month weighted moving average using weights of 0.6, 0.3, and 0.1 (largest weight to
most recent data) for period 4 – 13 (Round off
2.3.2. On the same graph, plot the actual and the three-month weighted moving average forecast.
2.3.3. Comment briefly, but meaningfully, on the graph plotted in question 2.3.2 and its implications.
Additional information:
1. For detailed discussion on Strategy, key success factors, core competencies, competitive advantages, etc. you
are encouraged to consult:
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