managing Operations and the Supply Chain

Please read this assessment 1 brief in
its entirety before starting work on the Assessment Task.

Assessment
Context

Founded
at the turn of the 20th Century as a maker of fine surgical
instruments, Waterside Medical (WM) has evolved into one of the leading vendors
of medical supplies in Europe.

When
the pandemic hit in early 2020, WM stepped up to deliver medical hardware and
consumables to hospitals, surgeries and clinics, nursing homes and other
primary care organisations.

Sales
reached new heights, but stock shortages were common. Suppliers not only raised
prices but also increased minimum order sizes, compounding the availability
problems and creating severe cash flow issues for WM.

“We had enough to worry about just getting critical
supplies to our customers”, explained the Head of Operations. “We had known for
some time that we needed to review our inventory strategy. When I took this job,
we used to try to aim for about ten weeks of stock cover, but we have just had
to work with what we can get, as and when it arrives. Some items sell out
really fast, but it can be really difficult to find room for some of the large
deliveries as we seem to have lots of other items that are in the way.”
“Most of our Reorder Levels (ROL) and Reorder Quantities
(ROQ) were set some time ago, long before these unprecedented times, but there
was no point in looking at them before things settled down. We think we have a
better forecast of what the “New Normal” is going to look like, so I’d like you
to work through some sample data for me.”

“Finance reckon that is costs us €50 every time we
place an order. Inventory holding is running at about 15% per annum, taking
account of the cost of borrowing, insurance and all of the warehouse overheads.”

The Assessment Task
Please
read the narrative of the case study above, noting the context of all the statements
made.

You
have been provided with a randomised sample of data covering 20 items from the
company’s catalogue.

1.
Prepare a spreadsheet-based ABC
analysis of usage value. Classify as follows:
A
items: top 20 per cent of usage value
B
items: next 30 per cent of usage value
C
items: remaining 50 per cent of usage value

2.
Calculate the inventory weeks for
each item, for each classification, and for all the items in total. Does this
suggest that the operational manager’s estimate of inventory weeks is correct?

3.
If so, what is your estimate of the
overall inventory at the end of the base year, and how much might that have
increased during the year?

4.
Based on the sample, analyse the
underlying causes of the availability problem described in the text.

5.
Calculate the Economic Order Quantities
(EOQs) for the A items.

6.
What recommendations would you give
to the company?

The
c count limit for this assessment is 1800 words (+/- 10%). In line with normal
practice, tables, figures, references and appendices are excluded from this
word count. Exceptionally, the checklist itself will not be considered as
forming part of the word count.

Please read this assessment 2 brief in
its entirety before starting work on the Assessment Task.
Assessment
Context
Waterside
Hospital Trust (WHT) provides in-patient services to a medium-sized town.
During the recent pandemic, the Trust’s general wards were converted to accommodate
pandemic patients only. Routine patients were instead treated by a local
private healthcare company, Nene Valley Health (NVH), under emergency
arrangements that allowed public hospitals such as WHT to secure additional
capacity.
WHT
was grateful for the additional capacity provided by NVH during the first part
of last year, but frankly did not need it.
The
patients admitted at that time were generally younger individuals who recovered
quickly. The same could not be said of the winter months, when the patients
tended to be more elderly. Once the rate of admissions rose above 250 per week,
the additional capacity filled up rapidly.
NVH
has indicated that it is prepared to make capacity available to WHT for the
coming year, providing guarantees can be given that the capacity will be needed.
[Images of empty wards at NVH caused some negative publicity at the time].
Forecasts
for the next wave of the pandemic have recently been released by the Public
Health Authority. These forecasts estimate the range of New Cases in the
Community (NCC) within 95% confidence limits (the upper and lower bounds).
The Assessment Task
You
are to use the supplied historic data and forecasts to inform WHT’s decision
whether or not to retain additional capacity at NVH.
1.
Plot the historic data and provide
an estimate of the lag between New Cases in the Community (NCC) and Hospital
Admissions (HA).
2.
Provide an estimate of the mathematical
relationship between NCC and HA (a) in the Summer and (b) in the Winter.
3.
Use the supplied Lower Bound and
Upper Bound growth rate forecasts to derive the forecast of New Cases in the Community
for the coming year.
4.
Apply your formula derived in (2) to
generate an Admissions forecast for the coming year, within Upper and Lower
Bounds.
5.
What advice would you offer
Waterside Hospital Trust regarding their capacity arrangement with Nene Valley
Health?
The
word count limit for this assessment is 2400 words (+/- 10%). In line with
normal practice, tables, graphs/figures, references and appendices are excluded
from this word count.
Note
that there is no expectation that you will use specialist software to undertake
this assignment. No additional credit will be given for doing so.
Show
your working; simple, auditable steps are preferred to the use of complex
models.

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