Question Tag: Operational Efficiency

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  • 10 Marks

AA – May 2016 – L2 – Q5b – Public Sector Auditing

This question identifies operational strengths in Okunka hospital and suggests ways to improve value for money.

(b) Okunka hospital is located in a country where healthcare is free, as the taxpayers fund state-owned hospitals. Two years ago, management reviewed all aspects of the hospital’s operations and instigated several measures aimed at improving overall ‘value for money’ for the local community. Management has asked you, an audit manager in the hospital’s internal audit department, to perform a review over the measures which have been implemented.

Required:

(i) Identify and explain FOUR strengths within Okunka’s operating environment. (6 marks)

(ii) For each strength identified, describe how Okunka might make further improvements to provide best value for money. (4 marks)

(i) Strengths in Okunka’s Operating Environment:

  1. Centralized Procurement Department:
    • The hospital’s procurement team researches suppliers to obtain the lowest price for purchases. This helps ensure that resources are acquired economically, promoting cost savings.
  2. Increased Overtime Rates to Reduce Temporary Staff:
    • By offering increased overtime rates, the hospital incentivized permanent staff to work additional hours, reducing reliance on more expensive temporary staff. This ensures better staffing efficiency and cost management.
  3. Time Card Clocking System:
    • The hospital has implemented a time card system for staff to clock in and out. This system provides accurate tracking of staff hours, ensuring that overtime payments are based on actual hours worked and helping monitor labor costs effectively.
  4. Investment in Surgical Equipment:
    • Okunka hospital invested in new surgical equipment, which allowed more operations to be performed and improved patient recovery times. This enhances the hospital’s effectiveness in delivering healthcare services.

(ii) Improvements to Provide Best Value for Money:

  1. Procurement Quality Control:
    • To further improve, the hospital could develop an approved list of suppliers that meet both cost and quality requirements. This would ensure that while costs are minimized, the quality of supplies is maintained or improved.
  2. Permanent Staff Recruitment:
    • While increasing overtime rates has reduced temporary staff costs, long-term reliance on overtime may affect staff efficiency due to fatigue. The hospital could look into recruiting additional permanent staff to further optimize labor costs and reduce reliance on overtime.
  3. Monitoring Overtime:
    • The time card system could be enhanced by implementing controls that limit unauthorized overtime. For example, overtime hours could require prior approval from department heads to ensure that only necessary overtime is worked.
  4. Maximizing Equipment Utilization:
    • While the investment in new surgical equipment has improved patient recovery times, the hospital could further enhance value by ensuring that staff are trained to use the equipment more efficiently, potentially increasing the number of procedures performed.
  • 5 Marks

MA – Mar 2024 – L2 – Q4b – Decision making techniques

This question identifies the challenges associated with the implementation of a Just-In-Time (JIT) inventory management system.

Just-In-Time (JIT) is an inventory management system in which goods are received from suppliers only as they are needed. The main objective of this method is to reduce inventory holding costs and increase inventory turnover. Despite the benefits of JIT, it has some disadvantages.

Required:
Examine THREE (3) challenges associated with the implementation of JIT Inventory Management System.

Challenges of Implementing JIT Inventory Management:

  1. Supplier Reliability:
    JIT relies heavily on the timely delivery of materials from suppliers. Any disruption in the supply chain, such as delays in transportation, strikes, or supplier issues, can halt production entirely since there is minimal inventory to cover any shortfalls.
  2. Demand Uncertainty:
    In industries where customer demand is unpredictable, it becomes difficult to implement JIT. Sudden fluctuations in demand can lead to stockouts, which may result in missed sales opportunities and customer dissatisfaction.
  3. Quality Control:
    JIT emphasizes minimal inventory, so defects or quality issues in delivered materials can significantly disrupt production. Ensuring defect-free supplies is crucial, as there is no buffer stock to cover any delays caused by returning defective goods or resolving quality issues.
  • 10 Marks

BMIS – March 2024 – L1 – Q4b – Operations strategy

Explain Total Quality Management (TQM) and outline four conditions for its successful implementation in organizations facing employee resistance.

Both manufacturing and service organisations are making increasing use of Total Quality Management (TQM) in their attempt to achieve operational efficiency. However, its implementation has been met with some form of resistance from employees who do not seem to fully appreciate the concept.

Required: i) Explain Total Quality Management (TQM). (2 marks) ii) Outline FOUR (4) conditions which must prevail for the successful implementation of the Total Quality Management (TQM) concept. (8 marks)

i) Explanation of Total Quality Management (TQM) Total Quality Management (TQM) is a management philosophy involving all organizational members in a continual effort to improve upon quality of goods and services and achieve customer satisfaction. (2 marks)

ii) Conditions/Guidelines for Implementing TQM

  • Management should demonstrate top down commitment and involvement approach in order to get all workers to participate in the implementation of the programme.
  • Employees must be properly trained and given the required resources to facilitate the effective implementation of the system.
  • Management must determine and communicate critical measurement factors which can be used to monitor the progress of the programme.
  • Teamwork should be instituted and emphasized by management to ensure the successful implementation of TQM.
  • Management should periodically make known to employees the success of the programme to act as motivator to employees.
  • The costs of quality and routes to improvement must be identified to enhance the successful implementation of the programme.
  • Management must offer rewards for contribution towards the success of the programme.
  • 10 Marks

BMIS – Dec 2023 – L1 – Q5a – Introduction to information technology and information systems

Explains five factors to consider before implementing a Management Information Systems (MIS) package.

You recently submitted a memorandum to the Operations Sub-Committee of the Board of Directors of your company recommending the installation and implementation of a Management Information Systems (MIS) package in order to enhance operational efficiency.

In response, the Committee has requested you to outline the conditions to be fulfilled before the package could be successfully implemented.

Required:

Explain FIVE (5) factors to be considered before the implementation of the MIS package.

Factors to Consider Before Implementing an MIS Package:

  1. Organizational Function:
    The functions to be performed by the organization will greatly influence the adoption and implementation of a particular MIS. The MIS must be aligned with the specific operational needs of the organization.
    (2 marks)
  2. Cost:
    It is essential to consider the total cost involved in purchasing the required infrastructure for the MIS. This includes both initial and ongoing costs to ensure that the implementation is financially feasible for the company.
    (2 marks)
  3. Scalability:
    The organization should consider how the MIS can be expanded to accommodate additional operations in the future if necessary. Scalability ensures that the system can grow with the company’s needs.
    (2 marks)
  4. Management Support:
    For the successful implementation of the MIS package, top management must be prepared to offer the necessary financial and non-financial support. This includes commitment from leadership to drive the implementation process.
    (2 marks)
  5. Security:
    It is important for management to take every practicable step to ensure maximum security for the MIS package, especially in light of potential threats from hackers. Adequate security measures must be in place to protect sensitive organizational data.
    (2 marks)
  • 10 Marks

BMIS – Dec 2023 – L1 – Q1b – Business and organisational structure

Explains the nature of virtual organizations and the benefits associated with them.

The emergence of globalization has resulted in some small and large businesses operating as virtual organizations.

Required:

Explain to your study mates the nature of this organizational type and state FOUR (4) benefits associated with it.

Nature of Virtual Organizations:

A virtual organization is any organization that outsources most of the key functions performed in the organization while maintaining a small core activity. Most virtual organizations conduct their operations electronically, with the organization’s website containing the database of information about suppliers, customers, and other stakeholders.
(2 marks)

Advantages of a Virtual Organization:

  1. Reduced Costs:
    A virtual organization has reduced operational expenses because it incurs minimal administrative expenses.
    (2 marks)
  2. Fewer Employees:
    A virtual organization requires fewer employees, leading to minimal salaries and fewer human resource problems to manage.
    (2 marks)
  3. Access to Specialists:
    A virtual organization can access people with the needed expertise from around the globe, offering superior and better services to its clients.
    (2 marks)
  4. Instant and Effective Communication:
    The development of strong Internet connectivity provides an effective communication network for the virtual organization, enabling it to offer excellent services to customers.
    (2 marks)
  • 10 Marks

BMIS – Aug 2022 – L1 – Q5a – Introduction to information technology and information systems

Explains five operational improvements that an organization can achieve by investing in information and communications technology (ICT) systems.

Quantum Manufacturing Ltd has invested GH¢1 million in information and communications technology systems to facilitate more effective operations which will result in operational improvements in their activities.

Required:

Explain FIVE (5) of such operational improvements.

Operational Improvements from ICT Investment:

  1. Improved Productivity:
    Investment in ICT systems can lead to increased overall organizational productivity by better managing manufacturing and operational activities.
    (2 marks)
  2. Cost Reduction:
    ICT systems can help reduce operational expenses by automating tasks that would otherwise be performed manually, leading to cost savings.
    (2 marks)
  3. Improved Information Management:
    ICT systems enhance the access, processing, storage, and distribution of information, aiding in better decision-making and control within the organization.
    (2 marks)
  4. Enhanced Administrative Efficiency:
    ICT systems, such as enterprise resource planning (ERP), enable the automation of processes across functional areas, improving the overall administrative efficiency of the organization.
    (2 marks)
  5. Improved Change Management:
    With ICT systems, organizations can implement changes more quickly and effectively, as machines are more adaptable to change than human resources, who may resist change to protect personal interests.
    (2 marks)
  • 10 Marks

BMIS – Aug 2022 – L1 – Q3a – Business and organisational structure

Explains the benefits an organization would gain from integrating all of its operations.

Integrating the operations of an organization is a decision that many find difficult to make as it is possible to find architectures that adapt to different requirements. Despite this, business integration is a necessity because of the success and benefits it brings to corporations and businesses.

Required:

Explain FIVE (5) benefits an organization would gain from integrating all of its operations.

Benefits of Integrating Organizational Operations:

  1. Cost Reduction:
    Organizations that integrate all operations into a single system can reduce their operational costs by eliminating duplication of efforts and resources.
    (2 marks)
  2. Operational Efficiency:
    Integration facilitates operational efficiency by ensuring that the functional areas with the required expertise are used to support other areas where such services may be needed.
    (2 marks)
  3. Organizational Harmony:
    Integration ensures peace and harmony within the organization, as all functional areas recognize their interdependence for excellent performance.
    (2 marks)
  4. Competitive Advantage:
    Effective integration can lead to competitive advantage, as the organization can conduct its operations better than its competitors, gaining an edge in the market.
    (2 marks)
  5. Better Customer Service:
    Integrated operations allow organizations to offer excellent services to their customers, with employees willing to go the extra mile to meet customer needs.
    (2 marks)
  • 10 Marks

BMIS – Nov 2020 – L1 – Q5a – Introduction to information technology and information systems

Describes five accounting information systems that could enhance the operational efficiency of a company.

The management of Marine Services Ltd intends to convert the existing manual accounting systems to an accounting information system to achieve its operational efficiency.

Required:

Explain FIVE (5) accounting information systems that could be used to enhance the operational efficiency of Marine Services Ltd.

Accounting Information Systems for Operational Efficiency:

  1. Order Processing System:
    This application records and processes customer orders and produces data for inventory control and accounts receivables. It helps in streamlining the order fulfillment process, ensuring accuracy and efficiency.
  2. Inventory Control System:
    This system processes data reflecting changes in inventory as well as shipping and re-order information. It helps in maintaining optimal inventory levels, reducing waste, and ensuring timely replenishment.
  3. Accounts Receivable System:
    This application records the amounts owed by customers and produces invoices and monthly information for them. It also provides monthly accounting transactions for customers, ensuring timely collection of receivables and improving cash flow management.
  4. Accounts Payable System:
    This system captures all purchases made by a company and tracks amounts owed to suppliers. It provides periodic statements to appropriate users, helping in managing payables and maintaining good supplier relationships.
  5. Payroll Administration System:
    This application facilitates the recording of employees’ outputs and other financial benefits, and provides periodic pay slips to them. It also generates periodic reports for management, ensuring accurate and timely payment of salaries and benefits to employees.
  • 6 Marks

BMIS – May 2021 – L1 – Q4b – Introduction to information technology and information systems

Explain the advantages of a Transaction Processing System (TPS) for a supermarket.

The Management of My Hope Enterprise Ltd, a family-owned supermarket with branches throughout the country, has refused to adopt modern communication technology in its operations, citing heavy initial capital outlay. You have decided to convince the General Manager of the firm who is your friend on the benefits to be accrued from the use of modern technology.
Explain FOUR (4) advantages of Transaction Processing System (TPS) to the General Manager of My Hope Enterprise Ltd.

Advantages of Transaction Processing System (TPS):

  1. Operational Efficiency: TPS facilitates the smooth operations of the supermarket by processing large volumes of transactions quickly and accurately, which enhances overall efficiency.
  2. Access to a Wider Market: By integrating TPS with internet capabilities, the supermarket can reach a broader customer base, allowing for online sales and better customer service.
  3. Activity Tracking: TPS helps information systems managers to keep track of all activities and transactions within the organization, providing valuable data for reporting and analysis.
  4. Backup and Data Integrity: TPS provides robust backup features that ensure data is securely stored and can be recovered in case of system failures, ensuring business continuity.
  5. Time-Saving: TPS can process large amounts of data within a short period, reducing the time required for transactions and improving customer service.
  6. Database Stability: In the event of network failure, TPS ensures that the information is stored securely in the database and transactions can resume once service is restored.
  • 10 Marks

BMIS – May 2016 – L1 – Q7a – Introduction to information technology and information systems

State five advantages that would accrue to a firm from installing a Transaction Processing System (TPS).

You work as an accounts officer in a supermarket in Accra. The supermarket has recently witnessed a dramatic growth in its customer base. Management has therefore decided to install a Transaction Processing System (TPS) to cater for this growth. State FIVE advantages that would accrue to the firm with this decision.

i) Time Saving: TPS can process large volumes of data within a short period of time.

ii) Operational Efficiency: TPS will facilitate the smooth operations of the supermarket and will provide the base for other internal information systems.

iii) Database Stability: TPS facilitates database stability in the sense that in the event of network failure, the information will be stored in the database and the transaction will continue when service is restored.

iv) Activity Tracking: TPS assists information system managers and staff to keep track of all activities and transactions of the company, such as sales and receipts.

v) Access to a Wider Market: TPS will enable the supermarket to access potential customers to buy the goods when linked to the internet.

vi) Time Sharing: TPS facilitates the sharing of the system and its properties among multiple users working on the same transaction at the same time.

vii) Back-up: TPS provides the basic building blocks for other systems in that it has a backup in case of system failure.

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