⋆ ⋆ ⋆
]]
AOM4801: ADVANCED OP-
ERATIONS MANAGEMENT
Comprehensive Exam Revision Guide — May/June 2025 & 2024
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Operations Management — College of Economic and Management Sciences
Exam Revision Guide
AOM4801
Module Code:
Advanced Operations Management
Module Name:
May/June 2025 & May/June 2024
Papers Covered:
2024 – 2025
Year:
100 marks per paper
Total Marks:
4–6 Hours
Duration:
Study every question and answer thoroughly. Focus on understanding the applica-
tion of concepts, not rote memorisation. Predicted exam questions are provided at
the end.
Exam Revision Notes | AOM4801 | 2024–2025
,AOM4801 | Exam Revision Advanced Operations Management
PAPER 1: MAY/JUNE 2025
Advanced Operations Management — AOM4801
Total: 100 Marks • Duration: 4–6 Hours
Page 2 of 33
,AOM4801 | Exam Revision Advanced Operations Management
Question 1 [25 marks]
(a) [10 marks]
Question: You are the operations manager for a growing e-commerce company planning
to open a new distribution centre in South Africa. Transportation costs are a major con-
sideration in your location decision. Apply the following location evaluation techniques to
recommend an appropriate location:
• Location cost-profit-volume analysis
• The factor rating method
• The centre-of-gravity method
In your answer, briefly explain each technique and show how it can be used in making a
location decision. Support your answer with realistic examples. (10)
Answer: Location Cost-Profit-Volume (CPV) Analysis
CPV analysis determines the most cost-effective location based on fixed costs, variable
costs, and the expected volume of output.
• Fixed costs (FC): Costs that do not change with volume (rent, equipment).
• Variable costs (VC): Costs per unit produced or shipped.
• Total cost: T C = F C + V C × Q where Q is the annual volume.
Example: Three candidate sites (Johannesburg, Durban, Cape Town):
Site Fixed Cost (R/yr) Variable Cost (R/unit) TC at 50 000 units
Johannesburg 500 000 12 1 100 000
Durban 350 000 16 1 150 000
Cape Town 600 000 9 1 050 000
Cape Town has the lowest total cost at 50 000 units. Plot each site’s TC line; the pre-
ferred location changes at crossover volumes.
Factor Rating Method
Assigns weighted scores to qualitative and quantitative location factors.
Steps:
1. Identify relevant factors (labour, infrastructure, proximity to markets).
2. Assign weights (sum to 1.0).
3. Score each site (1–100).
Page 3 of 33
, AOM4801 | Exam Revision Advanced Operations Management
4. Compute weighted score: W S =
P
(weighti × scorei ).
Factor Weight Johannesburg Durban
Score WS Score WS
Labour availability 0.30 80 24.0 70 21.0
Transport access 0.25 90 22.5 85 21.3
Cost of site 0.20 60 12.0 75 15.0
Market proximity 0.15 85 12.8 70 10.5
Government support 0.10 70 7.0 80 8.0
Total 1.00 78.3 75.8
Johannesburg scores highest and is preferred.
Centre-of-Gravity Method
Finds the geographic location that minimises transportation costs, weighted by volume
shipped to/from each demand point.
P P
dix · Vi diy · Vi
Cx = P , Cy = P
Vi Vi
where dix and diy are the x- and y-coordinates of demand point i, and Vi is the volume.
Example: Three retail hubs with coordinates and weekly volumes:
Hub x y Volume
Pretoria 200 700 3 000
Durban 400 100 2 000
Cape Town 50 50 1 000
Total – – 6 000
(200 × 3000) + (400 × 2000) + (50 × 1000) 600000 + 800000 + 50000 1450000
Cx = = = ≈ 241.7
6000 6000 6000
(700 × 3000) + (100 × 2000) + (50 × 1000) 2100000 + 200000 + 50000 2350000
Cy = = = ≈ 391.7
6000 6000 6000
The optimal distribution centre location is approximately at coordinates (241.7, 391.7),
consistent with a site in the Gauteng/Free State region.
Page 4 of 33
]]
AOM4801: ADVANCED OP-
ERATIONS MANAGEMENT
Comprehensive Exam Revision Guide — May/June 2025 & 2024
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Operations Management — College of Economic and Management Sciences
Exam Revision Guide
AOM4801
Module Code:
Advanced Operations Management
Module Name:
May/June 2025 & May/June 2024
Papers Covered:
2024 – 2025
Year:
100 marks per paper
Total Marks:
4–6 Hours
Duration:
Study every question and answer thoroughly. Focus on understanding the applica-
tion of concepts, not rote memorisation. Predicted exam questions are provided at
the end.
Exam Revision Notes | AOM4801 | 2024–2025
,AOM4801 | Exam Revision Advanced Operations Management
PAPER 1: MAY/JUNE 2025
Advanced Operations Management — AOM4801
Total: 100 Marks • Duration: 4–6 Hours
Page 2 of 33
,AOM4801 | Exam Revision Advanced Operations Management
Question 1 [25 marks]
(a) [10 marks]
Question: You are the operations manager for a growing e-commerce company planning
to open a new distribution centre in South Africa. Transportation costs are a major con-
sideration in your location decision. Apply the following location evaluation techniques to
recommend an appropriate location:
• Location cost-profit-volume analysis
• The factor rating method
• The centre-of-gravity method
In your answer, briefly explain each technique and show how it can be used in making a
location decision. Support your answer with realistic examples. (10)
Answer: Location Cost-Profit-Volume (CPV) Analysis
CPV analysis determines the most cost-effective location based on fixed costs, variable
costs, and the expected volume of output.
• Fixed costs (FC): Costs that do not change with volume (rent, equipment).
• Variable costs (VC): Costs per unit produced or shipped.
• Total cost: T C = F C + V C × Q where Q is the annual volume.
Example: Three candidate sites (Johannesburg, Durban, Cape Town):
Site Fixed Cost (R/yr) Variable Cost (R/unit) TC at 50 000 units
Johannesburg 500 000 12 1 100 000
Durban 350 000 16 1 150 000
Cape Town 600 000 9 1 050 000
Cape Town has the lowest total cost at 50 000 units. Plot each site’s TC line; the pre-
ferred location changes at crossover volumes.
Factor Rating Method
Assigns weighted scores to qualitative and quantitative location factors.
Steps:
1. Identify relevant factors (labour, infrastructure, proximity to markets).
2. Assign weights (sum to 1.0).
3. Score each site (1–100).
Page 3 of 33
, AOM4801 | Exam Revision Advanced Operations Management
4. Compute weighted score: W S =
P
(weighti × scorei ).
Factor Weight Johannesburg Durban
Score WS Score WS
Labour availability 0.30 80 24.0 70 21.0
Transport access 0.25 90 22.5 85 21.3
Cost of site 0.20 60 12.0 75 15.0
Market proximity 0.15 85 12.8 70 10.5
Government support 0.10 70 7.0 80 8.0
Total 1.00 78.3 75.8
Johannesburg scores highest and is preferred.
Centre-of-Gravity Method
Finds the geographic location that minimises transportation costs, weighted by volume
shipped to/from each demand point.
P P
dix · Vi diy · Vi
Cx = P , Cy = P
Vi Vi
where dix and diy are the x- and y-coordinates of demand point i, and Vi is the volume.
Example: Three retail hubs with coordinates and weekly volumes:
Hub x y Volume
Pretoria 200 700 3 000
Durban 400 100 2 000
Cape Town 50 50 1 000
Total – – 6 000
(200 × 3000) + (400 × 2000) + (50 × 1000) 600000 + 800000 + 50000 1450000
Cx = = = ≈ 241.7
6000 6000 6000
(700 × 3000) + (100 × 2000) + (50 × 1000) 2100000 + 200000 + 50000 2350000
Cy = = = ≈ 391.7
6000 6000 6000
The optimal distribution centre location is approximately at coordinates (241.7, 391.7),
consistent with a site in the Gauteng/Free State region.
Page 4 of 33
