What is EOQ and EBQ, point out the significant difference between

them in your own words.

The economic order quantity (EOQ) is a model which is being used
to calculate the optimal quantity which can be purchased or
produced to minimize the processing of purchase orders or
production set-ups and the cost of both the carrying inventory.
Economic Order Quantity is the quantity which minimizes all these
costs. Formula:
Q= (2DS/C)
Where,
Q = optimal order quantity or economic order quantity
D = demand of the item
S = fixed ordering cost or setup cost
C = inventory holding cost per unit

A company purchases a single component having annual demand

of 15000 units. Inventory carrying cost is 20% per annum,
component is purchased at unit price Rs. 12 per unit, ordering cost
is Rs. 300 per order. Determine the EOQ.
D =15000 = Annual Demand
S =300 = Ordering cost
C= Carrying Cost = 20% 0f 12 = 2.4
EOQ = (2DS/C)^1/2=((2*15000*300)/(2.4))^1/2 =1937 Units

A company is manufacturing a single component whose annual

demand is 24000 units. Set up cost for batch is Rs. 1000, factory
cost is Rs. 1200 per unit, Inventory carrying cost is 25% per annum,
and production rate is 200 per day (Assume 300 days per year).
Calculate EBQ.
Demand rate =24000/300=80
Set up cost= 1000
P=Production rate= 200
EBQ = (2*Annual Demand*Setup Cost/Inventory Carrying

Cost)^1/2
= (2*24000*1000/.25*1200) ^1/2
= 400 units Ans

2. Write Short notes on

DR. W. EDWARDS DEMING

William Edwards Deming was born in 1900 and died in

1993
He was an American engineer, professor, statistician,
lecture, author , and management consultant.
He helped develop the sampling techniques.
In his book The New Economics for Industry,
Government, and Education Deming championed the
work which he called The Shewhart Cycle, which
evolved into PDSA (Plan-Do-Study-Act).
Deming is best known for his work in Japan after WWII,
particularly his work with the leaders of Japanese
industry.
DR. JOSEPH M. JURAN
Joseph Moses Juran born in 1904 and died in 2008)
He
was
a Romanian-born American engineer
and
management consultant.
But he is mainly remembered as an evangelist
for quality and quality management.
Has written several influential books on these subjects.
DR. KAORU ISHIKAWA
Kaoru Ishikawa was born in 1915 and died in 1989.
He was an organizational theorist, and Professor at the
Faculty of Engineering at The University of Tokyo.
He is noted for his innovation in quality management.
He is considered a key figure in the development of
quality initiatives in Japan.
He is best known outside Japan for the Ishikawa or cause
and effect diagram, which is often used in the analysis
of industrial processes.
PHILIP B. CROSBY
Philip Bayard Crosby was born in 1926 and breathed last
in 2001. He was an author and businessman who
contributed to quality management practices and
management theory.
He initiated the Zero Defects program at the Martin
Company and was credited with a twenty five percent
reduction in the overall rejection rate and a thirty
percent reduction in scrap costs.

3. Explain Six Sigma, DMAIC, DMADV

Six Sigma
Six Sigma is a set of tools & techniques for process improvement.

It was developed by Motorola in 1986.

It aims at improving the quality output of process by identifying and

removing
the
causes
of
defects
and
minimizing
variability in manufacturing and business processes.

It uses a set of quality management methods, mainly statistical,

empirical methods, and creates a special infrastructure of people
within the organization, who are experts in these methods.

It is used in projects to reduce process cycle time, reduce costs,

reduce pollution, increase profits, increase customer satisfaction
etc.
DMAIC
a. DMAIC stands for Define, Measure, Analyze, Improve and
Control
b. It refers to a data-driven improvement cycle
c. It is the core tool used to drive Six Sigma projects. However, it
is not exclusive to Six Sigma and can be used for other
improvement applications.
DMADV
a. DMADV stands for define measure analyze design
verify,
b. It is sometimes referred to as DFSS i.e Design for six sigma.
c. It is focused on continuous improvement of manufacturing or
service processes.

4. Explain MRP1 & MRP2 and explain the differences between them.
MRP 1 stands for material requirement planning where as MRP II
stands for manufacturing resource planning.
Material Requirements Planning (MRP) is software based production
planning and inventory control system which is used to manage
manufacturing processes.

MRPII is a method for the effective planning of all resources of a

manufacturing company.
Differences :
MRP I
MRP is manufacturing-centric
Short term
production
considered

impact of
resources

MRP II
more
integrative
and
strategically
oriented

all medium-term and long-term

is impacts of all production
resources
is
considered