Abstract: Small Scale Industry (SSI) contributes to as good as 40% of export of India and contribute
50% to Indias GDP. National Industry Policy and National Manufacturing Policy of India,
therefore, lays emphasis on SSI promotion through such means as tax exemption, sanction of loans,
providing infrastructure, etc. In order to excel in export promotion and to capture a large chunk of
Indian market. SSI needs to go for advanced manufacturing technology like FMS, Robotics,
automation, etc. CNCs are, therefore, the right machine tool for SSI. CNCs are capital intensive,
however. SSI being small organizations having no expertise in procurement of such capital intensive
units needs some way out to overcome this roadblock.
The present paper is an attempt in this direction namely to develop a Decision Making Support
Mechanism for SSIs to procure capital intensive machine tools. The data of 21 CNC is is taken from
a paper Comparing CNC Lathes Using Data Envelopment Analysis (DEA)[1]. The data is subjected
to Data Envelopment Analysis and Genetic Algorithms obtaining a set of solutions. The set thus
obtained is subjected to Benefit-Cost analysis (BCA). The weighting for 3 major and 13 sub-factors
are finalized in consultation with a committee set up by management for this purpose. TOPSIS
analysis is also applied to the set of selected candidates (CNC machines). The work done by us
provides a good take off for the industry, a fruitful Decision Support System (DSS) approach. The
approach adopted in this paper i.e. subjecting data to DEA, GAs, Benefit-Cost analysis and
validation through TOPSIS is found to be satisfactory and acceptable to the industry. The approach
or methodology developed in this paper will be useful to SSI manufacturing units and can be
extended to the service sector as well.
December, 2013
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Vol 2 Issue 12
1. Introduction:
The small-scale industries (SSI) sector plays a vital role in the growth of the country. It
contributes almost 40% of the gross industrial value added in the Indian economy. It has been
estimated that a million Rs. of investment in fixed assets in the small scale sector produces
4.62 million worth of goods or services with an approximate value addition of ten percentage
points [2]. By its less capital intensive and high labor absorption nature, SSI sector has made
significant contributions to employment generation and also to rural industrialization.
Government of India under her NMP has introduced some promotional measures for SSI like
reserving over 294 items for SSI, investment Rs 100 lakhs, no duty on clearances of excisable
goods up to Rs. 100 lakhs [3], etc. Such and similar provisions have been encouraging SSIs to
move towards WCM, encouraging them to go for capital intensive tools like CNC,
CAD/CAM, robotics, application soft-wares, etc. Cost efficient purchase of such tools is one
of the most important aspects of manufacturing management leading towards more
productivity and sustainability. The present paper deals with how to arrive at the optimal
purchase model on similar lines of DEA philosophy, in case of CNC lathes using one input
(unit cost) with five outputs: spindle max speed, spindle speed range, number of tool position,
range of rapid traverse X-axis, range of rapid traverse Z-axis). The efficiencies obtained with
this input-output set will be referred to as Cost efficient . The present paper is organized as
follows, Chapter 2 deals with the problem solving using DEA, Chapter 3 gives the solution
obtained by Genetic Algorithms, Chapter 4 deals with result analysis and discussion chapter 5
gives the conclusion and then references.
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Vol 2 Issue 12
Money X1 Input
ii.
iii.
iv.
v.
vi.
OUTPUTS
SPINDL
CNC LATHE
( DMU'S )
MONEY
E MAX.
SPEED
(RPM)
SPINDL NO.
E
OF
TOOL
SPEED POSITIO
RANGE NS
RAPID
RAPID
TRAVERS TRAVERS
E X- AXIS E Z- AXIS
(m/min)
(m/min)
(Y3)
(Y4)
(Y5)
5950
24
24
15,50,000 3500
3465
20
20
YCM-TC-15 (DMU3)
14,00,000 6000
5950
12
15
20
VTURN 16 (DMU4)
11,00,000 6000
5940
12
12
15
12,00,000 6000
5940
12
12
16
3465
12
12
(RPM)
(NOS.)
(Y1)
(Y2)
12,00,000 6000
(X1)
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3960
12
12
16
EX-106 (DMU8)
13,20,000 5000
4950
12
24
30
11,80,000 4500
4480
24
24
ECOCA SJ 25 (DMU10)
15,50,000 4000
3950
12
15
20
16,00,000 3500
3450
12
15
20
3465
20
24
14,50,000 3000
2970
20
24
14,00,000 3000
2970
12
24
30
3465
12
30
30
14,50,000 3000
2970
12
20
24
(DMU17)
15,20,000 2500
2475
12
20
24
13,76,000 4800
4752
12
20
24
14,40,000 4800
4752
12
20
24
18,24,000 3800
3970
10
12
20
3970
10
12
20
TOPPER
TNL
100A
(DMU13)
TOPPER
NL
100AL
DMU14)
TNL
120T
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Sr.
DMU
No
no.
Mone
Efficiencies
Spindle Speed
speed
Range
(RPM)
(RPM)
Rapid traverse
Tool
X
Positions
Direction
Y
Direction
595
1
100%
12,00,000
6000 0
24
24
12
12
15
12
24
30
12
30
30
594
2
100%
11,00,000
6000 0
495
100%
13,20,000
5000 0
346
15
100%
13,50,000
3500 5
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Vol 2 Issue 12
Step 1: Population size selected is 5. The initial solution is binary coded using random
numbers. The string length chosen is 6.
Step 2: The objective function is then calculated from the model developed for each solution
of population.
Step 3: The new fitness function is then defined by the incorporating adaptive penalty
parameter as shown in the equation
F(x) = f(x) + kgi(x)
Step 4: The GA operators reproduction, crossover and mutations are now applied to these
newly defined fitness functions and all the above mentioned steps are repeated till optimum
solution is obtained.
Reproduction is performed by using random numbers in such a way that fittest strings are
selected with largest probability as in roulette wheel selection. Then crossover is performed
using scattered method with the help of random numbers. Mutation is performed with
probability of 0.03. The crossover operation is performed with fraction of 0.33.
The optimum result obtained after 101 generation is
Y1 = 6000.000,
Y2 = 5950.000,
Y3 = 12.000,
Y4 = 16.085,
Y5 = 19.95,
X1 = 1366804.100
This corresponds to the DMU 5.
The results obtained by GAs and DEA do not match hence the analysis has to be continued
further. The next chapter presents the result analysis and discussion using Cost-Benefit
analysis and TOPSIS.
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[6]. They have introduced some major factors contributing towards benefits of a unit to be
procured with appropriate weightage to each factor. They suggests that rather than a single
person attempting to develop criteria for selection a purchase committee should be setup for
this purpose. The committee shall evaluate the alternative systems and make recommendation
for vendor selection. The purchase committee selected for this purpose should include the
members from design engineering, production department, purchase department and accounts
department. The committee should develop a comprehensive list of applicable criteria for
purchase. The TABLEIVmust be compiled on the basis of reference of their decisions. The
analysis is divided in to 3 major factors namely, General consideration, Applications
Electricals and Applications Mechanical all the considerations are allotted 1000 points each.
Then each factor is further divided into sub factors as General consideration in 5 sub factors as
Cost, Services, Quality, Delivery and logistics support and programming etc. and the 1000
points allotted to each factor is subdivided into these sub factors as decided by the purchase
committee. For example cost is allotted 200 points, services 100 points, quality 300 points
delivery and logistic support 100 points and programming 300 points. The sub factors are
further divided into sub-sub factors as the sub factor cost is divided into hardware, software,
maintenance, spares, transportation, field support etc. and the sub-sub factors are also allotted
points. This allocation may be varied from situations to situations. Similarly all the factors,
their sub factors and their points allocation are completed as shown in Table IV. All the
alternatives given by DEA and GAs are subjected to Benefit-Cost analysis. All the DMUs are
given points.
A. General Consideration
Max.
DMU DMU
DMU DMU
Marks
15
DMU 3
COST (200)
A.
Hard ware
50
20
20
30
20
30
B.
Software
30
10
20
20
30
30
C.
Maintenance
30
30
20
30
30
30
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D.
Spares
30
20
20
20
30
10
E.
Transportation
20
10
20
20
10
10
F.
Field Support
40
10
10
10
200
2
SERVICES (100)
A.
30
10
10
20
20
10
B.
Parts Location
20
20
20
20
20
20
10
10
30
20
20
20
20
10
C.
D.
Warrantee and
discontinuance clause
Software service
100
3
QUALITY (300)
A.
Reliability
40
20
40
40
20
20
B.
Simultaneous operation
40
40
40
20
40
40
C.
Crash recovery
40
40
20
40
20
D.
40
40
40
20
20
40
20
20
20
20
40
20
20
40
20
E.
F.
Environmental
sustainability
Human factor
consideration
G.
20
20
20
20
20
20
H.
Product documentation
20
20
20
20
20
20
I.
Training
40
40
40
40
20
40
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December, 2013
Vol 2 Issue 12
300
Packaging
10
10
10
10
10
B.
Installation
20
20
10
20
10
20
C.
Pre-delivery inspection
20
20
20
20
20
20
D.
Installation guide
10
10
10
10
10
10
E.
Revisions
10
10
10
10
10
10
F.
Billing
10
10
10
10
10
10
G.
Proprietary agreement
20
20
20
20
20
100
100
100
100
100
100
5
PROGRAMMING (300)
A.
B.
Standard language
50
50
30
50
50
40
C.
Assembly language
50
50
50
50
50
D.
User protection
50
50
30
50
50
50
E.
Diagnostic aids
50
50
30
50
50
50
610
850
750
700
300
TOTAL 790
B. Application - Electricals (15 Marks )
Max
DMU DMU
DMU DMU
Marks
15
DMU3
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ELECTRICAL DESIGN
APPLICATIONS (500)
A. Logic diagram
100
50
50
100
50
100
B. Circuit diagram
100
100
100
100
100
100
C. Electrical wirings
200
200
100
50
D. Bill of materials
100
100
100
100
100
100
500
2 NC PACKAGES (300)
A. Auto placement
50
50
50
50
50
B. Cable viewing
200
200
100
200
150
150
C. Wire Wrap
50
50
50
50
300
3 DOCUMENTATION (200)
A. Handbooks
80
60
50
70
80
80
B. Organization chart
40
40
40
C. Flow diagrams
40
20
20
40
40
40
30
30
40
550
930
580
800
200
TOTAL 630
C. Applications - Mechanicals ( 35 Marks )
Max.
DMU DMU
DMU DMU
Marks
15
DMU3
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Vol 2 Issue 12
A.
Process Diagrams
80
60
80
80
80
60
B.
Architecherial Drawing
20
20
20
20
C.
Plant layout
30
D.
Pipe layout
30
15
E.
10
10
F.
2D drawings
10
10
10
10
10
10
G.
3D drawings
10
10
10
10
10
H.
80
80
80
80
80
80
I.
80
40
80
80
80
80
J.
Design Data
50
50
50
50
50
50
400
MECHANICAL INTERFACES
(250)
A.
Stress analysis
50
50
50
B.
50
C.
Flow analysis
50
50
50
50
50
50
D.
Mechanical analysis
50
50
50
50
E.
50
250
Machining NC programming
50
50
20
40
40
40
B.
Automatic NC programming
150
150
100
150
150
100
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Vol 2 Issue 12
Functions
C.
Other NC Functions
50
D.
NC default values
50
50
50
50
50
E.
NC interfaces
50
30
20
50
20
30
670
695
690
610
350
TOTAL 575
15
1995
1830
2475
2020
2110
Price
Trunketed Price
120
110
132
135
140
Benefit/Cost Ratio
16.625
16.636
18.75
14.962
15.071
Rank
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Vol 2 Issue 12
Ideal point is called DMU+ and anti-ideal point is called DMU-. Suppose { x1+ , x2+ , ,..xm+}
and { y1+ , y2+ , ,..ys+ } represents the input and output vectors of DMU+
} and { y1- , y2- , ,..ys- } represents the input and output vectors of DMU-
respectively.
, i=1,.m
xij
yr+ =
ij
, r=1,.s
xi- =
xij
, i=1,.m
yr- =
yij
, r=1,.s
.. (1)
.(2)
.. (3)
Now DMUj s general distance to the ideal and anti-ideal point is calculated as
.. (4)
The larger value of Dj represents the better value of DMUj compared to other DMUs
In this method, first the ideal point and the anti-ideal point are obtained using relation (1), all
the efficient DMUs are identified, and then obtained results are put in E = {1, . . . , e}.
Continuing with all the efficient DMUs, we produced a virtual DMU. The acquired inputs and
Outputs of the virtual DMU are the average of the corresponding inputs and outputs of all the
efficient DMUs, respectively and it is called DMUM(DMUMis the center of gravity of all the
efficient DMUs). After that, general distance of DMUMto the ideal point and the antiIdeal point are obtained through applying relation (9), this distance is called DM. In the next
step DMUq, q E, is deleted from the efficient frontier and the new virtual DMU is created
which is the average of all corresponding inputs and outputs of all the efficient DMUs
respectively expect DMUq. This is called
to the
ideal and anti-ideal point is obtained using relation (4). Then the true difference between Dm
and Dq/will be computed and named as
the distance
DMUqwill have.
The sample calculation for DMU5 of the chosen data is shown below
International Journal of Innovative Research and Studies
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December, 2013
Vol 2 Issue 12
Rapid
Sr.
DMU
No
Efficienc
Money
ies
Spindle
Speed
Tool
traverse
speed
Range
Positi
(RPM)
(RPM)
ons
Directi
Directi
on
on
100%
12,00,000
6000
5950
24
24
100%
11,00,000
6000
5940
12
12
15
100%
13,20,000
5000
4950
12
24
30
15
100%
13,50,000
3500
3465
12
30
30
14,00,000
6000
5950
12
15
20
6370000
26500
26255
56
105
119
1274000
5300
5251
21
23.8
Input Xi
Output Yi
1100000
6000
5950
12
30
30
1400000
3500
3465
12
15
-126000
1800
1786
3.2
8.8
158760000
324000
31897
10.24
81
77.44
-0.8
-9
-6.2
0.64
81
38.44
85.98
5
%
TOTA
L
Avera
ge
Ideal
11.2
AntiIdeal
DMU
D+
Square 00
0
158760000
Total
00
Subtra
ct
96
642996
5
158695700
35
125974.48
SqRt
17
D-
174000
-700
-699
302760000
Square 00
48860
490000
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December, 2013
Vol 2 Issue 12
302760000
Total
00
Subtra
ct
978721
302750212
79
173997.18
SqRt
Dm
76
0.580045
Rapid
Sr.
DMU
Efficienc
No
no.
ies
Money
Spindle
Speed
Tool
traverse
speed
Range
Positi
(RPM)
(RPM)
ons
Directi
Directi
on
on
100%
12,00,000
6000
5950
24
24
100%
11,00,000
6000
5940
12
12
15
100%
13,20,000
5000
4950
12
24
30
15
100%
13,50,000
3500
3465
12
30
30
20500
20305
44
90
99
( DMU5 )
TOTA
L
4970000
Avera
5076.2
ge
Ideal
1242500
5125
Input Xi
Output Yi
1100000
6000
1350000
3500
24.7
11
22.5
5950
12
30
30
3465
12
15
-1
-7.5
-5.25
AntiIdeal
DMUQ1
D+
142500
-875
873.75
203062500
76343
Square 00
765625
203062500
Total
00
56.25
27.5625
152914
9
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December, 2013
Subtra
Vol 2 Issue 12
203047208
ct
51
142494.63
SqRt
45
1611.2
D-
-107500
1625
115562500
264062
Square 00
5
115562500
Total
00
Substr
10.
3
110.25
9.75
25961
27
95.0625
523696
6
115510130
act
34
107475.63
SqRt
93
Dq1
0.429954
Dq1-
0.150092
Table 6: Sample calculation for TOPSIS
DMU
Dq-
no.
Rank
0.2217
1
1
0.1676
2
0.0967
4
0.0967
15
5
0.1500
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Vol 2 Issue 12
ii.
iii.
4.3. Discussions:
In the preceding section three candidates are the winners namely DMU1, DMU3 and DMU8.
The following considerations are taken into account for final selection .DMU 3 has got the
second lowest benefit cost ratio and the highest cost. But it rank is 3rd in TOPSIS analysis.
However, TOPSIS does not consider some vital factors like warrantee period, after sales
services, vendor rating etc. hence DMU 3 is dropped for further consideration.
TOPSIS and BCA based DEA generates DMU1 and DMU8 as elements of final set of
solutions. DMU8 has got higher Benefit-Cost ratio of 18.75 (See TABLE V). Moreover
TOPSIS in case of DMU1 does not take care about such factors as warrantee period, vendor
rating, quality of product, no. of tool positions, rapid traverse etc. Therefor even though the
DMU8 is costlier by 1, 20,000.00 than DMU1, the DMU 1 is dropped and DMU 8 has
emerged as the final solution recommended by the committee. Thus the winner candidate is
DMU 8 i.e EX 106.
5. Conclusion:
Based on the data for 21 CNC lathes the DEA approach is used to obtain a set of 4 competitive
machine tools with 100% efficiency. Further the same data of 21 CNC lathes is used for GAs
approach. Thus a set of 5 competitive candidates are worked out and subjected to benefit cost
analysis. The benefit analysis 3 major factors with 13 sub factors are identified and assigned
weightages to various sub factor the total weightages being 1000 and the BCA analysis and
one candidate out of 5 is recognized as winner candidate. The 5 competitive candidates are
again subjected to TOPSIS analysis using Microsoft Excel and one winning candidate is
worked out.The output of cost benefit analysis and TOPSIS was analyzed and a single winner
from this set emerges.
Thus DEA analysis identifies 4 competitive candidates as DMU1, DMU4, DMU8 and
DMU15. And GAs identifies DMU3 this is subject to BCA which identifies DMU8 as winner
candidate. Whereas, TOPSIS identifies DMU1 as winner that has already appeared in above
solutions.Finally DMU8 emerges as a winning candidate. It is believed that the approach
generated in the present paper will work as a vital tool of decision support mechanism not only
International Journal of Innovative Research and Studies
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Vol 2 Issue 12
for SSI units but also for the other units of industry and service sector, especially for
procurement of units.
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Vol 2 Issue 12
References:
1. Nan Fang, Shinn Sun, Comparing CNC Lathes Using Data Envelopment Analysis
APDSI 2000
2. Website: http://dcmsme.gov.in/ssiindia/performance.htm
3. MadhuBala, Lesson 20: Structure, Policy s Support to Small Scale Industries
4. Bhattacharya Rajiv K, 2012, Introduction to Genetics Algorithm, Department of Civil
Engineering, IIT, Guwahati.
5. Pawar PJ, and Bhusnar, 2010, Genetic Algorithm using adaptive selection method,,
Pune University.
6. GrooverMikell P and Zimmers Emory W Jr., 2011, CAD CAM: Computer-Aided
Design and Manufacturing, Tenth Impression, New Delhi: Dorling Kindersley (India)
Pvt. Ltd.
7. F. HosseinzadehLotfi, M. Rostamy mal khalifeh, M. HeydariAlvar (2012), A New
Method for Ranking Efficient DMUs Based on TOPSIS and Virtual DMUs Int. J.
Research in Industrial Engineering, pp. 1- 9
Page 664