MB0044 Productions & Operations Management

Set- 1

Q1. What do you understand by Vendor-Managed

Inventory (VMI)?
Some firms have successfully improved their supply chain performance by
implementing an approach known as Vendor Managed Inventory (VMI).
With VMI, the vendor specifies delivery quantities sent to customers
through the distribution channel using data obtained from EDI. Vendor
Managed Inventory, Just-in-Time Distribution (JITD), and Eficient
Consumer Response (ECR) all refer to similar concepts, but applied to
diferent industries. For example, the grocery and apparel industries tend
to use ECR, whereas the automobile industry tends to use VMI and JITD.
The
Vendor
Inventory Approach

Managed

VMI reduces stock-outs and reduces inventory in the supply chain. Some
features of VMI
includ
e:
Shortening of the supply chain
Centralized forecasting
Frequent communication of inventory, stock-outs, and planned
promotions. Electronic
Data Interchange (EDI) linkages facilitate this communication.
No manufacturer promotions
Trucks are filled in a prioritized order. For example, items that are
expected to stock out have top priority, then items that are furthest
below targeted stock levels, then advance shipments of promotional
items (promotions allowed only in transition phase), and finally,
items that are least above targeted stock levels.
Relationship with downstream distribution channels
Result: Inventory reduction and stock-out reduction
VMI
Implementation
Challenges
VMI can be made to work, but the problem is not just one of logistics. VMI
often encounters resistance from the sales force and distributors. At
issue are roles and skills, trust, and power shifts. Some of the sales force
concerns are:
Loss of control

 Effect on compensation - incentive bonuses may depend on how

much is sold, but sales force has less influence under VMI.
Possible loss of job
Skepticism that it will function well - technical problems
Concern that reduced inventory will result in less shelf space and
therefore loss of market share. This concern can be addressed by
filling the shelf space with other stock keeping units from the same
vendor.
Distributors also may have concerns about vendor managed inventory,
including:
Inventory will be pushed on them
No more promotions, discounts, and forward buying
With less inventory, more risk of disruptions due to strikes, adverse
weather, etc.
The vendor enjoys the benefits while the distributor gives up its only
lever of power - data on what the retailers want.
Danger of being replaced - vendor may decide to forward integrate.
Addressing Concerns
For a VMI system to work, the concerns of distributors and the
sales force must be addressed. They can be at least partially addressed
by the following:
Transform the sales role into one of marketing. For example,
bonuses can be given
based on the number of new clients.
Distributor skepticism can be addressed by implementing a pilot
program with vendor- owned
warehouses
in
order
to
demonstrate that the system works. Introduce system in
distributor-owned warehouses on a pilot basis.
Engage a neutral consultant in meetings among the vendor,
distributor, and sales
force.
Allow some manufacturer promotions in the transition.
Extensively simulate the system off-line before implementing.
Don't exaggerate the benefits of VMI; otherwise, any delay in
realizing the benefits may cause the supply chain to lose faith in the
system.

Q2. Explain briefly the four classifcation of scheduling

strategies & its approaches. Types of Scheduling Strategies
Burst Campaigns: often associated with the awareness objective,
the burst campaign
compacts media activities into a series of relatively short time frames,
with relatively long periods of absence from media activity in between.
This pattern may be used when a new product is being introduced.
Flighting: Wave method or the flighting method is another kind of
scheduling. In flighting,
advertisements are bunched with the intention of providing a
concentrated impact.
is another method of creating an advertising schedule. The phrase
advertising flight describes the time when commercials are aired. When
flighting is used in relation to a scheduling technique, it refers to a method
that has advertising going on and off the air. The advantage of the
flighting technique is that it allows a campaign that does not have funds
for running spots continuously to conserve money and maximize the
impact of the commercials by airing them at key strategic times during the
campaign.
Frequently when flighting is employed, radio or cable TV will be used to
supplement the advertising campaign during the times when television
commercials are off the air. This method of media planning allows the
messages and themes of the campaign to reach the voter through radio or
cable TV, less costly alternatives to broadcast TV.
Overview: Henko Stain Champion Powder (HSCP) was launched in July
1994 in South India. It was clearly positioned as a brand in the premium
segment of detergents among HLLs Surf Wash Booster (todays Surf MultiAction).
Battling consumer inertia to try out this new brand was its toughest
challenge and carving out pride of association was the other issue.
Continuous Campaign: Another approach mostly associated with
reminder campaigns, is to extend the time frame of the advertising
message over a long period. The campaign provides continuity of the
message, although at the cost of the impact. These continuous patterns
are often used for mature products, where reminder advertising is
appropriate.
Over a long term .this strategy is more appropriate for products and
services where the demand is constant or there is a long purchase cycle.
There can be perfect continuous advertising, rising continuity or
falling continuity.

1. Rising continuity: this pattern is used when the advertising circles

around a particular event. E.g. the advertisement for Paints
generally increases during the festive seasons like divali.
2. Falling continuity: this pattern may follow an initial burst to launch a
new product or to inform a product modification.
Pulsing Campaign: A compromise between the burst and the continuous
strategy is the development of the pulsing campaign. Here a
comparatively low level of media activity is maintained over long period of
time, with periodic increases in the expenditure patterns. It is often
associated with seasonal or other influences on buyer activities.
Normally, scheduling is done for a 4-week period. The six types of
schedules available are:
1. Steady pulse: it is the easiest. For instance, one ad/week for 52
weeks or one ad/month for 12 months.
2. Seasonal pulse: ads are scheduled to meet seasonal peaks by
appearing in concentrated doses ahead of buying season. Products
like Vicks Balm, Glycodin Terp- Vasaka Syrup, and Ponds cold cream
follow this approach.
3.

Period pulse: Scheduling follows a regular pattern,

media scheduling of consumer durables, non-durables, etc.

e.g.,

4. Erratic pulse: The ads are spaced irregularly. Perhaps, we want to

change the typical purchase cycles.
5. Start-up pulse: It is concentrated media scheduling. It launches a
new product or a new campaign.
6. Promotional pulse: A one-shot affair it suits only particular
promotional theme. Heavy concentration during a period is the
characteristic of this scheduling. For instance, financial advertising
of companys issue.

Q3. Define production management. What are

functions involved in production management?

the

various

Production management means planning, organising, directing and

controlling of production activities.
Production management deals with converting raw materials into
finished goods or products. It brings together the 6M's i.e. men, money,
machines, materials, methods and markets to satisfy the wants of the
people.
Production management also deals with decision-making regarding the
quality, quantity, cost, etc., of production. It applies management
principles to production.
Production management is a part of business management. It is also
called "Production
Function." Production management is slowly being replaced by
operations management.
The main objective of production management is to produce goods and
services of the right quality, right quantity, at the right time and at
minimum cost. It also tries to improve the efficiency. An eficient
organisation can face competition efectively. Production management
ensures full or optimum utilisation of available production capacity
Functions
of
Management

Production

Functions of production management are depicted, listed &

explained below.

The components or functions of production management

are as follows:

1. Selection of Product and

Design,
2. Selection of Production
Process,
3. Selecting Right Production
Capacity,
4.
Production
Planning,
5.
Production
Control,
6. Quality and Cost
Control,
7. Inventory Control,
and
8. Maintenance and Replacement of
Machines
The above functions of production management are briefly
discussed below.
1. Selection of Product and
Design
Production management first selects the right product for production.
Then it selects the right design for the product. Care must be taken while
selecting the product and design because the survival and success of
the company depend on it. The product must be selected only after
detailed evaluation of all the other alternative products. After selecting
the right product, the right
design must be selected. The design must be according to the customers'
requirements. It must give the customers maximum value at the lowest
cost. So, production management must use techniques such as value
engineering and value analysis.
2. Selection of Production
Process
Production management must select the right production process. They
must decide about the type of technology, machines, material handling
system, etc.
3. Selecting Right Production
Capacity
Production management must select the right production capacity to
match the demand for the product. This is because more or less capacity
will create problems. The production manager must plan the capacity for
both short and long term's production. He must use break-even analysis
for capacity planning.
4.
Production
Planning
Production management includes production planning. Here,
production manager decides about the routing and scheduling.

the

Routing means deciding the path of work and the sequence of operations.
The main objective of routing is to find out the best and most economical
sequence of operations to be followed in the manufacturing process.
Routing ensures a smooth flow of work.
Scheduling means to decide when to start and when to complete a
particular production activity.
5.
Production
Control
Production management also includes production control. The manager
has to monitor and control the production. He has to find out whether
the actual production is done as per plans or not. He has to compare
actual production with the plans and finds out the deviations. He then
takes necessary steps to correct these deviations.

6. Quality and Cost

Control
Production management also includes quality and cost control. Quality and
Cost Control are given a lot of importance in today's competitive world.
Customers all over the world want good-quality products at cheapest
prices. To satisfy this demand of consumers, the production manager must
continuously improve the quality of his products. Along with this, he must
also take essential steps to reduce the cost of his products.
7.
Inventory
Control
Production
management
also includes inventory control. The
production manager must monitor the level of inventories. There must be
neither over stocking nor under stocking of inventories.
If there is an overstocking, then the working capital will be blocked, and
the materials may be spoiled, wasted or misused.
If there is an under stocking, then production will not take place as per
schedule, and deliveries will be affected.
8. Maintenance and Replacement of
Machines
Production management ensures proper maintenance and replacement of
machines and equipments. The production manager must have an
eficient system for continuous inspection (routine checks), cleaning,
oiling, maintenance and replacement of machines, equipments, spare
parts, etc. This prevents breakdown of machines and avoids production
halts.

Q4. Explain the various phases in project

management life cycle. Phases of project
management life cycle
Project management life cycle has
six phases:

Analysis and evaluation phase

Marketing phase
Design phase
Execution phase
Control inspecting, testing, and delivery phase
Closure and post completion analysis phase

Analysis
and
evaluation phase
Analysis and evaluation phase is the initial phase of any project. In this
phase, information is collected from the customer pertaining to the
project. From the collected information, the requirements of the project
are analysed. According to the customer requirement, the entire
project is planned in a strategic manner. The project manager conducts
the analysis of the problem and submits a detailed report to the top
management.
Marketing
phase
A project proposal is prepared by a group of people including the
project manager. This proposal has to contain the strategies adopted to
market the product to the customers.
Design
phase
Design phase involves the study of inputs and outputs of the
various project stages

Inputs received consist of: project feasibility study, preliminary

project evaluation details, project proposal, and customer
interviews.
Outputs produced consist of: system design specifications,
functional specifications of the project, design specifications of the
project, and project plan.

Execution
phase
In execution phase, the project manager and the team members
work on the project objectives as per the plan. At every stage during the
execution, reports are prepared.

Control inspecting, testing and

delivery phase
During this phase, the project team works under the guidance of the
project manager. The project manager has to ensure that the team
working under him is implementing the project designs accurately. The
project has to be tracked or monitored through its cost, manpower, and
schedule. The project manager has to ensure ways of managing the
customer and marketing the future work, as well as ways to perform
quality control work.

Closure and post

analysis phase

completion

Upon satisfactory completion and delivery of the intended product or

service the staff performance has to be evaluated. The project manager
has to document the lessons from the project. Reports on project feedback
are to be prepared and analysed. A project execution report is to be
prepared.

Q5. Explain the ingredients of a business process.

Explain Physical Modelling. Business Process Modelling

A process is a coordinated set of activities designed to produce a
specific outcome. There are processes for saving a file, constructing a
building, and cooking a meal. In fact, there is a process for almost
everything we do. A business process is a type of process designed to
achieve a particular business objective. Business processes consist of
many components, including:

The data needed to accomplish the desired business objective

Individual work tasks that manipulate, review, or act upon the data in
some way

Decisions that affect the data in the process or the manner in

which the process is conducted

The movement of data between tasks in the process

Individuals and groups which perform tasks Processes can be manual or

automated, fully documented or simply knowledge in the minds of one or
more people. They can be simple or complex. They can be formal, requiring
exact adherence to all details; or flexible, provided the desired outcome is
achieved.
Logical
Process
Modelling
Logical Process Modelling is the representation of a business process,
detailing all the activities in the process from gathering the initial data to
reaching the desired outcome.
These are the kinds of activities described in a
logical process model:

Gathering the data to be acted upon

Controlling access to the data during the process execution

Determining which work task in the process should be accomplished

next

 Delivering the appropriate subset of the data to the corresponding

work task

Assuring that all necessary data exists and all required actions have
been performed at each task

Providing a mechanism to indicate acceptance of the results of the

process, such as, electronic signatures

All business processes are made up of these actions. The most complex of
processes can be broken down into these concepts. The complexity comes
in the manner in which the process activities are connected together.
Some activities may occur in sequential order, while some may be
performed in parallel. There may be circular paths in the process (a re-work
loop, for example). It is likely there will be some combination of these. The
movement of data and the decisions made determining the paths the data
follow during the process comprise the process model. The contains only
business activities, uses business terminology (not software acronyms,
technical jargon, etc.), completely describes the activities of the business
area being modelled, and is independent of any individual or position
working in the organization. Like its sibling, Logical Data Modelling, Logical
Process Modelling does not include redundant activities, technology
dependent activities, physical limitations or requirements or current
systems limitations
or
requirements. The
process
models a
representation of the business view of the set of activities under analysis.
Heretofore, many applications and systems were built without a logical
process model or rigorous examination of the processes needed to
accomplish the business goals. This resulted in applications that did not
meet the needs of the users and / or were dificult to maintain and
enhance. Problems with an un modelled system include the following:
Not knowing who is in possession of the data
at any point in time
Lack of control over access to the data at
any point in the process
Inability to determine quickly where in the process the data resides
and how long it has been there
Difficulties in making adjustments to a specific execution of a
business process
Inconsistent process
execution. Ingredients of
Business Process

1) Time: You must understand that time is money. In business, our

objective is to make money. Period. But the question is how productively
you convert your time into money. Are you making full use of your time or
you just let the time pass by you? How much you make depends on how
good you are at converting time to money. If you are already productive,
then you may want to ask what are the things you can do to improve
further the ratio of dollar/second? If you are making $0.01/second, what
you can dote make it $0.02/second? Or even more. Remember time is the
most valuable asset and once

its gone, its gone. Also time is also the fairest distribution of resources
every human beingreceives.2) People: To be successful in business, you
must have people connections. I mean the right people. People consist of
customers, suppliers, partners, staff, and associates.
One thing that you must not leave out is your mentor or coach. Having
genuine mentors or coaches is very important and it can make a very big
difference in your business. To make sure that you have more profits, you
must serve people well. Organize your database of people connections. By
simply knowing who does what, who supplies what, whoneeds what, where
to get what make you miles ahead of other people. To organize your
connections, you can either use a paper folder or computer
spreadsheet.3) Knowledge and Skills: When I talk about knowledge and
skills, I am not referring toacademic knowledge that you find in schools or
colleges. Whats more important to youis knowledge and skills that can
bring you results you want.How many MBA holders that you know of have
become business owners and have madetones of money? That shows
getting the right knowledge and skills is important. Dont blindly go after
knowledge that could drown you.
Go for knowledge and skills that areuniversally tested and
proven.Examples of right knowledge and skills are where to get what from
who, money makingtrends, marketing strategies, art of dealing with
people, negotiation skills, selling skills, skillsof managing and growing
money, investment skills, universal laws of success, and more.Dont waste
time on unnecessary knowledge as I went through that before. Theres only
somuch that you need to know and learn. Be sharp and focus when you
acquire knowledge andskills. Dont follow what normal people do.4)
Personal Health: In fact, this is the most important ingredient of all. How
can you run a business without a healthy body? In order to maintain an
optimum health, you have to provide your body with proper nutrients and
sufficient exercise. And also dont forget aboutemotional well being. Dont
let anger and other negative emotions control you.This is where positive
and empowering attitudes come into play. Maintaining your body is just like
maintaining your car. If you send your car to workshop for regular service
and pump petrol regularly, why dont you do the same for your body? Its
something for you to think about. Dont be stingy over spending money for
your own health because physical andmental health can cause you a lot of
money in the long run if your body is not taken care of properly.5) Money:
Lets face it. It does take money to make money even you need a little. But
youmight not need a lot of money to start a business because there are
many ways tostart one with low capital.I meet a lot of people who want to
be rich but are not willing to invest the money. You mustinvest in
something in order to for you to get something. The law of sowing
andreaping is at work. Dont expect something without investing anything.
Money is one of theinvestments you need to make.
Even though you dont need to have a capital for your business, but at least
you must be ableto cover your expenses while building your business. You
also need money to buy productsto stock up and other stuff. So, you must
at least come up with whatever amount that youhave to start a
business.These are the five basic ingredients of business success. Do your
best to acquire or grow or invest in these ingredients. But the good thing is
you dont need to have a perfectcombination of ingredients to get started.

You can still perfect the ingredients along the way.Somehow, get it started
with what youve got.

Q.6 Define the term quality. Explain the concept

of quality at source.

Quality Control (QC) is a system of routine technical activities, to

measure and control the quality of the inventory as it is being developed.
The QC system is designed to:
Provide routine and consistent checks to ensure data integrity,
correctness, and completeness;
Identify and address errors and omissions;
Document and archive inventory material and record all QC activities.

The following seven are considered basic tools for

achieving quality. Flow Chart
Check sheet
Histogram
Pareto
Analysis
Scatter
Diagram
Control Chart
Cause and Effect Diagram

Flow Chart
It is a visual representation of process showing the various steps. It helps
in locating the points at which a problem exists or an improvement is
possible. Detailed data can be collected, analyzed and methods for
correction can be developed. A sample is shown below lists out the
various steps or activities in a particular job. It classifies them as a
procedure or a decision. Each decision point generates alternatives.
Criteria and Consequences that go with decision are amenable to
evaluation for purposes of assessing quality. The flow chart helps in pinpointing the exact at which errors have crept in. A simple chart is shown
below.

Check
Sheet
These are used to record the number of defects, types of defects,
locations at which they are occurring, times at which they are occurring,
workmen by whom they are occurring. It keeps a record of the frequencies
of occurrence with reference to possible defect causing parameter. It helps
to implement a corrective procedure at the point where the frequencies
are more, so that the benefit of correct will be maximum. A sample sheet
is shown below.

Histogra
m
Histograms are graphical representations of distribution of data. They
are generally used
to record huge volumes of data about a process. They reveal whether the
pattern of distribution whether there is a single peak, or many peak and
also the extent of variation around the peak value. This helps in
identifying whether the problem is serious. When used in conjunction with
comparable parameters, the visual patterns help us to identify the
problem which should be attended to.

Pareto
Analysis
This is a tool for classifying problem areas according to the degree of
importance and attending to the most important. Pareto principle, also
called 80-20 rule, states that 80 percent of the problems that we
encounter arise out of 20 percent of items. If we find that, in a day, we
have 184 assemblies have given problems and there are 11 possible
causes, it is observed that 80 per cent of them i.e. 147 of them have been
caused by just 2 or 3 of them. It will be easy to focus on these 2 or three
and reduce the number of defects to a great extent. When the cause of
these defects have been attended, we will observe that some other defect

Scatter
Diagram
These are used when we have two variables and want to know the degree
of relationship between them. We can determine if there is cause and
efect relationship between and its extent over a range of values.
Sometimes, we can observe that there is no relationship, in which we can
change one parameter being sure that it has no effect on the other
parameter.

Control
Charts

These are used to verify whether a process is under control. Variables

when they remain within a range will render the product maintain the
specifications. This is the quality of conformance. The range of permitted
deviations is determined by design parameters. Samples are taken and
the mean and range of the variable of each sample (subgroup) is
recorded. The mean of the means of the samples gives the control lines.
Assuming normal distribution, we expect 99.97 per cent of all values to lie
within the UCL when we take 3 standard deviations Upper Control Limit
and LCL Lower Control Limit. The graphical representation of data helps
in changing settings to bring back the process closer to the target.

Cause and
Diagram

Effect

This is a diagram in which all possible causes are classified on quality

characteristics which lead to a defect. These are arranged in such a way
that diferent branches the causes are
leading the stem in the direction of the discovery of the problem. When
each of them is
investigated thoroughly we will be able to pinpoint some factors which
cause the problem. We will also observe that a few of them will have
cumulative effect or even a cascading effect.

Deming
Wheel

Demings approach is summarized in his

14 points. Constancy of purpose for
continuous improvement Adopt the TQM
philosophy for economic purposes Do not
depend on inspection to deliver quality
Do not award any business based on
price alone
Improve the system of production and service
constantly
Conduct meaningful training on
the job
Adopt modern methods of supervision and
leadership

Remove fear from the minds of everyone connected with

the organisation
Remove barriers between departments
and people
Do not exhort, repeat slogans and put
up posters.

Do not set up numerical quotas and work

standards Give pride of workmanship to
the workmen Education and training to be
given vigorously
State and exhibit top managements commitment for quality
and productivity

Using the above principles, Deming gave a four step approach to

ensure a purposeful journey of TQM. The slope is shown to indicate that if
efforts are let up the program will roll back

Plan means that a problem is identified, processes are determined and

relevant theories are checked out.
Do means that the plan is implemented on a trial basis. All inputs are
correctly measured and recorded.
Check/Study/Analyze means that the trials taken according to the plan
are in accordance with the expected results.
Act When all the above steps are satisfactory regular production is
started so that quality outcomes are assured

Crosbys Absolutes of
Quality
Like Deming, he also lays emphasis on top management commitment and
responsibility for designing the system so that defects are not
inevitable. He urged that there be no restriction on spending for
achieving quality. In the long run, maintaining quality is more economical
rather than compromising on its achievement.

His absolutes can be listed as

under.
Quality is conformance to requirements not
goodness.
Prevention, not appraisal, is the path
to quality.
Quality is measured as the price paid for non-conformance
and as indexes.

Quality originates in all factions not quality department. There are no

quality problems people, design, process create problems.

Crosby also has given 14 points similar to those of Deming. His approach
emphasizes on measurement of quality, increasing awareness, corrective
action, error cause removal and continuously reinforcing the system, so
that advantages derived are not lost over time. He desires that the quality
management regimen should improve the overall health of the
organization and prescribed a vaccine.

The ingredients
are:
Integrity honesty and commitment to produce everything right first time,
every time. Communication Flow of information between departments,
suppliers, customers helps
in
identifying
opportunities.
Systems and operations These should bring in a quality environment so
that nobody is comfortable with anything less than the best.

MB0044 Productions & Operations Management

Set- 2

Q.1 What is value engineering? Explain the steps

involved in Value analysis.

Value Engineering (VE) or Value Analysis is a methodology by which

we try to find substitutes for a product or an operation.
The concept of value engineering originated during the Second World War.
It was developed by the General Electric Corporations (GEC). Value
Engineering has gained popularity due to its potential for gaining high
Returns on Investment (ROI). This methodology is widely used in business
re-engineering, government projects, automakers, transportation and
distribution, industrial equipment, construction, assembling and
machining processes, health care and environmental engineering, and
many others. Value engineering process calls for a deep study of a
product and the purpose for which it is used, such as, the raw materials
used; the processes of transformation; the equipment needed, and many
others. It also questions whether what is being used is the most
appropriate and economical. This applies to all aspects of the product.
Simplification of processes reduces the cost of manufacturing. Every piece
of material and the process should add value to the product so as to
render the best performance. Thus, there is an opportunity at every stage
of the manufacturing and delivery process to find alternatives which will
increase the functionality or reduce cost in terms of material,
process, and time.
The different aspects of value engineering can be encapsulated into a
sequence of steps
known as a Job Plan. Value Engineering in organisations
helps to identify:

The problem or situation that needs to be changed/improved

All that is good about the existing situation
The improvements required in the situation
The functions to be performed
The ways of performing each function
The best ways among the selected functions
The steps to be followed to implement the function
The person who executes the function

It should be remembered that we are not seeking a cost reduction

sacrificing quality. It has been found that there will be an improvement in
quality when systematic value analysis principles are employed.
Examples
of
Engineering

Value

it

Russian liquid-fuel rocket motors are intentionally designed to

permit ugly (though leak-free) welding. This reduces costs by
eliminating grinding and finishing operations that do not help the
motor function better.
Some Japanese disk brakes have parts toleranced to three
millimeters, an easy-to- meet precision. When combined with crude
statistical process controls, this assures that less than one in a
million parts will fail to fit.
Many vehicle manufacturers have active programs to reduce the
numbers and types of fasteners in their product, to reduce
inventory, tooling and assembly costs.
Often a premium forming process (like near net shape
forming) can eliminate hundreds of low-precision machining or
drilling steps. Precision transfer stamping can quickly produce
hundreds of high quality parts from generic rolls of steel and
aluminum. Die casting is used to produce metal parts from
aluminum or sturdy tin alloys (theyre often about as strong as mild
steels). Plastic injection molding is a powerful technique, especially
if the parts special properties are supplemented with inserts of
brass or steel.
When a product incorporates a computer, it replaces many parts
with software that fits into a single light-weight, low-power memory
part or microcontroller. As computers grow faster, digital signal
processing software is beginning to replace many analog
electronic circuits for audio and sometimes radio frequency
processing.
On some printed circuit boards (itself a producibility technique), the
conductors are intentionally sized to act as delay lines, resistors and
inductors to reduce the parts count. An important recent innovation
was to eliminate the leads of surface mounted components. At
one stroke, this eliminated the need to drill most holes in a printed
cricuit board, as well as clip off the leads after soldering.
In Japan (the land where manufacturing engineers are most valued),
is a standard
process to design printed circuit boards of inexpensive phenolic
resin and paper, and reduce the number of copper layers to one or
two to lower costs without harming specifications.

Q2. Describe dimensions of quality. Which are the quality control

tools?

The Old Seven

The First Seven.
The Basic Seven.

Quality pros have many names for these seven basic tools of quality, first
emphasized by KaoruIshikawa, a professor of engineering at Tokyo
University and the father of quality circles.
Start your quality journey by mastering these tools, and you'll have a name
for them too:"indispensable."

Cause-and-effect diagram
(also called Ishikawa or fishbone chart): Identifies manypossible causes for
an effect or problem and sorts ideas into useful categories.
Check sheet:
A structured, prepared form for collecting and analyzing data; a generictool
that can be adapted for a wide variety of purposes.
Control charts:
Graphs used to study how a process changes over time.
Histogram:
The most commonly used graph for showing frequency distributions, or
howoften each different value in a set of data occurs.
Pareto chart:
Shows on a bar graph which factors are more significant.
Scatter diagram:
Graphs pairs of numerical data, one variable on each axis, to look for
arelationship.
Stratificati
o n:
A technique that separates data gathered from a
variety of sources so that
patterns can be seen (some lists replace stratification
flowchart or run chart).

with

Q.3 What are the objectives of layout? Explain the

classification of layouts.

Break Even Analysis refers to the calculation to determine how much

product a company must sell in order to break even on that product. It is
an efective analysis to measure the impact of different marketing
decisions. It can focus on the product, or incremental changes to the
product to determine the potential outcomes of marketing tactics. The
formula for a break even analysis is:
Break even
t
= (Total
Fixed
+ Total Variable
Total poin
Variable ($)
Costs = Costs
Variable
cost
unit xCosts).
units
per
sold
Unit contribution (contribution margin) = Price per unit Variable cost per
unit.

When looking at making a change to the marketing program, one can

calculate the incremental break even volume, to determine the merits of
the change. This determines the required volume needed such
that
there
is
no
effect
to
the
company
due
to
the
change. If
making
changes
to
fixed
costs
(changing
advertising
expenditure
etc.): Incremental
break
even volume = change in expenditure / unit contribution.
Thus if a company increased its advertising expenditure by $1 million, and
its unit contribution for the specific product is $20, then the company
would need to sell an additional
50,000
units
to
break
even
on
the
decision. If making changes to
the unit
contribution
(change
in price,
or variable
costs):
Incremental break even volume = (Old Unit Volume x (Old Unit
Contribution New Unit Contribution))
/
New
Unit
Contribution Thus if a company increased its price
from $15 to $20, and had variable costs of $10, it is increasing its unit
contribution from $5 to $10, assume also an old unit volume of 1 million.
It could therefore reduce its volume by 500,000 to break even
on
the
decision. When making changes to a specific product,
cannibalization of other products may occur. To calculate the efect of
cannibalization, the Break Even Cannibalization rate for a change in a
product
is: New
Product
Unit
Contribution
/
Old
Product
Unit
Contribution. New Product is the planned addition to a product
line (or change to a product within a product line), Old Product is the
product that loses sales to the new product (or the product line that loses
sales). The cannibalization rate refers to the percentage of new product
that would have gone to the old product, this must be lower than the
break even cannibalization rate in order for the change to be profitable.
In manufacturing, facility layout consists of configuring the plant site with
lines, buildings, major facilities, work areas, aisles, and other pertinent
features such as department boundaries. While facility layout for services
may be similar to that for manufacturing, it also may be somewhat
differentas is the case with ofices, retailers, and warehouses. Because
of its relative permanence, facility layout probably is one of the most
crucial elements afecting efficiency. An efficient layout can reduce
unnecessary material handling, help to keep costs low, and maintain
product flow through the facility.
Firms in the upper left-hand corner of the product-process matrix have a
process structure known as a jumbled flow or a disconnected or
intermittent line flow. Upper-left firms generally have a process layout.
Firms in the lower right-hand corner of the product-process matrix can
have a line or continuous flow. Firms in the lower-right part of the
matrix generally have a product layout. Other types of layouts include
fixed-position, combination, cellular, and certain types of service layouts.
PROCESS
LAYOUT

Process layouts are found primarily in job shops, or firms that produce
customized, low- volume
products that may
require diferent
processing requirements and sequences of operations. Process layouts
are facility configurations in which operations of a similar nature or
function are grouped together. As such, they occasionally are referred to
as functional

layouts. Their purpose is to process goods or provide services that involve

a variety of processing requirements. A manufacturing example would be
a machine shop. A machine shop generally has separate departments
where general-purpose machines are grouped together by function (e.g.,
milling, grinding, drilling, hydraulic presses, and lathes). Therefore,
facilities that are configured according to individual functions or processes
have a process layout. This type of layout gives the firm the flexibility
needed to handle a variety of routes and process requirements. Services
that utilize process layouts include hospitals, banks, auto repair, libraries,
and universities.
Improving process layouts involves the minimization of transportation
cost, distance, or time. To accomplish this some firms use what is known
as a Muther grid, where subjective information is summarized on a grid
displaying various combinations of department, work group, or machine
pairs. Each combination (pair), represented by an intersection on the
grid, is assigned a letter indicating the importance of the closeness
of the two (A = absolutely necessary; E = very important; I = important;
O = ordinary importance; U = unimportant; X = undesirable). Importance
generally is based on the shared use of facilities, equipment, workers or
records, work flow, communication requirements, or safety requirements.
The departments and other elements are then assigned to clusters in
order of importance.
Advantages
of
layouts include:

process

Flexibility. The firm has the ability to handle a variety of processing

requirements.
Cost. Sometimes, the general-purpose equipment utilized may
be less costly to purchase and less costly and easier to maintain
than specialized equipment.
Motivation. Employees in this type of layout will probably be able
to perform a variety of tasks on multiple machines, as opposed to
the boredom of performing a repetitive task on an assembly line. A
process layout also allows the employer to use some type of
individual incentive system.
System protection. Since there are multiple machines available,
process layouts are not particularly vulnerable to equipment
failures.

Disadvantages
layouts include:

of

process

Utilization. Equipment utilization rates in process layout are

frequently very low, because machine usage is dependent upon a
variety of output requirements.
Cost. If batch processing is used, in-process inventory costs could
be high. Lower volume means higher per-unit costs. More
specialized attention is necessary for both products and customers.
Setups are more frequent, hence higher setup costs. Material
handling is slower and more ineficient. The span of supervision is
small due to job complexities (routing, setups, etc.), so supervisory

costs are higher. Additionally, in this type of layout accounting,

inventory control, and purchasing usually are highly involved.
Confusion. Constantly changing schedules and routings make
juggling process requirements more difficult.

PRODUCT
LAYOUT
Product layouts are found in flow shops (repetitive assembly and process
or continuous flow industries). Flow shops produce high-volume, highly
standardized products
that
require highly standardized, repetitive
processes. In a product layout, resources are arranged sequentially, based
on the routing of the products. In theory, this sequential layout allows the
entire process to be laid out in a straight line, which at times may be
totally dedicated to the production of only one product or product version.
The flow of the line can then be subdivided so that labor and equipment
are utilized smoothly throughout the operation.
Two types of lines are used in product layouts: paced and unpaced.
Paced lines can use some sort of conveyor that moves output along at a
continuous rate so that workers can perform operations on the product
as it goes by. For longer operating times, the worker may have to walk
alongside the work as it moves until he or she is finished and can walk
back to the workstation to begin working on another part (this essentially
is how automobile manufacturing works).
On an unpaced line, workers build up queues between workstations to
allow a variable work pace. However, this type of line does not work well
with large, bulky products because too much storage space may be
required. Also, it is dificult to balance an extreme variety of output rates
without significant idle time. A technique known as assembly-line
balancing can be used to group the individual tasks performed into
workstations so that there will be a reasonable balance of work among the
workstations.
Product layout eficiency is often enhanced through the use of line
balancing. Line balancing is the assignment of tasks to workstations in
such a way that workstations have approximately equal
time
requirements.
This minimizes the amount of time that
some
workstations are idle, due to waiting on parts from an upstream process or
to avoid building up an inventory queue in front of a downstream process.
Advantages
of
layouts include:

product

Output. Product layouts can generate a large volume of products in a

short time.
Cost. Unit cost is low as a result of the high volume. Labor
specialization results in reduced training time and cost. A wider
span of supervision also reduces labor costs. Accounting,
purchasing, and inventory control are routine. Because routing is
fixed, less attention is required.
Utilization. There is a high degree of labor and equipment utilization.

Disadvantages
layouts include:

of

product

Motivation. The systems inherent division of labor can result in

dull, repetitive jobs that can prove to be quite stressful. Also,
assembly-line layouts make it very hard to administer individual
incentive plans.
Flexibility. Product layouts are inflexible and cannot easily
respond
to
required system changesespecially changes in
product or process design.

System protection. The system is at risk from equipment

breakdown, absenteeism, and downtime due to preventive
maintenance.

Q.4 List the benefts of forecasting.

forecasting in modern business context.

Discuss

the

role

of

Facilities management is an important strategic level decision taken by an

organisation. It involves planning and management of the plant location
and layout. A plant location cannot be changed frequently since a large
capital needs to be invested to build the plant and machinery in the
selected area. Therefore, before selecting a plant location, a long range
forecasting is to be made to foresee the future needs of the company.
Location decisions are made on the basis of parameters which make it
suitable for various considerations of suppliers and markets. While
locating a plant, the following long range forecasting needs are to be
considered:
The companys expansion plan
and policy
Diversification plan for the
products

Changing
conditions

market

The changing sources of raw

materials
Many other factors that influence the choice of the
location decision
Layout means the positioning of various equipments, machineries, and
department facilities so as to maximise productivity and valuable space
utilisation. They are, in turn, linked to the inventory strategy, such as,
make or buy policies. The main concern of the operations manager
will be the extent of flexibility he/she has regarding:
What is the list of quantities of different
products?
What operations have to be
outsourced?
How to deal with surge or wane in
demand?

Considering the future needs, layout has to be prepared with a view to

accommodate additional machines. Some of the manufacturing systems
that have to be considered when layouts are planned are:

Group
Technology
Flexible
Systems

Extent

Manufacturing


Kind
automation

of

Materials need to be stocked and moved to various locations for

operations. Since decisions in this area have long term implications,
thorough analysis and involvement of senior managers from all
departments is essential. Multi-locations for manufacturing and
distribution to exploit situations of supplier availability or market
requirements also become important.
In this unit, you will learn about the various methodologies used to select
the location of plant, the ways in which machineries and other facilities
are laid to maximise productivity. You will also learn the methodology of
flow of information with materials to facilitate the production process.
Q.5 Mention the significance of plant location decision. Explain
the location decision sequence.

Facilities management is an important strategic level decision taken by an

organisation. It involves planning and management of the plant location
and layout. A plant location cannot be changed frequently since a large
capital needs to be invested to build the plant and machinery in the
selected area. Therefore, before selecting a plant location, a long range
forecasting is to be made to foresee the future needs of the company.
Location decisions are made on the basis of parameters which make it
suitable for various considerations of suppliers and markets. While
locating a plant, the following long range forecasting needs are to be
considered:
The companys expansion plan
and policy
Diversification plan for the
products

Changing
conditions

market

The changing sources of raw

materials
Many other factors that influence the choice of the
location decision
Layout means the positioning of various equipments, machineries, and
department facilities so as to maximise productivity and valuable space
utilisation. They are, in turn, linked to the inventory strategy, such as,
make or buy policies. The main concern of the operations manager
will be the extent of flexibility he/she has regarding:

 What is the list of quantities of different

products?
What operations have to be
outsourced?
How to deal with surge or wane in
demand?

Considering the future needs, layout has to be prepared with a view to

accommodate additional machines. Some of the manufacturing systems
that have to be considered when layouts are planned are:

Group
Technology
Flexible
Systems

Manufacturing

Extent

Kind
automation

of

Materials need to be stocked and moved to various locations for

operations. Since decisions in this area have long term implications,
thorough analysis and involvement of senior managers from all
departments is essential. Multi-locations for manufacturing and
distribution to exploit situations of supplier availability or market
requirements also become important.
In this unit, you will learn about the various methodologies used to select
the location of plant, the ways in which machineries and other facilities
are laid to maximise productivity. You will also learn the methodology of
flow of information with materials to facilitate the production process.

Planning the location of

the plant
You will now study about planning for the location of a plant. You will also
study the various factors that affect the economics of competing locations
and helps in choosing the most optimal location.
Factors influencing Plant Location can be broadly divided into two types
namely: general factors and special factors (See Figure 5.1 Factors
influencing plant location).

Figure 5.1: Factors influencing

plant location

In this section, let us know in detail about the factors

influencing plant location.
General
factors

The general factors that influence the plant location are listed below (See
Figure 5.2 General factors influencing plant location).
1. Availability of land: Availability of land plays an important role in
determining the plant location. Many-a-time, our plans, calculations and
forecasts suggest a particular area as the best to start an organisation.
However, availability of land may be in question. In such cases, we will
have to choose the second best location.
2. Availability of inputs: While choosing a plant location, it is very
important for the organisation to get the labour at the right time and
raw materials at good qualities. The plant should be located:
Near to the raw material source when there is no
loss of weight
At the market place when there is a loss of weight in
the material
Close to the market when universally available, so as to minimise the
transportation cost

Figure 5.2: General factors influencing

plant location
Closeness to market places: Organisations can choose to locate
the plant near to the customers market or far from them, depending
upon the product they produce. It is advisable to locate the plant near to
the market place, when:
The projection
product is low

life

of

the

The transportation cost

is high
The products are delicate and susceptible
to spoilage

 After sales services are promptly required

very often
The advantages of locating the plant near to the
market place are:

 Consistent supply of goods to the

customers
Reduction of
transportation

the

cost

of

4. Communication facilities: Communication facility is also an important

factor which influences the location of a plant. Regions with good
communication facilities viz. Postal and Tele communication links should
be given priority for the selection of sites.
5. Infrastructure: Infrastructure plays a prominent role in deciding the
location. The basic infrastructure needed in any organisation are:
Power: For example, industries which run day and night require
continuous power supply. So they should be located near to the power
stations and should ensure continuous power supply throughout the year.
Water: For example, process industries such as, paper, chemical, and
cement, requires continuous water supply in large amount. So, such
process industries need to be located near to the water.
Waste disposal: For example, for process industries such as, paper
and sugarcane industries facility for disposal of waste is the key factor.
6. Transport: Transport facility is a must for facility location and layout of
location of the plant. Timely supply of raw materials to the company and
supply of finished goods to the customers is an important factor. The basic
modes of transportation are by Air, Road, Rail, Water, and Pipeline. The
choice of location should be made depending on these basic modes.
Cost of transportation is also an important criterion for plant location.
7. Government support: The factors that demand additional attention
for plant location are the policies of the state governments and local
bodies concerning labour laws, building codes, and safety.
8. Housing and recreation: Housing and recreation factors also
influence the plant location. Locating a plant with the facilities of good
schools, housing and recreation for employees will have a greater impact
on the organisation. These factor seems to be unimportant, but have a
difference as they motivate the employees and hence the location
decisions.

Q.6 What is meant by business process? Explain

logical process modelling?
Business Process
Modeling
A process is a coordinated set of activities designed to produce a
specific outcome. There are processes for saving a file, constructing a

building, and cooking a meal. In fact, there is a process for almost

everything we do. A business process is a type of process designed
toachieve a particular business objective.Business processes consist of
many components, including:

The data needed to accomplish the desired

business objective
Individual work tasks that manipulate, review, or act
upon the data in some way
Decisions that affect the data in the process or the manner in which the
process isconducted
The movement of data between tasks in
the process
Individuals and groups which perform tasksProcesses can be manual or
automated, fully documented or simply knowledge in the mindsof one or
more people. They can be simple or complex. They can be formal, requiring
exactadherence to all details; or flexible, provided the desired outcome is
achieved.
Logical
Process
Modeling
Logical Process Modeling is the representation of a business process,
detailing all theactivities in the process from gathering the initial data to
reaching the desired outcome. Theseare the kinds of activities described in
a logical process model:
Gathering the data to be
acted upon
Controlling access to the data during the
process execution
Determining which work task in the process should be
accomplished next
Delivering the appropriate subset of the data to the
corresponding work task
Assuring that all necessary data exists and all required actions have been
performed ateach task
Providing a mechanism to indicate acceptance of the results of the
process, such as,electronic signatures

All business processes are made up of these actions. The most complex of
processes can be broken down into these concepts. The complexity comes
in the manner in which the processactivities are connected together. Some
activities may occur in sequential order, while somemay be performed in
parallel. There may be circular paths in the process (a re-work loop, for
example). It is likely there will be some combination of these.The
movement of data and the decisions made determining the paths the data
follow duringthe
process
comprise
the
process
model.
The
contains only business activities, uses

businessterminology (not software acronyms, technical jargon, etc.),

completely describes theactivities of the business area being modeled, and
is independent of any individual or positionworking in the organization.
Like its sibling, Logical Data Modeling, Logical ProcessModeling does not
include
redundant
activities,
technology
dependent
activities,
physicallimitations or requirements or current systems limitations or
requirements. The process modelis a representation of the business view
of the set of activities under analysis.Heretofore, many applications and
systems were built without a logical process model or arigorous
examination of the processes needed to accomplish the business goals.
This resultedin applications that did not meet the needs of the users and /
or were difficult to maintain andenhance.Problems with an unmodeled
system include the following:
Not knowing who is in possession of the data
at any point in time
Lack of control over access to the data at
any point in the process
Inability to determine quickly where in the process the data resides
and how long it has been there
Difficulties in making adjustments to a specific execution of a
business process
Inconsistent process
execution. Ingredients of
Business Process
1) Time: You must understand that time is money. In business, our
objective is to makemoney. Period. But the question is how productively
you convert your time into money. Areyou making full use of your time or
you just let the time pass by you?How much you make depends on how
good you are at converting time to money. If you arealready productive,
then you may want to ask what are the things you can do toimprove
further the ratio of dollar/second? If you are making $0.01/second, what
you can doto make it
$0.02/second? Or even more. Remember time is the most valuable asset
and onceits gone, its gone. Also time is also the fairest distribution of
resources every human beingreceives.2) People: To be successful in
business, you must have people connections. I mean the right people.
People consist of customers, suppliers, partners, staf, and associates.
One thing that you must not leave out is your mentor or coach. Having
genuine mentors or coaches is very important and it can make a very big
difference in your business.To make sure that you have more profits, you
must serve people well. Organize your database of people connections. By

simply knowing who does what, who supplies what, whoneeds what, where
to get what make you miles ahead of other people. To organize your
connections, you can either use a paper folder or computer
spreadsheet.3) Knowledge and Skills: When I talk about knowledge and
skills, I am not referring toacademic knowledge that you find in schools or
colleges. Whats more important to youis knowledge and skills that can
bring you results you want.How many MBA holders that you know of have
become business owners and have madetones of money? That shows
getting the right knowledge and skills is important. Dont blindly go after
knowledge thatcould drown you.

Go for knowledge and skills that areuniversally tested and

proven.Examples of right knowledge and skills are where to get what from
who, money makingtrends, marketing strategies, art of dealing with
people, negotiation skills, selling skills, skillsof managing and growing
money, investment skills, universal laws of success, and more.Dont waste
time on unnecessary knowledge as I went through that before. Theres only
somuch that you need to know and learn. Be sharp and focus when you
acquire knowledge andskills. Dont follow what normal people do.4)
Personal Health: In fact, this is the most important ingredient of all. How
can you run a business without a healthy body? In order to maintain an
optimum health, you have to provide your body with proper nutrients and
sufficient exercise. And also dont forget aboutemotional well being. Dont
let anger and other negative emotions control you.This is where positive
and empowering attitudes come into play. Maintaining your body is just like
maintaining your car. If you send your car to workshop for regular service
and pump petrol regularly, why dont you do the same for your body? Its
something for you to think about. Dont be stingy over spending money for
your own health because physical andmental health can cause you a lot of
money in the long run if your body is not taken care of properly.5) Money:
Lets face it. It does take money to make money even you need a little. But
youmight not need a lot of money to start a business because there are
many ways tostart one with low capital.I meet a lot of people who want to
be rich but are not willing to invest the money. You mustinvest in
something in order to for you to get something. The law of sowing
andreaping is at work. Dont expect something without investing anything.
Money is one of theinvestments you need to make.
Even though you dont need to have a capital for your business, but at least
you must be ableto cover your expenses while building your business. You
also need money to buy productsto stock up and other stuff. So, you must
at least come up with whatever amount that youhave to start a
business.These are the five basic ingredients of business success. Do your
best to acquire or grow or invest in these ingredients. But the good thing is
you dont need to have a perfectcombination of ingredients to get started.
You can still perfect the ingredients along the way.Somehow, get it started
with what youve got.