Question #1
Illustrate the difference between needs, wants, desires and demands with examples.
Question #2
Demonstrate with examples that forward and backward integration strategy can save the
cost/ profit of the company.
Question #3
Write down the tangible and intangible attributes of any five tangible products.
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 1 CLO2-C3-PLO11 Section-A
Instructor: Tanzeela Siddiqui
Question #1
Illustrate the difference between Economics at individual, organizational and economy
level with respect to resources and wants.
Question #2
Write down the characteristics of a partnership firm.
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 2 CLO2-C3-PLO11 Section-B
Instructor: Tanzeela Siddiqui
Question #1
Sheharyar autos manufactures and sale 2000 tri-vehicles every year. Company purchases
tires for the production of vehicles from Ahmed and Sons at the rate of $10 per tire. The
cost for placing the order is $60 and inventory carrying cost is 5% per quarter. Solve for the
following;
a. Economic order quantity\
b. Optimal no. of orders per year
c. Annual holding cost= Annual Ordering cost
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 2 CLO2-C3-PLO11 Section-A
Instructor: Tanzeela Siddiqui
Question #1
Sheharyar autos manufactures and sale 3000 bi-cycles every year. Company purchases tires
for the production of vehicles from Ahmed and Sons at the rate of $10 per tire. The cost for
placing the order is $60 and inventory carrying cost is 10% semi-annualy. Solve for the
following;
a. Economic order quantity\
b. Optimal no. of orders per year
c. Annual holding cost= Annual Ordering cost
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 3 CLO2-C3-PLO11 Section-B
Instructor: Tanzeela Siddiqui
Question #1
At the end of the year 2018 company holds
- Cash Rs. 500,000
- Machinery Rs. 700,000
- Furniture Rs. 200,000
- Loan Rs. 700,000
- Debtors Rs. 200,000
- Inventories Rs. 300,000
- Creditors Rs. 300,000
- Capital Rs. 800,000
Question #1
Revenue, Rs. 500,000; utility bills, Rs. 17,000; salaries Rs. 60,000; machinery Rs. 170,000;
loan Rs. 200,000; tax Rs. 2,000 upto 200,000 plus 5% of any amount above 200,000;
income from other sources Rs. 300,000; cost of sales, Rs. 200,000; interest, 7% of the
amount of loan, depreciation on machinery is 10% annually.
Solve for the following;
a) Gross profit b) Operating profit
c) Earnings before interest and tax d) Taxable profit
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 4 CLO3-C3-PLO9 Section-B
Instructor: Tanzeela Siddiqui
Question #1
Identify which of the following transactions and events are product costs and which are
period costs:
Question #1
Identify which of the following transactions and events are product costs and which are
period costs:
Question #1
Illustrate the different methods of disposal of scraps in the following industry.
- Textile
- Beverage
- Fast food restaurant
- Food Processing
- Electronic
- Sports
- Sugar\
- Cement
- Fertilizers
- Furniture
- Agriculture
- Chemical
- Paint
- Construction
- Electric power
- Petroleum
- Edible oil
- Poultry farms
- Dairy farms
- Pharmaceutical
- Defence and arms
- Healthcare
- Automotive
- Paper
- Steel
Department of Electrical Engineering
Engineering Economics and Management
Assignment # 2 CLO1-C3-PLO7
Instructor: Tanzeela Siddiqui
Question #1
Illustrate the different methods of disposal of scraps in the following industry.
- Textile
- Beverage
- Fast food restaurant
- Food Processing
- Electronic
- Sports
- Sugar\
- Cement
- Fertilizers
- Furniture
- Agriculture
- Chemical
- Paint
- Construction
- Electric power
- Petroleum
- Edible oil
- Poultry farms
- Dairy farms
- Pharmaceutical
- Defence and arms
- Healthcare
- Automotive
- Paper
- Steel
Department of Electrical Engineering
Engineering Economics and Management
Assignment # 01 CLO2-C3-PLO11
Instructor: Tanzeela Siddiqui Section-A
EMPLOYEES
The company recognizes the value of good employees. It typically invests an average of
Rs.7000 to train each new employee. In addition to learning about stores operations, new
employees learn the importance of good customer service and how to provide it. The
employees are helpful, cheerfully answering customer questions or handling complaints.
Employees are motivated through a combination of compensation, profit sharing, and
benefits.
QUALITY
Quality and Customer satisfaction are utmost in the minds of Wegmans management and its
employees. Private label food items as well as name brands are regularly evaluated in test
kitchens, along with the potential new products. Managers are responsible for checking and
maintaining products and service quality in their departments. Moreover, employees are
encouraged to report problems to their managers.
If a customer is dissatisfied with an item and returns it, or even a portion of the item, the
customer is offered a choice of a replacement or a refund. If the item is a Wegmans brand
food item, it is then sent to the test kitchen to determine the cause of the problem. If the
cause can be determined, corrective action is taken.
Questions
1. Illustrate that how do customers judge the quality of a supermarket?
2. How and why each of these factors is employed to the successful operation of a
supermarket:
(a) Customer satisfaction.
(b) Forecasting.
(c) Capacity planning.
(d) Location
(e) Inventory management.
(f) Layout of the store.
(g) Scheduling.
Department of Electrical Engineering
Engineering Economics and Management
Assignment # 01 CLO2-C3-PLO11
Instructor: Tanzeela Siddiqui Section-B
Read the case study below and answer the questions that follow.
Background
T-Sole Ltd produce fashion boots and industrial footwear, which are sold under the brand
name of MDs. This footwear brand can only be bought in specialist retail outlets
throughout the UK or from their own shop, which is situated in the heart of London.
During the mid 1980s to the mid 1990s the company achieved huge
successes. Their footwear range was particularly popular with
the student segment of the market, because of their durability.
Sales to other segments of the market were also increasing, as
were their profits.
The managers of the company decided to expand their factory to cope with this increased
demand, which also meant doubling their workforce.
The experienced workers started rushing their work in order to increase their wages and
this led to an increased number of consumer complaints regarding faulty or poor quality
goods. Added to this was the increased competition from trainer manufacturers. The
MDs brand saw its sales figures drop by 50 per cent within three years, which was a huge
loss of market share.
Two-thirds of the workforce have now been made redundant. Those remaining feel very
insecure and are unhappy with their current working conditions. Production has been
limited, which means they are losing out on wages. The equipment they use is constantly
breaking down, leading to further time lost for which they are not being paid.
The remaining workers have asked the management to change their payment system to a
guaranteed weekly wage for the hours they work. They have threatened to withdraw their
labour if conditions do not improve.
1. Change the payment system for the employees and improve maintenance procedures
on the machinery. This would eat into their already reduced profits and would not
be popular with the shareholders.
2. Keep the present payment system for the employees and instead move into the
casual footwear range and hope that the employees will accept the change. This
would involve some modification and upgrading of existing machinery. Finance
could be a problem.
3. Have a combination of both options. Give the employees a guaranteed wage and
diversify into the casual footwear market.
Questions
1. Challenges for business can come from internal and/or external pressures.
Illustrate two such pressures affecting the current situation of T-Sole Ltd.
(4)
2. Illustrate the stages in the product life cycle of the MDs footwear brand and state
which stage it is now at. (4)
3. Employee relations at T-Sole Ltd suffered because of the new payment system.
What strategies the Human Resources Department of T-Sole Ltd could have used to
avoid these problems. (4)
Question #1
Illustrate the difference between needs, wants, desires and demands with examples.
Answer:
Need is the basic human requirements like shelter, clothe, food, water, etc. These are
essential for human beings to survive. In addition, needs aren’t only physical. Needs can be
a social thing, for example, social class, belonging to a certain society and need of self-
expression.
This is quite different from needs.
Wants aren’t permanent and it regularly changes.
As time passes, people and location change, wants change accordingly.
Wants aren’t essential for humans to survive, but it’s associated with needs.
For example, if we always manage to satisfy our wants, it transforms into a need.
There are two options, you either buy a Samsung’s or Apple’s product.
Though, the prices are really different. The Samsung’s phone costs $150 and the Apple’s
iPhone $780.
We’d prefer to purchase the Apple product, but the question is, can we?
If we, financially, are strong enough and can allow ourselves to buy a $780 iPhone, it
means that we’ve transformed our want/need into a demand.
So, the key difference between wants and demand is desire. Consequently, for people, who
can afford a desirable product are transforming their wants into demands.
In other words, if a customer is willing and able to buy a need or a want, it means that
they have a demand for that need or a want.
Question #2
Demonstrate with examples that forward and backward integration strategy can save the
cost/ profit of the company.
Forward integration is a operational strategy implemented by a company that wants to
increase control over its suppliers, manufacturers or distributors, so it can increase
its market power. For a forward integration to be successful, a company needs to gain
ownership over other companies that were once customers. his differs from backward
integration in which a company tries to increase ownership over companies that were once
its suppliers.
For example, the company Intel supplies Dell with intermediate goods - its processors - that
are placed within Dell's hardware. If Intel wanted to move forward in the supply chain, it
could conduct a merger or acquisition of Dell in order to own the manufacturing portion of
the industry. Additionally, if Dell wanted to engage in a forward integration, it could seek to
take control of a marketing agency that the company previously used to market its end-
product. However, Dell cannot seek to take over Intel if it wants to integrate forward. Only
a backward integration allows a movement up the supply chain.
A general example of backward integration is when a bakery business moves up the supply
chain to purchase a wheat processor or a wheat farm. In this scenario, a retail supplier is
purchasing one of its manufacturers, therefore cutting out the middleman, and hindering
competition.
Question #3
Write down the tangible and intangible attributes of any five tangible products.
Answer:
A product attribute is a characteristic that defines a particular product and will affect a
consumer's purchase decision. Product attributes can be tangible (or physical in nature) or
intangible (or not physical in nature).
Tangible Attributes
Tangible attributes can include such product characteristics as size, color, weight, volume,
smell, taste, touch, quantity, or material composition.
For example, when you want to buy a new car, you might consider tangible attributes such
as its size, color, and material composition. If you are looking for a 2-door, red sports car
with a leather interior, you are searching for a product based on its tangible attributes.
Intangible Attributes
Intangible attributes may include such characteristics as price, quality, reliability, beauty or
aesthetics, and je ne sais quoi (an indefinable, elusive pleasing quality).
Again, if you are looking to buy a new car, you might also consider intangible attributes
such as price, quality, and safety test scores. If you want a new car that is relatively
inexpensive but has garnered high marks on performance tests, you are searching for a
product based on its intangible attributes.
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 1 CLO2-C3-PLO11 Section-A
Instructor: Tanzeela Siddiqui
Question #1
Illustrate the difference between Economics at individual, organizational and economy
level with respect to resources and wants.
Answer: Economics is the efficient utilization of scarce resources to satisfy unlimited
human wants.
Economics at: Resources Wants
Individual level Income, Salary, Pocket To meet basic needs, daily
money expenditures etc
Organizational level Financial, Human, Physical To maximize profits
Economy level Financial, Human, To be a better economy
Physical/Natural
Question #2
Write down the characteristics of a partnership firm.
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 2 CLO2-C3-PLO11 Section-B
Instructor: Tanzeela Siddiqui
Question #1
Sheharyar autos manufactures and sale 2000 tri-vehicles every year. Company purchases
tires for the production of vehicles from Ahmed and Sons at the rate of $10 per tire. The
cost for placing the order is $60 and inventory carrying cost is 5% per quarter. Solve for the
following;
d. Economic order quantity\
e. Optimal no. of orders per year
f. Annual holding cost= Annual Ordering cost
Answer:
EOQ= 600 units/ order
N= 10 orders/ year
Annual Holding Cost = Rs. 600
Annual Ordering Cost = Rs. 600
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 2 CLO2-C3-PLO11 Section-A
Instructor: Tanzeela Siddiqui
Question #1
Sheharyar autos manufactures and sale 3000 bi-cycles every year. Company purchases tires
for the production of vehicles from Ahmed and Sons at the rate of $10 per tire. The cost for
placing the order is $60 and inventory carrying cost is 10% semi-annualy. Solve for the
following;
d. Economic order quantity\
e. Optimal no. of orders per year
f. Annual holding cost= Annual Ordering cost
Answer:
EOQ= 600 units/ order
N= 10 orders/ year
Annual Holding Cost = Rs. 600
Annual Ordering Cost = Rs. 600
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 3 CLO2-C3-PLO11 Section-B
Instructor: Tanzeela Siddiqui
Question #1
At the end of the year 2018 company holds
- Cash Rs. 500,000
- Machinery Rs. 700,000
- Furniture Rs. 100,000
- Loan Rs. 700,000
- Debtors Rs. 200,000
- Inventories Rs. 300,000
- Creditors Rs. 300,000
- Capital Rs. 800,000
Solution:
Balance Sheet
As on December 31, 2018
1800000 1800000
Department of Electrical Engineering
Engineering Economics and Management
Quiz # 3 CLO2-C3-PLO11 Section-A
Instructor: Tanzeela Siddiqui
Question #1
Revenue, Rs. 500,000; utility bills, Rs. 17,000; salaries Rs. 60,000; machinery Rs. 170,000;
loan Rs. 200,000; tax Rs. 2,000 upto 200,000 plus 5% of any amount above 200,000;
income from other sources Rs. 300,000; cost of sales, Rs. 200,000; interest, 7% of the
amount of loan, depreciation on machinery is 10% annually.
Solve for the following;
e) Gross profit f) Operating profit
g) Earnings before interest and tax h) Taxable profit
Solution:
Amount Amount
Particulars
Dr (Rs.) Cr (Rs.)
Sales/ Revenues 500,000
less: Cost of Goods Sold (200,000)
Gross Profit 300,000
less: Operating Expenses:
salaries 60,000
Utilities 17,000
Depreciation 17,000
(94,000)
Operating Income 206,000
Add: Income from other sources 300,000
Income before interest and tax 506,000
less: Interest (14,000)
Earning before Tax 492,000
less: Tax (16,600)
Net Profit 475,400
Department of Electrical Engineering
Engineering Economics and Management
Assignment # 2 CLO1-C3-PLO7
Instructor: Tanzeela Siddiqui
Question #1
Illustrate the different methods of disposal of scraps in the following industry.
- Textile
- Beverage
- Fast food restaurant
- Food Processing
- Electronic
- Sports
- Sugar\
- Cement
- Fertilizers
- Furniture
- Agriculture
- Chemical
- Paint
- Construction
- Electric power
- Petroleum
- Edible oil
- Poultry farms
- Dairy farms
- Pharmaceutical
- Defence and arms
- Healthcare
- Automotive
- Paper
- Steel
Department of Electrical Engineering
Engineering Economics and Management
Assignment # 2 CLO1-C3-PLO7
Instructor: Tanzeela Siddiqui
Question #1
Illustrate the different methods of disposal of scraps in the following industry.
- Textile
- Beverage
- Fast food restaurant
- Food Processing
- Electronic
- Sports
- Sugar\
- Cement
- Fertilizers
- Furniture
- Agriculture
- Chemical
- Paint
- Construction
- Electric power
- Petroleum
- Edible oil
- Poultry farms
- Dairy farms
- Pharmaceutical
- Defence and arms
- Healthcare
- Automotive
- Paper
- Steel
Department of Electrical Engineering
Engineering Economics and Management
Assignment # 01 CLO2-C3-PLO11
Instructor: Tanzeela Siddiqui Section-A
Questions
1. Illustrate that how do customers judge the quality of a supermarket?
Customers judge the quality of supermarket (Wegmans Food Markets) in the following
mentioned ways:
1. Large selection of choices. If customers can find everything they want under
one roof.
2. Systematic way to placing products the supermarket offers. For example, a shelf
of biscuits in one place whereas the shelf of edible oil in the other.
3. Timely/ scheduled checking of products whether they are okay or not, and if any
issues found, reporting to the managers.
4. Maintained counter for payment of bills. Customers find no lines or queues to
pay the bills.
5. Higher quality products in comparatively low price than any other
supermarkets.
6. The neat and tidiness of the supermarket too adds quality of it.
7. Timely/ scheduled checking of products whether they are okay or not, and if any
issues found, reporting to the managers (Stevenson, 2012).
2. Indicate how and why each of these factors is important to the successful operation
of a supermarket:
a. Customer Satisfaction
Any business firm that is successful is because of its customer satisfaction. The satisfied
customer visits the supermarket time and again and so does irregular customers who
eventually become regular customer because of the satisfaction with the supermarket. The
satisfaction could either be because of suitability, or quality of the service they offer or the
planned and mannered structure of the supermarket. The time and visit of customer helps in
gaining more of revenues to the supermarket which makes the supermarket successful.
b. Forecasting
c. Capacity planning
The proper capacity planning helps for the successful operation of the supermarket. The
process required to set products in the supermarket and the capacity available to have these
products in the supermarket have direct impact on successful operation of the supermarket.
More spaces in the supermarket with wide range of choices of products available to the
customers helps is yielding high return to the supermarket.
d. Location
Supermarket location influence visiting supermarket frequency of the customers. The more
near and at appropriate the supermarket lies, the more customers visit the supermarket
which is another important factor for the successful operation of the supermarket.
Moreover the questions like where should the facility should be put or on what criteria
should the location of the supermarket base should be address by the operation managers.
e. Inventory Management
Inventory required for the supermarkets should be maintained in timely order so as to meet
the day to day operation and create successive operation of the supermarket. The planning
of materials requirements must be made for the efficiency in operation of the supermarket
as well.
The layout of the supermarket also plays important role in the successful operation of the
supermarket. The proper arrangement of physical assets and determining how large the
facility is required by the operation managers helps in actual and efficient operation of the
supermarket. This too leads in the convenience for the supermarket as well as customers.
g. Scheduling
Scheduling the number of work force required in the supermarket, when are they required,
how long they should be kept etc also helps in the successful operation of the supermarket.
It is because scheduling is directly related to the out flow of finance with the supermarket.
Proper scheduling helps reducing the costs and hence in the profitability of the
supermarket.
What are some of the ways Wegmans uses technology to gain an edge over its competition?
One of the top grocery operating in the US market, Wegmans Food Markets, Inc.,
employing over 37,000 people and very successful in maintaining customer satisfaction,
resulting the sales of over $3 billion is very successful in its operation (Stevenson, 2012).
It is possible because of the Wegmans uses of the technology continuously to gain edge
over its competition. Wegmans use the technologies in order to determine the level of
inventory required as well to manage the supply change in the firm. Moreover, the use of
technology is in maintaining the freshness of the meat too. Also, the technologies are used
to determine if any departments are to be added in the firm (Stevenson, 2012).
Department of Electrical Engineering
Engineering Economics and Management
Assignment # 01 CLO2-C3-PLO11(Solution)
Instructor: Tanzeela Siddiqui Section-B
Location Analysis
Location analysis is a dynamic process where entrepreneur analyses and compares the
appropriateness or otherwise of alternative sites with the aim of selecting the best site for a
given enterprise. It consists the following:
1. Demographic Analysis:
It involves study of population in the area in terms of total population (in no.), age composition, per
capita income, educational level, occupational structure etc.
2. Competitive Analysis:
It helps to judge the nature, location, size and quality of competition in a given trade area.
3. Traffic analysis:
To have a rough idea about the number of potential customers passing by the proposed site during
the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of
pedestrian and vehicular traffic passing a site.
4. Site economics:
Alternative sites are evaluated in terms of establishment costs and operational costs under this.
Costs of establishment is basically cost incurred for permanent physical facilities but operational
costs are incurred for running business on day to day basis, they are also called as running costs.
Two sites A and B are evaluated in terms of above mentioned two costs as follows:
The above cost statement indicates that site B is preferable to site A keeping in mind
economic considerations only although in some respects site A has lower costs. By
applying the definition of ideal location which is the place of maximum net advantage or
which gives lowest unit cost of production and distribution, site
B would be preferred.
PLANT LAYOUT:
Plant layout refers to the arrangement of physical facilities such as machinery, equipment,
furniture etc. within the factory building in such a manner so as to have quickest flow of
material at the lowest cost and with the least amount of handling in processing the product
from the receipt of material to the shipment of the finished product.
It may be defined as a technique of locating machines, processes and plant services within
the factory so as to achieve the right quantity and quality of output at the lowest possible
cost of manufacturing.
Essentials
An efficient plant layout is one that can be instrumental in achieving the following
objectives:
Proper and efficient utilization of available floor space
To ensure that work proceeds from one point to another point without any
Delay
Reduce material handling costs
Reduce hazards to personnel
Utilize labour efficiently
Increase employee morale
Reduce accidents
Allow ease of maintenance
Types of Layout
In case of manufacturing unit, plant layout may be of four types:
Product or line layout: Under this, machines and equipments are arranged in one line
depending upon the sequence of operations required for the product. The materials move
from one workstation to another sequentially without any backtracking or deviation. Under
this, machines are grouped in one sequence.
Manufacturing units involving continuous manufacturing process, producing few
standardized products continuously on the firm’s own specifications and in anticipation of
sales would prefer product layout e.g. chemicals, sugar, paper, rubber, refineries, cement,
automobiles, food processing and electronics etc.
Process or functional layout:
In this type of layout machines of a similar type are arranged together at one place. E.g.
Machines performing drilling operations are arranged in the drilling department, machines
performing casting operations be grouped in the casting department. The work has to be
allocated to each department in such a way that no machines are chosen to do as many
different job as possible i.e. the emphasis is on general purpose machine.
Process layout is shown in the following diagram.
Thus, process layout or functional layout is suitable for job order production involving non-
repetitive processes and customer specifications and non-standardized products, e.g.
tailoring, light and heavy engineering products, made to order furniture industries, jewelry.
Disposal of Scrap
Disposal action follows when the scrap cannot be utilized within the organization. In
practice, it has been found that it is profitable to dispose the scrap directly to end-users
rather than to middlemen who normally form a cartel of their own which leads to lower
returns. Before disposal action it is essential that the scrap is segregated according to metal,
size, etc. when the scrap is mixed, the return is even lower than the lowest element in the
mixture.
Auction and Tender methods are frequently used for disposal of scrap. Parties in both the
cases are normally required to inspect the scrap in the scrap yard and deposit earnest
money. It is necessary that optimum usage of materials is made and funds tied up in
obsolete surplus and scrap items minimized. This is only possible when top management
shows commitment and support. The employees of the organizations are naturally the best
people to suggest improvements in materials, processes and new end users for scrap. It is
they who can minimize the accumulation of scrap through coordination.
Therefore, top management should work out formal reward systems to promote employee
participation in this matter.
Location Analysis
Location analysis is a dynamic process where entrepreneur analyses and compares the
appropriateness or otherwise of alternative sites with the aim of selecting the best site for a
given enterprise. It consists the following:
5. Demographic Analysis:
It involves study of population in the area in terms of total population (in no.), age composition, per
capita income, educational level, occupational structure etc.
6. Competitive Analysis:
It helps to judge the nature, location, size and quality of competition in a given trade area.
7. Traffic analysis:
To have a rough idea about the number of potential customers passing by the proposed site during
the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of
pedestrian and vehicular traffic passing a site.
8. Site economics:
Alternative sites are evaluated in terms of establishment costs and operational costs under this.
Costs of establishment is basically cost incurred for permanent physical facilities but operational
costs are incurred for running business on day to day basis, they are also called as running costs.
Two sites A and B are evaluated in terms of above mentioned two costs as follows:
The above cost statement indicates that site B is preferable to site A keeping in mind
economic considerations only although in some respects site A has lower costs. By
applying the definition of ideal location which is the place of maximum net advantage or
which gives lowest unit cost of production and distribution, site
B would be preferred.
PLANT LAYOUT:
Plant layout refers to the arrangement of physical facilities such as machinery, equipment,
furniture etc. within the factory building in such a manner so as to have quickest flow of
material at the lowest cost and with the least amount of handling in processing the product
from the receipt of material to the shipment of the finished product.
It may be defined as a technique of locating machines, processes and plant services within
the factory so as to achieve the right quantity and quality of output at the lowest possible
cost of manufacturing.
Essentials
An efficient plant layout is one that can be instrumental in achieving the following
objectives:
Proper and efficient utilization of available floor space
To ensure that work proceeds from one point to another point without any
Delay
Reduce material handling costs
Reduce hazards to personnel
Utilize labour efficiently
Increase employee morale
Reduce accidents
Allow ease of maintenance
Types of Layout
In case of manufacturing unit, plant layout may be of four types:
Product or line layout: Under this, machines and equipments are arranged in one line
depending upon the sequence of operations required for the product. The materials move
from one workstation to another sequentially without any backtracking or deviation. Under
this, machines are grouped in one sequence.
Manufacturing units involving continuous manufacturing process, producing few
standardized products continuously on the firm’s own specifications and in anticipation of
sales would prefer product layout e.g. chemicals, sugar, paper, rubber, refineries, cement,
automobiles, food processing and electronics etc.
Process or functional layout:
In this type of layout machines of a similar type are arranged together at one place. E.g.
Machines performing drilling operations are arranged in the drilling department, machines
performing casting operations be grouped in the casting department. The work has to be
allocated to each department in such a way that no machines are chosen to do as many
different job as possible i.e. the emphasis is on general purpose machine.
Process layout is shown in the following diagram.
Thus, process layout or functional layout is suitable for job order production involving non-
repetitive processes and customer specifications and non-standardized products, e.g.
tailoring, light and heavy engineering products, made to order furniture industries, jewelry.
Disposal of Scrap
Disposal action follows when the scrap cannot be utilized within the organization. In
practice, it has been found that it is profitable to dispose the scrap directly to end-users
rather than to middlemen who normally form a cartel of their own which leads to lower
returns. Before disposal action it is essential that the scrap is segregated according to metal,
size, etc. when the scrap is mixed, the return is even lower than the lowest element in the
mixture.
Auction and Tender methods are frequently used for disposal of scrap. Parties in both the
cases are normally required to inspect the scrap in the scrap yard and deposit earnest
money. It is necessary that optimum usage of materials is made and funds tied up in
obsolete surplus and scrap items minimized. This is only possible when top management
shows commitment and support. The employees of the organizations are naturally the best
people to suggest improvements in materials, processes and new end users for scrap. It is
they who can minimize the accumulation of scrap through coordination.
Therefore, top management should work out formal reward systems to promote employee
participation in this matter.
Question #1
Answer:
.
Storage and material handling costs for raw materials: product cost
Gains or loss on disposal of factory equipment: period income (costs)
Lubricants for machinery and equipment used in production: product cost (mfg.
Overhead)
Depreciation of a factory building: product cost (mfg. Overhead)
Depreciation of manufacturing equipment: product cost (mfg. Overhead)
Depreciation of the company president’s automobile: period cost
Leasehold costs for land on which factory buildings stand: period cost
Inspection costs of finished goods: product cost
Direct labor cost: product cost
Raw materials cost: product cost
Advertising expenses: period cost
Department of Electrical Engineering
Engineering Economics and Management
Solution
Quiz # 4 CLO3-C3-PLO9
Instructor: Tanzeela Siddiqui
Question #1
Answer:
.
Storage and material handling costs for raw materials: product cost
Gains or loss on disposal of factory equipment: period income (costs)
Lubricants for machinery and equipment used in production: product cost (mfg.
Overhead)
Depreciation of a factory building: product cost (mfg. Overhead)
Depreciation of manufacturing equipment: product cost (mfg. Overhead)
Depreciation of the company president’s automobile: period cost
Leasehold costs for land on which factory buildings stand: period cost
Inspection costs of finished goods: product cost
Direct labor cost: product cost
Raw materials cost: product cost
Advertising expenses: period cost