Internal Assignment No :- 1

Paper Title :- Production and Operation Management

MBA :-- 205

1. I) Define Operation Management?

Operations management refers to the administration of business practices to create the highest level of efficiency possible within an organization. Operations management is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization.

ii) Name any four factors affecting Plant location ?

Some of the major factors which affect plant layout are: (1) Policies of management (2) Plant

location (3) Nature of the product (4) Volume of production (5) Availability of floor space (6)

Nature of manufacturing process and (7) Repairs and maintenance of equipment and machines.

1. Policies of management:

It is important to keep in mind various managerial policies and plans before deciding plant layout.

Various managerial policies relate to future volume of production and expansion, size of the plant,

integration of production processes; facilities to employees, sales and marketing policies and

purchasing policies etc. These policies and plans have positive impact in deciding plant layout.

(2) Plant location:

Location of a plant greatly influences the layout of the plant. Topography, shape, climate

conditions, and size of the site selected will influence the general arrangement of the layout and the

flow of work in and out of the building.

(3) Nature of the product:

Nature of the commodity or article to be produced greatly affects the type of layout to be adopted.

In case of process industries, where the production is carried in a sequence, product layout is

suitable. For example, soap manufacturing, sugar producing units and breweries apply product

type of layout. On the other hand in case of intermittent or assembly industries, process type of

layout best suited. For example, in case of industries manufacturing cycles, typewriters, sewing

machines and refrigerators etc., process layout method is best suited.

(4) Volume of production:

Plant layout is generally determined by taking into consideration the quantum of production to be

produced. There are three systems of production viz.,

(5) Availability of floor space:

Availability of floor space can be other decisive factor in adopting a particular mode of layout. If

there is a scarcity of space, product layout may be undertaken. On the other hand more space may

lead to the adoption of process layout.

(6) Nature of manufacturing process:

The type of manufacturing process undertaken by a business enterprise will greatly affect the type

of layout to be undertaken.

iii) Draw The Input Output process diagram?

 

iv) What are the qualitative factor analysis models?

Qualitative analysis is a securities analysis that uses subjective judgment based on unquantifiable

information, such as management expertise, industry cycles, strength of research and development, and

labor relations. Qualitative analysis contrasts with quantitative analysis, which focuses on numbers that

can be found on reports such as balance sheets. The two techniques, however, will often be used together

in order to examine a company's operations and evaluate its potential as an investment opportunity. 

v) Write the different types of facility layout?

Keeping in view the type of industry and volume of production, the type of layout to be selected is

to be decided from the following:

1. Product or Line Layout

2. Process or Functional Layout.

3. Fixed Position Layout.

4. Combination type of Layout.

Q. 2. Explain the concept of ABC analysis with an example ?

In materials management, the ABC analysis (or Selective Inventory Control) is an inventory categorization technique. ABC analysis divides an inventory into three categories- "A items" with very tight control and accurate records, "B items" with less tightly controlled and good records, and "C items" with the simplest controls possible and minimal records.

The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost,[1]while also providing a mechanism for identifying different categories of stock that will require different management and controls.

The ABC analysis suggests that inventories of an organization are not of equal value. [2] Thus, the inventory is grouped into three categories (A, B, and C) in order of their estimated importance.

'A' items are very important for an organization. Because of the high value of these 'A' items, frequent value analysis is required. In addition to that, an organization needs to choose an appropriate order pattern (e.g. ‘Just- in- time’) to avoid excess capacity. 'B' items are important, but of course less important than 'A' items and more important than 'C' items. Therefore 'B' items are intergroup items. 'C' items are marginally important.

ABC analysis categories

There are no fixed threshold for each class, different proportion can be applied based on objective and criteria. ABC Analysis is similar to the Pareto principle in that the 'A' items will typically account for a large proportion of the overall value but a small percentage of number of items.[3]

Example of ABC class are

‘A’ items – 20% of the items accounts for 70% of the annual consumption value of the items.

‘B’ items - 30% of the items accounts for 25% of the annual consumption value of the items.

‘C’ items - 50% of the items accounts for 5% of the annual consumption value of the items.

Another recommended breakdown of ABC classes:[4]

1. "A" approximately 10% of items or 66.6% of value

2. "B" approximately 20% of items or 23.3% of value

3. "C" approximately 70% of items or 10.1% of value

ts. 

Distribution of ABC class

ABC class

Number of items Total amount required

A 10％ 70％

B 20％ 20％

C 70％ 10％

Total 100％ 100％

Using this distribution of ABC class and change total number of the parts to 14213.

Uniform Purchase

When you apply equal purchasing policy to all 14213 components, example weekly delivery and re-order point (safety stock) of 2 week supply assuming that there are no lot size constraints, the factory will have 16000 delivery in 4 weeks and average inventory will be 2.5 week supply.

Application of Weighed Purchasing condition

Uniform condition Weighed condition

Items Conditions Items Conditions

　 All items 14213

　 Re-order point=2 week supplyDelivery frequency=weekly

A-class items　200

Re-order point=1 week supplyDelivery frequency=weekly

B-class items 400Re-order point=2 week supplyDelivery frequency=bi-weekly

C-class items 3400

Re-order point=3 week supplyDelivery frequency=every 4 weeks

Q. 3. What do you understand by TQM ? Explain the Role of TQM in an organization ?

“Quality management” ensures superior quality products and services.

Quality of a product can be measured in terms of performance, reliability and durability. Quality is a crucial parameter which differentiates an organization from its competitors. Quality management tools ensure changes in the systems and processes which eventually result in superior quality products and services. Quality management methods such as Total Quality management or Six Sigma have a common goal - to deliver a high quality product. Quality management is essential to create superior quality products which not only meet but also exceed customer satisfaction. Customers need to be satisfied with your brand. Business marketers are successful only when they emphasize on quality rather than quantity. Quality products ensure that you survive the cut throat competition with a smile.

Quality management is essential for customer satisfaction which eventually leads to customer loyalty.

How do you think businesses run? Do businesses thrive only on new customers? It is important for every business to have some loyal customers. You need to have some customers who would come back to your organization no matter what.

Would you buy a Nokia mobile again if the previous handset was defective? The answer is NO.

Customers would return to your organization only if they are satisfied with your products and services. Make sure the end-user is happy with your product. Remember, a customer would be happy and satisfied only when your product meets his expectations and fulfills his needs. Understand what the customer expects from you? Find out what actually his need is? Collect relevant data which would give you more insight into customer’s needs and demands. Customer feedbacks should be collected on a regular basis and carefully monitored. Quality management ensures high quality products and services by eliminating defects and incorporating continuous changes and improvements in the system. High quality products in turn lead to loyal and satisfied customers who bring ten new customers along with them. Do not forget that you might save some money by ignoring quality management processes but ultimately lose out on your major customers, thus incurring huge losses. Quality management ensures that you deliver products as per promises made to the customers through various modes of promotions.

Quality management tools help an organization to design and create a product which the customer actually wants and desires.

Quality Management ensures increased revenues and higher productivity for the organization. Remember, if an organization is earning, employees are also earning. Employees are frustrated only when their salaries or other payments are not released on time. Yes, money is a strong motivating factor. Would you feel like working if your organization does not give you salary on time? Ask yourself. Salaries are released on time only when there is free cash flow. Implementing Quality management tools ensure high customer loyalty, thus better business, increased cash flow, satisfied employees, healthy workplace and so on. Quality management processes make the organization a better place to work.

Remove unnecessary processes which merely waste employee’s time and do not contribute much to the organization’s productivity. Quality management enables employees to deliver more work in less time.

Quality management helps organizations to reduce waste and inventory.

It enables employees to work closely with suppliers and incorporate “Just in Time” Philosophy.

Quality management ensures close coordination between employees of an organization. It inculcates a strong feeling of team work in the employees.

Internal Assignment No :- 2

Production and Operation Management

MBA :-- 205

1.

i.) What are two major responsibility of Operation Manager?

Ans :- Operations managers are essential to any large business organization.　The　core　responsibilities　of　operations　managers　tend　to　be　similar　across　many　industries.

Policy FormulationFormulating　policy　is　one　of　the　core　duties　of　an　operations　manager.　Companies　must　operate　and　function　on　a　daily　basis　within　a　prescribed　set　of　guidelines.　

PlanningThe　planning　of　various　company　operations　and　activities　is　another　major　concern　of　the　operations　manager..　The　operations　manager　also　helps　plan　and　coordinate　activities　between　various　departments　such　as　determining　what　types　of　sales　promotions　the　company　will　engage　in.

Controlling Resources

Controlling　major　company　resources　is　yet　a　third　major　function　of　an　operations　manager.　.　Operations　managers　regularly　review　financial　statements　to　ensure　that　the　company　is　operating　as　efficiently　and　as　profitably　as　possible.

CommunicationA　final　core　responsibility　of　an　operations　manager　is　communicating　with　other　management　professionals　within　the　organization　to　keep　the　company　running　smoothly,　and　communicating　with　other　companies　and　organizations　with　which　the　company　does　business.　

ii) what do you understand by CPM?

The critical path method (CPM) is a step-by-step project management technique for process planning that defines critical and non-critical tasks with the goal of preventing time-frame problems and process bottlenecks. The CPM is ideally suited to projects consisting of numerous activities that interact in a complex manner.

In applying the CPM, there are several steps that can be summarized as follows:

Define the required tasks and put them down in an ordered (sequenced) list.

Create a flowchart or other diagram showing each task in relation to the others.

Identify the critical and non-critical relationships (paths) among tasks.

Determine the expected completion or execution time for each task.

Locate or devise alternatives (backups) for the most critical paths.

iii) What the concept of EOQ ?

Concept And Meaning Of Economic Order Quantity(EOQ)Economic order quantity is also known as reorder quantity. Economic order quantity (EOQ) is a level of inventory where the total cost of holding inventory is at minimum. Economic order quantity is the level of quantity at which the cost of ordering will be equal with the storage cost of materials. In other words, the quantity of materials which is economical to be ordered at one time is known as economic order quantity. The total costs of materials consists of the ordering cost and carrying cost. While determining the economic order quantity, the ordering cost and carrying cost should be considered.

iv) What are the types of Costs to be considered for inventory management?

There　are　three　types　of　costs　that　must　be　considered　in　setting　inventory　levels:

1.　Holding\Carrying　cost: 

They　are　expenses　such　as　storage,　handling,　insurance,　taxes,　obsolescence,　theft,　and　interest　on　funds　financing　the　goods.　Holding　costs　are　commonly　assessed　as　a　percentage　of　unit　value,　rather　than　attempting　to　derive　monetary　value　for　each　of　these　costs　individually.　

2.　Ordering　costs:

Ordering　costs　are　those　fees　associated　with　placing　an　order,　including　expenses　related　to　personnel　in　purchasing　department,　communications,　and　the　handling　of　related　paper　work.

3.　Stock-out　costs: 

They　include　sales　that　are　lost,　both　short　and　long　term,　when　a　desired　item　is　not　available;　the　costs　associated　with　back　ordering　the　missing　item;　or　expenses　related　to　stopping　the　production　line　because　a　component　part　has　not　arrived.　

v)　What　is　work　study　or　work　measurement　?

Work measurement is the application of techniques designed to establish the time for an average worker to carry out a specified manufacturing task at a defined level of performance.[1] It is concerned with the length of time it takes to complete a work task assigned to a specific job

Work measurement helps to uncover non-standardization that exist in the workplace and non-value adding activities and waste. A work has to be measured for the following reasons:

1. To discover and eliminate lost or ineffective time.

2. To establish standard times for performance measurement.

3. To measure performance against realistic expectations.

4. To set operating goals and objectives.

3) Explain any 5 difference between PERT and CPM

Project Management and  Review Technique (PERT) andCritical Path Method (CPM) are two popular statistical tool used by the business entities for the management of the project. These two methods are used in the successful completion of a project and hence

used in conjunction with each other. Nevertheless, the truth is that CPM is different from PERT in a way that the former cost based while the latter is time based. In the same manner, there are many differences between PERT and CPM, which we are going to discuss in this article.

The most important differences between PERT and CPM are provided below:

1. PERT is a project management technique, whereby planning, scheduling, organizing, coordinating and controlling of uncertain activities is done. CPM is a statistical technique of project management in which planning, scheduling, organizing, coordination and control of well defined activities takes place.

2. PERT is a technique of planning and control of time. Unlike CPM, which is a method to control costs and time.

3. PERT is set according to events while CPM is aligned towards activities.

4. Deterministic model is used in PERT. Conversely, CPM uses probabilistic model.

5. There are three times estimates in PERT i.e. optimistic time (to), most likely time ™, pessimistic time (tp). On the other hand, there is only one estimate in CPM.

4) What is MRP? Write the objective and advantages of MRP?

Material requirement planning is an information system for production planning based on inventory management. The basic components of material planning are:

Material planning provides information that all the required raw material and products are available for production.

Material planning ensures that inventory level are maintained at its minimum levels. But also ensures that material and product are available whenever production is scheduled, therefore, helping in matching demand and supply.

Material planning provides information of production planning and scheduling but also provides information around dispatch and stocking.

Objective of Material Requirement Planning

Material req

uirement planning is processed which production planning and inventory control system, and its three objectives are as follows:

Primary objective is to ensure that material and components are available for production, and final products are ready for dispatch.

Another primary objective is not only to maintain minimum inventory but also ensure right quantity of material is available at the right time to produce right quantity of final products.

Another primary objective is to ensure planning of all manufacturing processes, this scheduling of different job works as to minimize or remove any kind of idle time for machine and workers.

Advantages and Disadvantages of Material Resource Planning

As with every system based process, material resource planning also has its advantages and disadvantages, and they are as follows:

Advantages of Material Resource Planning

It helps in maintain minimum inventory levels. With minimum inventory levels, material planning also reduces associated costs. Material tracking becomes easy and ensures that economic order quantity is achieved for all lot

orders. Material planning smoothens capacity utilization and allocates correct time to products as per

demand forecast.