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Set 1

PRODUCTION & OPERATIONS MANAGEMENT1. Explain what is meant by capital productivity?

Ans:-

Capital Productivity

Capital deployed in plant, machinery, buildings and the distributionsystem as well as working capital are components of the cost of manufactureand need to be productive. Demand fluctuations, uncertainties of productionowing to breakdowns and inventories being created drag the productivitydown. Therefore, strategies are needed to maximize the utilization of thefunds allotted towards capital. Adapting to new technologies, outsourcing andbalancing of the workstations to reduce the proportion of idle times onequipments are the focus of this section.

1) Outsourcing Strategies:-

When capacity requirements are determined it will be easy todetermine whether some goods or services can be outsourced so that thecapital and manpower requirements can be reduced and the availablecapacities are used to augment core competencies thus reducing the cost ofthe product or service to the customer. However, the following factors mayrestrict outsourcing

(a)Lack of expertise the outsourced firm may not have the requisiteexpertise to do

the job required

(b)Quality considerations - Loss of control over operations may result in

lower quality.This is a risk that the firm gets exposed to.

(c)Nature of demand When the load is uniform and steady, it may not beworthwhile

to outsourcing. Absence of supervision and control may be a hindrance tomeet any

urgent requirements of the customer. This affects the business especiallyif no

production facilities are built in the organization

(d) Cost - When the fixed costs that go along with making the product doesnot get

reduced considerably

2) Methods Improvement:-Methods Improvement starts with Methods analysis focus of this

process is how a job is done breaking it down to elemental tasks so that theyare amenable for analysis.. This is done for both running jobs and new jobs.For a new job, the description becomes the input for analysis. For current

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jobs, the analyst depends on observations, records and suggestions of thepersons involved in the job. When improved methods are suggested, they areimplemented and records created for assessing the consequences of themethods improvement procedures. The analyst should involve all concernedpersons in the process so that acceptance becomes possible andopportunities open up for further improvements. Moreover, the peopleactually involved would be interested in

improving their productivity and will help the analyst in the process.

3) Balancing of Workstations:-Assembly lines necessitate out stringing together workstations which

carry out operations in a sequence so that the product gets completed instages. Since the workflow has to be uniform and operations may requiredifferent periods for completion the necessity of Line Balancing is felt.Capacities at workstations and the workforce to man are so adjusted that aproduct in the process of assembly almost approximately the same amountof time.

4) Rationalization of Packaging Methods:-With logistics becoming an important function of the supply chain and

outsourcing becoming the norm, packaging has become an important aspect,packaging has become important. Space is at a premium and thereforestacking and storing have to more scientific. Movements inside the premisesfrom one location to another location are being done with automated systemsand they need that the packaging systems are designed for safe transit,continuous monitoring both for quantities and operations. In case ofoutsourced products the materials used and their design should facilitatereuse of the same which brings in economy.

5) Quality Circles:-Kaoru Ishikawa is generally considered to have promoted the concept

of Quality Circles. It is well known that he is the originator offishbonediagrams to identify the root cause of any problem. The causes for theexistence of a problem are classified as pertaining to the material, processesor method or any factor that goes into production. The matter is furtherinvestigated and pursued till the exact cause is determined. Quality circlesuse these principles in solving problems. The teams select projects selectedon the above basis and implement actions to achieve improvement in theprocesses with a view to improve quality. Since these activities are carriedout without affecting the regular day to day work and involve littleinvolvement of the managers, team work gets reinforced and results in

continuous improvement in methods and quality. The capital deployed isminimal, if at all and therefore productivity is enhanced.

2. Write a detailed note on Split case order fulfillment methods and mechanization.

Ans:-

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Split case Order Fulfillment Methods and Mechanization

This system looks at situations when bulk supplies in full cases to oneor more destinations are not done. Fulfillment of orders which need differentmerchandise in different quantities requires that cases will have to be split,and pieces picked, repacked in cartons and ship to the customer.Mechanization helps in improving identification, pickup and repacking the

materials in addition to relieving monotony of the workers. A few strategies ofachieving this objective optimally are discussed here.

1) Order Picking Methods:Items as per customer requirements have to be picked and packed in a

logical manner and assigned to personnel so that their productivity ismaximized.Accuracy of fulfillment of order is ensured by two basic factors

a) Order Extent:

It is defined as the number of order to be picked simultaneously by apicker in an assignment. This is categorized as discrete order picking in whichcase asingle order is selected at a time and Batch order Picking in which case themerchandise requirements of many orders are put together and selected forpick up inthe geographical area which is covered in a single pass.

b) Coverage Extent:it is the physical area to be traversed by the picker in selecting

merchandise for an assignment within the picking system. The personnel pickup the

merchandise from a zone the zone being a contiguous area with differentpickinglocations. The boundaries may be fixed or dynamically adjusted toaccommodate eitherpersonnel or customers. This zone is identified within the picking area. In theothermethod called tour picking the entire picking area is considered for pickingmerchandise. Either of the strategies is adopted to meet the constraints oropportunitieswhich maximize employee productivity and the customers needs.

2) Sorting and Routing:

Sorting is done for the purpose of easing the operation of matchingorders, merchandise and the customers for whom they are done. This activitycan be done as and when orders are picked Sort Immediate or by merging anumber of order and batches are made to consolidate the priorities forexecution. This method is called Merge and Sort. The strategy used dependson the total area of the zone, the number of orders, and the type ofmerchandise. and the economics of balancing all the above.

When orders are routed among those zones where picks are requiredwe call them routing the picks. When orders are routed from zone to zone, in

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a particular order, whether any picks are there or not, we call them chaining.When multiple zones are covered simultaneously in different zones we callthem parallel routing. As can be discerned, no one single method is suitablefor actual situations on site. They are formulated as a strategy foroptimization of resources in view of the constraints.

3) Order Packing Methods:-

Order fulfilling methodology covers one more aspect i.e. the orderpacking methods. When split case is executed it becomes necessary that themerchandise is repackaged for shipment to meet the requirements of thecustomers. In the first method they are packed as they are picked. This isapplicable in cases where the merchandise is usable by the customer directlyand when the tools and packaging materials are available with the picker andhe can pack them throughout the picking area.

4) Classification Schemes:-In this section you will come to know about the coding of various

methods of split picking and packing. The letters will uniquely identify themethod intended to be used and all personnel in the process will know

disposition status of the merchandise.

Discrete Order Picking or Batch Order Picking - Letter D or B is usedZ one Picking or Tour PickingPack Immediate or Assemble and PackBS Batch Order Picking Sort ImmediateBM - Batch Order Picking Merge & SortZR - Zone Picking with RoutingZC - Zone Picking with ChainingZP - Zone Picking in ParallelFor example, BSDZCA means Batch Order Picking Sort Immediate DiscreteOrder Packing Zone Picking with Chaining and Assemble.

With this type of coding 24 ways of representing the type of split orderpicking and packing are identifiable.

5) Choice of Optimal Fulfillment Strategies:-The choice of order fulfillment strategy depends upon the predominant

order characteristics and category of distribution. They are determined byGeneral order characteristics such as -a) number of line itemsb) quality of pieces per line- itemGeneral order categories area) Wholesale Distribution usually large number of pieces of a few itemsb) Retail Distribution orders for large quantities for a large number of items

c) Direct Marketing orders for a small quantityd) Consumer Distribution - small quantities of different items for purposes ofevaluation,

promotion and consumptionThe performance measures to be satisfied by the choice of strategy are tominimizethe costs involved and maximize desirable characteristics..

They area) Minimise the cost of pick and pack for every order

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b) Minimise the cost of shipping per order,c) Reduce the time required per cycled) To increase the fill ratee) Improve Accuracy of the elements of the processf) Traceability and accountability of all transactions..Advanced technology involving Bar Coding, feeding on line data, high speedprocessing an distribution of information across all nodes of the supply chain

help in improving efficiency, reduce costs and improve customer satisfaction.

3. Explain strategic management process and strategic decision making in detail.

Ans:-

Strategic Management ProcessMost of organizational processes depend upon the structure of the

organization, the hierarchical levels, decision arrival mechanisms,communication systems, authorization processes, implementationprocedures, feedback and monitoring devices to formulate and implement

strategies. It is necessary to ensure that the process is effective and efficientand avoid loss of control. In essence, the purpose of strategies is to leveragethe companys advantages, prepare for the eventualities of uncertainexternal happenings and maximize the chances of success in its endeavors.Organizational goals necessitate the adoption of certain strategies, which areconverted to functional goals in the areas of finance, marketing andoperations. These goals are achieved by adopting strategies arrived at usingorganizational processes mentioned above. When these long term strategiesare being implemented tactics may have to be employed to meet short termchallenges depending upon situations. The actual activities which result inoutcomes are called operations.

A business strategy is the result of a decision taken at the highest

level. They are specific programme of action which outline how the resourcesare deployed to achieve goals in an environment. A general framework toguide and activate think tanks in the organization to come up with proposals.Action plans with time frames, authority hierarchies and feedbackmechanisms are formulated and designed. At this stage detailed scenarios asto the likely consequences are considered and contingency plans worked outfor implementation, if situations call for the same. Being in readiness withalternatives is a good way of assuring the success of any plan.

For example the production of a model of motor cycle is to beincreased by 25% and possibly reduce the price by 10%. This decision wouldhave been taken as a strategy to meet the increasing demands which arereal

to enter a niche market of the competitor to augment marketing departments claim after a vigorous sales campaign or any other reason.

The strategy for the marketing function would be many like promisingfreebies, make the commission attractive for the dealer, to open moreservice outlets. The operations strategy would consider the following additional machinery or subcontracting methods to improve productivity revamping assembly lines

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measures to improve motivation promoting existing employees or hire new ones identifying and developing new supplierslook for opportunities to reduce costs as scaling up provides scope.

The above measures will be under consideration at all times. When a changeis considered, identification of areas of cooperation and collaboration becomevisible. Opportunities arise for understanding and resolution of problems.

Setting up visible targets to meet deadlines encourages application ofconstancy of purpose as Deming. This in itself would be a strategy forimproving quality and productivity.

Strategic Decision Making

Decision making is the most crucial management function.Decisions commit the organization and its members to activities which

have financial repercussions and affect the functioning of others who areconnected with those. Therefore decisions are taken after lot of deliberationswhich involve data gathering, analysis and predicting outcomes. Accuracy ofdata, their relevance for the matter under consideration are matters which

affect the quality of decisions. In addition, the following factors also form thebasis of decision making:

a) Environmental Scanning:-The business environment in which the firm exists and has to compete

continually exhibits potential for opportunities and threats. Becoming awareof those and their impact on the firm by a process of analysis is calledenvironmental scanning. The environment includes the industry, themarketplace, the governmental agencies, society, ecology, technology, etc.Competitors may be gaining edge by diversification, making forays into thefirms niche market by making new and better products suppliers could beforming cartels and preparing to drive hard bargains the Government could

be passing laws and issuing orders which could affect the supply of materialsor restrictions on import and export or even employment conditions.Adaptation to thesedynamic factors by environment scanning and basic strategic decisions isvital.

b) Core Competencies:-Each organization is started by an entrepreneur or a small group of

them

who believed in some unique strengths which would give them a place in themarket. Utilizing those strengths the venture would have succeeded anddevelopment and expansion take place either laterally or vertically or in bothways. However, additional strengths or competences would have beenacquired to augment the existing business built on the core competencieswith which the organization had started. Markets know how, the learning ofthe workforce and additional facilities created, would be continuouslydemanding and satisfying new needs. Investors and suppliers would

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be wiling to back an enterprise, who, they have, seen grow in strength. Thedevelopments and improvements both in knowledge and skills make the corestrengths better. This tends to make these an advantage over thecompetitors who would have to grapple with these competencies. Usingthese advantages would form a part of the decision strategy of the firm.

Core processes of an organisation are determined by the corecompetencies. Four main core processes are customer relationship, new

product/service development, supplier relationship and order fulfillment. Theemphasis on these processes depends on the type of industry, the length ofits existence and the consequent strengths built up in certain areas, the wayearlier successes have been achieved and the reinforcement they have givento the organisation. One should remember that the environment is alwaysdynamic and the strategy formulation needs to be constantly updated formaking implementation effective. Ultimately every organisation depends onthe core compete cities which gives it an advantage over the competitors.

4. What is TQM? Explain Quality approaches of Deming Wheel and Jurans QualityTrio logy?

Ans:-

Introduction to TQM:-TQM is viewed from many angles as a philosophy, as an approach

and journey towards excellence. The main thrust is to achieve customersatisfaction by involving everybody in the organisation across all functions with continuous improvement driving all activities. TQM systems aredesigned to prevent poor quality from occurring. The following steps areimplemented to achieve Total Quality.a) Take all measures to know what the customer wants voice of thecustomer. Develop

methods that generate facts which can be used for decision making. Donot ignore the

internal customer the next person in the process.b) Convert the wants into design specifications, that meet or exceedcustomer

expectations.c) Processes are to be designed so that they facilitate doing the job right thefirst time.

Incorporate elements that make it impossible to make mistakes. It is calledfail safing

or fool proofing. The Japanese call it Pokayoke.d) Keeping record of all occurrences, procedures followed and consequences.

They helpin validating the processes so that continuous improvement becomes

possible. Moreimportantly any gaps can be seen and rectified immediately. One of the

basic tenetsof TQM is just because something is working well improvement is not

necessary. Thesearch must be continuous to find ways and means to improve every

aspect of

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the business process finance, operations and management. Complacencyshould

never be allowed to creep in at any time. In this aspect, culture plays animportant

role. All these require top management commitmentApproaches to TQM

Being practiced worldwide by different organizations, TQM has

different approaches towards its achievement. The basic thrust of each ofthese is realizing excellence. All the approaches have a lot in common, butthe emphasis shifts from one other. Needless to say, each organisation willuse any of these or even a combination to suit its structure, culture and need.Some emphasize on the philosophy of TQM and the role of management andemployees in being aware, committed and act. Some expect us to usestatistics more intensely. Some give us an integrated approach.

Deming WheelDemings approach is summarized in his 14 points.

1) Constancy of purpose for continuous improvement2) Adopt the TQM philosophy for economic purposes

3) Do not depend on inspection to deliver quality4) Do not award any business based on price alone5) Improve the system of production and service constantly6) Conduct meaningful training on the job7) Adopt modern methods of supervision and leadership8) Remove fear from the minds of everyone connected with the organisation9) Remove barriers between departments and people10) Do not exhort, repeat slogans and put up posters.11) Do not set up numerical quotas and work standards12) Give pride of workmanship to the workmen13) Education and training to be given vigorously14) State and exhibit top managements commitment for quality and

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

ensure apurposeful journey of TQM. The slope is shown to indicate that if efforts arelet up theprogramme will roll back.

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Plan - means that a problem is identified, processes are determined andrelevant

theories are checked out .

Do means that the plan is implemented on a trial basis. All inputs arecorrectly

measured and recorded.Check means that the trials taken according to the plan are in accordancewith the

expected results.Act - When all the above steps are satisfactory regular production isstarted so that

quality outcomes are assured

Jurans Quality Triology

Juran uses his famous Universal Breakthrough Sequence to implementquality programmes. They are:A Proof of need - there should be a compelling need to make changesB Project Identification - Here what is to be changed is identified Specificprojects with

time frames and the resource allocation are decided.C - Organisation with top managements commitment is made in terms ofassignment of

persons, responsibilities fixedD - Diagnostic journey - Each team will determine the problems result fromsystemic

causes or random or deliberately caused. Root causes are ascertained

with utmostcertainty.

E - Remedial Action This is the stage when changes are introduced.Inspection,

Testing and validation are also included at this point.F - Holding on to the gains - The above steps result in beneficiary results.Having

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records or all actions and consequences will help in furtherimprovements. The

actions that resulted in the benefits derived should be the norm forestablishing

standards.

Juran has categorized cost of quality into four categories :

(a) Failure costs Internal - These are costs of rejections, repairs etc in termsof

materials, labour, machine time and loss of morale(b) Failure costs External These are costs of replacement, onsite reworkincluding

spare parts and expenses of the personnel, warranty costs and loss ofgoodwill(c) Appraisal Costs - costs of inspection, including maintenance of records,certification,

segregation costs, etc.(d) Prevention costs

The sequence of three sets of activities - Quality Planning, Quality Control

andQuality Improvement form the triology to achieve Total Quality

Management.

His arguments are that :1) Quality is the result of good planning considering the needs of bothinternal and

external customers and develop processes to meet them. The processesare also

planned to meet them.2) Quality is built into the system of manufacture inputs and processes thatare on

stream like raw material, spare parts, labour, machine maintenance,training,

warehousing, inspection procedures, packaging, etc. They have to bemade to follow

standards and control exercised to make sure that mistakes do not occuroften and if

they are they are corrected at the source.3) Quality Improvement measures are essential to keep the quality culturealive. Newer

methods will be found, some operations can be eliminated, improvedtechnology

available In short, as experience is gained things can always be done

better. It is forthe management to take the initiative and encourage the employees to be

on the lookout for opportunities for improvement.

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5. Compare Workflow with BPM. Explain in detail the Project Development processCycle?

Ans:-

Workflow vs. BPMWorkflow contains a number of entities in a unidirectional path with

nodes. Each of these nodes may contain a number of elements material,data, attributes, value. They come together for integration or even fordivision and will have transformation going on. The activities that make thesetransformations are the sub processes. So, there are changes taking placealong the path and at the end we have a completed process. Every detail hasbeen worked out, the outcomes verified and corrected brought into the flowso that nothing untoward occurs. The only thing lacking is flexibility thatbusiness situations demand all the time and because the enterprise has toperform and excel in conditions of uncertainty, improvement and

competition. Fortunately these are exceptions. While majority of thehumdrum goes on smoothly, we need to manage exceptions. Notably,exceptions create new processes, opportunities and help us get new insightsinto the processes. It has been found that 80% of process costs arise out ofmanaging exceptions. These happen at many points in the value chain.Managing these is Business Process Management. Workflow does not offeroptions in the way processes are conducted. They have fixed routes,activities and schedules. Actually, there is not much management. BPMgoes ahead not on a fixed track, but on bumpy roads, swerving sharply toavoid collisions and overtaking the vehicles that are ahead. It calls for allmanagement skills..The Project Development Process Cycle:

Every company would be interested to improve their performance overthe their previous performance in projects. In order to improve projectperformance, the company must assure quality and quality control at everystage of the project throughout the project life cycle. The various steps whichmay be considered in the development ofthe process cycle in any project are listed below:

1) Planning For Review:In this step the main focus is on collection of data. Data is the main

input requirement of any successful project information system and thereforethe project. Once the data has been gathered prepare a suitable plan for itsanalysis. Obtain necessary commitment from management and teammembers to participate actively and take actions on findings. It is necessarythat every project member gives his or her commitment to participate anddeliver the service/product in the project. Review are necessary for everystage of the project. Prepare schedule for each project review.

2) Conducting the Review:

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Before the review prepare an agenda. The agenda should be wellstructured in terms of time and content. Make necessary arrangements togather inputs to the review. The review leader is the project manager.Incorporate points, which are external to the project. These external pointshave to be well structured to be reviewed. A reporter must be designated todocument key points of the meeting. An automated checklist must beformulated for the session. The use of flipcharts may be helpful to collect

data from participants.

3) Take actions on findings:During the meeting, determine the points which are critical to the

project and its performance. The members may have brain storming sessionto discuss critical points. Make a list of all such items discussed and itemssuggested and group the data into categories and then prioritize, either bygroup discussion or voting. Identify action items and assign a project memberor a team the task pertaining to the action planned. For all such actions andrecommendations, prioritize the items depending upon the task for

execution. After reaching consensus on results, summarize project successfactors, recommendations for further study and action items withresponsibilities and due dates. Set expectations of scope, investment, time,etc., for each item and send a copy to the team. Follow up all the actions.Place review reports in the project documents file, in thequality/productivity departments and in the library. Make reports available tomanagers of the life process for similar projects.

4) Do continuous improvement:Continual improvement is one of the management mantras. Every

organization wants to improve continuously. It is not possible to achieveimprovement unless sufficient measures are adopted to measure

improvement. Encourage the quality managers to look for quality themesthat emerge from review meetings. The quality managers should highlighttrends and deescalate chronic problems. Reviews are a check process in thePlan-Do-Check-Act (PDCA) cycle of a quality cycle. They are not just aonetime event. In this context, act on recommendations from previousprojects plan to capture data about project do continuous improvementcheck on how you are doing with a retrospective analysis. Do periodic projectreviews that will trigger mid project corrections. Conduct immediate, informalretrospective after solving unexpected obstacles. Understand any impact onthe remainder of the project. Recognize people for extra efforts andnoteworthy contributions.

Be open to attend reviews for other projects. Learn from similar

ventures, warranty failures, customer surveys and experiences of otherdivisions and companies. Be a part of continuous organizational learningprogram that includes experimentation, evaluation and documentation witheasy access and retrieval.

5) Critical Success Factors:It is necessary that a company identifies critical factors in a project.

These factors may slacken the project if not focused. Routines tasks may beassigned to lower level team members as this may relieve the project team

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from wasting their skill set on routine matters. In terms of project delivery,the project office can relieve project managers oftasks, like filling forms and templates, getting these forms signed off, mailing,receiving and checking items etc.

Regarding project management skills the project office can help theproject manager in the project scope definition, project kickoff preparationand planning tasks, through mentoring and coaching services. These are the

combining strengths that make the project manager to move forward andachieve the project success. Regarding project quality reviews, the projectmanagement office adds value providing processes, tools and projectmanagement experience but any quality review process can be implementedby the team without sponsorship from the management level.

It is necessary to identify all the critical success factors. One of thecritical success factors for the project quality review process implementationis to convince and sell the benefits to the management team of theorganization. The team should show exhibit better control of their projectportfolio and then demonstrate better control about business profitability.

6) Results and Benefits of the Project Quality Reviews:

The main benefits of the project quality review are the project status isformally visible to the whole organization. It creates awareness and room forimprovement. Only reviewing, in a detailed manner, every project we canhave a clear idea about the lack of knowledge mistakes, errors, deviations,and their reasons.

The project quality reviews helps the project manager and his/hermanager to enable the necessary adjustments and taking the actions neededto achieve the project goals finishing the project on time, scope and budget.

The team can find benefits for the project manager, for the customerand for the sponsor. For the project manager because that process helps interms of discipline and control, for the customer because, in the way thatprocess is anticipating results, also create some kind of proactive behavior in

the project manager anticipating potential problems of the customer andfinally for the sponsor because this process helps him to know more projectdetails and then to ask the customer upper management level forclarifications.

Management expectations are crucial for the project success butproject reviews add value to such expectations.

The above steps can be represented in the form of a diagram to showvarious process items in a project. These diagrams will help in the reviewprocesses ot pin point facts and figures of concern post delivery. Every flowand process can be studied and reviewed for enhancement in the product orservice deliverable in future.As an example consider packaging of a tonic bottle in a box :

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6. What is JIT? Explain Value engineering with examples.

Ans:-

Introduction to JITJIT can be considered to be a philosophy of manufacturing founded on

the principles of elimination of all waste and thereby increasing productivity.When the philosophy is applied at workplace, the approach results inproviding parts in just right quantities at the right time. This results ineconomy of material and time thus lowering the costs and increasingproductivity. Since no extra parts are available, production of only good partsis forced on the system. JIT has been extended to mean continuous

improvement. These principles are being applied to engineering, purchasing,accounting and data processing also. We will see how JIT helps inimplementing Lean Production systems. In these days when technology isable to provide us with highly accurate equipments which have highcapacities and the business has become global meaning that both suppliersand customers are widely accessible. To remain competitive, cost efficiencieshave become compulsory. JIT helps in this process. It is extended to the shopfloor and inventory systems of the vendors also. One of the main challengesfor JIT is frequent changes in production schedules owing to the changes in

bottle

tonic

capOuterbox

Printedlabel

Assemble

Sticklabelon box

Check the alignmentand position of label

Check the fitment ofcap on bottle

PackedTonic

Bottle

Assemble

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demand. This causes the procurements plans to change. In the present dayscenario where most manufacturing concerns depend upon a number ofsuppliers, who in turn may outsource parts and services, disruptions have acascading effect. However, there is a limit to the agility that a company canbuild into the system. Communication right through the supply chain helps inreducing inventories and keeps the flow lines smooth. Success of

JIT depends upon a lot of preparation and committed implementation.

Characteristics of JITIn this section, we will study different methods by which inefficiency is

reduced and unproductive time is minimized. The consequent saving is to beutilized for reducing cost and render better service to the customer. JITconsiders elimination of waste asfundamental to any processes. Shigeo Shingo an authority on JIT at Toyotaclassifies them as under:

1) Over Production - The extra parts or products may not be needed ormay not be

available when needed. So, it is a waste.

2) Waiting Time - The operator, the machine or the part will not be eitherworking or

worked upon. The duration of waiting is unproductive and may create moreserious

consequences.

3) Movement - Any unnecessary movement is a waste of energy causesblockages

disrupting movements and delaying the flow of other items creatingdelays.

4) Process - Some steps in the process may not be necessary to arrive atthe required

stage. It is waste of all the inputs that go into the process.

5) Inventory - Excess procurement or production builds up stock ofmaterials which are

not immediately used, thus locking space, funds carrying heavy costs.

6) Effort and movement - The people who work do not make a study as tohow these

are utilized in realizing the purpose for which they are made. Both, againuse up

resources which are not available when needed.

7) Defective Products - these are produced using the same equipments,workmen and

the time that would be used to make good products. Thus defectiveproducts use up

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resources and result in losses.

Since these wastes have to be eliminated, a thorough study how theyoccur and what steps would result in their elimination is of paramountimportance. We focus on some of them now.

Implementation of JIT

JIT, like TQM and other developmental measures is possible only withtop management commitment and a learning culture in the organisation. Themain handicap to any programme is the resistance by the organizationalmembers even at the top, to make changes. This resistance may take theform of non-cooperation and may enlarge to become sabotage. These showup at the implementation stage. So, communication of the goals to berealized and the objectives of each team should be make effectively. Initially,a milestone chart will help in establishing the various steps to be taken andcorrecting the activities as the process is on is the best way of ensuringsuccess. It is well to remind at this stage, that JIT is not a destination, but anongoing continuous improvement programme in the process of achieving

Total Quality Management.

Introduction of Value EngineeringValue Engineering / Value Analysis has gained importance in todays

manufacturing field because of the necessity of making all components aseconomically as possible. Every unnecessary component, every unwantedoperation has to be eliminated for economizing. Materials may have to bechanged, tolerances in manufactures relaxed because value can be createdin terms of reduced volume, increased strength or longer service. Involvingthe supplier and utilizing his knowledge and experience are crucial for itssuccess.

What is Value Engineering / Value Analysis

Basically it is a methodology by which we try to find substitutes for aproduct or an operation. It can be conducted both internally and externally.

The concept took shape during the Second World War. The thinking processcalls for a deep study of a product the purpose for which it is used, the rawmaterials used, the processes of transformation,the equipment needed etc. and question whether what is being used is themost appropriate and economical. This applies to all aspects of the product.For example, let us consider a component needs a round brass rod as rawmaterial in size 21.5 mm. Diameter. It has seven operations cutting, drilling,chamfering boring. milling, plating and polishing. Value analysis considers allaspects of each of these and investigates whether any of them cansubstituted by another material, a different size, a different tool, a different

machine, a different cot sequence, a different tool for an operation, adifferent chemical, a different concentration, a different voltage, shorter timeor processing. Studies can be conducted to verify whether any operation canbe eliminated. Simplification of processes reduces the cost of manufacture.Every piece of material and the process should add value to the product so asto render the best performance. Thus there is an opportunity at every stageof the manufacturing and delivery process to find alternatives which willincrease the functionality or reduce cost in terms of material, process andtime. It should be remembered that we are not seeking a cost reduction

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sacrificing quality. It has been found that there will be an improvement inquality when systematic value engineering principles are employed.

Relevance of VE in modern manufacturingModern manufacturing can be seen from two important perspectives.

One is the management approach which consists of TQM, JIT, Kanban,concurrent engineering, Lean Manufacturing, TPM, Group Technology,

Cellular Manufacturing and others. These have basic philosophies based onwhich techniques, tools and methodologies are developed. To aid theprocess, we have computers and softwares written to collect data, processthem, distribute them and analyse them. We have Management InformationSystems which help in decision making. Optimisation at every level looks intothe aspects of cost and benefit. Modern machines like automatic machines,Special Purpose Machines, Robots are built to high produce highly accuratecomponents at greatly reduced costs. New materials and processes haveresulted in great advances in the variety of products available to largenumbers of people. With globalisation procurement and distribution are beingconducted over great distances. The main thrust is on quality, timely deliveryat the least price. These are the values that we put in the product. Value

Analysis looks at the manufacturing activities with a view to make thecomponents simpler, processes faster and the products better. Since hugeinvestments on the machines, it is mandatory that every component/partused is made as economically as possible. Fabrication, erection andinstallation being costly and have long term implications, assessment ofutility of the materials used and processes adopted is important. In themanufacturing activities power drives many machine elements with respectto one another to obtain the transformation on the materials that result inbecoming parts. Using machines with appropriate capabilities in terms ofpower, voltage, distances moved, lifting and placing them all provideopportunities for value analysis.Modifications may be made to effect savings.

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Set-2

PRODUCTION & OPERATIONS MANAGEMENT1. What is meant by System Productivity? Give examples?Ans:-

System Productivity:-Productivity is generally expressed as the ratio of outputs to inputs.

Productivity can be calculated for a single operation, a functional unit, adepartment division or a plant. It is a measure of the efficiency of the systemand looks at the economies achieved during the processes. Every process willhave number of contributors people, machines, facilitating goods, ancillaryequipments, technology, etc. which help in achieving maximum productivity each element attempting to enhance the contribution of other elements.Enhancement of productivity is achieved by either reducing the inputs for thesame output or increasing the output by using the same input. Opportunitiesexist at all stages of the workflow. The entire system to introduce measuresfor increasing productivity. However in actual manufacturing situations, theinefficiencies will havecascading effect in hampering productivity. Communication, effective reviewprocesses and innovative methods will ensure optimization of resources.

Building up reliability into the equipments, managing the supply chainto economize on the cost factors improves productivity. Quality circles arevery efficient in incorporating low cost and non-intrusive methods ofimproving productivity and quality throughout the organisation. They seek toinvolve all persons who are actually involved in the production system andthe information they elicit and bring about improvements highly costeffective. They unveil creativity and encourage team work and bring aboutimprovements almost on a day to day basis. They do not bring aboutdramatic changes, but continuous incremental changes in a harmonious way.

They also tend to encourageidentification of possible failures and seek methods of preventing thingsgoing wrong..

2. Explain capital costs for online storage in detail?Ans:-

Capital costs for online StorageStorageeconomics are mainly concerned with thecapital cost for online storage when rationalized with annual item cube movement. Capitalcostsare those for the space, building, and material handling equipments,bins, pallets, pallet loadingsystems, computer hardware and software foridentifying and processing information about thestorage cost. The mainconcern is the provision for picking, retrieval and packing. Thesupportingand efficiency enhancing fixtures needed for the efficient use of space andheavyequipments should be addressed. The extent of mechanization

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depends on the expected returns in them. Many times mechanization will notsolve some fundamental problems of basic design of the system, inadequateforecasting or inappropriate methodologies. It will be found that capital costswhich are quite huge fail to result in increased productivity and will be a drainon the economics of the operation,

1) Mechanization Costs for Assembly and Packing:-Failure of the split case order Assembly and Packaging systems occurs

mainly due to two reasons a) Tote Sorting b) Item Sorting. Totes containingthe picked merchandise area moved from the selected zone. These arereceived for sorting where the sorter automatically transfers all totes of agiven order on a conveyor which supplies them to the packing station. Thestations which perform this activity will have their workload assigneddynamically. The Item Sorting System received the Totes with pickedmerchandise are transported to one more induction stations where individualitems are removed. These items area inducted into an item sorter. The sorterwill be in the form of tilt tray or a cross belt. Individual items get sorted and

sent to chutes which carry the items for assembly and packing. The dischargetakes place at the Pack stations. Some times belt conveyors are used forSorting and transporting. In such cases chutes may become redundant. It isto be noted that type of merchandise, their quantities determine the methodfor the intended operations. The capital costs in adopting one system toanother will vary and utilization and productivity are factors which determinethe choice. However, it is advisable that provision for alternates may beplanned so that modifications do not become very costly.

2) Picking and Packing Costs:- These activities require a good deal of human intervention, thusneeding a number of people. Distribution centre where picking and packing

activities take place will measure performances on the basis of pieces perman hour or order lines per man hour. Inevitably, these get linked to orders.

There is a large variation in the quantities per order, variety of merchandise,waiting lines and other characteristics of the orders being filled. The ordersmight be wholesale, retail, direct or consumer. Productivity measures thoughdependent on pieces per hour or lines per hour will have to be adjusted tosuit the peculiarities of the situation. The extent of mechanization also has tobe considered. Costs involved both in terms of capital and labour intensiveactivities should get suitable representation of the cost structure.

3) Order Assembly and Packing System Costs:-Assembly is done manually and hence needs a well trained workforce.

The variety of merchandise that arrive from totes either via the chute or traysor cross belt have to be accurately identified and placed for Assembly.

Though every care would have been taken gaps in the information flow wouldstill hold up the operations. Reducing inventory at this level is critical toproductivity. Feed back systems should b e very efficient to rectify errors asand when they occur. Main costs involved at this stage are the manpowerand capital costs would not be heavy. Packing systems may besemiautomatic or manual. Fully automatic systems may not be advisable for

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Order Assembly situation unless quantities are large and requirements are forlonger periods.

3. Explain automated assembly lines and automated flow lines?

Ans:-

Automated flow linesWhen several automated machines are linked by a transfer system

which moves the parts by using handling machines which are alsoautomated, we have an automated flow line. After completing an operationon a machine, the semi-finished parts are moved to the next machine in thesequence determined by the process requirements a flow line is established.

The parts at various stages from raw material to ready for fitment orassembly are processed continuously to attain the required shapes or acquirespecial properties to enable them to perform desired functions. The materialsneed to be moved, held, rotated, lifted, positioned etc. for completingdifferent operations. Sometimes, a few of the operations can be done on a

single machine with a number of attachments.They are moved further to other machines for performing further operations.Human intervention may be needed to verify that the operations are takingplace according to standards. When these can be achieved with the help ofautomation and the processes are conducted with self regulation, we willhave automated flow lines established. One important consideration is tobalance times that different machines take to complete the operationsassigned to them. It is necessary to design the machines in such a way thatthe operation times are the same throughout the sequence in the flow of themartial. In fixed automation or hard automation, where one component ismanufactured usingseveral operations and machines it is possible to achieve this condition or

very nearly. We assume that product life cycles are sufficiently stable toinvest heavily on the automated flow lines to achieve reduced cost per unit.

The global trends are favouring flexibility in the manufacturing systems. Thecosts involved in changing the set up of automated flow lines are high. So,automated flow lines are considered only when the product is required to bemade in high volumes over a relatively long period. Designers nowincorporate flexibility in the machines which will take care of small changesin dimensions by making adjustments or minor changes in the existingmachine or layout. The change in movements needed can be achieved byprogramming the machines. Provision for extra pallets or tool holders orconveyors are made in the original design to accommodate anticipatedchanges. The logic to be followed is to find out whether the reduction in cost

per piece justifies the costs of designing, manufacturing and setting upautomated flow lines. Group Technology, CellularManufacturing along with conventional Product and Process Layouts are stillresorted to as they allow flexibility for the production system. Withmethodologies of JIT and Lean Manufacturing finding importance andrelevance in the competitive field of manufacturing, many companies havefound that well designed flow lines suit their purpose well. Flow lines compelengineers to put in place equipments that balance their production rates. It isnot possible to think of inventories (Work In Process) in a flow line.

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Bottlenecks cannot be permitted. By necessity, every bottleneck gets focusedupon and solutions found to ease them. Production managers see everybottleneck as an opportunity to hasten the flow and reduce inventories.However, it is important to note that setting up automated flow lines will notbe suitable for many industries

Automated Assembly Lines:

All equipments needed to make a finished product are laid out in sucha way as to follow the sequence in which the parts or subassemblies are puttogether and fitted. Usually, a frame, body, base will be the starting point ofan assembly. The frame itself consists of a construction made up of severalcomponents and would have been assembled or fabricated in a separatebay or plant and brought to the assembly line. All parts or subassemblies arefitted to enable the product to be in readiness to perform the function it wasdesigned to. This process is called assembly. Methodologies of achieving thefinal result may vary, but the basic principle is to fit all parts together andensure linkages so that their functions are integrated and give out thedesired output.

Product Layouts are designed so that the assembly tasks are

performed in the sequence they are designed. You will note that the sametask gets repeated at each station continuously. The finished item comes outat the end of the line

The material goes from station 1 to 5 sequentially. Operation 2 takeslonger time, say twice as long. To see that the flow is kept at the same pacewe provide two locations 2a and 2b so that operations 3, 4 an 5 need notwait. At 5, we may provide more personnel to complete operations. The timetaken at any of the locations should be the same. Otherwise the flow isinterrupted. In automated assembly lines the moving pallets move thematerials from station to station and moving arms pick up parts, place themat specified places and fasten them by pressing, riveting, screwing or evenwelding. Sensors will keep track of these activities and move the assembliesto the next stage. An operator will oversee that the assemblies are happeningand there are no stoppages. The main consideration for using automatedassembly lines is that the volumes justify the huge expenses involved insetting up the system.

4. Write a detailed note on Crosbys Absolutes of Quality and Taguchis QualityLoss Function?

Ans:-

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Crosbys absolutes of Quality

Like Deming, he also lays emphasis on top management commitmentand responsibility for designing the system so that defects are not inevitable.He urged that there be no restriction on spending for achieving quality. In thelong run, maintaining quality is more economical rather than compromisingon its achievement.

His absolutes can be listed as under.

(i) Quality is conformance to requirements not goodness.

(ii) Prevention, not appraisal, is the path to quality.

(iii) Quality is measured as the price paid for nonconformance and asindexes.

(iv) Quality originates in all factions. There are no quality problems. It is thepeople,

design, process, who create problems

Crosby also has given 14 points similar to those of Deming. His approachemphasizes on measurement of quality, increasing awareness, correctiveaction, error cause removal and continuously reinforcing the system, so thatadvantages derived are not lost over time. He desires that the qualitymanagement regimen should improve the overall health of the organisationand prescribed a vaccine.

The ingredients are:

1) Integrity - honesty and commitment to produce everything right first time,every time.

2) Communication - Flow of information between departments, suppliers,customers helps in identifying opportunities.

3) Systems and operations - These should bring in a quality environment sothat nobody

is comfortable with anything less than the best.

Taguchis Quality Loss FunctionHis contention is that quality comes from design. He advocated a wide

use of Design of Experiments for experimentation on variables and obtainspecifications which will result in high quality of the product. It helps in

bringing cost effective improvements in quality. He believed that designersshould make robust designs so that product can withstand the variabilitieswhich tend to be persistent and give quality for longer periods. His objectivein giving the loss function is to make manufacturers realize that it is thetarget value of the specification that should be sought to be achieved and notthe permissible deviations. The loss caused is the square of the deviationmultiplied by a cost constant.

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L = Total LossC = Cost constantX = average value of the quality characteristicT = target value of the characteristic.

Taguchi also talks about losses to society because of a dent in quality both

The manufacturers and users in society who will have to endure the consequences of

reduced performance as long as the product is used.

5. Read the following case and answer the question.

Shane O'Leary, chief operating officer of the UK-Canadian group, will take over the reinsfrom Mr. [Richard Anderson]. High hopes over the gas explorer's intentions to develop afield in Algeria caused its share price to peak in 2005 but its failure to exploit theprospect has since caused its share price to slump.In spite of Mr. [Khelil]'s views, FCP yesterday announced that Mr [Michael Kroupeev]'sproposed slate of directors would now be recommended by management, making theirelection virtually guaranteed, although two of his nominees would step down and makeway for compromise board members.

Mr Kroupeev, who controls nearly 10 per cent of FCP through an investment vehicle,also sounded a conciliatory tone. "The minister has no grounds to be concerned. Therehas been no change in control of the board. We are fully committed to developing thisproject." [Source : Proquest : STANLEY PIGNAL. Financial Times. London (UK): Apr 15, 2008. pg. 20]

Question : Identify the major process of operations as applicable to this context andexplain it in detail?

Ans:-

OPERATION STRATEGYIS TOTAL PATTERN OF DECISIONS AND ACTIONS WHICH SETTHE OBJECTIVES AND ACTIVITIES OF THE OPERATIONS SO THAT THEY

CONTRIBUTE AND SUPPORT THE ORGANISATIONS BUSINESS STRATEGY.

WITH REFERENCE TO THE CASE EXAMPLE, MENTIONED IN PRODUCTIN &

OPERATION MANAGEMENT-AS PER ME-MAIN EMPHASIS HAS BEEN GIVEN TO

BELOW MENTIONED PROCESS OF OPERATION:

CORPORATE STRATEGY &

MARKETING STRATEGY (TO SOME EXTENT)

COMPETITATIVE STRATEGY &

CORPORATE STRATEGY:CORPORATE STRATEGIES, VIEWS ORGANISATION AS A SYSTEM OFINTERCONNECTED PARTS, EACH WORKING WITH OTHERS TO ACHIEVE THEDESIRE GOALS.BUT MR.MICHAEL KROUPEEV tried to impose his suggestion using his powers, which

is clearly seen by the incident which states How FirstPetroleum and itsdissident shareholders agreed to oust Richard Anderson as chiefexecutive in spite of the repeated trust placed in him by Algerias

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Minister of Energy. Even, Mr. Michael Kroupeev, British Russianinvestor who has lobbied heavily for Mr. Anderson to be replacedwhich by rules is not exceptable-though to some extent it would prove rightbut at the end of the day-it cant bear a fruitful result. Corporate policydevelops only, when they adapt to environment, core processes and corecompetencies.

Secondly,MARKET STRATEGY:Like the old adage says,"The best way to eat an elephant is...one biteat a time."If you break your marketing strategy down into smaller chunks thanit's easier to be consistent. And the best way to be consistent is to makeeach chunk a process.A process is a particular course of action intended toachieve a result in a routine way.But Mr. Michael Kroupeev tried to rule the management circle, withoutstudying the MARKET STRATEGY, which says The processes you want yourmarketing strategy to be broken down into should mirror that of therelationship building process; convert strangers into friends, friends

into clients and clients into loyal clients.Where as Mr. Michael Kroupeev wanted to rule the market, by replacing Mr.Anderson with Mr. Shane OLeary-but resulted into downfall of their prices-seeing the negative results of his decision-he tried to follow the marketingexisting strategy to survive in the market and concluded in his commentslater that-Mr. Anderson would remain as a consultant for FCP for around sixmonths, during which time he would assist in the managementtransition. Because of which FCP jumped from 21 p to 138 p inLondon, up 18 percent. The Companys value now stands at C$636m,around 10 percent of its value in 2005.If he would have studied the market strategy, instead of his stint

power-he would have been successful in his decision making.

Thirdly,COMPETITATIVE STRATEGY:Competitive Strategy is the unique resources and strength and organizationpossesses. Where as Mr. Michael Kroupeev tried to impose his rules on policydecision, by following an acrimonious proxy battle between the currentmanagement and pressuring heavily for Mr. Andersons replacement. Thisweakens the policy decision making.

Therefore, its always advisable for the success to understand what exactlywe want, how to achieve it, who exactly do we require, what we expect fromthem, what they expect from us, does the result derived is a success or

failure? If failure whats the reason behind? if success who are thecontributors? Are we satisfied? Are the people for whom we are servingsatisfied? And many more questions-which can be answered only by followingright strategy of Operation Management.See power point module .