Submission of mba spring 2012

SUBMISSION OF MBA SPRING 2012

ASSIGNMENTS

SEM:2

:SUBJECT CODES:

MB 0044

MB 0045

MB 0046

MB 0047

MB 0048

MB 0049

NAME:SHRADDHA SINGH

ROLL NO:581128190

COURSE:MBAN1

SEM:2

ROLL NO. 581128190 1 NAME:SHRADDHA SINGH

MB0044 – Production and Operations Management

Assignment Set – 2

ROLL NO. 581128190 NAME:SHRADDHA SINGH

Q1. What is productivity? Write a brief note on capital productivity.

Answer: Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input.

Capital deployed in plant, machinery, buildings and the distribution systems as well as working capital are the components of the cost of manufacturing. Demand fluctuations, uncertainties of production owing to breakdowns, and inventories being created drag the productivity down. Therefore, strategies are needed to maximize the utilization of the funds allotted towards capital. The strategies included are:

Outsourcing strategies Methods improvement Balancing of workstations Quality circles Rationalization of packaging methods

Outsourcing strategies

When capacity requirements are determined it is easy to figure out whether some goods or services can be outsourced. Outsourcing can reduce the capital and manpower requirements. Also the available capacities can be used to augment core competencies thus reducing the cost of the product or service to the customer. However, lack of expertise, quality considerations, nature of demand and cost factors may restrict outsourcing.

Lack of Expertise: The outsourced firm may not have the requisite expertise to do the job required. Quality Considerations: Loss of control over operations may result in lower quality. Nature of Demand: When the load is uniform and steady, it may not be worthwhile to

outsource. Absence of supervision and control may be a hindrance to meet any urgent requirements of the customer. This affects the business especially if no production facilities are built in the organisation.

Cost: It may not be worthwhile when the fixed costs that go along with making the product does not get reduced considerably.

Methods improvement

Methods Improvement starts with Methods Analysis. The focus of this process is to find out how a ROLL NO. 581128190 2 NAME:SHRADDHA SINGH

job is done and breaking it down to elemental tasks so that they are 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 jobs, the analyst depends on observations, records and suggestions of the persons involved in the job. When improved methods are suggested, they areimplemented and records created for assessing the consequences of the methods improvement procedures.

The analyst should involve all concerned persons in the process so that acceptance becomes possible and opportunities open up for further improvements. Moreover, the people actually involved would be interested in improving their productivity and will help the analyst in the process.

Balancing of workstations

Assembly lines carry out operations in a sequence so that the product gets completed in stages. Since the workflow has to be uniform and operations may require different periods for completion the necessity of Line Balancing is felt. Capacities at workstations are so adjusted that a product takes approximately the same amount of time during each stage in theprocess of assembly.

Quality circles

Kaoru Ishikawa is generally considered to have promoted the concept of Quality Circles. It is well known that he is the originator of fishbone diagrams to identify the root cause of any problem (See Figure 1.5 Example of a fishbone diagram). The causes for the existence of a problem are classified as pertaining to the material, processes or method or any factor that goes into production. The matter is further investigated and pursued till the exact cause is determined.


Quality Circles use these principles in solving problems. A Quality Circle is composed of a small group of employees who genuinely care about others, and who preferably does similar work, that is:

Meeting voluntarily with a leader on a regular basis Identifying the problems Analyzing the causes Recommending their solutions to management Implementing solutions, wherever possible

The teams select projects as per these problems and implement actions to achieve improvement in the processes with a view to improve quality. Since these activities are carried out without affecting the regular work and involve little involvement of the managers, team work gets reinforced and results in continuous improvement in methods and quality. The capital deployed is minimal, if at all, and therefore productivity is enhanced.

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. Space is at a premium and therefore stacking and storing have to more scientific. Movements inside the premises from one location to another location are being done with automated systems. Also there is a need for the packaging systems to be designed for safe transit and continuous monitoring – both for quantities and operations need to be there. In case of outsourced products the materials used and their design should facilitate reuse of the same, which brings about economy.

Q2. Describe briefly the automated flow lines.

Answer: When several automated machines are linked by a transfer system which moves the parts by using handling machines which are also automated, we have an automated flow line. After completing an operation on a machine, the semi-finished parts are moved to the next machine in the sequence determined by the process requirements and a flowline is established. The parts at various stages from raw material to ready for fitment or assembly are processed continuously to attain the required shapes or acquire special properties to enable them to perform desired functions. The materials need to be moved, held, rotated, lifted, and positioned for completing different 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 taking place according to standards. When these can be achieved with the help of automation and the processes are conducted with self-regulation, we will have automated flow lines established. (See Figure 4.2 Automated flow lines)


The main consideration is to balance times that different machines take to complete the operations assigned to them. It is necessary to design the machines in such a way that, the operation times are the same throughout the sequence in the flow of the martial. In fixed automation or hard automation, where one component is manufactured using several operations and machines, it is possible to achieve this condition. We assume that product life cycles are sufficiently stable to invest heavily on the automated flow lines to achieve reduced cost per unit.

The global trends are favoring flexibility in the manufacturing systems. The costs 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 be made in high volumes over a relatively long period. Designers now incorporate flexibility in the machines which will take care of small changes in dimensions by making adjustments or minor changes in the existing machine or layout. The change in movements needed can be achieved by programming the machines. Provisions for extra pallets or tool holders or conveyors are made in the original design to accommodate anticipated changes. The logic to be followed is to find out whether the reduction in cost per piece justifies the costs of designing, manufacturing, and setting up automated flow lines. Group Technology and Cellular Manufacturing along with conventional Product and Process Layouts are still resorted to, as they allow flexibility for the production system.

As the methodologies of JIT and Lean Manufacturing have become important and relevant in manufacturing, many companies have realized that well designed flow lines suit their purpose well. Flow lines compel engineers to put in place equipments that balance their production rates. It is not possible to think of inventories (Work In Process) in a flow line. Bottlenecks cannot be permitted. By necessity, every bottleneck gets focused upon and solutions found to ease them.

Production managers see every bottleneck as an opportunity to hasten the flow and reduce inventories. However, it is important to note that setting up automated flow lines will not be suitable for many industries.


Q3. What is meant by Total Quality Management? Mention the 14 points of Deming’s approach to management.

Answer: TQM is viewed from many angles – as a philosophy, as an approach and as a journey towards excellence. The main thrust is to achieve customer satisfaction by involving everybody in the organisation, across all functions with continuous improvement driving all activities. TQM systems are designed to prevent poor quality from occurring.

Deming's TQM helps organizations to improve the quality of the products and services they offer. Deming’s approach issummarized in his 14 points.

1. Constancy of purpose for continuous improvement

2. Adopt the TQM philosophy for economic purposes

3. Do not depend on inspection to deliver quality

4. Do not award any business based on price alone

5. Improve the system of production and service constantly

6. Conduct meaningful training on the job

7. Adopt modern methods of supervision and leadership

8. Remove fear from the minds of everyone connected with the organisation

9. Remove barriers between departments and people

10. Do not exhort, repeat slogans, and put up posters

11. Do not set-up numerical quotas and work standards

12. Give pride of workmanship to the workmen

13. Education and training to be given vigorously

14. State and exhibit top management’s commitment for quality and productivity

Q4. Describe briefly the Project Monitoring and control.

Answer: Any project aimed at delivering a product or a service has to go through phases in a planned manner, in order to meet the requirements. It is possible to work according to the project


plan only by careful monitoring of the project progress. It requires establishing control factors to keep the project on the track of progress. The results of any stage in a project, depends on the inputs to that stage. It is therefore necessary to control all the inputs and the corresponding outputs from a stage. A project manager may use certain standard tools to keep the project on track. The project manager and the team members should be fully aware of the techniques and methods to rectify the factors influencing delay of the project and its product.

To analyze the project, methodologies such as, PERT (Program Evaluation Review Technique) and CPM (Critical PathMethod) may be used.

In the PERT method, one can find out the variance and use the variance to analyze the various probabilistic estimates pertaining to the project.

Using the CPM, one can estimate the start time and the finish time for every event of the project in its WBS (Work

Breakdown Structure).

The analysis charts can be used to monitor, control, track, and execute a project. The various steps involved in monitoring and controlling a project from start to end are listed below. (See Figure 9.3 Steps for monitoring and controlling a project)

Preliminary work: The team members must understand the project plans, project stage schedule, progress controls, tracking schedules, summary of the stage cost and related worksheets. All the members have to understand the tolerances in any change and maintain a change control log. They must realize the need and importance of quality for which they have to strictly follow a quality review schedule and frequently discuss the quality agendas.


They must understand the stage status reports, stage end reports, stage end approval reports.

Project progress: The members must keep a track of the project progress and communicate the same to other related

members of the project. They must monitor and control project progress, through the use of regular check points, quality charts, and statistical tables; control the quality factors which are likely to deviate from expected values as any deviation may result in changes to the stage schedule. The project manager ensures that these changes are made smoothly and organizes review meeting with the project management group. Thus all the members are aware about the progress of the project at all times. This helps them to plan well in advance for any exigency arising due to deviation from planned schedule.

Stage control: The project manager must establish a project check point cycle. For this, suitable stage version control procedures may be followed. The details are to be documented stage wise. Project files have to be frequently updated with suitable version control number and revision status should be maintained for each change. Team members are identified who will exercise controls at various points of the project.

Resources: The project manager has to plan the resources required for various stages of the project. He has to brief both the project team and the key resources about the objectives of every stage, planned activities, products, organisation metrics, and the project controls. This increases the visibility into the project performance and hence a quality control can be achieved. Allocating a right resource at the right place and the right time will significantly enhance the efficiency and effectiveness of the resource.

Quality control: Quality control is very important in any project. Quality control is possible if the project members follow the quality charts and norms very strictly. The following lists the possible ways to control quality: (See Figure9.4 Phases of quality control)


Schedule quality review: Project members are recommended to schedule the quality review at the beginning and also the end of every stage. This helps the project manager and team members to plan well in advance for any unforeseen deviation.

Agenda for quality review: The project manager should create and distribute a quality review agenda specifying the objectives, products, logistics, roles, responsibilities, and time frames. This increases the effectiveness of the review and also reduces the time gap.

Conduct quality review: The quality review is to be conducted in a structured and formal manner. Quality review should focus on product development and its quality factors. The project members should check whether the review meets the prescribed quality standards.

Progress control: The progress control of a project can be achieved by considering the following: (See Figure 9.5 Phases of progress control)

Monitor performance: The first step for any project control mechanism is to monitor the progress. There are numerous ways to monitor and measure various project parameters. For example, the team members log in details of actual start date, actual finish date, actual hours worked per task, estimated hours to complete the task, elapsed time in hours to complete the task, any miscellaneous costs incurred during a stage. These inputs become the base to monitor the performance of the project and its stages.

Update schedule: Update the schedule for:

Actual start date for tasks started Actual finish date for tasks finished Actual hours worked per task latest estimated work in hours to complete the task


Update costs: Update the stage cost summary worksheet with actual costs incurred during the period and estimated remaining costs. Miscellaneous costs will be automatically updated from the scheduler, since they are calculated from actual work.

Re-plan stage schedule: Review the tracking Gantt and Cost workbook and identify any deviation from the baseline. Analyze the cause of the deviation. Refer back to the project control factors to help determine the appropriate corrective action and adjust the schedule accordingly. Determine if the stage has exceeded the progress, cost and quality tolerance levels agreed with the project management team. Review status of open issues and determine any further action required on these issues. Review the status of any outstanding quality reviews.

Conduct team status review: Conduct a status meeting with the project team. This is important to bring everyone on the same page of the project progress.

Create status report: The status report provides a record of current achievement and immediate expectations of

the project. The status has to be effectively communicated to all concerned parties.Create flash report: Summarize the accomplishments for the month, schedule status, upcoming tasks for the month and any major issues. Distribute the same to all project team members and stakeholders.

* Project status reports: As discussed earlier, the status report provides a record of current achievements and immediate expectations of the project. This is generated on a regular basis depending upon the type, requirements and phase of the project. Typically it is generated for a week.

* Approvals: In any project, it is important to have top management or project sponsors into confidence about all the aspects of the project. This project stage reviews the decisions taken and actions planned and get it approved by the top management. The goals of such review are to improve quality by finding defects and to improve productivity by finding defects in a cost effective and timely manner. The group review process includes several stages like planning, preparation, overview of a group review meeting, rework recommendations and follow-up.


Q5. Write a brief note on Just-In-Time (JIT).

Answer: Just-In-Time (JIT) manufacturing is a process by which companies don't keep lots of excess inventory; instead, they manufacture a product as an order comes in. The objective of JIT manufacturing system is to: * Eliminate waste that is, minimise the amount of equipment, materials, parts, space, and worker’s time, which adds agreat value to the product

* Increase productivity

JIT means making what the market demands when it is in need. It is the most popular systems that incorporate the generic elements of lean systems. Lean production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement.

Deploying JIT results in decrease of inventories and increases the overall efficiencies. Decreasing inventory allows reducing wastes which in turn results in saving lots of money. There are many advantages of JIT. JIT:

* Increases the work productivity * Reduces operating costs* Improves performance and throughput * Improves quality* Improves deliveries * Increases flexibility and innovativeness

For industrial organisations to remain competitive, cost efficiencies have become compulsory. JIT helps in this process. It is extended to the shop floor and also the inventory systems of the vendors. JIT has been extended to mean continuous improvement. These principles are being applied to the fields of Engineering, Purchasing, Accounting, and Data processing.

However, for organizations to completely implement JIT manufacturing system, they need to have a proper commitment along with the following basic facilities - proper material, quality, equipment, and people involvement.

Q6. What is value engineering? Explain its significance.

Answer: Value Engineering (VE) or Value Analysis is a methodology by which we try to find substitutes for a product or an operation.

The concept of value engineering originated during the Second World War. It was developed by the General Electric Corporations (GEC). Value Engineering has gained popularity due to its potential for gaining high Returns on Investment (ROI). This methodology is widely used in business re-engineering, government projects, automakers, transportation and distribution, industrial equipment, construction, assembling and machining processes, health care and environmental engineering, and many others.


Value engineering process calls for a deep study of a product and the purpose for which it is used, such as, the raw materials used; the processes of transformation; the equipment needed, and many others. It also questions whether what is being used is the most appropriate and economical.This applies to all aspects of the product.

Value Engineering helps your organization in:

*Lowering O & M costs *Improving quality management*Improving resource efficiency *Simplifying procedures

*Minimizing paperwork *Lowering staff costs*Increasing procedural efficiency *Optimizing construction expenditures*Developing value attitudes in staff *Competing more successfully in marketplace

Value Engineering helps you to learn how to:

Improve your career skillsSeparate "Symptoms" from "problems"Solve "root cause" problems and capture opportunitiesBecome more competitive by improving "benchmarking" processTake command of a powerful problem solving methodology to use in any situation


MB0045 –Financial Management

Assignment Set- 2

Q1. The following data is available in respect of a company :

Equity Rs.10lakhs,cost of capital 18%

Debt Rs.5lakhs,cost of debt 13%

Calculate the weighted average cost of funds taking market values as weights assuming tax rate as 40%

Answer:is to determine the cost of each component.Ke = ( D1/P0) + g= (2/32) + 0.1= 0.1625 or

16.25%Kp = [D + {(F

—

P)/n}] / {F+P)/2}

= [14 + (105

—

84)/8] / (105+84)/2

=16.625/94.5= 0.1759 or

17.59%Kr = Ke which is 16.25%Kd = [I(1

—

T) + {(F

–

P)/n}] / {F+P)/2}

= [12(1

—

0.4) + (105

—


90)/7] / (105+90)/2= [7.2 + 2.14] / 97.5= 0.096 or

9.6%

Kt = I(1

–

T)= 0.11(1

–

0.4)= 0.066 or

6.6%

Step II

is to calculate the weights of each source.

We = 200/750 = 0.267Wp = 100/750 = 0.133Wr = 100/750 = 0.133Wd = 300/750 = 0.4Wt = 50/750 = 0.06

Step III

Multiply the costs of various sources of finance with corresponding weightsand WACC is calculated by adding all these components

WACC = We Ke + Wp Kp +Wr Kr + Wd Kd + Wt Kt

= (0.267*0.1625) + (0.133*0.1759) + (0.133*0.1625) + (0.4*0.092) + (0.06*0.066)= 0.043 + 0.023 + 0.022 + 0.0384 + 0.004= 0.1457 or

14.57%

The value of WACC is 14.57%


Q2. ABC Ltd. provides the information as shown in table 6.21 regarding the cost, sales, interests and selling prices. Calculate the DFL.

20,000 units

Fixed costs Rs.3,500

Variable cost Rs.0.05 per unit

Interest on borrowed funds

Nil

Selling price per unit 0.20

Answer: EBIT 200000

Less interest on borrowed funds - NIL EBT 150000 DFL= EBIT ÷ {EBIT—I—{Dp/(1-T)}} 200000/(200000—50000—{25000/(1—0.50)}

DFL=2.0 The degree of financial leverage of ABC ltd is found to be 2.0.

Q3. Two companies are identical in all respects except in the debt equity profile. Company X has 14% debentures worth Rs. 25,00,000 whereas company Y does not have any debt. Both companies earn 20% before interest and taxes on their total assets of Rs. 50,00,000. Assuming a tax rate of 40%, and cost of equity capital to be 22%, find out the value of the companies X and Y using NOI approach? Hint: use the formula K0 = [B/(B+S)]Kd + [S/(B+S)]Ke

Answer: S= 1000,000/.22 =4545454.5 B=25,00,000

=K0=[25,00,000/[2500000+4545454.5)].14+[4545454.5/2500000+4545454.5)].22 0.0496+.142 =.1915 or 19.15%

V = 5000000/0.1915 = 26,109,660.57


Q4. Examine the importance of capital budgeting.

Answer: Capital budgeting decisions are the most important decisions in corporate financial management. These decisions make or mar a business organisation. These decisions commit a firm to invest its current funds in the operating assets (i.e. long-term assets) with the hope of employing them most efficiently to generate a series of cash flows in future. These decisions could be grouped into:

• Decision to replace the equipments for maintenance of current level of business or decisions aiming at cost reductions, known as replacement decisions

• Decisions on expenditure for increasing the present operating level or expansion through improved network of distribution

• Decisions for production of new goods or rendering of new services

• Decisions on penetrating into new geographical area

• Decisions to comply with the regulatory structure affecting the operations of the company, like investments in assets to comply with the conditions imposed by Environmental Protection Act

• Decisions on investment to build township for providing residential accommodation to employees working in a manufacturing plant The reasons that make the capital budgeting decisions most crucial for finance managers are:

• These decisions involve large outlay of funds in anticipation of cash flows in future For example, investment in plant and machinery. The economic life of such assets has long periods. The projections of cash flows anticipated involve forecasts of many financial variables. The most crucial variable is the sales forecast.

• For example, Metal Box spent large sums of money on expansion of its production facilities based on its own sales forecast. During this period, huge investments in R & D in packaging industry brought about new packaging medium totally replacing metal as an important component of packing boxes. At the end of the expansion Metal Box

Ltd found itself that the market for its metal boxes has declined drastically.

The end result is that metal box became a sick company from the position it enjoyed earlier prior to the execution of expansion as a blue chip. Employees lost their jobs. It affected the standard of living and cash flow position of its employees. This highlights the element of risk involved in these type of decisions.

• Equally we have empirical evidence of companies which took decisions on expansion through the addition of new products and adoption of the latest technology, creating wealth for share-holders.


The best example is the Reliance Group.

• Any serious error in forecasting sales, the amount of capital expenditure can significantly affect the firm. An upward bias might lead to a situation of the firm creating idle capacity, laying the path for the cancer of sickness.

• Any downward bias in forecasting might lead the firm to a situation of losing its market to its competitors.

• Long time investments of the funds sometimes may change the risk profile of the firm.

• Most of the capital budgeting decisions involve huge outlay. The funds required during the phase of execution must be synchronised with the flow of funds. Failure to achieve the required coordination between the inflow and outflow may cause time over run and cost over-run.

These two problems of time over run and cost overrun have to be prevented from occurring in the beginning of execution of the project.

Quite a lot of empirical examples are there in public sector in India in support of this argument that cost overrun and time over run can make a company’s operation unproductive.

• Capital budgeting decisions involve assessment of market for company’s product and services, deciding on the scale of operations, selection of relevant technology and finally procurement of costly equipment.

If a firm were to realise after committing itself to considerable sums of money in the process of implementing the capital budgeting decisions taken that the decision to diversify or expand would become a wealth destroyer to the company, then the firm would have experienced a situation of inability to sell the equipments bought. Loss incurred by the firm on account of this would be heavy if the firm were to scrap the equipments bought specifically for implementing the decision taken.

Sometimes these equipments will be specialised costly equipments. Therefore, capital budgeting decisions are irreversible. All capital budgeting decisions involves three elements. These three elements are:

cost

quality

timing

Decisions must be taken at the right time which would enable the firm to procure the assets at the least cost for producing products of required quality for the customer. Any lapse on the part of the firm in understanding the effect of these elements on implementation of capital expenditure decision taken, will strategically affect the firms profitability.


• Liberalisation and globalisation gave birth to economic institutions like world trade organisations. General Electrical can expand its market into India snatching the share already enjoyed by firms like Bajaj Electricals or Kirloskar Electric company. Ability of GE to sell its products in India at a rate less than the rate at which Indian companies sell cannot be ignored.

Therefore, the growth and survival of any firm in today’s business environment demands a firm to be pro-active. Pro-active firms cannot avoid the risk of taking challenging capital budgeting decisions for growth.

• The social, political, economic and technological forces generate high level of uncertainty in future cash flow streams associated with capital budgeting decisions. These factors make these decisions highly complex.

• Capital budgeting decisions are very expensive. To implement these decisions, firms will have to tap the capital market for funds. The composition of debt and equity must be optimal keeping in view the expectations of investors and risk profile of the selected project.

Therefore capital budgeting decisions for growth have become an essential characteristic of successful firms today.

Q5. Explain briefly Capital Rationing.

Answer: Capital Rationing:When there is a scarcity of funds, capital rationing is resorted to.Capital rationing means the util ization of existing funds in most profitable manner by selectingthe acceptable projects in the descending order or ranking with limited available funds. The firmmust be able to maximize the profits by combining the most profitable proposals. Capitalrationing may arise due to (i) external factors such as high borrowing rate or non -availability of

loan funds due to constraints of Debt-Equity Ratio; and (ii) Internal Constraints Imposed bymanagement. Project should be accepted as a whole or rejected. It cannot be accepted andexecuted in piecemeal.IRR or NPV are the best basis of evaluation even under Capital Rationing situations. Theobjective is to select those projects which have maximum and positive NPV. Preferenceshould be given to interdependent projects. Projects are to be ranked in the order of NPV.Where there is multi-period Capital Rationing, Linear Programming Technique should be usedto maximize NPV. In times of Capital Rationing, the investment policy of the company maynot be the optimal one.In nutshell Capital Rationing leads to:(i) Allocation of limited resources among ranked acceptable investments.(ii) This function enables management to select the most profitable investment first.(i i i) It helps a company use limited resources to the best advantage by investing only in theprojects that offer the highest return.(iv) Either the internal rate of return method or the net preset value method may be used inranking investments.


Ways of Resorting Capital Rationing :

There are various ways of resorting to capital rationing,some of which are :

(i) By Way of Retained Earnings :

A firm may put up a ceiling when it has been financinginvestment proposals only by way of retained earnings (ploughing back of profits). Since theamount of capital expenditure in that situation cannot exceed the amount of retained earnings,it is said to be an example of capital rationing.

(ii) By Way of Responsibility Accounting :

Capital Rationing may also be introduced by following the concept of responsibility accounting where by management may introduce capitalrationing by authorising a particular department to make investment only upto a specified limit,beyond which the investment decisions are to be taken by higher-ups.(iii) By Making Full Utilization of Budget as Primary Consideration : In Capital Rationing it may alsobe more desirable to accept several small investment proposals than a few large investment proposals so that there may be full utilization of budgeted amount. This may result inaccepting relatively less profitable investment proposals if full utilisation of budget is aprimary consideration. Thus Capital Rationing does not always lead to optimum results.

Q6.Explain the concepts of working capital

Answer :Money required by the company to meet out day – today expenses to finance production and stocks to pay wages and other production etc. is called the working capital of the company. Working capital

is used in operating the business. It is mostly dept is circulation by releasing it back after selling the products and reinvesting it in further production. It is because of this regular cycle that the working capital requirements are usually for short periods. Though, both fixed and working capitals shall be recovered from the business, the differences lies in the rate of their recovery. Working capital shall be recovered much more quickly as compared to fixed capitals which would last for several years. As the process of production become more round about and complicated the production to fixed working capital increase correspondingly.

Therefore, working capital management refers to the management of current assets and current liabilities. Working capital, however, represents investment in current assets, such as cash, marketable securities, inventories and bills receivables. Current liabilities mainly include bills payable, notes payable and miscellaneous accruals. Net working capital is the excess of current assets over current liabilities here. Current assets are those assets which are normally converted into cash within an accounting year; and current liabilities are usually paid within an accounting year.

What for is working capital required by firm very much depends on the nature of the business which the firm is conducting. If the firm has business which deals with public utility services, obviously the requirement will be low.


It is primarily because the amount becomes available as soon as services are sold and also the services arranged by the firm and immediately sold, without much difficulty and complication. On the other hand trading concerns need heavy amounts because these require funds for carrying goods traded. Similarly many industrial units will also need heavy amounts for carrying on their business. Many manufacturing concerns will also need sufficiently heavy amounts, that of course depends on the nature of commodities which are being manufactured.


MB0046 – Marketing Management

ASSIGNMENT- Set 2

ROLL NO. 581128190 NAME:SHRADDHA SINGH

Q.1 what do you mean by marketing functions? Briefly explain the important marketing functions. Answer:The delivery of goods and services from producers to their ultimate consumers or users includes many different activities. These different activities are known as marketing functions. Different thinkers have described these functions in different ways. Some of the most important functions of marketing are briefly discussed below:

Marketing Research and Information Management:Marketers need to take decisions scientifically. Marketing research function is concerned with gathering, analyzing and interpreting data in a systematic and scientific manner. The types of market information could be analysis of market size and characteristics, consumer tastes and preferences and changes in them from time to time, channels of distribution and communication and their effectiveness, economic, social, political and technological environment and changes therein. A company can procure such information from specialized market research agencies, government or can decide to collect themselves.

Advertising and Sales Promotion:Advertising is a mass media tool used to inform, persuade or remind customers about products or services. It is an impersonal form of communication targeted at a chosen group through paid space or time. Sales Promotion is a short-term incentive given to customers or intermediaries to promote sales. It supplements advertising and personal selling and can be used at the time of launching a new product or even during its maturity period.

Product Planning and Management:A Marketer should identify the needs and wants of consumers, develop suitable products / services and make them available. Marketer is also required to maintain the product and its variations in size, weight, package and price range according to the changing needs and requirements of his customers. Information available through Market Research helps product management in taking appropriate decisions while planning the marketing efforts.

Selling:This function of marketing is concerned with transferring of products to the customer. An important part of this function is organizing sales force and managing their activities. Sales force management includes recruitment, training, supervision, compensation and evaluation of salesmen. They need to be assigned targets and territories where they can operate. The salesmen interact with prospective purchasers face-to-face in order to sell the goods. The purchaser may be end customer or an intermediary, such as a retailer or a dealer.


Physical Distribution:Moving and handling of products from factory to consumers come under this function. Order processing, inventory, management, warehousing and transportation are the key activities in the physical distribution system.

Pricing:This is perhaps the most important decision taken by marketer, as it is the only revenue fetching function and success and failure of the product may depend upon this decision. Therefore, the decision regarding how much to charge should be taken such that the price is acceptable to the prospective buyers and at the same time fetches profits for the company. While deciding on the price, the factors to be considered are competition, competitive prices, company‟s marketing policy, government policy, and the buying capacity of target market etc.

Q.2 Define the term “Brand Equity “? Discuss the components of Brand Equity.

Answer: Brand equity is set of assets linked to a brand„s name and symbol that adds value to the product or service and/or that firm’s customer. Components of brand equity:

Brand Loyalty: Is consumer's commitment to repurchase the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy. True brand loyalty implies that the consumer is willing, occasionally at least, to put aside their own desires in the interest of the brand. This will help organization to reduce the promotion cost. For example, many girls in India use only Ponds products, though competitors‟ products like Fa, Spinz, Cuticura, and Mysore Sandal are present in the market and vice versa.

Brand Awareness: The number of customers exposed to the brand name. Higher the brand awareness, higher will be the brand equity. Organizations put all the effort in the introduction stage of the product to create awareness among the customers. For example, Xerox Company has huge brand awareness since photocopier machines were introduced by this company and even today photocopies are referred as Xerox copies.

Perceived Quality: The customer perception about the actual quality level of the product. For example, when a customer purchases Levis jeans he knows that it indicates quality even though there are several cheaper brands of jeans available in the market.


Brand Associations: The attribute of the brand that customer associates with his/ her belief. A person may associate the brand for power, strength or protectiveness. For example, a customer may associate Nike brand not just for sports shoes but also any accessory associated with sports. So, for him, Nike represents sports.

Q.3 Why are marketing channels indispensable? List the functions of marketing channels.

Answer:Marketing channels are a set of independent organizations comprising of the marketing intermediaries who are involved in the distribution of the goods or services from the factory to the consumption points at the right time or even before the time.

Functions of marketing channels: Helps in Physical distribution: Transporting goods and storing them in the assigned warehouses

or godowns. Promotes Communication: Marketing intermediaries promote the company’s products. Here

channel member provides the information regarding the products and pushes it to the customers. Provides Information: Retailers and wholesalers collect the information or feedbacks from the

customers and provide the same to the company or manufacturer. Plays a key role in Title transforming: Marketing intermediaries purchase the goods from the

company and transform the title of goods or ownership to the next channel intermediary or customer.

Supports Relationship management: Here marketing intermediaries try to understand the needs of consumers, try to match his needs and satisfy them.

Q.4.Explain the different methods which allows a media planner to decide budget allocation

Answer:Media vehicle selection, number of insertions and message structure depend on the budget allotted for the communication program. A popular channel may charge more for advertisement but organization gets better viewership. A newspaper having high circulation charges premium for the advertisement but all the organization may not have enough budgets to support such campaign. Hence marketer would like to decide what is the budget for the communication program? And how shall it be allotted optimally? There are four different methods on which a media planner decides the allocation of advertisement budget.


Affordable method:This method is used by small companies who don‟t have enough communication budgets. In this method company allots the fixed amount for the communication program. The advantage of this method is company can have better control over the spending on the communication. The disadvantage is if sales require higher communication effort, company is not in a position to allocate the budget.

Percentage of sales method:In this method company allots the budget on the basis of total sales forecasted. This is the simplest method. Marketer can have better control over the budget and also have flexibility to allocate the budget.

Follow the Competitor method:The Company sets its promotion budget on the basis of competitors advertising effort. Here company closely monitors the developments of the competitors‟ communication program and study the industry trends in communication budget prior to setting up communication budget.

Objective and task method:The procedure involved in estimating the advertisement budget by this method are First, Objectives are set for the communication programs. Second, identifying the task to be performed to achieve the objective and third, estimating the cost of achieving these objectives.

Q.5 Define the term” direct marketing” Explain the different methods adopted for direct marketing

Answer:When the company or organization is involved in marketing activities (usually selling products) without the use of any intervening media or channel, then it is called as Direct Marketing. The company directly sells its products to the final consumer and the consumer is expected to respond immediately or at the earliest. Direct marketing is sometimes called as B2C marketing for example, direct factory shoe sale. Following are the methods of Direct Marketing:

Direct mail:It is the most common method used in direct marketing, it involves sending postal mails to the consumer’s address and consumers maybe randomly chosen or specifically selected as targets. For example, credit card applications forms sent by banks, travel guides or manuals sent by tour operators, free trial packs of products sent by companies, subscriptions offers for magazines etc.

Telephone marketing: Telephone marketing is used to sell the product directly to consumer. The growth of BPOs in India fuelled the development of telephone marketing. In the case of BPOs, two types of verticals exist. They are inbound call center and outbound call center. In case of inbound call center, customer is given a toll free number for enquiry and executives try to sell the product to such customers. In out bound call center employees call the customers and sell the products.


The expansion of Indian telecommunication industry and its cheapest tariffs in the world attracted domestic sellers to use this type of channel.

Catalogue marketing:According to Philip Kotler, catalogue marketing is direct marketing through print, video or electronic catalogues that are mailed to select customers, made available in stores or presented online. The growth of catalogue marketing in India is in a nascent stage. The notable example in this type of marketing worldwide is J.C. Penny.

Kiosk marketing:Organizations spreads the information and keep ordering machines called kiosks in the shopping malls and other places. For example, Ambi Pur a perfume company recently organized a kiosk related marketing campaign in the Nirmal life style Mumbai. Company used inflatable as shown in the pictures to attract the small boys.

Parents who came along with their children stopped at Kiosk and got the information from the company. The objective of campaign was to create awareness about the product among the target customers.

Online marketing:Marketing the organization’s product on the virtual medium using the company websites as selling point or ordering point for the consumers. Sometimes companies use e-mails to offer their products and make a sale to the prospective consumers or even existing consumers.

Q.6 List the important differences between International marketing and Domestic marketing.

Answer:International marketing is defined as “The performance of business activities designed to plan, price, promote and direct the company’s flow of goods and services to consumers or users in more than one nation for a profit”. A company that wants to sell their product in other than domestic market should understand the environmental factors, consumer behavior, market forces and other characters relevant to the international market. After understanding the definition, several questions may arise in your mind like why marketer should go to the international market? And what is the difference between international marketing and domestic marketing? As we discussed in the introduction part, companies enter into the international market to tap the potential, to support the customer requirements or to avoid the unprofitable domestic market. The differences between domestic marketing and international marketing are listed below:



MB0047 – Management Information Systems

Assignment - Set- 1

Characteristics International Marketing Domestic MarketingCulture Multi culture Single culture and in some cases

multi cultureData accessibility Very difficult EasyData reliability Very Low HighControl Difficult Relatively easyConsumer preferences Vary from country to country Vary in small extent Product mix Adaptability required Standardization required Business operation More than one country Home country only Currency exposure Required Required only if there is importing

Q1.What is MIS? Define the characteristics of MIS? What are the basic Functions of MIS? Give some Disadvantage of MIS?

Answer:Organized approach to the study of information needs of a management at every level in making operational, tactical, and strategic decisions. Its objective is to design and implement man-machine procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent, and timely manner. Modern, computerized systems continuously gather relevant data, both from inside and outside the organization. This data is then processed, integrated, and stored in a centralized database (or data warehouse) where it is constantly updated and made available to all who have the authority to access it, in a form that suits their purpose.Characteristics of MIS:MIS is mainly designed to take care of the needs of the managers in the organization.MIS aids in integrating the information generated by various departments of the organization.MIS helps in identifying a proper mechanism of storage of data.MIS also helps in establishing mechanism to eliminate redundancies in data.MIS as a system can be broken down into sub systems.The role and significance of MIS in business and its classification is explained. It is possible to understand the various phases of development in MIS based on the type of system required in any organization.

Functions of MIS1. Data processing: It includes the collection, transmission, storage, processing and output of data. It simplifies the statistics and reduces to the lowest cost by supplying an unified format.2. Function of prediction: It predicts the future situation by applying modern mathematics, statistics or simulation.3. Function of plan: It arranges reasonably the plans of each functional department in accordance with the restrictions afforded by enterprises and provides the appropriate planning reports according to different management.4. Function of control: It monitors and inspects the operation of plans and comprises with the differences between operation and plan in accordance with the data afforded by every functional department, and be assistant to managers to control timely each method by analyzing the reasons why the differences comes into being.5. Function of assistance: It derives instantly the best answers of related problems by applying to various of mathematics’ mode and analyzing a plentiful data stored in computers in the hope of using rationally human resource, financial resource, material resource and information resource for relative abundant economic benefits.


Disadvantages of MIS 1.highly senstive requires constant monitoring.2.buddgeting of MIS extremely difficult.3.Quality of outputs governed by quality of inputs.4.lack of flexiblity to update itself.5.effectiveness decreases due to frequent changes in top management

6.takes into account only qualitative factors and ignores non-qualitative factors like morale of worker, attitude of worker etc.

Q2. Explain Knowledge based system? Explain DSS and OLAP with example?

Answer: KBS are the systems based on knowledge base. Knowledge base is the database maintained for knowledge management which provides the means of data collections, organization and retrieval of knowledge. The knowledge management manages the domain where it creates and enables organization for adoption of insights and experiences. There are two types of knowledge bases. a. Machine readable knowledge bases: The knowledge base helps the computer to process through. It makes the data in the computer readable code which makes the operator to perform easier. Such information sare used by semantic web. Semantic web is a web that will make a description of the system that a system can understand. b. Human readable knowledge bases: They are designed to help people to retrieve knowledge. The information need to be processed by the reader. The reader can access the information and synthesize their own. KBS refers to a system of data and information used for decision making. The system is automated to work on the knowledge based data and information required in a particular domain of management activity. The processing is done based on the past decisions taken under suitable conditions. Decision making is based on the fact that the condition is similar to the past situation hence the decision is also is similar. Examples of KBS are intelligent systems, robotics, neural networks etc. Decision Support Systems (DSS) DSS is an interactive computer based system designed to help the decision makers to use all l the resources available and make use in the decision making. In management many a time problems arise out of situations for which simple solution may not be possible. To solve such problems you may have to use complex theories. The models that would be required to solve such problems may have to be identified. DSS requires a lot of managerial abilities and managers judgment. You may gather and present the following information by using decision support application: • Accessing all of your current information assets, including legacy and relational data sources, cubes, data warehouses, and data marts • Comparative sales figures between one week and the next


• Projected revenue figures based on new product sales assumptions • The consequences of different decision alternatives, given past experience in a context that is described.

Manager may sometimes find it difficult to solve such problems. E.g. – In a sales problem if there is multiple decision variables modeled as a simple linear problem but having multiple optima, it becomes difficult to take a decision. Since any of the multiple optima would give optimum results. But the strategy to select the

one most suitable under conditions prevailing in the market, requires skills beyond the model. It would take some trials to select a best strategy. Under such circumstances it would be easy to take decision if a ready system of databases of various market conditions and corresponding appropriate decision is available. A system which consists of database pertaining to decision making based on certain rules is known as decision support system. It is a flexible system which can be customized to suit the organization needs. It can work in the interactive mode in order to enable managers to take quick decisions. You can consider decision support systems as the best when it includes high-level summary reports or charts and allow the user to drill down for more detailed information. A DSS has the capability to update its decision database. Whenever manager feels that a particular decision is unique and not available in the system, the manager can chose to update the database with such decisions. This will strengthen the DSS to take decisions in future.. There is no scope for errors in decision making when such systems are used as aid to decision making. DSS is a consistent decision making system. It can be used to generate reports of various lever management activities. It is capable of performing mathematical calculations and logical calculation depending upon the model adopted to solve the problem. You can summarize the benefits of DSS into following: • Improves personal efficiency • Expedites problem solving • Facilitates interpersonal communication • Promotes learning or training • Increases organizational control • Generates new evidence in support of a decision • Creates a competitive advantage over competition • Encourages exploration and discovery on the part of the decision maker • Reveals new approaches to thinking about the problem space

Online Analytical Processing (OLAP) OLAP refers to a system in which there are predefined multiple instances of various modules used in business applications. Any input to such a system results in verification of the facts with respect to the available instances. A nearest match is found analytically and the results displayed form the database. The output is sent only after thorough verification of the input facts fed to the system. The system goes through a series of multiple checks of the various parameters used in business decision making. OLAP is also referred to as a multi dimensional analytical model. Many big companies use OLAP to get good returns in business.


The querying process of the OLAP is very strong. It helps the management take decisions like which month would be appropriate to launch a product in the market, what should be the production quantity to maximize the returns, what should be the stocking policy in order to minimize the wastage etc. A model of OLAP may be well represented in the form of a 3D box. There are six faces of the box. Each adjoining faces with common vertex may be considered to represent the various parameter of the business situation under consideration. E.g.: Region, Sales & demand, Product etc

Q3. What are Value Chain Analysis & describe its significance in MIS? Explain what is meant by BPR? What is its significance? How Data warehousing & Data Mining is useful in terms of MIS?

Answer: Business Process Re-engineering :The existing system in the organization is totally reexamined and radically modified for incorporating the latest technology. This process of change for the betterment of the organization is called as Business process re-engineering. This process is mainly used to modernize and make the organizations efficient. BPR directly affects the performance. It is used to gain an understanding the process of business and to understand the process to make it better and re-designing and thereby improving the system. BPR is mainly used for change in the work process. Latest software is used and accordingly the business procedures are modified, so that documents are worked upon more easily and efficiently. This is known as workflow management.

Significance of BPR Business process are a group of activities performed by various departments, various organizations or between individuals that is mainly used for transactions in business. There may be people who do this transaction or tools. We all do them at one point or another either as a supplier or customer. You will really appreciate the need of process improvement or change in the organizations conduct with business if you have ever waited in the queue for a longer time to purchase 1 kilo of ricefrom a Public Distribution Shop (PDS-ration shop). The process is called the check-out process. It is called process because uniform standard system has been maintained to undertake such a task. The system starts with forming a queue, receiving the needed item form the shop, getting it billed, payment which involves billing, paying amount and receiving the receipt of purchase and the process ends up with the exit from the store. It is the transaction between customer and supplier. The above activities takes place between the customer and supplier which forms the process steps this example explains the business process. The business process may be getting admission to the college and graduating from the college, building house, and implementing new technology to an organization (Example EDUNXT in SMUDE), etc A Process can be represented by triangle and following figure shows continuous process of Business. Business process reengineering is a major innovation changing the way organizations conduct their business. Such changes are often necessary for profitability or even survival. ROLL NO. 581128190 30 NAME:SHRADDHA SINGH

BPR is employed when major IT projects such as ERP are undertaken. Reengineering involves changes in structure, organizational culture and processes. Many concepts of BPR changes organizational structure. Team based organization, mass customization; empowerment and telecommutingare some of the examples. The support system in any organization plays a important role in BPR. ES, DSS, AI (discussed later) allows business to be conducted in different locations, provides flexibility in manufacturing permits quicker delivery to customers and supports rapid paperless transactions among suppliers, manufacturers and retailers. Expert systems can enable organizational changes by providing expertise to non experts. It is difficult to carry out BPR calculations using ordinary programs like spreadsheets etc. Experts make use of applications with simulations tools for BPR. Reengineering is basically done to achieve cost reduction, increase in quality, improvement in speed and service. BPR enable a company to become more competitive in the market. Employees work in team comprising of managers and engineers to develop a product. This leads to the formation of interdisciplinary teams which can work better than mere

functional teams. The coordination becomes easier and faster results can be achieved. The entire business process of developing a product gets a new dimension. This has led to reengineering of much old functional process in organizations. Data ware house is center part of data repository. Data warehousingprovides a strategic approach to all the business. Data warehouse is broadly famous for its characteristics like: a. Subject oriented: Data warehouse has the ability to analyze the data. The ability to define by subject matter makes DW subject oriented. b. Integrated: This resolves the problems of conflicts and inconsistencies existing in the units of measure. c. Non volatile: Once the data is entered in the warehouse it shall not change. This characteristics is very important because after all the purpose of heuristic data is for future use. d. Time variant: The data warehouse focus on change over time. To discover new trends in business, analysts need large amount of data which is contrasting to OLTP (Online transaction Processing) which works on heuristic data.

Data Warehousing – Data Warehouse is defined as collection of database which is referred as relational database for the purpose of querying and analysis rather than just transaction processing. Data warehouse is usually maintained to store heuristic data for future use. Data warehousing is usually used to generate reports. Integration and separation of data are the two basic features need to be kept in mind while creating a datawarehousing. The main output from data warehouse systems are; either tabular listings (queries) with minimal formatting or highly formatted "formal" reports on business activities. This becomes a convenient way to handle the information being generated by various processes. Data warehouse is an archive of information collected from wide multiple sources, stored under a unified scheme, at a single site. This data is stored for a long time permitting the user an access to archived data for years. The data stored and the subsequent report generated out of a querying process enables decision making quickly. This concept is useful for big companies having plenty of data on their business processes.


Big companies have bigger problems and complex problems. Decision makers require access to information from all sources. Setting up queries on individual processes may be tedious and inefficient. Data warehouse may be considered under such situations. Data warehouse Architecture: Data Mining – Data mining is primarily used as a part of information system today, by companies with a strong consumer focus -retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among "internal" factors such as price, product positioning, or staff skills, and "external" factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it enables them to "drill down" into summary information to view detail transactional data. With data mining, a retailer could use point-of-sale records of customer purchases to send targeted promotions based on an individual's purchase history. By mining demographic data from comment or warranty cards, the retailer could develop products and promotions to appeal to specific customer segments. Data Mining is a collaborative tool which comprises of database systems, statistics, machine

learning, visualization and information science. Based on the data mining approach used, different techniques form the other discipline can be used such as neural networks, artificial intelligence, fuzzy logic, knowledge representation, high performance Data mining refers to extracting or mining knowledge from large amount of data. There may be other terms which refer data mining such as knowledge mining, knowledge extraction, data/pattern analysis, data archeology, and data dredging. The Knowledge discovery as a process may consist of following steps: 1. Data Cleaning: It removes noise and inconsistent data. 2. Data integration: It is where multiple data sources are combined. 3. Data selection: Data relevant to the analysis task are retrieved from the database. 4. Data transformation: Data are transformed or consolidated into forms appropriate for mining by performing summary or aggregation operations, for instance. 5. Data mining: An essential process where intelligent methods are applied in order to extract data patterns. 6. Pattern evaluation: To identify the truly interesting patterns representing knowledge based on some interesting measure. 7. Knowledge presentation: Visualization and knowledge representation techniques are used to present the mined knowledge to the users. When you look at the above step you will find that data mining is a very important step in knowledge representation. It interacts with the user for knowledge base. So it is found that there is necessity of a typical architecture for data mining as a big process. The architecture of the data mining has the following components: 1 Database, data warehouse and information repository: This is one or a set of databases, data warehouse, and information repository which can be used for data cleaning and data integration. ROLL NO. 581128190 32 NAME:SHRADDHA SINGH

2 Database server: This Server is responsible for fetching the relevant data

3 Data mining engine: This helps in accessing the user through applications. It accesses data from the warehouse with the help of standard data connectivity mechanisms. Usually database drivers are used to connect the database. 4 Patterns evaluation model: It acquires the data to be evaluated form the database, producing the pattern edge. This model scans the data. It searches and creates the interesting patterns based on the thresholds. 5 Graphical user interface: It communicates between the user and the data mining system. It allows the user to interact with the system and specifies the data mining queries or task. 6 Data mining is applicable to any kind of information repository. Some of these may be relational databases, data warehouse, transactional databases, advanced database management systems, www and files. Advance database systems include object oriented databases, object relational databases, and application oriented databases. 7 The best example for data mining which is so close to our lives is Google. The success of Google depends on the use of data mining techniques in the analysis of data in the search engine to meet your search demand.

Q4. Explain DFD & Data Dictionary? Explain in detail how the information requirement is determined for an organization?

Answer: DFD :-Data flow diagrams represent the logical flow of data within the system. DFD do not explain how the processes convert the input data into output. They do not explain how the processing takes place. DFD uses few symbols like circles and rectangles connected by arrows to represent data flows. DFD can easily illustrate relationships among data, flows, external entities an stores. DFD can also be drawn in increasing levels of detail, starting with a summary high level view and proceeding o more detailed lower level views. A number of guidelines should be used in constructing DFD. • Choose meaningful names for the symbols on the diagram. • Number the processes consistently. The numbers do not imply the sequence. • Avoid over complex DFD. • Make sure the diagrams are balanced. Data Dictionary :The data dictionary is used to create and store definitions of data, location, format for storage and other characteristics. The data dictionary can be used to retrieve the definition of data that has already been used in an application. The data dictionary also stores some of the description of data structures, such as entities, attributes and relationships. It can also have software to update itself and to produce reports on its contents and to answer some of the queries.


A schedule is made for the development of the system. While preparing the schedule due consideration is given to the importance of the system in the overall information requirement. Due regard is also given to logical system development. For example, it is necessary to develop the accounting system first and then the analysis. Further, unless the systems are fully developed their integration is not possible. This development schedule is to be weighed against the time scale for achieving certain information requirement linked to a business plan. If these are not fully met, it is necessary to revise the time schedule and also the development schedule, whenever necessary. decisions with the financial decisions. The system development schedule is linked with the information requirements which in turn, are linked with the goals and objectives of the business. The selection of the architecture, the approach to the information system development and the choice of hardware and software are the strategic decisions in the design and development of the MIS in the organisation. The organisations which do not care to take proper decisions in these areas suffer from over-investment, under-utilisation and are not able to meet the critical information requirements.

Q5. What is ERP? Explain its existence before and its future after? What are the advantages andDisadvantages of ERP? What is Artificial Intelligence? How is it different from Neural Networks?

Answer:Enterprise Resource Planning :To be considered an ERP system, a software package must provide the function of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package. However, the term is typically reserved for larger, more broadly based applications. The introduction of an ERP system to replace two or more independent applications eliminates the need for external interfaces previously required between systems, and provides additional benefits that range from standardization and lower maintenance to easier and/or greater reporting capabilities. Examples of modules in an ERP which formerly would have been stand-alone applications include: Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM), Human Resources, Warehouse Management and Decision Support System. Enterprise Resource Planning is a term originally derived from manufacturing resource planning that followed material requirements planning . MRP evolved into ERP when "routings" became a major part of the software architecture and a company's capacity planning activity also became a part of the standard software activity. ERP systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. Enterprise Resource Planning or ERP software can aid in the control of many business activities, like sales, marketing, delivery, billing, production, inventory management, quality management, and human resource management. ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K problem in their legacy systems.


Many companies took this opportunity to replace their legacy information systems with ERP systems. This rapid growth in sales was followed by a slump in 1999, at which time most companies had already implemented their Y2K solution. ERPs are often incorrectly called back office systems indicating that customers and the general public are not directly involved. This is contrasted with front office systems like customer relationship management (CRM) systems that deal directly with the customers, or the eBusiness systems such as eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship management (SRM) systems. ERPs are cross-functional and enterprise wide. All functional departments that are involved in operations or production are integrated in one system. In addition to manufacturing, warehousing, logistics, and information technology, this would include accounting, human resources, marketing, and strategic management.

ERP II means open ERP architecture of components. The older, monolithic ERP systems became component oriented. EAS – Enterprise Application Suite is a new name for formerly developed ERP systems which include (almost) all segments of business, using ordinary Internet browsers as thin clients.

ERP Before and After Before : Prior to the concept of ERP systems, departments within an organization (for example, the human resources (HR)) department, the payroll department, and the financial department) would have their own

computer systems. The HR computer system (often called HRMS or HRIS) would typically contain information on the department, reporting structure, and personal details of employees. The payroll department would typically calculate and store paycheck information. The financial department would typically store financial transactions for the organization. Each system would have to rely on a set of common data to communicate with each other. For the HRIS to send salary information to the payroll system, an employee number would need to be assigned and remain static between the two systems to accurately identify an employee. The financial system was not interested in the employee-level data, but only in the payouts made by the payroll systems, such as the tax payments to various authorities, payments for employee benefits to providers, and so on. This provided complications. For instance, a person could not be paid in the payroll system without an employee number.

After ERP software, among other things, combined the data of formerly separate applications. This made the worry of keeping numbers in synchronization across multiple systems disappears. It standardized and reduced the number of software specialties required within larger organizations.


Advantages and Disadvantages Advantages – In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Tasks that need to interface with one another may involve: • A totally integrated system • The ability to streamline different processes and workflows • The ability to easily share data across various departments in an organization • Improved efficiency and productivity levels • Better tracking and forecasting • Lower costs • Improved customer service

Change how a product is made, in the engineering details, and that is how it will now be made. Effective dates can be used to control when the switch over will occur from an old version to the next one, both the date that some ingredients go into effect, and date that some are discontinued. Part of the change can include labelling to identify version numbers. Some security features are included within an ERP system to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement. A data tampering scenario might involve a disgruntled employee intentionally modifying prices to below the breakeven point in order to attempt to take down the company, or other sabotage. ERP systems typically provide functionality for implementing internal controls to prevent actions of this kind. ERP vendors are also moving toward better integration with other kinds of information security tools. Disadvantages – Many problems organizations have with ERP systems are due to inadequate investment

in ongoing training for involved personnel, including those implementing and testing changes, as well as a lack of corporate policy protecting the integrity of the data in the ERP systems and how it is used. While advantages usually outweigh disadvantages for most organizations implementing an ERP system, here are some of the most common obstacles experienced: Usually many obstacles can be prevented if adequate investment is made and adequate training is involved, however, success does depend on skills and the experience of the workforce to quickly adapt to the new system. • Customization in many situations is limited • The need to reengineer business processes • ERP systems can be cost prohibitive to install and run • Technical support can be shoddy • ERP's may be too rigid for specific organizations that are either new or want to move in a new direction in the near future.


Artificial Intelligence: Artificial Intelligence is the science and technology based on various functions to develop a system that can think and work like a human being. It can reason, analyze, learn, conclude and solve problems. The systems which use this type of intelligence are known as artificial intelligent systems and their intelligence is referred to as artificial intelligence. It was said that the computer don’t have common sense. Here in AI, the main idea is to make the computer think like human beings, so that it can be then said that computers also have common sense. More precisely the aim is to obtain a knowledge based computer system that will help managers to take quick decisions in business. Artificial Intelligence can be classified into various branches like Natural Language Processing (NLP), Speech Recognition, Automated Programming, Machine Learning, Pattern Recognition and Probabilistic Networks. Most of the software developed for AI have been through Prolog, C++, Java and LISP. These programming languages provide facility of creating various functions of business activity, extension of a function, handling dynamic situations in business, providing uniformity in application etc. A business decision making process depends upon the level of risk and uncertainty involved in the problem. To model the uncertainty and risk of natural language used in developing a AI for business application the concept of fuzzy logic is used. For problems related finance applications apart from fuzzy logic concepts, two other concepts of AI are being researched. These are genetic algorithm and chaotic models. AI is also being applied to the functions of marketing like – Selling, Forecasting, and Communication etc. Artificial Intelligence and Neural Networks : Artificial intelligence is a field of science and technology based on disciplines such as computer science, biology, psychology, linguistics, mathematics and engineering. The goal of AI is to develop computers that can simulate the ability to think, see, hear, walk, talk and feel. In other words, simulation of computer functions normally associated with human intelligence, such as reasoning, learning and problem solving. AI can be grouped under three major areas: cognitive science, robotics and natural interfaces. Cognitive science focuses on researching on how the human brain works and how humans think and learn. Applications in the cognitive science area of AI include the development of expert systems and other knowledge-based systems that add a knowledge base and some reasoning capability to information

systems. Also included are adaptive learning systems that can modify their behavior based on information they acquire as they operate. Chess-playing systems are some examples of such systems. Fussy logic systems can process data that are incomplete or ambiguous. Thus, they can solve semi-structured problems with incomplete knowledge by developing approximate inferences and answers, as humans do. Neural network software can learn by processing sample problems and their solutions. As neural nets start to recognize patterns, they can begin to program themselves to solve such problems on their own. Neural networks are computing systems modeled after the human brain’s mesh like network of interconnected processing elements, called neurons. The human brain is estimated to have over 100 billion neuron brain cells. The neural networks are lot simpler in architecture. Like the brain, the interconnected processors in a neural network operate in parallel and interact dynamically with each other.


This enables the network to operate and learn from the data it processes, similar to the human brain. That is, it learns to recognize patterns and relationships in the data. The more data examples it receives as input, the better it can learn to duplicate the results of the examples it processes. Thus, the neural networks will change the strengths of the interconnections between the processing elements in response to changing patterns in the data it receives and results that occur. For example, neural network can be trained to learn which credit characteristics result in good or bad loans. The neural network would continue to be trained until it demonstrated a high degree of accuracy in correctly duplicating the results of recent cases. At that point it would be trained enough to begin making credit evaluations of its own. Genetic algorithm software uses Darwinian (survival of the fittest), randomizing and other mathematics functions to simulate evolutionary processes that can generate increasingly better solutions to problems.

Q6. Distinguish between closed decision making system & open decision making system? What is‘What – if‘ analysis? Why is more time spend in problem analysis & problem definition as compared to the time spends on decision analysis?

Answer: closed decision making system :The decision-making systems can be classified in a number of ways. There are two types of systems based on the manager's knowledge about the environment. If the manager operates in a known environment then it is a closed decision-making system. The conditions of the closed decision-making system are: a) The manager has a known set of decision alternatives and knows their outcomes fully in terms of value, if implemented. b) The manager has a model, a method or a rule whereby the decision alternatives can be generated, tested, and ranked for selection. c) The manager can choose one of them, based on some goal or objective criterion. Few examples are a product mix problem, an examination system to declare pass or fail, or an acceptance of the fixed deposits. Open decision-making system :If the manager operates in an environment not known to him, then the

decision-making system is termed as an open decision-making system. The conditions of this system in contrast closed decision-making system are: a) The manager does not know all the decision alternatives. b) The outcome of the decision is also not known fully. The knowledge of the outcome may be a probabilistic one. c) No method, rule or model is available to study and finalise one decision among the set of decision alternatives. d) It is difficult to decide an objective or a goal and, therefore, the manager resorts to that decision, where his aspirations or desires are met best. Deciding on the possible product diversification lines, the pricing of a new product, and the plant location, are some decision-making situations which fall in the category of the open decision-making systems.


The MIS tries to convert every open system to a closed decision-making system by providing information support for the best decision. The MIS gives the information support, whereby the manager knows more and more about environment and the outcomes, he is able to generate the decision alternatives, test them and select one of them. A good MIS achieves this.

What if analysis Decisions are made using a model of the problem for developing various solution alternatives and testing them for best choice. The model is built with some variables and relationship between variables. In reality, the considered values of variables or relationship in the model may not hold good and therefore solution needs to be tested for an outcome, if the considered values of variables or relationship change. This method of analysis is called 'what if analysis.' For example, in decision-making problem about determining inventory control parameters (EOQ, Safety Stock, Maximum Stock, Minimum Stock, Reorder level) lead time is assumed fairly constant and stable for a planning period. Based on this, the inventory parameters are calculated. Inventory manager wants to know how the cost of holding inventory will be affected if lead time is reduced by one week or increased by one week. The model with changed lead time would compute the cost of holding inventory under new conditions. Such type of analysis can be done for purchase price change, demand forecast variations and so on. Such analysis helps a manager to take more learned decisions. ‘What if analysis’ creates confidence in decision-making model by painting a picture of outcomes under different conditions?

Decision Analysis A decision is made but such decision needs to be analysed for conditions and assumptions considered in the decision model. The process is executed through analytical modelling of problem and solution. Problem Definition The starting point of a problem definition is the information gathered in the problem analysis stage. The different aspects surrounding the design problem have been analysed and should be taken into account in the problem definition. For defining a problem this implies that it is not sufficient to describe the existing state. Therefore, we speak consciously of the situation someone is or is not content with. A description of the situation is therefore a description of a state plus the relevant causal model(s), including the assumed patterns of behaviour of the people and organizations involved. A situation is only a problem if the problem-owner wishes to, and want

to do something about it. This implies that a situation must be conceivable that is more desirable than the present one: the goal situation. The existing situation, however, can also be formulated in such a manner that a problem does arise. A problem definition is usually set up at the end of the problem analysis phase.


Problem Analysis You can use problem analysis to gather information that helps you determine the nature of a problem encountered on your system. The problem analysis information is used to: • Determine if you can resolve the problem yourself. • Gather sufficient information to communicate with a service provider and quickly determine the service action that needs to be taken.

The method of finding and collecting error information depends on the state of the hardware at the time of the failure. This procedure directs you to one of the following places to find error information: • Hardware Management Console (HMC) error logs • The operating system's error log • The control panel

• Advanced System Management Interface (ASMI) error logs Hence more time is spent Problem Analysis and Problem Definiti


MB 0048: Operations Research

ASSIGNMENT- Set 1

Q1. A toy company manufactures two types of dolls, a basic version doll-A and a deluxe version doll-B. Each doll of type B takes twice as long to produce as one of type A, and the company would have time to make maximum of 1000 per day. The supply of plastic is sufficient to produce 1000 dolls per day (both A & B combined). The deluxe version requires a fancy dress of which there are only 500 per day available. If the company makes a profit of Rs 3.00 and Rs 5.. per doll, respectively on doll A and B, then how many of each doll should be produced per day in order to maximize the total profit. Formulate this problem.

Answer: Let X1 and X2 be the number of dolls produced per day of type A and B, respectively.

Let the A require t hrs. So that the doll B require 2t hrs.

So the total time to manufacture X1 and X2 dolls should not exceed 2000t hrs.

Therefore, tX1 + 2tX2 ≤ 2000t

Other constraints are simple. Then the linear programming problem becomes:

Maximize p = 3 X1 + 5 X2

Subject to restrictions,

X1 + 2X2 ≤ 2000 (Time constraint)

X1 + X2 ≤ 1500 (Plastic constraint)

X2 ≤ 600 (Dress constraint)

And non-negatively restrictions

X1, X2 ≥ 0

Q2. What are the advantages of Linear programming techniques?

Answer: 1. The linear programming technique helps to make the best possible use of available productive resources (such as time, labor, machines etc.)

2. It improves the quality of decisions. The individual who makes use of linear programming methods becomes more objective than subjective.


3. It also helps in providing better tools for adjustment to meet changing conditions.

4. In a production process, bottle necks may occur. For example, in a factory some machines may be in great demand while others may lie idle for some time. A significant advantage of linear programming is highlighting of such bottle necks.

5. Most business problems involve constraints like raw materials availability, market demand etc. which must be taken into consideration. Just we can produce so many units of product does not mean that they can be sold. Linear programming can handle such situation also.

Q3. Solve the following Assignment Problem

Operations M1 M2 M3 M4

O1 10 15 12 11

O2 9 10 9 12

O3 15 16 16 17

Answer: Since the number of rows are less than number of columns, adding a dummy row and applying Hungarian method,

Row reduction matrix

Operations M1 M2 M3 M4O1 10 15 12 11

O2 9 10 9 12

O3 15 16 16 17

O4 0 0 0 0

Optimum assignment solution

Operations M1 M2 M3 M4O1 [0] 5 2 1O2 x 1 [0] 3

O3 1 [0] x xO4 x x x [0]


Hungarian Method leads to multiple solutions. Selecting (03, M2) arbitrarily.

O1 – M1 10

O2 – M3 09

O3 – M2 16

O4 – M4 00-------------------------TOTAL 35

Therefore, the optimum assignment schedule is O1 – M1, O2 – M3, O3 – M2 AND O4 – M4.

Q4. What is integer programming?

Answer: If the unknown variables are all required to be integers, then the problem is called an integer programming (IP) or integer linear programming (ILP) problem. In contrast to linear programming, which can be solved efficiently in the worst case, integer programming problems are in many practical situations (those with bounded variables) NP-hard (non-deterministic polynomial-time hard), in computational complexity theory, is a class of problems that are, informally, "at least as hard as the hardest problems in NP"). 0-1 integer programming or binary integer programming (BIP) is the special case of integer programming where variables are required to be 0 or 1 (rather than arbitrary integers). This problem is also classified as NP-hard, and in fact the decision version was one of Karp's 21 NP-complete problems.

If only some of the unknown variables are required to be integers, then the problem is called a mixed integer programming (MIP) problem. These are generally also NP-hard.

There are however some important subclasses of IP and MIP problems that are efficiently solvable, most notably problems where the constraint matrix is totally uni-modular and the right-hand sides of the constraints are integers.

Advanced algorithms for solving integer linear programs include:

cutting-plane method branch and bound branch and cut branch and price if the problem has some extra structure, it may be possible to apply delayed column generation.


Such integer-programming algorithms are discussed by Padberg and in Beasley.

Q5. Explain the different steps involved in simulation methodologies?

Answr: The methodology developed for simulation process consists of the following seven steps:

Step 1: Identify and clearly define the problem.

Step 2: List the statement of objectives of the problem.

Step 3: Formulate the variables that influence the situation and an extract or probabilistic description of their possible values or states.

Step 4: Obtain a consistent set of values (or states) for the variables, i.e., a sample of probabilistic variables, random sampling technique maybe used.

Step 5: Use the sample obtained in step 2 to calculate the values of the decision criterion, by actually following the relationships among the variables for each of the alternative decisions.

Step 6: Repeat steps 2 and 3 until a sufficient number of samples are available.

Step 7: Tabulate the various values of the decision criterion and choose the best policy.

Q6. Write down the basic difference between PERT &CPM.

Answer: Though there are no essential differences between PERT and CPM as both of them share in common the determination of a critical path. Both are based on the network representation of activities and their scheduling that determines the most critical activities to be controlled so as to meet the completion date of the project.

PERT

Some key points about PERT are as follows:

1. PERT was developed in connection with an R&D work. Therefore, it had to cope with the uncertainties that are associated with R&D activities. In PERT, the total project duration is regarded as a random variable. Therefore, associated probabilities are calculated so as to characterize it.

2. It is an event-oriented network because in the analysis of a network, emphasis is given on the important stages of completion of a task rather than the activities required to be performed to reach a particular event or task.


3. PERT is normally used for projects involving activities of non-repetitive nature in which time estimates are uncertain.

4. It helps in pinpointing critical areas in a project so that necessary adjustment can be made to meet the scheduled completion date of the project.

CPM

1. CPM was developed in connection with a construction project, which consisted of routine tasks whose resource requirements and duration were known with certainty. Therefore, it is basically deterministic.

2. CPM is suitable for establishing a trade-off for optimum balancing between schedule time and cost of the project.

3. CPM is used for projects involving activities of repetitive nature.


MB0049 – Project Management

ASSIGNMENT- Set 1

Q1.Define project management. Discuss the need for project management.

Answer. Project Management – It is an art of controlling the cost, time, manpower, and hardware and software resources involved in a project.

Project Management Knowledge Areas refer to various techniques needed to manage projects, the practical methodologies adopted in formulating a project and managing the resources which would affect the project completion. Relationship with other management disciplines is essential for a project to be successful. Supporting disciplines include law, strategic planning, logistics, human resource management and domain knowledge.

Need for Project Management

Project management is necessary because it helps an organisation execute a project successfully by:

a) Preventing Project Failure: A project requires huge investments which should not go waste. A loss in any project would have direct or indirect impact on the society. Project management helps an organisation prevent failures in projects.

b) Controlling Project Scope: Scope of the project activity may undergo a change. Project management helps an organisation define and control project scope.

c) Improving understanding: Lack of understanding of the project among the participants leads to failure. Project management helps participants understand the project and its purpose.

d) Managing Risks: A project is vulnerable to various risks. A project is affected if the technology used is changed during the course of project execution. Similarly changes in economic conditions may affect a project. Project management is very useful in assessing and mitigating such risks.

e) Managing Project Problems: Consequences of ignoring project related problems can be very serious. Project management helps in identification and communication of problem areas.


Project process categories

Q2. What is meant by risk management? Explain the components of risk management.

Answer. Risk Management Risks are those events or conditions that may occur and whose occurrence has a harmful or negative impact on a project. Risk management aims to identify the risks and then take actions to minimise their effect on the project. Risk management entails additional cost. Hence risk management can be considered cost-effective only if the cost of risk management is considerably less than the cost incurred if the risk materialises.Components

Important components in risk management

Risk management components


a) Risk Assessment – Identify the possible risks and assess the consequences by means of checklists of possible risks, surveys, meetings and brainstorming and reviews of plans, processes and products. The project manager can also use the process database to get information about risks and risk management on similar projects. b) Risk Control – Identify the actions needed to minimise the risk consequences. This is also known as risk mitigation. Develop a risk management plan. Focus on the highest prioritised risks. Prioritisation requires analysing the possible effects of the risk event in case it actually occurs. This approach requires a quantitative assessment of the risk probability and the risk consequences. For each risk, determine the rate of its occurrence and indicate whether the risk is low, medium or of high category. If necessary, assign probability values in the ranges as prescribed based upon experience. If necessary assign a weight on a scale of 1 to 10. c) Risk Ranking – Rank the risk based on the probability and effects on the project; for example, a high probability, high impact item will have higher rank than a risk item with a medium probability and high impact. In case of conflict, use judgment. d) Risk Mitigation – Select the top few risk items for mitigation and tracking. Refer to a list of commonly used risk mitigation steps for various risks from the previous risk logs maintained by the project manager and select suitable risk mitigation step. The risk mitigation step must be properly executed by incorporating them into the project schedule. In addition to monitoring the progress of the planned risk mitigation steps, periodically revisit the risk perception for the entire project. The results of this review are reported in each milestone analysis report. To prepare this report, make fresh risk analysis to determine whether the priorities have changed.

Q3. Discuss the various steps in project monitoring and control.

Answer.Project Monitoring and Control : Any project aimed at delivering a product or a service has to go through phases in a planned manner in order to meet the requirements. It is very important to measure the performance of the current status of the project at anytime against its planned version. This helps to tackle any unexpected deviation in time, efforts and cost. It is possible to work according to the project plan only by careful and close monitoring of the project progress.

It requires establishing control factors to keep the project on the track of progress. The results of any stage in a project, depends on the inputs to that stage. It is therefore necessary to control all the inputs and the corresponding outputs from a stage. This is achieved through devising proper controls for every stage.

A project manager may use certain standard tools to keep the project on track. The project manager and the team members should be fully aware of the techniques and methods to rectify the factors influencing delay of the project and its product. It is important for all stakeholders to know the impact of the changes in any parameters to the overall project. The various steps involved in monitoring and controlling a project from start to end are shown in figure


Steps for monitoring and control

Preliminary work The team members understand the project plans, project stage schedule, progress controls, tracking schedules, summary of the stage cost and related worksheets. All the members have to understand the tolerances in any change and maintain a change control log. They must realise the need and importance of quality for which they have to strictly follow a quality review schedule and frequently discuss the quality agendas. They must understand the stage status reports, stage end reports, stage end approval reports. Project Progress The members must keep a track of the project progress and communicate the same to other related members of the project. They must monitor and control project progress, through the use of regular check points, quality charts, and statistical tables; control the quality factors which are likely to deviate from expected values as any deviation may result in changes to the stage schedule. The project manager ensures that these changes are made smoothly and organises review meeting with the project management group. Thus all the members are aware about the progress of the project at all times. This helps them to plan well in advance for any exigency arising due to deviation from planned schedule

.Stage Control

The manager must establish a project check point cycle. For this, a suitable stage version control procedures may be followed. The details are to be documented stage wise. Project files have to be timely updated with appropriate version control number and revision status should be maintained for each change. Team members are identified who will exercise controls at various points of the project.


Resources

Plan the resources required for various stage of the project well in advance. Communication is the key. Brief both the project team and the key resources about the objectives of every stage, planned activities, products, organisation, metrics and the project controls. This increases the visibility into the project performance and hence a quality control can be achieved. Allocating a right resource at the right place and the right time will significantly enhance the efficiency and effectiveness of the resource. Quality Control This is very important in any project. It is a tool which helps in tracking the progress of various parameters at any stage of the project. A project manager may use a standard quality control or customise according to the requirements. Quality control is possible if the project members follow the quality charts and norms very strictly. It is also important for all the project team members to know the importance of such quality checks and should have a good visibility into project performance. Schedule Quality Review Conduct quality reviews at regular intervals. It is recommended that quality review be scheduled at the beginning of the stage and also at the ending of every stage. This helps the project manager and team members to plan well in advance for any unforeseen deviation.

Agenda for Quality Review Create and distribute a quality review agenda specifying the objective, products, logistics, roles, responsibilities and time frame. This increases the effectiveness of the review and also reduces the time gap.

Conduct Quality Review Conduct the quality review in a structured and formal manner. Quality review should focus on product development and its quality factors. Focus on whether it meets the prescribed quality standard.

Follow Up Revise the complete quality review product status from ‘In-progress’ to ‘QR Complete’. Follow up the actions planned in strict manner which ensures conformity to the standards.

Review Quality Control Procedure Verify that the quality objectives for each product are appropriate and that all participants are satisfied both with the process and its outcome. This is to ensure that all the stakeholders of the project are in conformity of control procedures.

Q4. What is Project Management Information System (PMIS)? What are the major aspects of PMIS?

Ans. Project Management Information System (PMIS) An information system is mainly aimed at providing the management at different levels with information related to the system of the organisation. It helps in maintaining discipline in the system.


An information system dealing with project management tasks is the project management information system. It helps in decision making in arriving at optimum allocation of resources. The information system is based on a database of the organisation. A project management information system also holds schedule, scope changes, risk assessment and actual results.

The information is communicated to managers at different levels of the organisation depending upon the need. Let us find how a project management information system is used by different stakeholders.

The four major aspects of a PMIS are – a. Providing information to the major stakeholders b. Assisting the team members, stakeholders, managers with necessary information and summary of the information shared to the higher level managers c. Assisting the managers in doing what if analyses about project staffing, proposed staffing changes and total allocation of resources d. Helping organisational learning by helping the members of the organisation learn about project management

Usually, the team members, and not the systems administrators of the company, develop a good PMIS. Organisations tend to allocate such responsibility by rotation among members with a well designed and structured data entry and analytical format.

Q5. What is PERT chart? What are the advantages of PERT chart?

Answer. PERT stands for Program (or Project) Evaluation and Review Technique. It is a popular project management model designed to analyse and represent the tasks involved in completing a given project. It also helps in identifying the minimum time required for completing the total project. A number of activities make a project. Due to technological necessities, some activities can be performed only after some others have been completed. Some activities are independent of some other set of activities.

Different activities have different duration for their completion. Some projects are big and a number of clearly distinguishable stages or milestones are identified. Since some activities run concurrently, there are possibilities that one set of activities end up early and have to wait for some other activities to proceed further. This means that there are more paths from the beginning to the end, and one of them takes more time than the others. We call that critical path. A PERT chart helps us to follow the critical path. Let us become familiar with the PERT chart.

A PERT chart is a graphic representation of a project’s schedule, showing the sequence of tasks. It also shows the tasks that can be performed parallely, and the critical path of tasks which has direct impact on the project schedule. The tasks in the critical path must be completed as per schedule in order for the project to meet its completion deadline. The chart can be constructed with a variety of attributes, such as:


Earliest and latest start dates for each task

Earliest and latest finish dates for each task

Slack time between tasks

A PERT chart for a seven-month project with five milestones (10 - 50) and six activities (A - F).

Sample PERT chart

You need to be familiar with some conventions while preparing a PERT chart.

Advantages of PERT chart

Avoid unrealistic timetables and schedule expectations

Understand the dependencies

Identify and shorten tasks that are bottlenecks

Focus attention on most critical tasks

Document an entire project or a key phase of a project

Q6. Write brief notes on the following: (i) Re-engineering and (ii) Re-structuring?

Answer. Revolutionary Change: There are four important instruments for revolutionary change Reengineering, E-Engineering, Restructuring and Innovation.


Instruments of revolutionary change

i) Reengineering: This is a process by which managers redesign a bundle of tasks into roles and functions so that organisational effectiveness is achieved. By doing so dramatic improvements in critical measures of performance like cost, quality and service are expected. There will be a radical rethink about the business processes adopted.

A business process may be of any activity like inventory control, product design, orders processing, and delivery systems. No reference is taken to the existing process and an entirely new process is adopted.

The following rules for reengineering are effective: i) Make changes with the outcome in mind – not the tasks that result in them.

ii) Make the users of the results of the process effect the change.

iii) Let the people on the spot decide on the solution – decentralise.

ii) E-Engineering: The term E-Engineering refers to the attempts of companies to make use of all kinds of information systems, to make their functions efficient. New information systems are installed for conducting all business processes in the organisation. The use of electronic communication within the organisation enables frequent interactions between employees and results in better communication. Typically meetings require their presence, but with teleconferencing a lot of time and money is saved. Data have repositories which are accessible, transferable and updatable instantly and used by all concerned. Cross-functional workflows make it easier to coordinate activities. The increase in efficiency makes the organisation meet customers‟ requirements faster. All these result in widespread utilisation of knowledge in the organisation. It helps in creating and making available high quality of information. The information system also comprises of intranet and internet solutions to carry on their regular activities online. The Project Manager may have to initiate the change process to increase the effectiveness of his team. Being a key person and the change agent in the organisation, his actions are always under scrutiny. If he takes initiative, whenever the opportunity arises, to effect incremental changes, he will face minimum resistance both by the top management and his team members.


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Submission of mba spring 2012