MB 0044 - Production and Operation Management

Q1. Explain the basic competitive priorities considered while formulating operations strategy by a firm? Ans. Operations strategy reflects the long-term goals of an organisation in its corporate strategy. To achieve good results, a clear understanding of the operating advantages and a good cross functional coordination between functional areas of marketing, production, finance, and human resources departments are required. Operating advantages depend on its processes and competitive priorities considered while establishing the capabilities. The basic competitive priorities are: Cost Quality Time Flexibility Cost Cost is one of the primary considerations while marketing a product or a service. Being a low cost producer, the product accepted by the customer offers sustainability and can outperform competitors. Lower price and better quality of a product will ensure higher demand and higher profitability. To estimate the actual cost of production, the operations manager must address labour, materials, scrap generations, overhead and other initial cost of design and development, etc. Quality Quality is defined by the customer. The operations manager looks into two important aspects namely high performance design and consistent quality. High performance design includes superior features, greater durability, convenience to services, etc where as consistent design measures the frequency with which the product meets its design specifications and performs best. Time Faster delivery time, on-time delivery, and speedy development cycle are the time factors that operations strategy looks into. Faster delivery time is the time lapsed between the customer order and the delivery. On-time delivery is the frequency with which the product is delivered on time. The development speed is the elapsed time from the idea generation up to the final design and production of products. Flexibility Flexibility is the ability to provide a wide variety of products, and it measures how fast the manufacturer can convert its process line used for one product to produce another product after making the required changes. The two types of flexibilities are: Customisation Volume flexibility While customisation is the ability of the firm to satisfy the specific needs of each its customer, the volume flexibility is the ability to accelerate or decelerate the rate of production to handle the fluctuations in demand. For example, the production of fertilisers of different specifications and applications.

Q2. a. List the benefits of forecasting. Ans. Forecasting is required for: Production planning Financial planning Personnel planning Scheduling planning Facilities planning Process design and planning

Forecasting basically helps to overcome the uncertainty about the demand and thus provides a workable solution. Without the forecast, no production function can be taken up. Hence, it can be stated that forecasting helps to: Q2. b. Explain the significance of plant location decision. Ans. A plant location cannot be changed frequently since a large capital needs to be invested to build the plant and machinery in the selected area. Therefore, before selecting a plant location, a long range forecasting is to be made to foresee the future needs of the company. Location strategies used to select the location of the plant, the flexibility in location choice, the trends and practices across the globe and also techniques available to determine the location for a particular type of industry. Location identification for an organisation is an important strategic level decision taken by the top management. It involves planning and management of the plant location. Location decisions are strategic decisions that bind the organisation to a certain place. Hence utmost care has to be taken while selecting the location. Location decisions are made on the basis of parameters which make it suitable for various considerations of suppliers and markets. While locating a plant, the following long range forecasting needs are to be considered: The companys expansion plan and policy Diversification plan for the products Changing market conditions The changing sources of raw materials Many other factors that influence the choice of the location decision Improve employee relations Improve materials management Get better use of capital and facilities Improve customer service

Q3. What do you understand by line balancing? What happens if balance doesnt exist? Ans. A simple line (typically set up for the purpose of assembly) consists of a series of work stations, and the total work content of the product, which is expressed in terms of the total time is divided among these workstations equally. For example, consider five operations performed at A, B, C, D, and E. Each one can be a workstation or more than one operation can be combined at a single workstation. In a simple line like this it is easy to visualise the flow and also to make out the work allocation.

As the items move along the line, the work is progressed intermittently and leaves the line as a finished product. Typically the objective is, to divide the work content equally among the workstations so that the workstations are loaded as evenly as possible. This is known as balancing. Firstly, if such a balance is not achieved, a certain amount of inefficiency will arise because some stations will have more work to perform than others, and all the stations are expected to process same number of items per period of time. Secondly, unequal work content at different workstations leads to unequal work distribution and also formation of queue of items. Hence, to ensure a smooth flow, all the workstations are given the same time to process the items. The entire line typically, on a manual or power-driven conveyor moves from workstation to workstation at a constant rate. The time required to complete the work allotted to each station is known as the service time and the time available at each station is known as the cycle time, normally longer than the service time. The cycle time includes both the productive as well as the non-productive time along with idle time if any. Non productive time includes time for movement, handling and inspection time. The manner in which the work content is allocated to the station is influenced by the technological sequence of the assembly and expressed by precedence requirements, that is, one operation must be completed before the other operation can start. Such constraints limit the ability to achieve complete or perfect balance while allocating work to stations. The allocation of work elements to a workstation may also be influenced by zoning constraints which occurs in two ways: positive zoning constraint demands that certain operations have to be clubbed together because of certain sharing of resources, and negative zoning which insists that certain operations should be clubbed together because of interference or conflict. All these constraints make it very difficult or impossible to achieve perfect line balance and hence, a certain amount of balancing delay or balancing loss is inevitable. Balance delay is defined as the total time available to complete the given job and the total time required. In other words, the balance delay is the difference in time between the service time and the cycle time, expressed as a percentage of the cycle time. The objective of line balancing is that, given a desired cycle time, the attempt is to assign work elements to workstations to: Minimise idle time or balancing delay Minimise the number of work stations Distribute balancing delay evenly between stations Avoid violating any constraints

Q4. Describe the various approaches to TQM? Ans. Total quality management (TQM) has different approaches towards its achievement. The basic thrust of each of these is realising excellence. All the approaches have a lot in common; however, the emphasis shifts from one to other. Needless to say, each organisation will use any of these or even a combination to suit its structure, culture, and need. Some emphasise on the philosophy of total quality management and the role of management and employees in being aware, committed and active. Some use statistics more intensely. Some use an integrated approach. Following are some of the approaches to TQM: A) Deming wheel Edward Deming is regarded as the American who taught the Japanese about quality improvement. Deming's philosophy helps organisations to improve the quality of the products and services they offer. Demings approach is summarised in 14 points: 1. Constancy of purpose for continuous improvement 2. Adopt the total quality management 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 managements commitment for quality and productivity Using the above principles, Deming gave a four step approach to ensure a purposeful journey of total quality management. These steps have to be performed in the same sequence repeatedly to sustain and improve quality. Plan means that a problem is identified, processes are determined and relevant theories are checked out. Do means that the plan is implemented on a trial basis. All inputs are correctly measured and recorded. Check means that the trials taken according to the plan are in accordance with the expected results. Act means when all the above steps are satisfactory, regular production is started so that quality outcomes are assured. B) Jurans quality trilogy Joseph Juran like Edward Deming is considered as a legendary quality guru and is also regarded as a proponent in spreading total quality management culture. According to Juran, the definition of quality is Fitness for use and is considered as most adequate. Juran uses his famous universal breakthrough sequence to implement quality programmes. The universal breakthrough sequences are: Proof of need There should be a compelling need to make changes. Project identification Here what is to be changed is identified. Specific projects with time frames and the resource allocation are decided. Top management commitment Commitment of the top management is to assign people and fix responsibilities to complete the project.

 Diagnostic journey Each team will determine whether the problems result from systemic causes or are random or are deliberately caused. Root causes are ascertained with utmost certainty. Remedial action This is the stage when changes are introduced. Inspection, testing, and validation are also included at this point. Holding on to the gains The above steps result in beneficiary results. Having records or all actions and consequences will help in further improvements. The actions that result in the benefits derived should be the norm for establishing standards. C) Crosbys absolutes of quality Philip Crosby is internationally known for the Zero Defects concept of quality. Like Deming, Crosby also lays emphasis on top management commitment and responsibility for designing the system, so that defects are not inevitable. He urged that there be no restriction on spending for achieving quality. In the long run, maintaining quality is more economical than compromising on its achievement. His absolutes can be listed as follows: Quality is conformance to requirements, not goodness Prevention, not appraisal, is the path to quality Quality is measured as the price paid for non-conformance and as indices Quality originates in all factions.

There are no quality problems. It is the people, designs, and processes that create problems Crosby also has given 14 points similar to those of Deming. His approach emphasises on measurement of quality, increasing awareness, corrective action, error cause removal and continuously reinforcing the system, so that advantages derived are not lost over time. He stated that the quality management regimen should improve the overall health of the organisation and prescribe a vaccine. The ingredients are: Integrity Honesty and commitment help in producing everything right first time, every time Communication Flow of information between departments, suppliers, customers helps in identifying opportunities Systems and operations These should bring in a quality environment so that nobody is comfortable with anything less than the best Philip Crosby also emphasises on the fact that quality is free meaning that, quality should not demand additional resources and hence there should be no cost. D) Taguchis quality loss function Genichi Taguchi is a Japanese quality guru and unlike other experts sees quality from a perspective of loss. He is not in favour of just meeting the specifications, but contends that the quality characteristics should always be close to the nominal or target value. Taguchis contention is that quality comes from design. He advocated a wide use of design of experiments for experimentation on variables and obtains specifications which will result in high quality of the product. It helps in bringing cost effective improvements in quality. He believed that, designers should make robust designs so that, product can withstand the variability which tends to be persistent and give quality for longer periods. His objective in giving the loss function is to make manufacturers realise that it is the target value of the specification that should be sought to be achieved and not the permissible deviations. The loss caused is the square of the deviation multiplied by a cost constant.

Where, L = Total loss C= Cost constant X = Average value of the quality characteristic T = Target value of the characteristic

Taguchi also talks about losses to society because of a dent in quality both the manufacturers and users in society will have to endure the consequences of reduced performance as long as the product is used. Q5. a. What is meant by productivity? Explain. Ans. Productivity is generally expressed as the ratio of outputs to inputs.

While the above ratio may imply efficiency, productivity is the value added for every unit of investment. Thus, it is value added upon cost. Enhancement of productivity is achieved by either reducing the inputs for the same output or increasing the output by using the same input. Productivity can be calculated for: A single operation A functional unit A department or division A plant Productivity is a measure of the efficiency of the system and looks at the economies achieved during the processes. Every process will have a number of contributors which help in achieving the maximum productivity. The processes are people, machines, facilitating goods, ancillary equipments, and technology. Each of these elements attempts to enhance the contribution of other elements. Opportunities exist at all stages of the workflow in the entire system to introduce measures for increasing the productivity. However in actual manufacturing situations, the inefficiencies will have a cascading effect in hampering the productivity. Communication, effective review processes, and innovative methods will ensure optimisation of resources. Building up reliability into the equipments and managing the supply chain to economise on the cost factors improves productivity. Quite often, productivity may suffer because of several problems associated with different elements of production. In such cases, quality circles are very efficient in executing low cost projects by using non-intrusive methods of improving productivity and quality throughout the organisation. Quality circles: Voluntary groups of employees who develop solutions to various problems with less additional resources Involve all persons who are actually involved in the production system and the information they elicit and bring about improvements that are highly cost effective Unveil creativity and encourage team work and bring about improvements almost on a day-to-day basis Bring continuous incremental changes in a harmonious way instead of dramatic changes Encourage identification of possible failures and seek methods of preventing things going wrong Q5. b. What do you mean by operations strategy? Explain in brief. Ans. Operations strategy is defined as the set of decisions that are warranted in the operational processes in order to support the competitive strategies of the business. The objectives stated above will give the firm a competitive advantage in the products or services that are served to the customers. Operations strategy is a long-range business plan for the companys products and will provide a road map for the operational functions to be pursued. Therefore, the strategic decisions include the capacity

to be built into the production system, the type of processes and manufacturing technology to be adopted, the nature of products to be produced, and the type of material flow and other logistics required to achieve the level of performance. Planning of operations strategy is very essential as it will enable the organisation to respond to the market needs in an effective manner. It also gives the opportunity to align the resources and manufacturing activities to produce and deliver the products and become successful in the market. Q6. What is logical process modelling? What is physical modelling? Ans. Logical process modelling Logical process modelling is the representation of putting together all the activities of business process in detail and making a representation of them. The initial data collected has to be arranged in a logical manner so that, links are made between nodes for making the workflow smooth. The steps to be followed to make the work smoother are given as follows: 1. Capture relevant data in detail to be acted upon 2. Establish controls and limit access to the data during process execution 3. Determine which task in the process is to be done and also the subsequent tasks in that process 4. Make sure that all relevant data is available for all the tasks 5. Make the relevant and appropriate data available for that task 6. Establish a mechanism to indicate acceptance of the results after every task or process. This is to have an assurance that flow is going ahead with accomplishments in the desired path Some of these activities may occur in a sequential order whereas; some of them may run parallel. There may even be circular paths, like re-work loops. Complexities arise when the process activities are not connected together. Logical process model consists of only the business activities and shows the connectivity among them. The process model is a representation of the business activities and is different from the technology dependent ones. Thus, we have a model that is singularly structured only for business activities. Computer programmes are also present in the total system. This allows the business oriented executives to be in control of the inputs, processes and outputs. The logical process model improves control on the access to data. It also identifies, who is in possession of data at different nodes in the dataflow network that has been structured. A few of the logical modelling formats are as follows: Process descriptions with task sequences and data addresses Flow charts with various activities and relationships Flow diagrams Function hierarchies Function dependency diagrams Every business activity, when considered as a logical process model, can be represented by a diagram. It can be decomposed and meaningful names can be given to the details. Verb and noun form combinations can be used to describe each level. Nouns give the name of the activity uniquely and are used for the entire model meaning the same activity. Physical process modelling Physical process modelling is concerned with the actual design of database meeting the requirements of the business. Physical modelling deals with the conversion of the logical model into a relational model. Objects get defined at the schema level. The objects here are tables created on the basis of entities and attributes. A database is defined for the business. All the information is put together to make the database software specific. This means that the objects during physical modelling vary on the database

software being used. The outcomes are server model diagrams showing tables and relationships with a database.