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UNIT- I PART A

1. Classify the manufacturing systems?

1.Product based: Continuous production (e.g. chemicals, food processing etc.) Discrete part production. Further divided into: Assembly lines Transfer Lines 2.Process-based: these are facilities where machines of the same type are grouped together physically. Some examples may be seen in job shops, workshops, prototype makers, tool 3.Flexible Manufacturing systems may loosely be categorized as highly automated versions of process-based systems. 4.Cellular: Cells are formed using GT, and typical cells are small clusters of a mixed bunch of machines that can handle a particular family of products. Such layouts are used when the batch sizes of orders are not large, but throughput times required are lower. 5.Fixed position: For single units of a large item (e.g. construction project, MTR line, ship building etc.) 2. What are the factors affecting forecasting? Business cycle Random variables Customers plan Products life cycle Competitions efforts and prices Customers confidence Quality Credit policy Design of goods or services Reputation for service Sales effort Advertising 3. List out the quantitative forecasting techniques? Simple moving average Single exponential smoothing Double moving average Double exponential smoothing Simple regression Semi-average method

Multiple regression Box Jenkins

4. Define forecasting? It is an estimate of event which will happen in future. It may be the demand of product, population of a country, or growth of technology. 5. What are the three factors in selection of a forecasting technique? a) The characteristics of the decision making situation, which include: The time horizon Level of detail Number of items Control versus planning b) The characteristics of the forecasting methods: The time horizon The pattern of data Type of model Cost Accuracy Ease of application c) Present situation, which includes: The item that is being forecast Amount of historical data available Time allowed for preparing forecast 6. What is meant by regression? Regression means dependence. Here the independent variable (y) is calculated from independent variable (x). In simple regression only one independent variable is used. Y = a + bx 7. Define the term production management? The job of coordinating and controlling the activities required to make a product, typically involving effective control of scheduling, cost, performance, quality, and waste requirements. OR Product management is an organizational lifecycle function within a company dealing with the planning, forecasting, or marketing of a product or products at all stages of the product lifecycle. 8. What is forecasting accuracy? Mention the types of errors. The forecast error is the difference between the actual value and the forecast value for the corresponding period.

where E is the forecast error at period t, Y is the actual value at period t, and F is the forecast for period t. the types of errors are: Mean absolute deviation(MAD)

Mean square error(MSE) Mean forecast error (MFE) Mean absolute percent error(MAPE) 9. What is qualitative forecasting technique? Qualitative techniques use subjective approaches. These are useful where no data is available and are useful for new products. 10. What are the types of demand pattern? Historical pattern (stationary pattern) Seasonal demand pattern Cyclical pattern Trend pattern

PART-B 2.Discuss the classification of forecasting techniques with suitable comments. Forecasting:
It is an estimate of an event which will happen in future. It may be the demand of product, population of a country, or growth of technology. Forecasting techniques are classified in to two groups 1.Qualitative techniques 2.Quantitative techniques Simple moving average It is the method of computing the average of a specified number of the most recent data values in a series mt =1/n(Dt-(n-1)+Dt-(n-2)+.....+Dt-2+Dt-1+Dt) mt - simple moving average at the end of period t dt - actual demand in period t n - no. of periods included in each average. Comments It is applied to forecast only one period into the future. The forecaster must wait to get demand entries. This is applicable for horizontal demand data patterns. This model requires n observed values. Weighted moving average Here we assign more weightage to some demand values weight Mat = i=1n widi/i=1n wi Where I- most recent time period wt - weight for time period t. Double moving average method Let n- moving average period First single moving average

M1(n)= (D1+D2+....+Dn)/n Subsequent moving average for any period M1(t-1)= (Dt-D(t-n))/n First double moving average Subsequent double moving average m2(t)=m2(t-1)+(m1(t)-m1(t-1))/n Comments This is applicable to trend data patterns This method can be used to forecast any no. of period. Simple exponential smoothing This method keeps a running average of demand and adjust it for each period. Ft=Ft-1 +(Dt-1-Ft-1) ft- smoothed avera forecast for period t ft-1 - previous forecast period Smoothing constant Dt-1 - previous period demand. Comments Smoothing methods are well suited for short or immediate term predictions of large no. of items Suitable for stationary data patterns. No need of historical data. Linear regression Regression means dependance here the valu of dependent variable y from independent variable Y=a+bX

Y- dependent variable X- independent variable a- intercept b- slope Delphi method It is a forecasting technique here several knowledge persons are provide subjective demands. The experts may provide several opinions then they are compared. Delphi method is an iterative process. Here the values are defined by the required accuracy.

3. Discuss all the types of manufacturing systems with its characteristics and examples.
A large number of manufacturing equipment exist for the implementation of basic discrete manufacturing processes into production machinery. Kalpakjian and Schmid (2003) provide a list of discrete manufacturing processes available under different categories of manufacturing, which are used in actual production. These major categories are 1. Metal forming processes 2. Bulk deformation processes 3. Sheet Metal forming processes 4. Metal removal processes 5. Metal joining processes

6. Processing of Polymers and reinforced plastics 7. Processing of Metal Powders, Ceramics, Glasses, Composites and Super Conductors 8. Thermal Treatment of materials 9. Surface Treatment of materials 10. Fabrication of Micro-mechanical and Microelectronic Devices 11. Non conventional processes Discrete Manufacturing Systems A manufacturing system comprises manufacturing equipment arranged in certain fashion. Tangibly, these manufacturing systems have a physical layout while intangible production control operates on production philosophies. Other important elements of the manufacturing systems are methods of information, energy, and material transfer. The physical layout of the discrete manufacturing systems is normally divided into two areas: 1. Processing area; 2. Assembly area The processing area is used for manufacturing the components, while the assembly area is meant for assembling the product. Continuous Manufacturing System Continuous manufacturing systems produce liquid, gases, or powders. As in flow line, processes are arrayed in the processing sequence of the products. The continuous system is the least flexible of the types of manufacturing systems Flexible Manufacturing System A flexible manufacturing system (FMS) is manufacturing system that comprises the properties of a job shop and a cellular manufacturing system. It has higher flexibility in manufacturing that can produce diverse product ranges as in the case of a job shop, and, can manufacture larger numbers of group of products as in the case in cellular manufacturing. The FMS arranges CNC machines tools through pick and place technology, and conveyors physically such that a group of products can be produced efficiently in small-to-medium batches Assembly System Another substantial part of a manufacturing companys production facilities is the assembly system. Assembly system can be categorized according to the motion of parts and workplaces. Stationary part systems are usually employed for large assemblies, such as airplanes, which are difficult to be moved around. Moving part systems can be divided into stationary workplace systems, in which parts are brought to stationery workplaces, and moving workplace system, in which the workplaces move along with the parts. Assembly systems with stationery parts tend to have higher floor area requirements. They also tend to have more work at each workplace than moving part systems. Moving part systems are generally more expensive because complicated material handling equipment is required to move parts quickly from workplace to

workplace. In moving part-stationary workplace systems, the assembly operations at each workplace are usually short in duration and are highly repetitive. Moving partmoving workplace systems allow workers to work on each assembly for a longer period of time, making the assembly work less repetitive. The assembly systems are presented .

4. List and explain the types of forecast in decision making?


Forecasting Methods for Decision Making Forecasting is used in different functional areas such as marketing production, finance and production. The various types of forecast in each of the five mentioned areas are as follows. Marketing Demand forecasting of products Forecast of market share Forecasting trends in prices Production Forecasting of material and labour costs Maitenance requirements Plant capacity Finance Forecast of each flow Rate of expenses Revenues Personnel Forecast of no. of workers in each category Labour turnover Absenteeism

Forecasting is an essential part of decision making under uncertainty. A need for forecasting arises only when there is uncertainty about the future and some aspects of the future can not be controlled (Armstrong 2002). If everything relevant to an event is certain and the future of the event is deterministically predicted or controlled based on what is known at the point of forecasting, any decisions about it can be made according to the decision makers preference for expected outcomes. Otherwise, decisions should be made based on forecasts which account for the uncertainty about the future. The limits of deterministic approaches and the need for probabilistic models in engineering and management decision making have been repeatedly addressed over the last four decades (Ang and Tang 1975; Barraza et al. 2004; Hertz 1979; Spooner 1974). The use of probabilistic methods, however, is often avoided among practitioners, largely because of the lack of appropriate methods, the lack of sufficient reliable data, and the

additional difficulty in dealing with uncertainty in a quantitative way during the decision making process. Plenty of forecasting methods are available for engineering and management decision making and they can be characterized in several ways. Makridakis et al. (1982) classified forecasting methods into four groups: purely judgmental approaches, causal or explanatory methods, extrapolative (time series) methods, and any combination of the three. On the other hand, Al-Tabtabai and Diekmann (1992) classified forecasting models as econometric models, time-series models and judgmental models. With so many alternatives available, selecting the right method for a specific problem is itself a challenging decision. Some comprehensive overviews of the management forecasting methods and selecting the right method can be found in the literature (Armstrong 2002; Chambers et al. 1971). For example, Georgoff and Murdick (1986) evaluated 20 forecasting techniques according to 16 criteria to provide a guide for how to choose the best technique or combination of techniques. Use of subjective information and judgment in forecasting is another important issue in forecasting literature. Some forecasting methods use objective data observed in a quantitative way, while others rely on subjective information. For example, the Delphi method makes forecasts by deriving a consensus from a group of experts through a sequence of questionnaires. For many forecasting methods, however, there is no clearcut distinction between the forecasting methods that rely on objective data and other methods based on subjective information. Some forecasters believe that subjective information or the use of it is the second best alternative, which can be justified only when there are no objective data available (Chau 1995), while others suggest use of subjective information as a way of improving forecasting performance (Georgoff and Murdick 1986). For example, Al-Tabtabai and Diekmann (1992) conducted a study of applying social judgment theory to cost forecasting of a construction work package and asserted that both historical data and competent judgments based on experience and knowledge need to be included in a forecasting technique.

5.What is linear regression ? and explain with suitable graph and example.
Regression means dependance hers the dependent variable y is calculated from independent variable x in simple regression only one independent variable is used. Y- dependent variable. X- independent variable. a- intercept. b- slope these are represented in the following graph. Multiple regression. In multiple regression two or more independent variables are used the model for multiple regression is

Example: Year (X) 1 2 3 4 X =x/n y=y/n

Expenceses for research(x) Annual Profit(y) xy x 2 2 20 40 4 3 25 75 9 5 34 170 25 4 30 120 16

b=xy-nxy/x2-nx2 (405-4*14/4*109/4)/(54-4*(14/4)2) =4.7 a = y-bx =(109/4)-4.7*14/4 =10.5s y=a+bx y=10.5+4.7*11=62.2

UNIT II PART A 1. What do you mean by Aggregate planning? It is the process that follows capacity planning and it uses the medium range forecast. It provides specific instructions for daily, weekly operations such as loading, sequencing and dispatching , etc. 2. What is the aim of linear decision rule? The linear decision rule aims to minimize the combined costs of regular payroll, hiring and firing, overtime and inventory using four approximate cost functions. The function of the regular payroll cost is linear. The other three cost functions are quadratic in nature.

3. Name the various methods used to solve the aggregate planning problems. Graphical method Heuristic method Explicit mathematical solutions simulations, etc 4. What are the inputs required for linear decision rules? The forecast for each period of the planning horizon in aggregate terms. The ending size of work force of the last period. Ending inventory of the last period. 5. List out the various pure strategies? Building and utilizing inventory through constant work force Varying the size of work force Overtime utilization Sub contracting

6. What is mixed strategies in Aggregate planning? Here the combination of pure strategies may be used to meet the demand at minimum cost. The mixed strategy may be formed regular production time with constant work force and overtime.

7. Name the different capacities which are generally used to manufacture a product.
Leading capacity, where capacity is increased to meet expected demand, Following capacity, where companies wait for demand increases before expanding capabilities Tracking capacity which adds incremental capacity over time to meet demand.

Design capacity refers to the maximum designed service capacity or output rate and the

Effective capacity is the design capacity minus personal and other allowances. These
two functions of capacity can be used to find the efficiency

8. Mention few assumptions while using linear programming model. The demand is deterministic for future. The cost of production during regular time are assumed to be piece-wise linear The cost of changes in production level are approximated by a piece-wise linear function 9. What is goal programming? Goal programming is a branch of multiobjective optimization, which in turn is a branch of multi-criteria decision analysis (MCDA), also known as[multi-criteria decision making(MCDM). This is an optimization programme. It can be thought of as an extension or generalization of linear programming to handle multiple, normally conflicting objective measures. Each of these measures is given a goal or target value to be achieved. Unwanted deviations from this set of target values are then minimized in an achievement function. This can be a vector or a weighted sum dependent on the goal programming variant used. As satisfaction of the target is deemed to satisfy the decision maker(s), an underlying satisfying philosophy is assumed. Goal programming is used to perform three types of analysis: 1. Determine the required resources to achieve a desired set of objectives. 2. Determine the degree of attainment of the goals with the available resources. 3. Providing the best satisfying solution under a varying amount of resources and priorities of the goals.

PART-B
1. Discuss the significance of aggregate planning strategies? Capacity Options change capacity A big picture approach to planning. Balance supply and demand by minimizing the production cost, adjustment cost, and opportunity cost of a system. Concerned with the quantity and the timing of both the supply and demand. Level capacity strategy with inventories, overtime, part-time workers, subcontracting, and back orders. Chase demand strategy with overtime, part-time workers, and subcontracting. Use a combination of both strategies.

Changing inventory levels There are variations in demand over planning horizon. There are two types of time periods; Slack months: The months when demand is low Peak months: The months when demand is high. One planning-thumb-rule is; Produce excess than demand during Slack months. Keep the excess production in stock (inventory). Since, there will be shortage during peak months, overcome the shortage in peak periods from the inventory. Varying work force size by hiring or layoffs The utility of work-force increases or decreases with an organizations work load. During peak period, organization requires more and more work force. However, the large pool of work force remains under-utilized in slack period. In order to keep tight control over expenses, organizations should employ matching number of workers in peak as well as in slack Periods. This implies that large work force should be employed (hired) in peak period and, excess work force should be laid-off (fired) in slack period. Varying production capacity through overtime or idle time If frequent hiring/firing is not feasible, then organizations will have a constant pool of work force of adequate size. In slack periods, some of the work force will remain underutilized. However, some portion of the work force will be engaged in over time as well during peak period. This strategy is far better than frequent hiring and firing of the work force.

Subcontracting If some portion of the work order is technically complex and, requires special expertise. Also, this work is not of repetitive nature, then organization can award the work to some 3rd party (subcontracting) Using part-time workers If organizations regular work force is too much occupied with workloads, some portion of work may be assigned to part-time workers. Demand Options change demand: Influencing demand Demand rises and goes down because of buying trend of the consumer. Offer special discounts during low-demand periods so as to increase sales.

Backordering during high demand periods Since capacity is limited and all the demand cannot be met on time, get permission from customer to deliver the products at a later time; e.g., meeting January demand by producing in March (Late delivery)

Counter seasonal product mixing Some organizations are engaged in producing more than two products. One product has high demand in winter , and, the other product has demand in summer.

Advantages; Changes in human resources are gradual, not abrupt production changes Avoids use of other alternatives Back ordering during high demand periods, May avoid overtime. Keeps capacity constant Less costly and More flexible than full-time workers (Using part-time workers)

Mixed strategy Combines 2 or more aggregate scheduling options uses alternatives mixing inventory, back order, capacity change, work force change, etc

Level scheduling strategy Produce same amount of products every day Keep work force level constant Vary non-work force capacity or demand options Often results in lowest production cost

Aggregate Planning Procedures Determine demand for each period Determine capacities for each period Identify policies that are pertinent Determine units costs regular time, overtime, subcontracting, holding inventories, back orders, layoffs, and other relevant costs. Develop alternative plans and compute costs Select the best plan that satisfies ob

2. Explain the various methods at the basic feasible solution for transportation model?

TRANSPORTATION MODEL Transportation modeling finds the least-cost means of shipping supplies from several origins to several destinations. Origin points (or sources) can be factories, warehouses, car rental agencies like Avis, or any other points from which goods are shipped. Destinations are any points that receive goods. To use the transportation model, we need to know the following 1. The origin points and the capacity or supply per period at each. 2. The destination points and the demand per period at each. 3. The cost of shipping one unit from each origin to each destination THE STEPPING-STONE METHOD The stepping-stone method will help us move from an initial feasible solution to an optimal solution. It is used to evaluate the cost effectiveness of shipping goods via transportation routes not currently in the solution. What would happen to total shipping costs if one unit of the product (for example, one bathtub) was tentatively shipped on an unused route? We conduct the test as follows 1. Select any unused square to evaluate. 2. Beginning at this square, trace a closed path back to the original square via squares that are currently being used (only horizontal and vertical moves are permissible). You may, how- ever, step over either an empty or an occupied square.

3. Beginning with a plus (+) sign at the unused square, place alternating minus signs and plus Signs on each corner square of the closed path just traced.

4. Calculate an improvement index by first adding the unit-cost figures found in each square containing a plus sign and then by subtracting the unit costs in each square containing a minus sign. 5. Repeat steps 1 through 4 until you have calculated an improvement index for all unused squares. If all indices computed are greater than or equal to zero, you have reached an optimal solution. If not, the current solution can be improved further to decrease total shipping costs. Aggregate Planning Methods Graphical & charting techniques Popular & easy-to-understand Trial & error approach Mathematical approaches Transportation method Linear decision rule Management coefficients model Simulation Forecast the demand for each period Determine the capacity for regular time, overtime, and subcontracting, for each period Determine the labor costs, hiring and firing costs, and inventory holding costs Consider company policies which may apply to the workers or to stock levels Develop alternative plans, and examine their total costs Say we want to expand and build either a new source or destination (or both) . Say for now we want to expand a source.

Say we have two choices Cincinnati or Seattle. The way to do this is include one new source in an analysis with existing sources and get the total costs throughout the system .Then do another analysis for the other new source (taking out the other proposed new source) and get the total cost. An important way to characterize the performance of a decision rule Training data set: must be independent of testing data set Hold-out method: a common technique constructs the decision rule with half the data set, and test with the other half

From the point of view of distribution costs, the site to chose is the one, that when included in the overall analysis, has the lowest total cost. A set of units each of which takes a linear combination of values from either an input vector or the output of other units 3. Describe the procedure steps to find optimum solution of given transportation model.

Basic Problem The basic idea in a transportation problem is that there are sites or sources of product that need to be shipped to destinations. Typically the routes and the amounts shipped on each route must be determined and the goal is to minimize the cost of shipping. The constraints are that you can not ship more from a source than made at that source and you do not want to ship more to a place than needed. Some assumptions If production costs are the same at each source, ignore them. If they are not the same include them in the analysis with the shipping cost. From a given site, shipping costs per unit are the same no matter the volume of shipping. We have a balanced problem, or the total amount from sources adds up to the total demand at destinations we change this later. Lets do an example to highlight details of the work needed to arrive at the optimal solution. Say the following amounts are made at the various sources: Des Moines Evansville 100 (units) 300

Ft. Lauderdale 300 Albuquerque 300 Boston Cleveland 200

and say the following sites demand the amounts shown,

200 (note the balance of supply and demand).

Say the costs of shipping a unit from each source to each destination is as in the following table: Dest. Source Des Moines Evansville Ft. Lauderdal e Demand Albuquerq ue 5 8 9 Boston 4 4 7 Clevelan d 3 3 5 Suppl y 100 300 300

300

200

200

Now, lets combine the information into one table and I will explain more about the table on the next slide Dest. Source Des Moines Evansville Ft. Lauderdal e Demand Albuquerq ue 5 8 9 Bosto n 4 4 7 Clevelan d 3 3 5 Suppl y 100 300 300

300

200

200

You will notice on the previous slide I added some information and changed how I presented the information from slide 5. First, note I added a supply column. This is keeping track of how much is made at each source. (I initially thought the info should be in a row, but is in a column that has information about the amount supplied in each row.)

Second I added a demand row similar to the supply column. The last thing I did was move over the unit shopping cost into a small boxed-off area in each cell. The table sort of looks like a bowling score sheet now. This is done for a reason. We will get into that next. Ultimately we will have the computer do our work for us. But we want to get some of the logic of the solution process. We will follow the Northwest Corner rule for now (in the context of our problem.) We want to take care of Des Moines and Albuquerque first the Northwest corner of our table. Note that Des Moines has 100 supplied and Albuquerque needs 300 units. Take all 100 to Albuquerque. Des Moines is done. Drop down to Evansville. It has 300 available and Albuquerque needs 200 more. Drop 200 at Als. With the other 100 from Evansville, take them to Boston, since Boston needs 200. Evansville is done, but Boston still needs 100, so ship them from Ft. Lauderdale and since Ft. Lauderdale has some left give the rest to Cleveland.

4. Explain the concepts of linear decision rules and its applications. A set of decision rules is the verbal equivalent of a graphical decision tree, which specifies class membership based on a hierarchical sequence of (contingent) decisions. Each rule in a set of decision rules therefore generally takes the form of a Horn clause wherein class membership is implied by a conjunction of contingent observations. Goal: minimize the sum of costs related to regular labor time, overtime, subcontracting, inventory holding costs, and costs associated with changing the size of the workforce. Constraints: capacities of the workforce, inventories, and subcontracting.

Limitations linear relationships among variables inability to continuously adjust output rates single objective

Thresholding the measurement component Fishers linear decision rule Bayes quadratic decision rule Bayes linear decision rule Linear decision rule from the first principal component

Simulation Models Develop and test computer models under different scenarios to identify acceptable solutions to problems. Examples: grocery checkouts, banking. An important way to characterize the performance of a decision rule Training data set: must be independent of testing data set Hold-out method: a common technique construct the decision rule with half the data set, and test with the other half A set of units each of which takes a linear combination of values from either an input vector or the output of other units

Chief difficulty: brute-force nearest neighbor algorithm computational complexity proportional to number of patterns in training set

Linear Decision Rule Minimized combined costs using a set of cost-approximating functions to obtain a single quadratic equation. Limitations: A specific type of cost function is assumed. Considerable effort needed to obtain relevant cost data and develop cost functions for each organization. Solutions may be unfeasible.

Indicate the quantity and timing of planned production, taking into account desired delivery quantity and timing as well as on-hand inventory. (what, when, how much) Services occur when they are rendered. Inventory may not apply to services.

Demand for service can be difficult to predict. Some customers request prompt service or go elsewhere, if there is a waiting line.

Capacity availability can be difficult to predict. Depend on skills details required.

Labor flexibility can be an advantage in services. Can handle wide variety of service requirements.

UNIT - III PART A


1. What is inventory control? "Inventory control is the process where by the investment in materials and parts carried in stocks is regulated, within pre-determined limits set in accordance with the inventory policy established by the management." (or) "Inventory control is a method to identify those stocks of goods, which can be used for the production of finished goods. It shall be supported by a schedule which gives details regarding; opening stock, receipt of raw-materials, issue of materials, closing stock, and scrap generated." 2. What is meant by lead time? The amount of time that elapses between when a process starts and when it is completed. Lead time is examined closely in manufacturing, supply chain management and project management, as companies want to reduce the amount of time it takes to deliver products to the market. In business, lead time minimization is normally preferred. 3. What are the various inventory management techniques? 1. Determination of various levels of materials 2. Economic Order Quantity 3. ABC Analysis 4. Perpetual Inventory System 4. What are the various models of inventory? Single period ordering Economic order quantity (EOQ) Replenishment models Deterministic inventory model Stochastic inventory model The (s,Q) inventory policy

5. What is inventory holding cost? The cost of holding goods in stock. Expressed usually as a percentage of the inventory value and includes cost of capital, warehousing, depreciation, insurance, taxation, obsolescence, and shrinkage. Also called inventory cost. (or) The associated price of storing inventory or assets that remain unsold. Holding costs are a major component of supply chain management, since businesses must determine how much of a

product to keep in stock. This represents an opportunity cost, as the presence of the goods means that they are not being sold while that money could be deployed elsewhere. In addition, holding costs include the costs of goods being damaged or spoiled over time and the general costs, such as space, labor and other direct expenses. 6. What is meant by quantity discount? If a consumer purchases a large amount of products from a company, the company will offer a lower price to retain future business from the consumer. (or) Incentive offered by a seller to a buyer for purchasing or ordering greater than usual or normal quantity of goods or materials, to be delivered at one time or over a specified period. 7. What are the costs associated with inventory? Holding or carrying cost Set up or production cost Ordering cost Shortage cost

8. Define the term Inventory turnover? The Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the Cost of goods sold divided by the average inventory. Inventory turnover is also known as inventory turns, stock turn, stock turns, turns, and stock turnover. 9. What is economic order quantity? An inventory-related equation that determines the optimum order quantity that a company should hold in its inventory given a set cost of production, demand rate and other variables. This is done to minimize variable inventory costs. The full equation is as follows:

where : S = Setup costs D = Demand rate P = Production cost I = Interest rate (considered an opportunity cost, so the risk-free rate can be used)

PART B

INVENTORY CONTROL TECHNIQUES There are two general types of inventorysystems. They are: 1. Fixed order quantity models(q models) 2. Fixed time period models(p models) These models provide answers to the questions: How much to order? When to order?

Fixed order quantity models This model is also known as the economic order quantity (EOQ) Model, Q model, reorders point inventory system, and perpetual inventory system. This is the oldest and most common reordering system. Under this system, the size of the order is predetermined and fixed, but the time of its placement is allowed to vary depending upon the fluctuation in demand. The replenishment order is placed when the stocks reach the reorder level To use the fixed order model, the inventory remaining must be continually monitored. Thus the fixed order quantity is a perpetual system. This model requires that every time a withdrawal from inventory or an addition to inventory is made, records must be updated to ensure that the reorder point has or has not been reached. Let Q=Quantity to ordered L=Lead time, and R=reorder point Below figure shows the sawtooth effect relating Q and R.as shown in fig, when the inventory position drops to point R, a reorder is placed. This order is received at the end of time period L. Also it may be noted that lead time L does not vary in this Q model.

IDLE STATE WAITING FOR DEMAND

DEMAND OCCURS UNITS WITHDRAWN FROM INVENTORY OR BACK ORDERED

COMPUTE INVENTORY POSITION POSITION=ON HAND+ON ORDERBACK ORDER

IS POSITION REORDER POINT?

ISSUE AN ORDER FOR EXACTLY Q UNITS

Inventory decision parameters for Q-model 1. Reorder quantity (i.e. how much to order?): In Q- model isfixed, and it is usually equal to EOQ 2. Reorder level (i.e. when to order?) Reorder level=safety stock + lead time consumption =safety stock +(lead time*consumption rate) Inventory position=on hand quantity+ on order quantity-back ordered quantity

Fixed time period models The fixed time period models are also referred to as the periodic system, periodic review system, fixed order system and p models

In a fixed-time period system, periodicreview of inventories are made and an order is invariably placed in that period In other words model has a fixed ordering interval, but the size of the order quantity may vary with thefluctuation in demand The ordering procedure consists of reviewing of reviewing the inventory position after a fixed period of time, known as review pwriod.at each review period.an order is placed for an amount equal to the difference between a fixed replacement level. This procedure is This model generally require a higher level of safety stock than a fixed order quantity system exhibited in below fig Inventory decision parameters for p model 1. Reorder level(i.e., when to order): In this model, order time period is fixed and hence the order is placed when the review period T arrives 2. Reorder quantity (i.e., how much to order?): Reorder quantity = maximum stock-stock actually held at the time of review Where maximum stock = safety stock + consumption during review period and lead time = safety stock+{lead time+review period}*consumption rate 3. When lead time is more than review period: Reorder quantity= maximum stock-[stock on hand+stock on order]

IDLE STATE WAITING FOR DEMAND

DEMAND OCCURS UNITS WITHDRAWN FROM INVENTORY OR BACK ORDERED

HAS REVIEW TIME ARRIVED?

COMPUTE INVENTORY POSITION POSITION=ON HAND+ON ORDERBACK ORDER

COMPUTE ORDER QUANTITY TO BRING INVENTORY UPTO REQUIRED LEVEL

ISSUE AN ORDER FOR THE NUMBER OF UNITS NEEDED

Unit IV PART A
1. Define MRP? Material requirement planning is a computerized method for managing inventories and issuing orders for parts and materials. It converts the master schedule for end product into detailed schedule for the raw materials and components used in the end product. 2. Define the term JIT? Just in time is an operation management philosophy. JIT means that the right number of parts would be delivered to the right shop floor operation at the right time. It is also defined as the methodology by which, the overall productivity of plant is increased by eliminating the waste. 3. What are the inputs to MRP? Master production plan On-hand inventories Bill of material Purchased or manufactured order status by item Replenishment rules by item 4. What are the benefits of JIT? Productivity improvement Set-up time in reduced Inventory reduction Quality is improved Space savings
Lead time reduction

5. List out the objectives of MRP? Ensure materials are available for production and products are available for delivery to customers. Maintain the lowest possible material and product levels in store Plan manufacturing activities, delivery schedules and purchasing activities. 6. Define the term dependent demand? The demand for an item that isnt there until another item is there. The parent and child items need each other to profit.

8. What are the basic elements of JIT? Flow layout

Mixed model scheduling Small lots and minimum set up times Buffer stock control Quality Production and process simplification Preventive maintenance 9. What is kanban card? Kanban means card or visible record in Japanese & refers to cards used to control the flow of production through a factory. KANBAN is a PULL System. 10. Define supply chain management? Supply chain is showing the route through which the raw material is converted into finished products into the hands of customers. It is an effective management of all the activities in the route.

PART-B
1.Discuss the silent characteristics of JIT? A narrow shop floor based technique concerned with making very small batches, just in time for the next production process, often accompanied by a pull system of production scheduling, using an information system called kanban cards.terms like zero inventory production, A highly integrated production, sales and distribution system leading to continuous flow through the whole supply chain. A production system to produce the kind of units needed, at the time needed and in quantities needed A way to visualize the physical operations of the company from raw material to customer delivery A combination of purchasing , inventory control production management function. In the manufacturing assembly which aims to improve overall productivity through the delivery of only the necessary parts. In the right quantity, at the right time and place , while using a minimum of facilities, equipment, materials and human resources JIT is based on the cardinal principles of continuous improvement and elimination of all waste. Thus JIT is a philosophy that aims simultaneous attainment of goals of perfect quality, quick delivery, low cost and high degree of flexibility. JIT APPROACH The secret of JIT success lines in the following factors Strict adherence to time schedule of various activities Workers co operation and devotion to work

Stringent quality control Competitive product cost Use of an information system called kanban. JIT seeks to design a manufacturing system for efficient production of 100 % good units. As stated earlier JIT seeks to produce only the required time and in the required quantities. To be more specific. JIT seeks to archive the following goals

Zero defects Zero set up time Zero inventories Zero handling Zero break downs Zero lead time Lot size of one ZERO DEFET It is a performance standard of the alertness of a workman performing the work assigned to him. aims at do it once and do it right. It means concentrate on preventing defective rather than detecting JIT approach aims to eliminate . once and for all, the causes of defects, and seeks to achieve excellence at all stages in the manufacturing process. ZERO INVENTORIES Inventories include WIP and finished goods stores, inventories are considered as a buffer against uncertain suppliers. JIT view looks at inventories as an evidence of poor design, poor co ordination and poor operation of the manufacturing system. ZERO LEAD TIME To approach zero lead time, the products, the manufacturing system and the production processes must be so designed as to facilitate repaid throughput of orders. JIT philosophy takes a holistic approach and recognizes the interdependence of these activites

Effects of JIT Production


Productivity improvement Set up time improvement Inventory reduction Quality improvement Space saving Lead times reduction

2.Discuss the important elements of JIT manufacturing system ? FLOW / LAYOUT

The production facilities are arranged so that the process flow is as streamlined as possible. The production of queuing and non value adding time are minimized . The layout is then configured so as to reduce or eliminate the stores and conveyors. Use of dedicated lines MIXED MODEL SCHEDULING JIT objective is to match the production rate to order demand as closely as possible. One method of doing this is to increase the flexibility of production lines to allow concurrent assembly of different models on the same line. This enables the JIT system. SMALL LOTS AND MINIMUM SET UP TIMES This results in release of floor space and minimizing material handling. BUFFER STOCK REMOVEL Constant elimination of buffer stocks is emphasized to highlight production problems previously shielded by high inventory levels. This also release space KANBAN SYSTEM Minimize the total number of kanban QUALITY The achievement of high quality levels is pre requisite of successful JIT. Commonly used quality programs in support of JIT include zero defects, SPC, Process data collection STANDARD CONTAINERS JIT emphasizes use of small standardized containers this way, it is possible to greatly simplify the material movement and the use of material handling equipment. PERVENTIVE MAINTENANCE Effective JIT requires removal of causes of uncertainly and waste. A major cause of uncertainly in breakdown. Rigorous preventive maintenance attempt to remove the uncertainly. FLEXIBLE WORK FORCE Cross training of both shop floor and office staff and engineers is an effective way of doing this. JIT PURCHASING It emphasizes small lot purchasing, vendor development, long term buyer seller relationship, vendor involvement in product design, high quality of purchased material, frequent part delivery, co operative transportation system etc. MODULES OR CELL ORGANISATION The factory should be organized in small autonomous modules or cells. The material flow between cells should be minimized. GT is very helpful in this respect.

3.Discribe the major tools and techniques of JIT manufacturing system? Just in time JIT is a management philosophy that strives to eliminate sources of manufacturing waste by producing the right part place at the right time. JIT also know as lean production. Zero defects Zero inventories Zero break downs Lot size of one Zero setup time Zero handling Zero lead time

JIT begins with a master schedule drawn for one to three months .This is communicated to the production personal on the shop floor and to the suppliers who in turn are expected to schedule their work accordingly. Within a production month, the master schedule is leveled on a daily basis. EFFECTS OF JIT PRODUCTION Productivity improvement Set up time improvement Inventory reduction Quality improvement Space saving Lead times reduction

JIT improves productivity Smaller lot size inventories Smaller buffer inventories Less scrap Less direct lab our wasted on rework Less space for inventories

4.Explain the working principle of kanban system? A Kanban is a card of two types a withdrawal kanban(WK) and a production ordering kanban (POK). The wk shows the quantity of the items that the subsequent process should with withdraw from the preceding work centre. Each card circulates between two work centers only the user for the part in question and the work centre which produces it .the pok shows the quantity that the preceding process should produce to replace those which have been removed. The worker on the assembly line producing product A goes to the fabrication line to withdraw the necessary number of part a from the storage location. The worker the required number of

parts. Detaches the pok and lves it in place of the parts, and returns to the assembly line with a wk. The pok is picked up by a worker from from the fabrication line as a direction to produce the quantity of part a. KANBAN RULES RULE 1: The subsequent process should withdraw the necessary products from the preceding process in the necessary quantities at the necessary point in time RULE 2: The preceding process should produce its products in the quantities withdrawn subsequent process. RULE 3: Defective products should never be conveyed to subsequent process. RULE 4:The number of kanban should be minimized. RULE 5: The kanban system should be used to adapt to only small fluctu 5.Supply chain management Fierce competition in todays global markets, the introduction of products with shorter life cycles, and the heightened expectations of customers have forced business enterprises to invest in, and focus attention on, their supply chains. This, together with continuing advances in communications and transportation technologies (e.g., mobile communication, Internet, and overnight delivery), has motivated the continuous evolution of the supply chain and of the techniques to manage it effectively. In a typical supply chain, raw materials are procured and items are produced at one or more factories, shipped to warehouses for intermediate storage, and then shipped to retailers or customers. Consequently, to reduce cost and improve service levels, effective supply chain strategies must take into account the interactions at the various levels in the supply chain. The supply chain, which is also referred to as the logistics network, consists of suppliers, manufacturing centers, warehouses, distribution centers, and retail outlets, as well as raw materials, work-in-process inventory, and finished products that flow between the facilities In this book, we present and explain concepts, insights, practical tools, and decision support systems important for the effective management of the supply chain. But what exactly is supply chain management? We define it as follows: Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers,warehouses, and stores, so that merchandise is produced and distributed at the rightquantities, to the right locations, and at the right time, in order to minimize systemwide costs while satisfying service level requirements.This definition leads to several observations. First, supply chain management takes into consideration every facility that has an impact on cost and plays a role in making the product conform to customer requirements: from supplier and manufacturing facilities through warehouses and distribution centers to retailers and stores. Indeed, in some supply chain analysis, it is necessary to account for the suppliers suppliers and the customers customers because they have an impact on supply chain performance. by the

Second, the objective of supply chain management is to be efficient and cost-effective across the entire system; total systemwide costs, from transportation and distribution to inventories of raw materials, work in process, and finished goods, are to be minimized. Thus, the emphasis is not on simply minimizing transportation cost or reducing inventories but, rather, on taking a systems approach to supply chain management. Finally, because supply chain management revolves around efficient integration of suppliers, manufacturers, warehouses, and stores, it encompasses the firms activities at many levels, from the strategic level through the tactical to the operational level. What about logistics management, or value chain management, or demand chain management? Various companies, consultants, and academics have developed a variety of terms and concepts to stress what they believe are the salient issues in supply chain management. Although many of these concepts are useful and insightful, for the purposes of this text, we will use supply chain management as the generic name for the set of concepts, approaches, strategies, and ideas that we are discussing. What makes supply chain management difficult? Although we will discuss a variety of reasons throughout this text, they can all be related to some or all of the following observations: 1. Supply chain strategies cannot be determined in isolation. They are directly affected by another chain that most organizations have, the development chain that includes the set of activities associated with new product introduction. At the same time, supply chain strategies also should be aligned with the specific goals of the organization, such as maximizing market share or increasing profit. 2. It is challenging to design and operate a supply chain so that total systemwide costs are minimized, and systemwide service levels are maintained. Indeed, it is frequently difficult to operate a single facility so that costs are minimized and service level is maintained. The difficulty increases exponentially when an entire Suppliers Manufacturers Customers Warehouses and distribution centers Material costs Transportation costs Manufacturing costs Transportation costs Inventory costs system is being considered. The process of finding the best systemwide strategy is known as global optimization. 3. Uncertainty and risk are inherent in every supply chain; customer demand can never be forecast exactly, travel times will never be certain, and machines and vehicles will break down. Similarly, recent industry trends, including outsourcing, offshoring, and lean manufacturing that focus on reducing supply chain costs, significantly increase the level of risk in the supply chain. Thus, supply chains need to be designed and managed to eliminate as much uncertainty and risk as possible as well as deal effectively with the uncertainty and risk that remain.

Unit - V 1. Define Scheduling? Assigning an appropriate number of workers to the jobs during each day of work. Determining when an activity should start or end, depending on its (1) duration, (2) predecessor activity (or activities), (3) predecessor relationships, (4) resource availability, and (5) target completion date of the project. 2. Classify the scheduling strategies? Chase strategy Level production Make-to-stock Make-to-order Assemble-to-order 3. Write down the priority sequencing rules? Finish to Start (FS) Start to Start (SS) Finish to Finish (FF) Start to Finish (SF) 4. What are the inputs to scheduling? Performance standards U nit of measurement Unit of loading and scheduling Effective capacity per work centre 5. Mention the principles of scheduling? Eliminate Dead Hours Use daylight hours Study before recitation-type classes Study after lecture-type classes List according to priorities Avoid too much detail. Know your sleep pattern Discover how long to study 6. What is backward scheduling? Backward scheduling is planning the tasks from the due date or required-by date to determine the start date and/or any changes in capacity required. 7. What is Index method of Assignment problem? It is a technique that can be effectively utilized for the purpose of loading and the allocation of different jobs to different machines.

8. What is critical ratio scheduling? It is a technique for establishing and maintaining priorities among the jobs in a factory. The technique utilizes the concepts of ratios called critical ratios which set the time relationship between when a product is required and when it can be made available. 9. What is Gantt chart? It is a very useful aid in loading and scheduling, dispatching and progressing. The chart is normally drawn on a printed or ruled sheet.Itwas developed by an American engineer, Henry L. Gantt. 10. What is expediting? To speed up the progress of; accelerate. To execute quickly and efficiently: was trusted to expedite the directives of the board. To issue officially; dispatch.

PART B
Write the procedure steps of hugarian method for to solving assignment problems.

START

SETUP COST TABLE FOR PROBLEM

IS IT A MAXIMISATION PROBLEM ?

CONVERT IT IN TO MINIMISATION PROBLEM BY MINIMISATIONBY SUBRATING ALL THE ELEMENTS FROM LARGEST ELEMENT OF COST TABLE

IS IT A BALANCED PROBLEM ?

ADD DUMMY ROWS OR COLUMNS

OBTAIN REDUCED COST TABLES 1.SUBTRACT SMALLEST NUMBER IN EACH ROW FROM EVERY ELEMENT 2.SUBTRACT SMALLEST NUMBER IN EACH COLUMN FROM EVERY ELEMENT

CAN ALLZEROS BE COVERED NY NO. OF LINES < NO. OF LINES

SUBRACT SMALLER NUMBER NOT COVERED BY A LINE FROM ITSELF AND EVERY OTHER UNCOVERED NUMBER ADD THIS NUMBER AT EVERY INTERSECTION OF ANY TWO LINES.

yes

CHECK EACH ROW AND COLUMN FOR A UNIQUE ZERO AND MAKE THE FIRST CHECK ASSIGNMENT AT THAT INTERSECTION. ELIMINATE THAT ROW AND COLUMN AND SEARCH FOR ANOTHER UNIQUE ZERO MAKE THAT ASSIGNMENT AND PROCEED IN A LIKE MANNER

STOP

Identify the least element in each row and subtract that element from all the elements of that row. Prepare the transformed matrix From the transformed matrix ,identify the least element in each column and deduct that element from all the prepare anew transformation matrix. In the matrix from step 2 start making allocations. Consider row by row identify any single zero in any two encircle it .this is called an allocation. After making an allocation, cancel all the other zeros in the column in which the allocation is made. Now verify whether each row and each column have an assignment. i.e. the number of assignment made should be equal to the order of the matrix. If the the number of assignments is equal to the order of the matrix,optimum solution is obtained. Mark the row for that no assignment could be made Mark the columns ,that have zeros in the marked row Mark the rows, which have assignments in the marked column. Repeat (i) and (ii) till no more marking are possible. Draw lines that passes through all unmarked row and columns. Identify least element from uncovered elements .add this elements at the points of intersection, deduct this element from all the uncovered elements and leave the rest as it is.