MBA - 2nd Year Assignments

Page | 1

Date

: 23.12.2014

Place : Komarapalayam
From,
B.Boobalan, (A12E30164001)
S/o.P.Balasubramaniam,
4-267 NA, Anna Nagar First Street,
Kuppandapalayam 638008
Namakkal, Tamilnadu.
To,
The Director, DD&CE,
Manonmaniam Sundaranar University,
Tirunelveli 627 012
Respected Sir,
Subject: Submission of Assignments Reg.
I am pursuing my second year MBA in production management in your esteemed university
through Distance Education. Hereby I am forwarding & submitting my second year assignments for
your kind perusal. I promise you that all the assignments are truly prepared by myself only. Kindly go
through my assignments and award me your valuable internal marks for the fulfillment of my MBA
degree in production management.

Thanking You

Yours Truly,

B.Boobalan

Page | 2

Name
Reg.No

: B.Boobalan
: A12E30164001

Degree
: MBA-Production II year
Paper Code : DRC22

Subject

: Functional Management II

1.Determinants Of Working Capital

Requirements Of working capital depend upon various factors such
as nature of business, size of business, the flow of business activities.
However, small organization relatively needs lesser working capital than
the big business organization. Following are the factors which affect the
working capital of a firm:

Page | 3

1. Size Of Business
Working capital requirement of a firm is directly influenced by the size of
its business operation. Big business organizations require more working
capital than the small business organization. Therefore, the size of
organization is one of the major determinants of working capital.
2. Nature Of Business
Working capital requirement depends upon the nature of business
carried by the firm. Normally, manufacturing industries and trading
organizations need more working capital than in the service business
organizations. A service sector does not require any amount of stock of
goods. In service enterprises, there are less credit transactions. But in the
manufacturing or trading firm, credit sales and advance related
transactions are in large amount. So, they need more working capital.
3. Storage Time Or Processing Period
Time needed for keeping the stock in store is called storage period. The
amount of working capital is influenced by the storage period. If storage
period is high, a firm should keep more quantity of goods in store and
hence requires more working capital. Similarly, if the processing time is
more, then more stock of goods must be held in store as work-inprogress.
4. Credit Period
Credit period allowed to customers is also one of the major factors which
influence the requirement of working capital. Longer credit period
requires more investment in debtors and hence more working capital is
needed.But, the firm which allows less credit period to customers needs
less working capital.

Page | 4

5. Seasonal Requirement
In certain business, raw material is not available throughout the year.
Such business organizations have to buy raw material in bulk during the
season to ensure an uninterrupted flow and process them during the
entire year. Thus, a huge amount is blocked in the form of raw material
inventories which gives rise to more working capital requirements.
6. Potential Growth Or Expansion Of Business
If the business is to be extended in future, more working capital is
required. More amount of working capital is required to meet the
expansion need of business.
7. Changes In Price Level
Change in price level also affects the working capital requirements.
Generally, the rise in price will require the firm to maintain large amount
of working capital as more funds will be required to maintain the sale
level of current assets.

8. Dividend Policy
The dividend policy of the firm is an important determinant of working
capital. The need for working capital can be met with the retained
earning. If a firm retains more profit and distributes lower amount of
dividend, it needs less working capital.
9. Access To Money Market
If a firm has good access to capital market, it can raise loan from bank
and financial institutions. It results in minimization of need of working
capital.

Page | 5

10. Working Capital Cycle

When the working capital cycle of a firm is long, it will require larger
amount of working capital. But, if working capital cycle is short, it will
need less working capital.
11. Operating Efficiency
The operating efficiency of a firm also affects the firm's need of working
capital. The operating efficiency of the firm results in optimum utilization
of assets. The optimum utilization of assets in turn results in more fund
release for working capital.

Other determinants:
The following are the other determinants of working capital:
i) Absence of co-ordination in production and distribution policies in a
company results in a high demand for working capital.
ii) The absence of specialisation in the distribution of products may
enhance the need of working capital.
iii) If the means of transport and communication in a country like India
are not well-developed, the industries may face a great demand for
working capital in order to maintain big inventory of raw materials and
other accessories.

Page | 6

Name
Reg.No

: B.Boobalan
: A12E30164001

Degree
: MBA-Production II year
Paper Code : DRC22

Subject

: Functional Management II

2. Important Types of Plant Layout

Some of the important types of plant layout are: A. Product or line
layout, B. Process or functional layout, C. Layout by stationary
material!

(A) Product or Line Layout:

Product or Line Layout is the arrangement of machines in a line (not
always straight) or a sequence in which they would be used in the
process of manufacture of the product. This type of layout is most
appropriate in case of continuous type of industries where raw
materials is fed at one end and taken out as finished product at the
other end. For each type of product a separate line of production will
have to be maintained.
This type of layout is most suitable in case of metal extraction
industry, chemical industry, soap manufacturing industry, sugar
industry and electric industry. It should be noted that this method is
most suitable in case of mass production industries.
Advantages of Product Layout:
(1) Removal of obstacles in production:
Product layout ensures unrestricted and continuous production
thereby minimising bottlenecks in the process of production, this is
because work stoppages are minimum under this method.

Page | 7

(2) Economies in material handling:

Under this method there are direct channels for the flow of materials
requiring lesser time which considerably eliminate back-tracking of
materials. On account of this, cost of material handling is considerably
reduced. This is greatly helpful in achieving desired quality of the end
product.
Disadvantages of Product Layout:
(1) Lesser flexibility:
As work is carried in sequence and process arranged in a line, it is very
difficult to make adjustments in production of operations. Sometimes,
certain changes under this method become very costly and
impractical. On account of this drawback, this method is not suitable
in the production of goods which are subject to quick style and design
changes.
(2) Large investment:
Under this method, machines are not arranged in accordance with
functions as such similar type of machines and equipment is fixed at
various lines of production. This leads to unavoidable machinery
duplication resulting in idle capacity and large capital investment on
the part of the entrepreneur.

(B) Functional or Process Layout:

It is just the reverse of product layout. There is a functional division of
work under this method. For example, lathes are fixed in one
department and welding activities are carried in another department
of the factory. The salient features of this type of layout are based on
Frederick W. Taylors concept of functional organisation.
Page | 8

This method is generally adopted for producing different varieties of

unlike products. This is particularly adopted tor job order industries
like engineering, ship building and printing etc. The following diagram
shows that raw material travels through various process or
departments from lathes passing through mills, grinders, drills,
welding, inspection, finishing, and assembly and to finished product.

Advantages of Process Layout:

(1) Maximum utilisation of machines:
This method ensures fuller and effective utilisation of machines and
consequently investment in equipment and machines becomes
economical.
(2) Greater flexibility:
Changes in the sequence of machines and operations can be made
without much difficulty. This is because the machines are arranged in
different departments in accordance with the nature of functions
performed by them.
Disadvantages of Process Layout:
(1) Coverage of more floor area:
Under this method, more floor space is needed for the same quantum
of work as compared to product layout.
(2) Higher cost of material handling:
Material moves from one department to another under this method,
leading to the higher cost of material handling. The mechanical
devices of material handling cannot be conveniently employed under
this method on account of functional division of work. Material has to
Page | 9

be carried by applying other methods from one department to

another, resulting into higher cost of material handling.

(C) Layout by Stationary Material:

This type of layout is undertaken for the manufacture of large parts
and assemblies. In this case, material remains fixed or stationary at
one place, men and equipment are taken to the site of material. This is
suitable in case of ship building, locomotives and heavy machinery
industries etc.
Advantages:
(a) Economies in transformation:
As the work is carried at one place and material is not taken from one
place to another, this leads to savings in transformation costs.
(b) Different jobs with same layout:
Different projects can be undertaken with the help of same layout.
Disadvantages:
(a) Immobility of material:
As material is fixed at one place, this leads to certain difficulties in
arranging specialised workers, machines and equipment for the job.
(b) Large investment:
This method is time consuming and costlier as compared to first two
methods.

Page | 10

Name
Reg.No

: B.Boobalan
: A12E30164001

Subject

: Material Management

Degree
: MBA-Production II year
Paper Code : DRP24

1. Time series analysis in material management.

Time series analysis comprises methods for analyzing time series data
in order to extract meaningful statistics and other characteristics of
the data. Time series forecasting is the use of a model to predict future
values based on previously observed values. While regression
analysis is often employed in such a way as to test theories that the
current values of one or more independent time series affect the
current value of another time series, this type of analysis of time series
is not called "time series analysis", which focuses on comparing values
of a single time series or multiple dependent time series at different
points in time.
Time series data have a natural temporal ordering. This makes time
series analysis distinct from cross-sectional studies, in which there is
no natural ordering of the observations (e.g. explaining people's wages
by reference to their respective education levels, where the individuals'
data could be entered in any order). Time series analysis is also
distinct from spatial data analysis where the observations typically
relate to geographical locations (e.g. accounting for house prices by the
location as well as the intrinsic characteristics of the houses).
A stochastic model for a time series will generally reflect the fact that
observations close together in time will be more closely related than
observations further apart. In addition, time series models will often
make use of the natural one-way ordering of time so that values for a
Page | 11

given period will be expressed as deriving in some way from past

values, rather than from future values (see time reversibility.)
Time series analysis can be applied to real-valued, continuous
data, discrete numeric data, or discrete symbolic data (i.e. sequences
of characters, such as letters and words in the English language.[2]).
Methods for time series analyses
Methods for time series analyses may be divided into two
classes: frequency-domain methods and time-domain methods. The
former include spectral analysis and recently wavelet analysis; the
latter include auto-correlation and cross-correlation analysis. In time
domain correlation analyses can be made in a filter-like manner
using scaled correlation, thereby mitigating the need to operate in
frequency domain.
Additionally, time series analysis techniques may be divided
into parametric and non-parametric methods. The parametric
approaches assume that the underlying stationary stochastic
process has a certain structure which can be described using a small
number of parameters (for example, using
an autoregressive or moving average model). In these approaches, the
task is to estimate the parameters of the model that describes the
stochastic process. By contrast, non-parametric approaches explicitly
estimate the covarianceor the spectrum of the process without
assuming that the process has any particular structure.
Methods of time series analysis may also be divided
into linear and non-linear, and univariate and multivariate.
Page | 12

Analysis
There are several types of motivation and data analysis available for
time series which are appropriate for different purposes.
Motivation
the context of statistics, econometrics, quantitative
finance, seismology, meteorology, and geophysics the primary goal of
time series analysis is forecasting. In the context of signal
processing, control engineering and communication engineering it is
used for signal detection and estimation, while in the context of data
mining, pattern recognition and machine learning time series analysis
can be used for clustering, classification, query by content, anomaly
detection as well as forecasting.
Exploratory analysis

Tuberculosis incidence US 1953-2009

The clearest way to examine a regular time series manually is with
a line chart such as the one shown for tuberculosis in the United
States, made with a spreadsheet program. The number of cases was
standardized to a rate per 100,000 and the percent change per year in
this rate was calculated. The nearly steadily dropping line shows that
Page | 13

the TB incidence was decreasing in most years, but the percent change
in this rate varied by as much as +/- 10%, with 'surges' in 1975 and
around the early 1990s. The use of both vertical axes allows the
comparison of two time series in one graphic. Other techniques
include:
Autocorrelation analysis to examine serial dependence
Spectral analysis to examine cyclic behavior which need not be related
to seasonality. For example, sun spot activity varies over 11 year
cycles.[3][4] Other common examples include celestial phenomena,
weather patterns, neural activity, commodity prices, and economic
activity.
Separation into components representing trend, seasonality, slow and
fast variation, and cyclical irregularity: see trend estimation and
decomposition of time series
Prediction and forecasting
Fully formed statistical models for stochastic simulation purposes, so
as to generate alternative versions of the time series, representing
what might happen over non-specific time-periods in the future
Simple or fully formed statistical models to describe the likely
outcome of the time series in the immediate future, given knowledge
of the most recent outcomes (forecasting).

Page | 14

Name

: B.Boobalan

Degree

: MBA-Production II year

Reg.No

: A12E30164001

Paper Code : DRP24

Subject

: Material Management

2. Simulation and its Applications in Inventory Control

Simulation is the process of imitating a real phenomenon with a set of
mathematical formulas. Advanced computer programs can simulate
weather conditions, chemical reactions, atomic reactions and even
biological processes. In theory any phenomenon that can be reduced to
mathematical data and equations can be simulated on a computer. One
of the tricks to developing useful simulations, is to determine which are
the most important factors .In addition to imitating processes to see
how they behave under different conditions, simulators are also used to
test new theories .After creating a theory of causal relationships, the
theorist can codify the relationship in the form of a computer program.
If the program the behaves in the same way as the real process, there is
a good chance that proposed relationships are correct.
An inventory control system should take into account key
factors such as demand fluctuation based on market trends,
spoilage in unstable goods such as food or chemicals,
shrinkage due to spills, product damaged in shipping, and
shrinkage caused by staff. Demand fluctuation based on
market trends can only be predicted in a general sense by
analyzing past precedences with similar products and how
they relate to new items. In contrast, the spoilage of
unstable goods is usually a very predictable process and
can be minimized by effectively estimating how much
product will be sold before the shelf-life of the item expires, thereby
eliminating
over-purchasing.
Within
inventory
control,
estimating
the
market
demand
for
unstable goods and ensuring that the company does not buy
too much or too little of a product is among the most
difficult of tasks, and must be supported by large volume
data samples before an informed decision can be made.
Page | 15

Shrinkage due to spills can be minimized through the

employee training programs, although the exact amount of
shrinkage will vary dramatically between locations and
require some real-world data gathering. Shrinkage due to
internal and external staff can be virtually eliminated by
enhancing systemic security protocols, including adequate
security
monitoring
and
loss-prevention
technology.
During the past many years simulated models in inventory
management
are
discussed
by
many
researchers.
Donald.L.Byrkett(1978) demonstrated the use of simulation
in the design of a forecasting and inventory control system
The use of alternate approximate modelling strategies was
simulated using an analytic simulation model of the real
system
on
a
relatively
large
sample
of
parts.
Andersson(1980)
described
hierarchical
planning
methods
which
can
be
utilized
in
connection
with
material
requirements planning have been evaluated in a simulation
study. A simulation based decision support system for
multiproduct inventory control management is developed
by Masood.A.Badri (1999 )The model in this system
permits the management to obtain an inventory systemwide view of the
effect
of
changes
in
decision
variables
on
the
performance
measures
of
a
furniture
manufacturingfirm..Arboleda(2005)described
the
use
of
reinforcement
learning
algorithms
and
artificial
neural
networks
for
the
optimization
of
simulation
models.
Several types of variables are taken into account in order to
find global optimum values. The benefits of approach are
demonstrated through the example of an inventory control
problem
frequently
found
in
manufacturing
systems.Kattan(2010) studied first time simulation model
of inventory control system in supply chain management
using barcode and Radio Frequency Identification (RFID).
The main objective of this model is to compare two
inventory systems in a supply chain, one using RFID,
versus the barcode The model will help company to consider moving
from
a
barcode
system
to
the
RFID
application.
Page | 16

When simulating an inventory control systems project, it is

important to take stock of all the key elements of real-world
inventory control without overlooking the critical realworld factors. A
well-designed
inventory
control
simulation
should
include
data
based
on
the
recommendations of front-line employees who know where
losses
occur
that
might
otherwise
go
unnoticed.A
simulation model is easier to explain to management
personnel since it is a description of behavior of some
system or process.Hence even a non-technical manager can
comprehend
situation
more
easily
than
a
complex
mathematical
model.
HOW TO IMPLEMENT SIMULATION IN INVENTORY
MANAGEMENT
Choosing an inventory control strategy for the simulation
experiment requires an intimate knowledge of the specific
nature of the business being analyzed. A small-scale
greengrocer, for example, should focus their inventory
control strategy on anticipating consumer demand and
minimizing loss due to spoilage, whereas a large stable
goods retailer such as Wal-Mart, Kmart or Target can
afford to make large purchase orders of items, store them in
a warehouse and distribute them internally while receiving
volume
purchasing
discounts.
To provide efficient service to customers,it is necessary to
choose reorder point with proper consideration of demand
during lead time.If the lead time and demand of inventory
per unit time both are random variables,then the simulation
techniques can be applied to determine the effect of
alternate
inventory
policies
on
a
stochastic
inventory
system i.e. different combinations of order quantity and reorder
point.Thus we run the inventory system artificially by
generating the future observations on the assumptions of
the
same
distributions.
In inventory control, the problem of determining the
replenishment policy due to uncertain demand and lead
time
can
be
solved
by
simulation.Instead
of
trying
manually the three replenishment alternatives for each level
Page | 17

of demand and lead time for a period of one year and then
selecting the best one,we process on the computer and
obtain the results in a very short time at a small cost.
Uncertainty and variation in construction process has an
important influence on project performance.
The common practice to deal with variation is the holding of inventory.
A suitable inventory improves the performance of project.
However,
excessive
inventory
induces
no-added
value.
Simulation
experiments
show
that
application
of
DES(discrete
event
simulation)
and
CONWIP(constant
work-in-progress) provides an effective way of inventory
control,
simultaneously,
maintain
throughout
the
cycle
time . Using advanced computer simulation models is an
economical way to help in decision-making which allows
the user to visualize the effects of changes to existing
systems and what the costs will be prior to implementation.
Just
-in-Time(JIT),
Total
Quality
Management
(TQM)
,decision
support
systems
for
continuous
improvement,
graphical display of physical elements, simulating dynamic
changes
of
the
system,
communication
tool,
problem
understanding tool, AS-IS vs. TO-BE models, random
behaviour
of
system
elements
captured
in
models,
manufacturing oriented models, models usually represent
the flow of physical object, is used in Inventory control
management.

Page | 18

Name

: B.Boobalan

Degree

Reg.No

: A12E30164001

Paper Code : DRP26

Subject

: Project Management

1.

: MBA-Production II year

Critical Path Analysis CPA (Network Analysis)

Critical Path Analysis (CPA) is a project management tool that: Sets

out all the individual activities that make up a larger project.Shows the
order in which activities have to be undertaken.Shows which activities
can only taken place once other activities have been completed.
Shows which activities can be undertaken simultaneously, thereby
reducing the overall time taken to complete the whole project.
Shows when certain resources will be needed for example, a crane to
be hired for a building site.
In order to construct a CPA, it is necessary to estimate the elapsed
time for each activity that is the time taken from commencement to
completion.
Then the CPA is drawn up a based on dependencies such as:
The availability of labour and other resources
Lead times for delivery of materials and other services
Seasonal factors such as dry weather required in a building project
Once the CPA is drawn up, it is possible to see the CRITICAL
PATH itself this is a route through the CPA, which has no spare
time (called FLOAT or slack) in any of the activities. In other words,
Page | 19

if there is any delay to any of the activities on the critical path, the
whole project will be delayed unless the firm makes other changes to
bring the project back on track.
The total time along this critical path is also the minimum time in
which the whole project can be completed.
Some branches on the CPA may have FLOAT, which means that there
is some spare time available for these activities.
What can a business do if a project is delayed?
Firstly, the CPA is helpful because it shows the likely impact on the
whole project if no action were taken.
Secondly, if there is float elsewhere, it might be possible to switch staff
from another activity to help catch up on the delayed activity.
As a rule, most projects can be brought back on track by using extra
labour either by hiring additional people or overtime. Note, there
will be usually be an extra cost. Alternative suppliers can usually be
found but again, it might cost more to get urgent help.
The key rules of a CPA
Nodes are numbered to identify each one and show the Earliest Start
Time (EST) of the activities that immediately follow the node, and the
Latest Finish Time (LFT) of the immediately preceding activities
The CPA must begin and end on one node see below
There must be no crossing activities in the CPA
Page | 20

East activity is labelled with its name eg print brochure, or it may be

given a label, such as D, below.
The activities on the critical path are usually marked with a //
In the example below
The Node is number 3
The EST for the following activities is 14 days
The LFT for the preceding activities is 16 days
There is 2 days float in this case (difference between EST and LFT)
The activity that follows the node is labelled D and will take 6 days

A simple example baking a loaf of bread

Here is a simple example, in which some activities depend on others
having been undertaken in order, whereas others can be done
independently.
Page | 21

Activity

Preceded by Elapsed time

(minutes)

A weigh ingredients

B mix ingredients

C dough rising time

60

D prepare tins

E pre-heat oven

10

F knock back dough and place C&D

in tins
G 2 nd dough rising time

15

H cooking time

E&G

40

Page | 22

In this example, there is a clear sequence of events that have to

happen in the right order. If any of the events on the critical path is
delayed, then the bread will not be ready as soon. However, tasks D
(prepare tins) and E (heat the oven) can be started at any time as long
as they are done by the latest finish time in the following node.
So, we can see that the oven could be switched on as early as time 0,
but we can work out that it could be switched on at any time before 71
any later than this and it wont be hot enough when the dough is
ready for cooking. There is some float available for tasks D and E as
neither is on the critical path.
This is a fairly simple example, and we can see the LST and LFT are
the same in each node. In a more complex CPA, this will not
necessarily be the case, and if so, will indicate that there is some float
in at least one activity leading to the node. However, nodes on the
critical path will always have the same EST and LFT.

Page | 23

Name

: B.Boobalan

Degree

: MBA-Production II year

Reg.No

: A12E30164001

Paper Code : DRP26

Subject

: Project Management

2.Factors considered for location size in technical analysis.

Location and site: Initially, as many locations as possible should be
identified which meet the most fundamental operational requirements
of the proposed project. These should then be evaluated and an
optimum location selected using the criteria of material versus market
orientation (see note below), quality standards, infrastructural status,
local laws, and socio-economic and living conditions. Within the
geographical location so selected, alternative sites are similarly
identified and the most optimal one selected after considering factors
like terrain, local climate land its impact on plant & equipment and their
operation), availability and cost of land (plus its development), local
infrastructural facilities and their costs (power; water: road/ air/water
transport; telecommunications; etc.), socio-economic conditions,
availability and quality of labour and construction equipment, valid
waste disposal alternatives and their costs, local living conditions,
public policies, local law, and taxes, etc. [Note: Resource-oriented
projects like mining of minerals involve items like geological analysis
covering geological structure, hydrological conditions, characteristics
of the resource, resource reserves, prospecting status, and expected
geological
problems.
The locational decision should be made after giving due consideration
to various benefits and incentives offered by governments or local
bodies for setting up production or service facilities in certain specified
areas. These may include assistance in the form of or in respect of
capital loans and grants, tax, concessions, clearances, subsidies,
infrastructure, etc. One way to do this is to evolve (or use available).
Location Cost Indices (LCI) for different sites. If the cost (in a specified
currency) of setting up a plant is CA at location A and CB at location B,
the LCI for location A is defined as 100 x CA/CB. If reliable values of
Page | 24

LCI for different locations, whether within one or more countries, are
available, the selection of an appropriate location becomes a bit more
easy. Such valuable information is however kept a closely guarded
secret by a consulting company and is therefore difficult to come by.
Plant Size: Determination of an optimum plant size is critical to the
success of a project. A plant represents sunk costs and any under
utilisation of its capacity means either reduced profits or, for levels
below the Break-Even Point, losses. The adverse impact of an extralarge capacity is felt all the more keenly during the early years when
profits are all the more important for survival. It is therefore normally
better to err on the lower side and to build a plant having a capacity that
is likely to be fully utilized quickly, rather than to go in for a large
capacity in the fond hope of a growing share of the market. In a
feasibility study, one-begins by looking 'at projections of the demandsupply Feasibility and Technical Analysis. gap in the market and
anticipated arrives' at the possible range of project sizes after
considering various constants like availability of materials, technology,
equipment, public policy (for example, a large company may be
precluded from setting up capacities beyond a size) and finances, etc..
The best possible size of plant & equipment is then recommended after
analysing the availability, economics, and practicability of different size
options.
Technology: The same product or service can generally be obtained
using quite different technologies. Electricity, for example, can be
generated using solar panels, coal (thermal plants), hydraulic power
plants, nuclear power plants and so on. Basic telephone Sol-vices can
similarly be provided using manual, semiautomatic, or automatic
exchanges. And, even the last-named category is available if] various
technological versions like Stronger, Crossbar, Analogue electronic and
Digital electronic. Needless to say, the latest technologies usually
represent many improvements over the existing or older ones. They
may also offer certain unique features. However, newly emerging
technologies may have some inherent dangers as well.
What is important for formulating a successful project is to weigh
available alternative technologies and select the one that is most
appropriate in the prevailing situation, rather than blindly adopt the
Page | 25

latest, state-of-the-art technology assuming that it will work since it

works elsewhere. A technology is considered appropriate only if it is
assessed
to
be
satisfactory,
and
relevant,
vis-vis the following aspects in lie specific situation of the project.
Specifications of the task/product Task uncertainties and
interdependence [Especially for public sector] Developmental
imperatives (e.g. growth of employment; maximising use of local
resources;
reduction
of
disparities
in
income
levels)
Required gestation period versus the time actually available of the
project. Source(s) and ease of availability. [Remember the Cray super
computer deal between USA and India'?] Indigenous availability of
comparable technology Field validation status in comparable
situations. If necessary, field trials may have to be set up.
Adaptability to the qualitative characteristics of the locally (or
indigenously) available resources including energy and efficiency in
their usage Dependence on nonrenewable sources of energy
Capacity of the organisation to absorb/adopt the technology
Required operational parameters of ambient environment. For
example, a technology which has proven itself in cold climates may fail
in tropics. Timely availability of manpower with requisite skills for
installation, operation and maintenance Cost of' acquisition,
installation,
repairs
and
maintenance
versus
availability
of funds (local/foreign) Safety characteristics Requirement or
availability of R & D facilities Environmental and sociocultural
sensitivities Likelihood, and time frame, of obsolescence After the
existing technologies have been ranked on the basis of the above point,
these have to be further assessed vis--vis acquisitional aspects. viz., the
available modes of procuring it and the associated costs in focal or
foreign currencies. The important questions to be asked include: Is the
technology available as a technical know-how, or through a technical
collaboration, or a joint venture? Are patents, trademarks, or licensing
involved? At what terms and with what legal obligations'?
Will it tie down the investor to procure equipment(s) as well from a
specific country or company? Design, Layout & Plant & Machinery: The
feasibility study should broadly specify the recommended design of the
processes and plant (giving essential assumptions and design
calculations). It should also present a rough layout of various facilities
and list out all the major equipments needed, with key
Page | 26

specifications and available source(s) of supply. Moreover, it should

consider,and evaluate, alternative equipments as well and give
reasoned recommendations about them. Project Formulation and
Appraisal The importance of thoroughness of planning at this stage of
the feasibility study can hardly be overemphasized. Many delays, cost
overruns, and even failures of projects can be avoided provided the
design and physical formulation of the project are based on a
sufficiently deep analysis and have the support of the
owner at the highest level. Otherwise, the project is likely to encounter
midsteam changes, with untoward consequences. There is a general
impression that "minor" midstream changes would not pose much of a
problem. This is not so. A project is a multi-task entity with complex
linkages and interrelationships between its various constituents, and
even "small" changes, which may result in certain made-to-order
procured equipments being rendered unsuitable and thus throw the
project schedule and costs haywire.
The aim of all the efforts at this stage is to design a viable operating
entity which not only works, but works harmoniously (and with
minimum costs) in relation to the stipulated inputs and local
environment. Apparent as well as latent and relatively infrequent
factors having a bearing on the effectiveness of the project must
therefore be identified and considered. Neglect of climatic and
geographical aspects (e.g. monsoons, floods, snowstorms, duststorms, heat/cold-waves, earthquakes, typhoons, etc.) at this stage can
prove quite costly later on. It is equally important to ascertain and give
due consideration to local industrial and safety standards

Page | 27

Name

: B.Boobalan

Degree

: MBA-Production II year

Reg.No

: A12E30164001

Paper Code : DRP27

Subject

: Operation Research

1. Explain with examples, the probabilistic models in operations research

Modelling Classifications:
Static vs. Dynamic:
Static: No attempts to model a time sequence of changes.
Dynamic: Updating each entity at each occurring event.
Deterministic vs. Stochastic:
Deterministic: Rule based.
Stochastic: Based on conditional probabilities.
Discrete vs. Continuous:
Discrete: Changes in the state of the system occur instantaneously at
random points in time as a result of the occurrence of discrete events.
Continuous: Changes of the state of the system occur continuously over
Time.
Elements of a Discrete Event Simulation Model:
Entities: Tangible elements (temporary/permanent) found in the real world.
Logical Relationships: Link the different entities together.
Executive: Controlling the time advance (dynamic behaviour of the model).
Random number generator: Used to provides stochastic behaviour.

Page | 28

Limitations OF OPERATION RESEARCH:

Dependence on an Electronic Computer:
O.R. techniques try to find out an optimal solution taking into account all the factors. In
the modern society, these factors are enormous and expressing them in quantity and
establishing relationships among these require voluminous calculations that can only be
handled by computers.
Non-Quantifiable Factors:
O.R. techniques provide a solution only when all the elements related to a problem can
be quantified. All relevant variables do not lend themselves to quantification. Factors that
cannot be quantified find no place in O.R. models.
Distance between Manager and Operations Researcher:
O.R. being specialist's job requires a mathematician or a statistician, who might not be
aware of the business problems. Similarly, a manager fails to understand the complex
working of O.R. Thus, there is a gap between the two.
Money and Time Costs:
When the basic data are subjected to frequent changes, incorporating them into the O.R.
models is a costly affair. Moreover, a fairly good solution at present may be more
desirable than a perfect O.R. solution available after sometime.
Implementation:
Implementation of decisions is a delicate task. It must take into account the complexities
of human relations and behaviour.
Application Types:

Design and Operation of Queuing Systems

Managing Inventory Systems
Estimating the Probability of Completing a Project by the Deadline
Design and Operation of Manufacturing & Distribution Systems
Page | 29

Financial Risk Analysis

Health Care Applications
Applications to Other Service Industries
Government service, banking, hotels, restaurants, educational institutions,
disaster planning, the military, amusement parks.

Advantages:
Interaction of random events: e.g. random occurrence of machine breakdowns
Non-standard distributions: Only simulation gives you the flexibility to describe

events and timings as they occur in real life

Communication tool (visualisation, animation). Lets you clearly describe your
proposal to others
It is able to show the behaviour of a system (how the system develops over time)
rather than just the end result.
Makes you think: Simulation provides a vehicle for a discussion about all aspects
of a process
Most simulation packages have some optimisation add-ons; once a valid
simulation model exists it can also be used for optimisation

Basic concept of simulation is easy to comprehend and hence easier to justify to

customer.
Requires fewer simplifying assumptions and hence captures more of the true
characteristic of the system under study.
Allows us to gain insight into how a modelled system actually works and
understanding of which variables are most important to performance.

Page | 30

Disadvantages of Simulation:
Utility of the study depends upon the quality of the model and the skills of the
modeller.
Gathering highly reliable input data can be time consuming and therefore
expensive.
Simulation models do not yield an optimal solution, rather they serve as a tool for
analysis of the behaviour of a system under conditions specified by the
experimenter.

Page | 31

Name

: B.Boobalan

Degree

: MBA-Production II year

Reg.No

: A12E30164001

Paper Code : DRP27

Subject

: Operation Research

2. Procedure of arriving the optimal solution to a Linear Programming Problem

Linear programming (LP) is an application of matrix algebra used to

solve a broad class of problems that can be represented by a system of
linear equations. A linear equation is an algebraic equation whose
variable quantity or quantities are in the first power only and whose
graph is a straight line. LP problems are characterized by an objective
function that is to be maximized or minimized, subject to a number of
constraints. Both the objective function and the constraints must be
formulated in terms of a linear equality or inequality. Typically; the
objective function will be to maximize profits (e.g., contribution
margin) or to minimize costs (e.g., variable costs).. The following
assumptions must be satisfied to justify the use of linear
programming:
Linearity. All functions, such as costs, prices, and technological
requirements, must be linear in nature.
Certainty. All parameters are assumed to be known with certainty.
Non negativity. Negative values of decision variables are unacceptable.
Two approaches were commonly used to solve LP problems:
Graphical method
Simplex method
Page | 32

Now, however, MSExcel is much easier to use.

The graphical method is limited to LP problems involving two decision
variables and a limited number of constraints due to the difficulty of
graphing and evaluating more than two decision variables. This
restriction severely limits the use of the graphical method for realworld problems. The graphical method is presented first here,
however, because it is simple and easy to understand and it is a very
good learning tool.
The computer-based simplex method is much more powerful than the
graphical method and provides the optimal solution to LP problems
containing thousands of decision variables and constraints. It uses an
iterative algorithm to solve for the optimal solution. Moreover, the
simplex method provides information on slack variables (unused
resources) and shadow prices (opportunity costs) that is useful in
performing sensitivity analysis. Excel uses a special version of the
simplex method, as will be discussed later.

CONSTRUCTING LINEAR PROGRAMMING PROBLEMS AND

SOLVING THEM GRAPHICALLY
We will use the following Bridgeway Company case to introduce the
graphical method and illustrate how it solves LP maximization
problems. Bridgeway Company manufactures a printer and keyboard.
The contribution margins of the printer and keyboard are $30 and
$20, respectively. Two types of skilled labor are required to
manufacture these products: soldering and assembling. A printer
Page | 33

requires 2 hours of soldering and I hour of assembling. A keyboard

requires 1 hour of soldering and 1 hour of assembling. Bridgeway has
1,000 soldering hours and 800 assembling hours available per week.
There are no constraints on the supply of raw materials. Demand for
keyboards is unlimited, but at most 350 printers are sold each week.
Bridgeway wishes to maximize its weekly total contribution margin.
Constructing the Linear Programming Problem for Maximization of
the Objective Function
Constructing the LP problem requires four steps:
Step 1. Define the decision variables.
Step 2. Define the objective function.
Step 3. Determine the constraints.
Step 4. Declare sign restrictions.
STEP 1: DEFINE THE DECISION VARIABLES. In any LP problem,
the decision variables should completely describe the decisions to be
made. Bridgeway must decide how many printers and keyboards
should be manufactured each week. With this in mind, the decision
variables are defined as follows:
X = Number of printers to produce weekly
Y = Number of keyboards to produce weekly
STEP 2: DEFINE THE OBJECTIVE FUNCTION. The objective
function represents the goal that management is trying to achieve. The
Page | 34

goal in Bridgeway's case is to maximize (max) total contribution

margin. For each printer that is sold, $30 in contribution margin will
be realized. For each keyboard that is sold, $20 in contribution margin
will be realized. Thus, the total contribution margin for Bridgeway can
be expressed by the following objective function equation:
max Z = $30X + $20Y
where the variable Z denotes the objective function value of any LP
problem. In the Bridgeway case, Z equals the total contribution margin
that will be realized when an optimal mix of products X (printer) and
Y (keyboard) is manufactured and sold.
STEP 3: DETERMINE THE CONSTRAINTS. A constraint is simply
some limitation under which the enterprise must operate, such as
limited production time or raw materials. In Bridgeway's case, the
objective function grows larger as X and Y increase. In other words, if
Bridgeway were free to choose any values for X and Y, the company
could make an arbitrarily large contribution margin by choosing X and
Y to be very large. The values of X and Y, however, are restricted by the
following three constraints:
Constraint 1. Each week, no more than 1,000 hours of soldering time
may be used. Thus, constraint l may be expressed by:
2X + Y 1,000
because it takes 2 hours of soldering to produce one printer and 1 hour
of soldering to produce one keyboard.

Page | 35

Name

: B.Boobalan

Degree

: MBA-Production II year

Reg.No

: A12E30164001

Paper Code : DRP28

Subject

: Entrepreneurship and Management of Small Business.

1. Role of entrepreneurship in the economic development

The entrepreneur who is a business leader looks for ideas and puts
them into effect in fostering economic growth and development.
Entrepreneurship is one of the most important input in the economic
development of a country. The entrepreneur acts as a trigger head to
give spark to economic activities by his entrepreneurial decisions. He
plays a pivotal role not only in the development of industrial sector of
a country but also in the development of farm and service sector. The
major roles played by an entrepreneur in the economic development
of an economy is discussed in a systematic and orderly manner as
follows.
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilising the idle
savings of public. They employ their own as well as borrowed
resources for setting up their enterprises. Such type of entrepreneurial
activities lead to value addition and creation of wealth, which is very
essential for the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the
unemployed which is a chronic problem of underdeveloped nations.
With the setting up.of more and more units by entrepreneurs, both on
small and large-scale numerous job opportunities are created for
Page | 36

others. As time passes, these enterprises grow, providing direct and

indirect employment opportunities to many more. In this way,
entrepreneurs play an effective role in reducing the problem of
unemployment in the country which in turn clears the path towards
economic development of the nation.

(3) Promotes Balanced Regional Development:

Entrepreneurs help to remove regional disparities through setting up
of industries in less developed and backward areas. The growth of
industries and business in these areas lead to a large number of public
benefits like road transport, health, education, entertainment, etc.
Setting up of more industries lead to more development of backward
regions and thereby promotes balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural outcome of industrial and business
activity. Industrial development normally lead to concentration of
economic power in the hands of a few individuals which results in the
growth of monopolies. In order to redress this problem a large number
of entrepreneurs need to be developed, which will help reduce the
concentration of economic power amongst the population.
(5) Wealth Creation and Distribution:
It stimulates equitable redistribution of wealth and income in the
interest of the country to more people and geographic areas, thus
giving benefit to larger sections of the society. Entrepreneurial
Page | 37

activities also generate more activities and give a multiplier effect in

the economy.
(6) Increasing Gross National Product and Per Capita Income:
Entrepreneurs are always on the look out for opportunities. They
explore and exploit opportunities,, encourage effective resource
mobilisation of capital and skill, bring in new products and services
and develops markets for growth of the economy. In this way, they
help increasing gross national product as well as per capita income of
the people in a country. Increase in gross national product and per
capita income of the people in a country, is a sign of economic growth.
(6) Improvement in the Standard of Living:
Increase in the standard of living of the people is a characteristic
feature of economic development of the country. Entrepreneurs play a
key role in increasing the standard of living of the people by adopting
latest innovations in the production of wide variety of goods and
services in large scale that too at a lower cost. This enables the people
to avail better quality goods at lower prices which results in the
improvement of their standard of living.
(7) Promotes Country's Export Trade:
Entrepreneurs help in promoting a country's export-trade, which is an
important ingredient of economic development. They produce goods
and services in large scale for the purpose earning huge amount of
foreign exchange from export in order to combat the import dues

Page | 38

requirement. Hence import substitution and export promotion ensure

economic independence and development.
(8) Induces Backward and Forward Linkages:
Entrepreneurs like to work in an environment of change and try to
maximise profits by innovation. When an enterprise is established in
accordance with the changing technology, it induces backward and
forward linkages which stimulate the process of economic
development in the country.
(9) Facilitates Overall Development:
Entrepreneurs act as catalytic agent for change which results in chain
reaction. Once an enterprise is established, the process of
industrialisation is set in motion. This unit will generate demand for
various types of units required by it and there will be so many other
units which require the output of this unit. This leads to overall
development of an area due to increase in demand and setting up of
more and more units. In this way, the entrepreneurs multiply their
entrepreneurial activities, thus creating an environment of enthusiasm
and conveying an impetus for overall development of the area.

Page | 39

Name

: B.Boobalan

Degree

: MBA-Production II year

Reg.No

: A12E30164001

Paper Code : DRP28

Subject

: Entrepreneurship and Management of Small Business.

2. Evaluate the Public Distribution System (PDS) in TamilNadu

Public Distribution System (PDS) is a poverty alleviation programme

and contributes towards the social welfare of the people. Essential
commodities like rice, wheat, sugar, kerosene and the like are supplied
to the people under the PDS at reasonable prices. PDS is a boon to the
people living below the poverty line. PDS is the primary social welfare
and antipoverty programme of the Government of India. Revamped
Public Distribution System (RPDS) has been initiated by the
Government of India from the year 1992 in order to serve and provide
essential commodities to the people living in remote, backward and
hilly areas. Government introduced Targeted Public Distribution
System (TPDS) in the year 1997. Central Government and State
Governments have been actively involved in steering the operations
for the success of the PDS. It is not possible to neglect the PDS in
India, because majority of the Indian population are living in rural
areas and their standard of living is also poor and they cannot afford
to pay the prevailing market prices for the essential commodities.
Central Government has provided Rs. 6066 Crore for food subsidy in
the Union Budget for the year 1996-97. This has increased over the
years and stood at Rs. 21,200 crores in 2002-03. Tamil Nadu sets a
model in implementing the PDS as universal system for the cause of
eradicating poverty and improving standard of living of the people
living below the poverty line. Timely supply of essential commodities
is the basic element for the success of the PDS. Infrastructure i.e., Fair
Price Shops (FPS), godown facilities and employees are other
Page | 40

requisites of the PDS.

3 The involvement of the Cooperative Societies is noteworthy for the
success of the PDS in Tamil Nadu. The total family cards under the
PDS in Tamil Nadu are 13230193 as on 30th June 2004. There are
21662 full time FPS run by cooperatives. More than 93 per cent of the
fair price shops of Tamil Nadu are managed by cooperatives. It shows
the extensive involvement of the Cooperative Societies in serving the
rural people by taking steps to supply essential commodities in the
right time at affordable prices. In addition to the regular and fulltime
FPS, Department of Cooperation has established part time FPS in
villages. It helps the villagers to purchase the essential commodities in
the nearby places. There are 4673 part time FPS, 549 women shops
and 36 mobile FPS functioning in Tamil Nadu. Cooperative societies
have become accelerator for the success of the PDS in Tamil Nadu. To
procure essential commodities and supply them to the public, an
established and organized agency becomes essential. The Food
Corporation of India procures essential commodities on behalf of the
Central Government. The TNCSC procures essential commodities on
behalf of Government of Tamil Nadu. The lead societies viz., consumer
cooperatives and marketing cooperatives procure the essential
commodities (rice, wheat, sugar, palm oil) from the civil supplies
corporation and deliver to the FPS. The procurement and delivery of
essential commodities is performed in every taluk by the lead
societies. Kerosene is procured from the private dealers and it is
supplied in the FPS. The FPSs are the agents at the field level to
distribute the articles to the ultimate beneficiaries in right time. The
Cooperatives have become organized agency for the supply of essential
commodities to the public in Tamil Nadu. In the procurement stage as
Page | 41

well as in the supply stage, the role of cooperatives is the felt need of
the hour. Cooperative Societies are actively involved and participated
in ensuring food security in Tamil Nadu.
Public Distribution System (PDS) is a poverty alleviation programme
and contributes towards the social welfare of the people. Essential
commodities like rice, wheat, sugar, kerosene and the like are supplied
to the people under the PDS at reasonable prices. PDS is a boon to the
people living below the poverty line. PDS is the primary social welfare
and antipoverty programme of the Government of India. Revamped
Public Distribution System (RPDS) has been initiated by the
Government of India from the year 1992 in order to serve and provide
essential commodities to the people living in remote, backward and
hilly areas. Government introduced Targeted Public Distribution
System (TPDS) in the year 1997. Central Government and State
Governments have been actively involved in steering the operations
for the success of the PDS. It is not possible to neglect the PDS in
India, because majority of the Indian population are living in rural
areas and their standard of living is also poor and they cannot afford
to pay the prevailing market prices for the essential commodities.
Central Government has provided Rs. 6066 Crore for food subsidy in
the Union Budget for the year 1996-97. This has increased over the
years and stood at Rs. 21,200 crores in 2002-03. Tamil Nadu sets a
model in implementing the PDS as universal system for the cause of
eradicating poverty and improving standard of living of the people
living below the poverty line. Timely supply of essential commodities
is the basic element for the success of the PDS. Infrastructure i.e., Fair
Price Shops (FPS), godown facilities and employees are other
requisites of the PDS.
Page | 42

3 The involvement of the Cooperative Societies is noteworthy for the

success of the PDS in Tamil Nadu. The total family cards under the
PDS in Tamil Nadu are 13230193 as on 30th June 2004. There are
21662 full time FPS run by cooperatives. More than 93 per cent of the
fair price shops of Tamil Nadu are managed by cooperatives. It shows
the extensive involvement of the Cooperative Societies in serving the
rural people by taking steps to supply essential commodities in the
right time at affordable prices. In addition to the regular and fulltime
FPS, Department of Cooperation has established part time FPS in
villages. It helps the villagers to purchase the essential commodities in
the nearby places. There are 4673 part time FPS, 549 women shops
and 36 mobile FPS functioning in Tamil Nadu. Cooperative societies
have become accelerator for the success of the PDS in Tamil Nadu. To
procure essential commodities and supply them to the public, an
established and organized agency becomes essential. The Food
Corporation of India procures essential commodities on behalf of the
Central Government. The TNCSC procures essential commodities on
behalf of Government of Tamil Nadu. The lead societies viz., consumer
cooperatives and marketing cooperatives procure the essential
commodities (rice, wheat, sugar, palm oil) from the civil supplies
corporation and deliver to the FPS. The procurement and delivery of
essential commodities is performed in every taluk by the lead
societies. Kerosene is procured from the private dealers and it is
supplied in the FPS. The FPSs are the agents at the field level to
distribute the articles to the ultimate beneficiaries in right time. The
Cooperatives have become organized agency for the supply of essential
commodities to the public in Tamil Nadu. In the procurement stage as
well as in the supply stage, the role of cooperatives is the felt need of
Page | 43

the hour. Cooperative Societies are actively involved and participated

in ensuring food security in Tamil Nadu.
Public Distribution System (PDS) is a poverty alleviation programme
and contributes towards the social welfare of the people. Essential
commodities like rice, wheat, sugar, kerosene and the like are supplied
to the people under the PDS at reasonable prices. PDS is a boon to the
people living below the poverty line. PDS is the primary social welfare
and antipoverty programme of the Government of India. Revamped
Public Distribution System (RPDS) has been initiated by the
Government of India from the year 1992 in order to serve and provide
essential commodities to the people living in remote, backward and
hilly areas. Government introduced Targeted Public Distribution
System (TPDS) in the year 1997. Central Government and State
Governments have been actively involved in steering the operations
for the success of the PDS. It is not possible to neglect the PDS in
India, because majority of the Indian population are living in rural
areas and their standard of living is also poor and they cannot afford
to pay the prevailing market prices for the essential commodities.
Central Government has provided Rs. 6066 Crore for food subsidy in
the Union Budget for the year 1996-97. This has increased over the
years and stood at Rs. 21,200 crores in 2002-03. Tamil Nadu sets a
model in implementing the PDS as universal system for the cause of
eradicating poverty and improving standard of living of the people
living below the poverty line. Timely supply of essential commodities
is the basic element for the success of the PDS. Infrastructure i.e., Fair
Price Shops (FPS), godown facilities and employees are other
requisites of the PDS.
Page | 44