OPERATIONS ASSIGNMENT

1) What is Quality Management System (QMS)? Highlight its essential elements.

A quality management system (QMS) is defined as a formalized system that documents processes,
procedures, and responsibilities for achieving quality policies and objectives. It helps to coordinate
and provides direction to organization activities to meet customers requirement and improve
efficiency. International standards ISO 9001:2015 specify requirement and prominent approach for
quality management.
The elements of QMS are following:-

 The organization’s quality policy and quality objectives

 Quality manual
 Procedures, instructions, and records
 Data management
 Internal processes
 Customer satisfaction from product quality
 Improvement opportunities
 Quality analysis

Throw light on the following concepts: (Minimum 100 words each)

a. Kaizen

Kaizen is a Japanese term for “change for the better” or “continuous improvement” and a Japanese
business philosophy regarding the processes that continuously improves its operations with the
involvement of all the employees. It sees improvement in productivity as a ever gradual and a very
methodical process.

It provides with a wide range of ideas making the work environment more efficient and effective so as to
ensure employee satisfaction and productivity. Some of the key objectives of the kaizen philosophy
include quality control, just-in-time delivery, standardized work, the use of efficient equipment, and the
elimination of waste. The overall goal of kaizen is to make small changes over a period of time to create
improvements within a company. it simply recognizes that small changes in the current system which can
have huge impacts in the future. Improvements in the business can be implemented by anyone from the
organisation at any period of time. Many companies tend to adopt the kaizen concept. Most notably,
Toyota employs the kaizen philosophy within its organization and has esteemed it as one of its core values.
b. Benchmarking

In the current cut throat competition it is important for the organization to gain an edge over their
competitors. It helps any organisation to get ahead of competition. It helps companies for taking strategic
decisions. Those companies who translate this information to knowledge is the real winner. At a naïve
level it may be compared to the concept of control as the similarities do exist. In simple words it is
measuring the performance of companies with the best industry practices. It only helps in improving the
performance. It cannot be copied it just has to be studies carefully considering all the available resources
and the required one.

c. Root Cause Analysis (RCA)

The root cause analysis as the name suggests it is to study and identify the very root cause for any problem
in the system to as to be eliminated from the very root of it. It describes a wide range of techniques,
methods and tools to do the same. It is a very core issue that affects the supply demand cycle. It is a
broader field of Total Quality Management.

The Approaches for Root cause can be Situational Analysis, Problem Analysis, Solution Analysis or
potential problem analysis. There is a very small team provided to identify the root cause in any
organisation.

2) Elaborate on the concept of ‘Inventory Control’. What is the Just-In-Time (JIT) inventory

management system? Weigh its advantages and disadvantages.

Inventory control is stock control it incorporates so many functions that it is difficult to describe in a
limited definition. It refers to managing the company’s inventories purchasing, shipping, receiving,
tracking, warehousing and storage, turnover, and reordering. It is a very critical piece of an organization’s
operations and bottom line that it is too important to leave to human error or antiquated systems. So many
companies tend to invest huge for Inventory Control. Also it is managed by a very integrated system.

Just In Time (JIT):-

It is a philosophy of continuous improvement in which non value adding activities are identified and
removed. When these principals are put together carefully significant competitive advantage is identified.
The major objective of JIT is to increase the inventory turnover and reduce the holding and all cost. This
concept was made applicable again by the Japanese firms, placing an order for the material, the same day
for the production of the product.

One example of JIT system is a car manufacturer, a manufacturer operates with bare minimum inventory
levels, as there is a strong reliance on the supply chain to deliver the parts required to manufacture cars.
The parts required in the manufacturing of cars do not arrive before or after they are needed; rather, they
arrive only when they are needed.

Advantages are as follows:-

 Reduction of cost
 Elimination of waste
 Increase in Return of Investment
 Greater efficiency and high Quality production
 Eliminates over production

Disadvantages are as follows:-

 Zero tolerance for mistakes

 Requires high dependency on suppliers
 No buffers make production line idle for a long time
 Could not meet unexpected increase in orders
 Transaction cost will be high due to increased transportation.

3) Elucidate the PERT and CPM techniques in Operations Research. Explain Gantt chart and its

application in Project Management.

Project Evaluation Review Technique or PERT is used to identify the time it takes to finish a particular
task or activity. It was originally derived by the US navy wherein they had to analyse the exact progress on
real time basis and stands to execute the project efficiently. This technique makes all the odds priorly
available so as to detect and analyses them so as to provide a realistic action.

The four definitions of time needed to finish an activity:

 Optimistic time – The least amount of time to complete a task

 Pessimistic time – The maximum amount of time to complete a task
  Most likely time – Assuming there are no problems, it is the best estimate of how long it would
take to complete a task.
 Expected time – Assuming there are problems, it is the best estimate of how long it would take to
complete a task.

CPM Techniques

The critical path method (CPM) is a step-by-step project management technique for process planning
that defines critical and non-critical tasks with the goal of preventing time-frame problems and
process bottlenecks. The CPM is ideally suited to projects consisting of numerous activities that
interact in a complex manner. It was developed in the 1950s by DuPont, and was first used in missile-
defense construction projects. Since that time, the CPM has been adapted to other fields including
hardware and software product research and development. Various computer programs are available to
help project managers use the CPM.

Gantt Chart

A Gantt chart is a horizontal bar chart developed as a production control tool in 1917 by Henry L.
Gantt, an American engineer and social scientist. Frequently used in project management, a Gantt chart
provides a graphical illustration of a schedule that helps to plan, coordinate, and track specific tasks in
a project.

4) Describe the ‘Bullwhip Effect’ in Supply Chain Management (SCM). Illustrate with the help

of a suitable example, Bullwhip Effect in the service sector. (Minimum 200 words)

The bullwhip effect is a supply chain phenomenon describes how small fluctuations in demand at the retail
level can cause progressively larger fluctuations in demand at the all levels. The effect is named after the
physics involved in cracking a whip. When the person holding the whip snaps their wrist, the small
movement causes the whip's wave patterns to increasingly amplify in a chain reaction.

In supply chain management customers, suppliers, manufacturers and salespeople all have only partial
understanding of demand and direct control over only part of the supply chain, but each influences the
entire chain with their forecasting inaccuracies (ordering too much or too little). A change in any link along
the supply chain can have a profound effect on the rest of the supply chain. Given that, there are many
contributors and causes of the bullwhip effect in supply chain management.
5) Explain the concept of Economic Order Quantity (EOQ). (Minimum 150 words)

A firm uses 12000 units of raw material every year costing Rs. 1.25 per unit. Ordering cost is

Rs. 15.00 per order and the holding cost is 15% per year of average inventory. Find the

economic order quantity.

6) Define forecasting. Enlist and explain the different methods of forecasting with respect to

its advantages and disadvantages. (Minimum 250 words)

A baking company sells its classic doughnuts though a chain of food stores. Given below is

the daily demand for these doughnuts. Compute the 3 days moving average forecast for

Thursday and Friday.

Mention all the steps required to arrive at the answers.

Day Demand

Monday 12

Tuesday 8

Wednesday 10

Thursday

Friday

There are four main type of forecasting method that financial analysts use to predict future revenues,
expenses, and capital costs for a business. While there are a wide range of frequently used quantitative
budget forecasting tools, in this article we focus on the top four methods: (1) straight-line, (2) moving
average, (3) simple linear regression, and (4) multiple linear regression.
 1. Moving Average
Moving average methods take the avrage of past actuals and project it forward. These methods
assume that the recent past represents the future. As a result, they work best for products with
relatively little change — steady demand, no seasonality, limited trends or cycles, and no
significant demand shifts. Many copanies apply this method because it is simple and easy to use.
However, since few products actually behave in this way, it tends to be less useful than more
speialized methods.

2. Straight Line
This is the simplest of all the methods to calcule future sales. Straight-lined forecasting is
sometimes referred to as the Historical growth rate and can give you a ough look at where sales will
be based on past growth rate.
3. simple linear regression
Regression analysis is a set of statistical methds used for the estiation of relationships beteen a
dependent varible and one or more independent variables. It can be utlized to assess the strngth of
the relatiship between variabes and for modeling the fture relatioship between them.
4. Multiple linear regression.
When there are two or more predictor variables, the model is called a multiple regression
model. The general form of a multiple regression model
isyt=β0+β1x1,t+β2x2,t+⋯+βkxk,t+εt,(5.1)(5.1)yt=β0+β1x1,t+β2x2,t+⋯+βkxk,t+εt,where yy is the
variable to be forecast and x1,…,xkx1,…,xk are the kk predictor variables. Each of the predictor
variables must be numerical. The coefficients β1,…,βkβ1,…,βk measure the effect of each
predictor after taking into account the effects of all the other predictors in the model. Thus, the
coefficients measure the marginal effects of the predictor variables.

For computing the three days moving averge I have took the average of demand of three days and
divided it by 3 to arrive on the demand for next day and followed the same steps ahead.

Days Demand
Monday 12
Tuesday 8
Wednesday 10
Thursday 10
Friday 9.33