Q.1 Meaning & Nature of Operation Management?

Explain
Product design & Process design..?
Meaning-Operations management is the administration of business practices to create the
highest level of efficiency possible within an organization. It is concerned with converting
materials and labor into goods and services as efficiently as possible to maximize the profit of
an organization. Operations management teams attempt to balance costs with revenue to
achieve the highest net operating profit possible.
Joseph G .Monks defines Operations Management as the process whereby resources, flowing
with in a defined system, are combined and transformed by a controlled manner to add value in
accordance with policies communicated by management.

NATURE OF OPERATIONS:

The nature of operations can be better understood by viewing the manufacturing function as :

1. operations as a system,

2.operations as an organisational function,

3. operations as a conversion or transformation process and

4. operations as a means of creating utility.

5.The application of operations management concepts in service operations.

6. The growing importance of quality.

7. The introduction of operation management concepts to other areas such as marketing and
human resources and

8. The realization that the operations management function can add value to the end product.
Product Design
Product design is concerned primarily with the relationship between products, systems and those
who use them. The product design programme at NID inculcates user-centric approach and
processes. Responsibility and concern towards the social, physical and ecological environments
is emphasized in the process of developing innovative ideas. The product design programme
assimilates inputs in diverse domains such as human factors, cognitive ergonomics, form studies,
studio skills, advanced cad, research methods, design management, materials & manufacturing
processes & social sciences. Emphasis is on process centric approach which shapes a student’s
education through participation and teamwork. Design projects form the core of a product
designer’s education, with gradual increase in level of complexity and cover broad areas that
product designers are likely to encounter in their professional careers. Students are actively
encouraged to participate in collaborative projects with industrial houses, social sector,
government & mncs design projects can be broadly classified into domains of:

 Design for industry

 Design for quality of life
 Design for healthcare
 Design for social impact
 Design for sustainability
 Design led futures

Process Design –
The activity of determining the workflow, equipment needs, and implementation requirements
for a particular process. Process design typically uses a number of tools including flowcharting,
process simulation software, and scale models.
A successful process design has to take into account the appropriateness of the process to overall
organization objective. Process design requires a broad view of the whole organization and
should not have a myopic outlook. And the process should deliver customer value with constant
involvement of the management at various stages.
In order to achieve a good process design, effective process strategy is required, which deals
with a singular line items required to manufacture the end product. Effective process strategy
deals with raw material procurement, customer participation, technology investment, etc.
Over a period of time process design has undergone change and new concepts like Flexible
Manufacturing Systems have been developed, which delivers efficient and effective production
design and analysis.

Types of Process Design-

1.Continuous Process
2.Semi- continuous Process
3.Intermittent Process
4.Batch Process
5.Job Shop
6.Projects
Q.2.What is Scheduling? Explain Gantt charts?
Scheduling is a method that is used to distribute valuable computing resources, usually processor
time, bandwidth and memory, to the various processes, threads, data flows and applications that
need them. Scheduling is done to balance the load on the system and ensure equal distribution of
resources and give some prioritization according to set rules. This ensures that a computer
system is able to serve all requests and achieve a certain quality of service. Scheduling is also
known as process scheduling. Scheduling is largely based on the factors mentioned above and
varies depending on the system and the programming of the system's or user's preferences and
objectives. In modern computers such as PCs with large amounts of processing power and other
resources and with the ability to multitask by running multiple threads or pipelines at once,
scheduling is no longer a big issue and most times processes and applications are given free reign
with extra resources

Gantt Chart
A Gantt chart, commonly used in project management, is one of the most popular and useful
ways of showing activities (tasks or events) displayed against time. On the left of the chart is a
list of the activities and along the top is a suitable time scale. Each activity is represented by a
bar; the position and length of the bar reflects the start date, duration and end date of the activity.
This allows you to see at a glance:

 What the various activities are

 When each activity begins and ends
 How long each activity is scheduled to last
 Where activities overlap with other activities, and by how much
 The start and end date of the whole project

To summarize, a Gantt chart shows you what has to be done (the activities) and when (the
schedule).
Q.3 Inventory Mangement- Function,Classifications,Important
& Models..?
Inventory is the life blood of the industries. But an excess or shortage of inventory is harmful. It
is the most important component of working capital.
The term inventory is used to denote the stock on hand at a particular time comprising raw
materials, goods in the process of manufacture and finished goods. An inventory has a primary
significance for accounting purposes to ascertain the correct income for a particular period.
Inventory plays a very important part in the determination of profit of a business.
In the financial sector, inventory is defined as “the sum of the value of raw materials, fuels and
lubricants, spare parts, maintenance consumables, semi-processed materials and finished
goods stock at any given point of time”.

Classification of Inventory:
(a) Raw Materials Inventory:
This consists of basic materials that have not yet been committed to production in a
manufacturing firm. Raw materials that are purchased from firms to be used in the firm’s
production operations. The aim of maintaining raw material inventory is to uncouple the produc-
tion function from the purchasing function so that delays in shipment of raw materials do not
cause production delays.

(b) Stores and Spares:

This includes those products which are accessories to the main products produced for the
purpose of sale. Examples of stores and spares are bolts, nuts, clamps, screws, etc. These spare
parts are generally bought from outside.

(c) Works in Process Inventory:

This includes those materials that have been committed to the production process but have not
been completed. The more complex and lengthy the production process, the larger will be the
investment in work in process inventory.

(d) Finished Goods Inventory:

These are completed products awaiting sale. The purpose of finished goods inventory is to
uncouple the production and sale functions so that it is no longer necessary to produce the goods
before a sale can occur.

On the basis of functions, inventory may be classified into the following four types:
(i) Lot-size Inventories:
Some business firms prefer to purchase materials in bulk because they receive a discount on bulk
purchases. Big business firms can afford to buy in large quantities. To produce the goods in exact
amount of their demand is not generally possible and practical. Some inventories accumulate.
The inventories accumulated as a result are known as lot-size inventories.

(ii) Fluctuation Inventories:

Because of the demand and supply factors, the market for certain commodities or raw materials
generally fluctuates. This fluctuation is marked in respect of agro-based products.
Importance of Inventory
A businessman needs inventory to carry on the day-to-day operations of his business. Now busi-
ness activity has increased and the problem of inventory has also become more complex. The
businessman needs more cash to conduct his daily business activities. Therefore, the higher the
level of inventory, the lower the level of cash.

One of the causes for the failure of a business is a huge inventory. The existence of large
quantities of inventories is naturally a cause for alarm. The need for inventory must be balanced
against the preference for liquidity. If we can stock the required inventory well in advance, we
are able to save the cost of idle time of machinery and the cost of idle time of men.

Inventory Model:-
We Will first consider deterministic inventory models in which we assume that the rate of
demand for the item is constant or nearly constant.

Economic Order Quantity – EOQ Model -

Economic order quantity (EOQ) is the ideal order quantity a company should purchase for its
inventory given a set cost of production, a certain demand rate, and other variables. This is done
to minimize inventory holding costs and order-related costs.

The equation for EOQ also takes into account inventory holding costs such as storage, ordering
costs and shortage costs. This production-scheduling model was developed in 1913 by Ford W.
Harris and has been refined over time. The formula assumes that demand, ordering, and holding
costs all remain constant.

 The EOQ is a company's optimal order quantity that minimizes its total costs related to
ordering, receiving and holding the inventory.
 The EOQ formula is best used in situations where demand, ordering, and holding costs
remain constant over time.

Economic Order Quantity (EOQ) with Discount

EOQ generally minimizes the total inventory cost. However, EOQ may not be optimal when
discounts are factored into the calculation.
The optimal order quantity when discounts are involved is either:
 EOQ; or
 Any one of the minimum order quantities above EOQ that qualify for additional discount.
The optimum quantity is determined by comparing the total inventory cost of the different order
quantities listed above.
For example, if the EOQ is 1000 units and discounts of 2%, 5% and 8% are offered at 500 units,
1000 units and 2000 units, the order quantity that shall lead to the lowest total inventory cost will
either be the EOQ (i.e. 1000 units) or 2000 units. In order to determine the optimum quantity, we
need to compare the total inventory cost of order quantities of 1000 units and 2000 units. We can
ignore the total inventory cost of 500 units as it is below the EOQ level.
Q.4 What is Value Analysis? Explain Type of Value and
Steps in Value Analysis
Value Analysis is a tool of management which attempts the question of saving cost from the
point of view of, ‘Value’ or in other words the main aim is to study the relationship between the
design function and cost of a part, keeping in view to reduce part and cost through change in
design, modification in specification of the material used by changing the source of supply and
so on. The Value Engineering is also known as value analysis.

Value engineering identifies the areas of excessive or unnecessary expenses and attempts
to improve the value of the product. It provides the base for better performance at a lower cost
while reducing neither necessary quality, reliability nor maintainability.

Another definition of Value Analysis is “the systematic examination of all factors

which contribute to the cost of a product, part or a material with the object of uncovering
these possibilities of cost reduction which will not in any way reduce the quality,
performance or any other attribute of the product which is sought by the customer.”
Value Analysis means the organised and exhaustively critical study of a product in terms of the
design, functions and costs with the object of cost reduction.

Types of Values:
1. Cost Value:

It is the cost of manufacturing a product or component.

2. Use Value:

It considers work done, functions performed or service rendered and efficiency/effectiveness of

the product.

3. Esteem Value:

It involves the qualities and appearance of the product which attracts persons and creates a desire
in them to posses the product.

4. Exchange Value:

It considers the properties or qualities which will remain attractive enough to other people to
permit market resale in the future.

Maximum value is obtained when essential function is achieved for minimum cost.
Steps in Value Analysis :-
Sequence of steps for systematic approach of value analysis is:

1. Orientation:

Familiarization with needs, specifications and customer desire.

2. Information:

All those facts which have bearing on the problem should be gathered.

3. Creativity:

Use of imagination and brain storming. Adopt the process of blast, create and then refine.

4. Evaluation (Analysis):

Estimate value of ideas and explore best.

5. Planning:

After selecting few alternatives or combination of alternatives, each of them investigated

thoroughly. On the basis of final outcome, detailed planning is carried out and a report is
prepared for approval.

6. Execution (Implementation):

After approval of the proposals, its recommendations are implemented. Value engineers are
expected to see that the approved recommendations are implemented and hindrances, if any can
be sorted out.

Value Engineering -
Value Engineering is a function oriented, systematic team approach and study to provide value in
a product, system or service. Often, this improvement is focused on cost reduction; however
other important areas such as customer perceived quality and performance are also of paramount
importance in the value equation.
Value Engineering techniques can be applied to any product process procedure system or service
in any kind of business or economic activity including health care, governance, construction,
industry and in the service sector.
Value Engineering focuses on those value characteristics which are deemed most important from
the customer point of view.
Value Engineering is a powerful methodology for solving problems and/or reducing costs while
maintaining or improving performance and quality requirements.
Value Engineering can achieve impressive savings, much greater than what is possible through
conventional cost reduction exercise even when cost reduction is the objective of the task.
Value Engineering helps your organization in :
 Lowering O & M costs
 Improving quality management
 Improving resource efficiency
 Simplifying procedures
 Minimizing paperwork
 Lowering staff costs
 Increasing procedural efficiency
 Optimizing construction expenditures
Q.5 What is Capacity Plannig ? Explain Need,Importance and
types?
Capacity planning refers to determining what kind of labour and equipment capacities are
required and when they are required. Capacity is usually planned on the basis of labour or
machine hours available within the plant. Thus, capacity planning is planning for quantity or
scale of output.

There are four major considerations in capacity planning:

1. Level of demand
2. Cost of production
3. Availability of funds
4. Management policy.

Production has no meaning unless its products can be sold at a remunerative price. Generally, the
capacity of plant is limited by the level of current demand. Stable demand makes the task of
capacity planning simple while fluctuations in demand create problems concerning the
acquisition of resources and matching them up with demand levels. Estimation of demand is,
therefore, the first step in capacity planning. Size of the market depends upon the sales potential
rather than on the geographical areas.

Importance of Capacity Planning

Capacity planning is important due to the following reasons:
1. Capacity limits the rate of output. Therefore, capacity planning determines the ability of an
enterprise to meet future demand for its products and services.
2. Capacity influences the operating costs. Capacity is determined on the basis of estimated
demand. Actual demand is often different from estimated demand. As a result, there arises
excess capacity or under capacity. Excess or idle capacity increases the cost per unit of output.
Whereas under capacity results in the loss of sales.
3. Capacity decisions leave a direct impact on the amount of fixed investment made initially.
4. Capacity decisions result in long-term commitment of funds. Such long-term decisions cannot
be reversed except at major costs.

Three Types of Capacity :-

a. Design Capacity: It refers to the maximum output that can possibly be produced in a given
period of time. It is the ideal situation.

b. Effective Capacity: Refers to the maximum possible output, given the changes in product
mix, machine maintenance, scheduling and operating problems, labour problems, etc. It is
usually less than the design capacity.

c. Actual Output: It is the rate of output actually achieved. It cannot exceed effective capacity
due to machine breakdowns, labour absenteeism, irregular supply of raw materials, unusual
delay in supply of equipment, power breakdown, etc.

The effectiveness of a production system (system effectiveness) can be measured in two ways:

1. Efficiency which is the rate of actual output to effective output, and

2. Utilization which implies the rate of actual output to the design capacity.
Q.6 What are the Factor affecting facility location
Plannig..?
Location, localization and planned location of industries are often felt to be synonymous. But,
the distinction among these three terms is of immense importance. Entrepreneurs locate their
enterprises where the cost of production comes, the lowest at the time of establishing industries.
This is known as ‘location of industries’.

The concentration of a particular industry mainly in one area, as occurred with many industries
in India, for example, textile industry in Mumbai is known as ‘localisation of industries’.
‘Planned location of industries’ is a term whereby the location of industries is planned to give
each industrial area a variety of industries so that large industries are dispersed and not localised.

Nonetheless, regardless of the type of business/enterprise, there are host of factors but not
confined to the following only that influence the selection of the location of an enterprise:

(i) Availability of Raw Materials:

One of the most important considerations involved in selection of industrial location has been the
availability of raw materials required. The biggest advantage of availability of raw material at the
location of industry is that it involves less cost in terms of ‘transportation cost.

(ii) Proximity to Market:

If the proof of pudding lies in eating, the proof of production lies in consumption. Production has
no value without consumption. Consumption involves market that is, selling goods and products
to the consumers. Thus, an industry cannot be thought of without market.

(iii) Infrastructural Facilities:

Of course, the degree of dependency upon infrastructural facilities may vary from industry to
industry, yet there is no denying of the fact that availability of infrastructural facilities plays a
deciding role in the location selection of an industry. The infrastructural facilities include power,
transport and communication, water, banking, etc.

(iv) Government Policy:

In order to promote the balanced regional development, the Government also offers several
incentives, concessions, tax holidays for number of years, cheaper power supply, factory shed,
etc., to attract the entrepreneurs to set up industries in less developed and backward areas. Then,
other factors being comparative, these factors become the most significant in deciding the
location of an industry.

(v) Availability of Manpower:

Availability of required manpower skilled in specific trades may be yet another deciding factor
for the location of skill- intensive industries. As regards the availability of skilled labour, the
existence of technical training institutes in the area proves useful. Besides, an entrepreneur
should also study labour relations through turnover rates, absenteeism and liveliness of trade
unionism in the particular area.
(vi) Competition:

In case of some enterprises like retail stores where the revenue of a particular site depends on the
degree of competition from other competitors’ location nearby plays a crucial role in selecting
the location of an enterprise. The areas where there is more competition among industries, the
new units will not be established in these areas. On the other hand, the areas where there is either
no or very less competition, new enterprises will tend to be established in such areas.

(Vii) Climatic Conditions:

Climatic conditions vary from place to place in any country including India. And, climatic
conditions affect both people and manufacturing activity. It affects human efficiency and
behaviour to a great extent. Wild and cold climate is conducive to higher productivity. Likewise,
certain industries require specific type of climatic conditions to produce their goods. For
example, jute and textiles manufacturing industries require high humidity.

(Viii) Political Conditions:

Political stability is essential for industrial growth. That political stability fosters industrial
activity and political upheaval derails industrial initiates is duly confirmed by political situations
across the countries and regions within the same country. The reason is not difficult to seek.

(ix) Incentives, Land Costs, Subsidies for Backward Areas:

With an objective to foster balanced economic development in the country, the Government
decentralizes industries to less developed and backward areas in the country. This is because the
progress made in islands only cannot sustain for long. The reason is not difficult to seek.
Q.7 Why there is need for vendor development? Explain
factor of vendor Evaluation & rating and Motivation?
Purchasing in asn important function of materials management.In any industry purchase means
buying of equipments,meterials,tools,parts etc.requiredfor industry.The important of the
purchase function varies with nature and size of industry.in small industry,this function is
performed by works manager and in large manufacturing concern,this function is done by a
separate department known as purchase department.

Need for Vendor Development-

1.Reduce the cost of making the purchase

2.Reduce transportation cost

3.Reduce production cost

4.Improve product quality

5.Improve product design

6.Reduce the time it takes to get the product to the market

7.Improve customer satisfacton

8.Reduce Inventory cost

Factors on Vendor Evaluation & Rating –

1.Cost Factor – Price transportation cost installation cost if any tooling and other operations
cost,incidence of sales tax and excise duty,terms of payment & cash discount are considered in
cost factor.

2. Delivery – Routind and F.O.B tems ar important in detemining the point at which the title to
the goods passes from vendor to the buyer and the responsibility for the payment of the payment
charges.

3.Design & Specification Factors – Specification compliance specification deviations

specification advantages important dimensions and weights are consdered in line with the
demonstration of sample, experience of other users,after sale service etc.

4.Legal Factors – Legal factors include warranty cancellation provision ,patent protection,public
liability,federal laws and reputation compliance.

5.Vendor Rating – The Evalustion of supplier or vendor provedes valuable information which
help in improving the quality of the decision.IN the vendor rating three basic aspects are
considered anmely quality,service and price.
Vendor Motivation –
The Following factors will motivate vendors

1.Measure their progress – Client always try to maintain a healthy skepticism about their
vendors, and that due diligence represents good business practice.service providers, as a result
,assume the burden of showing how their actions and advice is ipactiong their clients.

2. Help your client compete with others –

It always helps to show how your client is Leaving the competition in the dust, thanks to your
help. Ask your client about their rivals ,evaluate them and devise ways to surpass then. While
measuring your clients progress in the previous item, use the same tools to measure their
competitors.

3.Create a Superior product,infrastructure or position-

In addition to helping your client compete,you need to do so as well. Keep up to date with the
latest developments in yuour fireld and offer cutting-edge services as they become available.
When you provide something new,make sure your client knows about the innovation.

4.Achieve recognition of their efforts-

Awards publicity and accolades for your client reflect favorably upon you, especially if you have
enabled them either through your efforts or by directly applying for them.

5.Provide a long-term plan-

A Structured program disciplines clients to use your services in a regular manner,helps them
become more productive and prvents wasting time through inaction or when other matters
intrude upon their attention.

6.Be Consitent Clients need predictability-

If you tell them one thing today and something else in a month , they become uncertain about
your grasp of your field, even if the reason involves a change in underlying realities. If
something is subject to change, your clients need to be informed about that in advance.
Q.8 Describe Layout…? Explain Types of Layout..?
In manufacturing, facility layout consists of configuring the plant site with lines, buildings, major
facilities, work areas, aisles, and other pertinent features such as department boundaries. While
facility layout for services may be similar to that for manufacturing, it also may be somewhat
different—as is the case with offices, retailers, and warehouses. Because of its relative
permanence, facility layout probably is one of the most crucial elements affecting efficiency. An
efficient layout can reduce unnecessary material handling, help to keep costs low, and maintain
product flow through the facility.

Firms in the upper left-hand corner of the product-process matrix have a process structure known
as a jumbled flow or a disconnected or intermittent line flow. Upper-left firms generally have a
process layout. Firms in the lower right-hand corner of the product-process matrix can have a
line or continuous flow. Firms in the lower-right part of the matrix generally have a product
layout. Other types of layouts include fixed-position, combination, cellular, and certain types of
service layouts.

The Following type of Layout –

1.Process Layout
2.Product Layout
3.Fixed Layout
4.Combination Layout
5.Cellular Layout
6.Other Layout

1.PROCESS LAYOUT

Process layouts are found primarily in job shops, or firms that produce customized, low-volume
products that may require different processing requirements and sequences of operations. Process
layouts are facility configurations in which operations of a similar nature or function are grouped
together. As such, they occasionally are referred to as functional layouts. Their purpose is to
process goods or provide services that involve a variety of processing requirements. A
manufacturing example would be a machine shop. A machine shop generally has separate
departments where general-purpose machines are grouped together by function (e.g., milling,
grinding, drilling, hydraulic presses, and lathes). Therefore, facilities that are configured
according to individual functions or processes have a process layout. This type of layout gives
the firm the flexibility needed to handle a variety of routes and process requirements. Services
that utilize process layouts include hospitals, banks, auto repair, libraries, and universities.

2.PRODUCT LAYOUT
Product layouts are found in flow shops (repetitive assembly and process or continuous flow
industries). Flow shops produce high-volume, highly standardized products that require highly
standardized, repetitive processes. In a product layout, resources are arranged sequentially, based
on the routing of the products. In theory, this sequential layout allows the entire process to be
laid out in a straight line, which at times may be totally dedicated to the production of only one
product or product version. The flow of the line can then be subdivided so that labor and
equipment are utilized smoothly throughout the operation.
Two types of lines are used in product layouts: paced and unpaced. Paced lines can use some sort
of conveyor that moves output along at a continuous rate so that workers can perform operations
on the product as it goes by. For longer operating times, the worker may have to walk alongside
the work as it moves until he or she is finished and can walk back to the workstation to begin
working on another part (this essentially is how automobile manufacturing works).
3.FIXED-POSITION LAYOUT
A fixed-position layout is appropriate for a product that is too large or too heavy to move. For
example, battleships are not produced on an assembly line. For services, other reasons may
dictate the fixed position (e.g., a hospital operating room where doctors, nurses, and medical
equipment are brought to the patient). Other fixed-position layout examples include construction
(e.g., buildings, dams, and electric or nuclear power plants), shipbuilding, aircraft, aerospace,
farming, drilling for oil, home repair, and automated car washes. In order to make this work,
required resources must be portable so that they can be taken to the job for "on the spot"
performance.
Due to the nature of the product, the user has little choice in the use of a fixed-position layout.
Disadvantages include:
 Space. For many fixed-position layouts, the work area may be crowded so that little storage
space is available. This also can cause material handling problems.
 Administration. Oftentimes, the administrative burden is higher for fixed-position layouts. The
span of control can be narrow, and coordination difficult.

4.CELLULAR LAYOUT
Cellular manufacturing is a type of layout where machines are grouped according to the process
requirements for a set of similar items (part families) that require similar processing. These
groups are called cells. Therefore, a cellular layout is an equipment layout configured to support
cellular manufacturing.
Processes are grouped into cells using a technique known as group technology (GT). Group
technology involves identifying parts with similar design characteristics (size, shape, and
function) and similar process characteristics (type of processing required, available machinery
that performs this type of process, and processing sequence).
Workers in cellular layouts are cross-trained so that they can operate all the equipment within the
cell and take responsibility for its output. Sometimes the cells feed into an assembly line that
produces the final product. In some cases a cell is formed by dedicating certain equipment to the
production of a family of parts without actually moving the equipment into a physical cell (these
are called virtual or nominal cells). In this way, the firm avoids the burden of rearranging its
current layout. However, physical cells are more common.

5.OTHER LAYOUTS
In addition to the aforementioned layouts, there are others that are more appropriate for use in
service organizations. These include warehouse/storage layouts, retail layouts, and office layouts.

With warehouse/storage layouts, order frequency is a key factor. Items that are ordered
frequently should be placed close together near the entrance of the facility, while those ordered
less frequently remain in the rear of the facility. Pareto analysis is an excellent method for
determining which items to place near the entrance. Since 20 percent of the items typically
represent 80 percent of the items ordered, it is not difficult to determine which 20 percent to
place in the most convenient location. In this way, order picking is made more efficient.

While layout design is much simpler for small retail establishments (shoe repair, dry cleaner,
etc.), retail stores, unlike manufacturers, must take into consideration the presence of customers
and the accompanying opportunities to influence sales and customer attitudes. For example,
supermarkets place dairy products near the rear of the store so that customers who run into the
store for a quick gallon of milk must travel through other sections of the store. This increases the
chance of the customer seeing an item of interest and making an impulse buy. Additionally,
expensive items such as meat are often placed so that the customer will see them frequently (e.g.,
pass them at the end of each aisle). Retail chains are able to take advantage of standardized
layouts, which give the customer more familiarity with the store when shopping in a new
location.