Set 1

PRODUCTION & OPERATIONS MANAGEMENT

1. Explain what is meant by capital productivity?

Ans:-

Capital Productivity
Capital deployed in plant, machinery, buildings and the distribution
system as well as working capital are components of the cost of manufacture
and need to be productive. Demand fluctuations, uncertainties of production
owing to breakdowns and inventories being created drag the productivity
down. Therefore, strategies are needed to maximize the utilization of the
funds allotted towards capital. Adapting to new technologies, outsourcing and
balancing of the workstations to reduce the proportion of idle times on
equipments are the focus of this section.

1) Outsourcing Strategies:-
When capacity requirements are determined it will be easy to
determine whether some goods or services can be outsourced so that the
capital and manpower requirements can be reduced and the available
capacities are used to augment core competencies thus reducing the cost of
the product or service to the customer. However, the following factors may
restrict outsourcing

(a) Lack of expertise – the outsourced firm may not have the requisite
expertise to do
the job required

(b) Quality considerations - Loss of control over operations may result in

lower quality.
This is a risk that the firm gets exposed to.

(c) Nature of demand – When the load is uniform and steady, it may not be
worthwhile
to outsourcing. Absence of supervision and control may be a hindrance to
meet any
urgent requirements of the customer. This affects the business especially
if no
production facilities are built in the organization

(d) Cost - When the fixed costs that go along with making the product does
not get
reduced considerably

2) Methods Improvement:-
Methods Improvement starts with Methods analysis focus of this
process is how a job is done breaking it down to elemental tasks so that they
are amenable for analysis.. This is done for both running jobs and new jobs.
For a new job, the description becomes the input for analysis. For current
jobs, the analyst depends on observations, records and suggestions of the
persons involved in the job. When improved methods are suggested, they are
implemented and records created for assessing the consequences of the
methods improvement procedures. The analyst should involve all concerned
persons in the process so that acceptance becomes possible and
opportunities open up for further improvements. Moreover, the people
actually involved would be interested in
improving their productivity and will help the analyst in the process.

3) Balancing of Workstations:-
Assembly lines necessitate out stringing together workstations which
carry out operations in a sequence so that the product gets completed in
stages. Since the workflow has to be uniform and operations may require
different periods for completion the necessity of Line Balancing is felt.
Capacities at workstations and the workforce to man are so adjusted that a
product in the process of assembly almost approximately the same amount
of time.

4) Rationalization of Packaging Methods:-

With logistics becoming an important function of the supply chain and
outsourcing becoming the norm, packaging has become an important aspect,
packaging has become important. Space is at a premium and therefore
stacking and storing have to more scientific. Movements inside the premises
from one location to another location are being done with automated systems
and they need that the packaging systems are designed for safe transit,
continuous monitoring – both for quantities and operations. In case of
outsourced products the materials used and their design should facilitate
reuse of the same which brings in economy.

5) Quality Circles:-
Kaoru Ishikawa is generally considered to have promoted the concept
of Quality Circles. It is well known that he is the originator of fishbone
diagrams to identify the root cause of any problem. The causes for the
existence of a problem are classified as pertaining to the material, processes
or method or any factor that goes into production. The matter is further
investigated and pursued till the exact cause is determined. Quality circles
use these principles in solving problems. The teams select projects selected
on the above basis and implement actions to achieve improvement in the
processes with a view to improve quality. Since these activities are carried
out without affecting the regular day to day work and involve little
involvement of the managers, team work gets reinforced and results in
continuous improvement in methods and quality. The capital deployed is
minimal, if at all and therefore productivity is enhanced.

2. Write a detailed note on Split case order fulfillment methods and mechanization.

Ans:-
Split case Order Fulfillment Methods and Mechanization

This system looks at situations when bulk supplies in full cases to one
or more destinations are not done. Fulfillment of orders which need different
merchandise in different quantities requires that ‘cases’ will have to be split,
and pieces picked, repacked in cartons and ship to the customer.
Mechanization helps in improving identification, pickup and repacking the
materials in addition to relieving monotony of the workers. A few strategies of
achieving this objective optimally are discussed here.

1) Order Picking Methods:

Items as per customer requirements have to be picked and packed in a
logical manner and assigned to personnel so that their productivity is
maximized.
Accuracy of fulfillment of order is ensured by two basic factors

a) Order Extent:
It is defined as the number of order to be picked simultaneously by a
picker in an assignment. This is categorized as discrete order picking in which
case a
single order is selected at a time; and Batch order Picking in which case the
merchandise requirements of many orders are put together and selected for
pick up in
the geographical area which is covered in a single pass.

b) Coverage Extent:
it is the physical area to be traversed by the picker in selecting
merchandise for an assignment within the picking system. The personnel pick
up the
merchandise from a zone the zone being a contiguous area with different
picking
locations. The boundaries may be fixed or dynamically adjusted to
accommodate either
personnel or customers. This zone is identified within the picking area. In the
other
method called tour picking the entire picking area is considered for picking
merchandise. Either of the strategies is adopted to meet the constraints or
opportunities
which maximize employee productivity and the customers’ needs.

2) Sorting and Routing:

Sorting is done for the purpose of easing the operation of matching
orders, merchandise and the customers for whom they are done. This activity
can be done as and when orders are picked Sort Immediate or by merging a
number of order and batches are made to consolidate the priorities for
execution. This method is called Merge and Sort. The strategy used depends
on the total area of the zone, the number of orders, and the type of
merchandise. and the economics of balancing all the above.
When orders are routed among those zones where picks are required
we call them routing the picks. When orders are routed from zone to zone, in
a particular order, whether any picks are there or not, we call them chaining.
When multiple zones are covered simultaneously in different zones we call
them parallel routing. As can be discerned, no one single method is suitable
for actual situations on site. They are formulated as a strategy for
optimization of resources in view of the constraints.

3) Order Packing Methods:-

Order fulfilling methodology covers one more aspect i.e. the order
packing methods. When split case is executed it becomes necessary that the
merchandise is repackaged for shipment to meet the requirements of the
customers. In the first method they are packed as they are picked. This is
applicable in cases where the merchandise is usable by the customer directly
and when the tools and packaging materials are available with the picker and
he can pack them throughout the picking area.

4) Classification Schemes:-
In this section you will come to know about the coding of various
methods of split picking and packing. The letters will uniquely identify the
method intended to be used and all personnel in the process will know
disposition status of the merchandise.

Discrete Order Picking or Batch Order Picking - Letter D or B is used

Z one Picking or Tour Picking
Pack Immediate or Assemble and Pack
BS – Batch Order Picking – Sort Immediate
BM - Batch Order Picking – Merge & Sort
ZR - Zone Picking with Routing
ZC - Zone Picking with Chaining
ZP - Zone Picking in Parallel
For example, BSDZCA means – Batch Order Picking Sort Immediate Discrete
Order Packing Zone Picking with Chaining and Assemble.
With this type of coding 24 ways of representing the type of split order
picking and packing are identifiable.

5) Choice of Optimal Fulfillment Strategies:-

The choice of order fulfillment strategy depends upon the predominant
order characteristics and category of distribution. They are determined by
General order characteristics such as -
a) number of line items;
b) quality of pieces per line- item
General order categories are
a) Wholesale Distribution – usually large number of pieces of a few items;
b) Retail Distribution – orders for large quantities for a large number of items;
c) Direct Marketing orders for a small quantity;
d) Consumer Distribution - small quantities of different items for purposes of
evaluation,
promotion and consumption
The performance measures to be satisfied by the choice of strategy are to
minimize
the costs involved and maximize desirable characteristics..
They are
a) Minimise the cost of pick and pack for every order;
b) Minimise the cost of shipping per order,
c) Reduce the time required per cycle;
d) To increase the fill rate
e) Improve Accuracy of the elements of the process
f) Traceability and accountability of all transactions..
Advanced technology involving Bar Coding, feeding on line data, high speed
processing an distribution of information across all nodes of the supply chain
help in improving efficiency, reduce costs and improve customer satisfaction.

3. Explain strategic management process and strategic decision making in detail.

Ans:-

Strategic Management Process

Most of organizational processes depend upon the structure of the
organization, the hierarchical levels, decision arrival mechanisms,
communication systems, authorization processes, implementation
procedures, feedback and monitoring devices to formulate and implement
strategies. It is necessary to ensure that the process is effective and efficient
and avoid loss of control. In essence, the purpose of strategies is to leverage
the company’s advantages, prepare for the eventualities of uncertain
external happenings and maximize the chances of success in its endeavors.
Organizational goals necessitate the adoption of certain strategies, which are
converted to functional goals in the areas of finance, marketing and
operations. These goals are achieved by adopting strategies arrived at using
organizational processes mentioned above. When these long term strategies
are being implemented tactics may have to be employed to meet short term
challenges depending upon situations. The actual activities which result in
outcomes are called operations.
A business strategy is the result of a decision taken at the highest
level. They are specific programme of action which outline how the resources
are deployed to achieve goals in an environment. A general framework to
guide and activate think tanks in the organization to come up with proposals.
Action plans with time frames, authority hierarchies and feedback
mechanisms are formulated and designed. At this stage detailed scenarios as
to the likely consequences are considered and contingency plans worked out
for implementation, if situations call for the same. Being in readiness with
alternatives is a good way of assuring the success of any plan.
For example the production of a model of motor cycle is to be
increased by 25% and possibly reduce the price by 10%. This decision would
have been taken as a strategy to meet the increasing demands which are
real
– to enter a niche market of the competitor
– to augment marketing department’s claim after a vigorous sales campaign
– or any other reason.
The strategy for the marketing function would be many like promising
freebies, make the commission attractive for the dealer, to open more
service outlets. The operations strategy would consider the following –
– additional machinery or subcontracting
– methods to improve productivity
– revamping assembly lines
– measures to improve motivation
– promoting existing employees or hire new ones
– identifying and developing new suppliers
look for opportunities to reduce costs as scaling up provides scope.
The above measures will be under consideration at all times. When a change
is considered, identification of areas of cooperation and collaboration become
visible. Opportunities arise for understanding and resolution of problems.
Setting up visible targets to meet deadlines encourages application of
‘constancy of purpose’ as Deming. This in itself would be a strategy for
improving quality and productivity.

Strategic Decision Making

Decision making is the most crucial management function.

Decisions commit the organization and its members to activities which
have financial repercussions and affect the functioning of others who are
connected with those. Therefore decisions are taken after lot of deliberations
which involve data gathering, analysis and predicting outcomes. Accuracy of
data, their relevance for the matter under consideration are matters which
affect the quality of decisions. In addition, the following factors also form the
basis of decision making:

a) Environmental Scanning:-
The business environment in which the firm exists and has to compete
continually exhibits potential for opportunities and threats. Becoming aware
of those and their impact on the firm by a process of analysis is called
environmental scanning. The environment includes the industry, the
marketplace, the governmental agencies, society, ecology, technology, etc.
Competitors may be gaining edge by diversification, making forays into the
firm’s niche market by making new and better products; suppliers could be
forming cartels and preparing to drive hard bargains; the Government could
be passing laws and issuing orders which could affect the supply of materials
or restrictions on import and export or even employment conditions.
Adaptation to these
dynamic factors by environment scanning and basic strategic decisions is
vital.

b) Core Competencies:-
Each organization is started by an entrepreneur or a small group of
them
who believed in some unique strengths which would give them a place in the
market. Utilizing those strengths the venture would have succeeded and
development and expansion take place either laterally or vertically or in both
ways. However, additional strengths or competences would have been
acquired to augment the existing business built on the core competencies
with which the organization had started. Markets know how, the learning of
the workforce and additional facilities created, would be continuously
demanding and satisfying new needs. Investors and suppliers would
be wiling to back an enterprise, who, they have, seen grow in strength. The
developments and improvements both in knowledge and skills make the core
strengths better. This tends to make these an advantage over the
competitors who would have to grapple with these competencies. Using
these advantages would form a part of the decision strategy of the firm.
Core processes of an organisation are determined by the core
competencies. Four main core processes are – customer relationship, new
product/service development, supplier relationship and order fulfillment. The
emphasis on these processes depends on the type of industry, the length of
its existence and the consequent strengths built up in certain areas, the way
earlier successes have been achieved and the reinforcement they have given
to the organisation. One should remember that the environment is always
dynamic and the strategy formulation needs to be constantly updated for
making implementation effective. Ultimately every organisation depends on
the core compete cities which gives it an advantage over the competitors.

4. What is TQM? Explain Quality approaches of Deming Wheel and Jurans Quality
Trio logy?

Ans:-

Introduction to TQM:-
TQM is viewed from many angles – as a philosophy, as an approach
and journey towards excellence. The main thrust is to achieve customer
satisfaction by involving everybody in the organisation – across all functions –
with continuous improvement driving all activities. TQM systems are
designed to prevent poor quality from occurring. The following steps are
implemented to achieve Total Quality.
a) Take all measures to know what the customer wants – voice of the
customer. Develop
methods that generate facts which can be used for decision making. Do
not ignore the
internal customer – the next person in the process.
b) Convert the wants into design specifications, that meet or exceed
customer
expectations.
c) Processes are to be designed so that they facilitate doing the job right the
first time.
Incorporate elements that make it impossible to make mistakes. It is called
fail safing
or fool proofing. The Japanese call it Pokayoke.
d) Keeping record of all occurrences, procedures followed and consequences.
They help
in validating the processes so that continuous improvement becomes
possible. More
importantly any gaps can be seen and rectified immediately. One of the
basic tenets
of TQM is just because something is working well improvement is not
necessary. The
search must be continuous to find ways and means to improve every
aspect of
 the business process – finance, operations and management. Complacency
should
never be allowed to creep in at any time. In this aspect, culture plays an
important
role. All these require top management commitment
Approaches to TQM
Being practiced worldwide by different organizations, TQM has
different approaches towards its achievement. The basic thrust of each of
these is realizing excellence. All the approaches have a lot in common, but
the emphasis shifts from one other. Needless to say, each organisation will
use any of these or even a combination to suit its structure, culture and need.
Some emphasize on the philosophy of TQM and the role of management and
employees in being aware, committed and act. Some expect us to use
statistics more intensely. Some give us an ‘integrated approach’.

Deming Wheel
Deming’s approach is summarized in his 14 points.
1) Constancy of purpose for continuous improvement
2) Adopt the TQM philosophy for economic purposes
3) Do not depend on inspection to deliver quality
4) Do not award any business based on price alone
5) Improve the system of production and service constantly
6) Conduct meaningful training on the job
7) Adopt modern methods of supervision and leadership
8) Remove fear from the minds of everyone connected with the organisation
9) Remove barriers between departments and people
10) Do not exhort, repeat slogans and put up posters.
11) Do not set up numerical quotas and work standards
12) Give pride of workmanship to the workmen
13) Education and training to be given vigorously
14) State and exhibit top management’s commitment for quality and
productivity
Using the above principles, Deming gave a four step approach to
ensure a
purposeful journey of TQM. The slope is shown to indicate that if efforts are
let up the
programme will roll back.
Plan - means that a problem is identified, processes are determined and
relevant
theories are checked out .
Do – means that the plan is implemented on a trial basis. All inputs are
correctly
measured and recorded.
Check – means that the trials taken according to the plan are in accordance
with the
expected results.
Act - When all the above steps are satisfactory regular production is
started so that
quality outcomes are assured

Juran’s Quality Triology

Juran uses his famous Universal Breakthrough Sequence to implement
quality programmes. They are:
A – Proof of need - there should be a compelling need to make changes
B – Project Identification - Here what is to be changed is identified Specific
projects with
time frames and the resource allocation are decided.
C - Organisation with top management’s commitment is made in terms of
assignment of
persons, responsibilities fixed
D - Diagnostic journey - Each team will determine the problems result from
systemic
causes or random or deliberately caused. Root causes are ascertained
with utmost
certainty.
E - Remedial Action – This is the stage when changes are introduced.
Inspection,
Testing and validation are also included at this point.
F - Holding on to the gains - The above steps result in beneficiary results.
Having
 records or all actions and consequences will help in further
improvements. The
actions that resulted in the benefits derived should be the norm for
establishing
standards.

Juran has categorized cost of quality into four categories :

(a) Failure costs – Internal - These are costs of rejections, repairs etc in terms
of
materials, labour, machine time and loss of morale;
(b) Failure costs – External – These are costs of replacement, onsite rework
including
spare parts and expenses of the personnel, warranty costs and loss of
goodwill;
(c) Appraisal Costs - costs of inspection, including maintenance of records,
certification,
segregation costs, etc.
(d) Prevention costs –
The sequence of three sets of activities - Quality Planning, Quality Control
and
Quality Improvement form the triology to achieve Total Quality
Management.

His arguments are that :

1) Quality is the result of good planning considering the needs of both
internal and
external customers and develop processes to meet them. The processes
are also
planned to meet them.
2) Quality is built into the system of manufacture inputs and processes that
are on
stream like raw material, spare parts, labour, machine maintenance,
training,
warehousing, inspection procedures, packaging, etc. They have to be
made to follow
standards and control exercised to make sure that mistakes do not occur
often and if
they are they are corrected at the source.
3) Quality Improvement measures are essential to keep the quality culture
alive. Newer
methods will be found, some operations can be eliminated, improved
technology
available In short, as experience is gained things can always be done
better. It is for
the management to take the initiative and encourage the employees to be
on the look
out for opportunities for improvement.
5. Compare Workflow with BPM. Explain in detail the Project Development process
Cycle?

Ans:-

Workflow vs. BPM

Workflow contains a number of entities in a unidirectional path with
nodes. Each of these nodes may contain a number of elements – material,
data, attributes, value. They come together for integration or even for
division and will have transformation going on. The activities that make these
transformations are the sub processes. So, there are changes taking place
along the path and at the end we have a completed process. Every detail has
been worked out, the outcomes verified and corrected brought into the flow
so that nothing untoward occurs. The only thing lacking is flexibility that
business situations demand all the time and because the enterprise has to
perform and excel in conditions of uncertainty, improvement and
competition. Fortunately these are exceptions. While majority of the
humdrum goes on smoothly, we need to manage exceptions. Notably,
exceptions create new processes, opportunities and help us get new insights
into the processes. It has been found that 80% of process costs arise out of
managing exceptions. These happen at many points in the value chain.
Managing these is Business Process Management. Workflow does not offer
options in the way processes are conducted. They have fixed routes,
activities and schedules. Actually, there is not much ‘management’. BPM
goes ahead not on a fixed track, but on bumpy roads, swerving sharply to
avoid collisions and overtaking the vehicles that are ahead. It calls for all
management skills.
.
The Project Development Process Cycle:
Every company would be interested to improve their performance over
the their previous performance in projects. In order to improve project
performance, the company must assure quality and quality control at every
stage of the project throughout the project life cycle. The various steps which
may be considered in the development of
the process cycle in any project are listed below:

1) Planning For Review:

In this step the main focus is on collection of data. Data is the main
input requirement of any successful project information system and therefore
the project. Once the data has been gathered prepare a suitable plan for its
analysis. Obtain necessary commitment from management and team
members to participate actively and take actions on findings. It is necessary
that every project member gives his or her commitment to participate and
deliver the service/product in the project. Review are necessary for every
stage of the project. Prepare schedule for each project review.

2) Conducting the Review:

 Before the review prepare an agenda. The agenda should be well
structured in terms of time and content. Make necessary arrangements to
gather inputs to the review. The review leader is the project manager.
Incorporate points, which are external to the project. These external points
have to be well structured to be reviewed. A reporter must be designated to
document key points of the meeting. An automated checklist must be
formulated for the session. The use of flipcharts may be helpful to collect
data from participants.

3) Take actions on findings:

During the meeting, determine the points which are critical to the
project and its performance. The members may have brain storming session
to discuss critical points. Make a list of all such items discussed and items
suggested and group the data into categories and then prioritize, either by
group discussion or voting. Identify action items and assign a project member
or a team the task pertaining to the action planned. For all such actions and
recommendations, prioritize the items depending upon the task for
execution. After reaching consensus on results, summarize project success
factors, recommendations for further study and action items with
responsibilities and due dates. Set expectations of scope, investment, time,
etc., for each item and send a copy to the team. Follow up all the actions.
Place review reports in the project documents file, in the
quality/productivity departments and in the library. Make reports available to
managers of the life process for similar projects.

4) Do continuous improvement:
Continual improvement is one of the management mantras. Every
organization wants to improve continuously. It is not possible to achieve
improvement unless sufficient measures are adopted to measure
improvement. Encourage the quality managers to look for quality themes
that emerge from review meetings. The quality managers should highlight
trends and deescalate chronic problems. Reviews are a check process in the
“Plan-Do-Check-Act” (PDCA) cycle of a quality cycle. They are not just a
onetime event. In this context, act on recommendations from previous
projects; plan to capture data about project; do continuous improvement;
check on how you are doing with a retrospective analysis. Do periodic project
reviews that will trigger mid project corrections. Conduct immediate, informal
retrospective after solving unexpected obstacles. Understand any impact on
the remainder of the project. Recognize people for extra efforts and
noteworthy contributions.
Be open to attend reviews for other projects. Learn from similar
ventures, warranty failures, customer surveys and experiences of other
divisions and companies. Be a part of continuous organizational learning
program that includes experimentation, evaluation and documentation with
easy access and retrieval.

5) Critical Success Factors:

It is necessary that a company identifies critical factors in a project.
These factors may slacken the project if not focused. Routines tasks may be
assigned to lower level team members as this may relieve the project team
from wasting their skill set on routine matters. In terms of project delivery,
the project office can relieve project managers of
tasks, like filling forms and templates, getting these forms signed off, mailing,
receiving and checking items etc.
Regarding project management skills the project office can help the
project manager in the project scope definition, project kickoff preparation
and planning tasks, through mentoring and coaching services. These are the
combining strengths that make the project manager to move forward and
achieve the project success. Regarding project quality reviews, the project
management office adds value providing processes, tools and project
management experience but any quality review process can be implemented
by the team without sponsorship from the management level.
It is necessary to identify all the critical success factors. One of the
critical success factors for the project quality review process implementation
is to convince and sell the benefits to the management team of the
organization. The team should show exhibit better control of their project
portfolio and then demonstrate better control about business profitability.

6) Results and Benefits of the Project Quality Reviews:

The main benefits of the project quality review are the project status is
formally visible to the whole organization. It creates awareness and room for
improvement. Only reviewing, in a detailed manner, every project we can
have a clear idea about the lack of knowledge mistakes, errors, deviations,
and their reasons.
The project quality reviews helps the project manager and his/her
manager to enable the necessary adjustments and taking the actions needed
to achieve the project goals finishing the project on time, scope and budget.
The team can find benefits for the project manager, for the customer
and for the sponsor. For the project manager because that process helps in
terms of discipline and control, for the customer because, in the way that
process is anticipating results, also create some kind of proactive behavior in
the project manager anticipating potential problems of the customer and
finally for the sponsor because this process helps him to know more project
details and then to ask the customer upper management level for
clarifications.
Management expectations are crucial for the project success but
project reviews add value to such expectations.
The above steps can be represented in the form of a diagram to show
various process items in a project. These diagrams will help in the review
processes ot pin point facts and figures of concern post delivery. Every flow
and process can be studied and reviewed for enhancement in the product or
service deliverable in future.
As an example consider packaging of a tonic bottle in a box :
 Prin
Out ted
bot ton labe
cap er
tle ic box l

Stick
Assembl
label
e
on box

Check the fitment of Check the alignment

cap on bottle and position of label

Assembl
e

Packed
Tonic
Bottle
6. What is JIT? Explain Value engineering with examples.

Ans:-

Introduction to JIT
JIT can be considered to be a philosophy of manufacturing founded on
the principles of elimination of all waste and thereby increasing productivity.
When the philosophy is applied at workplace, the approach results in
providing parts in just right quantities at the right time. This results in
economy of material and time thus lowering the costs and increasing
productivity. Since no extra parts are available, production of only good parts
is forced on the system. JIT has been extended to mean continuous
improvement. These principles are being applied to engineering, purchasing,
accounting and data processing also. We will see how JIT helps in
implementing Lean Production systems. In these days when technology is
able to provide us with highly accurate equipments which have high
capacities and the business has become global meaning that both suppliers
and customers are widely accessible. To remain competitive, cost efficiencies
have become compulsory. JIT helps in this process. It is extended to the shop
floor and inventory systems of the vendors also. One of the main challenges
for JIT is frequent changes in production schedules owing to the changes in
demand. This causes the procurements plans to change. In the present day
scenario where most manufacturing concerns depend upon a number of
suppliers, who in turn may outsource parts and services, disruptions have a
cascading effect. However, there is a limit to the agility that a company can
build into the system. Communication right through the supply chain helps in
reducing inventories and keeps the flow lines smooth. Success of
JIT depends upon a lot of preparation and committed implementation.

Characteristics of JIT
In this section, we will study different methods by which inefficiency is
reduced and unproductive time is minimized. The consequent saving is to be
utilized for reducing cost and render better service to the customer. JIT
considers elimination of waste as
fundamental to any processes. Shigeo Shingo an authority on JIT at Toyota
classifies them as under:

1) Over Production - The extra parts or products may not be needed or

may not be
available when needed. So, it is a waste.

2) Waiting Time - The operator, the machine or the part will not be either
working or
worked upon. The duration of waiting is unproductive and may create more
serious
consequences.

3) Movement - Any unnecessary movement is a waste of energy; causes

blockages
disrupting movements and delaying the flow of other items creating
delays.

4) Process - Some steps in the process may not be necessary to arrive at

the required
stage. It is waste of all the inputs that go into the process.

5) Inventory - Excess procurement or production builds up stock of

materials which are
not immediately used, thus locking space, funds carrying heavy costs.

6) Effort and movement - The people who work do not make a study as to
how these
are utilized in realizing the purpose for which they are made. Both, again
use up
resources which are not available when needed.

7) Defective Products - these are produced using the same equipments,

workmen and
the time that would be used to make good products. Thus defective
products use up
 resources and result in losses.

Since these wastes have to be eliminated, a thorough study how they

occur and what steps would result in their elimination is of paramount
importance. We focus on some of them now.

Implementation of JIT
JIT, like TQM and other developmental measures is possible only with
top management commitment and a learning culture in the organisation. The
main handicap to any programme is the resistance by the organizational
members even at the top, to make changes. This resistance may take the
form of non-cooperation and may enlarge to become sabotage. These show
up at the implementation stage. So, communication of the goals to be
realized and the objectives of each team should be make effectively. Initially,
a milestone chart will help in establishing the various steps to be taken and
correcting the activities as the process is on is the best way of ensuring
success. It is well to remind at this stage, that JIT is not a destination, but an
ongoing continuous improvement programme in the process of achieving
Total Quality Management.

Introduction of Value Engineering

Value Engineering / Value Analysis has gained importance in today’s
manufacturing field because of the necessity of making all components as
economically as possible. Every unnecessary component, every unwanted
operation has to be eliminated for economizing. Materials may have to be
changed, tolerances in manufactures relaxed – because value can be created
in terms of reduced volume, increased strength or longer service. Involving
the supplier and utilizing his knowledge and experience are crucial for its
success.

What is Value Engineering / Value Analysis

Basically it is a methodology by which we try to find substitutes for a
product or an operation. It can be conducted both internally and externally.
The concept took shape during the Second World War. The thinking process
calls for a deep study of a product – the purpose for which it is used, the raw
materials used, the processes of transformation,
the equipment needed etc. and question whether what is being used is the
most appropriate and economical. This applies to all aspects of the product.
For example, let us consider a component needs a round brass rod as raw
material in size 21.5 mm. Diameter. It has seven operations – cutting, drilling,
chamfering boring. milling, plating and polishing. Value analysis considers all
aspects of each of these and investigates whether any of them can
substituted by another material, a different size, a different tool, a different
machine, a different cot sequence, a different tool for an operation, a
different chemical, a different concentration, a different voltage, shorter time
or processing. Studies can be conducted to verify whether any operation can
be eliminated. Simplification of processes reduces the cost of manufacture.
Every piece of material and the process should add value to the product so as
to render the best performance. Thus there is an opportunity at every stage
of the manufacturing and delivery process to find alternatives which will
increase the functionality or reduce cost in terms of material, process and
time. It should be remembered that we are not seeking a cost reduction
sacrificing quality. It has been found that there will be an improvement in
quality when systematic value engineering principles are employed.

Relevance of VE in modern manufacturing

Modern manufacturing can be seen from two important perspectives.
One is the management approach which consists of TQM, JIT, Kanban,
concurrent engineering, Lean Manufacturing, TPM, Group Technology,
Cellular Manufacturing and others. These have basic philosophies based on
which techniques, tools and methodologies are developed. To aid the
process, we have computers and softwares written to collect data, process
them, distribute them and analyse them. We have Management Information
Systems which help in decision making. Optimisation at every level looks into
the aspects of cost and benefit. Modern machines like automatic machines,
Special Purpose Machines, Robots are built to high produce highly accurate
components at greatly reduced costs. New materials and processes have
resulted in great advances in the variety of products available to large
numbers of people. With globalisation procurement and distribution are being
conducted over great distances. The main thrust is on quality, timely delivery
at the least price. These are the values that we put in the product. Value
Analysis looks at the manufacturing activities with a view to make the
components simpler, processes faster and the products better. Since huge
investments on the machines, it is mandatory that every component/part
used is made as economically as possible. Fabrication, erection and
installation being costly and have long term implications, assessment of
utility of the materials used and processes adopted is important. In the
manufacturing activities power drives many machine elements with respect
to one another to obtain the transformation on the materials that result in
becoming parts. Using machines with appropriate capabilities in terms of
power, voltage, distances moved, lifting and placing them all provide
opportunities for value analysis.
Modifications may be made to effect savings.
 Set-2

PRODUCTION & OPERATIONS MANAGEMENT

1. What is meant by System Productivity? Give examples?

Ans:-

System Productivity:-
Productivity is generally expressed as the ratio of outputs to inputs.
Productivity can be calculated for a single operation, a functional unit, a
department division or a plant. It is a measure of the efficiency of the system
and looks at the economies achieved during the processes. Every process will
have number of contributors – people, machines, facilitating goods, ancillary
equipments, technology, etc. which help in achieving maximum productivity –
each element attempting to enhance the contribution of other elements.
Enhancement of productivity is achieved by either reducing the inputs for the
same output or increasing the output by using the same input. Opportunities
exist at all stages of the workflow. The entire system to introduce measures
for increasing productivity. However in actual manufacturing situations, the
inefficiencies will have
cascading effect in hampering productivity. Communication, effective review
processes and innovative methods will ensure optimization of resources.
Building up reliability into the equipments, managing the supply chain
to economize on the cost factors improves productivity. Quality circles are
very efficient in incorporating low cost and non-intrusive methods of
improving productivity and quality throughout the organisation. They seek to
involve all persons who are actually involved in the production system and
the information they elicit and bring about improvements highly cost
effective. They unveil creativity and encourage team work and bring about
improvements almost on a day to day basis. They do not bring about
dramatic changes, but continuous incremental changes in a harmonious way.
They also tend to encourage
identification of possible failures and seek methods of preventing things
going wrong..

2. Explain capital costs for online storage in detail?

Ans:-

Capital costs for online Storage

Storage economics are mainly concerned with the capital cost for on
line storage when rationalized with annual item cube movement. Capital
costs are those for the space, building, and material handling equipments,
bins, pallets, pallet loading systems, computer hardware and software for
identifying and processing information about the storage cost. The main
concern is the provision for picking, retrieval and packing. The supporting
and efficiency enhancing fixtures needed for the efficient use of space and
heavy equipments should be addressed. The extent of mechanization
depends on the expected returns in them. Many times mechanization will not
solve some fundamental problems of basic design of the system, inadequate
forecasting or inappropriate methodologies. It will be found that capital costs
which are quite huge fail to result in increased productivity and will be a drain
on the economics of the operation,

1) Mechanization Costs – for Assembly and Packing:-

Failure of the split case order Assembly and Packaging systems occurs
mainly due to two reasons a) Tote Sorting b) Item Sorting. Totes containing
the picked merchandise area moved from the selected zone. These are
received for sorting where the sorter automatically transfers all totes of a
given order on a conveyor which supplies them to the packing station. The
stations which perform this activity will have their workload assigned
dynamically. The Item Sorting System received the Totes with picked
merchandise are transported to one more induction stations where individual
items are removed. These items area inducted into an item sorter. The sorter
will be in the form of tilt tray or a cross belt. Individual items get sorted and
sent to chutes which carry the items for assembly and packing. The discharge
takes place at the Pack stations. Some times belt conveyors are used for
Sorting and transporting. In such cases chutes may become redundant. It is
to be noted that type of merchandise, their quantities determine the method
for the intended operations. The capital costs in adopting one system to
another will vary and utilization and productivity are factors which determine
the choice. However, it is advisable that provision for alternates may be
planned so that modifications do not become very costly.

2) Picking and Packing Costs:-

These activities require a good deal of human intervention, thus
needing a number of people. Distribution centre where picking and packing
activities take place will measure performances on the basis of pieces per
man hour or order lines per man hour. Inevitably, these get linked to orders.
There is a large variation in the quantities per order, variety of merchandise,
waiting lines and other characteristics of the orders being filled. The orders
might be wholesale, retail, direct or consumer. Productivity measures though
dependent on pieces per hour or lines per hour will have to be adjusted to
suit the peculiarities of the situation. The extent of mechanization also has to
be considered. Costs involved – both in terms of capital and labour intensive
activities should get suitable representation of the cost structure.

3) Order Assembly and Packing System Costs:-

Assembly is done manually and hence needs a well trained workforce.
The variety of merchandise that arrive from totes either via the chute or trays
or cross belt have to be accurately identified and placed for Assembly.
Though every care would have been taken gaps in the information flow would
still hold up the operations. Reducing inventory at this level is critical to
productivity. Feed back systems should b e very efficient to rectify errors as
and when they occur. Main costs involved at this stage are the manpower
and capital costs would not be heavy. Packing systems may be
semiautomatic or manual. Fully automatic systems may not be advisable for
Order Assembly situation unless quantities are large and requirements are for
longer periods.

3. Explain automated assembly lines and automated flow lines?

Ans:-

Automated flow lines

When several automated machines are linked by a transfer system
which moves the parts by using handling machines which are also
automated, we have an automated flow line. After completing an operation
on a machine, the semi-finished parts are moved to the next machine in the
sequence determined by the process requirements a flow line is established.
The parts at various stages from raw material to ready for fitment or
assembly are processed continuously to attain the required shapes or acquire
special properties to enable them to perform desired functions. The materials
need to be moved, held, rotated, lifted, positioned etc. for completing
different operations. Sometimes, a few of the operations can be done on a
single machine with a number of attachments.
They are moved further to other machines for performing further operations.
Human intervention may be needed to verify that the operations are taking
place according to standards. When these can be achieved with the help of
automation and the processes are conducted with self regulation, we will
have automated flow lines established. One important consideration is to
balance times that different machines take to complete the operations
assigned to them. It is necessary to design the machines in such a way that
the operation times are the same throughout the sequence in the flow of the
martial. In fixed automation or hard automation, where one component is
manufactured using
several operations and machines it is possible to achieve this condition – or
very nearly. We assume that product life cycles are sufficiently stable to
invest heavily on the automated flow lines to achieve reduced cost per unit.
The global trends are favouring flexibility in the manufacturing systems. The
costs involved in changing the set up of automated flow lines are high. So,
automated flow lines are considered only when the product is required to be
made in high volumes over a relatively long period. Designers now
incorporate flexibility in the machines which will take care of small changes
in dimensions by making adjustments or minor changes in the existing
machine or layout. The change in movements needed can be achieved by
programming the machines. Provision for extra pallets or tool holders or
conveyors are made in the original design to accommodate anticipated
changes. The logic to be followed is to find out whether the reduction in cost
per piece justifies the costs of designing, manufacturing and setting up
automated flow lines. Group Technology, Cellular
Manufacturing along with conventional Product and Process Layouts are still
resorted to as they allow flexibility for the production system. With
methodologies of JIT and Lean Manufacturing finding importance and
relevance in the competitive field of manufacturing, many companies have
found that well designed flow lines suit their purpose well. Flow lines compel
engineers to put in place equipments that balance their production rates. It is
not possible to think of inventories (Work In Process) in a flow line.
Bottlenecks cannot be permitted. By necessity, every bottleneck gets focused
upon and solutions found to ease them. Production managers see every
bottleneck as an opportunity to hasten the flow and reduce inventories.
However, it is important to note that setting up automated flow lines will not
be suitable for many industries

Automated Assembly Lines:

All equipments needed to make a finished product are laid out in such
a way as to follow the sequence in which the parts or subassemblies are put
together and fitted. Usually, a frame, body, base will be the starting point of
an assembly. The frame itself consists of a construction made up of several
components and would have been ‘assembled’ or ‘fabricated’ in a separate
bay or plant and brought to the assembly line. All parts or subassemblies are
fitted to enable the product to be in readiness to perform the function it was
designed to. This process is called assembly. Methodologies of achieving the
final result may vary, but the basic principle is to fit all parts together and
ensure linkages so that their functions are integrated and give out the
desired output.
Product Layouts are designed so that the assembly tasks are
performed in the sequence they are designed. You will note that the same
task gets repeated at each station continuously. The finished item comes out
at the end of the line

The material goes from station 1 to 5 sequentially. Operation 2 takes

longer time, say twice as long. To see that the flow is kept at the same pace
we provide two locations 2a and 2b so that operations 3, 4 an 5 need not
wait. At 5, we may provide more personnel to complete operations. The time
taken at any of the locations should be the same. Otherwise the flow is
interrupted. In automated assembly lines the moving pallets move the
materials from station to station and moving arms pick up parts, place them
at specified places and fasten them by pressing, riveting, screwing or even
welding. Sensors will keep track of these activities and move the assemblies
to the next stage. An operator will oversee that the assemblies are happening
and there are no stoppages. The main consideration for using automated
assembly lines is that the volumes justify the huge expenses involved in
setting up the system.

4. Write a detailed note on Crosby’s Absolutes of Quality and Taguchis Quality

Loss Function?

Ans:-
Crosby’s absolutes of Quality

Like Deming, he also lays emphasis on top management commitment

and responsibility for designing the system so that defects are not inevitable.
He urged that there be no restriction on spending for achieving quality. In the
long run, maintaining quality is more economical rather than compromising
on its achievement.
His absolutes can be listed as under.

(i) Quality is conformance to requirements – not ‘goodness’.

(ii) Prevention, not appraisal, is the path to quality.

(iii) Quality is measured as the price paid for nonconformance and as

indexes.

(iv) Quality originates in all factions. There are no quality problems. It is the
people,
design, process, who create problems
Crosby also has given 14 points similar to those of Deming. His approach
emphasizes on measurement of quality, increasing awareness, corrective
action, error cause removal and continuously reinforcing the system, so that
advantages derived are not lost over time. He desires that the quality
management regimen should improve the overall health of the organisation
and prescribed a vaccine.

The ingredients are:

1) Integrity - honesty and commitment to produce everything right first time,

every time.

2) Communication - Flow of information between departments, suppliers,

customers helps in identifying opportunities.

3) Systems and operations - These should bring in a quality environment so

that nobody
is comfortable with anything less than the best.

Taguchi’s Quality Loss Function

His contention is that quality comes from design. He advocated a wide
use of Design of Experiments for experimentation on variables and obtain
specifications which will result in high quality of the product. It helps in
bringing cost effective improvements in quality. He believed that designers
should make robust designs so that product can withstand the variabilities
which tend to be persistent and give quality for longer periods. His objective
in giving the loss function is to make manufacturers realize that it is the
target value of the specification that should be sought to be achieved and not
the permissible deviations. The loss caused is the square of the deviation
multiplied by a cost constant.
L = Total Loss
C = Cost constant
X = average value of the quality characteristic
T = target value of the characteristic.
Taguchi also talks about losses to society because of a dent in quality both
The manufacturers and users in society who will have to endure the consequences of
reduced performance as long as the product is used.

5. Read the following case and answer the question.

Shane O'Leary, chief operating officer of the UK-Canadian group, will take over the reins
from Mr. [Richard Anderson]. High hopes over the gas explorer's intentions to develop a
field in Algeria caused its share price to peak in 2005 but its failure to exploit the
prospect has since caused its share price to slump.
In spite of Mr. [Khelil]'s views, FCP yesterday announced that Mr [Michael Kroupeev]'s
proposed slate of directors would now be recommended by management, making their
election virtually guaranteed, although two of his nominees would step down and make
way for compromise board members.
Mr Kroupeev, who controls nearly 10 per cent of FCP through an investment vehicle,
also sounded a conciliatory tone. "The minister has no grounds to be concerned. There
has been no change in control of the board. We are fully committed to developing this
project." [Source : Proquest : STANLEY PIGNAL. Financial Times. London (UK): Apr 15, 2008. pg. 20]

Question : Identify the major process of operations as applicable to this context and
explain it in detail?

Ans:-

OPERATION STRATEGY IS TOTAL PATTERN OF DECISIONS AND ACTIONS WHICH SET

THE OBJECTIVES AND ACTIVITIES OF THE OPERATIONS SO THAT THEY
CONTRIBUTE AND SUPPORT THE ORGANISATION’S BUSINESS STRATEGY.

WITH REFERENCE TO THE CASE EXAMPLE, MENTIONED IN PRODUCTIN &

OPERATION MANAGEMENT-AS PER ME-MAIN EMPHASIS HAS BEEN GIVEN TO
BELOW MENTIONED PROCESS OF OPERATION:

• CORPORATE STRATEGY &

• MARKETING STRATEGY (TO SOME EXTENT)

• COMPETITATIVE STRATEGY &

CORPORATE STRATEGY:
CORPORATE STRATEGIES, VIEWS ORGANISATION AS A SYSTEM OF
INTERCONNECTED PARTS, EACH WORKING WITH OTHERS TO ACHIEVE THE
DESIRE GOALS.
BUT MR.MICHAEL KROUPEEV tried to impose his suggestion using his powers, which
is clearly seen by the incident which states “How First Petroleum and its
dissident shareholders agreed to oust Richard Anderson as chief
executive in spite of the repeated trust placed in him by Algeria’s
Minister of Energy. Even, Mr. Michael Kroupeev, British Russian
investor who has lobbied heavily for Mr. Anderson to be replaced”
which by rules is not exceptable-though to some extent it would prove right
but at the end of the day-it can’t bear a fruitful result. Corporate policy
develops only, when they adapt to environment, core processes and core
competencies.

Secondly,
MARKET STRATEGY:
Like the old adage says, "The best way to eat an elephant is...one bite
at a time."
If you break your marketing strategy down into smaller chunks than
it's easier to be consistent. And the best way to be consistent is to make
each chunk a process. A process is a particular course of action intended to
achieve a result in a routine way.
But Mr. Michael Kroupeev tried to rule the management circle, without
studying the MARKET STRATEGY, which says “The processes you want your
marketing strategy to be broken down into should mirror that of the
relationship building process; convert strangers into friends, friends
into clients and clients into loyal clients.”
Where as Mr. Michael Kroupeev wanted to rule the market, by replacing Mr.
Anderson with Mr. Shane O’Leary-but resulted into downfall of their prices-
seeing the negative results of his decision-he tried to follow the marketing
existing strategy to survive in the market and concluded in his comments
later that-
“Mr. Anderson would remain as a consultant for FCP for around six
months, during which time he would assist in the management
transition.” Because of which FCP jumped from 21 ½ p to 138 ½ p in
London, up 18 percent. The Company’s value now stands at C$636m,
around 10 percent of its value in 2005.
If he would have studied the market strategy, instead of his stint
power-he would have been successful in his decision making.

Thirdly,
COMPETITATIVE STRATEGY:
Competitive Strategy is the unique resources and strength and organization
possesses. Where as Mr. Michael Kroupeev tried to impose his rules on policy
decision, by following an acrimonious proxy battle between the current
management and pressuring heavily for Mr. Andersons replacement. This
weakens the policy decision making.
Therefore, it’s always advisable for the success to understand what exactly
we want, how to achieve it, who exactly do we require, what we expect from
them, what they expect from us, does the result derived is a success or
failure? If failure what’s the reason behind? if success who are the
contributors? Are we satisfied? Are the people for whom we are serving
satisfied? And many more questions-which can be answered only by following
right strategy of Operation Management.
See power point module …………………………………….