SMU-MBA Assignment Set-1

MB0044 Production & Operations Management

Q1. Explain in brief the origins of Just In Time. Explain the different types of wastes that can be eliminated using JIT. Ans. Just in Time (JIT) is a management philosophy aimed at eliminating waste and continuously improving quality. Credit for developing JIT as a management strategy goes to Toyota. Toyota JIT manufacturing started in the aftermath of World War II. Although the history of JIT traces back to Henry Ford who applied Just in Time principles to manage inventory in the Ford Automobile Company during the early part of the 20th Century, the origins of the JIT as a management strategy traces to Taiichi Onho of the Toyota Manufacturing Company. He developed Just in Time strategy as a means of competitive advantage during the post World War II period in Japan. The post-World War II Japanese automobile industry faced a crisis of existence, and companies such as Toyota looked to benchmark their thriving American counterparts. The productivity of an American car worker was nine times that of a Japanese car worker at that time, and Taiichi Onho sought ways to reach such levels. Two pressing challenges however prevented Toyota from adopting the American way: 1. American car manufacturers made lots or a batch of a model or a component before switching over to a new model or component. This system was not suited to the Japanese conditions where a small market required manufacturing in small quantities. 2. The car pricing policy of US manufacturers was to charge a mark-up on the cost price. The low demand in Japan led to price resistance. The need of the hour was thus to reduce manufacturing costs to increase profits. To overcome these two challenges, Taiichi Onho identified waste as the primary evil. The categories of waste identified included
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overproduction inventory or waste associated with keeping dead stock time spent by workers waiting for materials to appear in the assembly line time spend on transportation or movement workers spending more time than necessary processing an item waste associated with defective items

Taiichi Onho then sought to eliminate waste through the just-in-time philosophy, where items moved through the production system only as and when needed.

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SMU-MBA Assignment Set-1

MB0044 Production & Operations Management

Q2.What is Value Engineering or Value Analysis? Elucidate five companies which have incorporated VE with brief explanation. Value engineering (VE) is a systematic method to improve the "value" of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements.
In the United States, value engineering is specifically spelled out in Public Law 104-106,

which states Each executive agency shall establish and maintain cost-effective value engineering procedures and processes. Value engineering is sometimes taught within the project management or industrial engineering body of knowledge as a technique in which the value of a systems outputs is optimized by crafting a mix of performance (function) and costs. In most cases this practice identifies and removes unnecessary expenditures, thereby increasing the value for the manufacturer and/or their customers. VE follows a structured thought process that is based exclusively on "function", i.e. what something "does" not what it is. For example a screw driver that is being used to stir a can of paint has a "function" of mixing the contents of a paint can and not the original connotation of securing a screw into a screw-hole. In value engineering "functions" are always described in a two word abridgment consisting of an active verb and measurable noun (what is being done - the verb - and what it is being done to - the noun) and to do so in the most non-prescriptive way possible. In the screw driver and can of paint example, the most basic function would be "blend liquid" which is less prescriptive than "stir paint" which can be seen to limit the action (by stirring) and to limit the application (only considers paint.) This is the basis of what value engineering refers to as "function analysis". Value engineering uses rational logic (a unique "how" - "why" questioning technique) and the analysis of function to identify relationships that increase value. It is considered a quantitative method similar to the scientific method, which focuses on hypothesisconclusion approaches to test relationships, and operations research, which uses model building to identify predictive relationships. Value engineering is also referred to as "value management" or "value methodology" (VM), and "value analysis" (VA)VE is above all a structured problem solving process based on function analysisunderstanding something with such clarity that it can be described in two words, the active verb and measurable noun abridgement. For example, the function of a pencil is to "make marks". This then facilitates considering what else can make marks. From a spray can, lipstick, a diamond on glass to a stick in the sand, one can then clearly decide upon which alternative solution is most appropriate.

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SMU-MBA Assignment Set-1

MB0044 Production & Operations Management

Q3. Explain different types of Quantitative models. Differentiate between work study and motion study. Quantitative models are needed for a variety of management tasks, including (a) identication of critical variables to use for health monitoring, (b) antici- pating service level violations by using predictive models, and (c) on-going op- timization of congurations. In production and operations management, models refer to any simple representation of reality in different forms such as mathematical equations, graphical representation, pictorial representation, and physical models. Thus a model could be the well known economic order quantity (EOQ) formula, a PERT network chart, a motion picture of an operation, or pieces of strings stretched on a drawing of a plant layout to study the movement of material. The models help us to analyze and understand the reality. These also help us to work determine optimal conditions to for decision making. For example, the EOQ formula helps us to determine the optimum replenishment quantities that minimize the cost of storing plus replenishing.The number of different models we use in production and operations management run into hundreds, or even more than a thousand. These are really too many to enumerate in a place like these. I am listing below a random list of broad categories of models used in production and operations model.Operations research models. This is actually a very broad classification and covers many of the other categories in the list given here.
               

Inventory models Forecasting models Network models Linear programming models Queuing models Production planning and control models Engineering drawings Photographs and motion pictures used in time and motion studies. Material movement charts Process flow diagrams Systems charts Statistical process control charts. Variance analysis Regression analysis Organization chart Fishbone chart

Work study and motion study Work study includes a wide field of measurement tools and techniques. Motion study or method study is concerned with analyzing individual human motions (like get object, put object) with a view to improving motion economy.

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SMU-MBA Assignment Set-1

MB0044 Production & Operations Management

Q4. What is Rapid Prototyping? Explain the difference between Automated flow line and Automated assembly line with examples. Ans. Rapid prototyping is the automatic construction of physical objects using additive manufacturing technology. The first techniques for rapid prototyping became available in the late 1980s and were used to produce models and prototype parts. Today, they are used for a much wider range of applications and are even used to manufacture productionquality parts in relatively small numbers. Some sculptors use the technology to produce complex shapes for fine arts exhibitions. 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
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MB0044 Production & Operations Management

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. Q5.Explain Break Even Analysis and Centre of Gravity methods. Explain Product layout and process layout with examples. Ans. Break Even Analysis refers to the calculation to determine how much product a company must sell in order to break even on that product. It is an effective analysis to measure the impact of different marketing decisions. It can focus on the product, or incremental changes to the product to determine the potential outcomes of marketing tactics. The formula for a break even analysis is: Break even point ($) = (Total Fixed Costs + Total Variable Costs). Total Variable Costs = Variable cost per unit x units sold Unit contribution (contribution margin) = Price per unit Variable cost per unit. When looking at making a change to the marketing program, one can calculate the incremental break even volume, to determine the merits of the change. This determines the required volume needed such that there is no effect to the company due to the change. If making changes to fixed costs (changing advertising expenditure etc.):
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SMU-MBA Assignment Set-1

MB0044 Production & Operations Management

Incremental break even volume = change in expenditure / unit contribution. Thus if a company increased its advertising expenditure by $1 million, and its unit contribution for the specific product is $20, then the company would need to sell an additional 50,000 units to break even on the decision. If making changes to the unit contribution (change in price, or variable costs): Incremental break even volume = (Old Unit Volume x (Old Unit Contribution New Unit Contribution)) / New Unit Contribution Thus if a company increased its price from $15 to $20, and had variable costs of $10, it is increasing its unit contribution from $5 to $10, assume also an old unit volume of 1 million. It could therefore reduce its volume by 500,000 to break even on the decision. When making changes to a specific product, cannibalization of other products may occur. To calculate the effect of cannibalization, the Break Even Cannibalization rate for a change in a product is: New Product Unit Contribution / Old Product Unit Contribution. New Product is the planned addition to a product line (or change to a product within a product line), Old Product is the product that loses sales to the new product (or the product line that loses sales). The cannibalization rate refers to the percentage of new product that would have gone to the old product, this must be lower than the break even cannibalization rate in order for the change to be profitable. 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 differentas 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 productprocess 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. PROCESS LAYOUT Process layouts are found primarily in job shops, or firms that produce customized, lowvolume 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
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MB0044 Production & Operations Management

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.


Motivation. Employees in this type of layout will probably be able to perform a variety of tasks on multiple machines, as opposed to the boredom of performing a repetitive task on an assembly line. A process layout also allows the employer to use some type of individual incentive system. System protection. Since there are multiple machines available, process layouts are not particularly vulnerable to equipment failures. Disadvantages of process layouts include: Utilization. Equipment utilization rates in process layout are frequently very low, because machine usage is dependent upon a variety of output requirements. Cost. If batch processing is used, in-process inventory costs could be high. Lower volume means higher per-unit costs. More specialized attention is necessary for both products and customers. Setups are more frequent, hence higher setup costs. Material handling is slower and more inefficient. The span of supervision is small due to job complexities (routing, setups, etc.), so supervisory costs are higher.

 

Improving process layouts involves the minimization of transportation cost, distance, or time. To accomplish this some firms use what is known as a Muther grid, where subjective information is summarized on a grid displaying various combinations of department, work group, or machine pairs. Each combination (pair), represented by an intersection on the grid, is assigned a letter indicating the importance of the closeness of the two (A = absolutely necessary; E = very important; I = important; O = ordinary importance; U = unimportant; X = undesirable). Importance generally is based on the shared use of facilities, equipment, workers or records, work flow, communication requirements, or safety requirements. The departments and other elements are then assigned to clusters in order of importance. Advantages of process layouts include:
 

Flexibility. The firm has the ability to handle a variety of processing requirements. Cost. Sometimes, the general-purpose equipment utilized may be less costly to purchase and less costly and easier to maintain than specialized equipment. Additionally, in this type of layout accounting, inventory control, and purchasing usually are highly involved.

Confusion. Constantly changing schedules and routings make juggling process requirements more difficult.

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
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MB0044 Production & Operations Management

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). On an unpaced line, workers build up queues between workstations to allow a variable work pace. However, this type of line does not work well with large, bulky products because too much storage space may be required. Also, it is difficult to balance an extreme variety of output rates without significant idle time. A technique known as assembly-line balancing can be used to group the individual tasks performed into workstations so that there will be a reasonable balance of work among the workstations. Product layout efficiency is often enhanced through the use of line balancing. Line balancing is the assignment of tasks to workstations in such a way that workstations have approximately equal time requirements. This minimizes the amount of time that some workstations are idle, due to waiting on parts from an upstream process or to avoid building up an inventory queue in front of a downstream process. System protection. The system is at risk from equipment breakdown, absenteeism, and downtime due to preventive maintenance. Advantages of product layouts include:
 

Output. Product layouts can generate a large volume of products in a short time. Cost. Unit cost is low as a result of the high volume. Labor specialization results in reduced training time and cost. A wider span of supervision also reduces labor costs. Accounting, purchasing, and inventory control are routine. Because routing is fixed, less attention is required. Utilization. There is a high degree of labor and equipment utilization. Motivation. The systems inherent division of labor can result in dull, repetitive jobs that can prove to be quite stressful. Also, assembly-line layouts make it very hard to administer individual incentive plans. System protection. The system is at risk from equipment breakdown, absenteeism, and downtime due to preventive maintenance.

Disadvantages of product layouts include:



Unfortunately, constructing quantitative models requires specialized skills that are in short supply. Even worse, rapid changes in provider congurations and the evolution of business demands mean that quantitative models must be updated on an on-going basis. This paper de-scribes an architecture and algorithms for on-line discovery of
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quantitativemodels without prior knowledge of the managed elements. The architecture makes use of an element schema that describes managed elements using the common information model (CIM). Algorithms are presented for selecting a subset of the element metrics to use as explanatory variables in a quantitative model and for constructing the quantitative model itself. We further describe a prototype system based on this architecture that incorporates these algo-rithms. We apply the prototype to on-line estimation of response times for DB2 Universal Database under a TPC-W workload. Of the approximately 500 metrics available from the DB2 performance monitor, our system chooses 3 to construct a model that explains 72% of the variability of response time. Q6. Explain Jurans Quality Trilogy and Crosbys absolutes of quality. List out the pillars of Total Productive Maintenance. Ans: Jurans quality triology: Juran uses his famous Universal Breakthrough Sequence to implement quality programmers. The universal breakthrough sequences are: . Proof of need: There should be a compelling need to make changes. . Project identification. Here what is to be changed is identified. Specific projects with time frames and the resource allocation are decided. . Top management commitment: Commitment of the top management is to assign people and fix responsibilities to complete the project. . Diagnostic journey: Each team will determine whether the problems result from systemic causes or are random or are deliberately caused. Root causes are ascertained with utmost certainty. . Remedial action: This is the stage when changes are introduced. Inspection, testing and validation are also included at this point. . 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 result in the benefits derived should be the norm for establishing standards Juran has categorized cost of quality into four categories: 1. Failure cost Internal: These are costs of rejections, repairs in terms of material, labour, machine time and loss of morale. 2. Failure costs- External: These are costs of replacement, on-site rework including spare parts and expenses of the personnel, warranty costs and loss of goodwill. 3. Appraisal costs: These are costs of inspection, including maintenance of records, certification, segregation costs and others. 4. Prevention costs: Prevention cost is the sequence of three sets of activities, Quality Planning, Quality Control, and Quality Improvement, forming the triology to achieve Total Quality Management.
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