MBA-2nd Semester

Subject Code-MB0044
BOOK ID- B1133

Production & Operation Management Set-1 Q1. Explain in brief the origins of Just In Time. Explain how JIT is implemented?

Ans:- Just In Time manufacturing is a process by which companies doesn t keeps a lot of excess of
inventory; instead of they manufacture a product as an order comes in. It is a management philosophy of continuous and forced problem solving.

Origin:
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 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.
   

How JIT is implemented?

Like any advanced method of production and quality improvement, some pre-requisites are needed to be in place so that, implementation is easy and results are identifiable. The following table gives the requirements from the design process to the measurement of performances. A Design Flow Process y y y y y y y y y y y y y y y y y y y y y y y y y y y y y link operations balance workstation capacities relay-out for flow emphasize preventive maintenance reduce lot sizes reduce set-up and change over time worker responsibility measure-SQC enforce compliance fail safe methods automatic inspection level schedule under utilize capacity demand pull back flush reduce lot size reduce lead times frequent deliveries project usage requirements quality expectation look for other areas stores transits counsels conveyors standard product configuration standardized and reduce number of parts process design with product design quality expectations

Total Quality Control

C D

Stabilize schedule Kanban Pull

Work with Vendor

Reduce inventories

Improvement product design

The above activities lead to: y Solving problems concurrently  Root Cause  Solve Permanently  Team Approach  Line And Specialist Responsibility  Continual Education Measuring performance  Emphasise improvement  Track trends

When the above the requirements are met, we achieve JIT to a very close extent.

Q2.

Bring out the historical background of Value Engineering. Elucidate three companies which have incorporated VE with brief explanation?

Ans:- Value engineering or Value Analysis is a methodology by which we try to find substitute for a
product or an operation. The concept of value engineering originated during the Second World War. It was developed by the General Electric Corporations (GE). Value engineering has gained popularity due to its potential for gaining high returns on investments (ROI). This methodology is widely accepted in business reengineering, government projects, constructions, assembling and machine process, health care and environmental engineering etc. Value engineering process calls for a deep study of a product and the purpose for which it is used, such as the raw materials used; the process of transformation; the equipments needed, and many others. It is also questions whether what is being being used is the most appropriate and economical. This applies to all aspects of the products. 1. General Electrical Corporation The concepts of value engineering originated 1947 in GEC, when a substitute for asbestos for flooring had to be found. Specialized dealers could provide an equally good material at a lesser price. Initially, the practioners were the people in charge of purchasing who tried to locate substitute materials which would equally good, if not better at a lower price. This is the first approach to value engineering. 2. Ashok Leyland In implementation of VA , Ashok Leyland changed gear material from phosphor bronze to a less expensive cast iron and eliminated frequent complaint of gear seizure in trucks. 3. TVS T.V.Sunderam Lynger (TVS) Limited is one of the largest automobile distribution companies in India. During the mid 1940 to 1960 s, TVS based in Madurai was ranked as the best bus transportation system in India. It could manage to run the fleets for about 96% of the time. TVS used VE approach to restore the mobility of buses that had broken down. They stocked their garage with some critical assemblies of a bus. Whenever, a part or assembly failed of a bus, they replaced it immediately with a new one, thus restoring mobility within a couple of hours. When compared to the traditional method, this approach has gained much more benefits to the company, it helped to save time, reduce cost, efficient, quicker, and competitive.

Q.3. Explain the key elements of Quantitative modelling. What is work study and motion study? Ans:- Solving a problem using the quantitative approach involves three key elements or steps:
y y y

Defining the problem Constructing the mathematical model Testing the model and the solutions.

Defining the problem:  Determine the purpose of studying the problem.  Consider the various factors such as resources, constraints, uncertainties involving them, cost involved, time available, and issues that have utmost importance. After considering these, we have to determine which problem needs our attention, the factors that affect it, and the interrelationships between them. Constructing a mathematical model: For constructing a mathematical model for the problem, we follow certain steps. We :  Reformulate the physical problem into a form which can be analysed.  Convert it in to a model. The models plays a vital role in engineering, science and business.  Make the models of the dams, steel structure, chemical reactions, organizational structures, graph showing variation of shares prices and others. Many of these are capable of being expressed in terms of mathematical equations.  Solve the mathematical equations for solving the problems. Equations can be solved, if the values of some variables are known or presumed. Testing the models and its solutions: In business we do not have complete or reliable data most of the times. We have formulated the equations with presumptions. So, we can verify have obtained is acceptable by testing the solutions with the help of some known outcomes for known variables. This tests the model, as well as the presumptions we might have made. We may have to change the model or the presumptions if the results obtained are not right.

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.

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 production-quality 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 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 and 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. List different methods for selecting a suitable plant location and explain any two?
Ans:- Various methods for selecting a suitable plant location are: y Rating plan method y Factor rating method y Point rating method y Break-even method y Centre of gravity method

Rating plan Method In rating plan method, the various factors for locating a plant are given ratings depending upon the perception of the management. The location which gets maximum rating, considering all the factors, is chosen for the locating plant. Point Rating Method In point rating method, we appropriation a fraction of a suitably selected total rating and see how many points we can allocate to the locations under consideration. You should compare the totalled ratings and decide the preference. Break-even Analysis Every manufacturing company will have three major contributions to cost: y Investment made for land, plant and machinery resulting in interest and depreciation. y Recurring expenses, which are not proportional to the quantity of production. y Variable costs, which are directly proportional to the quantities produced. For our calculation, we combine the first two costs together and call them fixed costs. We call those costs that depend on the quantity of production as variable costs. We compare the total costs for different locations on estimated amounts per annum and select whichever location costs the least. However, we will have to consider the possible variations in production levels during the foreseeable time spans and take a decision. Factor rating Method In factor rating method, each of the factors for location is rated and the rating of the competitive location is considered. Then, the products of the rating are added and the location which get maximum product of rating is selected. Centre of gravity Method Centre of gravity method is used mainly when: y Transportation costs, either for distribution of products or collection of materials from different suppliers, is the main criterion. y Production rates are high. y The volume and weights of materials that have to be moved are huge. y Time taken, either to receive material from suppliers or delivery to customers, is critical.
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.): 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 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.

Q.6. Explain Juran s Quality Trilogy and Crosby s absolutes of quality. List out Demings 14 points?
Ans:-JURAN s Quality Triology Juran uses his famous universal Breakthrough Sequence to implement quality programmes. The universal break through sequences are ; y Proof of need: there should be a compelling need to make changes. y Project identification: here what is to be changed is identified. Specific projects with time frames and the resource allocation are decided. y Top management commitment: Commitment of the top management is to assign people and fix responsibilities to complete the project. y 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. y Remedial Action: This is the stage when changes are introduced. Inspection, testing, and validation are also included at this point. y Holding on to the gains: the above steps results in beneficiary results. Having records or all actions and consequences will help in further improvements. The actions that results in the benefits derived should be the norm for establishing standards. JURAN has categorised cost of quality in to four categories: 1. Failure Costs Internal: These are cost of rejections, repairs in terms of materials, labour, machine time and loss of morale. 2. Failure Costs-External: These are cost of replacement, on-site rework including spare parts and expenses of the personnel, warranty costs and loss of goodwill. 3. Appraisal Costs: These are cost 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 trilogy to achieve TOTAL QUALITY MANAGEMENT. JURAN s argument says that; y Quality is the result of good planning consideration the needs of both internal and

external customers and develops processes to meet them. The processes are also planned to meet them. y 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, and other. All these have to follow standards and control exercises to make sure that mistake do not occur often and that if mistakes do occur then they are corrected at the source. y 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 lookout for opportunities for improvement. CROSBY S Absolutes of Quality Like Deming, Crosby 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 than compromising on its achievement. His absolutes can be listed as under: y Quality is conformance to requirements, not goodness y Prevention, not appraisal, is the path to quality. y Quality is measured as the price Paid for non-conformance and as indices y Quality originates in all factors. There are no quality problems. It is the people designs and processes that 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 opined that the quality management regimen should improve that overall health of the organization and prescribed a vaccine. The ingredients are. 1. Integrity: Honesty and commitment help in producing everything right first time, every time. 2. Communication: Flow of information between departments, suppliers, customers helps in indentifying opportunities. 3. Systems and operations: These should bring in a quality environment so that nobody is comfortable with anything less than the best. Deming s 14 points
1. 2.

3. 4.

5. 6. 7.

8.

Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place. End the practice of awarding business on the basis of price tag. Instead, minimise total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs. Institute training on the job. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of an overhaul, as well as supervision of production workers. Drive out fear, so that everyone may work effectively for the company.

9.

10.

11.

12.

13. 14.

Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service. Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force. a. Eliminate work standards (quotas) on the factory floor. Substitute leadership. b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership. a. Remove barriers that rob the hourly paid worker of his right to pride in workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. b. Remove barriers that rob people in management and engineering of their right to pride in workmanship. This means, inter alia, abolishment of the annual or merit rating and management by objective. Institute a vigorous program of education and self-improvement. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.