Master of Business Administration - MBA Semester 4 Operations Management Specialization OM 0017 Advanced Production and Planning Control ASSIGNMENT-

- Set 1 Q.1 State the objectives of production planning and control.

Ans. To achieve production efficiency and higher productivity at the most economic cost; is always the main objective of any manufacturing unit. To manufacture the required quantity of product, of the required quality, at the specified time by the cheapest and best method, the management employs the PPC department and assigns total responsibility of coordinating all manufacturing activities across all processes in the organisation. As we have observed from the above discussion production incorporates the transformation process wherein all the material inputs are processed. The processing could be of two types disintegration i.e. converting the raw materials to give different shapes, sizes, states and next integrating through assembly processes to form main product. A closed planning, monitoring and controlling of all production activities is essential. As we see PPC has to maintain synchronisation between planning, integration, coordination etc. This is because each task provide input has an effect on the preplanning activity. And categorising the tasks helps in better understanding and implementation of the manufacturing process. While planning starts-off with the analysis of the data through which the system of utilising the resources is charted out, the control process initiates and supervises the operations with an appropriate control mechanism that feeds back information about the progress of the work. The control process can also be successively modified, redefined and adjusted to the targets set and achieve the set/revised targets. A trade-off between the manufacturing department and the marketing department should be ensured. If there is a clash of interest, it overshadows the production/manufacturing activity. The demand dictates what kind of manufacturing process should be employed in order to service the requirement. We discussed three types of manufacturing processes namely mass production, batch production and job shop production. The type of technique employed will reflect in timely delivery of goods. Finally, we discussed the planning and effort that goes into building a manufacturing plant/facility. In order to set-up a plant proper planning should be done because it translates into delivering the desired product. Without the required equipment or facility it is not possible to achieve the planned goal.

Q.2

Bring out the difference between mass and batch production system.

Ans. Mass production refers to a large quantity of production with standardised products having less variety. Therefore, the determining factor is the demand, which makes us choose between continuous or batch type production. Mass production is preferable when demand is greater than the rate of production. When the demand is less than the rate of production, batch production is preferred. The economic needs of the assembly line must also be addressed. The technique of batch production is resorted to when the variety and volume of goods to be manufactured are not large enough to demand a separate production line for each product. We observe that batch production employs a process lawet (unlike mass production where there is product lawet). Rational approach in the economic terms like lot size, set up cost, carrying costs are considered here. Batch production is the technique of manufacturing a particular group of components at a work centre before moving the group to the next step in the production process. This production technique is common seen in paint and ink industries, bakeries, in the manufacture of pharmaceutical ingredients, processing of leather and so on. In batch production, there is a continuous demand and hence flow of materials is complex. Batch production is suitable for a variety of products. Here the volumes are not so large to demand highly automated and productive machines. Batch production is distinct from job production. Batch production employs a process lawet and machines are grouped to facilitate smooth flow to produce products in batches. As different jobs follow their route, enough flexibility is built into the system. The main factor to opt for batch production is to keep the cost of maintaining inventory and the cost of production low. There are two reasons to maintain a specific batch size. One is to maintain an optimum batch size to facilitate production first and then sale of goods. Second is the simultaneous production and sale of goods. In both types most favourable minimum production runs per year or economic batch quantity is planned to keep the total costs to a minimum. Two major categories of costs are: Setup Cost. Inventory carrying cost. Merits of Batch production are: Fewer machines are needed, since the machines utilisation is better. Low investment in machineries is not so capital intensive. Flexibility in personnel and equipment selection.

 Job satisfaction for operators. Henry Ford is considered the pioneer of modern mass production. His Ford motor company started manufacturing of cars on an assembly line. As the name suggests, mass production or assembly line production follows the concept of assembly line. Here the production process is divided into the simplest possible parts. These components are then grouped to follow production procedures. Assembly line consists of arrangement of labour and equipment in a sequence or work stations. A pre-decided task is accomplished at each work station,. This facilitates the production in large volumes. The materials move continuously at a uniform average rate on an assembly line. A portion of work is done at different work stations. Industries that manufacture products such as toys, automobiles, televisions, and computers industries all employ assembly line productions. Mass production applies to a large volume of production with standardised products having more or less the same features. Over a period of time this standard product is manufactured continuously. This system has both merits and demerits: Merits of mass production Smooth flow of material from one work station to the other. Output of one work station becomes the input for the next, so there are inbuilt inventories at each work station. In assembly line productions the production time is shorter. Since work stations are spaced closely together, the material is more efficiently handled. Training cost is less, as there is no special expertise required for the staff. Production planning and control is simpler. Demerits of mass production Maintenance is a challenge since proper functioning of all the machines is required in an assembly line production. Any change in the design lawet proves difficult because assembly lines are rigid inflexible setups. The slowest machine determines the pace at which production will continue. Assembly line setups require installation of specific types of machines and are therefore capital intensive. The intent of assembly line balancing is to minimise the idle time of machines. It means the number of operators required to perform a task is reduced.

Q.3 What are the chief elements to be considered while implementing the production control functions/tasks in an organisation? Ans. The supreme objective of production planning and control is to add to the profits of the enterprise. Along with inventory management and control, this is accomplished by keeping the customers satisfied by sticking to delivery schedules. Specific objectives of production planning and control are to establish routes and schedules for work that will ensure the optimum utilisation of materials, workers, and machines and to provide the means for ensuring the operation of the plant in accordance with these plans. Following are the elements or scope of production control: Control on Timing of Production: Observes stoppages, delays, rushes operation and regulates the flow of production for executing as per delivery dates. in

Quality Control: Makes all the quality observations in the process and checks whether the right quality of acceptable work has been processed. Replacement Control: Observes rejected materials and work In progress. Replaces the quality standards which do not fulfil the required purpose. Labour Efficiency Control: labour efficiency. Observes labour operations, timings and maintains

Control on Machines and Equipments: Strives to attain maximum utilisation of installed capacity and keeps machines in good condition through proper coordination with the maintenance department. Control on Progress of Orders: effective adjustments. Controls progress of work orders and its

Control of Material Handling: Releases orders for material movements for work in different work centres and ensures availability of materials at the right place. Control on due dates: After checking actual and planned schedules and delays or stoppages, control section will revise the schedule or adjust so as to ensure delivery to customers within due dates. Control of Information: Ensures the required information is provided to the concerned work centres. If any deviations occur, then it provides the data on production performance for future planning.

Q.4

Bring out the differences between forecasting and prediction.

Ans. These are the following important differences between forecasting and prediction:1. Forecasting involves the projection of the past into the future while prediction involves judgment in management after taking all available information into account. 2. Forecasting involves estimating the level of demand of a product on the basis of

factors that generated the demand in the past while prediction involves the anticipated change into the future. It may include even new factors that may affect future demand. 3. Forecasting is relatively free from personal bias while prediction is usually

governed by personal biases and preferences. 4. Forecasting is generally called as Throw Ahead technique while prediction is

generally called as Saying Beforehand technique. 5. Forecasting is reproducible i.e. every time the same result would be obtained by

any particular technique while prediction is not reproducible. Q.5 Explain the inventory reduction options and tactics.

Ans. Inventory reduction involves eliminating excess inventory, improving inventory turn rates, increasing inventory turnover, and meeting the delivery timelines. Inventory reduction has become quite important with the changes in the economic environment. Reduced customer demand, resources, and dwindling budgets are the reasons for a challenging environment. Managing inventory levels can be a delicate balancing act. Inventory should be maintained at such a level that it can satisfy customer needs. Reducing inventory without hindering customer service is the real challenge faced by companies. Fundamental requirement is following certain tactics namely, Safety stock inventory. Pipeline inventory.

Safety stock inventory: Safety stock is an organisation stock designed to buffer against uncertainty. Uncertainties in demand, supply, and unpredictable events such as poor delivery reliability or poor quality of suppliers products can be overcome by the use of this inventory, known as safety stock. The excess amount of stock present above the current need is known as buffer stock. Customer service can be improved by higher levels of buffer inventory. The presence of buffer stock ensures the absence of stock outs. Pipeline inventory: Also known as movement inventories, pipeline inventories

are inventories in transit or transport from one place to the other. For example, when coal is transported from the coal fields to an industrial town by trains, then the coal, while in transit, cannot provide service to the customers for power generation or for burning in furnaces. Pipeline inventories cannot be reduced, because they support the sales rate directly. Q.6 A transmission manufacturer supplying to a car manufacturer at the rate of 25 per day has a holding cost of the complete unit at Rs. 10/month and produces in batches with a set up cost of Rs. 10000 each time when the set-up is changed. Its production capacity is 40 transmissions per day and works for 300 days in a year. Cost of material inputs per transmission is Rs. 3000. Calculate: a. Most economical numbers that can be produced in one batch b. How frequently should the batches be started in a day c. What will be the minimum average inventory cost and production time ? d. What is the production time ? Ans. a) EBQ = Economic Batch Quantity = EPQ = 2 x 25 x 300 x 10000 10 x 12 40 . = 40 25 1826 Transmissions

Number of set ups in a year N =

D .= (25 X 300) = 4 orders EPQ 1826

b) Time per Order = 300 days = 75 days = frequency of batches 4 setups c) Production Time = tp = EBQ = 1826 = 45.65 days P 40 d) Total inventory cost. T(Q) = DA + hQ (1 d) = Rs.82158.00 Q 2 p

Master of Business Administration - MBA Semester 4 Operations Management Specialization OM 0017 Advanced Production and Planning Control ASSIGNMENT- Set 2 Q.1 (a) Differentiate between forward and backward scheduling. Ans. Forward scheduling Forward scheduling can be associated with the scheduler selecting a planned order release date and schedules all activities from this point forward in time. This is the approach in which customer orders are processed immediately, even if the order dates are far away. For example, if a part is required to be delivered in two weeks and if it needs a total of nine days to process it, the first nine days are used to make it. Forward scheduling can be associated with taking up jobs with a number of tasks and assigning resources as early as possible. The task should utilise the resource as soon as it is allotted. Forward scheduling also has its own advantages and disadvantages. Jobs can be completed ahead of their due date by forward scheduling Backward scheduling In backward scheduling, the scheduler begins with the delivery date, and plans backward to calculate the date for order release. The start date is determined by counting the number of days required for processing in backwards. Backward scheduling can be associated with taking up jobs with a number of tasks and assigning resources in reverse order. This system requires a delivery date from the customer, since scheduling is done backwards from the date of delivery. Backward scheduling is the method, which uses the same lead time offset logic as MRP. Here the customer orders for a job as late as possible but expects it to be delivered in time or on due date. The components are delivered when they are required rather than as soon as possible.

Q.1 (b) List the advantages and disadvantages of JIT Ans. : Advantages and Disadvantages of JIT Advantages Disadvantages

Lower stock holdings resulting in There may be room for mistakes, as minimum saving storage space and rent stock is kept for re-working defective product. incurred towards it. Working capital is attached with stock Production is very dependent on suppliers. as stock is obtained only when it is required. Lesser chance of stock perishing, or The entire manufacturing schedule can getting obsolete. delayed if the stock is not delivered to time. be

Prevents the possibility of unsold Absence of spare finished product which can be products which might lose demand used to meet un-expected orders. because of changed demand observed in the market. Less time spent on checking and The manufactured products are produced to meet reworks, as the products are manu- the actual orders only. factured correctly at the first time. Q.2 Bring out the differences between productivity and flexibility. And is productivity compromised by introducing flexibility in the manufacturing process? Ans. Productivity vs. Flexibility In order to know the concept of flexibility versus productivity, we need to address questions like, what is the nature of relationship between the two? And does it mean that greater flexibility implies lesser or higher productivity? A general proposition is flexibility hampers productivity by reduced output and requirement of more input. As flexibility facilitates more options, it would be hampering productivity. This is due to the freedom of choice and change mechanisms. Flexibility raises the need for more inputs for more options and reduced output. This opinion can be observed from two viewpoints: one from the input and the other from the output point of view. Let us match the output of a mass manufacturing system and a flexible manufacturing system. Less flexibility may cause productivity of undesired output, whereas more flexibility will result in more real productivity of the desired output.

In order to bring out the difference between productivity and flexibility, let us consider two manufacturing systems such as A mass manufacturing dedicated assembly line. A flexible system able to handle many products. Now, which manufacturing system is expected to have a higher rate of products manufactured per day? We may tell that a dedicated system would have higher output rate as there are no changeover time in-between. However, in reality, a manufacturer requires to produce many models as per customer requirements. If a dedicated assembly line is used, then we would incur loss of setup time as every new model requires a new setup to be created. Whereas, in case of an FMS many models can be handled simultaneously, and in that way, we will have more satisfactory output and thus more productivity in real sense. Thus, with less flexibility, the productivity seems to be high, but with more of undesired output-- whereas more flexibility enables more real productivity of desired output. A common assumption is that a dedicated system requires less input and is more efficient. However, a flexible system manages uncertainty of demand effectively, leading to less input per unit of output. Let us examine the condition of input required in a less flexible and more flexible system for the same issue being discussed above. Normally, it is assumed that a dedicated mass manufacturing system would be more efficient and would require less input of manpower and machines per unit product. A dedicated system requires balanced production stages and well skilled workers. On the contrary a flexible manufacturing system, producing different products at a time will require higher inputs of technology and multi-skilled workers. It is observed that a less flexible system has higher productivity level on account of lower inputs. However, this is not true always as a dedicated system may be idle, when there is no demand for that product resulting in higher input costs per unit of output produced. Whereas, in such a case, a flexible system will be able to better cope with uncertainty of demand as it deals with a variety of products. Thus, having higher capacity utilisation in real terms leads to higher productivity by way of less input per unit of output. Thus, from the above discussion, we can conclude that though the productivity of a less flexible system may appear to be higher than that of a more flexible system in a stable environment, in real terms, the situation would be reverse in an uncertain and dynamic environment. Flexibility built into FMS and its productivity with respect to machining technology is shown in the following figure. Here, lesser the volume of production, lot more is the flexibility.

Q.3

What is capacity? Explain in brief.

Ans. Capacity can be defined as the available time for production. This does not include maintenance and other downtimes. Now, we will discuss about the unbalanced capacity and dependent events. Unbalanced capacity: Generally, manufacturers try to balance capacity at every stage of the processes to match it with the market demand. This approach is wrong as unbalanced capacity is better. In synchronous manufacturing, considering all capacities, this practice of balancing the capacities at every stage of the process is viewed as a bad decision. This would be possible only if the output times of all stations were constant. ` A variation in output times causes downstream stations to have idle time when upstream stations are taking longer time to process. The rule of SM is that capacities within the process sequence should not be balanced to the same levels. The flow of product should be balanced throughout the system. Therefore, when the flow is balanced, capacities are unbalanced. Dependent events The term dependent events relates to a process sequence. If a process flows from a machine A to B to C to D, then the processes at B, C and D are dependent events.

Q.4

Describe capacity planning.

Ans. Capacity planning is the method of determining the production capacity required by an organisation to meet the constantly changing demands for its products. It is a very common concern within all the organisations, to know whether the equipments or the resources will be ready to handle the increasing demand from the customer or constant change in the market. The person responsible for capacity planning is also called as a capacity planner. A capacity planner should aim to plan so well that a new capacity is added at the right time to be ready to handle the requirement. However, this plan should not be implemented very early, so that the equipments or the resources will be unused for a longer period of time. A successful capacity planner is the one who makes the

plans comparing the present and the future situations to attain a most cost-efficient trade-off. The capacity planner using the business plans and forecasts tries to predict the future requirements. Systematic modelling tools can resolve the problems faced at the What if scenarios in order to explore other range of possibilities. It is very important that a capacity planner revisits the plans as there will be a constant emergence of new technology, business strategies, and forecast changes. There are generally three basic steps in capacity planning. They are: Determining service level requirements: Here, categorising the completed work by machines is done along with calculating employees expectations for how that work got completed. Analysing current capacity: Here, the present capacity of the machine is analysed to conclude how it is meeting the requirements of the customers. Planning for the future: Here, with the help of future business activity forecasts, the future machine requirements are concluded. Applying the required changes in machine configuration will ensure that adequate capacity will be available to maintain service levels, even as the conditions change in the future. It is important to know that inadequate capacity planning quickly leads to unnecessary increased work, frustrated sales representatives, and deteriorating delivery performance. However, excess capacity can also be unnecessary and costly. If the organisaton does not manage the capacity planning carefully, then it will be a barrier for the organisations desired achievements. In addition, capacity planning is an important factor in the organisations choice of machineries. We can also understand capacity planning as the process, which is used to decide how much capacity is required in order to produce an enhanced product or begin the manufacturing of a new product. Following are the aspects, which can affect a capacity planning. Number of workers and their ability. Number of machines. Waste. Scrap. Defects. Errors. Productivity. Suppliers. Government regulations. Preventive maintenance.

 It is important to know that capacity planning is applicable in both long term and short term. Nevertheless, there are different issues for each one. Q.5 Which are the four Cs of off shoring in the Value chain dynamics, the critical tool to make the right outsourcing decisions. Explain how they interact with each other to the central theme of off shoring? Ans. Value chain dynamics begins with what we do in-house and what we can outsource. Conventional wisdom says do anything that is core to wer company and outsource the rest. Getting the right answers for what, why and how is the approach called Value Chain Dynamics. Value chain dynamics is considered as the vital tool used to make the right outsourcing decisions. It enables the organisation to have effective business processes now as well as in the future. The value chain dynamics depends on 4Cs of off shoring, which include cost, complexity, culture, and compliance. The four Cs interact with each other and relate to the central theme of off shoring. Cost: Aims at recycling saving, which assumes that the resulting impact can be

sustained if the savings are employed into existing off shore operations. Complexity: Aims at determining the way to enhance the operational efficiency

and build a business model that enables transition to off shoring. Its main challenge is to determine the complexity of scaling and focus on the business processes. Culture: Aims at establishing operating offshore units to implement ethics and

management framework. Compliance: Aims at building global ethics as a long term management

program. This also integrates the off shore operations as well as take the responsibility to maintain a balance between short term investor demand and long term strategic development.

Q.6

Explain the importance of supply chain management

Ans. Importance of supply chain management Supply chain management is essential for the success of every company and to satisfy customer demand. Supply chain management plays a critical role in the success of the company. Supply chain management is equipped to deal with anything from flow of products to unexpected natural disasters. Supply chain management diagnoses the problem and innovatively works around the problems. It helps in bringing out an effective solution for various problems in production. Supply chain management has the following impact on business: Reduce operating costs: The operating cost can be reduced by decreasing the purchasing cost, production cost, and total supply chain cost. The purchasing cost can be reduced by depending on supply chains to deliver goods when needed and thereby avoid holding costly inventories. The production costs can be reduced by using reliable sources for delivery of raw materials. Efficient supply chain management reduces costs and enables the firm to be more competitive. Improve financial position: The financial position can be improved by increasing

profit leverage and cash inflow and decreasing fixed assets. The supply chain costs can be controlled and reduced hence the profits of a firm can be improved by efficient supply chain management. The investment on fixed assets such as plants, transportation vehicles, and warehouses are eliminated by the use of supply chain management. The cash flow is increased since supply chain management speeds up product flow to customers. Boost customer service: Customer service can be boosted by having the right product assortment and quantity, the right stock location, right delivery time, and right after sale report. Supply chain management ensures that the right product assortment and quantity is delivered to customers. The location of stock and delivery should be appropriate. Customers expect after sale service to be quick and this is done by having an efficient supply chain management.