Question 1. Explain briefly elements of operations strategy?

List the elements of operations strategy:

1) Designing of the production system
2) Facilities for production and services
3) Product or service design and development
4) Technology selection, development, and process development
5) Allocation of resources
6) Focus on facilities planning

Explain the elements of operations strategy (what it involves, provide examples if
required)
1. Designing of the production system: The designing of the production system involves the selection of the type of
product design, processing system, inventory plan for finished goods, etc. The product design has two varieties. They
are: a. Customised product design The design is customised when the volume is low and special features are
inbuilt. Examples: Industrial products like turbines, boilers, air compressors, etc. b. Standard product design The
designer adopt a universal design so that the product will have wide acceptance across the customers. Also the
demand is more and quantity is high. Examples: Air conditioners, TV, fans, etc.
2. Facilities for production and services: Certain specialisation in production allows the firm to provide the customers
with products of lower cost, faster delivery, on-time delivery, high product quality, and flexibility. Here, overheads
will be less and the firm can outperform compared to the competitors. While planning the specialised lines, the
economies of scale and the continuous demand are to be looked into. For example, Nikon Cameras plan and
establish special lines for each model and manufacture huge quantities for the global market. Here, the economies
of scale and the continuous demand matters.
3. Any product designed and introduced into the market has its own life cycle. The various stages of life cycle are: 1)
Introduction stage, 2) Growth stage, 3) Maturity stage, 4) Decline stage. In the introduction stage, the sales depend
on promotion and marketing efforts. The product which is successful at this stage will enter the next stage of
growth, where the organisation takes the decisions on the capacity to be augmented and the investments to be
made. During the maturity stage, the organisation focuses on improving the efficiency of the processes, minimising
the costs, etc. At declining stage, the product may meet the obsolescence both in technology and in customer
requirements, thus warranting the stop of production. There are many products that lost its market after going
through the above stages. For example, pagers, floppy drives, tapes for recording and playing, click-type cameras,
typewriters, etc.
4. A product selected for production will be analysed for the process and the applicable technology for optimal
production. There are many challenges faced by the operations managers in this decision as the alternatives are
many. The techno-economic analysis for each alternative will help to decide the required technology. Combining
high technology production equipments with conventional machines and using robotics, flexible manufacturing
systems, automated devices for material movements, etc have given an edge to the production units to excel in
quality, flexibility, production at economic costs, etc thus enabling the firm to meet the competitions.
5. The production units face continuous problems of allocating the scarce resources like capital, machines,
equipments, materials, manpower, services, etc. Allocation at the right time to the right place of production
indicates the efficiency of the production planners. Optimal use of resources will enable economical production.
Minimising waste, optimal utilisation of resources, and the best quality product demand a sound operations
strategy.
6. The location, layout, and facilities creation for the production are the key decision areas for the operations
manager. These are critical for achieving the competitiveness. The decision also influences the future expansion of
the plant. While evaluating the alternatives, the operations manager will consider the availability of raw materials,
access to market, etc. Enormous capital requirement is required and the planning is always long range. Here, the
production process adopted and the technology pursued dictates the volume, quality, and cost of production.
Question 2. Describe the general factors that influence the plant location
decision.
List the general factors that influence the plant location decision:
1. Availability of land
2. Availability of inputs
3. Closeness to market places
4. Communication facilities
5. Infrastructure
6. Transport
7. Government support
8. Housing and recreation
Describe the general factors that influence the plant location decision:
1. Availability of land Availability of land plays an important role in determining the plant location. On several
occasions, our plans, calculations and forecasts suggest a particular area as the best to start an organisation.
However, availability of land may be in question. In such cases, we will have to choose the second best location.
2. Availability of inputs While choosing a plant location, it is very important for the organisation to get the labour at
the right time and good quality raw materials. The plant should be located: a) Near to the raw material source b) At
the market place c) Close to the market when universally available, so as to minimise the transportation cost
3. Closeness to market places Organisations can choose to locate the plant near to the customers market or far
from them, depending upon the product they produce. It is advisable to locate the plant near to the market place,
when: a) The projected life of the product is low b) The transportation cost is high c) The products are delicate and
susceptible to spoilage d) After sales services have to be prompt.
4. Communication facilities Communication facility is also an important factor which influences the location of a
plant. Regions with good communication facilities namely postal and telecommunication links should be given
priority for the selection of sites.
5. Infrastructure Infrastructure plays a prominent role in deciding the location. The basic infrastructure needed in
any organisation is: a) Power For example, industries which run day and night require continuous power supply. So,
they should be located near the power stations and should ensure continuous power supply throughout the year. b)
Water For example, process industries such as, paper, chemical, and cement, require continuous water supply in
large amount. So, such process industries need to be located near the source of water supply. c) Waste disposal
For example, for process industries such as, paper and sugarcane industries, facility for disposal of waste is the key
factor.
6. Transport Transport facility is a must for facility location and layout of location of the plant. Timely supply of raw
materials to the company and supply of finished goods to the customers is an important factor. The basic modes of
transportation are by air, road, rail, water, and pipeline. The choice of location should be made depending on these
basic modes. Cost of transportation is also an important criterion for plant location.
7. Government support The factors that demand additional attention for plant location are the policies of the state
governments and local bodies concerning labour laws, building codes, and safety.
8. Housing and recreation Housing and recreation factors also influence the plant location. Locating a plant with or
near to the facilities of good schools, housing and recreation for employees will have a greater impact on the
organisation. These factors seem to be unimportant, but there is a difference as they motivate the employees and
hence the location decisions.
Question 3. Give a brief introduction, description including main points and
conclusion on
a. Total productive Maintenance: Maintenance is a function in any operations system. Maintenance keeps
the equipments in good condition. Generally, equipments deteriorate because usage causes wear and tear to the
parts causing inaccuracies to the products made by them. When the deterioration produces components which
exceed the permitted deviations rendering them unacceptable, maintenance is undertaken to bring back the
machine to produce acceptable components.
Total productive maintenance puts the responsibility of maintenance where it belongs to and on the operator who
uses the equipment. It is a companywide activity which involves all the people. The main thrust is eliminating all
break downs. The focus is on the operating personnel because they would know about malfunctioning earlier more
than anybody else. They work on the machine and are aware of the slightest variations that occur and thus, should
be able to remove the cause before it becomes serious. So, every planned maintenance activity reduces the
probability of a breakdown.
b. GANTT Chart: A GANTT chart is a graphical representation of the duration of tasks against the progression of
time. A Gantt chart is a useful tool for planning and scheduling projects as well as for monitoring and controlling the
project deliveries. There are a number of advantages of Gantt charts such as:
. A Gantt chart uses a fill in the bar method to indicate the progress of the project.
. It lays out the order in which the tasks need to be carried out.
. It helps in planning the time required for completion of a project.
. A Gantt chart shows dependencies between tasks.
. It shows all the tasks to be achieved at any point of time.
. It allows planning for the remedial actions, if any delay, to complete the project back on time.
. Along with a milestone chart, helps you to represent the planned bar which indicates the deadlines and other
significant events of the project.
c. Bullwhip effect in SCM: The Bullwhip effect is the uncertainty caused from distorted information flowing
up and down the supply chain. This affects almost all the industries, poses a risk to firms that experience large
variations in demand, and also those firms which are dependent on suppliers, distributors and retailers. A Bullwhip
effect may arise because of the following factors:
a) Increase in the lead time of the project due to increase in variability of demand b) Increase in the stocks to
accommodate the increasing demand arising out of complicated demand models and forecasting techniques c)
Reduced service levels in the organisation d) Inefficient allocation of resources e) Increased transportation cost.
Four rational factors create the bullwhip effect:
1. Demand signal processing: If demand increases, firms order more in anticipation of further increases, thereby by
ordering more than they need.
2. The rationing game: There is or may be a shortage, so a firm orders more than the actual forecast in the hope of
receiving a larger share of the items in short supply.
3. Order batching: Fixed cost at one location lead to batching orders.
4. Manufacturer price variations: This usually encourages bulk orders.

d. Scheduling in services: There are distinctive difference between the scheduling followed for
manufacturing and services. All these differences have a direct impact on scheduling. These differences are:
a) Service operations cannot create inventories to provide buffer for demand uncertainties
b) Demand in service operations cannot be predicted accurately
c) Demand for service is initiated mostly as unplanned event and hence, there may be certain distortions in
scheduling.
d) Providing the required manpower and skills for the sudden demand in scheduling a service activity is challenging
and sometimes becomes crucial.
Question 4. Explain the steps and tools for changing project management process.
List the steps for changing project management process in your own words.
1. Request for a change
2. Identify alternate solutions
3. Decide on the actions for the change
4. Implement change
Explain the steps for changing project management process in your own words.
a) Request for a change: The need for the change is identified first. Based on the need a formal request is made. This
request can come from either a member of the project team or a client or a coordinator or key stakeholder.
b) Identify alternate solutions: Evaluate the change request and identify several alternative solutions. Assess the
alternatives with respect to the functional scope, schedule, effort, and cost.
c) Decide on the actions for the change: Present the change request, alternative solutions and recommendation to
the project management team. The project management team is required to accept the recommendation, choose an
alternative solution, or request further investigation. Based on this, a final action plan for the change is selected.
d) Implement change: Once the project management approves a solution for the change, make appropriate schedule
and other project plan adjustments to accommodate the change, communicate these to team members, monitor
progress, and execute quality control on the changes.
List the tools for changing project management process in your own words.
1. Change Management System (CMS)
2. Configuration Management (CM)
List and explain the tools for changing project management process in your own words.
1. Change Management System (CMS): CMS is a methodology which requires collection of all formal documented
procedures, defining:
. How project performance is monitored and evaluated
. How project plans are updated
. How various measures are implemented to control the change process

These procedures may be unique to an organisation based on their project needs. It also includes
procedures to handle the changes that may be approved without prior review, so that the evolution of baseline can
be documented.

2. Configuration Management (CM): Configuration management involves:
. Identifying the configuration items
. Defining the naming and numbering scheme
. Structuring the changes
. Defining a backup procedure
. Following the methods for tracking the status of configuration items
. Defining the responsibility and authority of the CMS.

Question 5 :Under capacity options the company decides to vary the production
output by varying the time, workforce or outsourcing. What are the basic
capacity options a company can choose to meet demand?
Give a brief description of each capacity option by explaining in which situation it
can be used and how it affects costs.
1. Location decision: The geographic placement of production facilities, stocking points, and sourcing points is
the natural first step in creating a supply chain. The location of facilities involves a commitment of resources
to a long term plan. Once the size, number, and location of the production are determined, the possible
paths of product supply to the final customer can be determined. These decisions are of great significance to
a firm since they represent the basic strategy for accessing customer markets. They will have a considerable
impact on revenue, cost, and level of service. These decisions should be determined by an optimisation
routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution
costs, and production limitations. Although location decision is primarily strategic, they also have
implications on an operational level.
2. Production decision: The strategic decisions include what products to produce and which plants to produce,
in allocation of suppliers to plants, plants to distribution control system (DCS), and then DCS to customer
markets. As mentioned earlier, these decisions have a big impact on the revenues, costs, and customer
service levels of the firm. These decisions assume the existence of the facilities, but determine the exact
path through which a product flows to and from these facilities. Another critical issue is the capacity of the
manufacturing facilities and this largely depends on the degree of vertical integration within the firm.
Operational decisions focus on detailed production scheduling. These decisions include the construction of
the master production schedules, scheduling production on machines, and equipment maintenance. Other
considerations include workload balancing and quality control measures at a production facility.
3. Inventory decisions: Inventory decisions refer to means by which inventories are managed. Inventories exist
at every stage of the supply chain as either raw material, semi-finished or finished goods. They can also be in
process between locations. Their primary purpose is to buffer against any uncertainty that might exist in the
supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their
efficient management is critical in supply chain operations. It is strategic in the sense that top management
sets goals. However, most researchers have approached the management of inventory from an operational
perspective. These include deployment strategies control policies the determination of the optimal levels
of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels
are critical, since they are primary determinants of customer service levels.
4. Transportation decisions: Transportation decisions are closely linked to the inventory decisions, since the
best choice of the mode is often found by trading-off the cost of using the particular mode of transport with
the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and
warrant lesser safety stocks, they are expensive. Meanwhile, shipping by sea or rail may be much cheaper,
but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty
associated with them. Therefore, customer service levels and geographic location play vital roles in such
decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes
good economic sense. Shipment sizes, routing and scheduling of goods are the keys in effective management
of the firms transport strategy.
Question 6: Give a brief introduction, description including main points and
conclusion on
a) Relevance of Value engineering in manufacturing
The relevance of value engineering in modern manufacturing, the process of value analysis, the approaches and
aim of value engineering, providing value to the customers, and the main benefits of the application of value
engineering. Value engineering and/or value analysis has gained importance in todays manufacturing field because
of the necessity of making all components as economically as possible. Every unnecessary component and every
unwanted operation have to be eliminated for economising. Materials may have to be changed and tolerances in
manufacturing have to be relaxed because value can be created in terms of reduced volume, increased strength, or
longer service. Involving the supplier and utilising their knowledge and experience are crucial for the companys
success.
b) Vendor Managed inventory

The very purpose of JIT is to reduce inventory at all places in the supply chain. Inventory is considered a waste
because inventory is created by using materials, machines, and efforts of persons. All of these are resources which
have already been used up and that portion of it which is not consumed and sent up the value chain causes a drag in
the system. However, inventories are inevitable because uncertainties exist at every stage, making it necessary to
provide a buffer so that demands do not go unfilled. The challenge is to keep it to the minimum.
1. Forecasts of the market demand
2. Capacities of the equipments
3. Worker absenteeism
4. Suppliers lead times
5. Quality of the produced components

Each of these will have many factors which affect them. JIT depends upon the accurate assessment of them and
based on the decisions taken, activities are initiated. These should result in holding materials as small as the number
of components or products as feasible to maintain the flow of material without disruption. Many companies make
their suppliers hold their inventories and request them to make timely supplies. This may be done at a cost. The
most important requirement for a successful vendor-managed inventory system is a good communication system.
c) Rating methods for locating a plant
The methods which determine the most likely location are:
. 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 the maximum rating, considering all the factors, is
chosen for locating the plant.
. Factor rating method: In factor rating method, each of the factors for location is rated and the rating of the
competitive locations is considered. Then, the products of the rating are added and the location which gets the
maximum product of rating is selected.
. Point rating method: In point rating method, we apportion a fraction of a suitably selected total rating and see how
many points we can allocate to the locations under consideration. We should compare the totalled ratings and
decide the preference.
. Break-even analysis: We compare the total costs for different locations on estimated amounts per annum and
select whichever location costs the least.
. Centre of gravity method: This method is used mainly when: a) Transportation costs, either for distribution of
products or collection of materials from different suppliers, is the main criterion b) Production rates are high c) The
volume and weights of materials that have to be moved are huge d) Time taken, either to receive material from
suppliers or delivery to customers, is critical.
d) Importance of business process modelling
Business process is a total response that a business undertakes utilising the resources and delivering the
outputs that create a value for the customer. The business process:
. has a goal
. uses specific inputs
. delivers specific outputs
. collects resources
. performs a number of activities in some order
. creates value for the customer

Business process modelling refers to a set of activities undertaken to optimise the business process.

. Improve the performance of the process
. Deliver better value for the customer
. Maximise the earnings of the organisation
. Stabilise, sustain and improve the processes to beat the competition from outsiders