Master of Business Administration – MBA Semester 2

MB0044 – Production & operations Management

(Book ID: B1133)
Assignment Set- 1
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1. What are the components of systems productivity? Explain how CAD and CIM help in
improving productivity.
Answer:-

System Productivity
Productivity is generally expressed as the ratio of outputs to inputs. Input Output Productivity
Enhancement of productivity is achieved by either reducing the inputs for the same output or increasing the
output by using the same input.
Productivity is a measure of the efficiency of the system and looks at the economies achieved during the
processes. Every process will have a number of contributors which help in achieving maximum
productivity. The processes are: People, Machines, Facilitating goods, Ancillary equipments, and
Technology. Each of these elements attempts to enhance the contribution of other elements.
Opportunities exist at all stages of the workflow in the entire system to introduce measures for increasing
productivity. However in actual manufacturing situations, the inefficiencies will have cascading effect in
hampering productivity. Communication, effective review processes and innovative methods will ensure
optimisation of resources. Building up reliability into the equipments, managing the supply chain to
economise on the cost factors improves productivity.
Quality circles are very efficient in incorporating low cost and non-intrusive methods of improving
productivity and quality throughout the organisation.
Quality circles:

 Involve all persons who are actually involved in the production system and the information they elicit
and bring about improvements that are highly cost effective

 Unveil creativity and encourage team work and bring about improvements almost on a day to day
basis

 Bring continuous incremental changes in a harmonious way instead of dramatic changes

 Encourage identification of possible failures and seek methods of preventing things going wrong

2. What do you understand by ‘industry best practice’? Briefly explain different types of
Benchmarking.
Answer:-
Industry Best Practices
Each industry would have developed over years or decades. During this development materials would
have changed and processes would have changed. As all products or services are meant to serve needs of
the customers, they undergo continuous changes both in shapes and features.
Materials and methods go on improving incessantly because of the research that is conducted. The
companies that were at the front innovate to stay in business as new entrants would be adopting the latest
techniques that the pioneers had taken decades to establish. So, the various firms in any industry would
end up adopting almost similar methods of getting an output required. Such practices would get refined to
a great extent giving rise to what we call industry best practices. These tend to get stabilised or changed
owing to the development of new equipments which are designed.
Pragmatic bench marking
Pragmatic bench marking is a method of measuring a company’s processes, methods, and procedures; in
a way that all functions in great detail.
Benchmarking is used to understand how these got into the system and what circumstances brought them
about. It is a learning process, with a view to find out whether some of the reasons have changed and to
bring in new processes for improvement. The metrics that could be used are the:

 Number of pieces per hour

 Cost per unit

 Number of breakdowns per week

 Customer alienation during a week

 Return on investment

 Number of returns from customers in a month

 Inventory turnover

 Many others

The figures obtained from the above determine the efficiency of the organisation. To keep focused, many
organisations, especially the large ones, select a few processes for purposes of benchmarking. This helps
in ensuring constant and deep attention to those aspects which are to be dealt with. The following are the
types of benchmarking considered by various firms.

Process Benchmarking
Financial Benchmarking
Performance Benchmarking
Product Benchmarking
Strategic Benchmarking
Functional Benchmarking

Tools like Pareto Analysis are used to make the choice or choices from among many aspects in any one of
the above categories.
Example of Pareto Analysis
Planning, Analysis, Integration, and Action are the four steps recognised in the process of benchmarking.
The select criteria are compared with the performance parameters of the company which is considered the
best in the industry. Targets are set and activities are conducted to reach them. Let us discuss in detail,
about the steps which are necessary for conducting a benchmarking operation.

1. Planning: Planning determines the process, service or the product to be benchmarked on which metrics
are assigned for collection of data.
2. Analysis: Analysed data gives inputs for comparison with the target company‟s performance on the
parameter benchmark on which data was collected. Measuring gaps helps in identifying the process which
should be improved for reaching the benchmark.

3. Integration: Resources are required across all functions to achieve the target needs. Integration
involves putting together resources like people,
Equipments, and communication, so that, progress is unhindered and all activities reach their logical
conclusions without loss of initiative or time.

4. Action: When changes are needed, actions have to be planned according to the steps earlier stated.
Teams are provided with necessary leadership, authority, and supporting facilities to enable them to
complete all activities within the time frame set for the purpose. Since benchmarking is done in specific
areas, it is necessary to maintain the focus, and implement actions without losing initiative, so that, results
become demonstrable.

3.List out the various automated systems for transfer of materials in the production plant. What do
you understand by Line Balancing? Explain with an example .
Answer:-
All functions in the organisation including administration, finance, materials, purchase, marketing,
production, logistics, communication and others, can be considered operations. The reason is all of them
use some inputs like materials or information either on a person to person basis or through a flow line.
They are required to use some process and convert them into outputs usable in the next stage of the value
chain. For example, when an invoice is received for payment, it contains information about the following:

Material or a service
Person who needed the invoice
Price to be paid
Supplier
Transportation
Insurance
Quantity
Tax to be paid
Others

The bills payable section will have to verify data regarding the above, seek inspection reports from the
quality control department/user. Before actual payment is made, verification such as, the terms of
payment and availability of funds are done. Verification will help you to notice the following:

Information is sought or given

Materials received and transferred

Papers/instructions are received/issued for initiating activities

All these are also operations. However, for our study we will limit our focus to operations involving
manufacturing. We identify a set of specialised techniques. We call them tools which can be standardised
for ease of implementation and control.
Implementation of operations

Implementation is the process of executing the planned operations. When planning and controlling
functions are put together, we call it as Implementation of Operations.
The planning is the process of estimating, routing, and scheduling. The controlling functions are
conducted while the manufacturing is going on, like dispatching and expediting.

Estimating: Estimating gives the quantities to be made at each workstation depending on the Sales
forecast, Provision for buffer stock, Quantities bought out, Services outsourced, Likely shortfalls, and
Others. It is made on the basis of capacity.

Routing: Routing, determines the sequence of operations and the machines that do them, so that work
flow, as determined by the processes, is smooth resulting in minimum inventory.

Scheduling: Scheduling is mainly concerned with allocating time slots for different jobs. It specifies as
to when jobs start and end at particular workstations. The purpose is to prevent imbalances among work
centers and to utilise labour hours in such a way that established lead times are maintained.

Dispatching: Dispatching is concerned with moving of the materials with tools, jigs, and fixtures to
specific machines along with drawings and ensuring inspections at specific nodes, so that the materials
move in the supply chain

Expediting: Expediting ensures that all the above are being done properly. Reports are generated and any
bottleneck that gets created is removed.

Tools for implementation

GANTT charts are used to record progress, comparing the actual against the planned activities, and to
keep track of the flow of the material. Line balancing and line of balance are two more tools to ensure that
machining centres are loaded, as uniformly as possible to prevent build up stocks at intermediate stages.
Simulation models are used to predict utilisation of machines, and production levels. Various inventory
models help us to determine when to order, and how many to order. It also gives us an insight to the risks
and opportunities that come up for our consideration.
Proper maintenance and analysis of records help us to see the gaps that have crept into the operations
system. Learning that happens across functions will make the tools being used more realistically and
increase efficiency. ERP software, especially SAP, have many modules that store, sort, and analyse data,
and make them available to the staff across the Production and Operations Management Unit 3 Sikkim Manipal
University Page No. 53
globe in many plants enabling managers to streamline their operations. Software specific to functions,
applications or organisation can be obtained. Microsoft Operations Manager 2005 is a useful tool in this
regard.

4. Explain the different types of Quality Control Tools with examples? How do Crosby’s absolutes of
quality differ from Deming’s principles?
Answer:-
Quality control tools
Flow Chart, Check sheet, Histogram, Pareto Analysis, Scatter Diagram, Control Chart, and Cause and
Effect Diagram are the basic seven control tools considered for achieving quality.
a) Flow Chart: Flow chart is a visual representation of process showing the various steps. It helps in
locating the points at which a problem exists or an improvement is possible. Detailed data can be
collected, analysed, and methods for correction can be developed using flow charts. The various steps
include:
Listing out the various steps or activities in a particular job
Classifying them as a procedure or a decision
Each decision point generates alternatives. Criteria and consequences that go with decisions are amenable
to evaluation for purposes of assessing quality. The flow chart helps in pin-pointing the exact points at
which errors have crept in. (See Figure 6.3 for Sample flow chart)
Figure 6.3: Sample flow chart
b) Check Sheet: Check sheets are used to record the number of defects, types of defects, locations at
which they are occurring, times at which they are occurring, and workmen by whom they are occurring.
The sheet keeps a record of the frequencies of occurrence with reference to possible defect causing
parameters. It helps to implement a corrective procedure at the point where the frequencies are more.
c) Histogram – Histograms are graphical representations of distribution of data (See Figure 6.4 for Sample
histogram chart). They are generally used to record huge volumes of data about a process. They reveal
whether the pattern of distribution has a single peak, or many peaks and also the extent of variation
around the peak value. This helps in identifying whether the problem is serious. When used in
conjunction with comparable parameters, the visual patterns help us to identify the problem which should
be attended to.
The values shown are the number of observations made regarding a parameter. Sometimes, the
percentages are shown to demonstrate the relative contribution of each of the parameters.
d) Pareto Analysis: Pareto analysis is a tool for classifying problem areas according to the degree of
importance and attending to the most important. Pareto principle, also called 80-20 rule, states that 80
percent of the problems that we encounter arise out of 20 percent of items. If we find that, in a day, we
have 184 assemblies having problems and there are 11 possible causes, it is observed that 80 percent of
them, that is, 147 of them have been caused by just 2 or 3 of them. It will be easy to focus on these 2 or 3
and reduce the number of defects to a great
extent. When the cause of these defects has been attended, we will observe that some other defect
becomes predominantly observed and if the process is continued, we are marching toward zero defects.
e) Scatter Diagram: Scatter diagram is used when we have two variables and want to know the degree of
relationship between them (See Figure 6.5 for Sample scatter diagram). We can determine if there is cause
and effect relationship between the variables and the degree of extent over a range of values of the
variables. Sometimes, we can observe that there is no relationship, in which we can change one parameter
being sure that it has no effect on the other parameter..
f) Control Charts: Control charts are used to verify whether a process is under control. Variables, when
they remain within a range, will render the product and maintain the specifications. This is called the
quality of conformance. The range of permitted deviations is determined by design parameters. Samples
are taken and the mean and range of the variable of each sample (subgroup) is recorded. The mean of the
means of the samples gives the control lines. Assuming normal distribution, we expect 99.97 percent of
all values to lie within the Upper Control Limit (UCL) and Lower Control Limit (LCL) – corresponding
to + 3 . The graphical
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:

 Quality is conformance to requirements, not ‘goodness’

 Prevention, not appraisal, is the path to quality

 Quality is measured as the price paid for non-conformance and as indices

 Quality originates in all factions. 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 emphasises 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 the overall health of the organisation and prescribed a vaccine.So Deming’s principles is
differ from Crosby’s absolutes of quality

5. Define project cycle, project management, and scope of project. List the various
project management knowledge areas? What are the reasons for failure of a
project?
Answer:-
Definition of Project cycle
A project cycle consists of the various activities of operations, resources, and the limitations imposed on
them.
Project Management‟
Managing a project is the practice of controlling the use of resources, such as cost, time, manpower,
hardware, and software involved in the project. It usually starts with a problem statement and ends with
delivery of a complete product
Scop of Project
The main objective of scoping is to:

 Define the project boundaries

 State the objectives that the project will cover
 Provide directions to the project and to enable assessment of the final products quality

Scoping of project will enable the manager to prepare an outline of the project plan.

Project management knowledge areas

The knowledge areas of project management are the following

 Project integration management, cost management, communications management

 Project scope management, quality management, risk management
 Project time management, human management, procurement management

For a project to be successful, it is necessary to understand its relationship with other management
disciplines. Other management supporting disciplines are business legal issues, strategic planning,
logistics, human resource management, and domain knowledge.

Project failure
A project may fail because of one or more of the following reasons:
 Incidence of project failure

 Factors contributing to project success not emphasised

 Overview of Information and Communication Technologies (ICT) projects
 Common problems encountered during projects

6. Explain the various phases in project management life cycle. Explain the
necessity and objectives of SCM.
Answer:-
A project manager is a person who manages the project. The project manager is responsible for carrying
out all the tasks of a project. Responsibilities of the project manager are:

Budgeting and cost control

Scheduling tasks

Allocating resources

Tracking project expenditures

Ensuring technical quality

Managing relations with the customer and company

Life cycle of a project manager overlaps with the development life cycle in the middle. Duties of a project
manager start before the development and continue after delivery of the product. The project manager is
the one person who carries joint responsibility for all aspects of a project.

Necessity and objectives of scm

SCM is required by an enterprise as a tool to enhance management effectiveness with the following
organizational objectives:

 Reduction of inventory

 Enhancement of participation level and empowerment level

 Increase in functional effectiveness of existing systems like Enterprise Resource Planning (ERP),
Accounting Software, and Documentation such as Financial reports/ Statements/ISO 9000 Documents

 Effective integration of multiple systems like ERP, communication systems, documentation system
and security

 Design / Research & Development (R&D) systems

 Better utilization of resources like men, material, equipment, and money
 Optimization of money flow cycle within the organization as well as from external agencies
 Enhancement of value of products, operations, and services. These enhancements will consequently
enhance the profitability of organization
 Enhancement of satisfaction level of customers and clients, supporting institutions, statutory control
agencies, suppliers and vendors, employees and executives
 Enhancement of flexibility in the organization to help in easy implementation of schemes involving
modernization, expansion and diversification – even divestments, mergers and acquisitions
 Enhancement of coverage and accuracy of management information systems