Production & Operation Management

Q1. Take an example of any product or service industry and explain the factors considered while taking the decision on plant location. Ans: Work centers is a producing or processing facility comprising of one or more machineries and workmen with a defined process on the input material with a desired output. The work center as a unit may have single and multiple operations which are to be conducted on the input material. The input material can either be from an external vendor or from other work center as an input a particular work center to do a value addition. The work center decision is arrived at based on the design parameters and the information that flows in with the input materials. The information that accompanies the material flow enables the work center to freeze the process requirements for desired output. The information by way of a rout sheet that accompany the input could be the drawing, specification and process requirement, quantity, Quality Assurance Plan (QAP) etc. These are vital to the stage process and upon completion of the desired process or value addition in the work center the material moves into next stage with similar rout sheet. In this manner, the material and desired information arrives simultaneously to each work center enabling smooth material transformation in line with the objective. The material information thus helps the work center decision without the need for referring back to preceding work center. Consider a shopping center like Big Bazzar, where different goods arrive at the warehouse. The materials arrive along with the relevant details like vendor, source location, shelf life, quality, input price, total ordered quantity, so far supplied and balance to be supplied etc. Based on this information, the items undergo packing and branding and storage. During this process the bar codes are assigned to the pack. The barcode provides material information, source vendor details, MRP, reordering levels, shelf location in the mall etc. This information that flows with the material helps the store manager to keep track of the performance of the commodities and their movement. A faster moving commodity can be ordered and the vendor can be alerted for more supplies as the information is available at every
Submitted by : A.S.Sathyadevan. Page 1

Production & Operation Management stage of the work center. The decision making at each stage is made easier. Eg: The rice received in bulk comes with the vendor, input cost, type, concerned sourcing officers name etc. In the event of any quality problems, the matter is immediately referred back to the concerned as information is readily available. Similarly if a particular brand of rice is selling well, the store manager will be able to alert the supply chain using the information contained in the barcode making the replenishment in time easier. At the time of selling, the goods accompany a bill which carries the item code the name and price of the commodity. In the event of a sales return or customer complaint, the material source can be traced and issued sorted out with ease as the information trial is available throughout the supply chain along with the process undertaken in each work center. In case of a defective packing the matter need to be taken up with only packing unit which is a work center and not the entire supply chain. The management will be able to focus on the right issue at the right work center in view of the easy availability of information at every stage and as it accompanies the material.

Submitted by : A.S.Sathyadevan.

Page 2

Production & Operation Management Q2. What is Business Process? Explain with an example as to why a business process is to be modeled? Ans: A project may fail because of one or more of the following reasons. 1. Incidence of Project Failure. Project being initiated at random at all levels. Project objective not in line with the business objective Project management not observed. Project Manager with no prior experience in related project. Non dedicated team. Lack of complete support from the client. 2. Factors contributing to project success not emphasized. Project objective in alignment with business objective. Working within the frame work of the project management methodology. Effective scoping, planning, estimation, execution, controls and review, closure intertwined with quality. Proactive approach towards project bottleneck. Communicating and managing expectations effectively with clients, team members and stake holders. Prior experience of the project manager in similar projects. 3. Overview of Information and communication Technologies for project. Involve information and communication technologies such as world wide web, e mail, fiber optics and satellites. Enable societies to produce, access, adapt and apply information in greater amounts, more rapidly and at reduced costs. Offer enormous opportunities for enhancing business and economic viability. 4. Common Problems encountered during the projects. No prioritization of project activity from an organizational position. One or more of the project mis-handled. Less qualified or non dedicated man power. Absence of smooth flow of communication between the involved parties.
Submitted by : A.S.Sathyadevan. Page 3

Production & Operation Management

Example of major project failure : Major refinery project was planned by M/s E- group at Jamnagar in Gujrat beside the refinery project of M/s R- Group. While the R-group project was completed well in time the E-Group Project failed to be completed in time due to following planning flaws. The petroleum refinery was not aligned to the core business of E- group. E- had no core competence in project management. The project management team of E-group was not effective when compared to R-Group team with respect to prior experience. Further E- group had no team commitment as during the cyclone at the project site, the E group deserted the site and did not return even after situation turned normal, where as the R group supplemented the project team with additional supports and rescue helicopters and the top R group management landed in the cyclone hit site and encouraged the project team in rescue and reviving efforts. R Group has set up multilayer communication set up with video conferencing through communication satellite links between project site and core management group. This has enable de-bottlenecking of project issues in time and contributed to large extent to the project success. The E group depended on conventional channels and resulted in delay in resolution of project issues. The technology used by R group was such that they could refine the worst crude available but E group refinery could refine in certain sweet crude blends. The technology adopted by E group was therefore not versatile. Above factors resulted in delayed completion of E- group refinery which resulted in budget over run and starving of downstream function like retailing networks which was commissioned prior to the commissioning of refinery. This is a case of wrong prioritization of activities.

Submitted by : A.S.Sathyadevan.

Page 4

Production & Operation Management

Q3. What is Value Engineering? Explain briefly its origins and objectives? Ans: The project management life cycle consists of the following phases. 1. Analysis and Evaluation phase. 2. Marketing phase 3. Design phase 4. Execution phase 5. Control phase 6. Closure & knowledge leverage phase 1. Analysis and Evaluation of Value Engineering. This is the initial stage of any project. The information is collected from the customer pertaining to the project and the requirements are analyzed. The project concept is studied in detailed and its feasibility is thoroughly studied. After the required investigation, the project manager submits a details report to the top management for their appraisal and eventual approval. This report is also known as project charter and contains project justification, details of the project objective and the method to achieve the objectives. The budget for the project and its success rate are included in this report. The project feasibility and risk analysis also from part of the project charter. The important task to be undertaken during this stage are : Specification Requirement Analysis: The essential requirement and the standards to follow are framed in order to set the target for achievement. Feasibility study: This study is aimed at establishing the technical, economical and practical feasibility of undertaking the project. Trade-off analysis: This is carried out to examine and evaluate various alternatives that could be considered. Estimation: It is carried out to arrive at the project cost, efforts required, project duration and functionality of various process in the project.

Submitted by : A.S.Sathyadevan.

Page 5

Production & Operation Management System Design: A suitable general design is chosen than can fulfill the project requirement. Project Evaluation: Expected profit, cost and risks are evaluated.

2. Marketing phase: A project is prepared by a team including the project manager. The project has to, apart from the implementation strategy, adopt an evaluated strategy to market the project deliverable ( a product or service) to customer. 3. Design Phase: This phase involves the study of inputs and outputs of various project stages. Stage outputs are inputs to the next stage Eg: Project concept is an input to the design stage where in a composite design and project plan are prepared for implementation. The project design and implementation plan is an input to the implementation stage.

4. Execution stage:

The execution stage is characterized by action and

involvement of physical work. The project manager and his team embark on working towards the achievement of project objective in line with the project plan approved by the apex project management.

5. Control Phase: Control phase establishes the method for ensuring that the project work is carried out as per the project plan and specification standards. This is carried out by inspection, testing and delivery checks. The project is tracked and monitored through its cost, manpower and schedules. The project manager has to exercise quality, cost and other control measures to complete the project as per the need of the stake holders and within the approved project plan so as to ensure successful delivery and future business prospects. 6. Closure & Knowledge leverage phase: On completion of the project the

project deliverables are handed over to the end user (Customer) and the performance of the project team is evaluated. The team is them disbanded. The lessons learned during the project execution and the problems encountered are documented and handed over to the stake holders for future reference and use.
Submitted by : A.S.Sathyadevan. Page 6

Production & Operation Management Q4. Discuss the difference between work study and motion study. Explain with an example? Ans: Production lines have number of work centers in a particular sequence so that the material that gets processed has to move further without encountering any bottlenecks. The quantities produced, the rate of production at each center, the number of operations and operation duration has to be set in such a way that line is balanced in such a way that no shortage occurs between work centers and minimum inventory gets created. Assembly lines are best suited for study and analysis of line balancing problem called Assembly Line Balancing. (ALB). ALBs are categorized in to four categories as under. 7.
8.

SMD Single Model Deterministic: This model assumes that one product that passes through dedicated line has all tasks times known. This model is useful when automatic machines or where operations has their times predictable with certainty.

9.
10.

SMS- Single Model Stochastic: This model allows the task times to be variable. This is applicable when a single product goes through machines where manual content is more and the operations do not have any definite periods. Determining locations and sizes of buffer require to keep the throughput is the purpose of this algorithm.

11.
12.

MMD- Multi Model Deterministic: In this case task times are known, but have many products that go through the lines. The products are assembled in batches.

13.
14.

MMS- Multi Model Stochastic: The task times are variable and we have many products that go through the lines. The problem of balancing such lines is more. Decomposition of the assembly into sub assemblies and having

Submitted by : A.S.Sathyadevan.

Page 7

Production & Operation Management advanced handling equipment may help to make inventories small and keeping the flow line smooth. 15. 16. Generally the criteria for all the above cases are technical and economical ones. The technical criterion seeks to maximize the line efficiency. Increasing the throughput, minimizing the work stations, number of operations and reducing the quantum of buffers are economic criteria. It is for the operation manager to balance between two competing requirements. 17.
18.

Order picking:

It is a process by which the items or products for which

supply is to be made have to be retrieved from a specific storage location. This activity found to take 60% of labor activities in the warehouse. Since this is critical to the business to meet customers demand expeditiously and accurately, lot of attention is being given to this aspect of operation. In the manufacturing arena, we desire to move towards small lot sizes, point of use delivery and cycle time reduction. These are essential to achieve for targets of JIT, which have economical implications. Efficient order picking is necessary for being competitive. In a supply chain, Storage, Retrieval and Delivery do not add value to the product, but are essential to ensure customer satisfaction and profitability of the organizations involved in supply chain. 19. 20. Order picking therefore calls for efficient and orderly storage warehousing which enables the operator to identify, locate and pick an articles easily and quickly. It also calls for vertical and horizontal storage system and retrieval equipments to bring about operational efficiency. 21. 22. Some of the systems adopted in order picking in Electro Mechanical Workshop of Indian Railways located in Hubli is explained below: 23. 24. The storage of spares and consumable required for maintenance of locomotives are stored in a warehouse which adjacent to workshop, is arranged in parallel racks with aisles for free movements of picker. Spares are arranged in a volume based category. The larger and heavier spares are stored in racks along the entrance of the warehouses. The smaller parts are
Submitted by : A.S.Sathyadevan. Page 8

Production & Operation Management stored in the interior racks. Similarly the heavier spares are stored in lower racks and lighter ones are stored in higher racks. The part numbering with bin location is stored and managed in a inventory management software package which is online with the workshop, store, purchase finance and office of the Chief Mechanical Engineers office. 25. 26. When an online intent is placed by loco workshop for any spares, the stores department gets an alert with the requirement with the part number ( The numbering is designed in such a way that it revels the type of loco, category in volume class, coat class, movement class, bin location etc.). When an alert is received the system generates and order picking slip, which provides the picker with the spare code no. location and qty and delivery schedule for the items. The picker picks the spare and leads the same to delivery area in time when the intending department comes for taking delivery and leading the same to maintenance rakes where the locomotives engines are being repaired. 27. 28. The horizontal travel: It is facilitated by electric vehicles which have fork lift mechanism attached to it. The picker drives the vehicle to appropriate bin and picks the spare articles as per the intent are picked and place them on the platform trolley along with the intent slip and Goods Issue Note No. (Bar coded sticker on the articles is recorded at the exit points and necessary goods issues is accounted). 29. 30. Person Aboard: In order to contain the warehouse area the store is designed in vertical racks which are up to 6m in height. This calls for considerable vertical movement. This is achieved by hydraulically operated platform on which the picker can stand and lead the required spared. are also available for move and store major sub assemblies. 31. 32. Parts to picker: There are mechanized systems like rotary trays which are brought to the picker by way of motorized operation which helps the picker to Electrically operated over head rail mounted chain pulley lifting and leading mechanisms

Submitted by : A.S.Sathyadevan.

Page 9

Production & Operation Management pick the required spared and off load them into the delivery tray which least manual efforts. 33. 34. There are other specialized storage systems for dispensing lubricating oils. These are stored in vertical tanks and required quantity as per the intent is dispensed through computer controlled flow meters. The stock balance and receipts are accounted using automated tank gauging system. 35. These systems help railways to timely repair of locos and ensure timely re ordering and provision of spares with least inventory cost.

Q5. Time taken by three machines on five jobs in a factory is tabulated below in table below. Find out the optimal sequence to be followed to minimize the idle time taken by the jobs on the machines?

job A B C D E

Machine 1 (M1) 6 4 5 3 4

Machine 2 (M2) 8 5 5 4 3

Machine 3 (M3) 7 3 7 6 4

ANS.This is the initial stage of any project. The information is collected from the customer pertaining to the project and the requirements are analyzed. The project concept is studied in detailed and its feasibility is thoroughly studied. After the required investigation, the project manager submits a details report to the top management for their appraisal and eventual approval. This report is also known as project charter and contains project justification, details of the project objective and the method to achieve the objectives. The budget for the project and its success rate are included in this report. The project feasibility and risk analysis also from part of the project charter. The important task to be undertaken during this stage are : the project manager submits a details report to the top management for their appraisal and eventual approval. This report is also known as project charter and contains project justification, details of the project objective and the method to achieve the
Submitted by : A.S.Sathyadevan. Page 10

Production & Operation Management objectives. The budget for the project and its success rate are included in this report. The project feasibility and risk analysis also from part of the project charter. The important task to be undertaken during this stage are : Companies today no longer can afford to stock pile inventory to compensate for possible forecasting errors. Instead they need to postpone product differentiation in the manufacturing process closer to the customer demand. This strategy allows the supply chain to respond quickly and cost effectively to changes in customer needs. Q6. List the seven principal of SCM. Discuss Bullwhip effect, its effects and countermeasures? Ans: Seven principles of Supply Chain Management (SCM) are:
1.

Group Customers by need: In an effective SCM, the customers are grouped by their distinct service needs, regardless of the industry, and then tailor make the service to satisfy needs of that particular segment. This way the specific need of the customer is understood in depth and thereby the service provider is able to give due attention to the customer needs. It brings in better customer bonds which translate into business gains / advantages for the organization.

2.

Customize the logistics network: In designing their logistics network, companies need to focus on service requirement and profit potential of the customer segments identified. 20% of the total segments which generally generates 80% of the income are provided with the major share of logistic resources. Such prioritized resource allocation ensures better profit realization.

3.

Listen to signal of market demands and plan accordingly:

Sales and

operation planners must monitor the entire supply chain to detect early warning signals of changing customer demands and needs. This demand driven approach leads to more consistent forecast and optimal resource allocation. The
Submitted by : A.S.Sathyadevan. Page 11

Production & Operation Management planner must be able to feel the pulse of customers and swiftly respond accordingly. The timely course correction in tune with the changing customer needs is the initial stepping stone for organizational success.

4.

Differentiate the product closer to the customer: Companies today no longer can afford to stock pile inventory to compensate for possible forecasting errors. Instead they need to postpone product differentiation in the manufacturing process closer to the customer demand. This strategy allows the supply chain to respond quickly and cost effectively to changes in customer needs.

5.

Strategically manage the source of supply: It is essential that the

organizations work closely with the key suppliers to reduce the overall cost of owning the material or service. SCM maximize profit margins both themselves and suppliers. In view of the mutually beneficial association the supplier and purchaser leads a cordial coexistence benefitting from enhanced end customer satisfaction.

6.

Develop a supply chain wide technology strategy: As one of the cornerstones of successful SCM, information technology must be able to support multiple level of decision making. It also should afford a clear view and ability to measure the flow of products, service and information. The instant accessibility and accuracy of the information and feedback makes the decision making and initiating corrective action more appropriate and timely.

7.

Adopt channel spanning performance measure:

Excellent supply chain

performance measurement system do more than just monitor internal function. They apply performance criteria to every link in the supply chain. This enable the evaluation and localization of bottlenecks which leads to problem resolution easier to manage. This leads to each segment of the chain being profitable and leading to the supply chain being profitable as a cumulative effect.

Submitted by : A.S.Sathyadevan.

Page 12

Production & Operation Management

Explain what is meant by bullwhip effect and how it could be prevent A schematic representation of bullwhip effect is given below.

Bullwhip effect is magnification of demand variation as the information of demand fluctuation moves upstream on the supply chain. Eg: from the retailer to the producer. The exaggerated estimate of demand fluctuation leads to inappropriate production and warehousing which eats away precious resources due to unrealistic forecast. This leads to crippling of organizational profitability due to mounting inventory along the supply chain thereby adversely affecting the functioning of the organization. The changing market conditions, therefore needs to be studied and analyzed in details before suitable supply intents are pushed upstream. The amplification of demand as a result of the poor or ill-information is termed as Bullwhip effect. A bullwhip effect may arise because of: Increase in the lead time of a project due to increase in variability of demand. Increase in the stock to accommodate the increasing demand arising out of complicated demand models and forecasting techniques. Reduced service levels in the organizations.

Submitted by : A.S.Sathyadevan.

Page 13

Production & Operation Management Inefficient allocation of resources. Increased transportation cost

Bullwhip effect can be prevented by adopting one or more of the following measures. 1. Avoid multiple demand forecasting. 2. Breaking single orders in to number of batch orders.
3.

Stabilize the price and avoid risk involved in over stocking by maintaining proper and optimum stock.

4. Reduce the variability and uncertainty in the point of sales and sharing the information. 5. Reduce lead time in stages of projects. 6. Always keep analyzing the past figures and track current and future levels of requirement. 7. Enhance operational efficiency and outsourcing logistics to a capable and efficient agency.

Submitted by : A.S.Sathyadevan.

Page 14