Unit – I

■ Introduction to Management

Concept –nature and importance of Management –

Functions of Management – Scientific Management: F W
Taylor contributions, Henry Fayal 14 Principles. Theories of
Motivation: Abraham Maslow’s Need Hierarchy, Theory-X and
Theory Y. Herzberg Two Factor Theory.
 Unit - II
■ Operations Management: Plant Location, Plant layout types.
– Work study- Statistical Quality Control- Control charts (X-
chart, R-chart,) Simple problems,

■ Material Management: Need for Inventory control- EOQ, ABC

analysis (HML, SDE, VED, and FSN analysis).
 Unit - III

Functional Management:

Concept of HRM, HRD - Functions of HR Manager- Job analysis, Job

Evaluation and Merit Rating

Marketing Management Functions of Marketing – Four P’s , Product,

Price, Place and Promotion- New product development- product life cycle,
services marketing.
 UNIT IV

Project Management: (PERT/CPM): Development of Network –

Difference between PERT and CPM-Identifying Critical Path-

Project Crashing (Simple Problems).

 UNIT V
Strategic Management: Vision, Mission, Goals, Strategy- Strategic
management process – Elements of Corporate Planning Process –
Environmental Scanning – SWOT analysis.

Contemporary Management practices : Remote working Dynamics-Work

force diversity- automation of the business operations-ERP- Digital
Marketing-Green Marketing – Customization Trends – AI in Business –
Lean Startups and Entrepreneurship- Freelancing
 Unit – I
■ Introduction to Management

Concept –nature and importance of Management –

Functions of Management – Scientific Management: F W
Taylor contributions, Henry Fayal 14 Principles. Theories of
Motivation: Abraham Maslow’s Need Hierarchy, Theory-X and
Theory Y. Herzberg Two Factor Theory.
 Concept of Management

■ Management is what managers do.

■ It also refers to people at the top level, in the organisation,

concerned with decision-making
Concept of Management

M
A --- The Manager
N
A
G --- Knowledge
E
M
E --- The People
N
T --- Technology/Techniques/Tactics
 Concept of Management
In the above, Man refers to the manager who leads the groups and
organisation and is responsible for the performance of other activities.
Age does not means chronological age, it refers to the knowledge to
be possessed by a manager to operate the organisation successfully.
Knowledge can be secured through experience, study and exposure.
Men stands for the term people, i.e the team of subordinates working
under the supervision and control of the managers. They achieve the
objectives with the assistance of subordinates.
T denotes technology, it means know how. Managers should also
possess skills, techniques and tactics to win the game and to achieve the
objects.
 Definition
■ “Management is concerned with the systematic organisation of
economic resources and its task is to make these resources productive.”

- Peter F Drucker (1955)

■ “Management is effective utilisation of human and material resources to

achieve the enterprise objectives.”

- W F Glueck (1977)

■ Management can be considered as a social process of planning,

organising coordinating, commanding and controlling for the purpose of
achieving organisational goals, by using limited resources effectively
and efficiently, and by working with and through people.
 Nature & Features of Management

Management is a social process

Management also denotes a ‘body of people’ involved in decision-

making

It is an art and science

It is profession

It is inter-disciplinary

It is complex

Management is omnipresent and universal

Manager has four types of resources—the Four M’s

Importance of Management
■ It facilitates the achievements of goals through limited
resources

■ It ensures smooth sailing in case of difficulties

■ It ensures continuity in the organization

■ It ensures economy and efficiency

■ It focus on group efforts

■ It is the key to the economic growth

 Functions of Management
■ Koontz identified planning, organising, staffing, directing and

leading, and controlling as major functions,

■ Luther Gullick coined a new term ‘POSDCORB’ indicating P-

Planning, O-Organising, S-Staffing, D-Directing, CO-

Coordinating, R-Reporting and B-Budgeting.

■ Other classical thinkers on management suggested two

additional functions — innovation and representation.

 Functions of Management
■ Henri Fayol lists five functions as elements of management process —

planning, organising, commanding, coordinating, and controlling.

■ Other behavioural scientists such as Elton Mayo, Douglas McGregor,

Chester I Barnard considered motivation, leadership, and communication

respectively as indispensable functions of the manager.

■ From this, it can be generalised that functions of manager are planning,

organising, staffing, directing (which includes leadership, motivation,

communication, and coordination), and controlling.

 Planning
■ It refers to deciding now what is to be done in the future. It bridges the gap between the
present and the future.

■ Planning involves essentially four stages:

(a) identifying the goal to be achieved

(b) exploring the courses of action available to reach this goal

(c) evaluating each course of action on merits, and

(d) finally selecting the best course of action for implementation.

■ Planning is also referred to as the process of determining the best course of action to
achieve the given goals.

■ The main idea is to turn out the most uncertain things to happen with fair degree of
certainty.
 Elements of Planning

■ Forecasts

■ Objectives

■ Strategies

■ Programmes

■ Policies

■ Procedures

■ Schedules

■ Budgets
 Organising
■ Organising refers to the process of grouping the related activities and
assigning them to a manager with authority to supervise it.

■ Organising involves

(a) Identifying and classifying the activities to be performed, and

(b) Assigning the authority and allocating the responsibility for

each position. It gives rise to organisational structure that
further provides scope for formal communication

■ Organising makes the organisational environment more conducive

for group effectiveness.
 Staffing

■ Determine how many positions are there in the organisation and

at what level. Once this information is available, the next task is
to collect details such as what type of candidates are required
for each position, and accordingly, fill up these positions with
the right people.

■ Staffing is a process which includes recruitment, selection,

training, placement, appraisal, promotion, and career planning.
 Directing
■ Directing is a process of issuing orders and instructions to guide and teach the subordinates the

proper methods of work and ensuring that they perform their jobs as planned

■ The manager has to perform the following functions while directing the members of his group:

– Leading: The workers/employees are led and directed so that the objectives of the

organisation will be successfully achieved. The leader’s style of function has a profound

impact on the morale and performance of the group.

– Motivating: The process of stimulating the employees to perform more effectively using

their abilities and full potential is called motivation. The factors of motivation can be

broadly categorised into two types:

(a) Financial

(b) Non-Financial.

– Communicating: It is the process of creating, transmitting, and interpreting messages,

ideas, facts, opinions, and feelings.

– Coordinating: It refers to the process of arranging group efforts in such a way that the

common purpose is achieved effectively and efficiently.

 Controlling
■ It is the process of measuring the current performance of the
employee and assess whether the given objectives are achieved or
not.

■ It involves

(a) measuring the actual performance of the employee,

(b) comparing it with the target, and

(c) taking corrective or remedial action for improving the

performance
 SCIENTIFIC MANAGEMENT
PERIOD
■ The scientific management period holds prominently two greatest
promoters of classical theories—Henri Fayol (1841–1925), who was
a French industrialist (a mining engineer), and FW Taylor (1856 –
1915), who started his career as an apprentice in engineering and
later rose to the level of a shop superintendent.

■ Fayol’s contribution was enterprise-oriented, Taylor’s focus was

work-oriented.

■ In other words, Fayol tried to understand organisations from the top

to the bottom. On the contrary, Taylor analysed organisations from
the bottom to the top.
Contribution of Frederick Winslow Taylor

■ Frederick Winslow Taylor is well known as the father of scientific

management.

■ Taylor observed that the workers used to intentionally delayed the

process of completing the job, and that the tools and equipment
provided to them were not standard and modern.

■ Employers used to give a high degree of priority to efficient working

methods. New industries were cropping up. New plant and machinery
and plentiful labour were seen everywhere. The employers were
preoccupied with the task of organising all these efficiently and
profitably.
 Contribution of Frederick Winslow Taylor
■ He, initially, realised that the systematic analysis of work would find a solution to all the problems

associated with enhancing the efficiency of the working methods. His writings were published as

The Principles of Scientific Management in 1911.

■ Taylor was the first person to recognise and emphasise the need for adopting a scientific

approach to the task of an enterprise.

■ Scientific management was the process of applying scientific principles to management-related

issues. The process contained the following elements:

– Develop a scientific method for each operation replacing opinions or rule of thumb

– Determine accurately in a scientific way the correct time and method for each job

– Develop a suitable organisation to make the workers responsible

– Select and train the workers

– Convince the management that scientific approach is better than arbitrary methods of

controlling workers, and thus, they need to cooperate with workers for better results
 Directions to workers
Scientific management directed the workers to

■ Stop worrying about how the surplus was divided between wages and
profits

■ Work in the correct way, and thus, earn more

■ Discard the rule of thumb approach and cooperate with the

management in developing the scientific method to carry out the given
job

■ Accept the instructions of the management with the conviction that the
management will look after the future course of action

■ Volunteer for getting trained in new methods, where necessary

 Highlights of Henri Fayol’s
Contribution
■ Fayol defined managerial functions as forecasting and planning,
organising, commanding, coordinating, and controlling.

■ He identified six types of activities to be accomplished in every

industrial organisation: technical (e.g. production), commercial (e.g.
buying and selling), financial (e.g. procuring capital), security (e.g.
protecting property and people), accounting (e.g. maintaning account
books), and managerial (e.g. planning and controlling).

■ Henri Fayol contributed immensely to the growth of professional

management. Hence, he is hailed as the father of modern
management.
Highlights of Henri Fayol’s Contribution

DAD U2 S2 RCOE SIE

 Theories of Motivation

Abraham Maslow’s Needs

Hierarchy
■ The hierarchy theory is based on
the assumption that most people
are motivated by the desire to
satisfy specific groups of needs.
The needs as identified by Maslow
can be elaborated as follows:
■ Physiological needs Include need for food, sleep,
warmth, shelter, sex, and others.

■ Safety needs are also called security needs. These cover

security, protection, job security, safety of property,
availability of food or shelter on a continuing basis, and so
on.

■ Affiliation or acceptance needs include desire to seek

or show affection and recognition, need for
companionship, identification with a group, and so on.

■ Esteem needs states that one wants to be respected and

garlanded. To satisfy the esteem needs, people want to
feel more prestigious, politically very strong and powerful,
or enjoy better status!

■ Self-actualisation needs indicate the strong desire to

achieve something, particularly in view of the potential
one has.
 Theory X & Theory Y
■ Douglas McGregor Douglas McGregor presented two sets of
assumptions managers make about the nature of their employees.
These sets are named as theory X and theory Y.
 Herzberg Two Factor Theory
■ Frederick Herzberg Herzberg developed a two-factor theory of motivation
— hygiene factors (also called dissatisfiers) and motivators.

■ Hygiene factors are the basic requirements such as company policies and
procedures, salary, security, supervision, working conditions, personal and
social life, and so on. If these are provided, it may not lead to happiness.
But if these are not provided, it may lead to unhappiness.

■ The other set comprising motivators refers to the higher order needs such
as recognition on the job front, awards and rewards, challenging
assignments, promotion, and so forth. All these needs are built around the
nature and content of the job.
Herzberg Two Factor Theory
 Unit - 2
■ Operations Management: Plant Location, Plant layout types.
– Work study- Statistical Quality Control- Control charts (X-
chart, R-chart,) Simple problems,

■ Material Management: Need for Inventory control- EOQ, ABC

analysis (HML, SDE, VED, and FSN analysis).
 Introduction
■ Plant location decisions deal with where the plant is to be
located.

■ Plant layout refers to the method in which the machinery is laid

out within a given plant area.

■ Both of these are the decisions taken at the top management

level. These affect the cost of production significantly
 Plant Location
■ Plant location decisions deal with where the plant is to be located.

■ Plant location is a strategic decision.

■ The plant should be located in such a place where the large-scale

economies accrue. Optimum size and optimum location go hand in
hand.

■ Plant location is more a corporate decision than an engineering one

■ However, an entrepreneur has to necessarily understand the different

factors that influence the location of a plant and their relative merits and
demerits.
Factors Affecting Plant Location
■ There are many factors determining plant location. These are:

– Closeness to Raw Materials

– Nearness to the Markets

– Fuel and Power – SEZ, AQUA PARK

– Transport

– Availability of Labour

– Agglomeration Economies

– Natural and Climatic Factors

– Government Influence

– Political Factors and

– Other Considerations.
 PLANT LAYOUT
■ Plant layout refers to the arrangement of the physical
production facilities

■ It is concerned with arranging

– The manufacturing and servicing departments in the factory

site

– The machinery within these departments

– The layout of individual work places

 Plant Layout - Significance
Plant layout studies are essential when

■ There is a change in the product design and this changes the sequence of
operations or requires new operations

■ The management decides to manufacture a new product altogether

■ The management wants to increase the output by using additional machinery or

upgrading present machinery, or increasing the present rate of capacity
utilisation

■ It is necessary to reduce production costs

■ Accidents occur frequently

■ Workers complain congestion or uncomfortable working conditions

■ Shifting the existing plant to a new location

 Plant Layout - Types

1. Product or Line Layout

2. Process or Functional Layout.

3. Fixed Position Layout.

4. Group layout
 Plant Layout - Types

■ Product layout is based on the logical sequence to be followed in the

production of a given product or service. It facilitates large-scale production.
A change in the logical sequence may necessitate largescale changes in the
layout. Material handling costs in this method are lower. Monitoring is made
easier. This method of layout promotes a sense of team effort that results in

higher productivity.
 Product Layout
■ It is appropriate for producing one standardized
product,
■ usually in large volume.
■ it is also called as flow-shop layout or straight
line layouts.
■ The machines are arranged according to the
progressive
■ steps by which the product is made.

Example: chemical, paper, rubber, refineries,

cement industry.
Advantages of Product Layout
1. Lowers total material handling cost.

2. There is less work in processes.

3. Better utilization of men and machines,

4. Less floor area is occupied by material in transit and

for temporary storages.

5. Greater simplicity of production control. Total

production time is also minimized.
 Process Layout
■ Process layout is based on the nature or types of
operations involved in the manufacture of a given product or
service. Each operation of process is a section by itself, for
instance, drilling section, milling section, and so on.

■ It offers a high degree of flexibility so that any product with

any design can be manufactured with the same layout.
Material handling costs are higher in view of the fact that the
work in progress has to be moved from one section to the
other.
Process Layout
 Process Layout
■ The process layout is
particularly useful where low
volume of production is
needed.
■ This layout is commonly
suitable for non repetitive
jobs.
■ Same type of operation
facilities are grouped
together such as lathes will
be placed at one place.
 Advantages of Process Layout
■ There will be less duplication of machines. Thus, total

■ investment in equipment purchase will be reduced.

■ It offers better and more efficient supervision through

specialization at various levels.

■ There is a greater flexibility in equipment and man power thus

load distribution is easily controlled.

■ Better utilization of equipment available is possible.

■ Break down of equipment can be easily handled by transferring

work to another machine/work station.

■ There will be better control of complicated or precision

processes, especially where much inspection is required.
 Fixed Layout
■ In fixed layout, production
facilities are fixed in their
position. They cannot be
shifted from place to place, for
example—ship building, and
others. Here, the material
handling costs tend to be high
because all the resources of
production have to be moved
to this point of production
facilities.
 Fixed Layout
■ Due to size, shape
and other
characteristics
constraints, the
products cannot be
moved, the
machine and
operators move
around the product.

Example: construction
of a
building, assemble of
an aircraft or ship.
 Plant Layout - Types

■ Combination layout integrates the advantages of both

the product and process layouts.
 Work Study
■ Work study deals with the efficient design and execution of physical
work, and establishing standards of performance.

■ The ultimate objective is to enhance productivity.

 Work Study – Nature & Scope
■ The principal aim of work study is to bring efficiency and economy by making
improvements in the method of doing the job.

■ Work study is more concerned with human manual work. It deals with the efficient
design and execution of manual work.

■ Work study strives to establish better standards of performance by identifying

the essential movements (in other words, eliminating all unnecessary
movements) in the process of carrying out the job and determining the standard time
for a given job.

■ It is extensively employed in agricultural operations, manufacturing, services,

transport, and supply industries.

■ Work study has two parts: Method Study (also called Motion Study) and Work
Measurement (also called Time Study). Method study precedes work measurement.
Method study deals with the techniques of analysing the ways to do a given job
better. Work measurement seeks to measure the time required to perform the job.
 Work Study - Benefits
■ Work study directly leads to standardisation of the job process

■ It determines the cost of the work performed

■ It saves, and thus, minimises time since the unnecessary movements are eliminated

■ It enhances productivity of the workers and machines

■ It helps to evaluate the performance of an employee or department as against hard targets

■ It enables the worker to earn incentive

■ It contributes to cost savings

■ It enhances the employee morale

■ It facilitates the organisation to plan and achieve work targets

 Application of Work Study
■ Work study is to be applied in such circumstances, which are likely to yield maximum returns in
the years o come.

■ The economic results of work study can be assessed in terms of increase in production,
reduction in wastage, improved safety, reduction in training time, or better use of equipment or
labour. The following factors should be considered before a decision is taken to employ work
study:

– The anticipated life of the job

– Whether manual work is an important part of the job in terms of wage rate and the ratio
of machine-time to manual-time in the work cycle

– The cost and utilisation of equipment, machines, tools, and so on, and whether their
utilisation is governed by the work methods

– The importance of the job (to which the principles of work study are applied) to the
company

■ Even a slight change in the product or service, new equipment, or altering of wage rates or
incentives would call for a detailed work study.
 Statistical Quality Control
Quality Introduction

■ Quality is defined as ‘customer satisfaction’ in general and ‘fitness for use’

in particular.

■ The quality specifications are established in terms of acceptable limits of

quality requirements such as size, weight, finish, function, and so on.

■ Quality refers to any measurable characteristic of a particular product or

service.

■ Quality can be of two elements:

– Quality of Design (Product features such as performance, reliability,
durability and so on)
– Quality of Conformance (whether the product meets the given quality
specifications or not)
 Statistical Quality Control
■ The process of applying statistical principles to solve the
problem of controlling the quality control of a product or service
is called Statistical Quality Control (SQC).

■ W.A. Shewart introduced, in 1931, the control charts on the

basis of statistical principles. These are used to ensure quality.

■ In SQC, we are concerned with the quality of conformance

Control Charts
Control Charts
Control Charts
Control Charts Graph
Control Charts
Control Charts
Control Charts
Control Charts
 PROCEDURE FOR CHARTS
a. Compute average of Averages of X
b. Calculate average range
c. Multiply the average range by the conversion factor A2. This gives A2
1) To obtain the upper control limit, apply the following formula
Upper control limit =
Lower control limit=
Procedure for constructing R charts
a) Compute average range
b) Multiply the average range by the conversion factor (D4or D3)
1) To obtain the upper control limit, apply the following formula:
Upper Control Limit = D4*
2) To obtain the lower control limite, apply the following formula
Lower Control Limit – D3*
PROCEDURE FOR CHARTS
 PROCEDURE FOR CHARTS

Example:1 Construct charts from the following

information and state whether the process is in
control. For each of the following has been
computed from a sample of 5 units drawn at an
interval of half an hour from an ongoing
manufacturing process.
Sample 1 2 3 4 5 6 7 8 9 10

20 34 45 39 26 29 13 34 37 23

23 39 14 5 20 17 21 11 40 10
R
Table of Constant for Mean (X) and Range ( R) Charts

N A2 D3 D4

2 1.880 0 3.268
3 1.023 0 2.574
4 0.729 0 2.282
5 0.544 0 2.114
6 0.483 0 2.004
7 0.419 0.076 1.924
8 0.373 0.136 1.864
9 0.337 0.184 1.816
10 0.308 0.223 1.777
Sol:
The mean of the mean calculated as below:

R=ƩR/n R =200/10=20
PROCEDURE FOR CHARTS
PROCEDURE FOR CHARTS
PROCEDURE FOR CHARTS
 CONTENTS

➢ Introduction
➢ Objectives of inventory control
➢ Benefits of inventory control
➢ Inventory control techniques procedure
➢ Order points and service levels
 INTRODUCTION

• The term inventory means the value or amount of

materials or resource on hand. It includes raw material,
work-in-process, finished goods , stores & spares.

• Inventory Control is the process by which inventory is

measured and regulated according to predetermined
norms such as economic lot size for order or production,
safety stock, minimum level, maximum level, order level
etc.

• Inventory control pertains primarily to the

administration of established policies, systems &
procedures in order to reduce the inventory cost.
 INTRODUCTION.
.
• Lack of proper attention to the material management in
the health system in the country has been a major problem
in effective implementation of various health programs.

• Man fails to realize the fact that material represents money

and also there is a lack of perception about the inter-
relationship between money and the material.

• Non availability of drugs material supplies

and dissatisfaction among s – and
health community. personnel als
o
INVENTORY CONTROL
➢It costs money to hold stocks in terms of storage
space, personnel, insurance, security,
deterioration and obsolescence.

➢Higher inventory levels saddle a hospital with

avoidable costs. It may be more economical to
purchase an item on demand than to maintain an
inventory.

➢At the same time, a certain minimum amount of

each item must be held to minimize the chances of
total stock-out.
 INVENTORY CONTROL…
➢Helps in maintaining an optimum level of all the
resources at least possible cost.

➢Determine appropriate levels of holding inventories, the

ordering sequence & the quantities, so that the total costs
incurred are minimized.
 CONTENTS
➢ Introduction
➢ Objectives of inventory control
➢ Benefits of inventory control
➢ Inventory control techniques procedure
➢ Order points and service levels
 OBJECTIVES OF INVENTORY CONTROL

• To meet unforeseen future demand due to variation in

forecast figures and actual figures.

• To average out demand fluctuations due to seasonal or

cyclic variations.

• To meet the customer requirement timely,

effectively, efficiently, smoothly and satisfactorily.

• To smoothen the production process.

• To reduce loss due to changes in prices of

inventory items.
 OBJECTIVES OF INVENTORY CONTROL

• To meet the time lag for transportation of goods.

• To meet the technological constraints

of production/process.

• To balance various costs of inventory such as order

cost
or set up cost and inventory carrying cost.

• To minimize losses due to deterioration,

obsolescence, damage, pilferage etc.

• To stabilize employment and improve labour

relations by inventory of human resources and
 CONTENT
S
➢ Introduction
➢ Objectives of inventory control
➢ Benefits of inventory control
➢ Inventory control techniques procedure
➢ Order points and service levels
 BENEFITS OF INVENTORY
CONTROL
• Ensures an adequate supply of materials
• Minimizes inventory costs & facilitates purchasing
economies
• Eliminates duplication in ordering
• Better utilization of available stocks
• Provides a check against the loss of materials
• Facilitates cost accounting activities
• Enables management in cost comparison
• Locates & disposes inactive & obsolete store items
• Consistent & reliable basis for financial statements
 CONTENTS
➢ Introduction
➢ Objectives of inventory control
➢ Benefits of inventory control
➢ Inventory control techniques procedure
➢ Order points and service levels
 ALWAYS BETTER CONTROL (ABC)
ANALYSIS PRINCIPLE

• A small number of items

represent a large % of
the cost value.

• Conversely, a large % of
the items represent only
a small portion of the
cost value.

• Procedure to determine
varying levels of control
is called the ABC
analysis.
 CONTD…..
• The origin of ABC analysis is PARETO’S 80 – 20 rule.

• This rule says that 80 % of country’s economy is

controlled by
20% of the people.

• If we apply this rule to verify its correctness, the results

say that it is correct.

Example:

• List out all the expenses we do over a period of time and

arrange them in the order from highest to lowest. Find
the total of expenses and workout percentage of each
with respect to the total. We see that only 20 % of items
consume 80% of our expenses.
 PROCEDURE FOR ABC ANALYSIS:

List all the materials used in the company

Work out their annual consumption value
Arrange items in the descending order

Add all & get the total annual inventory cost

Write cumulative consumption value in % of total

Draw a line at 70% and 90%

between 70% and between 90% and

under 70%
90% 100%

A B C
ABC ANALYSIS- PROCEDURE…

Class % of Items % of value

(Annual
consumption
)
A 10 70
B 20 20
C 70 10
 Analysis of CHC Chiri Indent

Class % of items %of value

A 11.14 % 72.32 %
B 20.5 % 15.89 %
C 68.34 % 11.77 %
ABC ANALYSIS- PROCEDURE…

• Class A : High level control, low safety stocks, frequent

physical verification, close schedule control and review.

• Class B : Controls not as tight as for “A’, but more

than
for “C”.

• Class C : Inexpensive items, purchase in large

quantities, at lesser interval, minimize clerical effort to
control, large safety stock.
 VED ANALYSIS
➢In addition to the intrinsic or market value of materials,
which is invested in the materials, there is sometimes a
nuisance value to the materials.

➢In ABC analysis, we have seen that annual consumption

value; quantity of materials consumed and unit cost
plays a vital role.

➢This is to say that ABC analysis deals with the annual

consumption value of the item due to their presence and
not any other aspect such as the criticality of the material
or the nuisance value.
 VED ANALYSIS
• Depending on their criticality, and thereby their value in
the operation of the hospital, most of the items of the
inventory of the hospitals can be classified, as Vital,
Essential, and Desirable .

• Those items the absence or shortage of which even for a

short period can seriously hamper the work of the
hospital are classified as vital items. E.g. Adrenaline
injection, steroid preparations.

• Essential items are those items, the shortage or

absence of which cannot be tolerated for more than a
day or so or which are likely to cause disruption of
normal activity. E.g. Life supporting items such as
transfusion fluids.
 VED ANALYSIS

• Desirable items which are definitely needed, but

the work can continue even without them for a
substantial period of time. E.g. Aspirin, other
analgesics, vitamins, enzymes.
 FSN ANALYSIS
• FSN: Fast moving, slow moving & non moving.

• Classification is based on the pattern of issues from

stores & is useful in controlling obsolescence.

• Date of receipt or last date of issue, whichever is later, is

taken to determine the no. of months which have lapsed
since the last transaction.

• The items are usually grouped in periods of 12 months.

• It helps to avoid investments in non moving or slow

items. It is also useful in facilitating timely control.
 Contd….
• For analysis, the issues of items in past
two or three years are considered.

• If there are no issues of an item during the

period, it is “N” item.

• Then up to certain limit, say 10-

15 issues in the period, the item is “S”
item

• The items exceeding such limit of no. of

issues during the period are “F” items.

• The period of consideration & the limiting

 H-M-L Classification
• This method is similar to A-B-C classification. But in this case,
instead of the consumption value of items, their unit value is
considered for classification. As the name implies, the materials
are classified according to their unit value as:

▫ High,
▫ Medium
▫ Low.

• The cut-off point will depend on the individual user. The

procedure is to list out the items in descending order of unit value
and invoke management policy to fix the cut-off points. The
management may decide and delegate authority to various levels
of officers depending on the classification.
 X-Y-Z Classification
• X-Y-Z has the value of inventory available on a particular
date in the stores as its basis. This study is taken up once
in a year during the annual stock-taking exercise.
▫ X items are those items whose stock value is high
▫ Y items fall between the two categories
▫ Z items are those whose stock values are low

• This classification helps in identifying the items which are

being extensively stocked. If the management is caught
napping, one can expect C items in the X category.
Therefore, controls should be developed for A-B-C items
in conjunction with X-Y-Z items.
 G-O-L-F Classification
In Golf System Based on supply, lead time payment terms
and clerical processing cost and time.

GOVERNMENT SUPPLIERS: Transactions with these

suppliers involve long clerical processing and the lead time
will also generally be long.

ORDINARY SUPPLIERS: Bulk of suppliers. The quality and

continuity of supply is good especially. Credit availability
from some of these sources may be available.
LOCAL SUPPLIERS: From whom cash purchases are
generally made. They are usually in the market areas of
cities.

FOREIGN SUPPLIERS: Foreign suppliers. Will involve

heavy clerical work—starting with government
clearance,
e.g. obtaining an import license for customs clearance
before the foreign source of supply is contracted. After
orders have been placed, the shipping formalities must
be followed up and port clearance work done.
 SDE ANALYSIS

➢ Scarce in market,
➢ Difficult to procure,
➢ Easy to procure.
 CONTENTS
➢ Introduction
➢ Objectives of inventory control
➢ Benefits of inventory control
➢ Inventory control techniques
procedure
➢ Order points and service levels
 Economic Order Quantity

ORDERING COST

The cost incurred to get

the materials into the
inventory of the
hospital. Ordering costs
include many variables
and are not easily
measurable.
These costs comprise of:

1. salaries and wages of involved personnel,

2. postal, telephone, telex and other similar
bills,
3. advertisements,
4. stationary,
5. entertaining the vendors, suppliers, and
6. travel of stores personnel.
 INVENTORY CARRYING COST

• Costs incurred for holding the volume of inventory

and measured as a percentage of unit cost of an item.

• It includes-
▫ Capital cost
▫ Obsolescence cost
▫ Deterioration cost
▫ Taxes on inventory
▫ Insurance cost
▫ Storage & handling cost
 IMPORTANT TERMS
• Minimum Level – It is the minimum stock to
be maintained for smooth production.
• Maximum Level – It is the level of stock, beyond which
a firm should not maintain the stock.
• Reorder Level – The stock level at which an order
should be placed.
• Safety Stock – Stock for usage at normal rate during the
extension of lead time.
• Reserve Stock - Excess usage requirement during
normal lead time.
• Buffer Stock – Normal lead time consumption.
 ECONOMIC ORDER QUANTITY
• For keeping the inventory and inventory cost low, it is
necessary to procure the item in as small
consignments as possible.

• But this can mean placing larger number of

orders at
intervals and higher overall ordering cost.

• This conflicting situation is solved by the EOQ

method.
• The EOQ method helps in finding appropriate levels
for holding inventories.

• It facilitates the fixation of ordering sequence and the

quantities so as to minimize the total materials costs.
ECONOMIC ORDER QUANTITY...
• The EOQ Formula
• If stock-outs are not permitted, the total inventory cost
per year is depicted by the following formula:
Total annual cost = (purchase cost) + (order cost) +
(holding cost)

TC=RP +RC/Q +QH/2

R = annual demand in units
P = purchase cost of an item
C = ordering cost per order
H = holding cost per unit per year
Q = lot size or order quantity in units.
Q =√2CR/H
 ECONOMIC ORDER QUANTITY...
• Example ABC Hospital purchases 1,600 pairs (units)
of surgical gloves each year at a unit cost of Rs.
15.00. The order cost is Rs. 100.00 per order, and
the holding cost per unit per year is computed at Rs.
8.00. The EOQ will be:

• Q=√2CR/H=√2x100x1600/8
=200 units

• TC=RP +RC/Q +QH/2= 1600 x 15 +(1600

x100)/200+
(200 x 8)/2= Rs. 25,600/

• Number of orders to place in one year=1600/200=8

No. at Orde Average carryin Annual Total cost
orders r size Annual g 50% orderin
per year inventor order Qty g cost
y cost

1 1,600 800 64,00 100 6500

2 800 400 32,00 200 3400
3 540 270 2160 300 3460
4 400 200 1600 400 2000
5 320 160 1280 500 1780
6 270 135 1080 600 1680
7 230 115 920 700 1620
8 200 100 800 800 1600
9 180 90 720 900 1620
10 160 80 640 1000 1640
11 146 73 584 1100 1684
12 132 66 528 1200 1728
Relationship between cost and quantity.

50
Cost per period

40

30
Min
20 cost

10
EOQ Procuring costs

100 200 300 400 500

Order quantity
•When to order
?
FACTORS WHICH INFLUENCE ORDER TIMING

• LEAD TIME: The periodthat elapses between

placing an order and receiving the stores.
Important in determining the average inventory need.

• MINIMUM STOCK HOLDING

• SAFETY BUFFER STOCK:

This is the quantity of stores that one must set apart as
an insurance against the variations in demand and
procurement period, for unforeseen reasons, and to
avoid stock-out.
• Safety buffer stock:

It is calculated by multiplying the difference between maximum

and average consumption rate per day/week/month with the
lead time for the item. It is the level at which fresh supply
should normally arrive.

• REORDERING POINT

Is the predetermined stock level at which an order is initiated.

The reorder level is equal to the minimum stock plus

requirement during lead time.
 FACTORS WHICH INFLUENCE ORDER TIMING

• The reorder point is obtained by determining the demand

that will occur during the lead time period.

• When the stock position reaches the reorder point, an order

will be placed for Q units, the EOQ The following formula
gives the reorder point in units when the lead time L is
expressed in months:

• B = RL/12 reorder point in units.

= RL/52 when L is in weeks
 illustration

■ .
• If the lead time is 20 days, daily consumption 300 units and buffer
stock 400, the ROL
■ 20 x 300 = 6000 + 400 = 6,400.

• If the review time is every 30 days, the stock in hand should

be (6000) + (300 x 30) = 6000 + 9,000 = 15,000.

• If the buffer stock is say 400, adding the buffer stock to the
above quality gives a ROL of 15,400.
 REORDER METHODS
• CYCLIC SYSTEM
• TWO-BIN SYSTEM.

CYCLIC SYSTEM

• At fixed intervals.
• The size of the order will vary with fluctuation in
consumption. Orders are placed depending on the
stock on hand and rate of consumption,

• i.e. the ordering interval is fixed, but the quantity

ordered varies each time.
 TWO BIN SYSTEM:

• An order for the appropriate quantity is placed as soon as

the first bin becomes empty.

• The other bin contains stocks sufficient to meet probable

consumption during the period of replenishment, i.e.
before the actual receipt of the order.

• Frequency of ordering is determined by fluctuation in

consumption.
 Unit - III

Functional Management:

Concept of HRM, HRD - Functions of HR Manager- Job analysis, Job

Evaluation and Merit Rating

Marketing Management Functions of Marketing – Four P’s , Product,

Price, Place and Promotion- New product development- product life
cycle, services marketing.
 Human Resource
Management

1
 HRM
■ Human: refers to the skilled workforce in an organization.

■ Resource: refers to limited availability or scarce.

■ Management: refers how to optimize and make best use of such

limited or scarce resource so as to meet the organization goals
and objectives.

■ According to Flippo – HRM “ is the Planning, organizing, directing

and controlling of the procurement, development ,compensation,
integration, maintenance and reproduction of human resources to
the end that individual, organizational and societal objectives are
accomplished”.
 Concepts of HRM
◼ Recruitment & Selection
◼ Employment
◼ Selection and training
◼ Employee services
◼ Wages
◼ Industrial relations
◼ Health and safety &
◼ Education
 HUMAN RESOURCE DEVELOPMENT
(HRD)
HRD is viewed as a process to help employees

■ To acquire and sharpen their capabilities to perform better

■ To enable them to discover and exploit their own inner potential and
utilise the potential for their own and/or organisational development

■ To develop an organisational culture that reflects strong superior-

subordinate relationships, teamwork, and collaboration contributing
to the professional well-being, motivation, and pride of the
employees

According to the HRD philosophy, the employees must

continuously acquire capabilities, and sharpen and use them.
 Difference btw HRM & HRD
■ HRM is a routine ■ HRD is a continuous
function. development
■ Independent one. function.
■ Exclusive ■ HRD is a sub-system.
responsibility of ■ Aims at developing
personnel dept. the capabilities of all
■ It considers salary, its managers.
economic rewards, ■ It considers informal
job simplification as work groups, job
important motivators. enrichment, as main
motivators.
 FUNCTIONS OF HRM MANAGER
■ It started during the 1930s with the welfare function, assumed the tasks

of manpower planning and recruitment

■ During the 1950s, negotiation of industrial relations

■ During the 1970s & 80s supplying the necessary human resources

■ During the 1990s when it was realised that the personnel manager

should be involved in building up the vision and corporate philosophy of

the organisation in a new capacity as the general manager (HRM). For

this reason, today, the HRM function s identified as part of the top

management.
 Human Resources Management

HR Planning
strategic HR
planning; job design

Retaining
employee Attracting
s employee
compensation; s
maintenance; labor recruiting; selecting
relations;
separation Developin
g
employees
training &
1
2
development;
 Steps in selection Job
Offer
Physical Exam
In-depth
Interview

Background
Investigation Testing
Initial
Interview Job
1
2
 ROLE OF HR MANAGER
■ The HR manager is an integral part of the organisation. The personnel manager strives

➢ To contribute to the achievement of organisational goals, as envisioned by the top

management, by establishing and implementing a sound policy-framework for

personnel matters

➢ To develop vision and culture for the organisation

➢ To advise the line managers appropriately on personnel matters

➢ To facilitate the administration of contracts for the employees (e.g. ensuring correct

pay, other benefits, and perquisites)

➢ To counsel the employees on issues relating to grievance-handling procedures

➢ To ensure that the personnel in the organisation extend efficient and uninterrupted

service as per the expectations from customers and suppliers

 JOB ANALYSIS
■ A job is described as a collection of tasks assigned to a position
in an organisation structure. To control the performance of the
individual performing this job, it is necessary to identify the work
context and also fix job responsibilities.

■ Job analysis is the process of studying and collecting

information relating to the operations and responsibilities of a
specific job. The immediate products of this analysis are job
descriptions and job specifications
 JOB ANALYSIS
■ Job description is a document which states an overview of
the duties, responsibilities and functions of a specific job in an organisation.

■ Job specification is a statement of the qualifications, personality traits,

skills, etc. required by an individual to perform the job.

Position: Civil Engineer

No. of Vacancies: 4

Responsible for: Looking over the site & allied operations

Responsible to : Contractor & Allocated Budget

Reporting to : Civil Department of the unit

Educational Qualification: M.tech

Experience: 7 yrs

Traits: willing to work beyond Shifts, Willing to Travel and work in a team

Skills: AUTOCAD,
 JOB ANALYSIS
■ The following are the advantages of job analysis:

(a) It helps to develop job description. Job description enables the

interviewers to assess the requirements on the part of the interviewee
to perform the job better.

(b) It is an aid for assessing training needs.

(c) It is an aid for assessing the performance of the employees.

(d) It forms a prerequisite to job evaluation.

(e) It is helpful to the management and also to the employees. It helps

the management to view a job in a scientific manner. It enables
individual employees to understand their main responsibilities.
 JOB EVALUATION
■ Job evaluation is the technique of assessing systematically the relative worth (in
monetary terms) of each job.

■ A fundamental prerequisite to the establishment of a compensation policy is the

determination of the comparative values of jobs throughout the hierarchy

Aims of Job Evaluation

■ To provide a basis for ranking jobs to grade and group them under a salary scale

■ To ensure that job values are assessed on an objective basis, from an analytical
study of the job content, to the extent possible

■ To provide a database to facilitate the review and update of job values

Skill – 9/10, 4/10 ; effort – 2/5, 4/5; 4/5, 2/5; Responsibility –
9/10; 5/10, job Conditions- 8/10, 6/10
SKA
 Merit Rating
■ Is the process of evaluating the relative merit of the person
on a given job.

Objectives

■ To determine salary increments

■ Decide who has to be transferred, promoted, or

demoted.

■ To enhance employee morale.

■ To guide and monitor the performance of those who are

lagging behind
 Methods of Merit Rating

■ Ranking method

■ Paired comparison method

■ Rating scale

■ Narrative or essay method

■ Management by objectives (MBO)

What is Marketing?

Marketing is the delivery of customer satisfaction at a profit.

The Goal of Marketing is:

To attract new customer by promising superior value, and to

keep current customers by delivering satisfaction.
Marketing Defined

■ Marketing is a social and managerial process by which

individuals and groups obtain what they need and
want through creating and exchanging products and
value with others.

- Philip Kotler

Marketing: Concepts and Functions

4P’s of Marketing
Marketing Functions
The Product Life Cycle Concept
is Based on Four Premises

Profits from a product

Products have a
vary at different stages
limited life.
in the life cycle.

Product sales pass through

Products require different
distinct stages, each with
strategies at different
different marketing
life cycle stages.
implications.
PLC Stages and Characteristics
 PLC Marketing Strategies

Stage Objective Marketing Strategy

Introduction Awareness & trial Communicate benefits

Growth Usage of firm’s brand Specific brand communication,

lower prices, expand distribution

Maturity Maintain market share Sales promotion, drop price,

Extend life cycle expand distribution, new uses
& new versions of product

Decline Decide what to do Maintain, harvest, or divest

with product
 Services Marketing

■ P. Kotler suggested that ”service is an activity or benefit

that one party can offer to another that is essentially
intangible and does not result in the ownership of
anything. Its production may or may not be tied to a
physical product”.

■ There are four characteristics of service: Intangibility,

Inseparability, Variability, and Perishability
 UNIT IV

Project Management: (PERT/CPM): Development of Network –

Difference between PERT and CPM-Identifying Critical Path-

Project Crashing (Simple Problems).

 Project

■ A project is defined as a set of activities with a specific

goal occupying a specific period of time.

■ Ex: it may be small / big project like construction of college

building, lying of a road.
 Project Management

■ Project management can be defined as successful completion

of project on time with in the budgeted cost as per the
technical specifications to satisfy the end – users.

■ Project management is the organizing and managing of

resource in such a way that these resources deliver all the work
required to complete a project with in defined scope, time and
cost constraints.
 Network
It is a graphical representation of projects operations from starting to
completion
 NETWORK ANALYSIS
■ Network analysis refers to a number of techniques for the
planning and control of complex projects.

■ The basis of network planning is the representation of

sequential relationships between activities by means of a
network of lines and circles. The idea is to link the various
activities in such a way that the overall time spent on the
project is kept to a minimum. The optimum linking of the
various stages is called the critical path.
 Applications of Network Analysis

■ The construction of buildings, bridges, factories, highways, stadiums,

irrigation projects etc.

■ Budget and auditing procedures.

■ Installation of large computers and machinery.

■ Advertisement programmes and for launching a new product.

■ Research and development

■ Preparing inventory plans.

■ Organization of big public work, conferences etc.,

 Network Planning Techniques
■ Program Evaluation & Review Technique (PERT): It is a tool to
evaluate a given programme and review the progress made in it
from time to time.
– Developed to manage the Polaris missile project – 23 NETWORKS, 3000
ACTIVITIES – 2 YEARS

– 1950’S , 1958-US NAVY SPECIAL PROJECT WING

 Network Planning Techniques

■ Critical Path Method (CPM): It assumes that the time required to

complete an activity can be predicted fairly accurately, and
thus, the costs involved can be quantified once the critical path has
been identified

– Developed to coordinate maintenance projects in the

chemical industry

– A complex undertaking, but individual tasks are routine (tasks’

duration = deterministic)
 Terms used in a Network
■ Activity: An activity is a task / job of work, which takes time and resources for
accomplishment. It is represented by

Ex: providing electrical connections, digging of land etc.

The activities are mainly following types they are as follows:

■ Predecessor activity: An activity that must be occur / completed immediately before

anther activity can began is called Predecessor activity.

■ Successor activity: An activity that must be occur / required to be performed after the
performance of another activity is called successor activity.
 Terms used in a Network
■ Event: A event is specific instant of time which indicates the beginning or
end of the activity event is also known as a junction or node.

■ It is represented by a circle and the event number is written with in

the circle.
 Terms used in a Network
■ Dummy activity: This is an activity drawn to show clear and
logical dependencies between activities so as not to
violate the rules for drawing networks. It does not consume
resources. It is represented by a dotted arrow as follows:
 Terms used in a Network
■ Network : This is the combination of activities, dummy
activities, and events in a logical sequence, according to
the rules for drawing networks

• In the above network, the events are represented by A, B, C, D, E, and F.

The activities are represented by the numerals 1, 2, 3, 4, 5, 6, and 7.
• A is the start event and F is the end event. The following are the different
paths to reach the end event:
A-B-C-F (10); A-B-D-F (14); A-B-E-F (6); A-B-D-E-F (10); A-B-C-E-
F(8);
 Terms used in a Network
■ Critical Activity: A critical activity is an activity that if delayed,
affects the completion of entire project.

■ Critical path: the longest time path through a network is called

the critical path. It is the longest path in the network which
consumes maximum resources and maximum time. It is denoted
by heavy (double) line.
 Terms used in a Network
■ Activity duration: In CPM, this means the best estimate of the
time to complete an activity. In PERT, the expected time (or)
average time (or) average to complete an activity.

■ Float (or) Slack: The amount of time for that an activity (or)
group of activities can slip without causing a delay in the
completion of the project. It is also known as “float”. It is used in
PERT.
 Step 2- Diagram the Network for
Activity Cables By Us
Description
Immediate Duration
Predecessor (weeks)
A Develop product specifications None 4
B Design manufacturing process A 6
C Source & purchase materials A 3
D Source & purchase tooling & equipment B 6
E Receive & install tooling & equipment D 14
F Receive materials C 5
G Pilot production run E&F 2
H Evaluate product design G 2
I Evaluate process performance G 3
J Write documentation report H&I 4
K Transition to manufacturing J 2
 Step 1-Define the Project: Cables By Us is bringing a new
product on line to be manufactured in their current facility in
existing space. The owners have identified 11 activities and their
precedence relationships. Develop an AON for the project.

Immediate Duration
Activity Description
Predecessor (weeks)
A Develop product specifications None 4
B Design manufacturing process A 6
C Source & purchase materials A 3
D Source & purchase tooling & equipment B 6
E Receive & install tooling & equipment D 14
F Receive materials C 5
G Pilot production run E&F 2
H Evaluate product design G 2
I Evaluate process performance G 3
J Write documentation report H&I 4
K Transition to manufacturing J 2
Step 3 (a)- Add Deterministic Time
Estimates and Connected Paths
Step 3 (a) (Con’t): Calculate the Project
Completion Times
Paths Path duration
ABDEGHJK 40
ABDEGIJK 41
ACFGHJK 22
ACFGIJK 23
■ The longest path (ABDEGIJK) limits the
project’s duration (project cannot finish in
less time than its longest path)
■ ABDEGIJK is the project’s critical path
 RULES FOR DRAWING NETWORK

■ A complete network should have only one point of entry (a start) event and
only one point of exit (an end event).

■ Every activity must have one preceding or tail event and one succeeding or
head event. Note that many activities may use the same tail event and
many may use the head event. Figure illustrates this rule.
 RULES FOR DRAWING NETWORK

■ No activity can start until its tail event is reached.

■ An event is not complete until all activities leading into it are complete.

■ All the activities must be tied into the network, that is, they must contribute
to the progression. In other words, none of the events should be left untied
into the network. Events left untied to the overall network are called
danglers. Event D is a dangler as shown in Figure A

■ To avoid a danglor, connect it to the end event as shown in Figure B

Figure A Figure B
 RULES FOR DRAWING NETWORK

■ It is better if arrows do not cross each other. Wherever it is possible,

crossing of arrows should be avoided. The network given in Figure a is

not desirable. It is because arrows are intersecting each other. This can be

avoided as shown in Figure b.

Figure a Figure b
 RULES FOR DRAWING NETWORK
■ An arrow should always be straight, not curved, and head from left to right.

■ The length of the arrow should be uniform. However, the length of the

arrow has nothing to do with the time duration of the activity.

■ Loop network should be avoided.

■ Arrow cannot go backward as shown in Fig.

 RULES FOR DRAWING NETWORK

■ Use dummies only when it is required. The use of dummy activities is to

be minimised in the network. However, logical sequence can be explained

better by the use of dummy activity as illustrated below:

■ Figure I shows that event E follows event C and event F follows event D.

This logic can better be explained by Figure II

Figure I Figure II
■ Logical sequence: Logical sequence is the heart of network analysis. From a logical
sequence, we can draw a network. Also, if a network is given, the logical sequence
can be identified. See Figure

■ Event B follows A.

■ Events C, E, and D are parallel, and start from event B.

■ Unless events C and D are complete, E cannot start. In other words, events C and D
restrict the occurrence of E.

■ Event F follows events C, D, and E.

■ Before drawing the network, check whether the data relates to activities or events.
Then proceed to draw the network.
Steps for identifying
Critical Path
1. Specify the activates, duration and dependencies
2. Draw a network diagram.
3. Perform the forward pass to identify all Early Start and Early
Finish times for the network.
Early Finish = Early Start + Duration

4. Perform the backward pass to identify all Late Start and Late
Finish times for the network.
Late Start = Late Finish – Duration

5. Calculate the slack time.

Float = Late Start (LS) – Early Start (ES)

6. Identify the task on critical path with 0 float (slack) time.

 Project Management: Scheduling Projects
with Certain Time Estimates

• Create Network Diagram

– Based on order of precedence
among activities
 Calculation of the Critical Path
• Network approach helps calculate project duration
– A “path” is a sequence of activities that begins at the start of
the project and goes to the end of the project
• 1,2,3,5,6,7,8
• 1,2,4,6,7,8
– The “critical path” is the path that takes the
longest to complete
• and thus determines the minimum duration of the project

3 5
1 2 6 7 8

4
Calculation of the Critical Path
 Calculation of the Critical Path
• Critical Path
– The path that
takes the longest
to complete

2 weeks 3 weeks

4 weeks 10 weeks 3 5 16 weeks 4 weeks 1 week

1 2 4 weeks
6 7 8
4
 1-2-3-5-6-7-8 : 40 weeks
1-2-4-6-7-8
• Critical Path
: 39 weeks
– The path that
takes the longest
to complete

2 weeks 3 weeks

4 weeks 10 weeks 3 5 16 weeks 4 weeks 1 week

1 2 4 weeks
6 7 8
4 C.P. = 40 weeks
 Determining Slack
• Slack - The amount of time an activity on a non-critical
path can be delayed without affecting the duration of the
project (i.e., without putting it on the critical path)
– Uses four calculated values
• Early start - Earliest an activity can start (based on prerequisites)
• Early finish - Earliest it can finish (based on prerequisites &
duration)
• Late start - Latest an activity can start and not delay the project
• Late finish - Latest an activity can finish and not delay the project
 Calculating Early Start (ES) and
Early Finish (EF)
• Move from left to right in
network
– ES for 1st activity usually zero
– EF equals ES plus activity
duration
– ES is latest of the EF times of
an activity’s predecessors
THIS IS CALLED
THE FORWARD
PASS
 Calculating Late Start (LS) and
• Move from right to left in
Late Finish (LF)
network
– LF for last activity equals EF
for last activity
• Or target date if different
– LS equals LF minus activity
duration
– LF is earliest of the LS times of
an activity’s followers
THIS IS CALLED THE
BACKWARD PASS
 Calculating Slack
• Slack - The amount of time an • Computed by either:
activity on a non-critical path Late Start - Early Start
can be delayed without affecting
or
the duration of the project (i.e.,
putting it on the critical path) Late Finish - Early Finish

• Activities that have zero slack are, by definition, on the critical path
1. Task/Duration/Predecessor
TASK Duration Predecessor

A 2 ----
B 2 A
C 1 A
D 3 A
E 1 C,D
F 3 B
G 2 E,F
Terminologies
⚫ ID – Task ID
⚫ D- Duration
⚫ ES – Early Start
⚫ EF – Early Finish
⚫ LS – Late Start ES EF
⚫ LF – Late Finish F ID DR
⚫ S - Slack
LS LF
 2. Network Diagram

B 2 F 3

Activity

A 2 C 1 G 2

Duratio
n

ES EF

D 3 E 1 F ID DR

LS LF
 3. Forward Pass
2 4 4 7
B 2 F 3

Early Early Duration=

Start Finish 9days
7 9
0 2 2 3
G 2
A 2 C 1

2 5 5 6
ES EF
D 3 E 1
1sttask starts at 0 F ID DR
EF = ES + DR LS LF
ES = EF of predecessor
When more than one predecessor, pick the
larger #
 4. Backward Pass
2 4 4 7
B 2 F 3
2 4 4 7
1st task should
end with LS = 0.
2 3 7 9
0 2
C 1 G 2
A 2
5 6 7 9
0 2

Late Late
Start Finish

2 5 5 6 ES EF

D 3 E 1 F ID DR
LS = LF - DR 3 6 6 7 LS LF
LF = LS of successor

When more than one successor, pick the

smallest #
 5. Slack / Float
2 4 4 7
0 B 2 0 F 3
2 4 4 7

7 9
0 2 2 3
0 G 2
0 A 2 3 C 1
7 9
0 2 5 6
Float = LS – ES

2 5 5 6 ES EF
1 D 3 1 E 1 F ID DR
3 6 6 7 LS LF

Float = Late Start (LS) – Early Start (ES)

 6. Critical Path
The path with 0 Float 4 7
is the critical path.
2 4
0 B 2 0 F 3
2 4 4 7

A-B-F-G is the critical

7 9
0 2 pat h5. 6
0 A 2 0 C 1 0 G 2
0 2 5 6 7 9

2 5 5 6 ES EF

0 D 3 1 E 1 F ID DR

2 5 6 7 LS LF

LS = LF - DR
LF = LS of successor
 Crashing Projects
• A methodical approach to reducing project
duration
– Focus on the time of activities on the critical path
– Looking for greatest improvement with least cost
• Additional labor, machinery
• Overtime and temporary employees
• Premiums paid to outside contractors for early delivery
• Steps
– Create network
– Identify critical path
– Identify costs of reducing each activity on path
– Reduce most cost effective activity
– Look for critical path changes
• Beware of multiple critical paths
– Crash next activity
Crashing Projects: Create the
Network
Crashing Projects: Identify the Critical
Path
B C
7 7
A D F H
8 10 8 5
E G
12 9

A-B-C-F-H
Critical Path = 35 days

A-B-C-F-H: 35
A-D-G-H: 32
A-E-G-H: 34
Crashing Projects: Identify Costs of
Crashing Each Activity
Crashing Projects: Reduce Most Cost
Effective Activity
6
B C
7 7
X
A D F H
8 10 8 5
E G
12 9
Crashing Projects: Look for Critical
Path Changes
6
B C
7 7
X
A D F H
8 10 8 5
E G
12 9

Old Critical Path Completion = 35 days

Activity C Crashed by 1 day project completion = 34 days
Did that effect the critical path?
Crashing Projects: Look for Critical
Path Changes
6
B C
7 7
X
A D F H
8 10 8 5
E G
12 9

Multiple Critical Paths Appear!!!

Critical Path = 34 days

A-B-C-F-H: 34
A-D-G-H: 32
A-E-G-H: 34
 A-B-C-F-H: 34
A-E-G-H: 34

Exhibit 8.25: Crash Time and Costs

Both C.P. Path 1 Only Path 2 Only

 UNIT V
Strategic Management: Vision, Mission, Goals, Strategy-
Strategic management process – Elements of Corporate
Planning Process – Environmental Scanning – SWOT
analysis.
Mission:-

■ Also called ‘overall objective’ or ‘overall goal’

■ Mission statement defines the basic reason for the

‘existence of organization’ .

■ A mission statement defines why the organization exists. It

describes the customer needs, both present and future.
Characteristics:-
■ It must be clear enough to trigger action.

We meet everyday needs of nutrition, health with brands that help people feel
good, look good.

■ It focuses on customer needs and utilities, not products.

■ It should be capable of being measured in terms of specific targets.

■ It should focus on limited number of goals. (CCI)

■ It is a facilitator.

■ It provides for shared vision.

■ It should be flexible.

■ It also identifies the core principles to guide decision making

Goals:-

■ Goals are the overall objectives of a department or an

organization.

■ Goal is defined as what an organization wants to achieve

during or by the end of a given period.
 Significance:-
■ It helps to define the organization in its environment.

■ It helps in coordinating decisions

■ Goals are more tangible targets.

■ It facilitates performance appraisal

Objective:-

Objectives explain why one should do the given job.

 Policy
■ Policy is a broad guideline set by the top management for the purpose of
making decisions at different levels in the organization.

Features of policy:-

■ It expresses organizational culture.

■ It is a guide to managerial performance.

■ It brings out uniformity in action.

■ It provides discretion to managers.

■ It creates and sustains good conduct and character.

 Strategy:-
■ It is drawn from the armed forces.

Proactive action course

■ It is a strategic plan that interlocks all aspects of the corporate mission

designed to overpower the enemy or the competitor.

Purpose:-A strategy is an operational tool to achieve the goals, corporate

mission
Corporate Planning:-

The top level planning associated with realisation of

these goals is called ‘corporate planning’.

Definition:- can be defined as the process of formulating

the corporate mission, scanning the business
environment, evolving strategies, creating necessary
infrastructure and assigning resources to achieve the
given mission.
 Elements of corporate planning
process:-

■ Corporate Mission

■ Formulate Strategic objectives

■ Appraise internal and external environment

■ Develop and evaluate alternative strategies

■ Select the best strategy

■ Fix key targets and allot resources to strategic business units (SBUs)

■ Develop operating plans

■ Monitor the performance

■ Revise, where necessary

Environmental Scanning:-

A major purpose of environmental scanning is to identify

and understand the new opportunities in which the
company can perform profitability.

■ Environmental scanning involves an analysis and

diagnosis of the external and internal environments of the
business firm.
 SWOT Analysis:-

■ Is defined as the rational and overall

evaluation of a company's strengths,

weaknesses, opportunities and threats

which are likely to affect the strategic

choices significantly.
 UNIT VI
Contemporary Management Practices: ERP, Total Quality
Management (TQM), Six sigma, Supply Chain Management,
Business Process outsourcing (BPO), Lean start ups and
entrepreneurship.
Enterprise Resource Planning (ERP)

⚫ Enterprise Resource Planning systems (ERPs)

integrate all data and processes of an organisation
into a unified system.
E-CAP/ BEES
⚫ A typical ERP system will use multiple components
of computer software and hardware to achieve the
integration.
⚫ A key ingredient of most ERP systems is the use of
a unified database to store data.
Ex: PeopleSoft HRMS, SAP’s HRMS, CRM, SCM
 Enterprise Resource Planning (ERP)
Ideally, ERP delivers a single database that contains
all data for the software modules, which would include
• Manufacturing
• Supply Chain Management
• Financials
• Projects
• Human Resources –
• Customer Relationship Management
• Self-Service interfaces for Customers, Suppliers, and
Employees
Total Quality Management (TQM)

⚫ TQM is a set of management practices followed organisation-wide,

geared to ensure the organisation consistently meets or exceeds
customer requirements.

⚫ In a TQM effort, all members of the organisation participate in

improving processes, products, services and the culture in which
they work.

⚫ Product development in a TQM environment is always customer-

driven and focussed only on quality.

⚫ Teams in TQM environment are process-oriented, and interact with

their internal customers to deliver the required results.

BIS, ISO 9001:2000, CE, ISI

Total Quality Management (TQM)

In Japan, TQM comprises the following four process steps:

1. Kaizen—on focuses continuous process improvement by

making processes visible, repeatable and measurable.

2. Atarimae Hinshitsu—make things work as they are meant for .

3. Kansei—examine the way the user applies the product leads to

improvement in the product itself.

4. Miryokuteki Hinshitsu—things should have an aesthetic quality

 Six sigma
⚫ Six sigma refers to the ability of highly capable processes to
produce output within specification.
⚫ Objectives of six sigma are: design, operate and control
everyone of the processes in such a way that more of them
yield more than 3.4defects out of every 1 million units of
outputs (A defect is defined as non-conformity of a product or
service to its specifications)
The six sigma mainly has two methodologies
⚫ DMAIC process (define, measure, analyse, improve, control)
⚫ DMADV process (define, measure (CTQ), analyse (Facelift),
design, verify)
 SIX SIGMA
Six sigma identifies several key roles for its successful implementation

■ Executive Leadership

■ Champions.

■ Master black belts

■ Experts - work across departments (TPO)

■ Black Belts

■ Green Belts

■ Yellow Belts
Supply Chain Management

⚫ Supply chain is the entire process of accepting

a customer order through to delivery of the
product to the customer inclusive of supply
procurement and production of the product.

⚫ SCM is the overall system of coordinating closely

with suppliers so that both the firm and its supplier
reap the benefit of smaller inventories, some other
production and less waste.
 Supply Chain Management

⚫ It can also be said that it is the coordination of all the

activities and information flows involved in buying,
making and moving a product.
• Problems in SCM
Distribution Configuration
Distribution Strategy
Information
Inventory Management
Cash Flow
 Business Process Outsourcing (BPO)

⚫ It is the process of purchasing products or

services from another firm.

⚫ It is the practice of contracting computer

center operations, telecommunication
networks, or applications development to
external vendors.

⚫ Eg:-All major auto companies outsource

manufacturing of many components.
Lean Startup

Definition

■ The lean startup methodology is a method of managing and

building a business or startup by experimenting, testing, and
restating while developing products based on findings from your
tests and feedback.
Lean Startup

■ This methodology begins with the creation of a minimum

viable product (MVP), which refers to a service or
product that has enough features to keep customers
satisfied

■ The methodology of the lean startup technique centers

around build, measure, and learn, which ERIC Ries wrote
about in his novel.
 Concept of Entrepreneurship

• Various views about an ‘Entrepreneur’:

• as a risk bearer
• as an organizer
• as an innovator
• Entrepreneurship is related to:
• coordination, innovation and performance of the
entrepreneur.
• a system of creating new business.
• referred to the various activities, done for the establishment
and operation of an enterprise.
 Definition
• “Entrepreneurship is the purposeful activity of an individual or a
group of associated individuals, undertaken to initiate, maintain or
aggrandize profit by production or distribution of economic goods
and services”
- A. H. Cole

• “Entrepreneurship is based on purposeful and systematic

innovation. It included not only the independent businessman but
also company directors and managers who actually carry out
innovative functions.”
- Joseph A. Schumpeter
• “Entrepreneurs are people who have the abilities to see and
evaluate business opportunities , together with the necessary
resources to take advantage of them, and to ensure appropriate
action to ensure success.”
- International Labour Organization

• “An entrepreneur is a person who starts a new venture, taking the

initiative and risk associated with it and does so by crating
something new to provide value to customers.”
- David Holt
 Other Definitions of Entrepreneurship

• “Entrepreneurship is the process by which individuals pursue

opportunities without regard to resources they currently control.”
- Stevenson & Jarillo

• “Entrepreneurship is the art of turning an idea into a business.”

- Fred Wilson
 Entrepreneurial Traits

• Innovation (Google – Shankar Netralaya); Space X

• Risk – Bearing (Nirma)

• Passion for the Business (Cavin Care- CHIK- Sachets)

• Execution Intelligence
• Product/Customer Focus
 EntrepreneurialTraits

• Lengthy attention
span
• Optimistic
• Achievement motivated
disposition
• Alert to opportunities • Persuasive
• Creative • Responsive to
• Decisive criticism

• Energetic – Stephen • Self-confident &

Covey : 7 effective Self-starter
habits of Leader • Tenacious
• Has a strong work ethic • Tolerant of
ambiguity
• Is a networker
• Visionary
• Initiative Taker
 Entrepreneurs v/s Managers

• Entrepreneur refers to a person who creates an enterprise, by

taking financial risk in order to get profit.
• Manager is an individual who takes the responsibility of controlling
and administering the organization.

BASIS FOR COMPARISON ENTREPRENEUR MANAGER

Focus Business startup Ongoing operations
Primary motivation Achievement Power
Approach to task Informal Formal
Status Owner Employee
Reward Profit Salary
Decision making Intuitive Calculative
Driving force Creativity and Innovation Preserving status quo
Risk orientation Risk taker Risk averse
 The Entrepreneurial Decision Process
• Entrepreneurial decision process -
– Entails a movement from something to something.
– Movement from a present lifestyle to forming a new
enterprise .

Reasons For Possibilities

Desire to
The Present Changing to Become An
Become An
Status The Present An Entrepreneur
Entrepreneur
Status Entrepreneur

Culture/ Family Govt Incentives

By Chance /Choice Availability of Resources
Market Conditions
 Steps in the Entrepreneurial Process
• Once the decision to become an entrepreneur is taken, the
entrepreneurial process begins.
• The 5 stages of entrepreneurial process are –
1. Discovery
2. Concept Development
3. Resourcing
4. Actualization
5. Harvesting

Concept
Discovery Resourcing Actualization Harvesting
Development
Steps in the Entrepreneurial Process

1. Discovery: The stage in which the entrepreneur generates ideas,

recognizes opportunities, and studies the market.
2. Concept Development: Develop a business plan: a detailed proposal
describing the business idea.
3. Resourcing: The stage in which the entrepreneur identifies and
acquires the financial, human, and capital resources needed for the
venture startup, etc.
4. Actualization: The stage in which the entrepreneur operates the
business and utilizes resources to achieve its goals/objectives.
5. Harvesting: The stage in which the entrepreneur decides on business’s
future growth/ development, or demise.