MBAR Production & Operation Management

Internal Assignment No. 1        Paper Title:   Production and Operations Management

Q. 1.    Answer all the questions:

(i)         Define operations management.

ANS- Operations management involves planning, organizing, and supervising processes, and make necessary improvements for higher profitability. The adjustments in the everyday operations have to support the company’s strategic goals, so they are preceded by deep analysis and measurement of the current processes.

(ii)        Name any four factors affecting plant location.

ANS- The leading factors affecting plant location are as follows:

1. Selection of Region

2. Site Selection

3. Current Trends in Pant Location

4. The Design of Factory Plant Building.

(iii)       Draw the input output process diagram.

(iv)     What are the qualitative factor analysis models?

ANS- - A company's businessmodeland competitive advantage are a key component of qualitative analysis. ... The idea behind quantitativeanalysisis to measure things; the idea behindqualitative analysisis to understandthem.

(v)        Write  the different types of facility layout.

ANS- There are threetypesof workflow layouts that managers can choose from: Process layout: arranged in departments (e.g., hospitals). Productlayout: production line (e.g., a car assemblyplant). Fixed-positionlayout:building a large item (e.g., jumbo jet).

Note: Answer any two questions. Each question carries 5 marks (Word limits 500)

Q. 2.    Explain the concept of ABC analysis with an example.

ANS- The main use of ABC analysis is to improve your ability to deal with large and complex data sets by breaking them down into three segments. These segments define the priority of the data within whatever area you are using them in.

Once the data is broken down into segments, it is easier to focus on the data and use it in a meaningful way. Breaking down the data into these segments makes specific issues in the data more obvious. It also helps in prioritizing the different segments.

For example, ABC analysis can be used to segment your customers and break down customer-specific data.

First, you would divide the customers into each of the three categories based on the sales volume the customer provides. Then, you would consider how that volume relates to your margin contribution.

If you segment the customers successfully, the customers with the most value will go into the high priority category A, while less important customers would be placed in the bottom category C. Customers that are somewhere in between will stay in category B.

The segmentation allows you to pinpoint your most valuable customers. It then allows you to examine them separately so that you can form a plan of action. When you can look at things in three different categories, it is easier to allocate your resources in a more strategic way than it is if you’re flitting back and forth between charts or just trying to make sense of heaps of raw data. The benefit of taking this extra step is that it makes it easier to analyze the data strategically which in turn makes it easier to maximize your profits.

ABC analysis is also an excellent tool for inventory control. It is particularly useful for determining which of your inventory items impact your inventory cost the most. It also provides a framework for determining the best ways to manage and control your inventory.

Using ABC analysis in inventory control includes the same principles used in customer segmentation. Essentially, not every item in your inventory has equal value. You’ll use this method to determine the real value of each item in your inventory and then place it into the A, B or C category based on its importance.

Q. 3.    What do you understand by capacity planning?  Explain the decision tree modeling for   capacity expansion.

ANS- Capacity planning is one of the key aspects of operations management as it determines the amount of goods or services which can be produced within a given time duration. Too less capacity indicates that customers won't be satisfied and too much capacity would result in the operation being under-utilized with resultant high fixed costs and also affecting breakeven and profitability. A company, when it has to increase its capacity it has various options to consider, from working overtime to building a new facility or a plant. Forecasting demand is critical to capacity planning and companies can adopt different strategies of capacity planning, to ensure customer satisfaction and maintain the operations well within their budget and other constraints. Short term capacity planning is very important for any company be it a product based or a service based company especially when there are seasonal demands, as those demands are totally unpredictable and there can't a permanent plan in place for short term capacity planning for seasonal demands. Momentary plans like employee overtime, subcontracting have to be considered and the best among them and that incur least cost have to be selected and implemented and this has been discussed in detail in this project.

In this case, the resources take a long time to acquire and dipose. e.g., building, equipment, etc. Intermediate Range Monthly or quarterly planning. Capacity may vary due to hiring, layoff, new tools and changes, or subcontracting. Short Range Less than a month. This is tied into weekly or daily process and involves making adjustments to decrease variance between planned and actual output.

Decision trees are useful whenever we have to evaluate interdependent decisions that must be made in sequence and when there is uncertainty about events. For that reason, they are especially useful for evaluating capacity expansion alternatives given that future demand is uncertain. Remember that our main decision is whether to purchase a large facility or a small one with the possibility of expansion later. You can see that the decision to expand later is dependent on choosing a small facility now. Which alternative ends up being best will depend on whether demand turns out to be high or low. Unfortunately, we can only forecast future demand and have to incur some risks.

A decision tree is a diagram that models the alternatives being considered and the possible outcomes. Decision trees help by giving structure to a series of decisions and providing an objective way of evaluating alternatives. Decision trees contain the following information:

Decision points. These are the points in time when decisions, such as whether or not to expand, are made. They are represented by squares, called “nodes.”

Decision alternatives. Buying a large facility and buying a small facility are two decision alternatives. They are represented by “branches” or arrows leaving a decision point. ...

Internal Assignment No. 2

Q. 1.    Answer all the questions:

(i)         What are two major responsibilities of operations manager?

ANS- An operations manager is in charge of directing the company's daily activities for the benefit of employees, management, investors and customers. This requires organizing and synchronizing the activities of various managers and departments within a company and making sure the schedules, meetings and goals of each department work in harmony.

(ii)        What do you understand by CPM?

ANS- The critical path method (CPM) is a step-by-step methodology, technique or algorithm for planning projects with numerous activities that involve complex, interdependent interactions. CPM is an important tool for project management because it identifies critical and non-critical tasks to prevent conflicts and bottlenecks. CPM is often applied to the analysis of a project network logic diagram to produce maximum practical efficiency.

(iii)       Write the concept of EOQ.

ANS- EOQ is the acronym for economic order quantity. The economic order quantity is the optimum quantity of goods to be purchased at one time in order to minimize the annual total costs of ordering and carrying or holding items in inventory.

EOQ is also referred to as the optimum lot size.

The formula to calculate the economic order quantity is the square root of [(2 times the annual demand in units times the incremental cost to process an order) divided by (the incremental annual cost per unit to carry an item in inventory)].

(iv)       What are the types of costs to be considered for Inventory Management?

·         ANS- Purchase Costs.

·         Processing Costs. ...

·         Distribution Costs. ...

·         Inventory Holding Costs. ...

·         Losses From Shrinkage.

(v)        What is work study or Work Measurement?

ANS- Attempts to measure work and to establish work standards have always resulted in reactions, promoted criticism and generally have been the topic of considerable controversy among the managements and work force/workers.

It gives feeling to the workers that standards may result in more effective control and they may be required to do hard work for lesser wages. Management feels that the use of standards may lead workers to work hard which may result in higher wage bills.

Application of techniques designed to establish the time for qualified operator/worker to carry out a specified job at a defined level of performance is called the work measurement.

Q. 2.    ”Explain any 5 difference between PERT and CPM.

ANS- The most important differences between PERT and CPM are provided below:

1. PERT is a project management technique, whereby planning, scheduling, organising, coordinating and controlling of uncertain activities is done. CPM is a statistical technique of project management in which planning, scheduling, organising, coordination and control of well-defined activities takes place.
2. PERT is a technique of planning and control of time. Unlike CPM, which is a method to control costs and time.
3. While PERT is evolved as research and development project, CPM evolved as construction project.
4. PERT is set according to events while CPM is aligned towards activities.
5. A deterministic model is used in CPM. Conversely, PERT uses probabilistic model.
6. There are three times estimates in PERT i.e. optimistic time (to), most likely time ™, pessimistic time (tp). On the other hand, there is only one estimate in CPM.
7. PERT technique is best suited for a high precision time estimate, whereas CPM is appropriate for a reasonable time estimate.
8. PERT deals with unpredictable activities, but CPM deals with predictable activities.
9. PERT is used where the nature of the job is non-repetitive. In contrast to, CPM involves the job of repetitive nature.
10. There is a demarcation between critical and non-critical activities in CPM, which is not in the case of PERT.

Q. 4.    What is MRP? Write the objectives and advantages of MRP.

ANS- MRP as either Material Requirements Planning or Manufacturing Resource Planning (MRP II) is a methodology which has been around for nearly 30 years. For a good reason, people ask, what are the advantages and what are the disadvantages of MRP. Still, even though being one of the predominant ways in organizing inventory and production planning, it surely has its benefits and drawbacks.

OBJECTIVES OF MRP

The objectives of an MRP system are to determine the quantity and timing of material requirements and to keep priorities updated and valid.

o    Determine the quantity and timing of material requirements.Your company uses MRP to determine what to order (it checks the BOM), how much to order (it uses the lot size rule for the specific item), when to place the order (it looks at when the material is needed and backward-schedules to account for lead time), and when to schedule delivery (it schedules the material to arrive just as it is needed).

o    Maintain priorities. Your company also uses MRP to keep priorities updated and valid. Requirements change. Customers change order quantities and/or timing. Suppliers deliver late and/or the wrong quantities. Unexpected scrap results from manufacturing. Equipment breaks down and production is delayed. In an ever-changing environment, you use an MRP system to respond to changes in the daily environment, to reorganize priorities, and to keep plans current and viable.

The Advantages of MRP

The advantages of using MRP in manufacturing management and production planning come directly from the very nature of it:

• On time availability of the right materials required for production.
• Little, if any, excess inventory (our customers report that inventory reduced by 14% on average).
• Timely delivery of manufactured goods to your customers (increased by 17%).
• Optimal use of manufacturing resources (equipment downtime reduced 14%).
• Decrease in capital cost due to decreased inventory levels and optimal use of production resources.
• Collecting the business data for analysis and better planning.