Name: Roll Number: Study Centre: Program: Semester: Assignment:

Krupa Kiran ND 511220617 Garden Academy MBA Second Set 1

MB0044 Production and Operations Management Assignment Set 1

Q1. Explain briefly the Computer Integrated Manufacturing. Answer:

Computer integrated manufacturing (CIM) Integration occurs when a broad range of manufacturing and supporting activities are linked. CIM is the complete automation of a manufacturing plant, with all processes functioning under computer control and digital information tying them together. The three major functions in manufacturing are production, design, and management function. Production function converts resources into products. The design function transforms customer specifications into design. Finally the management functions plan and control production activities. The three computer aids in CIM are: mputer aid to the design function (automated flow of technological information) Example 1 CAD is revolutionising in-house design departments. Many large companies such as IBM, Rubbermaid, AT&T, and Steelcase are opting for investing CAD in their organisations. Production and Operations Management Unit 2 Sikkim Manipal University Page No. 24 managerial information) When it comes to production, CIMs are included in different areas of production process such as in engineering design, production planning, shop control, order processing, material control, distribution and many other areas. Information flow across all the functions takes place with the help of computers. Transmission, processing, distribution, and feedback happen almost in real time so that intended activities are conducted rapidly. (See Figure 2.2 for CIM related activities) Figure 2.2: CIM related activities CIM process helps in rapid production and also reduces indirect costs. CIM uses computers to control the entire production process. This integration

allows the processes to exchange information with each other and thus they become capable of initiating actions. As response times decrease, customer satisfaction increases resulting in better business. CIM helps in avoiding accumulation of materials resulting in better throughput and better utilisation of space. Bar coded labels that accompany materials contain instructions for processing them which are read by sensing devices and display the status on monitors. This information is available to all concerned personnel responsible in planning, marketing and other activities so that they will be aware of the status of any order. If expediting is needed to meet deadlines, they will be able to seek intervention. Identifying shortages and ensuring
faster deliveries become easy with CIM.

Q2. What is automation? What are the kinds of automation? Answer:

Automation Automation is the use of scientific and technological principles in the manufacture of machines that take over work normally done by humans. -http://science.jrank.org/pages/679/Automation.html#ixzz0WiXIpMX0 Figure 4.1 shows a sample automation production process. Figure 4.1: Automation Production and Operations Management Unit 4 Sikkim Manipal University Page No. 64 For services, automation usually means increase in quality and productivity using labour saving devices. Automation is ideal when the service provided or the product manufactured is highly standardised. Some extent of automation can be designed even with customisation, that is, product or services meant to produce or deliver low volumes specific to a requirement. The cost per unit determines the extent of automation required. Automation systems cost huge sums of money and therefore, a deep analysis of the various factors has to be done. The advantage of automation is that it has low variability and will be more consistent on a repetitive basis. On the shop floor variability causes loss of quality. There are three kinds of automation: fixed, programmable, and flexible. 1. Fixed: By its very nature, fixed automation is rigid. They are designed for high volume production and their rigidity ensures less variability. They are not amenable to change in product or process. They need minimal human intervention. Examples: Oil refineries and chemical processing units. 2. Programmable: Programming devices enable machines to operate automatically. The machines have sensing and control devices that enable this. The simplest of them called machine attachments replace human effort. They guide, locate, move, and achieve relative positions

by means of cams, optical sensing, and load sensing mechanisms and activate the controls to remove human intervention. Numerically controlled machines read instructions and convert them to machine Where is automation used? a huge amount of banks labour and it is found to have given greater customer satisfaction. education, long distance learning technology helps in supplementing class room instruction. The facilitating goods that are used in this case are e-courses, web sites and videos. Production and Operations Management Unit 4 Sikkim Manipal University Page No. 65 operations. Computers are used for controlling one machine or a number of them and they have programmes written into them for operations. They are Computer Numerically Controlled or, for short, CNC machines. 3. Flexible: Robots are higher in the order of automation as they perform a variety of tasks. They are designed to move materials by holding them in their arms and making precise movements according to programmes written into the computers that reside in them. They simulate human actions. They can grip and hold tools with the help of sensors. These sensors are sensitive to touch and force to know that the material is to be held with the requisite pressure for the conduct of operations. Vision sensors are used for inspection, identification and guidance. They use optics based instruments to gather data and feed them to the computers
for activating the other parts of the robot.

Q3. What are the factors that influence the plant location? Answer:
You will now study about planning for the location of a plant. You will also study the various factors that affect the economics of competing locations and helps in choosing the most optimal location. Factors influencing Plant Location can be broadly divided into two types namely: general factors and special factors (See Figure 5.1 Factors influencing plant location). Remember machineries. the plant location and layout. Production and Operations Management Unit 5 Sikkim Manipal University Page No. 81 Figure 5.1: Factors influencing plant location In this section, let us know in detail about the factors influencing plant location. 5.2.1.1 General factors The general factors that influence the plant location are listed below (See Figure 5.2 General factors influencing plant location). 1. Availability of land: Availability of land plays an important role in determining the plant location. Many-a-time, our plans, calculations and forecasts suggest a particular area as the best to start an organisation. However, availability of land may be in question. In such cases, we will have to choose the second best location. 2. Availability of inputs: While choosing a plant location, it is very important for the organisation to get the labour at the right time and raw materials at good qualities. The plant should be located: ace when there is a loss of weight in the material

the transportation cost Production and Operations Management Unit 5

Sikkim Manipal University Page No. 82 Figure 5.2: General factors influencing plant location 3. Closeness to market places: Organisations can choose to locate the plant near to the customers market or far from them, depending upon the product they produce. It is advisable to locate the plant near to the market place, when:

The advantages of locating the plant near to the market place are:

4. Communication facilities: Communication facility is also an important factor which influences the location of a plant. Regions with good

communication facilities viz. Postal and Tele communication links

should be given priority for the selection of sites.

Q4. Describe the seven basic quality control tools Answer:

Quality control tools Flow Chart, Check sheet, Histogram, Pareto Analysis, Scatter Diagram, Control Chart, and Cause and Effect Diagram are the basic seven control

Figure 6.2: Quality control tools a) Flow Chart: Flow chart is a visual representation of process showing the various steps. It helps in locating the points at which a problem exists or an improvement is possible. Detailed data can be collected, analysed, and methods for correction can be developed using flow charts. The various steps include: or a decision Production and Operations Management Unit 6 Sikkim Manipal University Page No. 108 Each decision point generates alternatives. Criteria and consequences that go with decisions are amenable to evaluation for purposes of

assessing quality. The flow chart helps in pin-pointing the exact points at which errors have crept in.

Q5. Define project management. Describe the five dimensions of project management. Answer:
Definition of Project Management Managing a project is the practice of controlling the use of resources, such as cost, time, manpower, hardware, and software involved in the project. It usually starts with a problem statement and ends with delivery of a complete product (See Figure 8.1 Project management). Project management involves understanding the scope and various processes in a project cycle.

Figure 8.1: Project management Some of the other definitions of project management are shown below. Project management is the complete set of tasks, techniques, and tools applied during project execution. DIN 69901 (German Organisation for Standardisation) Project management is the application of knowledge, skills, tools, and
techniques to project activities to meet project requirements.

Q6. What is meant by Supply Chain Management (SCM)? What are the objectives of SCM? Answer:
Supply Chain Management SCM is the practice of coordinating the flow of goods, services, information, and finances as they move from raw materials to parts supplier to manufacturer to wholesaler to retailer to consumer. This process includes order generation, order taking, information feedback and the efficient and timely delivery of goods and services. In the simplest terms, SCM lets an organisation get the right goods and services to the place they are needed at the right time, in the proper quantity and at an acceptable cost. Efficiently managing this process involves overseeing relationships with suppliers and customers, controlling inventory, forecasting demand and getting constant feedback on what is happening at every link in the chain. Production and Operations Management Unit 11 Sikkim Manipal University Page No. 230 11.4.2. How SCM works? The supply chain involves several elements such as, Location, Production, Inventory, and Transportation. Location: It is important to know where production facilities, stocking points, and sourcing points are located. These determine the paths along which goods will flow. Production: An organisation must decide what products to create at which plants, which suppliers will service those plants, which plants will supply specific distribution centers and sometimes, how goods will get to the final customer. These decisions have a big impact on revenue, costs and customer service. Inventory: Each link in the supply chain has to keep a certain inventory or raw materials, parts, subassemblies and other goods on hand as a buffer against uncertainties and unpredictability. Shutting down an assembly plant because an expected part shipment didnt arrive is expensive. But inventory costs money too, so it is important to manage deployment strategies, determine efficient order quantities and reorder points, and set safety stock levels.

Master of Business Administration- MBA Semester 2 MB0045 Financial Management Assignment Set- 1

Q1.Show the relationship between required rate of return and coupon rate on the value of a bond. Answer:
Financial planning is a process by which funds required for each course of action is decided. A financial plan has to consider capital structure, capital expenditure and cash flow. Decisions on the composition of debt and equity must be taken. Financial planning or financial plan indicates: The quantum of funds required to execute business plans Composition of debt and equity, keeping in view the risk profile of the existing business, new business to be taken up and the dynamics of capital market conditions Formulation of policies, giving effect to the financial plans under consideration 2.1.3 Benefits of financial planning Financial planning also helps firms in the following ways. A financial plan is at the core of value creation process. A successful value creation process can effectively meet the bench-marks of investors expectations. Financial planning ensures effective utilisation of the funds. To manage shortage of funds, planning helps the firms to obtain funds at the right time, in the right quantity and at the least cost as per the requirements of finance emerging opportunities. Surplus is deployed through well
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planned treasury management. Ultimately, the productivity of assets is enhanced. Effective financial planning provides firms the flexibility to change the composition of funds that constitute its capital structure in accordance with the changing conditions of the capital market. Financial planning helps in formulation of policies and instituting procedures for elimination of wastages in the process of execution of strategic plans. Financial planning helps in reducing the operating capital of a firm. Operating capital refers to the ratio of capital employed to the sales generated. Maintaining the operating capability of the firm through the evolution of scientific replacement schemes for plant and machinery and other fixed assets will help the firm in reducing its operating capital. A study of annual reports of Dell computers will throw light on how Dell strategically minimised the operating capital required to support sales. Such companies are admired by investing community.

Q2.What do you understand by operating cycle?

Answer:
Financial planning is a process by which funds required for each course of action is decided. A financial plan has to consider capital structure, capital expenditure and cash flow. Decisions on the composition of debt and equity must be taken. Financial planning or financial plan indicates: The quantum of funds required to execute business plans Composition of debt and equity, keeping in view the risk profile of the existing business, new business to be taken up and the dynamics of capital market conditions Formulation of policies, giving effect to the financial plans under consideration 2.1.3 Benefits of financial planning Financial planning also helps firms in the following ways. A financial plan is at the core of value creation process. A successful value creation process can effectively meet the bench-marks of investors expectations. Financial planning ensures effective utilisation of the funds. To manage shortage of funds, planning helps the firms to obtain funds at the right time, in the right quantity and at the least cost as per the requirements of finance emerging opportunities. Surplus is deployed through well planned treasury management. Ultimately, the productivity of assets is enhanced. Effective financial planning provides firms the flexibility to change the composition of funds that constitute its capital structure in accordance with the changing conditions of the capital market. Financial planning helps in formulation of policies and instituting procedures for elimination of wastages in the process of execution of strategic plans. Financial planning helps in reducing the operating capital of a firm. Operating capital refers to the ratio of capital employed to the sales generated. Maintaining the operating capability of the firm through the evolution of scientific replacement schemes for plant and machinery and other fixed assets will help the firm in reducing its operating capital. A study of annual reports of Dell computers will throw light on how Dell strategically minimised the operating capital required to support sales. Such companies are admired by investing community.

Q3.What is the implication of operating leverage for a firm?

Anwer:
Book value is an accounting concept. Value is what an asset is worth today in terms of their potential benefits. Assets are recorded at historical cost and these are depreciated over years. Book value may include intangible assets at acquisition cost minus amortised value. The book value of a debt is stated at an outstanding amount. Book value of a share is calculated by dividing the net worth by the number of outstanding shares. Shareholders net worth = Assets Liabilities Net worth = Paid-up capital + Reserves + Surplus The following factors explain the concept of book value more briefly Replacement value is the amount a company is required to spend, if it were to replace its existing assets in the present condition. It is difficult to find cost of assets presently used by the company. Liquidation value is the amount a company can realise if it sold the assets after winding up its business. It will not include the value of intangibles as the operations of the company will cease to exist. Liquidation value is generally the minimum value a company might accept if it sold its business. Going concern value is the amount a company can realise if it sells its business as an operating one. This value is higher than the liquidation value. Solved Problem Calculate the value of an asset if the annual cash inflow is Rs. 5000 per year for the next 6 years and the discount rate is 16%. Solution Value of an asset = 5000/ (1+0.16)6 = Rs.18425 Or = 5000 PVIFA (16%, 6y) = 5000*3.685 = Rs. 18425
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Market value is the current price at which the asset or security is being sold or bought into the market. Market value per share is generally higher than the book value per share for profitable and growing firms

4.2 Valuation of Bonds

Bonds are long term debt instruments issued by government agencies or big corporate houses to raise large sums of money. Bonds issued by government agencies are secured and those issued by private sector companies may be secured or unsecured. The rate of interest on bonds is fixed and they are redeemable after a specific period. Let us look at some important terms in bond valuation. Coupon rate is the specified rate of interest in the bond. The interest payable at regular intervals is the product of the par value and the coupon rate broken down to the relevant time horizon. Maturity period refers to the number of years after which the par value becomes payable to the bond-holder. Generally, corporate bonds have a maturity period of 7-10 years and government bonds 20-25 years. Face value, also known as par value, is the value stated on the face of the bond. It represents the amount that the unit borrows which is to be repaid at the time of maturity, after a certain period of time. A bond is

generally issued at values such as Rs. 100 or Rs. 1000. Market value is the price at which the bond is traded in the stock exchange. Market price is the price at which the bonds can be bought and sold and this price may be different from par value and redemption value. Redemption value is the amount the bond-holder gets on maturity. A bond may be redeemed at par, at a premium (bond-holder gets more Key Points Book value of a share is calculated by dividing the net worth by the number of outstanding shares. Book value may include intangible assets at acquisition cost minus amortised value

Q4.Explain the factors affecting Financial Plan.

Answer:
In India Zero coupon bonds are alternatively known as Deep Discount bonds. These bonds became very popular in India, for over a decade, because of issuance of such bonds at regular intervals by IDBI and ICICI. Zero coupon bonds have no coupon rate, that is, there is no interest to be paid out. Instead, these bonds are issued at a discount to their face value, and the face value is the amount payable to the holder of the instrument on maturity. They are called Deep Discount bonds because these bonds are long term bonds whose maturity some time extends up to 25 to 30 years. Reading the compound value (FVIF) table, horizontally along the 25 year line, we find r equals 8%. Therefore, the bond gives an effective return of 8% per annum. 4.2.4 Bond yield measures The bond yield measures are categorised into two parts current yield and the yield to maturity. 4.2.4.1 Current yield Effective interest earned = Discounted issue price Face value Solved Problem A bond of Rs. 1000 value carries a coupon rate of 10%, maturity period of 6 years. Interest is payable semi-annually. If the required rate of return is 12%, calculate the value of the bond. Solution V0 or P0 = n t=1 (I/2)/(I+kd/2)n +F/(I+kd/2)2n = (100/2)/(1+0.12/2)6 + 1000/(1+0.12/2)6 = 50*PVIFA (6%, 12y) + 1000*PVIFA (6%, 12y) = 50*8.384 + 1000*0 = 419.2 + 497 = Rs. 916.20
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Current yield measures the rate of return earned on a bond if it is purchased at its current market price and the coupon interest received. 4.2.4.2 Yield to maturity (YTM) Yield to maturity is the rate earned by an investor who purchases a bond and holds it till its maturity. The YTM is the discount rate equalling the present values of cash flows to the current market price. Current Yield (CY) = Coupon Interest / Current Market Price Solved Problem Continuing with the same problem, calculate the CY if the current market price is Rs. 920 Solution CY=Coupon Interest / Current Market Price = 80/920 = 8.7%

Q5.An employee of a bank deposits Rs. 30000 into his PF A/c at the end of each year for 20 years. Answer:
What is the amount he will accumulate in his PF at the end of 20 years, if the rate of interest given by PF authorities is 9%? Hint Amount= 1534800 The time preference for money is generally expressed by an interest rate, which remains positive even in the absence of any risk. It is called the risk free rate. For example, if an individuals time preference is 8%, it implies that he is willing to forego Rs. 100 today to receive Rs. 108 after a period of one year. Thus he considers Rs. 100 and Rs. 108 as equivalent in value. In reality though this is not the only factor he considers. He requires another rate for compensating him for the amount of risk involved in such an investment. This risk is called the risk premium. There are two methods by which the time value of money can be calculated: Compounding technique Discounting technique 3.2.1.1 Compounding technique In the compounding technique, the future values of all cash inflows at the end of the time horizon at a particular rate of interest are calculated. The amount earned on an initial deposit becomes part of the principal at the end of the first compounding period. Required rate of return = Risk free rate + Risk premium
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The compounding of interest can be calculated by the following equation: Where, A = Amount at the end of the period P = Principle at the end of the year i = Rate of interest n = Number of years
Example Mr. A invests Rs. 1,000 in a bank which offers him 5% interest compounded annually. Substituting the actual figures for the investment or Rs. 1000 in the formula n, we arrive at the values shown in table 3.1. Table 3.1: Interest compounded annually Year 1 2 3 Beginning amount Rs.1000 Rs.1050 Rs.1102.50 Interest rate 5% 5% 5% Amount of interest 50 52.50 55.13 Beginning principal Rs.1000 Rs.1050 Rs.1102.50 Ending principal Rs.1050 Rs.1102.50 Rs.1157.63 As seen from table 3.1, Mr. A has Rs. 1050 in his account at the end of the first year. The total of the interest and principal amount Rs. 1050 constitutes the principal for the next year. He thus earns Rs. 1102.50 for the second year. This becomes the principal for the third year. This compounding procedure will continue for an indefinite number of years. Let us now see how the values in table 3.1 are arrived at. Amount at the end of year 1 = Rs. 1000 (1+0.05) == Rs. 1050 Amount at the end of year 2 = Rs. 1050 (1+0.05) == Rs. 1102.50 Amount at the end of year 3 = Rs. 1102.50 (1+0.05) == Rs. 1157.63 The amount at the end of the second year can be ascertained by substituting Rs.1000 (1+0.05) for Rs.1050, that is,

Q6.Mr. Anant purchases a bond whose face value is Rs.1000, and which has a nominal interest rate of 8%. The maturity period is 5 years. The required rate of return is 10%. What is the price he should be willing to pay now to purchase the bond? Hint: 924.28 Answer:
The process of calculating future value will become very cumbersome if they have to be calculated over long maturity periods of 10 or 20 years. A generalised procedure of calculating the future value of a single cash flow compounded annually is as follows: Solved Problem Mr.A requires Rs.1050 at the end of the first year. Given the rate of interest as 5%,find out how much Mr. A would invest today to earn this amount. Solution If P is the unknown amount, then P (1+0.05) =1050 P=1050/ (1+0.05) =Rs.1000 Thus Rs. 1000 would be the required principal investment to have Rs. 1050 at the end of the first year at 5% interest rate. The present value of the money is the reciprocal of the compounding value. Mathematically, we have Where P is the present value for the future sum to be received, A is the sum to be received in future, i is the interest rate and n is the number of years.
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Where, FVn = future value of the initial flow in n years hence PV = initial cash flow i = annual rate of interest n = life of investment The expression (1 i)n represents the future value of the initial investment of Re. 1 at the end of n number of years. The interest rate i is referred to as the Future Value Interest Factor (FVIF). To help ease the calculations, the various combinations of i and n can be referred to in the table 3.1. To calculate the future value of any investment, the corresponding value of n (1 i) from the table 3.1 is multiplied with the initial investment. 3.2.2.1 Doubling period A very common question arising in the minds of an investor is how long will it take for the amount invested to double for a given rate of interest. There are 2 ways of answering this question.

MB0046 Marketing Management ASSIGNMENT- Set 1

Q.1 Explain the various stages involved in new product development Answer:
New product development process: Stage 1 - Idea generation: New product idea can be generated either from the internal sources or external sources. The internal sources include employees of the organization and data collected from the market. The external source includes customers, competitors and supply chain members. For example, Ingersoll Rand welcomes new ideas from the General public

. Stage 2-Idea screening: Organization may have various ideas but it should find out which of these ideas can be translated into concepts. In an interview to Times of India, Mr. Ratan Tata, chairman TATA group discussed how his idea saw many changes from the basic version. He told that he wanted to develop car with scooter engine, plastic doors etc... But when he unveiled the car, there were many changes in the product. This shows that initial idea will be changed on the basis of market requirements. Stage 3 - Concept development: the main feature or the specific desire that it caters to or the basic appeal of the product is created or designed in the concept development. Concepts used for Tata Nano car are Concept I: Low-end 'rural car,' probably without doors or windows and with plastic curtains that rolled down, a four-wheel version of the autorickshaw
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Concept II: A car made by engineering plastics and new materials, and using new technology like aerospace adhesives instead of welding. Concept III: Indigenous, in-house car which meets all the environment standards Stage 4 - Concept testing: At this stage concept is tested with the group of target customers. If any changes are required in the concept or the message it will be done during this stage. Also the effectiveness is tested on a minor scale. If the concept meets the specific requirements, then it will be accepted. Stage 5 Marketing strategy development: The marketing strategy development involves three parts. The first part focuses on target market,

sales, market share and profit goals. TATAs initial business plan consisted sales of 2 lakhs cars per annum. The second part involves product price, distribution and marketing budget strategies. TATAs fixed Rs 1 lakhs as the car price, and finding self employed persons who work like agent to distribute the cars. The final part contains marketing mix strategy and profit goals. Stage 6 - Business analysis: it is the analysis of sales, costs and profits estimated for a new product and to find out whether these align with the company mission and objectives. Stage 7 - Product development: during this stage, product is made to undergo further improvements, new features or improvised versions are added to the product. There is also scope for innovation and using the latest technology into the product. TATA Nano car development (Source: business world nanolution) Tried to outsource the product from all over the world. Development of mule or prototype with 20bhp. Designing the small engine Thermodynamic simulations and final engine Development of MPFI with help of Bosch. Cost reduction and negotiating with vendors. Sona Koyo and Rane Group came up with hollow steering shafts, saving cost and cutting weight. Sharda Motors and Emcon designed the exhaust system and MRF tweaked the tyres to bear extra weight on rear

wheels.

Q.2 Discuss the importance of SWOT analysis to develop effective marketing mix. Answer:
Product Line Strategies
Product line: The group of related products which uses same marketing efforts to reach the consumer. The product line identifies profitable and unprofitable products and helps in allocation of resources according to that. The product line understanding helps the marketer to take line extension, line pruning and line filling strategies of the company. Pidilite Industries, the adhesives and chemical company, have the following group of related products (or product lines) in consumer and business markets. Consumer market. 1. Adhesives and sealants. 2. Art materials and stationeries. 3. Construction chemicals. 4. Automotive chemicals 5. Fabric care Business market 1. Industrial adhesives. 2. Textile chemicals. 3. Organic pigment powders. 4. Industrial resins and 5. Leather chemicals. Product Line Decisions: The major product line decisions are a. Product line length b. Product line stretching c. Product line filling d. Product line pruning a. Product line length: The number of items in the product line is called the product line length. Company should decide whether it requires longer chain or shorter length. The decision depends upon the objective of the company, competitive environment and profitability. If the chain is short company can add new products and if it is lengthy company can reduce the number of products. For example, Pidilites adhesives and
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sealants line has following 11 items in the product line. Hence the length of product line is 11
1. White Glue 2. Paper Glue 3. Glue Stick 4. Instant Adhesive 5. Epoxy Putty 6. Epoxy Adhesive 7. PVC Insulation Tape 8. Silicone Sealants 9. Contact Glue 10. All Purpose Glue 11. Maintenance Spray

b. Product line stretching: Company lengthens its product line either by stretching upwards or downwards or both ways. Line stretching decision depends on three situations i. Company which operates in high end market may come up with mid class or low class targeted products. ii. The company which operates in lower end of market may come

up with high end market products. iii. If the company operates in mid segment and comes out with low end product as well as high end product then it is stretching both ways. For example, Maruti Suzuki Limited launched its first product, Maruti 800 in the year 1983 and in the year 1985 it launched Maruti Gypsy. Gypsy is costlier than Maruti 800 and targeted for higher segment. This shows that the company extended its product line upwards or in short, upward stretch. Tata Motors launched their Rs 1 lakh car NANO in the year 2008. The company which was targeting upper class and middle class with their products SUMO and Indica respectively, has stretched downwards to reach the lower level segment. This illustrates the downward stretch. Toyota Kirloskar Limited which extended their line from Qualis and Corolla to Innova and Camry is planning to come out with small car in India. This clearly illustrates the two way stretch of the product line. c. Product line filling: Adding more items in the present product line. For example, in the year 2000 Maruti Suzuki launched Alto. This product was between Maruti 800 and Maruti Zen. Here company was trying to fill

the gap existing in the segment by introducing ALTO, i.e. line filling.

Q.3 Briefly explain the major external and uncontrollable factors that influence an organization decision making, performance and strategies Answer:
1. Marketing objectives: There are four major objectives on which prices are determined. They are survival, current profit maximization, market share leadership and product quality leadership. Survival strategy is adopted when company is facing stiff competition from the competitors and it wants quick reaction and recovery. Current profit maximization strategy is used to defend the market position. For example, assume a company is operating in the lubricants business. Its sales and market share are very high. It always tries to hold their current position. To do this, it increases the price of the product. The next objective is market share leadership. Here, company strives to achieve the leadership position in the market. It reduces the price of the product so that more number of customers buy the product. Through volume generation, company gets the market leadership position. Product quality leadership objective is used when company decides to come with high quality product and premium price. The intention of the company is to cater to the needs of the niche segment. 2. Costs: The cost of marketing and promoting the product will have direct impact on the price. For example, When airline fuel cost went up all airline companies increased the ticket prices Company will be incurring fixed cost (plant, machinery etc...) as well as variable cost (raw material, labor etc) The fixed cost will go down if the number of products produced increases. The variable cost of the product decreases if the product is produced up to an optimal level and then once again it goes up. Hence the total cost (fixed cost plus variable cost) varies according to both costs. Marketer is interested in knowing the break even analysis when he introduces the product in the market. The break even point for a product is the point where total revenue (TR) received equals the total costs (TC) associated with the sale of the product (TR=TC). A break even point is typically calculated for businesses to determine whether it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product instead, so it can be made lucrative. Break-even Analysis can also be used to analyze the potential profitability of an expenditure in a sales-based business. 3. 4Ps of marketing: The price of the product is determined by the other marketing mix elements also. Product influences the price level, i.e. if the product quality is very high company would like to price it high and vice
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versa. The new product requires aggressive promotion and results in higher promotion cost and higher price. Supply chain management also plays an important role in the price determination. If the organization is able to integrate their supply chain well, then it will be having a distribution advantage over others. For example, Nokia when it introduced 1100 handset in Indian market priced it at Rs. 5200. It did so to get back its R&D and promotion cost. When the sales picked up, the price of the product has come down to Rs 3800. Cavin Care introduced sachets and priced at 50 paisa. HUL was forced to come out with sachets at the same price. 4. Nature of the market and demand: The price determination depends on the nature of the market also. The nature of the market is classified into following categories.

a. Perfect competition b. Monopolistic competition c. Oligopolistic competition d. Monopoly a. Perfect competition: The nature of the market where many buyers and sellers exist. Both the buyers and sellers exhibit the switching habit. If the seller charges more for the product, then buyer will shift to another seller. Usually in these types of markets, companies set their prices according to the competition. For example, in a stock market, prices of shares are frequently affected due to the large number of buyers and sellers. b. Monopolistic competition: The nature of the market where many buyers and sellers exist but no particular buyer or seller has total control over the market. The difference between perfect competition and monopolistic competition is that in case of the latter, prices for the products vary according to product differentiation, whereas in case of the former, there is a single price. In case of monopolistic competition, prices are fixed by the gap in the product line of all competitors and on the level of differentiation. For example, food suppliers, footwear manufacturers and various service providers exist in monopolistic competitive market. c. Oligopolistic competition: The market consists of few suppliers who dominate a large portion of the market. They do not allow new players to enter the market. They are price sensitive to each other and so are
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dependent on each other For example, automobile manufacturers, pharmaceutical companies do business in oligopolistic market. d. Monopoly: In a monopolistic market there is only one seller due to regulatory, technical or economic entry barriers. Indian Railways has monopoly over the railway industry in India. It is able to sell its products and services at the determined rates. Prices are economical in the monopoly

markets that are usually controlled by the government.

Q.4 Discuss the potential benefits associated with MIS. Answer:

Marketing channels are a set of independent organizations comprising of the marketing intermediaries who are involved in the distribution of the goods or services from the factory to the consumption points at the right time or even before the time. For example, Haldiram, a company which produces snacks, chats and sweets have two manufacturing locations at Delhi and Nagpur. The products from Delhi will be sent to 25 C&F agents. These C&F agents distribute the goods to 700 distributors, who in turn sell to 0.4 million retail outlets. In the same way, goods reaches to 0.2 million retailers from Nagpur plant via 25 C&Fs and 375 distributors. Consumer buys Haldiram snacks throughout India through these 0.6 million retailers. Marketing channels will have marketing intermediaries such as the retailers, wholesalers, agents, brokers, travelling agents, etc. Some companies do not use these channels. They directly market their products to consumers. For example, Dell computers ask its customers to login to the website, configure their product, and order the same on the internet. Then a general question arises as to why many companies use marketing channels and some do not. In order to answer this question, we need to understand the functions of marketing channels and how they are more beneficial than direct marketing.
Marketing Management Unit 11 Sikkim Manipal University Page No. 209

11.2.1 Functions of marketing channels 1. Helps in Physical distribution: Transporting goods and storing them in the assigned warehouses or godowns. 2. Promotes Communication: Marketing intermediaries promote the companys products. Here channel member provides the information regarding the products and pushes it to the customers. 3. Provides Information: Retailers and wholesalers collect the information or feedbacks from the customers and provide the same to the company or manufacturer. 4. Plays a key role in Title transforming: Marketing intermediaries purchase the goods from the company and transform the title of goods or ownership to the next channel intermediary or customer. 5. Supports Relationship management: Here marketing intermediaries try to understand the needs of consumers, try to match his needs and satisfy them. Activity 1: Visit a nearby retail shop and find out the functions it performs as a part of the distribution channel.

11.3 Decisions involved in setting up a Channel

Marketers should consider various factors before deciding the particular type of channel. It may be organizational or competitive factors. The type of goods to be transported and stored will decide the length and intensity of channel. To decide on the particular channels, marketer will have to take into account the following factors. 1. Understanding the customer profile: Purchasing habits differ from individual to individual. Individuals who face shortage of time would like to purchase on the net (direct channel) and those who have abundant time would like to go through the shopping experience. Some of them would like to have variety of goods, while others want unique or

specialized products. Hence marketers should understand who are his customers? How do they purchase and how often they purchase? For example, customers dont like to travel half a kilometer to purchase a
Marketing Management Unit 11 Sikkim Manipal University Page No. 210

shampoo sachet, but they dont mind travelling two kilometers while purchasing durable goods. 2. Determine the objectives on which channel is to be developed. a. Reach: Company would like to make the goods available in most of the retail outlets. So it, will adopt intensive distribution channel. b. Profitability: Company wants to reduce the cost in the channels and enhance their profitability. It will restructure the channel to optimum level so that it can reduce the cost and increase the profit. c. Differentiation: Company positions their products differently. When most of the industry players follow conventional system, company goes with new format of channels. For example, all computer manufacturers were adopting dealer-retailer channel to sell their products, but Dell started selling its product on the internet. 3. Identify type of channel members: Once the objectives are set on the basis of companys policies, it will analyze which types of channels are most suitable. Merchants, agents and resellers are some intermediaries involved in the distribution. Merchants are those who buy the product, take title and resell the merchandise. Agents will find the customers, negotiate with them, but do not take the title of the product. Facilitators are the people who aid the distribution but do not negotiate or take the

title of the product.

Q.5 Describe five interdependent levels of basic human needs (motivators) as propounded by Abraham Maslow Answer:
Consistent performance is the basis for rewarding and recognizing Partners. The reward and recognition criterion is partner performance score card. The performance is analyzed for different partner categories. Parameters The list of parameters and their weightages are
Sl. No. Ranking Parameters Weightages 1 Cost 25 2 Quality 15 3 Delivery 15 4 Development / Innovation / New Technology 10 5 After Sales service / SLA 15 6 Responsiveness / Flexibility 10 7 BACKWARD Compatibility / Scalability 5 8 Systems and Processes 5

Differentiators Key differentiators for the parameters are

SN Parameter Key Differentiators 1 Cost Beating Inflation Alternate Sourcing Value Engineering Continuous Cost Reduction Y-on-Y 2 Quality Minimum Failure on Receipt No infant Failure First time Acceptance Quality Certification Consistent Quality in long run Quality Culture initiatives Minimum Outage Eco Friendliness 3 Delivery On Time, as required Consistency Marketing Management Unit 11 Sikkim Manipal University Page No. 215 Handling Challenges Delivery in Exigency 4 Development / Innovation / New Technology Value Engineering Time to Market Competitive advantage Value for Money / Value Added Focus on R & D Additional Revenue Stream Go to Market 5 After Sales service / SLA No Outage Spares Availability Meeting TAT Preventive Maintenance Response Time Resolution within SLA

Detect ability of the defects - online monitoring 24 X 7 Support 6 Responsiveness / Flexibility Meeting Challenges Speed of Response Willingness to raise the bar Understanding Customer needs 7 BACKWARD Compatibility / Scalability Product Life Cycle - integration with Technology Timely Investments Breadth & Depth Alignment with Airtel 's Strategy 8 Systems and Processes Proactive Regulatory Compliance Innovative Business Models implementation Improvement Focus Marketing

Q.6 List the important differences between Consumer market and business markets Bharti Airtel recognizes Partners as one of the key stakeholders of its business and hence it is important to address their grievances in a transparent and structured manner. Issues related to ethics and integrity is handled by Ombudsman Process as per the Bharti Airtel Code of Conduct policy. Answer:
All other grievances are monitored, reviewed and resolved by Supply Chain Council. This council comprises of senior members of the supply chain function. Partner identity is kept confidential in case of sensitive grievances like integrity issues. Types of grievances Grievances are broadly classified into the following categories o Payments o Dispute/Disagreement in business o Unethical/Integrity/Code of Conduct violations There are different channels through which Partners can register their grievances o Partner Portal (to be activated soon) o E-mails to helpdesk Overview of Partner grievances handling process is given below Partner Grievance Handling Stages Partner registers grievance through available channels Receive the grievance and forward to respective teams. Analyse the grievance and come out with action plan and then implementation of the action plan. Partners are communicated on the action taken.
Marketing Management Unit 11 Sikkim Manipal University Page No. 218 Partner Communication

This section outlines Bharti Airtel requirements with respect to Partner Communication. Bharti Airtel believes that Communication is the nerve line for any partnership and focuses on establishing a transparent, two-way and trusting relationship with all partners. Communication with partners is done at different levels o Functional Directors - Conceptualization of requirement, delivery timing and KPI's o User Owner - Delivery as per specification, timeline and usage requirement o Supply Chain Team - Commercial and Contractual Agreements o Governance Team - Code of Conduct, Contractual Obligations and Ethical Issues Three types of communications are considered o Strategic o Operational

o Need Based

11.4.2 Evaluating Channel Members The channel members need to be evaluated on a regular basis to assess their performance. In case of Airtel, cellular service provider channel members are evaluated on the basis of SN Ranking Parameters Weightages 1 Cost 25 2 Quality 15 3 Delivery 15 4 Development / Innovation / New Technology 10 5 After Sales service / SLA 15 6 Responsiveness / Flexibility 10 7 BACKWARD Compatibility / Scalability 5 8 Systems and Processes 5

MB0047 Management Information Systems 4 Credits Assignment - Set- 1

1. What is MIS? Define the characteristics of MIS? What are the basic Functions of MIS? Give some Disadvantage of MIS? Answer:
1.1 Introduction to Management Information Systems For a better understanding of this unit, you must have the prior knowledge about the Organization system, Information, data and records. The organizations growth and the level of complexity in functioning have made the people to realize the facts. You can now question how such enormous information is maintained? Since the environment turns competitive and is ever changing, fixation of standard for an exception becomes exercise at Management Information System Unit 1 Sikkim Manipal University Page No. 2 least for the people in higher echelons of the organizations. The Information needed by the organization for different applications is difficult to be made available at the right time at the right level. In this unit you will study about the evolution of MIS and significance of MIS in the organization. You will study the impact of MIS on any business. You will also know the different phases of development of MIS and finally you will know the hardware support needed for MIS. MIS is an integrated system which provides information support for decision making in the organization. There may be various definitions for MIS, but you can see all of them defining MIS as a decision making methodology which helps in control. 1.2.1 MIS characteristics Management System which supports in major functional areas. access to timely but, for the most, structured information. making function which is a vital role of MIS. organization. users. basis on MBO (management by objectives). MIS is successfully used for measuring performance and making necessary change in the organizational plans and procedures. It helps to build relevant and measurable objectives, monitor results, and send alerts. Management Information System Unit 1 Sikkim Manipal University Page No. 7

departments are aware of the problem and requirements of the other departments. This helps in equal interaction of the different centers and connects decision centers of the organization. same data can be used by all the related departments. sistency of data. It is divided into subsystems. Handlings with small systems are much easier than an entire system. This helps in giving easy access of data, accuracy and better information production. s and disseminates the information. 1.2.2 Function of MIS The main functions of MIS are: getting output of the data. Making the data into information is a major task. Prediction is based on the historical data by applying the prior knowledge methodology by using modern mathematics, statistics or simulation. Prior knowledge varies on the application and with different departments. d based on the enterprise restriction on the companies and helps in planning each functional department to work reasonably. It consists of differences between operation and plan with respect to data belonging to different functional department. It controls the timely action of the plans and analyzes the reasons for the differences between the operations and plan. Thereby helps managers to accomplish their decision making task successfully. information to apply them for relative economic benefits. Through this it can derive instant answers of the related problem. 1.2.3 Disadvantages of MIS The following are some of the disadvantages of MIS: information of an authorized user. This needs to monitor constantly. ntaining indirect cost and overheads. Capturing the actual cost needs to have an accrual system having true costs of outputs which is extremely difficult. It has been

difficult to establish definite findings. changes. effectiveness. factors like morality, confidence or attitude will not have any base. 1.2.4 Roles of IS in Business

Fig. 1.3: Graphical representation to show the History of roles of IS Management

2. Explain Knowledge based system? Explain DSS and OLAP with example? Answer: Online Analytical Processing (OLAP)
OLAP refers to a system in which there are predefined multiple instances of various modules used in business applications. Any input to such a system results in verification of the facts with respect to the available instances. A nearest match is found analytically and the results displayed form the database. The output is sent only after thorough verification of the input facts fed to the system. The system goes through a series of multiple checks of the various parameters used in business decision making. OLAP is also referred to as a multi dimensional analytical model. Many big companies use OLAP to get good returns in business. The querying process of the OLAP is very strong. It helps the management take decisions like which month would be appropriate to launch a product in the market, what should be the production quantity to maximize the returns, what should be the stocking policy in order to minimize the wastage etc. A model of OLAP may be well represented in the form of a 3D box. There are six faces of the box. Each adjoining faces with common vertex may be considered to represent the various parameter of the business situation under consideration. E.g.: Region, Sales & demand, Product etc. Management Information System Unit 2 Sikkim Manipal University Page No. 27

2.1.3.5 Decision Support Systems (DSS)

DSS is an interactive computer based system designed to help the decision makers to use all l the resources available and make use in the decision making. In management many a time problems arise out of situations for which simple solution may not be possible. To solve such problems you may have to use complex theories. The models that would be required to solve such problems may have to be identified. DSS requires a lot of managerial abilities and managers judgment. You may gather and present the following information by using decision support application: relational data sources, cubes, data warehouses, and data marts ek and the next

experience in a context that is described. Manager may sometimes find it difficult to solve such problems. E.g. In a sales problem if there is multiple decision variables modeled as a simple linear problem but having multiple optima, it becomes difficult to take a decision. Since any of the multiple optima would give optimum results. But the strategy to select the one most suitable under conditions prevailing in the market, requires skills beyond the model. It would take some trials to select a best strategy. Under such circumstances it would be easy to take decision if a ready system of databases of various market conditions and corresponding appropriate Management Information System Unit 2 Sikkim Manipal University Page No. 30 decision is available. A system which consists of database pertaining to decision making based on certain rules is known as decision support system. It is a flexible system which can be customized to suit the organization needs. It can work in the interactive mode in order to enable managers to take quick decisions. You can consider decision support systems as the best when it includes high-level summary reports or charts and allow the user to drill down for more detailed information.

3. What are Value Chain Analysis & describe its significance in MIS? Explain what is meant by BPR? What is its significance? How Data warehousing & Data Mining is useful in terms of MIS? Answer:
3.4 Product Differentiation and Value Chain Product differentiation is the degree to which buyers perceive products from alternative suppliers to be different. It is expressed by economic theory, the degree to which buyers perceive imperfections in product substitutability. The buyers of differentiated products may have to pay a price when satisfying their preference for something special, in return for greater addedvalue. The connection between the producer and buyers may be reinforced, at least to the level of customer loyalty, and perhaps to the point of establishing a partnership between them. Such a relationship imposes 'switching costs' on the buyer, because its internal processes become adapted to the beneficial peculiarities of the particular factor of production, and use of an alternative would force internal changes. Hence product differentiation also serves as an entry barrier. In addition, a continuous process of product differentiation may produce an additional cost advantage over competitors and potential entrants, through intellectual property protections, such as patents, and the cost of imitation. The activities performed by a particular enterprise can be analyzed into primary activities, which directly adds value to the enterprise's factors of production, which are together referred to as the 'value chain', and supporting activities.

Fig. 3.3: Product Differentiation and Value Chain representation Porters Enterprise Value-Chain (Porter 1980) Value-addition activities like production, marketing delivery, and servicing of the product. These activities are connected in a chain. Support activities include those providing purchased inputs, technology, human resources, or overall infrastructure functions to support the primary activities. It is possible to reduce the transaction cost by proper coordination of all the activities. It should be possible to gather better information for various controls and also replace the same by less costlier activities. It will also be possible to reduce the overall time required to complete an activity. Therefore coordination is very important to achieve competitive advantage. For this it is necessary to manage the value chain as a system rather than as separate parts. An enterprise's value chain for competing in a particular industry is embedded in a larger stream of activities. What Porter termed as 'value system', may be referred to as the 'industry value-chain'. This chain consists of mainly the suppliers and distribution channels. Any activity of an organization is subjected to one or more of the following Newer technologies changes the direction of the value chain. The buyers have been increasing their demands to satisfy their needs in the form convenience and better price and features. This demand influences a change in the related market segments; The value system undergoes a

change depending upon the existence of old and new systems and its components in the value chain. Organizations, which fail to adjust will have to close down their business. It is possible to gain competitive advantage by optimizing the activities based on present conditions. Enterprises which continue to work on the older approaches in outdated modes of operation suffer. If there is a change in the standards of the product of the enterprise, with respect to the environmental controls, restrictions on entry to the market, and trade barriers then it affect the performance of the enterprise. Self Assessment Questions: True or False 5. Product differentiation is the degree to which buyers perceive products from alternative suppliers to be different. 6. The buyers of differentiated products may have to pay a price when satisfying their preference for something special, in return for no value. 7. Newer technologies change the direction of the value chain. 3.5 How IT influences Organizations goals There is always a mention about what IT contributes to corporate strategy. It was recognized that corporation achieved a significant competitive advantage by adopting suitable IT concepts in building up their strategy. It quickly became incumbent on its competitors to neutralize that advantage, and hence to avoid 'competitive disadvantage' (Vitale 1986, Warner 1987, Brousseau 1990). The notion of 'competitive necessity' was created to Management Information System Unit 3 Sikkim Manipal University Page No. 45 complement that of 'competitive advantage'. Comparison was drawn between 'sustainable' and 'contestable' competitive advantage (Clemons 1986, Feeny & Ives 1989, Ciborra 1992). Though many kinds of advantages which can possibly be derived from innovative use of IT, it is possible to quickly neutralize it by others. A distinction needs to be made between the sustainability of the original advantage, and of any derived advantage. An enhancement to the Porter framework of competitive strategy was the notion of 'alliance' (Barrett & Konsynski 1982, Gummesson 1987, EDP Analyzer 1987, Johnston & Vitale 1988, Rockart & Short 1989, Wiseman 1989, Konsynski & McFarlan 1990, Ford 1990, Bowersox 1990). This referred to chains or clusters of organisations which collaborate in order to gain competitive advantage over others, similar organizations, or to neutralize the advantage of one or more competitor organizations. The innovation in IT and its strategic importance to enterprise is compatible with the companys existing characteristics and advantages (Beath & Ives 1986, Clemons & Row 1987, Ives & Vitale 1988, Hopper 1990). One particular

important facet of this is the notion of 'strategic alignment' of IT policies and initiatives with the directions indicated by the corporation's senior executives (Henderson & Venkatraman 1989, Earl 1989, Broadbent & Weill 1991). An outline of factors that influence organization's strategic goals is summarized in the following diagram.

Fig. 3.4: Scott Mortons Five Forces Influencing the Organizations Objectives (Scott Morton 1991) 4.2 Business Process Re-engineering 4.2.1 Basics of BPR The existing system in the organization is totally reexamined and radically modified for incorporating the latest technology. This process of change for the betterment of the organization is called as Business process reengineering. This process is mainly used to modernize and make the organizations efficient. BPR directly affects the performance. It is used to gain an understanding the process of business and to understand the process to make it better and re-designing and thereby improving the system. BPR is mainly used for change in the work process. Latest software is used and accordingly the business procedures are modified, so that documents are worked upon more easily and efficiently. This is known as workflow management.

4. Explain DFD & Data Dictionary? Explain in detail how the information requirement is determined for an organization? Answer:
Data flow diagrams represent the logical flow of data within the system. DFD do not explain how the processes convert the input data into output. They do not explain how the processing takes place. DFD uses few symbols like circles and rectangles connected by arrows to represent data flows. DFD can easily illustrate relationships among data, flows, external entities an stores. DFD can also be drawn in increasing levels of detail, starting with a summary high level view and proceeding o more detailed lower level views. Rounded rectangles represent processes that transform flow of data or work to be done. Rectangle represents external agents- the boundary of the system. It is source or destination of data. The open-ended boxes represent data stores, sometimes called files or databases. These data stores correspond to all instances of a single entity in a data model. Arrow represents data flows, inputs and outputs to end from the processes. Management Information System Unit 5 Sikkim Manipal University Page No. 86 A number of guidelines should be used in constructing DFD.

sequence.

5.3.6 Data Dictionary The data dictionary is used to create and store definitions of data, location, format for storage and other characteristics. The data dictionary can be used to retrieve the definition of data that has already been used in an application. The data dictionary also stores some of the description of data structures, such as entities, attributes and relationships. It can also have software to update itself and to produce reports on its contents and to answer some of the queries.

The business application system demands designing of systems suitable to the application in project. The major steps involved in the design are the following: Input Design Input design is defined as the input requirement specification as per a format required. Input design begins long before the data arrives at the device. The analyst will have to design source documents, input screens and methods and procedures for getting the data into the computer. Output Design The design of the output is based on the requirement of the user manager, customer etc. The output formats have to very friendly Management Information System Unit 5 Sikkim Manipal University Page No. 87 to the user. Therefore the designer has to ensure the appropriateness of the output format. Development When the design and its methodology is approved, the system is developed using appropriate business models. The development has to be in accordance to a given standard. The norms have to be strictly adhered to. Testing Exhaustive and thorough testing must be conducted to ascertain whether the system produces the right results. Testing is time consuming: Test data must be carefully prepared, results reviewed and corrections made in the system. In some instances, parts of the system may have to be redesigned. Testing an information system can be broken down into three types of activities: unit testing, system testing and acceptance test. Unit testing or program testing consists of testing each program separately in the system. The purpose of such testing is to guarantee that programs are error free, but this goal is realistically impossible. Instead, testing should be viewed as a means of locating errors in programs, focusing on finding all ways to make a program fail. Once pinpointed, problems can be corrected. System testing tests the functioning of the information system as a whole. It tries to determine if discrete modules will function together as planned and whether discrepancies exist between the way the system actually works and the way it was conceived. Among the areas examined are performance time, capacity for file storage and handling peak loads, recovery and restart capabilities and manual procedures. Acceptance testing provides the final certification that the system is ready to be used in a production setting. Systems tests are evaluated by users and reviewed by management. When all parties are satisfied that the new system meets their standards, the system is formally accepted for installation. Implementation and Maintenance Conversion Conversion is the process of changing from the old system to the new system. Four main conversion strategies can be employed. They

are the parallel strategy, the direct cutover strategy, the pilot strategy and the phased strategy. In a parallel strategy both the old system and its potential replacement are run together for a time until everyone is assure that the new one functions correctly. This is the safest conversion approach because, in the event of errors or processing disruptions, the old system can still be used as a backup. But, this approach is very expensive, and additional staff or resources may be required to run the extra system. The direct cutover strategy replaces the old system entirely with the new system on an appointed day. At first glance, this strategy seems less costly than the parallel conversion strategy. But, it is a very risky approach that can potentially be more costly than parallel activities if serious problems with the new system are found. There is no other system to fall back on. Dislocations, disruptions and the cost of corrections are enormous. The pilot study strategy introduces the new system to only a limited area of the organization, such as a single department or operating unit. When this version is complete and working smoothly, it is installed throughout the rest of the organization, either simultaneously or in stages. The phased approach strategy introduces the new system in stages, either by functions or by organizational units. If, for example, the system is introduced by functions, a new payroll system might begin with hourly workers who are paid weekly, followed six months later by adding salaried employees (who are paid monthly) to the system. If the system is introduced by organizational units, corporate headquarters might be converted first, followed by outlying operating units four months later. Moving from an old system to a new system requires that end users be trained to use the new system. Detailed documentation showing how the system works from both a technical and end-user standpoint is finalized during conversion time for use in training and everyday operations. Lack of proper training and documentation contributes to system failure, so this portion of the systems development process is very important. Production and maintenance After the new system is installed and conversion is complete, the system is said to be in production. During this stage the system will be reviewed by both users and technical specialists to determine how well it has met its original objectives and to decide whether any revisions or modifications are in order. In some instances, a formal post implementation audit document will be prepared. After the system has been fine-tuned, it will need to be maintained while it is in production to correct errors, meet requirements or improve processing efficiency.

5. What is ERP? Explain its existence before and its future after? What are the advantages & Disadvantages of ERP? What is Artificial Intelligence? How is it different from Neural Networks? Answer:
Enterprise Resource Planning Manufacturing management systems have evolved in stages over the few decades from a simple means of calculating materials requirements to the automation of an entire enterprise. Around 1980, over-frequent changes in sales forecasts, entailing continual readjustments in production, as well as the unsuitability of the parameters fixed by the system, led MRP (Material Requirement Planning) to evolve into a new concept : Manufacturing Resource Planning (or MRP2) and finally the generic concept Enterprise Resource Planning (ERP) The initials ERP originated as an extension of MRP (material requirements planning then manufacturing resource planning). ERP systems now attempt to cover all basic functions of an enterprise, regardless of the organization's business or charter. Non-manufacturing businesses, non-profit organizations and governments now all utilize ERP systems. To be considered an ERP system, a software package must provide the function of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package. Management Information System Unit 7 Sikkim Manipal University Page No. 120 However, the term is typically reserved for larger, more broadly based applications. The introduction of an ERP system to replace two or more independent applications eliminates the need for external interfaces previously required between systems, and provides additional benefits that range from standardization and lower maintenance to easier and/or greater reporting capabilities. Examples of modules in an ERP which formerly would have been standalone

applications include: Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM), Human Resources, Warehouse Management and Decision Support System. 7.6.1 Perception of ERP Some organizations typically those with sufficient in-house IT skills to integrate multiple software products choose to implement only portions of an ERP system and develop an external interface to other ERP or standalone systems for their other application needs. For example, one may choose to use the HRMS from one vendor, and the financials systems from another, and perform the integration between the systems themselves. This is very common in the retail sector, where even a mid-sized retailer will have a discrete Point-of-Sale (POS) product and financials application, then a series of specialized applications to handle business requirements such as warehouse management, staff rostering, merchandising and logistics Ideally, ERP delivers a single database that contains all data for the software modules, which would include: Manufacturing Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality Control, Cost Management, Manufacturing Process, Manufacturing Projects, Manufacturing Flow. Supply Chain Management Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain Planning, Supplier Scheduling, Inspection of goods, Claim Processing, Commission Calculation. 7.6.2 ERP Before and After Before Prior to the concept of ERP systems, departments within an organization (for example, the human resources (HR)) department, the payroll department, and the financial department) would have their own computer systems. The HR computer system (often called HRMS or HRIS) would typically contain information on the department, reporting structure, and personal details of employees. The payroll department would typically calculate and store paycheck information. The financial department would typically store financial transactions for the organization. Each system would have to rely on a set of common data to communicate with each other. For the HRIS to send salary information to the payroll system, an employee number would need to be assigned and remain static between the two systems to accurately identify an employee. The financial system was not interested in the employee-level data, but only in the payouts made by the payroll systems, such as the tax payments to various authorities, payments for employee benefits to providers, and so on. This provided complications. For instance, a person could not be paid in the payroll system without an

employee number. After ERP software, among other things, combined the data of formerly separate applications. This made the worry of keeping numbers in synchronization across multiple systems disappears. It standardized and reduced the number of software specialties required within larger organizations. 7.6.3 Best Practices Best Practices were also a benefit of implementing an ERP system. When implementing an ERP system, organizations essentially had to choose Management Information System Unit 7 Sikkim Manipal University Page No. 123 between customizing the software or modifying their business processes to the "Best Practice" function delivered in the vanilla version of the software. Typically, the delivery of best practice applies more usefully to large organizations and especially where there is a compliance requirement such as IFRS, Sarbanes-Oxley or Basel II, or where the process is a commodity such as electronic funds transfer. This is because the procedure of capturing and reporting legislative or commodity content can be readily codified within the ERP software, and then replicated with confidence across multiple businesses that have the same business requirement. Where such a compliance or commodity requirement does not underpin the business process, it can be argued that determining and applying a Best Practice actually erodes competitive advantage by homogenizing the business as compared to everyone else in the industry sector. 7.6.4 Implementation Implementing an ERP system is not an easy task to achieve, in fact it takes lots of planning, consulting and in most cases 3 months to 1 year +. ERP systems are extraordinary wide in scope and for many larger organizations can be extremely complex. Implementing an ERP system will ultimately require significant changes on staff and work practices. While it may seem reasonable for an in house IT staff to head the project, it is widely advised that ERP implementation consultants be used, due to the fact that consultants are usually more cost effective and are specifically trained in implementing these types of systems. One of the most important traits that an organization should have when implementing an ERP system is ownership of the project. Because so many changes take place and its broad effect on almost every individual in the organization, it is important to make sure that everyone is on board and will help make the project and using the new ERP system a success. Usually organizations use ERP vendors or consulting companies to implement their customized ERP system. There are three types of

professional services that are provided when implementing an ERP system, they are Consulting, Customization and Support. Because of their wide scope of application within a business, ERP software system are typically complex and usually impose significant changes on Management Information System Unit 7 Sikkim Manipal University Page No. 124 staff work practices Implementing ERP software is typically not an "inhouse" skill, so even smaller projects are more cost effective if specialist ERP implementation consultants are employed. The length of time to implement an ERP system depends on the size of the business, the scope of the change and willingness of the customer to take ownership for the project. A small project (e.g., a company of less than 100 staff) may be planned and delivered within 3-9 months; however, a large, multi-site or multi-country implementation may take years.

6. Distinguish between closed decision making system & open decision making system? What is What if analysis? Why is more time spend in problem analysis & problem definition as compared to the time spends on decision analysis? Answer:
Introduction to DSS DSS is an interactive, flexible computer based information system. It uses rules and models for processing data, to support various managerial levels, ranging from top executives to mangers, in their decision-making. It supports all phases of decision-making: intelligence, design, choice and implementation. A DSS is usually built to support the solution of certain problem and does not replace the decision-maker. As such, it is called a DSS application. It is user-friendly with strong graphical capabilities. 8.2.2 DSS components The components of a DSS include a database of data used for query and analysis, software with models, data mining and other analytical tools and a user interface. The DSS database is a collection of current or historical data from a number of applications or groups. It can be small database or a massive data warehouse from a large company, which is continuously being updated. The DSS software system includes software tools for data analysis. They contain various OLAP tools, data mining tools or a collection of mathematical and analytical models. A model can be a physical model, a mathematical model or a verbal model. Most commonly used are the statistical functions such as means, medians, deviations and scatter plots. Optimization models such as linear programming are used to determine optimal resource allocation. 8.3.2 Introduction to Neural Networks (NN) It is modeled on the basis of the neuron structure of the human brain. A neuron is a micro cell which is connected to thousands of other micro cells

in the brain and all the other parts of the human body containing nerves. It is a system which tries to learn from the database and the manager then decides what the right answer is. The entire neural network is realized in the form of software. The software renders the computer as a problem solver. The neural networks goes on building strong database for problem solving depending upon the decisions taken by the manager in the form of response confirmation given to the system by the manager. Neural networks can be used in various business applications like forecasting, stock analysis, market analysis etc. Advantages of Neural Networks: Neural networks are used to forecast some complex data patterns. When designed properly, they can be used as experts for a particular project. They have the ability to adjust to the changing environment and thus are very flexible. For example, it can forecast net asset values of mutual funds with 40% accuracy. They take into account all variables and relationships between the data and detect patterns and trends in any set of data. Disadvantages of neural networks The process of designing the neural networks is very complex and time consuming. The network needs to be trained continuously, with different sets of data. In the training phase, large volumes of examples are used. Without repeated training, the accuracy of the network will decline. If there is over-training, with large amounts of data, also leads to inaccuracy. Sometimes, there is instability in problem solving. With the data constantly changing, it is difficult to repeat a solution to a problem and unable to explain how they arrived at that solution. Neural networks results are often criticized because of the fact that they are unable to give justification of how a particular solution has been arrived at. The rules are completely not understood.

MB 0048: Operations Research ASSIGNMENT- Set 1

1. A toy company manufactures two types of dolls, a basic version doll-A and a deluxe version doll-B. Each doll of type B takes twice as long to produce as one of type A, and the company would have time to make maximum of 1000 per day. The supply of plastic is sufficient to produce 1000 dolls per day(both A & B combined). The deluxe version requires a facny dress of ehich there are only 500 per day available. If the company makes a profit of Rs 3.00 and Rs 5.. per doll, respectively on doll A and B, then how many of each doll should be produced per day in order to maximise the total profit. Formulate this problem. Answer:
The basic dominant characteristic feature of operations research is that it employs mathematical representations or models to analyse problems. This distinct approach represents an adaptation of the scientific methodology used by the physical sciences. The scientific method translates a real given problem into a mathematical representation which is solved and retransformed into the original context. The OR approach to problem solving consists of the following steps: Defining the problem, Constructing the model, Solving the model, Validating the model and Implementing the final result. Figure 1.3: Steps in the OR methodology 1.7.1 Definition The first and the most important step in the OR approach of problem solving is to define the problem. You need to ensure that the problem is identified properly because this problem statement will indicate three major aspects: 1) A description of the goal or the objective of the study 2) An identification of the decision alternative to the system 3) The recognition of the limitations, restrictions and requirements of the system. 1.7.2 Construction Based on the problem definition, you need to identify and select the most appropriate model to represent the system. While selecting a model, you need to ensure that the model specifies quantitative expressions for the objective and the constraints of the problem in terms of its decision variables. A model gives a perspective picture of the whole problem and helps tackling it in a well-organised manner. Therefore, if the resulting model fits into one of the common mathematical models, you can obtain a convenient solution by using mathematical techniques. If the mathematical relationships of the model are too complex to allow analytic solutions, a simulation model may be more appropriate. There are various types of models which you can construct under different conditions. 1.7.3 Solution

After deciding on an appropriate model you need to develop a solution for the model and interpret the solution in the context of the given problem. A Operations Research Unit 1 Sikkim Manipal University Page No. 10 solution to a model implies determination of a specific set of decision variables that would yield an optimum solution. An optimum solution is one which maximises or minimises the performance of any measure in a model subject to the conditions and constraints imposed on the model. 1.7.4 Validation A model is a good representation of a system. However, the optimal solution must work towards improving the systems performance. You can test the validity of a model by comparing its performance with some past data available from the actual system. If under similar conditions of inputs, your model can reproduce the past performance of the system, then you can be sure that your model is valid. However, you will still have no assurance that future performance will continue to duplicate the past behaviour. Secondly, since the model is based on careful examination of past data, the comparison should always reveal favourable results. In some instances, this problem may be overcome by using data from trial runs of the system. Note that such validation methods are not appropriate for non-existent systems, since data will not be available for comparison.

2. What are the advantages of Linear programming techniques? Answer:

The different techniques and tools used in OR are as follows: 1. Linear programming: You can use linear programming to find a solution for optimising a given objective. The objective may be to maximise profit or to minimise cost. You need to ensure that both the objective function and the constraints can be expressed as linear expressions of decision variables. You will learn about the various uses of linear programming in Chapter-2. Operations Research Unit 1 Sikkim Manipal University Page No. 11 2. Inventory control methods: The production, purchasing and material managers are always confronted with questions, such as when to buy, how much to buy and how much to keep in stock. The inventory model aims at optimising these inventory levels. 3. Goal programming: In linear programming, you take a single objective function and consider all other factors as constraints. However, in real life there may be number of important objective functions. Goal programming has several objective functions, each having a target value Programme models are developed to minimise deviations from these targets. 4. Queuing model: The queuing theory is based on the concept of probability. It indicates the capability of a given system and the changes possible in the system when you modify the system. In formulating a queuing model you need not take into account all the constraints. There is no maximisation or minimisation of an objective function. Therefore, the application of queuing theory cannot be viewed as an optimisation process. You can use the queuing theory to estimate the required balance between customer waiting time and the service capability of the system. You need to first consider several alternatives, evaluate them through queuing models, study their effect on the system, and then make a choice. The criteria for evaluation will be measures of efficiency of the system, such as the average length of a queue, expected waiting time of a customer and the average time spent by the customer in the system. In this approach, your success primarily depends on the alternatives considered and not so much on the queuing models developed. 5. Transportation model: The transportation model is an important class of linear programs. The model studies the minimisation of the cost of transporting a commodity from a number of sources to several destinations. The supply at each source and the demand at each

destination are known. The objective of the model is to develop an integral transportation schedule that meets all demands from the inventory at a minimum total transportation cost. The transportation problem involves m sources, each of which has available ai (i = 1, 2, ..,m) units of homogeneous product and n destinations, each of which requires bj (j = 1, 2., n) units of products. Operations Research Unit 1 Sikkim Manipal University Page No. 12 Here ai and bj are positive integers. The cost cij of transporting one unit of the product from the ith source to the jth destination is given for each i and j. It is assumed that the total supply and the total demand are equal. n j1 m i1 ai bj (1) The condition (1) is guaranteed by creating either a fictitious destination with a demand equal to the surplus if total demand is less than the total supply or a (dummy) source with a supply equal to the shortage if total demand exceeds total supply. The cost of transportation from the fictitious destination to all sources and from all destinations to the fictitious sources are assumed to be zero so that total cost of transportation will remain the same. 6. In addition to the above there are tools, such as the sequence model, the assignment model, and network analysis which you will learn in detail in later units.

3. Solve the following Assignment Problem operations M1 M2 M3 M4 01 10 15 12 11 02 9 10 9 12 03 15 16 16 17 Answer:

Mathematical formulation: The data of the problem is summarized below:

Departments Profit Weaving (in min) Processing (in min) Packing (in min) (Rs per meter) Suitings 3 2 1 2 Step1 Study the given situation to find the key decisions to be made Step2 Identify the variables involved and designate them by symbols xj(j=1,2....) Step3 State the feasible alternatives which generally are : xj0, for all j Step4 Identify the constraints in the problem and express them as linear inequalities or equations, LHS of which are linear functions of the decision variables. Step5 Identify the objective function and express it as a linear function of the decision variables. Operational Research Unit 2

Shirtings 4 1 3 4 Woolens 3 3 3 3 Availability (min) 60*60 40*60 80*60 Step1: The key decision is to determine the weekly rate of production for the three types of clothes. Step2: Let us designate the weekly production of suitings, shirtings and woolens by x1 meters, x2 meters and x3 meters respectively. Step3: Since it is not possible to produce negative Quantities, feasible alternatives are sets of values of x1, x2 and X3 satisfying x1, x2 & x3 0. Step4: The constraints are the limited availability of three operational departments. One meter of suiting requires 3 minutes of weaving. The quantity being x1 meters, the requirement for suiting alone will be 3x1 units. Similarly, x2 meters of shirting and x3 meters of woolen will require 4x2 and 3x3 minutes respectively. Thus, the total requirement of weaving will be 3x1+4x2+3x3, which should not exceed the available 3600 minutes. So, the labor constraint becomes 3x1+4x2+3x3 3600 Similarly, the constraints for the processing department and packing departments are 2x1+x2+3x3 2400 and x1+3x2+3x3 4800 respectively. Step 5: The objective is to maximize the total profit from sales. Assuming that whatever is produced is sold in the market, the total profit is given by the linear relation z= 2x1+4x2+3x3 The linear programming problem can thus be put in the following algebraic

format: Find x1,x2 and x3 so as to maximize Z= 2x+4x+3x Subject to constraints: 3x1+4x2+3x3 3600 2x1+x2+3x3 2400 x1+3x2+3x3 4800 x1, x2 & x3 0. 2.4.1 General Linear Programming Problem The LPP is a class of mathematical programming where the functions representing the objectives and the constraints are linear. Optimization refers to the maximization or minimization of the objective functions. Operational Research Unit 2 __________________________________________________________________ ___________________________________________________________________ Sikkim Manipal University Page No.23 You can define the general linear programming model as follows: Maximize or Minimize: Z = c1 x1 + c2 x2 + - - - - + cn xn Subject to the constraints, a11 x1 + a12 x2 + + a1n xn ~ b1 a21 x1 + a22 x2 + + a2n xn ~ b2 am1 x1 + am2 x2 + - + amn xn ~ bm and x1 0, x2 0, xn 0 Where cj, bi and aij (i = 1, 2, 3, .. m, j = 1, 2, 3 - n) are constants determined from the technology of the problem and xj (j = 1, 2, 3 - n) are the decision variables. Here ~ is either (less than), (greater than) or =

(equal). Note that, in terms of the above formulation the coefficients cj, bi aij are interpreted physically as follows. If bi is the available amount of resources i, where aij is the amount of resource i that must be allocated to each unit of activity j, the worth per unit of activity is equal to cj. 2.4.2 Canonical forms You can represent the general Linear Programming Problem (LPP) mentioned above in the canonical form as follows: Maximize Z = c1 x1+c2 x2 + + cn Subject to, a11 x1 + a12 x2 + + a1n xn b1 a21 x1 + a22 x2 + + a2n xn b2 am1 x1+am2 x2 + + amn xn bm x1, x2, x3, xn 0.

4.What is integer programming? Answer:

General Linear Programming Problem The LPP is a class of mathematical programming where the functions representing the objectives and the constraints are linear. Optimization refers to the maximization or minimization of the objective functions. You can define the general linear programming model as follows: Maximize or Minimize: Z = c1 x1 + c2 x2 + - - - - + cn xn Subject to the constraints, a11 x1 + a12 x2 + + a1n xn ~ b1 a21 x1 + a22 x2 + + a2n xn ~ b2 am1 x1 + am2 x2 + - + amn xn ~ bm and x1 0, x2 0, xn 0 Where cj, bi and aij (i = 1, 2, 3, .. m, j = 1, 2, 3 - n) are constants determined from the technology of the problem and xj (j = 1, 2, 3 - n) are the decision variables. Here ~ is either (less than), (greater than) or = (equal). Note that, in terms of the above formulation the coefficients cj, bi aij are interpreted physically as follows. If bi is the available amount of resources i, where aij is the amount of resource i that must be allocated to each unit of activity j, the worth per unit of activity is equal to cj. 2.4.2 Canonical forms You can represent the general Linear Programming Problem (LPP) mentioned above in the canonical form as follows: Maximize Z = c1 x1+c2 x2 + + cn Subject to,

a11 x1 + a12 x2 + + a1n xn b1 a21 x1 + a22 x2 + + a2n xn b2 am1 x1+am2 x2 + + amn xn bm x1, x2, x3, xn 0. The following are the characteristics of this form. -negative. e of type.

You can represent any LPP in the canonical form by using five elementary transformations, which are as follows: 1. The minimization of a function is mathematically equivalent to the maximization of the negative expression of this function. That is, Minimize Z = c1 x1 + c2x2 + . + cn xn is equivalent to Maximize Z = c1x1 c2x2 cn xn 2. Any inequality in one direction ( or ) may be changed to an inequality in the opposite direction ( or ) by multiplying both sides of the inequality by 1. For example 2x1+3x2 5 is equivalent to 2x13x2 5 3. An equation can be replaced by two inequalities in opposite direction. For example: 2x1+3x2 = 5 can be written as 2x1+3x2 5 and 2x1+3x2 5 or 2x1+3x2 5 and 2x1 3x2 5 4. An inequality constraint with its left hand side in the absolute form can be changed into two regular inequalities. For example: 2x1+3x2 5 is equivalent to 2x1+3x2 5 and 2x1+3x2 5 or 2x1 3x2

5 5. The variable which is unconstrained in sign ( 0, 0 or zero) is equivalent to the difference between 2 non-negative variables. For example: if x is unconstrained in sign then x = (x+ x) where x+ 0, x 0 5.Explain the different steps involved in simulation methodologies? Probability and Cost Consideration in Project Scheduling The analysis in CPM does not take in the cases where time estimates for the different activities are probabilistic. It also does not consider explicitly the cost of schedules. Here we will consider both probability and cost aspects in project scheduling. Probability considerations are incorporated in project scheduling by assuming that the time estimate for each activity is based on 3 different values. They are as follows: a = The optimistic time, which will be required if the execution of the project goes extremely well. b = The pessimistic time, which will be required if everything goes bad. m = The most likely time, which will be required if execution is normal. The most likely estimate m need not coincide with the mid-point 2

of a and b. Then the expected duration of each activity D can be obtained as the mean of 2

and 2 m. Therefore, 6 a b 4m 3 2m 2 ab D

You can use this estimate to study the single estimate D in the critical path calculation. The variance of each activity denoted by V is defined by, Variance V = 2 6 ba

expected times of all activities

leading to the node i, when more than one activity leads to a node i, then the

all activities of the network are statistically independent, we can calculate the mean and

k kV where, k defines the activities along the largest path leading to i. For the latest expected time, we consider the last node. Now for each path move backwards and substitute the D iJ for each activity (i, j). Thus we have,

Dij

6. Write down the basic difference between PERT &CPM. Answer:

Though there are no essential differences between PERT and CPM as both of them share in common the determination of a critical path. Both are based on the network representation of activities and their scheduling that determines the most critical activities to be controlled so as to meet the completion date of the project. 14.2.1 PERT Some key points about PERT are as follows: 1. PERT was developed in connection with an R&D work. Therefore, it had to cope with the uncertainties that are associated with R&D activities. In PERT, the total project duration is regarded as a random variable. Therefore, associated probabilities are calculated so as to characterise it. 2. It is an event-oriented network because in the analysis of a network, emphasis is given on the important stages of completion of a task rather than the activities required to be performed to reach a particular event or task. 3. PERT is normally used for projects involving activities of non-repetitive nature in which time estimates are uncertain. 4. It helps in pinpointing critical areas in a project so that necessary adjustment can be made to meet the scheduled completion date of the project. Operations Research Unit 14 Sikkim Manipal University Page No. 246 14.2.2 CPM 1. CPM was developed in connection with a construction project, which consisted of routine tasks whose resource requirements and duration

were known with certainty. Therefore, it is basically deterministic. 2. CPM is suitable for establishing a trade-off for optimum balancing between schedule time and cost of the project. 3. CPM is used for projects involving activities of repetitive nature.

MB0049 Project Management ASSIGNMENT- Set 1

Q1. Define project management. Discuss the need for project management.

Answer:
Let us look at the definition of some vocabulary that you will often encounter in a project management discussion. Project A project is a set of activities which are networked in an order and aimed at achieving the defined goals for which the project is undertaken. Upon completion of all the activities, the goals of the project would have been achieved. Management Management is the technique of understanding the problems and needs and controlling the use of resources, such as cost, time, manpower, and materials. Project Management It is an art of controlling the cost, time, manpower, and hardware and software resources involved in a project. Project Cycle A project cycle basically consists of the various activities of operations, resources and the limitations imposed on them. Process A process is part of the project which consists of simple and routine instructions to achieve a desired result of any activity of the project. A process is responsible to bring about the changes in the input fed to the process and to give out desired outputs as a result of the process. Project Management Unit 1 Sikkim Manipal University Page No. 4 Resource It refers to manpower, machinery, money and materials required in the project. Scope It refers to the various parameters that affect the project in its planning, formulation and execution. Project Cost It is the budgeted expenditure of the project.

Now that you know what a project is can you think of some examples? Here are some that we could think of. Examples of a Project

1.3 Need for Project Management Project management is necessary because it helps an organisation execute a project successfully by: a) Preventing Project Failure: A project requires huge investments which should not go waste. A loss in any project would have direct or indirect impact on the society. Project management helps an organisation prevent failures in projects. b) Controlling Project Scope: Scope of the project activity may undergo a change. Project management helps an organisation define and control project scope. c) Improving understanding: Lack of understanding of the project among the participants leads to failure. Project management helps participants understand the project and its purpose. Project Management Unit 1 Sikkim Manipal University Page No. 5 d) Managing Risks: A project is vulnerable to various risks. A project is affected if the technology used is changed during the course of project execution. Similarly changes in economic conditions may affect a project. Project management is very useful in assessing and mitigating

such risks. e) Managing Project Problems: Consequences of ignoring project related problems can be very serious. Project management helps in identification and communication of problem areas.

Q2. What is meant by risk management? Explain the components of risk management. Answer:
Risks are those events or conditions that may occur and whose occurrence has a harmful or negative impact on a project. Risk management aims to identify the risks and then take actions to minimise their effect on the project. Risk management entails additional cost. Hence risk management can be considered cost-effective only if the cost of risk management is considerably less than the cost incurred if the risk materialises. 2.7.1 Components Important components in risk management are shown in figure 2.8.

Fig. 2.8: Risk management components Let us be familiar with the actions involved in each of the components. a) Risk Assessment Identify the possible risks and assess the consequences by means of checklists of possible risks, surveys, meetings and brainstorming and reviews of plans, processes and products. The project manager can also use the process database to get information about risks and risk management on similar projects. b) Risk Control Identify the actions needed to minimise the risk consequences. This is also known as risk mitigation. Develop a risk management plan. Focus on the highest prioritised risks. Prioritisation

requires analysing the possible effects of the risk event in case it actually occurs. This approach requires a quantitative assessment of the risk probability and the risk consequences. For each risk, determine the rate of its occurrence and indicate whether the risk is low, medium or of high category. If necessary, assign probability values in the ranges as prescribed based upon experience. If necessary assign a weight on a scale of 1 to 10. c) Risk Ranking Rank the risk based on the probability and effects on the project; for example, a high probability, high impact item will have higher rank than a risk item with a medium probability and high impact. In case of conflict, use judgment. d) Risk Mitigation Select the top few risk items for mitigation and tracking. Refer to a list of commonly used risk mitigation steps for various risks from the previous risk logs maintained by the project manager and select suitable risk mitigation step. The risk mitigation step must be properly executed by incorporating them into the project schedule. In addition to monitoring the progress of the planned risk mitigation steps, periodically revisit the risk perception for the entire project. The results of this review are reported in each milestone analysis report. To prepare this report, make fresh risk analysis to determine whether the priorities have changed.

Q3. Discuss the various steps in project monitoring and control. Answer:
Project Monitoring and Control Any project aimed at delivering a product or a service has to go through phases in a planned manner in order to meet the requirements. It is very important to measure the performance of the current status of the project at anytime against its planned version. This helps to tackle any unexpected deviation in time, efforts and cost. It is possible to work according to the project plan only by careful and close monitoring of the project progress. It requires establishing control factors to keep the project on the track of progress. The results of any stage in a project, depends on the inputs to that stage. It is therefore necessary to control all the inputs and the corresponding outputs from a stage. This is achieved through devising proper controls for every stage. A project manager may use certain standard tools to keep the project on track. The project manager and the team members should be fully aware of the techniques and methods to rectify the factors influencing delay of the project and its product. It is important for all stakeholders to know the impact of the changes in any parameters to the overall project. The various steps involved in monitoring and controlling a project from start to end are shown in figure 3.4.

Fig. 3.4: Steps for monitoring and control Now let us look into detail for each of these steps. 3.5.1 Preliminary work The team members understand the project plans, project stage schedule, progress controls, tracking schedules, summary of the stage cost and related worksheets. All the members have to understand the tolerances in any change and maintain a change control log. They must realise the need and importance of quality for which they have to strictly follow a quality review schedule and frequently discuss the quality agendas. They must understand the stage status reports, stage end reports, stage end approval reports. 3.5.2 Project Progress The members must keep a track of the project progress and communicate the same to other related members of the project. They must monitor and control project progress, through the use of regular check points, quality charts, and statistical tables; control the quality factors which are likely to deviate from expected values as any deviation may result in changes to the

stage schedule. The project manager ensures that these changes are made smoothly and organises review meeting with the project management group. Thus all the members are aware about the progress of the project at all times. This helps them to plan well in advance for any exigency arising due to deviation from planned schedule. 3.5.3 Stage Control The manager must establish a project check point cycle. For this, a suitable stage version control procedures may be followed. The details are to be documented stage wise. Project files have to be timely updated with appropriate version control number and revision status should be maintained for each change. Team members are identified who will exercise controls at various points of the project. 3.5.4 Resources Plan the resources required for various stage of the project well in advance. Communication is the key. Brief both the project team and the key resources about the objectives of every stage, planned activities, products, organisation, metrics and the project controls. This increases the visibility into the project performance and hence a quality control can be achieved. Allocating a right resource at the right place and the right time will significantly enhance the efficiency and effectiveness of the resource. 3.5.5 Quality Control This is very important in any project. It is a tool which helps in tracking the progress of various parameters at any stage of the project. A project manager may use a standard quality control or customise according to the requirements. Quality control is possible if the project members follow the quality charts and norms very strictly. It is also important for all the project team members to know the importance of such quality checks and should

have a good visibility into project performance. 3.5.6 Schedule Quality Review Conduct quality reviews at regular intervals. It is recommended that quality review be scheduled at the beginning of the stage and also at the ending of every stage. This helps the project manager and team members to plan well in advance for any unforeseen deviation. 3.5.7 Agenda for Quality Review Create and distribute a quality review agenda specifying the objective, products, logistics, roles, responsibilities and time frame. This increases the effectiveness of the review and also reduces the time gap.

Q4. What is Project Management Information System (PMIS)? What are the major aspects of PMIS? Answer:
Project Management Information System (PMIS) An information system is mainly aimed at providing the management at different levels with information related to the system of the organisation. It helps in maintaining discipline in the system. An information system dealing with project management tasks is the project management information system. It helps in decision making in arriving at optimum allocation of resources. The information system is based on a database of the organisation. A project management information system also holds schedule, scope changes, risk assessment and actual results. The information is communicated to managers at different levels of the organisation depending upon the need. Let us find how a project management information system is used by different stakeholders. A Caselet on Quality Management The top management of a company decided that their annual quality policy was to be promotion of standardisation. The need for this initiative was felt because the merchandise manufactured by the company had a high defect rate. Quality control programmes followed so far hardly reduced the defect rate. Higher defect rates meant more customer complaints and hence higher repair and return cost. To ensure successful merchandise standardization, the company devised 50 new quality standards and revised 80 existing quality standards. Soon the company experienced lower defects and reduction in overall manufacturing cost.

Who needs information and why Upper managers To know information on all projects regarding progress, problems, resource usage, costs and project goals. This information helps them take decisions on the project. They should review the projects at each milestone and arrive at appropriate decision Project manager and department managers To see each project schedule, priority and use of resources to determine the most efficient use across the organisation. Project team members To see schedule, task lists and specification so that they know what needs to be done next. The four major aspects of a PMIS are a. Providing information to the major stakeholders b. Assisting the team members, stakeholders, managers with necessary information and summary of the information shared to the higher level managers c. Assisting the managers in doing what if analyses about project staffing, proposed staffing changes and total allocation of resources d. Helping organisational learning by helping the members of the organisation learn about project management Usually, the team members, and not the systems administrators of the

company, develop a good PMIS. Organisations tend to allocate such responsibility by rotation among members with a well designed and structured data entry and analytical format.

Q5. What is PERT chart? What are the advantages of PERT chart? Answer:
It might sometimes be difficult for an organisation to straightaway launch into a project management exercise, even if they are well equipped. This holds particularly true if the project is too large for example, development of a new product, expansion of capacity, modernisation of facilities, diversification into a totally new business area, getting into a joint venture and so on. In such cases, the core project team itself might feel the need to have some major inputs before even a tentative plan could be drawn up. A well-drafted business plan would ideally serve this purpose, provided it is handled systematically and professionally.

The actual process of planning is documented in a business plan. A business plan is essential because of several reasons as listed below: 1. It communicates several things including:

-in 2. It consolidates management direction 3. It provides a scope for debate and reaching a finally consensus 4. It works as a guide when speed bumps appear 5. It is a managers professional and personal scorecard 13.3.2 Writing a plan

Writing is something that many people dread. Naturally, writing a plan is not everyones cup of tea. It is tough because of the following reasons 1. It requires disciplined balance 2. It is visionary, but flexible 3. It needs to be logical 4. It should be financially perfect not only for today, but also for next 3 years and beyond 5. It is formal plan which should be easy to read 6. It requires creativity and at the same time it follows certain rules