SHIVENDRA SINGH 1208005653

(Spring/Feb 2013)

Master of Business Administration - MBA Semester 2 MB 0044 - Production and Operation Management ASSIGNMENT- Set 1 Q1. State the important considerations for locating an automobile plant? All the resources have inherent potential of enabling the realization of the goals of the organization. It is the responsibility of the management to identify the strengths that all these factors have and utilize them for achieving productivity. Resources will have constraints in terms of their availability, such as, quantities and timeline. As mismatches will cause either shortages or excess inventory, optimization is necessary to reduce the ill effects of both. Linear programming, queuing theory, inventory and simulation models are used to arrive at decisions to procure materials and plan scheduling so as to minimize wastage of resources. Just-In-Time philosophy, which focuses on balancing the system, considers the following as wastes: 1-Transportation 2-Product defects 3-Overproduction 4-Waiting time 5-Inefficient work methods 6-Inventory 7-Unnecessary movement Inventory is necessary to avoid stock-out situations, which lead to machine downtime and which has serious consequences for productivity. Lead times and uncertainties of availability of materials make it mandatory to keep buffer stocks. The question is how much? Historic data and projections based on simulation or some other techniques help in optimizing this aspect. The reason why companies still build-up inventories is for the following reasons: 1-Customer service created inventory helps speed up delivery, thus meeting the need of the customer. An old customer trends to stay with you if you are able to give immediate delivery or he may be tempted to try a new supplier. 2-Ordering cost- frequent reordering increases the cost of procurement. Higher quantities may bring in entitlement for discounts. Further prices increases will not affect us. 3-In the shop floor longer runs lead to higher productivity and minimize the set up costs. 4-Labour and equipment utilization will be high as quantities produced per set up are high. 5-Transportation costs both inbound and outbound will be reduced. All the above are some of the reasons, why companies prefer to carry inventories. The only way to utilize this resource is to optimize. Optimization is a process where the resultant effect of all factors both cost increasing and decreasing elements in each of them is analyzed. Decisions are taken with some risks. Repeated implementation and study brings in organizational learning and improves the outcomes of subsequent decisions. Q2. Explain essentials of Project Management Philosophy?

a- Characteristic of project mindset:

1.

Time:

It is an important parameter in framing the right mindset. It is possible to improve the pace of the project by reducing the time frame of the process. The mindset is normally to work out a comfort mode by stretching the time limits. 2. Responsiveness: Responsiveness refers to quickness of response of an individual. The vibrancy and liveliness of an individual or an organization are proportional to its capabilities to respond to evolving processes and structure. 3. Information sharing: Information is power. Information is the master key to todays business. Information sharing is an important characteristic of the project mindset today. A seamless flow of information is the key to build a healthy mindset among various stakeholders in a project. 4. Processes: Project mindset lays emphasis on flexible processes. The major difference in a process and a system is in its capabilities of providing flexibility to different situational encounters. Flexible processes greater capabilities of adaptability. 5. Structured planning: Structured planning based on project management life cycle enables one to easily and conveniently work according to the plan. It also enables efficient use of project resources and prioritization of the activities based on resources planning. Hence, having a right mindset and flexible processes in place is very important for sound project management. b- Project evaluation and selection criteria: During project evaluation, the following nine criteria may be considered important: 1-Relevance: Is the project relevant to the defined scope in terms of the deliverable product and service?

2-State-of-the-art technical methodologies:

Check it the state-of-the-art methodologies are adequately described?

3-Relevance to market: Has any market analysis been done? Is there any documentation of the various market opportunities?

4-Creativity: Creativity is required to understand and develop a project as innovatively as possible and should be well described in its documents. The project objectives may be creatively quantified for its measurements Are the outcomes of each such objective task clearly defined?

5-Potential: Is there an adequate description of the project methodologies and its dissemination which would be used in future? Are the potential products or services of future identified?

6-Project management and work plan: Is there a project management and work plan? Are the roles and responsibilities of each project member clearly defined?

7-Effort Justification: Are the effort in-line with the work and the objectives to be achieved? Is there enough competence for doing research? Is there any value addition to the project?

Q3. Several different strategies have been employed to assist in aggregate planning. Explain these in brief? Several different strategies have been employed to assist in aggregate planning. The strategies are divided into two groups namely pure strategies and mixed strategies. a. Pure Strategies: Three focused or pure strategies are: Vary production to match demand by changes in employment (chase demand strategy):

This strategy permits hiring and layoff of workers as required. When the output is to be increased more workers are added and when the output is to be decreased, workers are removed. Produce at a constant rate and use inventories (level production strategy):

This strategy retains a stable work force producing at a constant output rate. Inventory can be accumulated to satisfy peak demands. Promotional programs may also be used to shift demand. However, by producing at a constant rate, it is possible that the entire demand is not met leading to sales loss in some periods while excess production results in inventory build-up in some cases. Produce with stable workforce but vary the utilization rate (stable work-force strategy):

This strategy retains a stable work force but permits overtime, part-time and idle time. Some versions of this strategy lead to a combination of back orders, subcontracting and use of inventories. This strategy avoids the detrimental effects of layoff and hence is seen as a stable strategy. Typically, information technology companies follow this strategy. b. Mixed strategies:

In mixed strategies, the aggregate planner has a wide variety of choices by mixing two or more strategies. The number of mixed strategies in alternative production plans is almost limitless. However, based on the realities of the situations, the number of practical solutions is limited. These can be evaluated on a trial-and-error basis to find which plan best satisfies the requirements, taking cost, employment policies, etc into account. Q4. Illustrate the different methods by which quality is sought to be achieved using various tools and techniques? Quantity control techniques are specific activities and procedures adopted using data, for determining a particular aspect of quality to arrive at decisions which are conclusive. Some of the quality control techniques are: 1. Quality at the source: The concept of quality makes the production worker responsible for inspecting his/her own work and for taking corrective actions. Every worker has the authority to stop production, if he/she finds some serious defect. This puts responsibility for quality on the workers and gives them pride in their work. This brings in cooperation and improves the achievement of quality. The information generated may be used to effect improvements at the suppliers end also. The entire process brings in openness, commitment, participation and helps in achieving quality. 2. Quality control tools: The most popular and widely used tools are called as 7 QC tools. 1) Flowchart: Flow chart is a visual representation of a 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, analyzed and methods for correction can develop using flow charts. The various steps include: a. Listing out the various steps or activities in a particular job. b. Classifying them as a procedure or a decision. Each decision point generates alternatives. Criteria and consequences that go with decisions are amenable to evaluate for purposes of assessing quality. The flow chart helps in pin-pointing the exact points at which errors have crept in. 2) Check sheet: Check sheets are used to record the number of defects, types of defects, locations at which they are occurring, times at which they are occurring, and workmen by whom they are occurring. The sheet keeps a record of the frequencies of occurrence with reference to possible defect causing parameters. It helps to implement a corrective procedure at the point where the frequencies are more 3) Histogram: Histograms are graphical representations of distribution of data. They are generally used to record huge volumes of data about a process. They reveal whether the pattern of distribution has a single peak, or many peaks and also the extent of variation around the peak value. This helps in identifying whether the problem is serious. The various types of visual patterns have been established along with relevant interpretations which help us to identify the problem. 4) Pareto analysis: Pareto analysis is a tool for classifying problem areas according to the degree of importance Pareto principle, verbally stated as "vital few; trivial many" is also called as 80-20 rule, because it is

observed that 80 percent of the problems that we encounter arise out of 20 percent of items. 5) Scatter diagram: Scatter diagram is used when we have two variables and want to know the degree of relationship between them. We can determine if there is a relationship between the variables and also the degree of extent over a range of values of the variables. Sometimes, we can observe that there is no relationship, in which we can change one parameter being sure that it has no effect on the other parameter. Further if there is a relationship between the variables, it also reveals the type of relation namely positive or negative. 6) Control charts: Control charts are used to verify whether a process is under statistical control. This means the process is subject to variations due to random causes and there are no variations due to assignable causes. Variables, when they remain within a range, will render the desired quality in the product and maintain the specifications. This is called the quality of conformance. The range of permitted deviations is determined by design parameters. Samples are taken and the mean and range of the variable of each sample (subgroup) is recorded. The mean of the means of the samples is taken as the central line, and deviations equal to three times the standard deviation corrected for sample size, are used to determine the control limits. The control above the mean line is called the Upper Control Limit (UCL) and the control limit below the mean line is called the Lowe Control Limit (LCL). Assuming normal distribution, we expect 99.97 percent of all values to lie within the Upper Control Limit (UCL) and Lower Control Limit (LCL) - corresponding to 3. The graphical representation of data helps in changing settings to bring back the process closer to the target. As long as all the plotted values taken from samples in chronological order fall within the control limits, the process is considered to be under control. If one or more points fall outside the control limits, the process is considered to be out of control and subject to variations due to assignable causes. In addition, the pattern of points whether; continuously raising or lowering, close to the central line, closer to the limits, five points continuously ascending or descending, clustering of points around central line or limits, erratic variation, and other such patterns, indicate that the process is not fully under control and hence demands investigation. Once the out of control signal is received the process stops and the investigation begins. It should be noted that based on sample size the limits are calculated using constants. 7) Cause and effect diagram: Cause and effect diagram represents all the possible causes which lead to a defect on quality characteristics. The effect is indicated at the end of the arrow and all the causes systematically categorized are indicated along branches and sub-branches. These are arranged in such a way that different branches representing causes connect the stem in the direction of the discovery of the problem. When each of them is investigated thoroughly we will be able to pin-point some factors which cause the problem. We will also observe that a few of them can have cumulative effect or even a cascading effect. 3. Acceptance sampling: In acceptance sampling method of quality control, the supplier and customer agree upon accepting a lot, by inspecting a small number taken randomly from the bulk supply. Acceptance sampling is also known as end of line inspection and categorizing the products based on sample based inspection. Q5. Explain the basic competitive priorities considered while formulating operations strategy by a firm? Operations strategy reflects the long-term goals of an organization in its corporate strategy. Operating advantages depend on its processes and competitive priorities considered while establishing the capabilities. The basic competitive priorities are: a- Cost:

Cost is one of the primary considerations while marketing a product or a service. Being a low cost producer, the product accepted by the customer offers sustainability and can outperform competitors. Lower price and better quality of a product will ensure higher demand and higher profitability b- Quality: Quality is defined by the customer. The operations manager looks into two important aspects namely high performance design and consistent quality. High performance design includes superior features, greater durability, convenience to services, etc where as consistent design measures the frequency with which the product meets its design specifications and performs best c- Time: Faster delivery time, on-time delivery and speedy development cycle are the time factors that operations strategy looks into. Faster delivery time is the time elapsed between the customer order and the delivery. On-time delivery is the frequency with which the product is delivered on time. The development speed is the elapsed time from the idea generation up to the final design and production of products. d- Flexibility Flexibility is the ability to provide a wide variety of products and it measures how fast the manufacturer can convert its process line used for one product to produce another product after making the required changes. The two types of flexibilities are: Customization:

Customization is the ability of the firm to satisfy the specific needs of each its customer. Volume flexibility:

The volume flexibility is the ability to accelerate or decelerate the rate of production to handle the fluctuations in demand. Q6. Explain briefly the four classification of scheduling strategies? Scheduling Strategies: Scheduling strategy differs from organization to organization as it depends on the quantum of production, size and type of production, company's policy, priorities, etc. Most of these strategies are concerned with job shop production since the problems encountered is more when more than one product is produced in the same plant. Following are the classifications: a- Detailed scheduling: All job orders from customers are scheduled to the last details. This may not be practical not be practical in case disruptions are there in production line like machine breakdown, absenteeism, etc. b- Cumulative scheduling: The customer orders are pooled to form a cumulative work load and then matched with the capacity. The work load is then allocated in such a way that immediate periods get allocated to maximum capacity. c- Cumulative-detailed scheduling: This combines both the earlier strategies of firm and flexible nature of work load. Cumulative work load projections can be used to plan for capacity as needed. As changes happen during the week, the materials and

capacity requirements are updated. The actual time allocated to the specified job at each work centre is as per the standard hours needed. This is turned further with the requirements of the master schedule. d- Priority decision rules: When a set of orders are to be executed, the question of prioritizing arises. These priority decision rules are scheduling guidelines used independently or in conjunction with any one of the above three strategies