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Published by Sanjeev Kumar
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Published by: Sanjeev Kumar on Mar 17, 2011
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ADL-61-Material Management-AM1
Assignment - A
Question 1. What do you understand by Vendor Development? How will you go aboutselecting and evaluating your vendors to ensure better performance? While explaining,draw examples from current practices in industry.Question 2. Why is Integrated Materials Management important? Support your answer with practical examples from an organisation you are familiar with and indicate in detailhow the objectives and functions of integrated materials management are being met inthis organisation.Question 3. Explain the Purchase Procedure and Purchase system with reference to goodpurchasing practices in industry. Support your answer outlining format of some keydocuments used in Purchasing. Take examples from existing practices in industry.Question 4. Phoenix General Hospital has experienced irregular, and usually increasing,demand for disposable kits throughout the hospital. The demand for a disposable plastictubing in pediatrics for September was 300 units and for October,350 units. The forecastfor September based on simple average of last year's demand was 200 units. Using asmoothing coefficient of 0.7, forecast the demand for disposable plastic tubing for November.Question 5. How can Materials Manager contribute to bringing about improvements inQuality, Productivity and Profitability? Explain in detail with specific examples.
Assignment - B
Question 1. The annual demand for component 'A' is 900 units. Cost of placing order isRs 100. Inventory carrying charge is 20%. The procurement price of component 'A'depends upon the quantity ordered as the supplier is willing to offer price breaks asunder:Price of component 'A' if order quantity upto 75 units --- Rs 200 per unitPrice of component 'A' if order quantityBetween 75 to 150 units --- Rs 180 per unitPrice of component 'A' if order quantityGreater than 150 units --- Rs 160 per unitDetermine the optimal order quantity for component 'A' and the total cost to beincluded per year. Show the relationship between the cost components and order quantityin a graph for the above case indicating the price breaks.Question 2. Calculate ordering cost and inventory carrying cost in the example givenbelow:
Purchasing department expenses Rs 200,000Stores personnel expenses Rs 200,000Obsolescence Rs 60,000Hire charges of warehouse Rs 140,000Material handling in stores Rs 160,000Cost of bill payment Rs 100,000Insurance charges 1%Interest charges 18%Orders placed per year 5000Average total inventory Rs 200 lakhsQuestion 3. With reference to an industry where you are working or you are familiar with, prepare a detailed outline of the stores system and procedures practiced in thatindustry. Describe the weaknesses in the system and what you would do as an incumbentMaterials Manager to overcome those weaknesses.
Case Study 
General Automobiles Ltd (GAL) is a large manufacturer of two wheelers in the country.Last year it produced more than 80,000 vehicles in three different models. Although GALassembles all the vehicles in its own plant, it does not manufacture the componentsrequired to assemble a two wheeler itself. In fact, only some of the critical componentsfor the engine and the transmission are manufactured by GAL itself and a large number of components are purchased from outside vendors.Hasti Precision Works (HPW) is one of the suppliers manufacturing and supplying smallpressed components to GAL. Last year, it supplied about 11,000 numbers of brackets for which GAL had six more suppliers. This bracket is used on all models of two wheelersmanufactured by GAL and so last year GAL must have bought close to 80,000 bracketsfrom all its vendors for this item. HPW currently charges Rs 15 per bracket to GAL. Mr Mehta of HPW has a suggestion for Mr Sen, the Purchase Manager to GAL. Mr Mehtathinks that if he is assured minimum order size of 40,000 nos he would buy a new die,which would be faster as well as of a higher precision and this would enable Mr Mehta tosupply these brackets to GAL only at Rs 13.50 per bracket.HPW is located very close to assembly plant of GAL. It has been supplying componentsto GAL for more than 7 years now. Mr Mehta himself is a quality engineer and hehimself looks after the day to day management of HPW. GAL has never had any major problem with HPW and in fact over the last 7 years, with the growth of HPW, itsbusiness with GAL has also grown steadily. The operation of GAL is heavily dependenton the timely availability of good quality components and that is why Mr Sen tries not todepend on a single supplier for all the items. HPW had a total turnover of Rs 50 lakhs.
1. What should Mr Sen do in regard to the proposal of Mr Mehta? State the reasonjustifying your suggestions.2. Comment on the nature of relationship between GAL and HPW, and what all shouldbe done for a better buyer seller relations.
Assignment - C 
1. If the material cost is 60% of sales turnover and profit margin is 6% of sales, whataction should be taken to increase profits by 10%:(a) Reduce material cost by 10%(b) Improve Quality by 5%(c) Reduce Material Cost by 1%(d) None of the above2. Effective materials management can improve productivity because:(a) Production volumes will increase as material will be available(b) Systems improvement will take place(c) Wastages will reduce(d) None of the above3. Effective materials management can increase profits because:(a) Market recession is getting over (b) Cost will reduce(c) Company will secure a larger market share(d) None of the above4. Centralisation of material function is desirable:(a) to reduce lead time(b) to give prompt service(c) to economise on procurement and overheads(d) none of the above5. 'A' category material must be handled by:(a) General Manager Materials(b) Purchase Officer (c) Stores Office(d) Finance Manager 6. Tick the item not required for Material Requirement Planning:(a) Bill of Materials using a product tree structure(b) Master Production Schedule(c) Lead time for supply(d) Value engineering

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