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Q.1 What is value engineering? Explain the steps involved in Value analysis. Answer: Value Engineering (VE) or value analysis is a methodology by which we try to minimise the cost and improve the revenue of a product or an operation. The concept of value engineering originated during the Second World War. It was developed by General Electric Corporations (GEC). Value engineering has gained popularity due to its potential for gaining high Returns on Investment (ROI). This methodology is widely used in business reengineering, government projects, automakers, transportation and distribution, industrial equipment, construction, assembling and machining processes, health care and environmental engineering, and many others. Value engineering process calls for a deep study of a product and the purpose for which it is used such as the raw materials used, the processes of transformation, the equipment needed, and many others. It also questions whether what is being used is the most appropriate and economical. This applies to all aspects of the product. Steps of Value Analysis The steps of value analysis can be divided into the following four steps: 1. Data gathering 2. Analysis and valuation of functions 3. Idea generation and evaluation of substitutes 4. Implementation and regulation
Steps of value analysis
Let us now discuss each step of value analysis in detail. Step 1: Data gathering All relevant information concerned with the product and the parts that go to make it are collected. The concerns at this stage are the raw materials used, its dimensions, characteristics, availability, lead time, price, mode of transport, storage, and the rate of consumption. All questions regarding each of them are asked. The available information is recorded and when information is not available, tags can be attached for information gathering at a later date. No information should be considered unimportant or irrelevant. It will be advantageous to record the source of information. Classification will be helpful. Table depicts a brief about the key questions, techniques, and tasks that need to be performed in step 1.
and tasks that need to be performed in step 2. Table of Analysis and Valuation of Functions Phase Objective Key questions Analysis and valuation of functions Analyse function and costs What is the worth of the basic function? What is the worth of secondary functions? What are high cost areas? Can any function be eliminated? Techniques Evaluate by comparison Put costs on specifications and requirements Put costs on key tolerances and finishes Put costs on key standards Analyse costs Analyse functions Evaluate value of function/cost Evaluate project potential Select specific study areas Tasks . techniques. If there are many functions that any part has to perform – weightage may be given to each of them. They are categorised as basic functions and secondary functions. Considered with the cost of the part and the weight. Table depicts a brief about the key questions. each function gets a value attached to it.Table of Data Gathering Phase Objective Key questions Data gathering Gather information about the product What is the product? Who is best able to gather information? What must be known to gather information? Whom to ask for the information? Solicit ideas Identify low/value/high cost areas Record available information Tag non-available information Allocate resources Select product List the product parts Classify relevant information Question to gather information Record the available information Submit to the management Techniques Tasks Step 2: Analysis and valuation of functions The function of each part is listed. The description should be cryptic – two or three words.
techniques. Many times. Ideas are allowed to be submitted to the group for discussion. Table depicts a brief about the key questions.Step 3: Idea Generation and Evaluation of Substitutes Having collected the data and analysed them and knowing the relative importance of the functions. Facts are analysed and consensus arrived as to what can be attempted. the next step is to identify the material or process that is amenable to the application of value engineering. A few of them will turn out to be worth more detailed evaluation. brain storming is preferred. Table of Idea Generation and Evaluation of Substitutes Phase Objective Key questions Techniques Tasks Evaluation Evaluate alternatives How might each idea work? What might be the cost? Will each idea perform the basic function well? Choose evaluation criteria Refine ideas Put approximate probable cost on each main idea Evaluate by comparison Speculate on evaluation criteria Evaluate alternatives Select the best alternative . and tasks that need to be performed in step 3. Since there are a number of factors to be considered and to break away from the conventional thinking. Debates about suitability or disadvantage of any particular change envisaged are conducted. the existing material or process will be ideal and nothing needs to be done. But a discussion and decision about this confirms that the maximum value is being derived.
they should be considered. Teams are formed for each implementation and concerned persons are involved and educated about the impending change. The methodology adopted is on the lines of continuous improvement.Step 4: Implementation and Regularization The decision taken after evaluation is conveyed to the top management and clearances are obtained for implementation. Table of Implementation and Regularisation Phase Implementation Objective Implement alternatives Key questions Who is to implement change? How to amend present plans/contracts? Have all resources been allocated? Techniques Translate plan into action Overcome problems Monitor project Tasks Develop change document Implement approved alternatives Evaluate process . Table depicts a brief about the key questions. the change – material change or the process change becomes the new norm or standard for further operations. Their cooperation is necessary for the change to be effective. After successful implementation. If any small changes are necessary when a few trials are taken. techniques. and tasks that need to be performed in step 4.
There is a need to rectify these and make products or services perform up to the expected standard. Inspection of the manufacturing processes is of utmost importance in ensuring quality of performance. pareto analysis. Utilisation conditions – Utilisation conditions refer to the necessity of the customer being informed or trained so that.Q. Figure depicts the quality control tools. It may be improper use. unexpected or additional demands.2 Describe dimensions of quality. and on-site training by the manufacturers‟ personnel improve the perception of quality. Conformance to design – Conformance to design is the degree to which the manufactured product or delivered service meets the parameters that have been incorporated in the design. Since we are attempting to measure the same. dimensions. the purpose for which the product was made is realised by the customer in total. manuals. control chart. help-lines. Quality control tools The most popular and widely used tools are called as 7 QC tools. Dimensions of quality. thus enhancing the customer‟s satisfaction. It verifies that the variability in the process is within acceptable limits so as not to compromise the functionalities that the designer wanted. Instructions. The quality of the product is introduced by the design of these features. For designing a product. These include flow chart. The firm should put in place a system by which these possibilities are anticipated and attended to give customer satisfaction. Some of the features to be known for designing a product include – material. and cause and effect diagram. called dimensions of quality. the manufacturer or service provider should be aware of the specifications of different features required to incorporate in the product. check sheet. After sales service – There are so many reasons why products do not function to the expected levels. Which are the quality control tools? Answer Dimensions of quality Quality is inherent in the product or service that is rendered to the customer. histogram. Quality of design – A product is designed keeping in view the customers‟ requirement. improper assembly or even manufacturing defects. . This is an important. scatter diagram. and characteristics. but often neglected dimension of quality. we will look into those aspects of quality. These are the basic seven quality control tools used for achieving or improving quality.
The flow chart helps in pin-pointing the exact points at which errors have crept in. Table 7. locations at which they are occurring. Inspect Open Pack Open Inspect Reject Reject Sample Flow Chart 2) Check sheet .Quality Control Tools 1) Flow chart – Flow chart is a visual representation of a process showing the various steps. times at which they are occurring. Detailed data can be collected. analysed. Figure of a sample flow chart. The various steps include: Listing out the various steps or activities in a particular job Classifying them as a procedure or a decision Each decision point generates alternatives. The sheet keeps a record of the frequencies of occurrence with reference to possible defect causing parameters. It helps in locating the points at which a problem exists or an improvement is possible.1 depicts a sample check sheet. It helps to implement a corrective procedure at the point where the frequencies are more. Criteria and consequences that go with decisions are amenable to evaluate for purposes of assessing quality. . and methods for correction can be developed using flow charts. types of defects. and workmen by whom they are occurring.Check sheets are used to record the number of defects.
A check list is a special type of check sheet which enables to provide a set of standardised activities or actions to be taken up while performing a task and to ensure quality. the percentages are shown to demonstrate the relative contribution of each of the parameters. They are generally used to record huge volumes of data about a process. Sometimes. 100 90 80 FREQUENCY 70 60 50 40 30 20 10 0 A B C D E F 14 27 32 29 20 50 Sample Histogram Chart The values shown are the number of observations made regarding a quality parameter. 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. 3) Histogram – Histograms are graphical representations of distribution of data. They reveal whether the pattern of distribution has a single peak. Figure depicts a sample histogram chart. or many peaks and also the extent of variation around the peak value. . if need be. The column which shows days can be changed to observed by the hour.Table of Sample Check Sheet No. of Defects Day 1 2 3 4 5 1 2 3 4 5 6 // / // // /// // /// //// ////// //// ////// //// /// /// //// /// /// /// ///// //// // // / /// // /// // // /// // The table shows that the number of defects 1 and 5 are not many as compared to defect number 2 which increased over the days and appears to be stabilising at the higher side and therefore needs to be attended immediately.
VARIABLE 2 Fig. because it is observed that 80 percent of the problems that we encounter arise out of 20 percent of items.4) Pareto analysis – Pareto analysis is a tool for classifying problem areas according to the degree of importance and attending to the most important ones. if we find that. in a day. verbally stated as “vital few. This means the process is subject to variations due to random causes and there are no variations due to assignable causes. the . For example. This is called the quality of conformance. When the causes of these defects have been attended. Pareto principle. we are marching towards zero defects. we have 184 assemblies having problems and there are 11 possible causes. when they remain within a range. 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. Assuming normal distribution. As long as all the plotted values taken from samples in chronological order fall within the control limits. Typically Pareto diagrams are drawn both before and after the quality initiative to visualise the improvement. The mean of the means of the samples is taken as the central line. will render the desired quality in the product and maintain the specifications. Variables. It will be easy to focus on these 2 or 3 and reduce the number of defects to a great extent.97 percent of all values to lie within the Upper Control Limit (UCL) and Lower Control Limit (LCL) – corresponding to + graphical representation of data helps in changing settings to bring back the process closer to the target. Sometimes. that is. trivial many” is also called as 80-20 rule. we will observe that some other defect becomes predominantly observed and if the process is continued. we expect 99. Figure depicts a sample scatter diagram. 5) Scatter diagram – Scatter diagram is used when we have two variables and want to know the degree of relationship between them. it also reveals the type of relation namely positive or negative. of Sample Scatter Diagram We can see that the change in variable 2 does not have much effect on variable 1. The range of permitted deviations is determined by design parameters. 6) Control charts – Control charts are used to verify whether a process is under statistical control. 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). the effect on variable 2 is more. The other interpretation can be that for a small change in variable 1. Pareto diagrams are vertical bar charts drawn to indicate the extent of each category of problems in descending order of magnitude of the problem. Further if there is a relationship between the variables. Samples are taken and the mean and range of the variable of each sample (subgroup) is recorded. and deviations equal to three times the standard deviation corrected for sample size. 147 of them have been caused by just 2 or 3 of them. it is observed that 80 percent of them. are used to determine the control limits. 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.
The effect is indicated at the end of the arrow and all the causes systematically categorised are indicated along branches and sub-branches. indicate that the process is not fully under control and hence demands investigation. the pattern of points whether. erratic variation. Usually the causes are identified by brainstorming and by experimentation. Once the out of control signal is received the process stops and the investigation begins. we try to identify all possible sources of the causes of defects. These are arranged in such a way that different branches representing causes connect the stem in the direction of the discovery of the problem. clustering of points around central line or limits. When each of them is investigated thoroughly we will be able to pin-point some factors which cause the problem. Fig. and other such patterns. In addition. continuously raising or lowering. . Figure depicts a sample and cause effect diagram. It should be noted that based on sample size the limits are calculated using constants. closer to the limits. close to the central line. We make a study of each of them and try to correct it. We will also observe that a few of them can have cumulative effect or even a cascading effect. of Sample Cause and Effect Diagram When we observe that we have excessive defects from a machine. If one or more points fall outside the control limits. Figure of a control chart. five points continuously ascending or descending.process is considered to be under control. 7) Cause and effect diagram – Cause and effect diagram represents all the possible causes which lead to a defect on quality characteristics. the process is considered to be out of control and subject to variations due to assignable causes.
Each car entering into the service centre will follow the following steps: Arrival at office .Q. and other requirements. The major objectives of a good plant layout are: Reduced risk to health and safety of employees Improved morale and worker satisfaction Increased output Fewer production delays Savings in floor space . Hence this type of layout is also called as functional layout. and service Reduced inventory-in-process Shorter manufacturing time Reduced clerical work and indirect labor Easier and better supervision Less congestion and confusion Easier adjustment to changing conditions Facilitate the overall production process. Answer Objectives of layout The primary objective of plant layout is to increase productivity and also to ensure employee satisfaction and lowering the costs. There may be several departments or functional areas which are arranged based on space and technical requirements like number of persons working.3 What are the objectives of layout? Explain the classification of layouts. Minimize material handling costs Increase production throughout Effective utilization of available space Improve employee morale Utilize labor effectively Avoid unnecessary capital investment Provide flexibility Reduce in-process inventories Types of Layouts The four basic varieties of layouts for manufacturing facilities are: Process layout Product layout Group technology layout Fixed position layout 1. Consider a car service and repair centre. Process layout typically uses general purpose machines that can be changed over rapidly to new operations for different product designs. Process layout This type of layout is concerned with the grouping of machines. and service Reduced material handling Greater utilization of machinery. This grouping of machines by function is characteristic of job shops and batch type production facilities. process. or services according to their function. storage. number of vehicles coming on an average.production. machines installed. manpower.
. they are not flexible as they are specifically designed for making or assembling one product. Figure depicts the various machines in a component manufacturing layout. such as machining operations. focuses on the sequence of production or assembly operations required for manufacturing or assembling a part or a product. These layouts typically use specialized machines that are set up once to perform a specific operation for a long period of time on one product. Customer informs about the type of problem Front office guides the customer to drive the car to the required departments Car is given the necessary service Customer returns to front office and makes payment Car exits from the service centre Figure shows the various departments in a car service centre. It requires that each cell process is a family of parts that have many common characteristics. cement manufacturing. Component Manufacturing Layout 3 Group technology layout In group technology. These are used in mass or continuous production. The cell acts like a product layout which is land within a larger process layout environment. the parts can be produced in a different path through a cell much like a product layout. oil refining. Due to these common characteristics. similar machine set . Examples are automobile assembly.ups and common raw materials. 2 Product layout Product layout commonly referred to as 'line layout'. machines are grouped into a cell. Figure depicts the facilities arrangement in a group technology layout. In contrast to process layouts.
Discuss the role of forecasting in modern business context.4 List the benefits of forecasting. Well-trained experts and associations substantially invest in human resources and hence charge their clients for the service rendered. Hence. Because of improved accuracy and better judgment. Aircraft assembly. Q. large aircraft assembly. Answer Benefits from forecasts Forecasting basically helps to overcome the uncertainty about the demand and thus provides a workable solution. Thus. These layouts are used when a product is bulky. Hence. forecasting done in-house or carried out externally requires significant investments. heavy or fragile. more will be the cost of forecasting. higher the . it can be stated that forecasting helps to: als management Cost implications of forecasting Forecasting requires special efforts and involves inputs from experts which cost a lot to the companies. These minimise the amount of product movement required. the losses that would occur because of poor forecasting would decrease as more efforts are put in for forecasting. large. materials. Missile assembly. it can be said that more the efforts put for forecasting. ship construction and bridge construction are examples of fixed-position layouts. the product is located in a fixed position and all the resources like workers. no production function can be taken up.Facilities Arrangement in a Group Technology Layout 4 Fixed position layouts In this type of layout. machines and equipment's are transported to that location. Thus. Without the forecast.
this cost goes up with increase in the forecasting efforts.efforts. it is necessary that the forecasting effort has to be raised up to a level at which certain uncertainty is acceptable and hence. Further to account for the uncertainty and provide allowance.Forecast demand Figure show the process of forecasting and the associated factors. Figure show the forecasting – cost implications graphically. it is to be understood that to keep the total cost of forecasting to a minimum. there is preparedness for some possible loss. Decision making using forecasting Forecasts are always subject to uncertainty because of the changing environment and hence. However. lower will be the losses. On the other hand. the managerial decision makers adopt the following rule: Actual decision = Decision assuming forecasting is correct + Allowance for forecast error. Forecasting – Cost Implications From figure. it doesn‟t make sense to increase the effort to improve the accuracy of forecasting because the forecasts are subject to market dynamics and many other unpredictable parameters which will not be known or controllable. Keeping this in mind. For Production and example. how much of error can creep in the forecast? It is difficult to answer. Because effort is a direct function of forecasting. it is necessary that the forecast output contains two numbers as follows: 1) Best estimate of the demand + 2) Error Again the question. the error in forecast is easy to calculate once the actual demand is known. the government‟s import policy drastically affects the capacity and thus any industry hoping of increasing the demand and expanding the capacity will face a major threat and possible loss. Forecast Generation and Revision . Forecast error = Actual demand . any attempt to improve the forecast accuracy only increases the cost but not the accuracy.
pricing choices. Further. They are: Human resources Capacity Supply chain management Let us now discuss these three activities in detail. 3 Supply chain management Supply chain management refers to all the activities that enable the right product at the right place at the right price. Thus unnecessary investments are not made. Hence hiring. all depend on the anticipated demand. Therefore. However. Forecast influences three key activities. training is required apart from developing good relations with the existing workers. Forecast is very much required for all types of industrial activity and also for those industries which are purely in the service sector like healthcare and education. 2 Capacity Capacity refers to the ability to meet the demand in terms of resources and the preparedness on the part of the company. When fresh workers are hired anticipating a rise in the demand. and material options. 1 Human resources Typically. if the demand is showing a decline. it is expected that they can quickly get into the required job. When the demand is properly forecasted. It involves planning and management of the plant location. and other intermediaries to ensure the delivery of the product at the right time. and laying off workers. When the demand pattern is well recognized and indicates a rise. demand forecasting has to be done with utmost care to help identifying the vendors. the removed workers will spread the news. Similarly. Hence. and the industry will suffer due to bad reputation and poor image. Hence utmost care has to be taken while selecting the location. in turn.The role of forecasting in modern business context.5 Mention the significance of plant location decision. it is easy to plan for the suppliers. Answer Location identification for an organisation is an important strategic level decision taken by the top management. forecast is said to drive decisions in many business areas. Good forecasts are of critical importance in all aspects of a business: The forecast is the only estimate of demand until the actual demand becomes known. the number of persons required is a function of the production output which. if workers are removed. it sets a demoralising atmosphere. it signals a decrease in capacity. logistics. demand forecasting is vital. the capacity build up happens and ensures that there are no lost sales for want of product. On the other hand. training. depends on demand forecasting. Explain the location decision sequence. Both for capacity-lead and capacity-lag decisions. . Forecasting is required for: Production planning Financial planning Personnel planning Scheduling planning Facilities planning Process design and planning Q. Location decisions are strategic decisions that bind the organisation to a certain place.
when we have to deal with lands. Lands. While locating a plant. This trend in the recent times has lead to Indian companies being called by a new name. Since decisions have long term implications. the following long range forecasting needs are to be considered: The company‟s expansion plan and policy Diversification plan for the products Changing market conditions The changing sources of raw materials Many other factors that influence the choice of the location decision The main concern of the operations manager will be the extent of flexibility he/she has. furniture • Heavy machinery and equipment • Petroleum. and move to the site level after moving through regional level and the community level. . other industries may have varied degrees of flexibility. thorough analysis and involvement of senior managers from all departments is essential. followed by regional choices and finally community levels have to be selected. buildings and machineries are costly and once fixed cannot be moved easily. This means that. and machineries.Location decisions are made on the basis of parameters which make it suitable for various considerations of suppliers and markets. buildings. lumber and agriculture • Hospitality • Professional (legal. data gathering. especially. requires a lot of thought. therefore. computer) • Transportation and communication • Education and non-profit organisations • Governmental organisations • Medical and emergency services Location decision sequence Location decisions start from the national level. Planning. Flexibility in choice is obviously an advantage and a better decision can be taken. This can be determined by raising such questions like: What is the volume of production of different products? What operations have to be outsourced? How to deal with surge or decline in demand? What will be the growth potential in that place? Materials need to be stocked and moved to various locations for operations and today it is common to see plants being operated at multiple locations. and estimates for the future. chemical and plastics • Mining. first the country of choice is to be selected. Multi locations for manufacturing and distribution to exploit situations of supplier availability or market requirements are now a common practice among Indian companies. Before looking at the planning process Selecting a location to a large extent is governed by the flexibility factor based on the type of industry or service. While some industries are completely dependent upon the location for survival. „Indian MNCs‟. Flexibility in choice is high • Electronics and light manufacturing • Textile. These considerations are vital for the success of any firm. Location Planning Process Planning is the most important function of management.
when considered as a logical process model. some of them may run parallel. who is in possession of data at different nodes in the dataflow network that has been structured. . This allows the business oriented executives to be in control of the inputs. The process model is a representation of the business activities and is different from the technology dependent ones. It can be decomposed and meaningful names can be given to the details. Make sure that all relevant data is available for all the tasks 5. Establish a mechanism to indicate acceptance of the results after every task or process. The initial data collected has to be arranged in a logical manner so that. The logical process model improves control on the access to data. Establish controls and limit access to the data during process execution 3. A few of the logical modelling formats are as follows: Process descriptions with task sequences and data addresses Flow charts with various activities and relationships Flow diagrams Function hierarchies Function dependency diagrams Every business activity. Complexities arise when the process activities are not connected together. and different techniques and activities are used as part of the business process management discipline.6 What is meant by business process? Explain logical process modelling? Answer A business process is a process designed to achieve a particular business objective. Thus. links are made between nodes for making the workflow smooth. processes and outputs. Determine which task in the process is to be done and also the subsequent tasks in that process 4. Verb and noun form combinations can be used to describe each level. Make the relevant and appropriate data available for that task 6. we have a model that is singularly structured only for business activities. like re-work loops. Nouns give the name of the activity uniquely and are used for the entire model meaning the same activity. Business process is a total response that a business undertakes utilising the resources and delivering the outputs that create a value for the customer. The steps to be followed to make the work smoother are given as follows: 1. It also identifies.Q. Capture relevant data in detail to be acted upon 2. The business process: has a goal uses specific inputs delivers specific outputs collects resources performs a number of activities in some order creates value for the customer Logical process modelling Logical process modelling is the representation of putting together all the activities of business process in detail and making a representation of them. can be represented by a diagram. Logical process model consists of only the business activities and shows the connectivity among them. Computer programmes are also present in the total system. This is to have an assurance that flow is going ahead with accomplishments in the desired path Some of these activities may occur in a sequential order whereas. There may even be circular paths.
Figure the ways of representing logical process modeling .
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