Master of Business Administration MBA Semester 2

MB0044 Production and Operation Management

(4 credits)
(Book ID: B1627)
ASSIGNMENT- Set 1
Marks 60

Roll No. 1208000294
Student Name: patil rasika somnath
Email Id:rasikapatil111.rp@gmail.com
Phone no: 9833172911
Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions

Q1. State the important considerations for locating an automobile plant.
Answer: all the resources have inherent potential of enabling the realisation of the goals of the
organisation. It is responsibility of the management to identify the strengths that all these factors have
and utilise them for achieving productivity.
Just in time philosophy, which focuses on balancing the system, considers the following 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.
The reasons 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 tends to stay with you if you are able to give immediate delivery or he may be
tempted to try anew supplier.
2. Ordering Cost frequent reordering increases the cost of procurement. Higher quantities may bring
in entitlement for discounts. Further price increase will not affect us.
3. in the shop floor longer runs leads to higher productivity and minimise the set up costs.
4. Labour and equipment utilisation 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
utilise this resource is to optimise. Optimisation is a process where the resultant effect of all factors
both cost increasing and decreasing elements in each of them is analysed.
Q2. Explain essentials of Project Management Philosophy.
Answer: characteristics of project mind set
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 organisation 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.
A seamless flow of information is a key build a healthy mindset among various stakeholders
in a project.
4. Processes: the major difference in a process and a system is in its capabilities of providing
flexibility to different situational encounters. Flexible processes possess 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.
Hence having a right mindset and flexible processes in place is very important for sound
project management.
Project evaluation and selection criteria
During project evaluation, the following nine criteria may be considered:
Relevance: Is the project relevant to the defined scope in terms of the deliverable
product and service?
State-of-the-art technical methodologies: check if the state-of-the-art
methodologies are adequately described?
Relevance to market: has any market analysis been done? Is there any
documentation of the various market opportunities?
Creativity: creativity is required to understand and develop a project. Are the
customers of each such objective task clearly defined?
Potential: are the potential products or services of future identified?
Effort justification: are the efforts in-line with the work and the objectives to be
achieved?

Q3. Several different strategies have been employed to assist in aggregate planning. Explain
these in brief.
Answer: The aggregate production plan is midway between short-range planning and long-
range planning. Aggregate planning includes the following factors:
1. Work force size and composition
2. Demand forecasts and orders
3. Raw material planning
4. Plant capacity management
5. Utilizing outside subcontractors
6. Inventory managemen
Aggregate planning is the link between short-term scheduling and long-term capacity
planning.
What are aggregate planning strategies?
There are three types of aggregate planning strategies:
Pure Strategy. In this strategy, only one production or supply factor is changed.
Mixed Strategy. This strategy simultaneously alters two or more production or supply factors
or some combination.
Level Scheduling. This strategy has been adopted by the Japanese and it embodies
maintaining constant monthly production schedules.
What aggregate planning strategies influence demand?
Aggregate planning can influence demand in the following ways:
1. Pricing strategies. Pricing can be used to increase or reduce demand. All things being
equal, increasing prices reduces demand while lowering prices will increase demand.
2. Advertising and promotion strategies. Advertising and promotion are pure demand
management strategies in that they can increase demand by making a product or service
better known as well as positioning it for a particular market segment.
3. Delayed deliveries or reserving orders. Managing future delivery schedules is a strategy for
managing orders when demand exceeds capacity. The net effect of delayed deliveries, or
back ordering, and reservations is to shift demand to a later period of time, often to a more
slack period, which provides a smoothing effect for overall demand. However, the negative is
that a percentage of orders will be lost as consumers are unwilling or unable to wait the
additional amount of time.
4. Diversifying the product mix. Product mix diversification is a method used to offset
demand seasonality. For example, a lawn mower manufacturing company may diversify into
snow removal equipment to offset the seasonality of the lawn mower industry.
What aggregate planning strategies influence supply?
Aggregate planning is also used to manage supply considerations by using the following
strategies:
1. Subcontracting (outsourcing). Subcontracting is a method of increasing capacity without
incurring large capital investment charges. It can turn the competitive advantage of other
corporations to the contracting organization`s advantage. However, subcontracting can be
costly, and also reveals part of the business to potential competitors.
2. Overtime and idle time. A direct short-term strategy for managing production capacity is to
either increase or decrease the number of the work force. This strategy has the advantage of
utilizing the currently existing work force. However, overtime is expensive and can produce
job burnout if relied upon too extensively. On the other hand, enforcing idle time on the work
force can result in resistance as well as a drop in morale.
3. Hiring and laying off employees. Hiring and laying off employees is a medium- to long-
term strategy for increasing or decreasing capacity. Hiring employees usually involves the
cost of training while laying off employees can incur severance charges. Laying off
employees can also cause labor difficulties with unions and reduce morale
4. Stockpiling inventory. Accumulating inventory is a strategy for smoothing variances which
may occur between demand and supply.
5. Part-time employees. Certain industries have seasonal requirements for lower skilled
employees. Aggregate planning can be used to manage these seasonal requirements.
What is the charting method of aggregate planning?
Charting is a highly utilized trial-and-error aggregate planning method. It is relatively simple
to use and is easily understood. Essentially, the charting approach uses a few variables in
forecasting demand, applying current production capacity. While the charting method does
not assure an accurate prediction, it is simple to implement requiring only minimal
calculations. But trial and error method does not provide an optimal solution.
The charting method requires five steps to implement:
1. Calculate each period`s demand.
2. Calculate each period`s production capacity for regular time, overtime, and subcontracting.
3. Determine all labor costs including costs for hiring and layoffs as well as the cost of
holding inventory.
4. Evaluate organizational employee and stock policies.
5. Create optional policies and evaluate their costs.

Q4. Illustrate the different methods by which quality is sought to be achieved using various tools
and techniques.
Answer:
The different methods by which quality is sought to be achieved using various tools and techniques
are as follows:
Quality control techniques
Quality control techniques are specific activities and procedures adopted using data, for determining a
particular aspect of quality to arrive at decisions which are conclusive. Each technique developed and
tested by senior personnel or consultants will be simple enough to be understood, implemented, and
interpreted by the personnel for their immediate use. The techniques to be used, the criteria to be
adopted and the way of interpreting data are handed over to them for use. Some of the quality control
techniques are:
Quality at the source
Quality control tools
Acceptance sampling
Quality at the source
The concept of quality makes the production worker responsible for inspecting his/her own work and
for taking corrective actions. Since inspection is done immediately after a job is done, finding the
cause of the error with clarity aids in faster rectification.
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. Help should always be
available from the quality control personnel to help workers understand the implications of the above
actions. 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.
Quality control tools
The most popular and widely used tools are called 7 QC tools. These include flow chart, check sheet,
histogram, pareto analysis, scatter diagram, control chart, and cause and effect diagram. These are the
basic seven quality control tools used for achieving or improving quality.
1. Flow chart 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, analysed, and methods for correction can be developed using flow
charts. The various steps include:
Listing out various steps or activities in a particular job.
Classifying them as a procedure or a decision.
Each decision point generates alternatives. Criteria and consequences that go with decisions
are amendable 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 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 and attending to the most important ones. 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. Pareto diagrams are
vertical bar charts drawn to indicate the extent of each category of problems in descending
order of magnitude of the problem. Typically Pareto diagrams are drawn both before and after
the quality initiative to visualise the improvement.

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 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 and 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 deviations 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 Lower 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.

7. Cause and effect diagram cause and effect diagram represents at 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 categorised 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.
Acceptance sampling: Acceptance sampling is also known as end of line inspection and
categorising the products based on sample based inspection. In acceptance sampling method of
quality control, the supplier and customer agree upon accepting a lot, by inspecting a small
number taken randomly from bulk supply. Out of the sample, if a small number as agreed
upon by the parties or as validated by a sampling scheme, is determined as defective, the lot is
accepted. Acceptance sampling is not quality improvement or correction, but only a way of
ensuring that the number of defectives is within a certain permitted number.

Q5. Explain the basic competitive priorities considered while formulating operations strategy by
a firm?
Answer: INTRODUCTION: operations strategy is the collective concrete actions chosen, mandated
or stimulated by corporate strategy. It is, of course, implemented within the operations function. The
operations strategy specifies how the firm will employ its operations capabilities to support the
business strategy. Operation advantages depend on its process and competitive priorities considered
while establishing the capabilities. The basic competitive priorities are:
Cost: cost is a primary consideration while marketing a product or service. A firm competing on a
price/cost basis is able to provide consumers with an in-demand product at a price that is
competitively lower than that offered by firms producing the same or similar good/service. Lower
price and better quality of a product will ensure and higher profitability. To estimate the actual cost of
production, the operations manager must address labour, materials, scrap generations, overhead and
other initial cost of design and development.
Quality: quality is defined by the customer. The operations manager mainly looks into two aspects
namely highly performance design and consistent quality. High performance design includes superior
features, great durability, and convenience to services where as consistent design measures the
frequency with which the product meets its design specifications and performs best.
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.
Flexibility: flexibility is the ability to provide a wide variety of products, and 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:
Customisation
Volume flexibility
While customisation is the ability of the firm to satisfy the specific needs of each its customer, the
volume flexibility is the ability to accelerate or decelerate the rate of production to handle the
fluctuations in demand.For example, the production of fertilisers of different specifications and
applications.

Q6. Explain briefly the four classification of scheduling strategies?
Answer: The four classification of scheduling strategies are:
1. Detailed scheduling: all job orders from customers are scheduled to the last details. This may
not be practical in case disruptions are there in production line like machine breakdown,
absenteeism, etc. (possible in airlines, hotels, etc)
2. Cumulative scheduling: the customer 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.
3. Cumulative-detailed combination: 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 tuned further with the requirements of the master
schedule.
4. Priority decision rules: when a set of orders are to be executed, the question of prioritising
arises. These priority decision rules are scheduling guidelines used independently or in
conjunction with anyone of the above three strategies.