Master of Business Administration-MBA Semester II

MB0044 – Production & Operations Management – 4 Credits

Assignment Set- 1

Q1. Explain in brief the origins of Just In Time. Explain the different types of wastes that
can be eliminated using JIT

Ans. Just in Time (JIT) is a management philosophy aimed at eliminating waste and
continuously improving quality. Credit for developing JIT as a management strategy goes to
Toyota. Toyota JIT manufacturing started in the aftermath of World War II.

Although the history of JIT traces back to Henry Ford who applied Just in Time principles to
manage inventory in the Ford Automobile Company during the early part of the 20th Century,
the origins of the JIT as a management strategy traces to Taiichi Onho of the Toyota
Manufacturing Company. He developed Just in Time strategy as a means of competitive
advantage during the post World War II period in Japan.

The post-World War II Japanese automobile industry faced a crisis of existence, and companies
such as Toyota looked to benchmark their thriving American counterparts. The productivity of
an American car worker was nine times that of a Japanese car worker at that time, and Taiichi
Onho sought ways to reach such levels.

Two pressing challenges however prevented Toyota from adopting the American way:

1. American car manufacturers made “lots” or a “batch” of a model or a component before

switching over to a new model or component. This system was not suited to the Japanese
conditions where a small market required manufacturing in small quantities.
2. The car pricing policy of US manufacturers was to charge a mark-up on the cost price.
The low demand in Japan led to price resistance. The need of the hour was thus to reduce
manufacturing costs to increase profits.

To overcome these two challenges, Taiichi Onho identified waste as the primary evil. The
categories of waste identified included

 overproduction
 inventory or waste associated with keeping dead stock
 time spent by workers waiting for materials to appear in the assembly line
 time spend on transportation or movement
 workers spending more time than necessary processing an item
 waste associated with defective items
Taiichi Onho then sought to eliminate waste through the just-in-time philosophy, where items
moved through the production system only as and when needed.

Q2. What is Value Engineering or Value Analysis? Elucidate five companies which have
incorporated VE with brief explanation.

Ans. Value Engineering (VE), also known as Value Analysis, is a systematic and function-
based approach to improving the value of products, projects, or processes.VE involves a team of
people following a structured process. The process helps team members communicate across
boundaries, understand different perspectives, innovate, and analyze.When to use itUse Value
Analysis to analyze and understand the detail of specific situations.Use it to find a focus on key
areas for innovation.

Use it in reverse (called Value Engineering) to identify specific solutions to detail problems.

It is particularly suited to physical and mechanical problems, but can also be used in other areas.

Quick X Long

Logical X Psychological

Individual X Group

How it works

Value Analysis (and its design partner, Value Engineering) is used to increase the value of
products or services to all concerned by considering the function of individual items and the
benefit of this function and balancing this against the costs incurred in delivering it. The task
then becomes to increase the value or decrease the cost.
Q3. Explain different types of Quantitative models. Differentiate between work study and
motion study.

Ans.  Quantitative models are needed for a variety of management tasks, including

(a) identi¯cation of critical variables to use for health monitoring,

(b) antici- pating service level violations by using predictive models, and

(c) on-going op- timization of con¯gurations.

Unfortunately, constructing quantitative models requires specialized skills that are in short
supply. Even worse, rapid changes in provider con¯gurations and the evolution of business
demands mean that quantitative models must be updated on an on-going basis. This paper de-
scribes an architecture and algorithms for on-line discovery of quantitativemodels without prior
knowledge of the managed elements. The architecture makes use of an element schema that
describes managed elements using the common information model (CIM). Algorithms are
presented for selecting a subset of the element metrics to use as explanatory variables in a
quantitative model and for constructing the quantitative model itself. We further describe a
prototype system based on this architecture that incorporates these algo-rithms. We apply the
prototype to on-line estimation of response times for

DB2 Universal Database under a TPC-W workload. Of the approximately 500 metrics available
from the DB2 performance monitor, our system chooses 3 to construct a model that explains
72% of the variability of response time.

In production and operations management, models refer to any simple representation of  reality in different
forms such as mathematical equations, graphical representation, pictorial representation, and physical models.
Thus a model could be the well known economic order quantity (EOQ) formula, a PERT network chart, a
motion picture of an operation, or pieces of strings stretched on a drawing of a plant layout to study the
movement of material. The models help us to analyze and understand the reality. These also help us to work
determine optimal conditions to for decision making. For example, the EOQ formula helps us to determine the
optimum replenishment quantities that minimize the cost of storing plus replenishing.The number of different
models we use in production and operations management run into hundreds, or even more than a thousand.
These are really too many to enumerate in a place like these. I am listing below a random list of broad
categories of models used in production and operations model.Operations research models. This is actually a
very broad classification and covers many of the other categories in the list given here.

 Inventory models
 Forecasting models
 Network models
  Linear programming models
 Queuing models
 Production planning and control models
 Engineering drawings
 Photographs and motion pictures used in time and motion studies.
 Material movement charts
 Process flow diagrams
 Systems charts
 Statistical process control charts.
 Variance analysis
 Regression analysis
 Organization chart
 Fishbone chart

Work study and motion study

Work study includes a wide field of measurement tools and techniques. Motion study or method study is
concerned with analyzing individual human motions (like get object, put object) with a view to improving
motion economy.

Q4. What is Rapid Prototyping? Explain the difference between Automated flow line and Automated
assembly line with examples.

Ans. Rapid prototyping is the automatic construction of physical objects using additive manufacturing
technology. The first techniques for rapid prototyping became available in the late 1980s and were used to
produce models and prototype parts. Today, they are used for a much wider range of applications and are even
used to manufacture production-quality parts in relatively small numbers. Some sculptors use the technology
to produce complex shapes for fine arts exhibitions.

Automated flow lines : When several automated machines are linked by a transfer system which moves the
parts by using handling machines which are also automated, we have an automated flow line. After completing
an operation on a machine, the semi finished parts are moved to the next machine in the sequence determined
by the process requirements a flow line is established. The parts at various stages from raw material to ready
for fitment or assembly are processed continuously to attain the required shapes or acquire special properties
to enable them to perform desired functions. The materials need to be moved, held, rotated, lifted, positioned
etc. for completing different operations.
Sometimes, a few of the operations can be done on a single machine with a number of attachments. They are
moved further to other machines for performing further operations. Human intervention may be needed to
verify that the operations are taking place according to standards. When these can be achieved with the help of
automation and the processes are conducted with self regulation, we will have automated flow lines
established. One important consideration is to balance times that different machines take to complete the
operations assigned to them. It is necessary to design the machines in such a way that the operation times are
the same throughout the sequence in the flow of the martial. In fixed automation or hard automation, where
one component is manufactured using several operations and machines it is possible to achieve this condition
– or very nearly. We assume that product life cycles are sufficiently stable to invest heavily on the automated
flow lines to achieve reduced cost per unit. The global trends are favouring flexibility in the manufacturing
systems. The costs involved in changing the set up of automated flow lines are high. So, automated flow lines
are considered only when the product is required to be made in high volumes over a relatively long period.
Designers now incorporate flexibility in the machines which will take care of small changes in dimensions by
making adjustments or minor changes in the existing machine or layout. The change in movements needed can
be achieved by programming the machines. Provision for extra pallets or tool holders or conveyors are made
in the original design to accommodate anticipated changes. The logic to be followed is to find out whether the
reduction in cost per piece justifies the costs of designing, manufacturing and setting up automated flow lines.
Group Technology, Cellular Manufacturing along with conventional Product and Process Layouts are still
resorted to as they allow flexibility for the production system. With methodologies of JIT and Lean
Manufacturing finding importance and relevance in the competitive field of manufacturing, many companies
have found that well designed flow lines suit their purpose well. Flow lines compel engineers to put in place
equipments that balance their production rates. It is not possible to think of inventories (Work
In Process) in a flow line. Bottlenecks cannot be permitted. By necessity, every bottleneck gets focused upon
and solutions found to ease them. Production managers see every bottleneck as an opportunity to hasten the
flow and reduce inventories. However, it is important to note that setting up automated flow lines will not be
suitable for many industries

Automated Assembly Lines : All equipments needed to make a finished product are laid out in such a way as
to follow the sequence in which the parts or subassemblies are put together and fitted. Usually, a frame, body,
base will be the starting point of an assembly. The frame itself consists of a construction made up of several
components and would have been ‘assembled’ or ‘fabricated’ in a separate bay or plant and brought to the
assembly line. All parts or subassemblies are fitted to enable the product to be in readiness to perform the
function it was designed to. This process is called assembly.
Methodologies of achieving the final result may vary, but the basic principle is to fit all parts together and
ensure linkages so that their functions are integrated and give out the desired output. Product Layouts are
designed so that the assembly tasks are performed in the sequence they are designed. You will note that the
same task gets repeated at each station continuously. The finished item comes out at the end of the line

The material goes from station 1 to 5 sequentially. Operation 2 takes longer time, say twice as long. To see
that the flow is kept at the same pace we provide two locations 2a and 2b so that operations 3, 4 an 5 need not
wait. At 5, we may provide more personnel to complete operations. The time taken at any of the locations
should be the same. Otherwise the flow is interrupted. In automated assembly lines the moving pallets move
the materials from station to station and moving arms pick up parts, place them at specified places and fasten
them by pressing, riveting, screwing or even welding. Sensors will keep track of these activities and move the
assemblies to the next stage. An operator will oversee that the assemblies are happening and there are no
stoppages. The main consideration for using automated assembly lines is that the volumes justify the huge
expenses involved in setting Up the system.
 Q5.Explain Break Even Analysis and Centre of Gravity methods. Explain Product layout and
process layout with examples.

Ans.  Break Even Analysis refers to the calculation to determine how much product a company must sell in
order to break even on that product. It is an effective analysis to measure the impact of different marketing
decisions. It can focus on the product, or incremental changes to the product to determine the potential
outcomes of marketing tactics. The formula for a break even analysis is:

Break even point ($) = (Total Fixed Costs + Total Variable Costs).
Total Variable Costs = Variable cost per unit x units sold
Unit contribution (contribution margin) = Price per unit – Variable cost per unit.

When looking at making a change to the marketing program, one can calculate the incremental break even
volume, to determine the merits of the change. This determines the required volume needed such that there is
no effect to the company due to the change. If making changes to fixed costs (changing advertising
expenditure etc.):

Incremental break even volume = change in expenditure / unit contribution. Thus if a company increased its
advertising expenditure by $1 million, and its unit contribution for the specific product is $20, then the
company would need to sell an additional 50,000 units to break even on the decision.
If making changes to the unit contribution (change in price, or variable costs):
Incremental break even volume = (Old Unit Volume x (Old Unit Contribution – New Unit Contribution)) /

New Unit Contribution Thus if a company increased its price from $15 to $20, and had variable costs of $10, it
is increasing its unit contribution from $5 to $10, assume also an old unit volume of 1 million. It could
therefore reduce its volume by 500,000 to break even on the decision.
When making changes to a specific product, cannibalization of other products may occur. To calculate the
effect of cannibalization, the Break Even Cannibalization rate for a change in a product is:
New Product Unit Contribution / Old Product Unit Contribution.

New Product is the planned addition to a product line (or change to a product within a product line), Old
Product is the product that loses sales to the new product (or the product line that loses sales). The
cannibalization rate refers to the percentage of new product that would have gone to the old product, this must
be lower than the break even cannibalization rate in order for the change to be profitable.

In manufacturing, facility layout consists of configuring the plant site with lines, buildings, major facilities,
work areas, aisles, and other pertinent features such as department boundaries. While facility layout for
services may be similar to that for manufacturing, it also may be somewhat different—as is the case with
offices, retailers, and warehouses. Because of its relative permanence, facility layout probably is one of the
most crucial elements affecting efficiency. An efficient layout can reduce unnecessary material handling, help
to keep costs low, and maintain product flow through the facility.

Firms in the upper left-hand corner of the product-process matrix have a process structure known as a jumbled
flow or a disconnected or intermittent line flow. Upper-left firms generally have a process layout. Firms in the
lower right-hand corner of the product-process matrix can have a line or continuous flow. Firms in the lower-
right part of the matrix generally have a product layout. Other types of layouts include fixed-position,
combination, cellular, and certain types of service layouts.

PROCESS LAYOUT

Process layouts are found primarily in job shops, or firms that produce customized, low-volume products that
may require different processing requirements and sequences of operations. Process layouts are facility
configurations in which operations of a similar nature or function are grouped together. As such, they
occasionally are referred to as functional layouts. Their purpose is to process goods or provide services that
involve a variety of processing requirements. A manufacturing example would be a machine shop. A machine
shop generally has separate departments where general-purpose machines are grouped together by function
(e.g., milling, grinding, drilling, hydraulic presses, and lathes). Therefore, facilities that are configured
according to individual functions or processes have a process layout. This type of layout gives the firm the
flexibility needed to handle a variety of routes and process requirements. Services that utilize process layouts
include hospitals, banks, auto repair, libraries, and universities.

Improving process layouts involves the minimization of transportation cost, distance, or time. To accomplish
this some firms use what is known as a Muther grid, where subjective information is summarized on a grid
displaying various combinations of department, work group, or machine pairs. Each combination (pair),
represented by an intersection on the grid, is assigned a letter indicating the importance of the closeness of the
two (A = absolutely necessary; E = very important; I = important; O = ordinary importance; U = unimportant;
X = undesirable). Importance generally is based on the shared use of facilities, equipment, workers or records,
work flow, communication requirements, or safety requirements. The departments and other elements are then
assigned to clusters in order of importance.

Advantages of process layouts include:

 Flexibility. The firm has the ability to handle a variety of processing requirements.
 Cost. Sometimes, the general-purpose equipment utilized may be less costly to purchase and less costly
and easier to maintain than specialized equipment.
 Motivation. Employees in this type of layout will probably be able to perform a variety of tasks on
multiple machines, as opposed to the boredom of performing a repetitive task on an assembly line. A
process layout also allows the employer to use some type of individual incentive system.
  System protection. Since there are multiple machines available, process layouts are not particularly
vulnerable to equipment failures.

Disadvantages of process layouts include:

 Utilization. Equipment utilization rates in process layout are frequently very low, because machine
usage is dependent upon a variety of output requirements.
 Cost. If batch processing is used, in-process inventory costs could be high. Lower volume means
higher per-unit costs. More specialized attention is necessary for both products and customers. Setups
are more frequent, hence higher setup costs. Material handling is slower and more inefficient. The span
of supervision is small due to job complexities (routing, setups, etc.), so supervisory costs are higher.
Additionally, in this type of layout accounting, inventory control, and purchasing usually are highly
involved.
 Confusion. Constantly changing schedules and routings make juggling process requirements more
difficult.

PRODUCT LAYOUT

Product layouts are found in flow shops (repetitive assembly and process or continuous flow industries). Flow
shops produce high-volume, highly standardized products that require highly standardized, repetitive
processes. In a product layout, resources are arranged sequentially, based on the routing of the products. In
theory, this sequential layout allows the entire process to be laid out in a straight line, which at times may be
totally dedicated to the production of only one product or product version. The flow of the line can then be
subdivided so that labor and equipment are utilized smoothly throughout the operation.

Two types of lines are used in product layouts: paced and unpaced. Paced lines can use some sort of conveyor
that moves output along at a continuous rate so that workers can perform operations on the product as it goes
by. For longer operating times, the worker may have to walk alongside the work as it moves until he or she is
finished and can walk back to the workstation to begin working on another part (this essentially is how
automobile manufacturing works).

On an unpaced line, workers build up queues between workstations to allow a variable work pace. However,
this type of line does not work well with large, bulky products because too much storage space may be
required. Also, it is difficult to balance an extreme variety of output rates without significant idle time. A
technique known as assembly-line balancing can be used to group the individual tasks performed into
workstations so that there will be a reasonable balance of work among the workstations.

Product layout efficiency is often enhanced through the use of line balancing. Line balancing is the assignment
of tasks to workstations in such a way that workstations have approximately equal time requirements. This
minimizes the amount of time that some workstations are idle, due to waiting on parts from an upstream
process or to avoid building up an inventory queue in front of a downstream process.
Advantages of product layouts include:

 Output. Product layouts can generate a large volume of products in a short time.
 Cost. Unit cost is low as a result of the high volume. Labor specialization results in reduced training
time and cost. A wider span of supervision also reduces labor costs. Accounting, purchasing, and
inventory control are routine. Because routing is fixed, less attention is required.
 Utilization. There is a high degree of labor and equipment utilization.

Disadvantages of product layouts include:

 Motivation. The system’s inherent division of labor can result in dull, repetitive jobs that can prove to
be quite stressful. Also, assembly-line layouts make it very hard to administer individual incentive
plans.
 Flexibility. Product layouts are inflexible and cannot easily respond to required system changes—
especially changes in product or process design.
 System protection. The system is at risk from equipment breakdown, absenteeism, and downtime due
to preventive maintenance.
Q6. Explain Juran’s Quality Trilogy and Crosby’s absolutes of quality. List out the pillars
of Total Productive Maintenance.

Ans: Juran’s quality triology:

Juran uses his famous Universal Breakthrough Sequence to implement quality programmers’.
The universal breakthrough sequences are:

. Proof of need: There should be a compelling need to make changes.

. Project identification. Here what is to be changed is identified. Specific projects with time
frames and the resource allocation are decided.

. Top management commitment: Commitment of the top management is to assign people and
fix responsibilities to complete the project.

. Diagnostic journey: Each team will determine whether the problems result from systemic
causes or are random or are deliberately caused. Root causes are ascertained with utmost
certainty.

. Remedial action: This is the stage when changes are introduced. Inspection, testing and
validation are also included at this point.

. Holding on to the gains: The above steps result in beneficiary results. Having records or all
actions and consequences will help in further improvements. The actions that result in the
benefits derived should be the norm for establishing standards

Juran has categorized cost of quality into four categories:

1. Failure cost – Internal: These are costs of rejections, repairs in terms of material,
labour, machine time and loss of morale.
2. Failure costs- External: These are costs of replacement, on-site rework including spare
parts and expenses of the personnel, warranty costs and loss of goodwill.
3. Appraisal costs: These are costs of inspection, including maintenance of records,
certification, segregation costs and others.
4. Prevention costs: Prevention cost is the sequence of three sets of activities, Quality
Planning, Quality Control, and Quality Improvement, forming the triology to achieve
Total Quality Management.
Juran’s argument says that:

 Quality is the result of good planning considering the needs of both internal and external
customers and develops processes to meet them. The processes are also planned to meet
them.
 Quality is built into the system of manufacture, inputs and processes that are on stream
like raw material, spare parts labour, machine maintenance, training, warehousing,
inspection procedures, packaging, and others. All these have to follow standards and
control exercises to make sure that mistake do not occur often and that if mistakes do
occur then they are corrected at the source.
 Quality improvement measures are essential to keep the quality culture alive. Newer
methods will be found, some operations can be eliminated, improved technology
available. In short, as experience is gained things can always be done better.It is for the
management to take the initiative and encourage the employees to be on the lookout for
opportunities for improvement.

Crosby’s absolutes of quality:

Like Deming, Crosby also lays emphasis on top management commitment and responsibility for
designing the system so that defects are not inevitable. He urged that there be no restriction on
spending for achieving quality. In the long run, maintaining quality is more economical than
compromising on its achievement. His absolutes can be listed as under:

 Quality is conformance to requirements, not ‘goodness’

 Prevention, not appraisal. Is the path to quality
 Quality is measured as the price paid for non-conformance and as indices.
 Quality originates in all faction. There are no quality problems. It is the people, designs,
and processes that create problems.

Crosby also has given 14points similar to those of Deming. His approach emphasizes on
measurement of quality, increasing awareness, corrective action, error cause removal and
continuously reinforcing the system, so that advantages derived are not lost over time. He opined
that the quality management regimen should improve the overall health of the organization and
prescribed a vaccine. The ingredients are:

 Integrity: Honestly and commitment help in producing everything right first time, every
time
 Communication: Flow of information between departments, suppliers, customers helps
in identifying opportunities.
 Systems and operations: These should bring in a quality environment so that nobody is
comfortable with anything less than the best.
Total Productive Maintenance (TPM)

Maintenance is a function in any operations system. Maintenance keeps the equipments in good
condition. Generally equipments deteriorate because usage causes wear to the parts introducing
inaccuracies on the products made on them. When the deterioration produces components which
exceed the permitted deviations rendering them unacceptable, maintenance is undertaken to
bring back the machine to produce acceptable components. Sometimes the failure is sudden and
serious and the equipment stops working. Disruption of production and emergency repair work
are costly and schedules are missed causing delays in supplies and consequent losses. These
breakdowns occur because the equipment was carrying hidden defects which were not apparent.
All these are attended to by the maintenance department. Historical record indicates the
probability of failures over different periods thus enabling us to plan to attend to them. With
progress in automation, we have costly equipments. We have flow lines and any one machine
breaking down causes a series of machines to be idle. So, we have to move towards zero
breakdowns like we want to move towards zero defects by implementing TQM tools.

TPM puts the responsibility of maintenance where it belongs to and the operator who uses the
equipment. It is a companywide activity which involves all the people. The main thrust is
eliminating all break downs. The focus is on the operating personnel because they would know
about malfunctioning earlier and more than anybody else. They work on the machine and are
aware of the slightest variations that occur and thus should be able to plan to remove the cause
before it becomes serious. So every planned maintenance activity reduces the probability of a
breakdown. Ownership of the operation and machine increases the commitment of the workman.
Autonomy is the starting point for learning and excellence. The worker can suggest better ways
of improving quality, productivity and design. This helps in continues improvement. Team work
and participation improves the quality culture. The principles of 5S – the housekeeping activities
which improve efficiency at workplace is considered a measurable standard to aid the
implementation of TPM even in the office rooms.