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MB0044 Production and Operations Management Assignment Set - 1 Q1. Explain briefly the Computer Integrated Manufacturing.

. Computer Integrated Manufacturing Integration occurs when a broad range of manufacturing and supporting activities are linked. Activities include engineering design, production planning, shop control, order processing, material control, distribution etc. Information flow across all functions takes place with the help of computers. Transmission, processing, distribution and feed back happen almost in real time so that intended activities are conducted rapidly. This process helps in rapid production and also reduce indirect costs. As response times decrease, customer satisfaction increases resulting in better business. CIM helps in avoiding accumulation of materials resulting in better throughput and better utilization of space. Bar coded labels that accompany materials contain instructions for processing them which are read by sensing devices and display the status on monitors. This information is available to all concerned personnel responsible in planning, marketing etc. so that they will be aware of the status of any order and if expediting is needed to meet deadlines, they will be able to seek intervention. Identifying shortages, ensuring faster deliveries becomes easy with CIM. One of the keys to success in the manufacturing business is to lessen errors and to enhance productivity. The more one can produce with fewer flaws, the more one can make at the bottom line. Over a period of time factory owners have integrated computer systems in order to streamline the production process. CAD, or computer aided design, has been able to aid the operators in the formulation and blueprints of more sophisticated products and technology. CAM, or computer aided manufacturing, has offered the means by which to produce the more sophisticated items. CAM also enhances the productivity of the factory's output. Together the CAD and CAM systems reduce cycle times, enhance productivity, and aid in the streamlining of the overall production process. Since the 1980's CAD and CAM have worked together to move from the idea phase to the application phase. This process has not ceased because of the implication. The factory sector has slowly been phasing in computer integrated manufacturing, or CIM over the years. This integration will allow for the digital information and computer control of the production process to be intertwined throughout and within the factory. In the CIM system some processes will be different. Data entry will now be stored in hard drives. This will allow for the manipulation and the retrieval of the data with a simple keystroke. The means by which the processing of data into the production of products will also be streamlined within hardware and software. This will allow operators to alter and enhance programs in order to improve products. The CIM system will also provide the necessary algorithms to bring all the data together. The data will then be able to intermingle with the sensor and modification components of the system.

While the CIM system is the optimal choice to aid in the manufacturing process, it does come with a unique set of challenges. The greatest challenge is to get all the different machines within the factory to work on the same system. In the typical factory, there are a variety of machines that perform different tasks, that are made by a variety of suppliers. The issue is to get every one of these machines to accept the programming, and tasks from one mainframe computer. The second challenge of the CIM system is encapsulated within the data itself. While many operators may be lost on the actual production floor, there will be a need for operators to maintain the integrity of the data that is transmitted to the machines. The challenge is in acquiring competent individuals who can assure that all the data within the system is at its optimum operating integrity. The third, and final challenge that has been encountered in the use of the CIM system is process control. This entails assuring that the whole process runs smoothly. This particular challenge ties the data entry people, the programmers, and the production operators together. The factory will need to assure that the individuals working with the system throughout the factory are competent and knowledgeable. These individuals will need to be well trained, and probably need to update their training periodically. The goal of the CIM system is to eliminate the waste within the manufacturing process. This is done by taking the design, analysis, planning, purchasing, cost accounting, inventory control and distribution departments and interlink them with the factory floor, material handling, and management departments. The CIM system will have an impact on every system within the factory. The CIM system, which is sometimes referred to as the integrated computer aided manufacturing system, operates on both hard and software. Simply put, the software is what runs the factory, or the brains. The hardware is what makes the machines run, or the muscles. The CIM system runs on an efficient output process. This means that the whole factory works together, not as separate parts. As a unified unit, it operates for the peak benefit of the whole factory. Simply put, the CIM system does not backload or store up work. It does not warehouse products. The CIM system keeps work flowing through computer integration in order to keep all the parts of the system constantly functioning. It registers all the raw material received by the factory. It then walks the material through the factory and the production process. The CIM system fractions every individual "center" of the factory into work cells. As work cells, they are then divided into individual stations. The stations are then broke down to the individual processes, and the processes are what metamorphosizes the raw materials into actual products. This may seem complicated, but it streamlines the whole manufacturing process. With each division of the factory broken down in such a manner, it allows operators to make any necessary changes to the system without shutting down the whole system. Cim is a very interactive, hands on system. If it is applied correctly, it will enhance the productivity of the whole factory. It will link several departments and functions together. It is simple to install. It usually is installed through a LAN, or local area network, connection.

Q2. What is automation? What are the kinds of automation? Answer: For services, automation usually means labour saving devices In education, long distance learning technology helps in supplementing class room instruction. The facilitating goods that are used are web site and videos. Automation in the banking sector has resulted in ATMs which save the banks a huge amount of labour and it is found to have given greater customer satisfaction. Automation is ideal when the service provided or the product manufactured is highly standardized. Some extent of automation can be designed even with customization i.e. product or service s meant to produce or deliver low volumes specific to a requirement. The advantage of automation is it has low variability and will be more consistent on a repetitive basis. On the shop floor variability causes loss of quality. There are three kinds of automation fixed, programmable and flexible. By its very nature, fixed automation is rigid. They are designed for high volume production and their rigidity ensures less variability. They are not amenable to change in product or process. They need minimal human intervention. The machines have sensing and control devices that enable them to operate automatically. The simplest of them called machine attachments they replace human effort. They guide, locate, move and achieve relative positions by means of cams, optical sensing, load sensing mechanisms and activate the controls to remove human intervention. Numerically controlled machines read instructions and convert them to machine operations. Computer/s are used for controlling one machine or a number of them and they have programme written into them for operations. They are Computer Numerically Controlled or, for short, CNC machines. Robots are higher in the order of automation as they perform a variety of tasks. They are designed to move materials by holding them in their arms and make precise movements according to programmers written into the computers that reside in them. They simulate human actions. They can grip and hold tools and with the help of sensors which are sensitive to touch and force to know that the material is to be held with the requisite pressure for the conduct of operations. Vision sensors are used for inspection, identification and guidance. They use optics based instruments to gather data and feed them to the computers for activating the other parts of the robot. With the help of automation, inspection of components can be done 100% which ensures highest quality Identification and movement of materials are helped by bar codes which are read and fed into the system for monitoring quantity, location, movement etc. They help the automated systems to sort information and provide information for effecting any changes necessary. To make effective use of automated machines, we need to have the movement of materials from and to different stations as also stores, automated. Automated Storage and Retrieval Systems ASRS receive orders for materials from anywhere in the production area, collect materials and deliver materials to the workstations. Computers and information systems are used for placing orders for materials, give commands, adjusts inventory records which show the location and quantity of materials available/needed. Continuous updation gives a clear picture for all concerned to enable them initiate action to keep the throughput smooth. Automated Guided Vehicle Systems AGVS are pallet trucks and unit load carriers follow embedded guide wires or paint strips to reach destinations as programmed.

Q3. What are the factors that influence the plant location? Answer: Factors influencing Plant Location can be broadly divided into two types namely: general factors and special factors (See Figure below Factors influencing plant location). Figure: Factors influencing plant location The factors influencing plant location. 1. General factors The general factors that influence the plant location are listed below (See Figure General factors influencing plant location).

1. Availability of land: Availability of land plays an important role in determining the plant location. Many-a-time, our plans, calculations and forecasts suggest a particular area as the best to start an organisation. However, availability of land may be in question. In such cases, we will have to choose the second best location. 2. Availability of inputs: While choosing a plant location, it is very important for the organisation to get the labour at the right time and raw materials at good qualities. The plant should be located: Near to the raw material source when there is no loss of weight At the market place when there is a loss of weight in the material Close to the market when universally available, so as to minimise the transportation cost 3. Closeness to market places: Organisations can choose to locate the plant near to the customers market or far from them, depending upon the product they produce. It is advisable to locate the plant near to the market place, when: The projection life of the product is low The transportation cost is high The products are delicate and susceptible to spoilage After sales services are promptly required very often The advantages of locating the plant near to the market place are: Consistent supply of goods to the customers Reduction of the cost of transportation

4. Communication facilities: Communication facility is also an important factor which influences the location of a plant. Regions with good communication facilities viz. Postal and Tele communication links should be given priority for the selection of sites. 5. Infrastructure: Infrastructure plays a prominent role in deciding the location. The basic infrastructure needed in any organisation are: Power: For example, industries which run day and night require continuous power supply. So they should be located near to the power stations and should ensure continuous power supply throughout the year. Water: For example, process industries such as, paper, chemical, and cement, requires continuous water supply in large amount. So, such process industries need to be located near to the water. Waste disposal: For example, for process industries such as, paper and sugarcane industries facility for disposal of waste is the key factor. 6. Transport: Transport facility is a must for facility location and layout of location of the plant. Timely supply of raw materials to the company and supply of finished goods to the customers is an important factor. The basic modes of transportation are by Air, Road, Rail, Water, and Pipeline. The choice of location should be made depending on these basic modes. Cost of transportation is also an important criterion for plant location. 7. Government support: The factors that demand additional attention for plant location are the policies of the state governments and local bodies concerning labour laws, building codes, and safety. 8. Housing and recreation: Housing and recreation factors also influence the plant location. Locating a plant with the facilities of good schools, housing and recreation for employees will have a greater impact on the organisation. These factor seems to be unimportant, but have a difference as they motivate the employees and hence the location decisions. 2. Special factors The special factors that influence the plant location are: 1. Economic stability outside investments 2. Cultural factors 3. Wages 4. Joint ventures support of big time players

Q4. Describe the seven basic quality control tools. QC Tools The following seven are considered basic tools for achieving quality. a) Flow Chart b) Check sheet c) Histogram d) Pareto Analysis e) Scatter Diagram f) Control Chart g) Cause and Effect Diagram a) Flow Chart It is a visual representation of 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. A sample is shown below. List out the various steps or activities in a particular job. Classify them as a procedure or a decision. Each decision point generates alternatives. Criteria and Consequences that go with decision are amenable to evaluation for purposes of assessing quality. The flow chart helps in pinpointing the exact at which errors have crept in. A simple chart is shown below.


b)Check Sheet These are used to record the number of defects, types of defects, locations at which they are occurring, times at which they are occurring, workmen by whom they are occurring. It keeps a record of the frequencies of occurrence with reference to possible defect causing parameter. It helps to implement a corrective procedure at the point where the frequencies are more, so that the benefit of correct will be maximum. A sample sheet shown below.

DAY DEFECT 1 2 3 4 5 1

/ /// /// ///// // 2 / //// The table shows that the number of defects/// and 5 are not many as compared to defect no 2 which 1 //// increased over the days and appears to be stabilizing at the higher side and therefore needs to be /// attended immediately. The column which shows days can be changed to observed by the hour, if 3 need be. c) 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 peak and also the extent of variation around the peak value. //// This helps in identifying whether the problem is serious. When used in conjunction with comparable // parameters, the visual patterns help us to identify the problem which should be attended to. // 4 // c) Pareto Analysis This is a tool for classifying problem areas according to the degree of //// importance and attending to the most important. Pareto principle, also called 8020 rule, states that /// 80 percent of the problems that we encounter arise out of 20 percent of items. If we find that, in a // day, we have 184 assemblies having problems and there are 11 possible causes, it is observed that // 80 per cent of them i.e. 147 of them have been caused by just 2 or 3 of them. It will be easy to focus 5 on these 2 or three and reduce the number of defects to a great extent. /// ////// /// / /// 6 // //// /// /// //

When the cause of these defects have been attended, we will observe that some other defect becomes predominantly observed and if the process is continued, we are marching toward zero defect. d) Scatter Diagram These are used when we have two variables and want to know the degree of relationship between them. We can determine if there is cause and effect relationship between and its extent over a range of values. Sometimes, we that there is no relationship, in which we can change one parameter being sure that it has no effect. e) Control Charts These are used to verify whether a process is under control. Variables when they remain within a range will render the product maintain the specifications. This is 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 gives the control lines. Assuming normal distribution, we expect 99.97 per cent of all values to lie within the UCL corresponding to 3 s Upper Control Limit and LCL Lower Control Limit. The graphical representation of data helps in changing settings to bring back the process closer to the target. f) Cause and Effect Diagram This is a diagram in which all possible causes are classified on quality characteristics which lead to a defect. 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 pinpoint some factors which cause the problem. We will also observe that a few of them will have cumulative effect or even a cascading effect.

Q5. Define project management. Describe the five dimensions of project management. Definition of Project Management Managing a project is the practice of controlling the use of resources, such as cost, time, manpower, hardware, and software involved in the project. It usually starts with a problem statement and ends with delivery of a complete product .Project management involves understanding the scope and various processes in a project cycle. Some of the other definitions of project management are shown below. Project management is the complete set of tasks, techniques, and tools applied during project execution. DIN 69901 (German Organisation for Standardisation) Project management is the application of knowledge, skills, tools, and techniques to project activities to meet project requirements. PMBOK (Project Management Body of Knowledge, defined by Project Management Institute (PMI)) Project management can be considered to have five dimensions which are necessary to be managed. The dimensions are a)Features b) Quality c) Cost d) Schedule e) Staff These dimensions are independent of one another. If you add staff, the schedule may shorten and the cost will increase. The tradeoffs among these five dimensions are not linear. For each project, we need o decide which dimensions are critical and how to balance the others so as to achieve the key project objectives. Each of the five dimensions can take one of three roles on any given project: A driver, a constraint or a degree of freedom A driver is a key objective of the project. A constraint is the limiting factor beyond the control of project team. Any project dimension that is neither a driver nor a constraint becomes a degree of freedom. A constraint gives the project team virtually no flexibility, a driver has low flexibility and a degree of freedom provides wider latitude to balance that dimension against the other four. An important aspect of this model is not which of the five dimensions turn out to be drivers or constraints on any given project, but that the relative priorities of the dimensions be negotiated in advance by the project team, customers and management. A graphical way to depict these points is to use a Kiviat diagram. A kiviat diagram is a graph which allows us to plot several values (five, in this case) as an irregularly shaped polygon on a set of normalized axes. The position of each point on its axis indicates the relative degree of flexibility of that dimension for a particular project. It is plotted on an arbitrary scale of 0 10 0 would indicate completely constrained and 10 would indicate completely flexible. The kiviat graph is a useful tool in project management to compare the relative flexibility of the parameters considered.

Q6. What is meant by Supply Chain Management (SCM)? What are the objectives of SCM? Supply chain management is considered by many experts worldwide as the ultimate solution towards efficient enterprise management. Many management failures have been attributed to lack of a system to bind various subsystems within a geographically wide spread enterprise which true to modern trends, also includes an umbrella of customers, suppliers and associates. Managers of tomorrow are therefore expected to raise themselves above the level of perpetual crisis management to one of proactive, predictive and performance oriented management. Need and objectives: SCM is required by and Enterprise as a tool to enhance management effectiveness with the following organizational objectives: 1. Reduction of inventory 2. Enhancement of participation level and empowerment level 3. Increase in functional effectiveness of existing systems like ERP, Accounting Software and Documentation like Financial reports/ Statements/ ISO 9000 Documents etc. 4. Effective integration of multiple systems like ERP, communication systems , documentation system and secure 5. Design / R&D systems etc. 6. Better utilization of resources men, material, equipment and money. 7. Optimization of money flow cycle within the organization as well as to and from external agencies. 8. Enhancement of value of products, operations and services and consequently, enhancement of profitability. 9. Enhancement of satisfaction level of customers and clients , supporting institutions , statutory control agencies, suppliers and vendors , employees and executives. 10. Enhancement of flexibility in the organization to help in easy implementation of schemes involving modernization, expansion and diversification even divestments, mergers and acquisitions. 11. Enhancement of coverage and accuracy of management information systems.

MB0044 Production and Operations Management Assignment Set - 2 Q1. What is productivity? Write a brief note on capital productivity. Answer: Production Management encompasses all activities which go into conversion of a set of inputs into outputs which are useful to meet human needs. It involves the identification of the requisite materials, knowledge of the processes, installation of equipments necessary to convert or transform the materials to products. The quantities to be produced have to be ascertained, processes established, specifications detailed out, quality maintained and products delivered in time to meet the demands. Decisions need to be taken about the location of the facility, variety of machineries required to be installed, technologies to be deployed, recruitment of workforce with adequate training to perform the tasks to achieve productivity with utmost efficiency. Constraints on resources and competition demands that optimization be obtained in all functions at all levels. Different materials will have to be procured, stored, transported inside the organisation for transformation using processes. Information flows throughout the cycle to instruct, to monitor and to control the processes to establish relevant costs and look for opportunities for continuous improvement. All these functions generate their own subsystems which will help in establishment of accountability and recognition of performance necessary for improvement. Strategies at various levels will have to be formulated with appropriate implementation procedures established with checks and balances. Flexibility will have to be designed into the system to take care of fluctuations in the market both for purchased items as well as the demand. Technological changes have to be accommodated both as challenges and opportunities for development to be abreast of the global environment. Capital Productivity Capital deployed in plant, machinery, buildings and the distribution system as well as working capital are components of the cost of manufacture and need to be productive. Demand fluctuations, uncertainties of production owing to breakdowns and inventories being created drag the productivity down. Therefore, strategies are needed to maximize the utilization of the funds allotted towards capital. Adapting to new technologies 1. Outsourcing Strategies When capacity requirements are determined it will be easy to determine whether some goods or services can be outsourced so that the capital and manpower requirements can be reduced and the available capacities are used to augment core competencies thus reducing the cost of the product or service to the customer. However, the following factors may restrict outsourcing (a) Lack of expertise the outsourced firm may not have the requisite expertise to do the job required

(b) Quality considerations Loss of control over operations may result in lower quality. This is a risk that the firm gets exposed to. (c) Nature of demand When the load is uniform and steady, it may not be worthwhile to outsourcing. Absence of spervisaion and control may be a hindrance to meet any urgent requirements of the customer. This affects the business especially if no production facilities are built in the organization (d) Cost When the fixed costs that go along with making the product does not get reduced considerably 2. Methods Improvement Methods Improvement starts with Methods analysis focus of this process is how a job is done breaking it down to elemental tasks so that they are amenable for analysis.. This is done for both running jobs and new jobs. For a new job, the description becomes the input for analysis. For current jobs, the analyst depends on observations, records and suggestions of the persons involved in the job. When improved methods are suggested, they are implemented and records created for assessing the consequences of the methods improvement procedures. The analyst should involve all concerned persons in the process so that acceptance becomes possible and opportunities open up for further improvements. Moreover, the people actually involved would be interested in improving their productivity and will help the analyst in the process. 3. Balancing of Workstations Assembly lines necessitate out stringing together workstations which carry out operations in a sequence so that the product gets completed in stages. Since the workflow has to be uniform and operations may require different periods for completion the necessity of Line Balancing is felt. Capacities at workstations and the workforce to man are so adjusted that a product in the process of assembly almost approximately the same amount of time. 4. Rationalization of Packaging Methods With logistics becoming an important function of the supply chain and outsourcing becoming the norm, packaging has become an important aspect, packaging has become important . Space is at a premium and therefore stacking and storing have to more scientific. Movements inside the premises from one location to another location are being done with automated systems and they need that the packaging systems are designed for safe transit, continuous monitoring both for quantities and operations. In case of outsourced products the materials used and their design should facilitate reuse of the same which brings in economy.

5. Quality Circles Kaoru Ishikawa is generally considered to have promoted the concept of Quality Circles. It is well known that he is the originator of fishbone diagrams to identify the root cause of any problem. The causes for the existence of a problem are classified as pertaining to the material, processes or method or any factor that goes into production. The matter is further investigated and pursued till the exact cause is determined. Quality circles use these principles in solving problems. The teams select projects selected on the above basis and implement actions to achieve improvement in the processes with a view to improve quality. Since these activities are carried out without affecting the regular day to day work and involve little involvement of the managers, team work gets reinforced and results in continuous improvement in methods and quality. The capital deployed is minimal, if at all, and therefore productivity is enhanced.

Q2. Describe briefly the automated flow lines. 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 semifinished 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

Q3. What is meant by Total Quality Management? Mention the 14 points of Demings approach to management. TQM is viewed from many angles as a philosophy, as an approach and journey towards excellence. The main thrust is to achieve customer satisfaction by involving everybody in the organisation across all functions with continuous improvement driving all activities. TQM systems are designed to prevent poor quality from occurring. The following steps are implemented to achieve Total Quality. a) Take all measures to know what the customer wants voice of the customer. Develop methods that generate facts which can be used for decision making. Do not ignore the internal customer the next person in the process. b) Convert the wants into design specifications, that meet or exceed customer expectations. c) Processes are to be designed so that they facilitate doing the job right the first time. Incorporate elements that make it impossible to make mistakes. It is called failsafing or fool proofing. The Japanese call it Pokayoke. d) Keeping record of all occurrences, procedures followed and consequences. They help in validating the processes so that continuous improvement becomes possible. More importantly any gaps can be seen and rectified immediately. One of the basic tenets of TQM is just because something is working well improvement is not necessary. The search must be continuous to find ways and means to improve every aspect of the business process finance, operations and management. Complacency should never be allowed to creep in at any time. In this aspect, culture plays an important role. All these require top management commitment Deming Wheel: Demings approach is summarised in his 14 points. 1. Constancy of purpose for continuous improvement 2. Adopt the TQM philosophy for economic purposes 3. Do not depend on inspection to deliver quality 4. Do not award any business based on price alone 5. Improve the system of production and service constantly 6. Conduct meaningful training on the job 7. Adopt modern methods of supervision and leadership 8. Remove fear from the minds of everyone connected with the organisation 9. Remove barriers between departments and people 10. Do not exhort, repeat slogans and put up posters. 11. Do not set up numerical quotas and work standards 12. Give pride of workmanship to the workmen 13. Education and training to be given vigorously 14. State and exhibit top managements commitment for quality and productivity

Using the above principles, Deming gave a four step approach to ensure a purposeful journey of TQM. The slope is shown to indicate that if efforts are let up the programme will roll back. Plan means that a problem is identified, processes are determined and relevant theories are checked out. Do means that the plan is implemented on a trial basis. All inputs are correctly measured and recorded. Check means that the trials taken according to the plan are in accordance with the expected results. Act When all the above steps are satisfactory regular production is started so that quality outcomes are assured

Q4. Describe briefly the Project Monitoring and control. Project Monitoring and Control Any project aimed at delivering a product or a service has to go through phases in a planned manner in order to meet the requirements. It is possible to work according to the project plan only by careful monitoring of the project progress. It requires establishing control factors to keep the project on the track of progress. The results of any stage in a project, depends on the inputs to that stage. It is therefore necessary to control all the inputs and the corresponding outputs from a stage. A project manager may use certain standard tools to keep the project on track. The project manager and the team members should be fully aware of the techniques and methods to rectify the factors influencing delay of the project and its product. The methodology of PERT (Programme Evaluation Review Technique) and CPM (Critical Path Method) may be used to analyze the project. In the PERT method one can find out the variance and use the variance to analyze the various probabilistic estimates pertaining to the project. Using the CPM one can estimate the start time and the finish time for every event of the project in its WBS (Work Breakdown Structure). The analysis charts can be used to monitor, control, track and execute a project. The various steps involved in monitoring and controlling a project from start to end are as follows 1. 1. Preliminary work the team members understand the project plans, project stage schedule, progress controls, tracking schedules, summary of the stage cost and related worksheets. All the member have to understand the tolerances in any change and maintain a change control log. They must realize the need and importance of quality for which they have to follow strictly a quality review schedule and frequently discuss on the quality agendas. They must understand the stage status reports, stage end reports, stage end approval reports. 2. Project Progress The members must keep a track of the project progress and communicate the same to other related members of the project. They must monitor and control project progress, through the use of regular check points, quality charts, statistical tables, control the quality factors which are likely to deviate from expected values as any deviation may result in changes to the stage schedule. The project manager ensures that these changes are made smoothly and organizes review meeting with the project management group. 3. Stage Control The manager must establish a project check point cycle. For this suitable stage version control procedures may be followed. The details are to be documented stage wise. Project files have to be frequently updated with suitable version control number and revision status should be maintained for each change. Team members are identified who will exercise controls at various points of the project. 4. Resources Plan the resources required for various stage of the project. Brief both the project team and the key resources about the objectives of every stage, planned activities, products, organization, metrics and project controls.

5. Quality Control This is very important in any project. Quality control is possible if the project members follow Schedule Quality Review It is recommended that quality review be scheduled at the beginning of the stage and also ending of every stage. Agenda for quality review create and distribute a quality review agenda specifying the objective, products, logistics, roles, responsibilities and time frame. Conduct quality review the quality review is to be conducted in a structured and formal manner. Quality review should focus on product development and its quality factors. Focus on whether it meets the prescribed quality standard . Follow up QR complete product status revised from In progress to QR Complete. Follow up the actions planned in strict manner which ensures conformity to the standards. Review quality control procedures verify that the quality objectives for each product are appropriate and that all participants are satisfied both with the process and its outcome.

6. Progress Control Monitor Performance: The team members log in details of actual start date, actual finish date, actual hours worked per task, estimated hours to complete the task, elapsed time in hours to compete the task, any miscellaneous costs incurred during a stage. These inputs become the base to monitor the performance of the project and its stages. Update ScheduleUpdate the schedule for actual start date for tasks started, actual finish date for tasks finished, actual hours worked per task, latest estimated work in hours to complete the task. Update costs Update the stage cost summary worksheet with actual costs incurred this period, estimated remaining costs. Miscellaneous costs will be automatically updated from the scheduler, since they are calculated from actual work. Replan stage scheduleReview the tracking Gantt and Cost workbook and identify any deviation from the baseline. Establish why the deviation has occurred. Refer back to the project control factors to help determine the appropriate corrective action and adjust the schedule accordingly. Determine if the stage has exceeded the progress, cost and quality tolerance levels agreed with the project management team. Review status of open issues and determine any further action required on these issues. Review the status of any outstanding quality reviews Review any new change requests. Conduct team status review Conduct a status meeting with the project team. Items for discussion are achievements this period planned activities that are incomplete or overdue, activities for the next period, new issues identified this period, issues closed this period, summary of results of quality reviews , summary of schedule and cost status, suggested revisions to the plan. Create status report The status report provides a record of current achievement and immediate expectations of the project. The status has to be effectively communicated to all interested parties. Create Flash report summarize the accomplishments for the month, schedule status, upcoming tasks for the month and any major issues. Distribute to the project team and project management team Project Status Reports the status report provides a record of current achievements and

immediate expectations of the project.

A weekly status report includes: Accomplishments during the period Items not completed during the period Proposed activities for the next period Any predicted slippage to the stage schedule, along with cause and corrective action. Any predicted cost overrun along with cause and corrective action. 7) Approvals Project stage reviews and the decisions taken and actions planned need to be approved by the top management. The goals of such review are to improve quality by finding defects and to improve productivity by finding defects in a cost effective manner. The group review process includes several stages like planning, preparation and overview a group review meeting and rework recommendations and followup.

Q5. Write a brief note on Just-In-Time (JIT). JIT can be considered to be a philosophy of manufacturing founded on the principles of elimination of all waste and thereby increasing productivity. When the philosophy is applied at workplace, the approach results in providing parts in just right quantities at the right time. This results in economy of material and time thus lowering the costs and increasing productivity. Since no extra parts are available, production of only good parts is forced on the system. JIT has been extended to mean continuous improvement. These principles are being applied to engineering, purchasing, accounting and data processing also. We will see how JIT helps in implementing Lean Production systems. In these days when technology is able to provide us with highly accurate equipments which have high capacities and the business has become global meaning that both suppliers and customers are widely accessible. To remain competitive, cost efficiencies have become compulsory. JIT helps in this process. It is extended to the shop floor and inventory systems of the vendors also. One of the main challenges for JIT is frequent changes in production schedules owing to the changes in demand. This causes the procurements plans to change. In the present day scenario where most manufacturing concerns depend upon a number of suppliers, who in turn may outsource parts and services, disruptions have a cascading effect. However, there is a limit to the agility that a company can build into the system. Communication right through the supply chain helps in reducing inventories and keep the flow lines smooth. Success of JIT depends upon a lot of preparation and committed implementation. Characteristics of JIT JIT considers elimination of waste as fundamental to any processes. Shigeo Shingo an authority on JIT at Toyota classifies them as under: 1. Over Production The extra parts or products may not be needed or may not be available when needed. So, it is a waste. 2. Waiting Time The operator, the machine or the part will not be either working or worked upon. The duration of waiting is unproductive and may create more serious consequences. 3. Movement Any unnecessary movement is a waste of energy; causes blockages disrupting movements and delaying the flow of other items creating delays. 4. Process Some steps in the process may not be necessary to arrive at the required stage. It is waste of all the inputs that go into the process. 5. Inventory Excess procurement or production builds up stock of materials which are not immediately used, thus locking space, funds carrying heavy costs. 6. Effort and movement The people who work do not make a study as to how these are utilized in realizing the purpose for which they are made. Both, again use up resources which are not available when needed.

7. Defective Products these are produced using the same equipments, workmen and the time that would be used to make good products. Thus defective products use up resources and result in losses. Since these wastes have to be eliminated, a thorough study how they occur and what steps would result in their elimination is of paramount importance.

Q6. What is value engineering? Explain its significance. Value Engineering / Value Analysis has gained importance in todays manufacturing field because of the necessity of making all components as economically as possible. Every unnecessary component, every unwanted operation has to be eliminated for economizing. Materials may have to be changed, tolerances in manufactures relaxed because value can be created in terms of reduced volume, increased strength or longer service. Involving the supplier and utilizing his knowledge and experience are crucial for its success. Value Engineering / Value Analysis Basically it is a methodology by which we try to find substitutes for a product or an operation. It can be conducted both internally and externally. The concept took shape during the Second World War. The thinking process calls for a deep study of a product the purpose for which it is used, the raw materials used, the processes of transformation, the equipment needed etc. and question whether what is being used is the most appropriate and economical. This applies to all aspects of the product. For example, let us consider a component needs a round brass rod as raw material in size 21.5 mm. Diameter. It has seven operations cutting, drilling, chamfering boring. milling, plating and polishing. Value analysis considers all aspects of each of these and investigates whether any of them can substituted by another material, a different size, a different tool, a different machine, a different cot sequence, a different tool for an operation, a different chemical, a different concentration, a different voltage, shorter time or processing. Studies can be conducted to verify whether any operation can be eliminated. Simplification of processes reduces the cost of manufacture. Every piece of material and the process should add value to the product so as to render the best performance. Thus there is an opportunity at every stage of the manufacturing and delivery process to find alternatives which will increase the functionality or reduce cost in terms of material, process and time. It should be remembered that we are not seeking a cost reduction sacrificing quality. It has been found that there will be an improvement in quality when systematic value engineering principles are employed. Relevance of VE in modern manufacturing Modern manufacturing can be seen from two important perspectives. One is the management approach which consists of TQM, JIT, Kanban, concurrent engineering, Lean Manufacturing, TPM, Group Technology, Cellular Manufacturing and others. These have basic philosophies based on which techniques, tools and methodologies are developed. To aid the process, we have computers and softwares written to collect data, process them, distribute them and analyse them. We have Management Information Systems which help in decision making. Optimisation at every level looks into the aspects of cost and benefit. Modern machines like automatic machines, Special Purpose Machines, Robots are built to high produce highly accurate components at greatly reduced costs. New materials and processes have resulted in great advances in the variety of products available to large numbers of people. With globalisation procurement and distribution are being conducted over great distances. The main thrust is on quality, timely delivery at the least price. These are the values that we put in the product.

Value Analysis looks at the manufacturing activities with a view to make the components simpler,processes faster and the products better. Since huge investments on the machines, it is mandatory that every component/part used is made as economically as possible. Fabrication, erection and installation being costly and have long term implications, assessment of utility of the materials used and processes adopted is important. In the manufacturing activities power drives many machine elements with respect to one another to obtain the transformation on the materials that result in becoming parts. Using machines with appropriate capabilities in terms of power, voltage, distances moved, lifting and placing them all provide opportunities for value analysis. Modifications may be made to effect savings.

MB0045 Financial Management Assignment Set- 1 Q.1 Show the relationship between required rate of return and coupon rate on the value of a bond. The relation between the required rate of interest (K ) and coupon rate on the value of a bond are displayed below.

When required rate of interest (K ) is equal to the coupon rate, the intrinsic value of the bond is equal to its face value.

When required rate of interest (K ) is greater than the coupon rate, the intrinsic value of the bond is less than its face value.

When required rate of interest (K ) is lesser than the coupon rate, the intrinsic value of the bond is greater than its face value.

Number of years of maturity When required rate of interest (K ) is greater than the coupon rate, the discount on the bond declines as maturity approaches.

When required rate of interest (K ) is less than the coupon rate, the premium on the bond declines as the maturity increases.

Example To show the effect of the above, consider a case of a bond whose face value is Rs. 100 with a coupon rate of 11% and a maturity of 7 years. If Kd is 13%, then, V0 = I*PVIFA (K , n) + F*PVIF (K , n) = 11*PVIFA (13%, 7) + 100*PVIF (13%, 7) = 11*4.423 + 100*0.425 = 48.65 + 42.50 = Rs.91.15
d d

After 1 year, the maturity period is 6 years, the value of the bond is V0 = I*PVIFA (K , n) + F*PVIF (K , n) = 11*PVIFA (13%, 6) + 100*PVIF (13%, 6) = 11* 3.998 + 100*0.480
d d

= 43.98 + 48 = Rs. 91.98. We see that the discount on the bond gradually decreases and value of the bond increases with the passage of time as required rate of interest (Kd) is higher than the coupon rate. Continuing with the same problem above, let us see the effect on the bond value if the required rate is 8%. If K is 8%, V0 = I*PVIFA (K , n) + F*PVIF (K , n) = 11*PVIFA (8%, 7) + 100*PVIF (8%, 7) = 11*5.206 + 100*0.583 = 57.27 + 58.3 = Rs. 115.57
d d d

One year later, with K at 8%,


V0 = I*PVIFA (K , n) + F*PVIF (K , n) = 11*PVIFA (8%, 6) + 100*PVIF (8%, 6) = 11*4.623 + 100* 0.630 = 50.85 + 63 = Rs. 113.85
d d

For a required rate of return of 8%, the bond value decreases with passage of time and premium on bond declines as maturity approaches

Q2. What do you understand by operating cycle? The time gap between acquisition of resources and collection of cash from customers is known as the operating cycle. Operating cycle of a firm involves the following elements. Acquisition of resources from suppliers Making payments to suppliers Conversion of raw materials into finished products Sale of finished products to customers Collection of cash from customers for the goods sold The five phases of the operating cycle occur on a continuous basis. There is no synchronization between the activities in the operating cycle. Cash outflows occur before the occurrences of cash inflows in operating cycle. Cash outflows are certain. However, cash inflows are uncertain because of uncertainties associated with effecting sales as per the sales forecast and ultimate timely collection of amount due from the customers to whom the firm has sold its goods. Since cash inflows do not match with cash out flows, firm has to invest in various current assets to ensure smooth conduct of day to day business operations. Therefore, the firm has to assess the operating cycle time of its operation for providing adequately for its working capital requirements. Operating cycle = IC period + RC period IC period = Inventory conversion period RC period = Receivables conversion period Inventory conversion period is the average length of time required to produce and sell the product. Inventory Conversion period = (Average Inventory * 365) / Annual Cost of goods sold Receivables conversion period is the average length of time required to convert the firms receivables into cash. Receivables conversion period = Average Accounts Receivables *365 / Annual Sales Accounts payables period is also known as payables deferral period. Accounts payables period = Average Creditors / Purchases per day (Payables deferral period)

Purchases per day = Total Purchases for year / 365 Cash conversion cycle is the length of time between the firms actual cash expenditure and its own cash receipt. The cash conversion cycle is the average length of time a rupee is tied up in current assets. Cash Conversion Cycle is CCC = ICP + RCP PDP CCC = Cash Conversion Cycle ICP = Inventory Conversion Period RCP = Receivables Conversion Period PDP = Payables deferral period

Q3. What is the implication of operating leverage for a firm? Operating leverage is associated with the asset purchase activities, while financial leverage is associated with the financial activities. However, combined leverage is the combination of operating leverage and the financial leverage. Operating leverage arises due to the presence of fixed operating expenses in the firms income flows. A companys operating costs can be categorized into three main sections as shown in figure fixed costs, variable costs and semi-variable costs.

Classification of operating costs Fixed costs

Fixed costs are those which do not vary with an increase in production or sales activities for a particular period of time. These are incurred irrespective of the income and value of sales and generally cannot be reduced. For example, consider that a firm named XYZ enterprise is planning to start a new business. The main aspects that the firm should concentrate at are salaries to the employees, rents, insurance of the firm and the accountancy costs. All these aspects relate to or are referred to as fixed costs. Variable costs Variable costs are those which vary in direct proportion to output and sales. An increase or decrease in production or sales activities will have a direct effect on such types of costs incurred. For example, we have discussed about fixed costs in the above context. Now, the firm has to concentrate on some other features like cost of labour, amount of raw material and the administrative expenses. All these features relate to or are referred to as Variable costs, as these costs are not fixed and keep changing depending upon the conditions. Semi-variable costs Semi-variable costs are those which are partly fixed and partly variable in nature. These costs are typically of fixed nature up to a certain level beyond which they vary with the firms activities. For example, after considering both the fixed costs and the variable costs, the firm should concentrate on some-other features like production cost and the wages paid to the workers which act at some point of time as fixed costs and can also shift to variable costs. These features relate to or are referred to as Semi-variable costs.

The operating leverage is the firms ability to use fixed operating costs to increase the effects of changes in sales on its earnings before interest and taxes (EBIT). Operating leverage occurs any time a firm has fixed costs. The percentage change in profits with a change in volume of sales is more than the percentage change in volume. As operating leverage can be favorable or unfavorable, high risks are attached to higher degrees of leverage. As DOL considers fixed expenses, a larger amount of these expenses increases the operating risks of the company and hence a higher degree of operating leverage. Higher operating risks can be taken when income levels of companies are rising and should not be ventured into when revenues move southwards. The applications of operating leverage are as follows: Business risk measurement Production planning Measurement of business risk Risk refers to the uncertain conditions in which a company performs. A business risk is measured using the degree of operating leverage (DOL) and the formula of DOL is: DOL = {Q(SV)} / {Q(SV)F} Greater the DOL, more sensitive is the earnings before interest and tax (EBIT) to a given change in unit sales. A high DOL is a measure of high business risk and vice versa. Production planning A change in production method increases or decreases DOL. A firm can change its cost structure by mechanising its operations, thereby reducing its variable costs and increasing its fixed costs. This will have a positive impact on DOL. This situation can be justified only if the company is confident of achieving a higher amount of sales thereby increasing its earnings.

Q4. Explain the factors affecting Financial Plan. Factors affecting Financial Plan Nature of the industry The very first factor affecting the financial plan is the nature of the industry. Here, we must check whether the industry is a capital intensive or labour intensive industry. This will have a major impact on the total assets that a firm owns. Size of the company The size of the company greatly influences the availability of funds from different sources. A small company normally finds it difficult to raise funds from long term sources at competitive terms. On the other hand, large companies like Reliance enjoy the privilege of obtaining funds both short term and long term at attractive rates Status of the company in the industry A well established company enjoys a good market share, for its products normally commands investors confidence. Such a company can tap the capital market for raising funds in competitive terms for implementing new projects to exploit the new opportunities emerging from changing business environment Sources of finance available Sources of finance could be grouped into debt and equity. Debt is cheap but risky whereas equity is costly. A firm should aim at optimum capital structure that would achieve the least cost capital structure. A large firm with a diversified product mix may manage higher quantum of debt because the firm may manage higher financial risk with a lower business risk. Selection of sources of finance is closely linked to the firms capability to manage the risk exposure. The capital structure of a company The capital structure of a company is influenced by the desire of the existing management (promoters) of the company to retain control over the affairs of the company. The promoters who do not like to lose their grip over the affairs of the company normally obtain extra funds for growth by issuing preference shares and debentures to outsiders. Matching the sources with utilization The prudent policy of any good financial plan is to match the term of the source with the term of the investment. To finance fluctuating working capital needs, the firm resorts to short term finance. All fixed asset investments are to be financed by long term sources, which is a cardinal principle of financial planning.

Flexibility The financial plan of a company should possess flexibility so as to effect changes in the composition of capital structure whenever need arises. If the capital structure of a company is flexible, there will not be any difficulty in changing the sources of funds. This factor has become a significant one today because of the globalisation of capital market. Government policy SEBI guidelines, finance ministry circulars, various clauses of Standard Listing Agreement and regulatory mechanism imposed by FEMA and Department of corporate affairs (Govt. of India) influence the financial plans of corporates today. Management of public issues of shares demands the compliances with many statues in India. They are to be complied with a time constraint.

Q5. An employee of a bank deposits Rs. 30000 into his PF A/c at the end of each year for 20 years. What is the amount he will accumulate in his PF at the end of 20 years, if the rate of interest given by PF authorities is 9%? Amount deposit/invested at the end of every year for n years= A = Rs 30000 Time horizon or no. of years= n = 20 years Rate of interest = i = 9% p.a Value of PF amount at end of 20 years= = A * FVIFA(i,n) where FVIFA(i,n) = {(1+i)n 1}/i} = 30000 * FVIFA (9%, 20Y) = 30000 * 51.160 = Rs. 1534800

Q6. Mr. Anant purchases a bond whose face value is Rs.1000, and which has a nominal interest rate of 8%. The maturity period is 5 years. The required rate of return is 10%. What is the price he should be willing to pay now to purchase the bond? Solution: Interest payable= 100*8% = Rs. 8 Principal repayment = Rs. 1000 Required rate of return = 10% Therefore, Value of the bond = 8*PVIFA(10%,5y)+1000*PVIF(10%,5y) = 924.28

MB0045 Financial Management Assignment Set- 2 Q1. The following data is available in respect of a company : Equity Rs.10lakhs,cost of capital 18% Debt Rs.5lakhs,cost of debt 13% Calculate the weighted average cost of funds taking market values as weights assuming tax rate as 40% Hint: Use the equation WACC = We Ke + Wp Kp +Wr Kr + Wd Kd + Wt Kt Solution: Equity = Rs.10lakhs, Cost of capital = 18% Debt = Rs.5lakhs, Cost of debt = 13% Total = Rs 15 lakh Tax rate as = 40% We = 10 / 15 = 0.67 Ke = 18% = 0.18 Wd = 5/15 = 0.33 Kd = I (1-T) WACC = We Ke + Wp Kp +Wr Kr + Wd Kd + Wt Kt = 0.67*.18 + 0 + 0 +0.33*13(1-.40) + 0 = 0.146 or 14.6%

Q2. ABC Ltd. provides the information as shown in table 6.21 regarding the cost, sales, interests and selling prices. Calculate the DFL. Details of ABC Ltd. Output 20,000 units Fixed costs Rs.3,500 Variable cost Solution : Rs.0.05 per unit Interest DFL = Q(S-V) / [Q(S-V) F I {Dp/(1-T)}] on borrowed funds = 20000(0.20 0.05) / [20000(0.20 0.05) 0 Nil 0] 0 Selling price per unit = 3000 / 3000 0.20 =1

Solution: S= 1000,000/.22 =4545454.5 ny Y does not have any debt. Both companies earn 20% before interest and taxes on their total asset B=25,00,000 =K0=[25,00,000/[2500000+4545454.5)].14+[4545454.5/2500000+4545454.5)].22 0.0496+.142 =.1915 or 19.15% V = 5000000/0.1915 = 26,109,660.57

Q4. Examine the importance of capital budgeting. Importance of Capital Budgeting: Capital budgeting decisions are the most important decisions in corporate financial management. These decisions make or mar a business organisation. These decisions commit a firm to invest its current funds in the operating assets (i.e. long-term assets) with the hope of employing them most efficiently to generate a series of cash flows in future. These decisions could be grouped into: Decision to replace the equipments for maintenance of current level of business or decisions aiming at cost reductions, known as replacement decisions Decisions on expenditure for increasing the present operating level or expansion through improved network of distribution Decisions for production of new goods or rendering of new services Decisions on penetrating into new geographical area Decisions to comply with the regulatory structure affecting the operations of the company, like investments in assets to comply with the conditions imposed by Environmental Protection Act Decisions on investment to build township for providing residential accommodation to employees working in a manufacturing plant The reasons that make the capital budgeting decisions most crucial for finance managers are: These decisions involve large outlay of funds in anticipation of cash flows in future For example, investment in plant and machinery. The economic life of such assets has long periods. The projections of cash flows anticipated involve forecasts of many financial variables. The most crucial variable is the sales forecast. For example, Metal Box spent large sums of money on expansion of its production facilities based on its own sales forecast. During this period, huge investments in R & D in packaging industry brought about new packaging medium totally replacing metal as an important component of packing boxes. At the end of the expansion Metal Box Ltd found itself that the market for its metal boxes has declined drastically. The end result is that metal box became a sick company from the position it enjoyed earlier prior to the execution of expansion as a blue chip. Employees lost their jobs. It affected the standard of living and cash flow position of its employees. This highlights the element of risk involved in these type of decisions. Equally we have empirical evidence of companies which took decisions on expansion through the addition of new products and adoption of the latest technology, creating wealth for shareholders. The best example is the Reliance Group.

Any serious error in forecasting sales, the amount of capital expenditure can significantly affect the firm. An upward bias might lead to a situation of the firm creating idle capacity, laying the path for the cancer of sickness. Any downward bias in forecasting might lead the firm to a situation of losing its market to its competitors. Long time investments of the funds sometimes may change the risk profile of the firm.

Capital budgeting is significant for the following reasons: 1. The decision-maker loses some of his flexibility, for the results continue over an extended period of time. He has to make a commitment for the future. 2. Asset expansion is related to future sales 3. The availability of capital assets has to be phased properly 4. Asset expansion typically involves the allocation of substantial amounts of funds 5. Many firms fail, because they have too much or too little capital equipment 6. Decision relating to capital investment are among the difficult and, at the same time, a most critical a management has to make. These decisions require an assessment of the future events which are uncertain.
7. The most important reason for capital budgeting decision is that they have long-term implications for a firm. The effects of a capital budgeting decision extend into the future and have to be put up with for a longer period than the consequences of current operating expenditures.

8. Capital budgeting is an important function of management because it is one of the critical determinants of success or failure of the company. Ill-advised or excessive capital spending may create excessive capacity and increase operating costs, limit the viability of company funds and reduce its profit earning capacity.

Q5. Briefly explain the process of capital rationing The following are the steps involved in capital rationing. Ranking of different investment proposals Selection of the most profitable investment proposal


Ranking of different investment proposals means the various investment proposals should be ranked on the basis of their profitability. Ranking is done on the basis of NPV, Profitability index or IRR the descending order.

Net present value method recognises the time value of money. Net present value correctly admits that cash flows occurring at different time periods differ in value. Therefore, there is a need to find out the present values of all the cash flows. Profitability index is also known as benefit cash ratio. Profitability index is the ratio of the present value of cash inflows to initial cash outlay. The discount factor based on the required rate of return is used to discount the cash inflows. Internal rate of return (IRR) is the rate (i.e. discount rate) which makes the net present value of any project equal to zero. Internal rate of return is the rate of interest which equates the present value (PV) of cash inflows with the present value of cash outflows. IRR is also called as yield on investment, managerial efficiency of capital, marginal productivity of capital, rate of return and time adjusted rate of return. IRR is the rate of return that a project earns. IRR can be determined by solving the following equation for

Selection of the most profitable investment proposal After ranking the different investment proposals based on their net present value, profitability index and the internal rate of return, the selection of the most profitable investment proposal is to be done. The selection is done mainly in a view to select the investment proposal which earns more profits than compared to the other proposals. The basic features to be taken under consideration during the selection of the most profitable investment proposal are: The proposal should have the potentiality of making large anticipated profits The proposal should involve high degree of risk The proposal should involve a relatively long time-period between the initial outlay and the anticipated return Evaluation of the selection procedure PI rule of selecting projects under capital rationing may not yield satisfactory result because of project indivisibility. When projects involving high investment is accepted many small projects will have to be excluded. But the sum of the NPVs of small projects to be accepted may be higher than the NPV of a single large project Capital rationing also suffers from the multi-period capital constraints

Q6. Explain the concepts of working capital. Answer: Concepts of Working Capital The four most important concepts of working capital are Gross working capital, Net working capital, Temporary working capital and Permanent working capital.

Gross working capital Gross Working Capital refers to the amounts invested in various components of current assets. This concept has the following practical relevance. Management of current assets is the crucial aspect of working capital management Gross working capital helps in the fixation of various areas of financial responsibility Gross working capital is an important component of operating capital. Therefore, for improving the profitability on its investment a finance manager of a company must give top priority to efficient management of current assets The need to plan and monitor the utilisation of funds of a firm demands working capital management, as applied to current assets

Net working capital Net working capital is the excess of current assets over current liabilities and provisions. Net working capital is positive when current assets exceed current liabilities and negative when current liabilities exceed current assets. This concept has the following practical relevance. Net working capital indicates the ability of the firm to effectively use the spontaneous finance in managing the firms working capital requirements A firms short term solvency is measured through the net working capital position it commands Permanent Working Capital Permanent working capital is the minimum amount of investment required to be made in current assets at all times to carry on the day to day operation of firms business. This minimum level of current assets has been given the name of core current assets by the Tandon Committee.

Permanent working capital is also known as fixed working capital. Temporary Working Capital Temporary working capital is also known as variable working capital or fluctuating working capital. The firms working capital requirements vary depending upon the seasonal and cyclical changes in demand for a firms products. The extra working capital required as per the changing production and sales levels of a firm is known as temporary working capital. The need for working capital arises on account of two reasons: To finance operations during the time gap between sale of goods on credit and realisation of money from customers of the firm To finance investments in current assets for achieving the growth target in sales Therefore to finance the operations in operating cycle of a firm, working capital is required. In the next section, we will know more about the operating cycle of the firm.

MB0046 Marketing Management ASSIGNMENT- Set 1 Q.1 Explain the various stages involved in new product development New Product Development New products are essential for existing firms to keep the momentum and for new firms they provide the differentiation. New product doesnt mean that it is absolutely new to the world. It may be a modification, or offered in a new market, or differentiated from existing products. Therefore it is necessary to understand the concept of new products. Meaning of New Products: a. They are really innovative. For example, Googles Orkut, a networking site which revolutionized social networking. In this site people can meet like-minded people; they can form their own groups, share photos, comments and many more. b. They are very different from the others: Haier launches path-breaking 4-Door Refrigerators first time in India c. They are imitative; these products are not new to the market but new to the company. For example, Cavin Kare launched Ruchi pickles. This product is new to Cavin Kare but not to the market. New product development process: Stage 1 - Idea generation: New product idea can be generated either from the internal sources or external sources. The internal sources include employees of the organization and data collected from the market. The external source includes customers, competitors and supply chain members. For example, Ingersoll Rand welcomes new ideas from the General public. Stage 2-Idea screening: Organization may have various ideas but it should find out which of these ideas can be translated into concepts. In an interview to Times of India, Mr. Ratan Tata, chairman TATA group discussed how his idea saw many changes from the basic version. He told that he wanted to develop car with scooter engine, plastic doors etc But when he unveiled the car, there were many changes in the product. This shows that initial idea will be changed on the basis of market requirements. Stage 3 - Concept development: the main feature or the specific desire that it caters to or the basic appeal of the product is created or designed in the concept development. Concepts used for Tata Nano car are

Concept I: Low-end rural car, probably without doors or windows and with plastic curtains that rolled down, a four-wheel version of the auto-rickshaw Concept II: A car made by engineering plastics and new materials, and using new technology like aerospace adhesives instead of welding. Concept III: Indigenous, in-house car which meets all the environment standards Stage 4 - Concept testing: At this stage concept is tested with the group of target customers. If any changes are required in the concept or the message it will be done during this stage. Also the effectiveness is tested on a minor scale. If the concept meets the specific requirements, then it will be accepted. Stage 5 Marketing strategy development: The marketing strategy development involves three parts. The first part focuses on target market, sales, market share and profit goals. TATAs initial business plan consisted sales of 2 lakhs cars per annum. The second part involves product price, distribution and marketing budget strategies. TATAs fixed Rs 1 lakhs as the car price, and finding self employed persons who work like agent to distribute the cars. The final part contains marketing mix strategy and profit goals. Stage 6 - Business analysis: it is the analysis of sales, costs and profits estimated for a new product and to find out whether these align with the company mission and objectives. Stage 7 - Product development: during this stage, product is made to undergo further improvements, new features or improvised versions are added to the product. There is also scope for innovation and using the latest technology into the product. TATA Nano car development (Source: business world nanolution) Tried to outsource the product from all over the world. Development of mule or prototype with 20bhp. Designing the small engine Thermodynamic simulations and final engine Development of MPFI with help of Bosch. Cost reduction and negotiating with vendors. Sona Koyo and Rane Group came up with hollow steering shafts, saving cost and cutting weight. Sharda Motors and Emcon designed the exhaust system and MRF tweaked the tyres to bear extra weight on rear wheels. Stage 8 - Test marketing: is the most crucial stage for the testing products performance and its future in the market. There are certain cases where product has failed in the test marketing and had to be withdrawn. The product is introduced into the realistic market The 4Ps of marketing are tested. The cost of test marketing varies with the type of product.

Stage 9 - Commercialization: In this stage product is completely placed in the open market and aggressive communication program accompanied with promotion activities is carried out to support it.

Q.2 Discuss the importance of SWOT analysis to develop effective marketing mix. Developing an effective marketing mix: Following example shows how Big Bazaar has worked out on its marketing mix in India after doing a SWOT analysis: SWOT analysis indicates the 4 specific and crucial areas by which an organization can know its position in the market. SWOT analysis can be done by any kind of organization, dealing with any kind of products or services, at any point of time and whenever it feels the need to do so. SWOT analysis is an analysis showing the Companys a) Strengths i.e. areas where it has got advantage, its core processes, its unique or successful brands, key people etc. If the company has a good reputation in the consumer market then it becomes strength of that company. b) Weaknesses i.e. areas where the company is weak or having drawbacks and which needs to be improvised or eliminated from the existing system. If the company is feeling that its sales force has too many inefficient people then it becomes the weakness of the company. c) Opportunities i.e. areas where company can establish itself and the challenges that it can accept to its benefit as well as the consumers. Suppose a company knows that there are consumers all over the world who consume companys products then there presents opportunity of expanding its activities globally. d) Threats i.e. areas where the company feels that it might be subject to pressure situations or where it is unable to pull itself from a possible crises or the threat may simply come from competitive forces or other external factors such as Recession.

Q.3 Briefly explain the major external and uncontrollable factors that influence an organization decision making, performance and strategies Companys Macro Environment Forces in the macro environment 1. Demographic Environment Demography: The study of population characteristics like size, density, location, gender composition, age structure, occupation and religion. Demography statistics helps companies to forecast demand. These statistics are also used in developing proper supply chain, communicating product information and changing the product attributes. Demographic environment is analyzed on the basis of the following factors. 1. Age structure of the population 2. Marital status of the population 3. Geographic distribution of the population 4. Education level 5. Migration 6. Occupation. Age structure of the population: from the following table you can generalize that 48% of the population in India are aged below 21yrs and 28% of the population are in the bracket of

21-25yrs. Many marketing companies are focusing on these two segments. For example, Radio Indigo, FM radio station from Jupiter capital venture operates in Bangalore and Goa, plays international music. Radio indigo targets youth segment who like western music. 2. Political and Legal Environment Government policies, legislations, regulations, and stability will directly affect the business. Therefore it is inevitable for the firm to closely monitor this environment. The political and legal forces are grouped into the following four categories. Monetary and fiscal policies: These policies regulate government spending, money supply and tax legislations. 1. Social legislations and regulations. For e.g. Environmental Protection Act which specifies the emission level etc. 2. Legislations, Policies and regulations relating to industries: labour Acts, Factories Act and policies regarding subsidies and change in tariff rate will have direct impact on a particular company. 3. Legislations related to manufacturing, trading, marketing etc: Following are the list of legislations which affect the various activities of the company. Economic, Monetary and Natural Environment These constitute a large number of variables which cannot be examined here in detail. The economic environment includes consumption patterns, productivity patterns, spending patterns, and sectored growth and so on. The monetary environment consists of inflation, interest rate, exchange rate, money supply etc. These provide vital clues for marketers to decide on product offering, incentive offerings, promotional decisions and pricing decisions. If the consumption pattern or expenditure behavior of the middle class shifts towards higher levels, marketers sees great opportunities for exchange offers, buy back offers etc. The middle class may like to upgrade and at the same time would like to get some value for their old goods. If the government decides to offer loans to farmers at a low interest rate, marketers see opportunities to sell more farm equipments. Consumer spending pattern According to National sample survey 2005-06, 1. Monthly per capita consumption in rural area: Rs625. 2. Monthly per capita consumption in urban area: Rs1, 171. 3. Food expenditure in monthly per capita consumption: 53 %(Rural area) 4. Food expenditure in monthly per capita consumption: 40%(Urban Area)

The data above shows that a significant percent of the monthly per capita income is on food expenditure. Marketers in the non food category may have to come up with new ideas in promotion in order to change this spending pattern. Interest rate: when interest rates are high, consumer tend not to make long term purchase like housing. If the interest rate is low people park their money in alternative financial options where they get better return. Marketers of financial products could seize this opportunity to promote new products. On the other hand the housing sector would do well to promote budget houses. Inflation: Higher the inflation rate lesser will be the purchasing power of the consumer. Hence government always tries to control inflation within a limit. In situations of rising inflation marketers may not be able to avoid the increase in prices. They sometimes try to cover this fact by offering clever incentives to buyers. They may also arrange to offer EMIs to consumers. In recent times (September 2009) LEVIs tried to woo middle income consumers to their store by offering EMI payments on their high priced apparels. Changes in income: The rise in the salaries of the employees, improved performance of stock market and better industrial growth led to the change in the income pattern in India. Many Indians entered the millionaires and billionaires categories. This provided great opportunity for luxury brands to set shop in India. The advent of Gucci, Armani and others with exclusive outlets in metros is a sign of changing income patterns and affordability. A similar trend is noticeable in the tourism sector. Indian are a significant percentage of the tourist population in destinations like Singapore, Ireland, New Zealand and other European countries Travel companies are targeting high net worth Indians to market their packages and also designing appropriate packages. Natural Environment: Environmental concerns are growing over the years. Governments are bringing in stringent regulations to conserve and manage natural resources. Marketers should beware of such trends in the environment. Some of the aspects/factors on which organizations should keep a vigil are; a. Inadequate raw materials arising out of strict mining regulations b. Global warming and pollution levels which have ushered in new legislations a. A case in point is the conversion of three wheelers and city buses to CNG fuel. This provided great opportunity for manufacturers of such engines in New Delhi during the later part of 20 Century. On the other hand, manufacturers of low-end passenger cars had to attune their facilities to Bharat-I, Bharat-II and subsequent norms. The ban on smoking in public places forced tobacco manufacturers to tone down their marketing efforts.


4. Social and cultural environment Growing urbanization, increasing participation of women in livelihood activities, advent of global cultural practices, greater exposure to life styles practiced world wide etc has altered marketing efforts remarkably. A club house and a swimming pool is an essential part of purchase decision for a flat in a metro. Marketers have encased this trend during the nineteen nineties and later too. Festivals have gained an urban color and marketers are packaging festivals offers accordingly. On the other hand the rural populace has been exposed to urban life style thanks to the electronic media. Companies like Hindustan Lever have successfully marketed their low priced offerings of toiletries and cosmetics in the rural areas. While this transformation is over a wide canvas, we mention below some of the major changes which have affected the marketing efforts.

1. Working women and the rise of metro sexual man.: The number of working women in India is ever increasing. This segment is looking towards products which help them in bringing better work life balance. MTR a fast food giant in South India started offering ready to eat products to this segment. Metro sexuality is another new phenomenon, wherein a man also assumes the role of women and plays a role in purchasing household items and helping kids chose products. It has made the marketers task more difficult in positioning their products. The shift in decision making is a challenge to marketers who till now focused on mothers to promote household items of daily use and also items relating to kids. 2. Jet set people: This segment involves people who work long hours and have less personal time. These are also working people who hop in and hop out of their house at a phone call. These people are looking for products and services which consume less time and are convenient. For example, Easy bill, from Hero group offers one stop solution to consumer to pay their utility bills and do other financial transactions. Technological environment There are several tumultuous changes being wrought in the technological from which is transforming the way business is conducted. The changes are so rapid and sweeping those enterprises have found it difficult to keep pace. Several have fallen by the wayside for failing to keep with the changes. Major public sector undertakings in India which did not upgrade in time and closed their shutters are, ITI, HMT, and HTIF. On the other hand in the private sector, Hindustan Motors, LML etc are examples who were known as flag bearers, collapsed once they fell behind in the race for technology. Some of the major changes are as follows: 1. Growth of information technology and biotechnology industries: Information technology has revolutionized the lives of the people. It bought dramatic changes in the way organizations operates. It helped in cost reduction, automation, better communication and efficiency in the organizations. New business platforms emerged, popularly know as e-commerce, e-business, and e-marketing. There were synergies among widely different fields such as informatics and life sciences which opened up new streams of business as bioinformatics, clinical research, biotechnology, medical technology etc. The marketing opportunities thrown up by these new entrants, in turn, helped management institutes to design MBA programs in these new streams. In the field of marketing, the virtual space provided new challenges to use the marketing mix, specially the issue of advertising and logistics which are important parts of promotion.

2. Nano technology: Another development which has shaken the world of electronic products is nano technology. On the one hand it has miniaturized products and combined multi-product features and on the other it has given marketers sleepless nights to maintain pace with their marketing efforts. The challenge has been in differentiating the offers and providing visibility at a rapid pace with increasing numbers of variety being rolled out in great frequency. Just imagine how thinner and smaller the cell phone is becoming with each passing day! And the number of players in the market??? Add to them the features!!

Q.4 Discuss the potential benefits associated with MIS. Benefits of MIS Various benefits of having a MIS and resultant flow of marketing information are given below: 1. It allows marketing managers to carry out their analysis, planning implementation and control responsibilities more effectively. 2. It ensures effective tapping of marketing opportunities and enables the company to develop effective safeguard against emerging marketing threats. 3. It provides marketing intelligence to the firm and helps in early spotting of changing trends. 4. It helps the firm adapt its products and services to the needs and tastes of the customers. 5. By providing quality marketing information to the decision maker, MIS helps in improving the quality of decision making. Types of Marketing Information A Marketing Information System supplies three types of information. 1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly, quarterly, or annual interval. This includes data such as sales, Market Share, sales call reports, inventory levels, payables, and receivables etc. which are made available regularly. Information on customer awareness of companys brands, advertising campaigns and similar data on close competitors can also be provided. 2. Monitoring Information is the data obtained from regular scanning of certain sources such as trade journals and other publications. Here relevant data from external environment is captured to monitor changes and trends related to marketing situation. Data about competitors can also be part of this category. Some of these data can be purchased at a price from commercial sources such as Market Research agencies or from Government sources. 3. Problem related or customized information is developed in response to some specific requirement related to a marketing problem or any particular data requested by a manager. Primary Data or Secondary Data (or both) are collected through survey Research in response to specific need. For example, if the company has developed a new product, the marketing manager may want to find out the opinion of the target customers before launching the product in the market. Such data is generated by conducting a market research study with adequate sample size, and the findings obtained are used to help decide whether the product is accepted and can be launched. Components of MIS The following diagram shows a typical Marketing Information System with its components. Which are?

1. Internal Records System 2. Marketing Intelligence System 3. Marketing Research System 4. Analytical Marketing System The Marketing Information System

Source: Philip Kotler, Marketing Management: Analysis, Planning and Control, 5 ed. (Englewood Cliffs, N.J.: Prentice-Hall, 1984), p. 189

Internal Records System This includes information on (i) Order to payment cycle and (ii) sales information systems. Order to payment cycle has a system which records, the timing and size of orders placed by consumers, the payment cycle followed by consumers and the time taken to fulfill the orders, in the shortest possible time. Customers place order through sales people and companies dispatch the goods and receive payments directly or through bank. A proper record system pertaining to order to payment cycle management helps mangers to decide on production and dispatch schedule, inventory and accounts receivable schedule and also logistics and distribution management schedules, Sales Information Systems records everything in the sales department, starting from Sales Call Reports to prospects history to Sales territory and quota information for better sales planning and forecasting purpose.

Marketing Intelligence System This is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. This system supplies happenings data unlike Internal Records System which supplies resultsdata. Marketing managers collect data from publishedsources like books, magazines and journals; by talking to customers, intermediaries and sales personnel. Some companies appoint specialists to gather consumer and competitor information, who does mystery shopping to monitor the performance of their own or competitors dealers. Competitor information can also be obtained by buying their product, attending their press conferences, trade shows and reading their annual reports. Companies purchase commercial information from outside suppliers and market research agencies like IMRB, ORG MARG to obtain competitive data on their sales, advertising expenditures etc., besides their own. Marketing Research System This is the third component of MIS. Marketing Research provides information to marketing manager when he/she encounters marketing problems. This may involve conducting Marketing Research survey by collecting primary data. These surveys may be conducted by the marketing department itself or it can hire services of an external marketing research agency. Analytical Marketing Systems Also known as Marketing Decision Support systems (MDSS), this is a co-ordinate collection of data, systems, tools and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. All the data which is generated through the other three systems described above are stored in a data base. The storage and retrieval capability of decision support system allows the collection and use of a wide variety of data throughout the company. Senior managers can access the data base and continually and monitor sales, markets, performance of the sales people and other marketing systems as well.

Q.5 Describe five interdependent levels of basic human needs (motivators) as propounded by Abraham Maslow Motivation: Abraham Maslows Need Hierarchy Theory: One of the most widely mentioned theories of motivation is the hierarchy of needs put forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a hierarchy, ascending from the lowest to the highest, and he concluded that when one set of needs is satisfied, this kind of need ceases to be a motivator. As per his theory these needs are: i. Physiological needs: These are important needs for sustaining the human life. Food, water, warmth, shelter, sleep, medicine and education are the basic physiological needs which fall in the primary list of need satisfaction. Maslow was of an opinion that until these needs were satisfied to a degree to maintain life, no other motivating factors will work. ii. Security or Safety needs: These are the needs to be free of physical danger and of the fear of losing a job, property, food or shelter. It also includes protection against any emotional harm. iii. Social needs: Human beings are social animals. They strive to be in the society. In this type of needs people will try to satisfy their needs for affection, acceptance and friendship. iv. Esteem needs: According to Maslow, once the people satisfied with social needs. They would like to have esteem needs. This category includes power, prestige status and self-confidence needs. It includes both internal esteem factors like self-respect, autonomy and achievements and external esteem factors such as states, recognition and attention.

v. Need for self-actualization: Maslow regards this as the highest need in his hierarchy. It is the drive to become what one is capable of becoming; it includes growth, achieving ones potential and self-fulfillment. It is to maximize ones potential and to accomplish something Marketer is interested in finding what state of need hierarchy the consumer is in and what type of product to be developed to suit his or her needs. If person needs security for his car than the mileage then auto companies should highlight that benefit in their marketing communications.

Q.6 List the important differences between Consumer market and business markets Answer: Difference between Consumer and Business Buyer Market The differences stated above may not exacting and water tight divisions. Even in case of a business making a purchase for a regular stationary item, the responsible employee may adopt an individualistic and direct approach. Similarly industrial advertising may be effective. The differences lead to behavior patterns which are also different. As an example, emotion plays a major role in a purchase decision for an individual in a consumer market but will hardly come into play in the business market. Features or Characteristics of Business Markets Following are some of the unique features of business markets where large establishments purchase the required goods and services from other businesses. Such B2B operations determine the organizations as buyers and those organizations who supply the various requirements will be the sellers or suppliers or service providers. 1. Few but bulk Buyers: The no. of buyers is few but they buy in large quantity. For example, major airlines buy the necessary equipments from the aircraft manufacturers 2. Geographical concentration of buyers: Buyers are geographically concentrated. For example, shipping industries are located on the east and west coasts of India than in any other places. 3. Variable demand: The nature of demand is fluctuating because the demand is basically a derived one. Based on the requirements of the consumer markets, organizations buy the goods and make the finished goods available in the market for final consumption. Larger the consumer demand, larger will be the organizational buying. For example, mobiles are being used by a large population and so cellular companies have to meet this rising demand. 4. Inelastic demand: The demand is also inelastic because organizations cannot make rapid changes in the production structure and so prices remain constant in the short-term. For example, Shoe manufacturers will not buy much leather if the price of leather is less neither will they buy less leather if the price increases.

5. Systematic purchasing: The purchasing activity is directly between the buyer and supplier organization which means there are no or very few middlemen involved. Purchasing activity is usually undertaken by purchase departments based on a proper structure and through various mechanisms like having purchase requisitions from other sections, inviting tenders and sending invoices from the suppliers, purchasing agreements or contracts with the key suppliers, renewing agreements etc. For example, Reliance Fresh has regular contracts with the agricultural producers for smooth supply of fresh fruits and vegetables. 6. Multiple buying influences: there will be several parties involved in deciding about the purchases because organizations will have several departments and units functioning under it with different requirements. So, unless they have the proper resources to work with there will be problems in the departments. For example, purchase department in a Hospital must be aware about the specific requirements in the clinical wards, operation theaters, labs, etc. 7. Reciprocation: This means that when an organization buys goods from another organization then the supplier organization also might need certain other goods that are produced by the buyer organization. For example, a stationery supplier will supply the necessary stationeries to the paper manufacturer who in turn provides papers to the supplier. 8. Lease agreements: Most organizations take on lease the expensive equipments required by them rather than buy it. So, in this way, they reduce cost, get better service and the lessor or one who provides the equipments will also profit from the rent or lease charges. For example, TATA provides the transport trucks to other organizations on lease.

MB0046 Marketing Management ASSIGNMENT- Set 2 Q.1 what do you mean by marketing functions? Briefly explain the important marketing functions. Functions Of Marketing The delivery of goods and services from producers to their ultimate consumers or users includes many different activities. These different activities are known as marketing functions. Different thinkers have described these functions in different ways. Some of the most important functions of marketing are discussed below: 1. Marketing Research and Information Management Marketers need to take decisions scientifically. Marketing research function is concerned with gathering, analyzing and interpreting data in a systematic and scientific manner. The types of market information could be analysis of market size and characteristics, consumer tastes and preferences and changes in them from time to time, channels of distribution and communication and their effectiveness, economic, social, political and technological environment and changes therein. A company can procure such information from specialized market research agencies, government or can decide to collect themselves. 2. Advertising and Sales Promotion Advertising is a mass media tool used to inform, persuade or remind customers about products or services. It is an impersonal message targeted at a chosen group through paid space or time. 3. Sales Promotion is a short term incentive given to customers or intermediaries to promote sales. It supplements advertising and personal selling and can be used at the time of launching a new product or even during its maturity period. 4. Product Planning and Management A Marketer should identify the needs and wants of consumers, develop suitable products / services and make them available. Marketer is also required to maintain the product and its variations in size, weight, package and price range according to the changing needs and requirements of his customers. Information available through Market Research helps product management in taking appropriate decisions while planning the marketing efforts. 5. Selling This function of marketing is concerned with transferring of products to the customer. An important part of this function is organizing sales force and managing their activities. Sales force management includes recruitment, training, supervision, compensation and evaluation of salesmen. They need to be assigned targets and territories where they can operate. The salesmen interact with prospective purchasers facetoface in order to sell the

goods. The purchaser may be end customer or an intermediary, such as a retailer or a dealer. 6. Physical Distribution Moving and handling of products from factory to consumers come under this function. Order processing, inventory, management, warehousing and transportation are the key activities in the physical distribution system. 7. Pricing This is perhaps the most important decision taken by marketer, as it is the only revenue fetching function and success and failure of the product may depend upon this decision. Therefore, the decision regarding how much to charge should be taken such that the price is acceptable to the prospective buyers and at the same time fetches profits for the company. While deciding on the price, the factors to be considered are competition, competitive prices, companys marketing policy, government policy, and the buying capacity of target market etc. Importance Of Marketing. Peter Drucker, the famous management thinker in one of his classic articles has said Marketing is everything. All other activities in the organization are support services to the marketing strategy that the company pursues. Marketing is important not only to the company but to the consumers and society and to the economy. Consumer stands to benefit from marketing activities. He has more alternatives to choose from, improved and better quality products are available and he is able to buy goods at convenient locations. Thanks to much improved customer service, a consumer is able to complain and expects his complaint to be attended in reasonable time. He can now buy with credit or debit card or cash or on installments. For the society as a whole, marketing is important because it acts as a change agent making people use latest products and improves the standard of living of the people. As we know, the main objective of marketing is to produce products and services for the society as per their needs and tastes, and while doing so it creates demand for these goods and services, encourages them to use them, thus leading to higher demand and sales. This higher demand allows the company to achieve economies of scale in both production and distribution resulting in decrease in production and distribution costs which can be used to reduce prices to consumers. For a company in any business, marketing is considered to be the most important activity. It helps an organization to keep abreast of changes taking place in the market and consumer tastes and preferences through market research. Based on this reliable data, it responds to these changes by rectifying any drawbacks in its products or changing its competitive strategy. Thus the companys decisionmaking and planning are not based on just hunches but on sound market information. The firm that follows such practices is sure to prosper under all conditions. Marketing provides an effective channel of communication to the company with its consumers by way of advertising and sales promotion. Marketing thus brings revenue and earns goodwill for the company.

Successful operation of marketing activities creates, maintains and increases the demand for goods and services in the economy. It results in the increased level of production. This, in turn, increases the national income, which is beneficial to the economy. Marketing operations require the services of intermediaries such as wholesalers, retailers, transporters, and service provides for storage, finance, insurance and advertising. These services provide employment in large numbers.

Q.2 Define the term Brand Equity? Discuss the components of Brand Equity. Brand Equity Brand equity is set of assets linked to a brands name and symbol that adds value to the product or service and/or that firms customer. Components of brand equity: 1. Brand loyalty 2. Brand awareness 3. Perceived quality 4. Brand associations 1. Brand Loyalty Is consumers commitment to repurchase the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy. True brand loyalty implies that the consumer is willing, occasionally at least, to put aside their own desires in the interest of the brand. This will help organization to reduce the promotion cost. For example, many girls in India use only Ponds products, though competitors products like Fa, Spinz, Cuticura, and Mysore Sandal are present in the market and vice versa. 2. Brand Awareness The number of customers exposed to the brand name. Higher the brand awareness, higher will be the brand equity. Organizations put all the effort in the introduction stage of the product to create awareness among the customers. For example, Xerox Company has huge brand awareness since photocopier machines were introduced by this company and even today photocopies are referred as Xerox copies. 3. Perceived Quality The customer perception about the actual quality level of the product. For example, when a customer purchases Levis jeans he knows that it indicates quality even though there are several cheaper brands of jeans available in the market. 4. Brand Associations The attribute of the brand that customer associates with his/ her belief. A person may associate the brand for power, strength or protectiveness. For example, a customer may associate Nike brand not just for sports shoes but also any accessory associated with sports. So, for him, Nike represents sports.

Q.3 Why are marketing channels indispensable? List the functions of marketing channels. Need for Marketing Channels Marketing channels are a set of independent organizations comprising of the marketing intermediaries who are involved in the distribution of the goods or services from the factory to the consumption points at the right time or even before the time. For example, Haldiram, a company which produces snacks, chats and sweets have two manufacturing locations at Delhi and Nagpur. The products from Delhi will be sent to 25 C&F agents. These C&F agents distribute the goods to 700 distributors, who in turn sell to 0.4 million retail outlets. In the same way, goods reaches to 0.2 million retailers from Nagpur plant via 25 C&Fs and 375 distributors. Consumer buys Haldiram snacks throughout India through these 0.6 million retailers. Marketing channels will have marketing intermediaries such as the retailers, wholesalers, agents, brokers, travelling agents, etc. Some companies do not use these channels. They directly market their products to consumers. For example, Dell computers ask its customers to login to the website, configure their product, and order the same on the internet. Then a general question arises as to why many companies use marketing channels and some do not. In order to answer this question, we need to understand the functions of marketing channels and how they are more beneficial than direct marketing. Functions of marketing channels 1. Helps in Physical distribution: Transporting goods and storing them in the assigned warehouses or godowns. 2. Promotes Communication: Marketing intermediaries promote the companys products. Here channel member provides the information regarding the products and pushes it to the customers. 3. Provides Information: Retailers and wholesalers collect the information or feedbacks from the customers and provide the same to the company or manufacturer. 4. Plays a key role in Title transforming: Marketing intermediaries purchase the goods from the company and transform the title of goods or ownership to the next channel intermediary or customer. 5. Supports Relationship management: Here marketing intermediaries try to understand the needs of consumers, try to match his needs and satisfy them.

Q.4.Explain the different methods which allows a media planner to decide budget allocation. Budget Allocation Decisions in Marketing Communications Media vehicle selection, number of insertions and message structure depend on the budget allotted for the communication program. A popular channel may charge more for advertisement but organization gets better viewership. A newspaper having high circulation charges premium for the advertisement but all the organization may not have enough budgets to support such campaign. Hence marketer would like to decide what is the budget for the communication program? And how shall it be allotted optimally? There are four different methods on which a media planner decides the allocation of advertisement budget. a) Affordable method: This method is used by small companies who dont have enough communication budgets. In this method company allots the fixed amount for the communication program. The advantage of this method is company can have better control over the spending on the communication. The disadvantage is if sales require higher communication effort, company is not in a position to allocate the budget. b) Percentage of sales method. In this method company allots the budget on the basis of total sales forecasted. This is the simplest method. Marketer can have better control over the budget and also have flexibility to allocate the budget. c) Follow the Competitor method: The Company sets its promotion budget on the basis of competitors advertising effort. Here company closely monitors the developments of the competitors communication program and study the industry trends in communication budget prior to setting up communication budget. d) Objective and task method: The procedure involved in estimating the advertisement budget by this method are First, Objectives are set for the communication programs. Second, identifying the task to be performed to achieve the objective and third, estimating the cost of achieving these objectives.

Q.5 Define the term direct marketing Explain the different methods adopted for direct marketing Direct Marketing When the company or organization is involved in marketing activities (usually selling products) without the use of any intervening media or channel, then it is called as Direct Marketing. The company directly sells its products to the final consumer and the consumer is expected to respond immediately or at the earliest. Direct marketing is sometimes called as B2C marketing for example, direct factory shoe sale. Following are the methods of Direct Marketing: 1. Direct mail: It is the most common method used in direct marketing, it involves sending postal mails to the consumers address and consumers maybe randomly chosen or specifically selected as targets. For example, credit card applications forms sent by banks, travel guides or manuals sent by tour operators, free trial packs of products sent by companies, subscriptions offers for magazines etc. 2. Telephone marketing: Telephone marketing is used to sell the product directly to consumer. The growth of BPOs in India fuelled the development of telephone marketing. In the case of BPOs, two types of verticals exist. They are inbound call center and outbound call center. In case of inbound call center, customer is given a toll free number for enquiry and executives try to sell the product to such customers. In out bound call center employees call the customers and sell the products. The expansion of Indian telecommunication industry and its cheapest tariffs in the world attracted domestic sellers to use this type of channel. 3. Catalogue marketing: According to Philip Kotler, catalogue marketing is direct marketing through print, video or electronic catalogues that are mailed to select customers, made available in stores or presented online. The growth of catalogue marketing in India is in a nascent stage. The notable example in this type of marketing worldwide is J.C. Penny. 4. Kiosk marketing: Organizations spreads the information and keep ordering machines called kiosks in the shopping malls and other places. For example, Ambi Pur a perfume company recently organized a kiosk related marketing campaign in the Nirmal life style Mumbai. Company used inflatable as shown in the pictures to attract the small boys. Parents who came along with their children stopped at Kiosk and got the information from the company. The objective of campaign was to create awareness about the product among the target customers. 5. Online marketing: Marketing the organizations product on the virtual medium using the company websites as selling point or ordering point for the consumers. Sometimes companies use e-mails to offer their products and make a sale to the prospective consumers or even existing consumers. In this format buyers and sellers exchange the products on the internet. Organizations sell their products directly to consumers (called B2C), use trading networks or auction sites to reach new customers and serve current customers (called B2B) and encourage one customer to sell the product to the another customer (called C2C).

To do business on the internet, organizations create an effective website, place the ads and promote it online, create web communities, and use e- mail. On the other side of e-Commerce, are the problems of profitability and legal/ethical issues.

Q.6 List the important differences between International marketing and Domestic marketing. Nature of International Marketing Concept International marketing is defined as The performance of business activities designed to plan, price, promote and direct the companys flow of goods and services to consumers or users in more than one nation for a profit. A company that wants to sell their product in other than domestic market should understand the environmental factors, consumer behavior, market forces and other characters relevant to the international market. After understanding the definition, several questions may arise in your mind like why marketer should go to the international market? And what is the difference between international marketing and domestic marketing? companies enter into the international market to tap the potential, to support the customer requirements or to avoid the unprofitable domestic market. The differences between domestic marketing and international marketing are listed below:

Advantages of International marketing: Characteristics International Marketing 1. International marketing provides growth opportunities for the companies whose domestic market Domestic Marketing is maturing. For example, General Motors focuses its strategies on the emerging markets like India 1. Culture Multiand profits to the company. For example, Unilevers major 2. It brings the major portion of sales culture revenue comes Single culturemarkets.some cases multi culture from the Asian and in 2. Data accessibility Very difficult 3. It generates employment: Indian textile sector which exports majority of the product produced is a Easy large employer after agriculture and retail. 3. Data reliability Very Low High 4. Control Difficult Relatively easy 5. Consumer preferences Vary from country to country Vary in small extent 6. Product mix Adaptability required Standardization required 7. Business operation More than one country Home country only 8. Currency exposure Required Required only if there is importing

4. International market also acts as survival place for the companies. If one market becomes unattractive, either they establish their operations in another country or outsource the major functions to streamline the businesses. 5. It helps in improving the standard of living in the country.

MB0047 Management Information Systems Assignment - Set- 1 Q1. What is MIS? Define the characteristics of MIS? What are the basic Functions of MIS? Give some Disadvantage of MIS? The industrial revolution has slowly replaced man power with machines. There emerged the use of computer for data processing. The digital computer was mainly designed to handle scientific calculations. During 1940 to 1960 computers were used commercially for census and payroll work which involved large amount of data processing. Since then the commercial application exceeded the scientific applications. Computer Based Information systems are of vital importance in modern organization. Systems professionals analyze, design, develop, implement and manage state-of-the-art telecommunications, multi-media and other computer-based information systems. In addition to maintaining traditional transaction processing systems, todays IS professionals are involved in exciting developments in computing systems, such as decision support and expert systems, database development and enhancement, development and use of Graphical User Interfaces (GUI), systems design using object oriented programming, design and management of telecommunications systems, and the management of end-user computing. So you can define MIS is a method of generating information which is used by management or organization for decision making, control of activities and operations etc MIS characteristics It supports transaction handling and record keeping. It is also called as integrated database Management System which supports in major functional areas. It provides operational, tactical, and strategic level managers with east access to timely but, for the most, structured information. It supports decision making function which is a vital role of MIS. It is flexible which is needed to adapt to the changing needs of the organization. It promotes security system by providing only access to authorized users. MIS not only provides statistical and data analysis but also works on the basis on MBO (management by objectives). MIS is successfully used for measuring performance and making necessary change in the organizational plans and procedures. It helps to build relevant and measurable objectives, monitor results, and send alerts. Coordination: MIS provides integrated information so that all the departments are aware of the problem and requirements of the other departments. This helps in equal interaction of the different centers and connects decision centers of the organization.

Duplication of data is reduced since data is stored in the central part and same data can be used by all the related departments. MIS eliminates redundant data. It helps in maintaining consistency of data. It is divided into subsystems. Handlings with small systems are much easier than an entire system. This helps in giving easy access of data, accuracy and better information production. MIS assembles, process, stores, Retrieves, evaluates and disseminates the information.

Function of MIS The main functions of MIS are: Data Processing: Gathering, storage, transmission, processing and getting output of the data. Making the data into information is a major task. Prediction: Prediction is based on the historical data by applying the prior knowledge methodology by using modern mathematics, statistics or simulation. Prior knowledge varies on the application and with different departments. Planning: Planning reports are produced based on the enterprise restriction on the companies and helps in planning each functional department to work reasonably. Control: MIS helps in monitoring the operations and inspects the plans. It consists of differences between operation and plan with respect to data belonging to different functional department. It controls the timely action of the plans and analyzes the reasons for the differences between the operations and plan. Thereby helps managers to accomplish their decision making task successfully. Assistance: It stores the related problems and frequently used information to apply them for relative economic benefits. Through this it can derive instant answers of the related problem. Database: This is the most important function of MIS. All the information is needs a storage space which can be accessed without causing any anomalies in the data. Integrated Database avoids the duplication of data and thereby reduces redundancy and hence consistency will be increased. The major function of MIS lies in application of the above functions to support the managers and the executives in the organization in decision-making.

Disadvantages of MIS The following are some of the disadvantages of MIS: MIS is highly sensitive: MIS is very helpful in maintaining logging information of an authorized user. This needs to monitor constantly. Quality of outputs is governed by quality of inputs.

MIS budgeting: There is difficulty in maintaining indirect cost and overheads. Capturing the actual cost needs to have an accrual system having true costs of outputs which is extremely difficult. It has been difficult to establish definite findings. MIS is not flexible to update itself for the changes. The changes in the decision of top level management decrease its effectiveness. Information accountability is based on the qualitative factors and the factors like morality, confidence or attitude will not have any base.

Q2. Explain Knowledge based system? Explain DSS and OLAP with example? Knowledge Based System (KBS) KBS are the systems based on knowledge base. Knowledge base is the database maintained for knowledge management which provides the means of data collections, organization and retrieval of knowledge. The knowledge management manages the domain where it creates and enables organization for adoption of insights and experiences. There are two types of knowledge bases. a. Machine readable knowledge bases: The knowledge base helps the computer to process through. It makes the data in the computer readable code which makes the operator to perform easier. Such information sare used by semantic web. Semantic web is a web that will make a description of the system that a system can understand.

b. Human readable knowledge bases: They are designed to help people to retrieve knowledge. The information need to be processed by the reader. The reader can access the information and synthesize their own. KBS refers to a system of data and information used for decision making. The system is automated to work on the knowledge based data and information required in a particular domain of management activity. The processing is done based on the past decisions taken under suitable conditions. Decision making is based on the fact that the condition is similar to the past situation hence the decision is also is similar. Examples of KBS are intelligent systems, robotics, neural networks etc. Online Analytical Processing (OLAP) OLAP refers to a system in which there are predefined multiple instances of various modules used in business applications. Any input to such a system results in verification of the facts with respect to the available instances. A nearest match is found analytically and the results displayed form the database. The output is sent only after thorough verification of the input facts fed to the system. The system goes through a series of multiple checks of the various parameters used in business decision making. OLAP is also referred to as a multi dimensional analytical model. Many big companies use OLAP to get good returns in business. The querying process of the OLAP is very strong. It helps the management take decisions like which month would be appropriate to launch a product in the market, what should be the production quantity to maximize the returns, what should be the stocking policy in order to minimize the wastage etc. A model of OLAP may be well represented in the form of a 3D box. There are six faces of the box. Each adjoining faces with common vertex may be considered to represent the various parameter of the business situation under consideration. E.g.: Region, Sales & demand, Product etc.

Decision Support Systems (DSS) DSS is an interactive computer based system designed to help the decision makers to use all l the resources available and make use in the decision making. In management many a time problems arise out of situations for which simple solution may not be possible. To solve such problems you may have to use complex theories. The models that would be required to solve such problems may have to be identified. DSS requires a lot of managerial abilities and managers judgment. You may gather and present the following information by using decision support application: Accessing all of your current information assets, including legacy and relational data sources, cubes, data warehouses, and data marts Comparative sales figures between one week and the next Projected revenue figures based on new product sales assumptions The consequences of different decision alternatives, given past experience in a context that is described. Model of OLAP

Manager may sometimes find it difficult to solve such problems. E.g. In a sales problem if there is multiple decision variables modeled as a simple linear problem but having multiple optima, it becomes difficult to take a decision. Since any of the multiple optima would give optimum results. But the strategy to select the one most suitable under conditions prevailing in the market, requires skills beyond the model. It would take some trials to select a best strategy. Under such circumstances it would be easy to take decision if a ready system of databases of various market conditions and corresponding appropriate decision is available. A system which consists of database pertaining to decision making based on certain rules is known as decision support system. It is a flexible system which can be customized to suit the organization needs. It can work in the interactive mode in order to enable managers to take quick decisions. You can consider decision support systems as the best when it includes high-level summary reports or charts and allow the user to drill down for more detailed information.

A DSS has the capability to update its decision database. Whenever manager feels that a particular decision is unique and not available in the system, the manager can chose to update the database with such decisions. This will strengthen the DSS to take decisions in future. There is no scope for errors in decision making when such systems are used as aid to decision making. DSS is a consistent decision making system. It can be used to generate reports of various lever management activities. It is capable of performing mathematical calculations and logical calculation depending upon the model adopted to solve the problem. You can summarize the benefits of DSS into following: Improves personal efficiency Expedites problem solving Facilitates interpersonal communication Promotes learning or training Increases organizational control Generates new evidence in support of a decision Creates a competitive advantage over competition Encourages exploration and discovery on the part of the decision maker Reveals new approaches to thinking about the problem space

Q3. What are Value Chain Analysis & describe its significance in MIS? Explain what is meant by BPR? What is its significance? How Data warehousing & Data Mining is useful in terms of MIS?

Product Differentiation and Value Chain Product differentiation is the degree to which buyers perceive products from alternative suppliers to be different. It is expressed by economic theory, the degree to which buyers perceive imperfections in product substitutability. The buyers of differentiated products may have to pay a price when satisfying their preference for something special, in return for greater added-value. The connection between the producer and buyers may be reinforced, at least to the level of customer loyalty, and perhaps to the point of establishing a partnership between them. Such a relationship imposes switching costs on the buyer, because its internal processes become adapted to the beneficial peculiarities of the particular factor of production, and use of an alternative would force internal changes. Hence product differentiation also serves as an entry barrier. In addition, a continuous process of product differentiation may produce an additional cost advantage over competitors and potential entrants, through intellectual property protections, such as patents, and the cost of imitation. The activities performed by a particular enterprise can be analyzed into primary activities, which directly adds value to the enterprises factors of production, which are together referred to as the value chain, and supporting activities. Porters Enterprise Value-Chain (Porter 1980) Value-addition activities like production, marketing delivery, and servicing of the product. These activities are connected in a chain. Support activities include those providing purchased inputs, technology, human resources, or overall infrastructure functions to support the primary activities. It is possible to reduce the transaction cost by proper coordination of all the activities. It should be possible to gather better information for various controls and also replace the same by less costlier activities. It will also be possible to reduce the overall time required to complete an activity. Therefore coordination is very important to achieve competitive advantage. For this it is necessary to manage the value chain as a system rather than as separate parts. An enterprises value chain for competing in a particular industry is embedded in a larger stream of activities. What Porter termed as value system, may be referred to as the industry value-chain. This chain consists of mainly the suppliers and distribution channels. Any activity of an organization is subjected to one or more of the following

New technologies Newer technologies changes the direction of the value chain. Shifting buyer needs The buyers have been increasing their demands to satisfy their needs in the form convenience and better price and features. This demand influences a change in the related market segments; Variation in industry segmentation The value system undergoes a change depending upon the existence of old and new systems and its components in the value chain. Organizations, which fail to adjust will have to close down their business. Changes in the costs It is possible to gain competitive advantage by optimizing the activities based on present conditions. Enterprises which continue to work on the older approaches in outdated modes of operation suffer. Changes in government regulations If there is a change in the standards of the product of the enterprise, with respect to the environmental controls, restrictions on entry to the market, and trade barriers then it affect the performance of the enterprise.

Basics of BPR The existing system in the organization is totally reexamined and radically modified for incorporating the latest technology. This process of change for the betterment of the organization is called as Business process re-engineering. This process is mainly used to modernize and make the organizations efficient. BPR directly affects the performance. It is used to gain an understanding the process of business and to understand the process to make it better and re-designing and thereby improving the system. BPR is mainly used for change in the work process. Latest software is used and accordingly the business procedures are modified, so that documents are worked upon more easily and efficiently. This is known as workflow management. Importance of BPR Business process are a group of activities performed by various departments, various organizations or between individuals that is mainly used for transactions in business. There may be people who do this transaction or tools. We all do them at one point or another either as a supplier or customer. You will really appreciate the need of process improvement or change in the organizations conduct with business if you have ever waited in the queue for a longer time to purchase 1 kilo of rice from a Public Distribution Shop (PDS-ration shop). The process is called the check-out process. It is called process because uniform standard system has been maintained to undertake such a task. The system starts with forming a queue, receiving the needed item form the shop, getting it billed, payment which involves billing, paying amount and receiving the receipt of purchase and the process ends up with the exit from the store. It is the transaction between customer and supplier. The above activities takes place between the customer and supplier which forms the process steps this example explains the business process. The business process may be getting admission to the college and graduating from the college, building house, and implementing new technology to an organization (Example EDUNXT in SMUDE), etc

A Process can be represented by triangle and figure 4.1 shows continue process of Business. Business process reengineering is a major innovation changing the way organizations conduct their business. Such changes are often necessary for profitability or even survival. BPR is employed when major IT projects such as ERP are undertaken.

Reengineering involves changes in structure, organizational culture and processes. Many concepts of BPR changes organizational structure. Team based organization, mass customization; empowerment and telecommuting are some of the examples. The support system in any organization plays a important role in BPR. ES, DSS, AI allows business to be conducted in different locations, provides flexibility in manufacturing permits quicker delivery to customers and supports rapid paperless transactions among suppliers, manufacturers and retailers. Expert systems can enable organizational changes by providing expertise to non experts. It is difficult to carry out BPR calculations using ordinary programs like spreadsheets etc. Experts make use of applications with simulations tools for BPR. Reengineering is basically done to achieve cost reduction, increase in quality, improvement in speed and service. BPR enable a company to become more competitive in the market. Employees work in team comprising of managers and engineers to develop a product. This leads to the formation of interdisciplinary teams which can work better than mere functional teams. The coordination becomes easier and faster results can be achieved. The entire business process of developing a product gets a new dimension. This has led to reengineering of much old functional process in organizations. Data Mining Data mining is primarily used as a part of information system today, by companies with a strong consumer focus - retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among "internal" factors such as price, product positioning, or staff skills, and "external" factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it enables them to "drill down" into summary information to view detail transactional data. With data mining, a retailer could use point-of-sale records of customer purchases to send targeted promotions based on an individuals purchase history. By mining demographic data from comment or warranty cards, the retailer could develop products and promotions to appeal to specific customer segments.

Data Mining is a collaborative tool which comprises of database systems, statistics, machine learning, visualization and information science. Based on the data mining approach used, different techniques form the other discipline can be used such as neural networks, artificial intelligence, fuzzy logic, knowledge representation, high performance computing and inductive logic programming. Data mining refers to extracting or mining knowledge from large amount of data. There may be other terms which refer data mining such as knowledge mining, knowledge extraction, data/pattern analysis, data archeology, and data dredging. The Knowledge discovery as a process may consist of following steps: 1. Data Cleaning: It removes noise and inconsistent data. 2. Data integration: It is where multiple data sources are combined. 3. Data selection: Data relevant to the analysis task are retrieved from the database. 4. Data transformation: Data are transformed or consolidated into forms appropriate for mining by performing summary or aggregation operations, for instance. 5. Data mining: An essential process where intelligent methods are applied in order to extract data patterns. 6. Pattern evaluation: To identify the truly interesting patterns representing knowledge based on some interesting measure. 7. Knowledge presentation: Visualization and knowledge representation techniques are used to present the mined knowledge to the users. When you look at the above step you will find that data mining is a very important step in knowledge representation. It interacts with the user for knowledge base. So it is found that there is necessity of a typical architecture for data mining as a big process. The architecture of the data mining has the following components: 1. Database, data warehouse and information repository: This is one or a set of databases, data warehouse, and information repository which can be used for data cleaning and data integration. 2. Database server: This Server is responsible for fetching the relevant data 3. Data mining engine: This helps in accessing the user through applications. It accesses data from the warehouse with the help of standard data connectivity mechanisms. Usually database drivers are used to connect the database. 4. Patterns evaluation model: It acquires the data to be evaluated form the database, producing the pattern edge. This model scans the data. It searches and creates the interesting patterns based on the thresholds. 5. Graphical user interface: It communicates between the user and the data mining system. It allows the user to interact with the system and specifies the data mining queries or task.

Data mining is applicable to any kind of information repository. Some of these may be relational databases, data warehouse, transactional databases, advanced database management systems, WWW and files. Advance database systems include object oriented databases, object relational databases, and application oriented databases. The best example for data mining which is so close to our lives is Google. The success of Google depends on the use of data mining techniques in the analysis of data in the search engine to meet your search demand. Data Warehousing Data Warehouse is defined as collection of database which is referred as relational database for the purpose of querying and analysis rather than just transaction processing. Data warehouse is usually maintained to store heuristic data for future use. Data warehousing is usually used to generate reports. Integration and separation of data are the two basic features need to be kept in mind while creating a data warehousing. The main output from data warehouse systems are; either tabular listings (queries) with minimal formatting or highly formatted "formal" reports on business activities. This becomes a convenient way to handle the information being generated by various processes. Data warehouse is an archive of information collected from wide multiple sources, stored under a unified scheme, at a single site. This data is stored for a long time permitting the user an access to archived data for years. The data stored and the subsequent report generated out of a querying process enables decision making quickly. This concept is useful for big companies having plenty of data on their business processes. Big companies have bigger problems and complex problems. Decision makers require access to information from all sources. Setting up queries on individual processes may be tedious and inefficient. Data warehouse may be considered under such situations. Data warehouse Architecture: Data ware house is center part of data repository. Data warehousing provides a strategic approach to all the business. Data warehouse is broadly famous for its characteristics like: Subject oriented: Data warehouse has the ability to analyze the data. The ability to define by subject matter makes DW subject oriented. Integrated: This resolves the problems of conflicts and inconsistencies existing in the units of measure. Non volatile: Once the data is entered in the warehouse it shall not change. This characteristics is very important because after all the purpose of heuristic data is for future use. Time variant: The data warehouse focus on change over time. To discover new trends in business, analysts need large amount of data which is contrasting to OLTP (Online transaction Processing) which works on heuristic data.

Q4. Explain DFD & Data Dictionary? Explain in detail how the information requirement is determined for an organization? DFD Data flow diagrams represent the logical flow of data within the system. DFD do not explain how the processes convert the input data into output. They do not explain how the processing takes place. DFD uses few symbols like circles and rectangles connected by arrows to represent data flows. DFD can easily illustrate relationships among data, flows, external entities an stores. DFD can also be drawn in increasing levels of detail, starting with a summary high level view and proceeding o more detailed lower level views. A number of guidelines should be used in constructing DFD. Choose meaningful names for the symbols on the diagram. Number the processes consistently. The numbers do not imply the sequence. Avoid over complex DFD. Make sure the diagrams are balanced. Data Dictionary The data dictionary is used to create and store definitions of data, location, format for storage and other characteristics. The data dictionary can be used to retrieve the definition of data that has already been used in an application. The data dictionary also stores some of the description of data structures, such as entities, attributes and relationships. It can also have software to update itself and to produce reports on its contents and to answer some of the queries. Many organisations have purchased computers for data processing and for meeting the statutory requirements of filing the returns and reports to the Government. Computers are used mainly for computing and accounting the business transactions and have not been considered as a tool for information processing. The organisations have invested on computers and expanded its use by adding more or bigger computers to take care of the numerous transactions in the business. In this approach, the information processing function of the computers in the organisation never got its due regard as an important asset to the organisation. In fact, this function is misinterpreted as data processing for expeditious generation of reports and returns, and not as information processing for management actions and decisions. However, the scene has been changing since late eighties when the computers became more versatile, in the function of Storage, Communications, Intelligence and Language. The computer technology is so advanced that the barriers of storage, distance understanding of language and speed are broken.

The computers have become user-friendly. They can communicate to any distance and share data, information and physical resources of other computers. Computers can now be used as a tool for information processing and communication. It can be used for storing large database or knowledge base. It can be used for knowing the current status of any aspect of the business due to its online real time processing capability. With the advancement of computer technology more popularly known as information technology, it is now possible to recognise information as a valuable resource like money and capacity. It is necessary to link its acquisition, storage, use, and disposal as per the business needs for meeting the business objectives. Such a broad-based activity can be executed only when it is conceived as a system. This system should deal with management information and not with data processing alone. It should provide support for management planning, decision making and action. It should support the needs of the lower management as well as that of the top management. It should satisfy the needs of different people in the organisation at different levels having varying managerial capabilities. It should provide support to the changing needs of business management. In short, we need a Management Information System flexible enough to deal with the changing information needs of the organisation. It should be conceived as an open system continuously interacting with the business environment with a built-in mechanism to provide the desired information as per the new requirements of the management. The designing of such an open system is a complex task. It can be achieved only if the MIS is planned, keeping in view, the plan of the business management of the organisation. The plan of MIS is consistent to the business plan of the organisation. The information needs for the implementation of the business plan should find place in the MIS. To ensure such an alignment possibility, it is necessary that the business plan strategic or otherwise, states the information needs. The information needs are then traced to the source data and the systems in the organisation which generate such a data. The plan of development of the MIS is linked with the steps of the implementation in a business development plan. The system of information generation is so planned that strategic information is provided for the strategic planning, control information is provided for a short term planning and execution. The details of information are provided to the operations management to assess the status of an activity and to find ways to make up, if necessary. Once the management needs are translated into information needs, it is left to the designer to evolve a plan of MIS development and implementation.

Due to Internet capabilities and web technology, traditional business organisation definition has undergone a change where scope of the enterprise now includes other company locations, business partners, customers and vendors. It has no geographic boundaries as it can extend its operations where Internet works. All this is possible due to Internet and web moving traditional paper driven organisation to information driven Internet enabled E-business enterprise. E-business enterprise is open twenty-four hours, and being independent, managers, vendors, customers transact business anytime from anywhere. Internet capabilities have given E-business enterprise a cutting edge capability advantage to increase the business value. It has opened new channels of business as buying and selling can be done on Internet. It enables to reach new markets across the world anywhere due to communication capabilities. It has empowered customers and vendors / suppliers through secured access to information to act, wherever necessary. The cost of business operations has come down significantly due to the elimination of paper-driven processes, faster communication and effective collaborative working. The effect of these radical changes is the reduction in administrative and management overheads, reduction in inventory, faster delivery of goods and services to the customers. In E-business enterprise traditional people organisation based on Command Control principle is absent. It is replaced by people organisations that are empowered by information and knowledge to perform their role. They are supported by information systems, application packages, and decisionsupport systems. It is no longer functional, product, and project or matrix organisation of people but E-organisation where people work in network environment as a team or work group in virtual mode. E-business enterprise is more process-driven, technology-enabled and uses its own information and knowledge to perform. It is lean in number, flat in structure, broad in scope and a learning organisation. In E-business enterprise, most of the things are electronic, use digital technologies and work on databases, knowledge bases, directories and document repositories. The business processes are conducted through enterprise software like ERP, SCM, and CRM supported by data warehouse, decision support, and knowledge management systems. Today most of the business organisations are using Internet technology, network, and wireless technology for improving the business performance measured in terms of cost, efficiency, competitiveness and profitability. They are using E-business, E-commerce solutions to reach faraway locations to deliver product and services. The enterprise solutions like ERP, SCM, and CRM run on Internet (Internet / Extranet) & Wide Area Network (WAN). The business processes across the organisation and outside run on E-technology platform using digital technology. Hence todays business firm is also called E-enterprise or Digital firm.

The paradigm shift to E-enterprise has brought four transformations, namely: Domestic business to global business. Industrial manufacturing economy to knowledge-based service economy. Enterprise Resource Management to Enterprise Network Management. Manual document driven business process to paperless, automated, electronically transacted business process. These transformations have made conventional organisation design obsolete. The basis of conventional organisation design is command & control which is now collaborates & control. This change has affected the organisation structure, scope of operations, reporting mechanisms, work practices, workflows, and business processes at large. E-commerce is a second big application next to ERP. It essentially deals with buying and selling of goods. With the advent of internet and web technology, E-commerce today covers an entire commercial scope online including design and developing, marketing, selling, delivering, servicing, and paying for goods. Some E-commerce applications add order tracking as a feature for customer to know the delivery status of the order. The entire model successfully works on web platform and uses Internet technology. E-commerce process has two participants, namely buyer and seller, like in traditional business model. And unique and typical to E-commerce there is one more participant known as Merchant Server. Merchant server in E-commerce secures payment to seller by authorisation and authentication of commercial transaction. E-commerce process model can be viewed in four ways and categories: B2C: Business Organisation to Customer B2B: Business Organisation to Business C2B: Customer to Business Organisation C2C: Customer to Customer In B2C model, business organisation uses websites or portals to offer information about product, through multimedia clippings, catalogues, product configuration guidelines, customer histories and so on. A new customer interacts with the site and uses interactive order processing system for order placement. On placement of order, secured payment systems comes into operation to authorize and authenticate payment to seller. The delivery system then takes over to execute the delivery to customer. In B2B model, buyer and seller are business organisations. They exchange technical & commercial information through websites and portals. Then model works on similar line like B2C. More advanced B2B model uses Extranet and conducts business transactions based on the information status displayed on the buyers application server. Auto component industry uses this model for supplying parts and components to auto manufacturer based on the inventory levels and production programme.

In C2B model, customer initiates actions after logging on to sellers website or to server. On the server of the selling organisation, E-commerce applications are present for the use of the customer. The entire Internet banking process works on C2B model where account holders of the bank transact a number of requirements such as seeking account balance, payment, and money transfer and so on. In C2C model, customer participates in the process of selling and buying through the auction website. In this model, website is used for personal advertising of products or services. Enewspaper website is an example of advertising and selling of goods to the consumer. In all models, there are two channels: one channel deals with information delivery and sharing, and another deals with the commercial aspect of buying and selling. Some illustrations of the two channels are listed below for all the four models.
In B2B model, the participants in E-business are two organisations with relations as buyer-seller, distributordealer and so on. MIS in E-organisation deviates from traditional report formats to automated intelligent knowledge driven system. It enforces manager to act quickly to response displayed on the screen. Most of the decisions of middle and operational management are delegated to IT-enabled information and knowledgedriven systems. They are supported by the rule-based transaction processing system, decision support systems, expert systems, artificial intelligence (AI) systems, and data warehouse and mining systems. MIS in E-organisation deviates from the conventional model of Capture Compute - Process - Analyse - Report Think and Act to Point - Click - Respond - Act.

The decision-making systems can be classified in a number of ways. There are two types of systems based on the managers knowledge about the environment. If the manager operates in a known environment then it is a closed decision-making system. The conditions of the closed decision-making system are: a) The manager has a known set of decision alternatives and knows their outcomes fully in terms of value, if implemented. b) The manager has a model, a method or a rule whereby the decision alternatives can be generated, tested, and ranked for selection. c) The manager can choose one of them, based on some goal or objective criterion. Few examples are a product mix problem, an examination system to declare pass or fail, or an acceptance of the fixed deposits. If the manager operates in an environment not known to him, then the decision-making system is termed as an open decision-making system. The conditions of this system in contrast closed decision-making system are: a) The manager does not know all the decision alternatives. b) The outcome of the decision is also not known fully. The knowledge of the outcome may be a probabilistic one. c) No method, rule or model is available to study and finalise one decision among the set of decision alternatives. d) It is difficult to decide an objective or a goal and, therefore, the manager resorts to that decision, where his aspirations or desires are met best. Deciding on the possible product diversification lines, the pricing of a new product, and the plant location, are some decision-making situations which fall in the category of the open decision-making systems. The MIS tries to convert every open system to a closed decision-making system by providing information support for the best decision. The MIS gives the information support, whereby the manager knows more and more about environment and the outcomes, he is able to generate the decision alternatives, test them and select one of them. A good MIS achieves this. What if analysis Decisions are made using a model of the problem for developing various solution alternatives and testing them for best choice. The model is built with some variables and relationship between variables. In reality, the considered values of variables or relationship

in the model may not hold good and therefore solution needs to be tested for an outcome, if the considered values of variables or relationship change. This method of analysis is called what if analysis. For example, in decision-making problem about determining inventory control parameters (EOQ, Safety Stock, Maximum Stock, Minimum Stock, Reorder level) lead time is assumed fairly constant and stable for a planning period. Based on this, the inventory parameters are calculated. Inventory manager wants to know how the cost of holding inventory will be affected if lead time is reduced by one week or increased by one week. The model with changed lead time would compute the cost of holding inventory under new conditions. Such type of analysis can be done for purchase price change, demand forecast variations and so on. Such analysis helps a manager to take more learned decisions. What if analysis creates confidence in decision-making model by painting a picture of outcomes under different conditions? The manager, being a human being, behaves in a peculiar way in a given situation. The response of one manager may not be the same as that of the two other managers, as they differ on the behavioural platform. Even though tools, methods and procedures are evolved, the decision is many a times influenced by personal factors such as behaviour. The managers differ in their approach towards decision-making in the organisation, and, therefore, they can be classified into two categories, viz., the achievement-oriented, i.e., looking for excellence and the task-oriented, i.e., looking for the completion of the task somehow. The achievementoriented manager will always opt for the best and, therefore, will be enterprising in every aspect of the decision-making. He will endeavour to develop all the possible alternatives. He would be scientific, and therefore, more rational. He would weigh all the pros and cons properly and then conclude. The managers personal values will definitely influence ultimately. Some of the managers show a nature of risk avoidance. Their behaviour shows a distinct pattern indicating a conservative approach to decision-making a path of low risk or no risk. Further, even though decision-making tools are available, the choice of the tools may differ depending on the motives of the manager. The motives are not apparent, and hence, are difficult to understand. A rational decision in the normal course may turn out to be different on account of the motives of the manager. The behaviour of the manager is also influenced by the position he holds in the organisation. The behaviour is influenced by a fear and an anxiety that the personal image may be tarnished and the career prospects in the organisation may be spoiled due to a defeat or a failure. The managerial behaviour, therefore, is a complex mix of the personal values, the atmosphere in the organisation, the motives and the motivation, and the resistance to change. Such behaviour sometimes overrides normal decisions based on business and economic principles. The interplay of different decision-making of all the managers in the organisation shapes up the organisational decision-making. The rationale of the business decision will largely

depend upon the individuals, their positions in the organisation and their inter-relationship with other managers. If two managers are placed in two decision-making situations, and if their objectives are in conflict, the managers will arrive at a decision objectively, satisfying individual goals. Many a times, they may make a conscious decision, disregarding organisations objective to meet their personal goals and to satisfy their personal values. If the manager is enterprising, he will make objectively rational decisions. But if the manager is averse to taking risk, he will make a decision which will be subjectively rational as he would act with limited knowledge and also be influenced by the risk averseness. Thus, it is clear that if the attitudes and the motives are not consistent across the organisation, the decision-making process slows down in the organisation.

MB0047 Management Information Systems Assignment - Set- 2 Q1. How hardware & software support in various MIS activities of the organization? Explain the transaction stages from manual system to automated systems? Answer: Hardware support for MIS Generally hardware in the form of personal computers and peripherals like printers, fax machines, copier, scanners etc are used in organization to support various MIS activities of the organization. Advantages of a PC: you can find the following advantages a personal computer offers: a) Speed A PC can process data at a very high speed. It can process millions of instructions within fraction of seconds. b) Storage A PC can store large quantity of data in a small space. It eliminates the need of storing the conventional office flat files and box files which requires lots of space. The storage system in a PC is such that the information can be transferred from one place to another place in electronic form. c) Communication A PC on the network can offer great support as a communicator in communicating information in the form of text and images. Today a PC with internet is used as a powerful tool of communication for every business activity. d) Accuracy A PC is highly reliable in the sense that it could be used to perform calculations continuously for hours with a great degree of accuracy. It is possible to obtain mathematical results correct up to a great degree of accuracy. e) Conferencing A PC with internet offers facility of video conferencing worldwide. Business people across the globe travel a lot to meet their business partner, colleagues, and customers etc to discuss about business activities. By video conferencing inconvenience of traveling can be avoided. A block diagram of a computer may be represented asFig. : Block diagram of a Computer

Input unit is used to give input to the processor. Examples of input unit Keyboard, scanner, mouse, bar code reader etc. A processor refers to unit which processes the input received the way it has been instructed. In a computer the processor is the CPU Central Processing Unit. It does all mathematical calculations, logical tasks, storing details in the memory etc. Output unit is used to give output s from the computer. Examples of output unit Monitor, printer, speakers etc. Software packages like Microsoft Office suite to many customized applications are used in MIS activities of an organization. Various ERP packages are also available t support MIS activities. Transformation stage Manual systems to automated systems The value of Information is not present day discovery. We have always observed that the Information is the asset of any organization. The existence of information is since the Big bang happened and then on it went on. But the value of information is being used only after the industrial revolution. Before, it was only in the record which we are using now in an efficient way. The first information was binary. Information is generated by interactions; information is by interaction, as without comparison, without a context, without interaction, there is nothing. Traditional information systems are said to contain data, which is then processed. The processed data is called information. The processing of data takes place by selecting the required fact and organizing it in a way to form meaningful information which is used for some organizational needs. In Manual systems, a series of action takes which may be similar as well as different to processing in traditional systems. For instance, in hospital information systems the patient details can be viewed by the administrator as well as patient. But the views perceived by these are different. One may view it as a record to take print and other may be the source of his ailment description. What is common to the two systems is the idea of transformation. Transformation occurs when systems participants are faced with cues from their environment, which may be data or situations, and the participants then define and redefine what to do next, either processing data or developing a situation, altering the system each time to transform it to a state closer to the participants goal or objective. When a fact from either type of system is presented for manipulation, a transformation can occur. Thus, transformation is common to both types of systems. A transformation had to necessarily go through the following stages a) appraisal of the procedures b) types of documents c) storage systems

d) formulations and coding e) verification and validation f) review g) documentation After the industrial revolution slowly manual systems were transformed into digital form by means of computer and related instruments.

Q2. Explain the various behavioral factors of management organization? As per Porter, how can performance of individual corporations be determined?

Behavioral factors The implementation of computer based information systems in general and MSS in particular is affected by the way people perceive these systems and by how they behave in accepting them. User resistance is a major behavioral factor associated with the adoption of new systems. The following are compiled by Jiang et al. (2000); reasons that employees resist new systems: Change in job content Loss of status Change in interpersonal relationships Loss of power Change in decision making approach Uncertainty or unfamiliarity or misinformation Job security The major behavioral factors are a) Decision styles symbolic processing of AI is heuristic; DSS and ANN are analytic b) Need for explanation ES provides explanation, ANN does not, DSS may provide partial explanation. Explanation can reduce resistance to change c) Organizational climate some organizations lead and support innovations and new technologies whereas others wait and lag behind in making changes d) Organizational expectations over expectation can result in disappointments and termination of innovation. Over expectation was observed in most early intelligent systems. e) Resistance to change can be strong in MSS because the impacts may be significant. Many can resist (Alter 1980; Guimarraies et al. 1992) Performance Out of many possible interpretations of a strategy an organization adopts in business, it is found that a majority is concerned with competition between corporations. Competition means cultivating unique strengths and capabilities, and defending them against imitation by other firms. Another alternative sees competition as a process linked to innovation in product, market, or technology. Strategic information systems theory is concerned with the use of information technology to support or sharpen an enterprises competitive strategy. Competitive strategy is an enterprises plan for achieving sustainable competitive advantage over, or reducing the edge of, its adversaries.

The performance of individual corporations is determined by the extent to which they manage the following (as given by Porter) a) The bargaining power of suppliers; b) The bargaining power of buyer; c) The threat of new entrants; d) The threat of substitute products; and e) Rivalry among existing firms. Porters classic diagram representing these forces is indicated below.

Porters Forces Driving Industry Competition (Porter 1980) There

are two basic factors which may be considered to be adopted by organization in their strategies: a) low cost b) product differentiation

Enterprise can succeed relative to their competitors if they possess sustainable competitive advantage in either of these two. Another important consideration in positioning is competitive scope, or the breadth of the enterprises target markets within its industry, i.e. the range of product varieties it offers, the distribution channels it employs, the types of buyers it serves, the geographic areas in which it sells, and the array of related industries in which it competes. Under Porters framework, enterprises have four generic strategies available to them whereby they can attain above-average performance. They are: a) cost leadership; b) differentiation; c) cost focus; and d) focused differentiation. Porters representation of them is indicated below

Porters Four Generic Strategies (Porter 1980) According to Porter, competitive advantage grows out of the way an enterprise organizes and performs discrete activities. The operations of any enterprise can be divided into a series of activities such as salespeople making sales calls, service technicians performing repairs, scientists in the laboratory designing products or processes, and treasurers raising capital. By performing these activities, enterprises create value for their customers. The ultimate value an enterprise creates is measured by the amount customers are willing to pay for its product or services. A firm is profitable if this value exceeds the collective cost of performing all of the required activities. To gain competitive advantage over its rivals, a firm must either provide comparable value to the customer, but perform activities more efficiently than its competitors (lower cost), or perform activities in a unique way that creates greater buyer value and commands a premium price (differentiation).

As per Borden 1964, quoted in Wiseman 1988 many differentiation bases can be classified as 4 Ps as given below:

Product (quality, features, options, style, brand name, packaging, sizes, services, warranties, returns); Price (list, discounts, allowances, payment period, credit terms); Place (channels, coverage, locations, inventory, transport); and Promotion (advertising, personal selling, sales promotion, publicity).

The various attributes listed above can be sharpened the firms product by the support of a suitable information technology.

a) Development of Long Range Plans of the MIS Many organisations have purchased computers for data processing and for meeting the statutory requirements of filing the returns and reports to the Government. Computers are used mainly for computing and accounting the business transactions and have not been considered as a tool for information processing. The organisations have invested on computers and expanded its use by adding more or bigger computers to take care of the numerous transactions in the business. In this approach, the information processing function of the computers in the organisation never got its due regard as an important asset to the organisation. In fact, this function is misinterpreted as data processing for expeditious generation of reports and returns, and not as information processing for management actions and decisions. However, the scene has been changing since late eighties when the computers became more versatile, in the function of Storage, Communications, Intelligence and Language. The computer technology is so advanced that the barriers of storage, distance understanding of language and speed are broken. The computers have become user-friendly. They can communicate to any distance and share data, information and physical resources of other computers. Computers can now be used as a tool for information processing and communication. It can be used for storing large database or knowledge base. It can be used for knowing the current status of any aspect of the business due to its online real time processing capability. With the advancement of computer technology more popularly known as information technology, it is now possible to recognise information as a valuable resource like money and capacity. It is necessary to link its acquisition, storage, use, and disposal as per the business needs for meeting the business objectives. Such a broad-based activity can be executed only when it is conceived as a system. This system should deal with management information and not with data processing alone. It should provide support for management planning, decision making and action. It should support the needs of the lower management as well as that of the top management. It should satisfy the needs of different people in the organisation at different levels having varying managerial capabilities. It should provide support to the changing needs of business management. In short, we need a Management Information System flexible enough to deal with the changing information needs of the organisation. It should be conceived as an open system continuously interacting with the business environment with a built-in mechanism to provide the desired information as per the new requirements of the management. The designing of such an open system is a complex task. It can be achieved only if the MIS is planned, keeping in view, the plan of the business management of the organisation. The plan of MIS is consistent to the business plan of the organisation. The information needs for the implementation of the business plan should find place in the MIS. To ensure such an alignment possibility, it is necessary that the business plan strategic or otherwise, states the information needs. The information needs are then traced to the source data and the systems in the organisation which generate such a data. The plan of development of the MIS is linked with the steps of the implementation in a business development plan. The system of information generation is so planned that strategic information is provided for the strategic planning, control information is provided for a short term planning and execution. The details of information are provided to the operations management to assess the status of an activity and to find ways to make up, if necessary. Once the management needs are translated into information needs, it is left to the designer to evolve a plan of MIS development and implementation. SDLC

System development cycle stages are sometimes known as system study. System concepts which are important in developing business information systems expedite problem solving and improve the quality of decision-making. The system analyst has to do a lot in this connection. They are confronted with the challenging task of creating new systems an planning major changes in the organization. The system analyst gives a system development project, meaning and direction. The typical breakdown of an information systems life cycle includes a feasibility study, requirements, collection and analysis, design, prototyping, implementation, validation, testing and operation. It may be represented in the form of a block diagram as shown below:


of in of

Feasibility study It is concerned with determining the cost effectiveness various alternatives the designs the information system and the priorities among the various system components.

b) Requirements, collection and analysis It is concerned with understanding the mission of the information systems, that is, the application areas of the system within the enterprise and the problems that the system should solve. c) Design It is concerned with the specification of the information systems structure. There are two types of design: database design and application design. The database design is the design of the database design and the application design is the design of the application programs. d) Prototyping A prototype is a simplified implementation that is produced in order to verify in practice that the previous phases of the design were well conducted. e) Implementation It is concerned with the programming of the final operational version of the information system. Implementation alternatives are carefully verifies and compared.

f) Validation and testing It is the process of assuring that each phase of the development process is of acceptable quality and is an accurate transformation from the previous phase.

Due to Internet capabilities and web technology, traditional business organisation definition has undergone a change where scope of the enterprise now includes other company locations, business partners, customers and vendors. It has no geographic boundaries as it can extend its operations where Internet works. All this is possible due to Internet and web moving traditional paper driven organisation to information driven Internet enabled E-business enterprise. E-business enterprise is open twenty-four hours, and being independent, managers, vendors, customers transact business anytime from anywhere. Internet capabilities have given E-business enterprise a cutting edge capability advantage to increase the business value. It has opened new channels of business as buying and selling can be done on Internet. It enables to reach new markets across the world anywhere due to communication capabilities. It has empowered customers and vendors / suppliers through secured access to information to act, wherever necessary. The cost of business operations has come down significantly due to the elimination of paper-driven processes, faster communication and effective collaborative working. The effect of these radical changes is the reduction in administrative and management overheads, reduction in inventory, faster delivery of goods and services to the customers. In E-business enterprise traditional people organisation based on Command Control principle is absent. It is replaced by people organisations that are empowered by information and knowledge to perform their role. They are supported by information systems, application packages, and decisionsupport systems. It is no longer functional, product, and project or matrix organisation of people but E-organisation where people work in network environment as a team or work group in virtual mode. E-business enterprise is more process-driven, technology-enabled and uses its own information and knowledge to perform. It is lean in number, flat in structure, broad in scope and a learning organisation. In E-business enterprise, most of the things are electronic, use digital technologies and work on databases, knowledge bases, directories and document repositories. The business processes are conducted through enterprise software like ERP, SCM, and CRM supported by data warehouse, decision support, and knowledge management systems. Today most of the business organisations are using Internet technology, network, and wireless technology for improving the business performance measured in terms of cost, efficiency, competitiveness and profitability. They are using E-business, E-commerce solutions to reach faraway locations to deliver product and services. The enterprise solutions like ERP, SCM, and CRM run on Internet (Internet / Extranet) & Wide Area Network (WAN). The business processes across the organisation and outside run on E-technology platform using digital technology. Hence todays business firm is also called E-enterprise or Digital firm.

The paradigm shift to E-enterprise has brought four transformations, namely: Domestic business to global business. Industrial manufacturing economy to knowledge-based service economy. Enterprise Resource Management to Enterprise Network Management. Manual document driven business process to paperless, automated, electronically transacted business process.

These transformations entional Organization Design have made conventional organisation design obsolete. The basis of conventional organisation design is command & control which is now collaborates & control. This erprise change has affected the organisation structure, scope of operations, reporting mechanisms, work practices, workflows, and business processes at large. The comparison between conventional heavy organization structure organisation design and E-enterprise is summarized in Table below

Table: Comparison between Conventional Design and organization structure E-Organization

k & work place location at one place

In E-enterprise, business is conducted electronically. Buyers and sellers through Internet drive the aration of work from work place location market and Internet-based web systems. Buying and selling is possible on Internet. Books, CDs, computer, white goods and many such goods are bought and sold on Internet. The new channel of business is well-known as E-commerce. On the same lines, banking, insurance, healthcare are ual & document-based work flows being managed through Internet E-banking, E-billing, E-audit, & use of Credit cards, Smart card, ATM, E-money are the examples of the E-commerce application.

erless work The digital firm, which uses Internet and web technology and uses E-business and E-commerce flows solutions, is a reality and is going to increase in number. administrative & management overheads


xible, rigid and longer business process cycles

ible agile and responsive process cycles

ate business process systems for self use. They are barred for usage to customers, vendors and business par

ic business processes and systems for use by customers, vendors and business partners

usage of technology

internet, wireless and network technologies

MIS for E-business is different compared to conventional MIS design of an organisation. The role of MIS in E-business organization is to deal with changes in global market and enterprises. MIS produces more knowledge-based products. Knowledge management system is formally recognized as a part of MIS. It is effectively used for strategic planning for survival and growth, increase in profit and productivity and so on. To achieve the said benefits of E-business organisation, it is necessary to redesign the organisation to realize the benefits of digital firm. The organisation structure should be lean and flat. Get rid of rigid established infrastructure such as branch office or zonal office. Allow people to work from anywhere. Automate processes after re-engineering the process to cut down process cycle time. Make use of groupware technology on Internet platform for faster response processing. Another challenge is to convert domestic process design to work for international process, where integration of multinational information systems using different communication standards, countryspecific accounting practices, and laws of security are to be adhered strictly. Internet and networking technology has thrown another challenge to enlarge the scope of organisation where customers and vendors become part of the organisation. This technology offers a solution to communicate, coordinate, and collaborate with customers, vendors and business partners. This is just not a technical change in business operations but a cultural change in the mindset of managers and workers to look beyond the conventional organisation. It means changing the organisation behaviour to take competitive advantage of the E-business technology. The last but not the least important is the challenge to organise and implement information architecture and information technology platforms, considering multiple locations and multiple information needs arising due to global operations of the business into a comprehensive MIS. The scope of E-business is limited to executing core business process of the organisation. These processes would have external interface like suppliers, customers, contractors, consultants and so on. The core business processes of the organisation are procurement, manufacturing, selling, distribution, delivery and accounting. These core processes are best run by application packages like Enterprise Resource Planning (ERP). If enterprise definition is made wider including customer, suppliers and distributors, application package like Supply Chain Management (SCM) is best suited for planning and execution of entire business process. In addition to these core processes, organisations use Internet enabled systems and other technologies to handle these processes more effectively. Transaction processing, workflow, work group and process control applications are the backend support systems to main ERP / SCM enterprise management systems. For example, when a supplier sends goods, it is received in the warehouse. This event is processed E-way using E-business systems suite. The receipt, documents and packages are read by bar coding system. Then receipt processing is done to confirm the validity of dispatch by the supplier, confirmation of quality, acknowledging the receipt, updating the inventory, communication of receipt to manufacturing, updating the purchase order, effecting material accounts and supplier accounts, creating a liability in payables and posting it into cash flow projections. You will

observe that receipt processing is first done at locations like warehouse, and Procurement module of ERP takes over to effect seamlessly all updates and changes. In this event processing, workflow system is used where quality of goods is checked, confirmed and certified in stages by three agencies in the organisation. This event is processed by a work group, which includes receiver at the warehouse, QA inspector, and warehouse manager playing their respective role in the receipt processing as specified in the workgroup application. Having accepted the goods, automated and process controlled goods movement, warehouse system takes over, and reads the receipt record to move the goods physically to assigned bin in a rack. E-business systems use internet / intranet / extranet capabilities to process an event in seamless manner covering all technical, commercial, business aspects and implications of an event. They perform internal business operations and interface with external agencies. E-business system scope manages cross-functional application systems as a single business process. It integrates cross functions seamlessly, automates the tasks, and updates the information in real time. The ERP/ SCM and now Customer Relations Management system (CRM) is a family of software solution packages dedicated to core management of functions of business. They are supported by front-end and back-end systems and applications designed for transaction processing, workflow management, work group processing and automated process control. E-business systems use client/ server architecture and run on Internet platform. E-business systems lay foundation for other Enterprise applications, namely E-commerce, E-communications, and E-collaboration. The current E-business system scope is built through ERP dedicated to manufacturing resource management for effective use of capacity and enhancing productivity. SCM is dedicated to logistics and distribution management and CRM is dedicated to customer relations management for customer satisfaction. IT, the backbone of E-enterprise, enables more precise target marketing towards intended audience. Organisations use websites and portals to store and share information, use networks to communicate, co-ordinate, and collaborate amongst structured teams and virtual teams. Employees use notebook computers, Personal Digital Assistant (PDAs). Most of the processes are automated and they use Internet, Intranet, and Extranet for communication and E-business application packages to run the functional systems in integrated manner. In Marketing System, IT helps to reach customer directly and is in the position to understand customer behaviour, customers demographic/ psychographic profile; it then helps to segment market by customer for advertising, promotion and contact. In Manufacturing System, IT helps to automate number of management processes relating to resource, capacity, engineering & design, maintenance, and support. The application of IT is so strong that it is termed as Computer Integrated Manufacturing (CIM) or Computer Aided Manufacturing (CAM). CIM adds value in the manufacturing by way of simplification of processes in production and design. Automation of simplified processes using process control devices, numerically

controlled machines and robots and lastly integration of all core and support processes contributes to manufacturing excellence. In Accounting and Finance system, IT application is very strong. E-business applications in this area are capable of accounting every business entity such as material, men, machines, cash, customer, vendor and so on. All processes, which deal with transaction, computing, accounting and analysis are automated using system intelligence and knowledge driver intelligent systems. The architecture of these processes enables to receive inputs from other functional systems like marketing, manufacturing, and HR, and process the same to account and analyze the impact on the business performance, be it cost, profit or productivity. An integrated E-business system is capable of forecasting resources requirement, managing resources, budgeting capital, sales, and manpower, and measuring financial performance.

Q5. What do you understand by service level Agreements (SLAs)? Why are they needed? What is the role of CIO in drafting these? Explain the various security hazards faced by an IS? Answer: A service-level agreement (SLA) is a contract between a network service provider and a customer that specifies, usually in measurable terms, what services the network service provider will furnish. Many Internet service providers (ISP)s provide their customers with an SLA. More recently, IS departments in major enterprises have adopted the idea One of the major responsibilities of the CIO is to establish the credibility of the systems organization. The systems department should not only focus on providing better service to the various lines of business but also help businesses operate better. If the CIO wants to be taken seriously, he needs to do what other executives do and have his own business metrics and performance measurements, so that he can effectively measure his internal business performance. Other business departments have them, but CIOs generally do not because IT has always been viewed as a cost center. Measurements in IT tend to be vague and lacking in context. For example, I had 14 projects last year, and I did them well. But there is no real business measurement there. How many projects should the manager have had? Did he really have the capacity to handle 14 projects? A CIO should explore running their area more like a service operation rather than a cost center, and develop metrics that track the performance of the information systems staff, as well as the equipment comprising the applications, infrastructure, and networks under the CIOs control. The first step, they say, is to implement service level agreements (SLAs) with business units. It sets the expectation on the technical areas of the CIOs operations. At a minimum, they should set up what is expected and what levels of service the equipment will provide. The underlying SLAs should be some sort of a charge-back system with business units, particularly when it comes to apportioning staff time. If information systems are now providing a service, the staff need to understand where the service is being used to be properly remunerate or to demonstrate where the value is. The second part of the IT operations equation is computer equipment, and CIOs must have a firm handle on how that equipment is being used. There are software to help with the people picture, and there are other products that can monitor hardware performance, such as network and server uptime. One of the major roles of the CIO is to make the organization information systems savvy and increase the technological maturity of the information systems organization. A major part of the CIOs job is to make the users aware of the opportunities arising as a result of technical innovations, how this can help them perform better, and familiarizing them with computers and information systems applications. The information systems management also has the job of helping the endusers adapt to the changes caused by information systems, and to encourage their use. Finally, CIOs need to institute life cycle management with their applications and computer equipment. Most IT organizations do not have any idea of the life cycle of an application how long they want it to last, and when it needs to be refurbished, replaced, or disposed off. Lacking this knowledge, it is easy for applications to linger long after they should be gone, and for

companies to spend far too much money on maintaining ailing applications. Forcing innovation is probably the dot-com eras most worthwhile legacy. The advent of the Internet spurred every business organization to take a new look at its business model. In the financial services industry, thinking about new ways to touch the customer forced companies to consider alternative channels of distribution that utilize the World Wide Web, call centers, and traditional brick and mortar models to provide unprecedented levels of customer access. Likewise, in other industries, the digital directive has focused the managements attention on supply chain issues, logistics, and distribution. As impatient shareholders press for steady productivity improvement, IT departments are being called upon to create efficiencies, drive costs down, and streamline buyer and supplier behaviour. This effort is likely to continue for the next three to five years in just about every industrial sector we care to name, as corporations continue to look to technology and the CIO for ways to make better business decisions, improve returns, and build connectivity, both within the organization and across the length of the value chain. Without a background in technology, the ability to manage people who supply technology is often limited. Todays CIOs are becoming more like investment portfolio managers. CIOs need to know when to build capabilities internally versus outsourcing some part of the portfolio to suppliers versus building alliances and forging partnerships. How do a CEO and CIO jointly architect the business so that they can derive as much efficiency and value out of the entire portfolio as possible? More and more evidence supports the case for a CIO to possess as sharp business acumen as any operating executive. In very large organizations, the CIO is in charge of thousands of people and an annual budget of billions of dollars. The position requires strong organizational leadership and financial management skills, and also calls for an ability to balance short-term realities against long-term objectives. CIOs have become policy-level executives in most companies. Strong communication skills are another essential component of this tool kit. The CIO should be able to present the business case to the technical people and the technical case to the business people. But more than anything else, the CIO needs to be a leader who can build and inspire a high-performance team. A CIO needs to learn the strengths and weaknesses of existing IT systems as the basis for strategic and tactical decisionmaking in order to make a successful enterprise-wide information systems initiative to capture the organizations mission-specific business rules (enterprise requirements, work flow, structure, procedures, etc.). Then, based on this extracted business logic, development or redevelopment of the information systems application infrastructure commences. For proper alignment of the business and IT strategy, it is important for the CIO to do the following. Understand die process by which the company gains a comprehensive view of the Interoperation, interrelationships, and interdependencies of the IT environment, in order to gain the most effective analysis of all potential IT impacts of the proposed changes. Implement the process by which the modernization project is carried out, which can include any combination of the following:

1. Migration databases, platforms, languages, and data 2. Transformation data-field adjustment, naming standardization, and system consolidation 3. Redevelopment application mining, process mining, and Web redeployment Maintain the process by which an IT data repository is continuously updated, in order to facilitate more effective understanding, management, and maintenance of complex IT environments, providing CIOs with the information they need in order to effectively manage system changes and enhancements and adapt to new technologies and business needs. The resulting detailed reports contain the information that IT management requires in order to fully understand legacy systems. For an effective IT organization, a CIO needs to: Achieve two-way strategic alignment management and IT must work together to ensure that their initiatives are aligned. Develop effective relationships with line management communication between IT and line personnel will ensure integration of business and technology Capabilities. Deliver and implement new systems systems delivery will include not only development but also procurement and integration. Build and manage infrastructure IT units must develop architecture, establish standards, communicate the value of the infrastructure, and operate the increasingly complex infrastructure. Re-skill the IT organization new skills, not just technical skills but business skills, will be needed. Manage vendor partnerships IT managers must be informed buyers and negotiators. Build high-performance IT applications the IT unit must meet increasingly demanding performance goals.

Q6. Case Study: Information system in a restaurant. A waiter takes an order at a table, and then enters it online via one of the six terminals located in the restaurant dining room. The order is routed to a printer in the appropriate preparation area: the cold item printer if it is a salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink. A customers meal check-listing (bill) the items ordered and the respective prices are automatically generated. This ordering system eliminates the old three-carbon-copy guest check system as well as any problems caused by a waiters handwriting. When the kitchen runs out of a food item, the cooks send out an out of stock message, which will be displayed on the dining room terminals when waiters try to order that item. This gives the waiters faster feedback, enabling them to give better service to the customers. Other system features aid management in the planning and control of their restaurant business. The system provides up-to-the-minute information on the food items ordered and breaks out percentages showing sales of each item versus total sales. This helps management plan menus according to customers tastes. The system also compares the weekly sales totals versus food costs, allowing planning for tighter cost controls. In addition, whenever an order is voided, the reasons for the void are keyed in. This may help later in management decisions, especially if the voids consistently related to food or service. Acceptance of the system by the users is exceptionally high since the waiters and waitresses were involved in the selection and design process. All potential users were asked to give their impressions and ideas about the various systems available before one was chosen. Questions: 1. In the light of the system, describe the decisions to be made in the area of strategic planning, managerial control and operational control? What information would you require to make such decisions? 2. What would make the system a more complete MIS rather than just doing transaction processing? 3. Explain the probable effects that making the system more formal would have on the customers and the management. Solution: 1. A management information system (MIS) is an organized combination of people, hardware, communication networks and data sources that collects, transforms and distributes information in an organization. An MIS helps decision making by providing timely, relevant and accurate information to managers. The physical components of an MIS include hardware, software, database, personnel and procedures. Management information is an important input for efficient performance of various managerial functions at different organization levels. The information system facilitates decision making. Management functions include planning, controlling and decision making.

Decision making is the core of management and aims at selecting the best alternative to achieve an objective. The decisions may be strategic, tactical or technical. Strategic decisions are characterized by uncertainty. They are future oriented and relate directly to planning activity. Tactical decisions cover both planning and controlling. Technical decisions pertain to implementation of specific tasks through appropriate technology. Sales region analysis, cost analysis, annual budgeting, and relocation analysis are examples of decision-support systems and management information systems. There are 3 areas in the organization. They are strategic, managerial and operational control. Strategic decisions are characterized by uncertainty. The decisions to be made in the area of strategic planning are future oriented and relate directly to planning activity. Here basically planning for future that is budgets, target markets, policies, objectives etc. is done. This is basically a top level where up-to-the minute information on the food items ordered and breaks out percentages showing sales of each item versus total sales is provided. The top level where strategic planning is done compares the weekly sales totals versus food costs, allowing planning for tighter cost controls. Executive support systems function at the strategic level, support unstructured decision making, and use advanced graphics and communications. Examples of executive support systems include sales trend forecasting, budget forecasting, operating plan development, budget forecasting, profit planning, and manpower planning. The decisions to be made in the area of managerial control are largely dependent upon the information available to the decision makers. It is basically a middle level where planning of menus is done and whenever an order is voided, the reasons for the void are keyed in which later helps in management decisions, especially if the voids are related to food or service. The managerial control that is middle level also gets customer feedback and is responsible for customer satisfaction. The decisions to be made in the area of operational control pertain to implementation of specific tasks through appropriate technology. This is basically a lower level where the waiter takes the order and enters it online via one of the six terminals located in the restaurant dining room and the order is routed to a printer in the appropriate preparation area. The items ordered list and the respective prices are automatically generated. The cooks send out of stock message when the kitchen runs out of a food item, which is basically displayed on the dining room terminals when waiter tries to order that item. This basically gives the waiters faster feedback, enabling them to give better service to the customers. Transaction processing systems function at the operational level of the organization. Examples of transaction processing systems include order tracking, order processing, machine control, plant scheduling, compensation, and securities trading. The information required to make such decision must be such that it highlights the trouble spots and shows the interconnections with the other functions. It must summarize all information relating to the span of control of the manager. The information required to make these decisions can be strategic, tactical or operational information.

Advantages of an online computer system:

Eliminates carbon copies Waiters handwriting issues Out-of-stock message Faster feedback, helps waiters to service the customers

Advantages to management:
Sales figures and percentages item-wise Helps in planning the menu Cost accounting details

2. If the management provides sufficient incentive for efficiency and results to their customers, it would make the system a more complete MIS and so the MIS should support this culture by providing such information which will aid the promotion of efficiency in the management services and operational system. It is also necessary to study the keys to successful Executive Information System (EIS) development and operation. Decision support systems would also make the system a complete MIS as it constitutes a class of computer-based information systems including knowledgebased systems that support decision-making activities. DSSs serve the management level of the organization and help to take decisions, which may be rapidly changing and not easily specified in advance. Improving personal efficiency, expediting problem solving (speed up the progress of problems solving in an organization), facilitating interpersonal communication, promoting learning and training, increasing organizational control, generating new evidence in support of a decision, creating a competitive advantage over competition, encouraging exploration and discovery on the part of the decision maker, revealing new approaches to thinking about the problem space and helping automate the managerial processes would make the system a complete MIS rather than just doing transaction processing. 3. The management system should be an open system and MIS should be so designed that it highlights the critical business, operational, technological and environmental changes to the concerned level in the management, so that the action can be taken to correct the situation. To make the system a success, knowledge will have to be formalized so that machines worldwide have a shared and common understanding of the information provided. The systems developed will have to be able to handle enormous amounts of information very fast. An organization operates in an ever-increasing competitive, global environment. Operating in a global environment requires an organization to focus on the efficient execution of its processes, customer service, and speed to market. To accomplish these goals, the organization must exchange valuable information across different functions, levels, and business units. By making the system more formal, the organization can more efficiently exchange information among its functional areas, business units, suppliers, and customers.

As the transactions are taking place every day, the system stores all the data which can be used later on when the hotel is in need of some financial help from financial institutes or banks. As the inventory is always entered into the system, any frauds can be easily taken care of and if anything goes missing then it can be detected through the system.

MB0048: Operations Research ASSIGNMENT Set 1 Q1. A toy company manufactures two types of dolls, a basic version doll-A and a deluxe version doll-B. Each doll of type B takes twice as long to produce as one of type A, and the company would have time to make maximum of 1000 per day. The supply of plastic is sufficient to produce 1000 dolls per day(both A & B combined). The deluxe version requires a facny dress of ehich there are only 500 per day available. If the company makes a profit of Rs 3.00 and Rs 5.. per doll, respectively on doll A and B, then how many of each doll should be produced per day in order to maximise the total profit. Formulate this problem. Solution: Formulation maximize z =3x +5x
1 2

Constraints x +2x <=2000

1 2

X +x <=1500 X <=600 X ,x >=0

1 2 1 2 2

[x =1000,x =500,max z= 5500]

1 2

Q2. What are the advantages of Linear programming techniques? Linear programming focuses on obtaining the best possible output (or a set of outputs) from a given set of limited resources. Minimal time and effort and maximum benefit coupled with the best possible output or a set of outputs is the mantra of any decision-maker. Today, decision-makers or managements have to tackle the issue of allocating limited and scarce resources at various levels in an organisation in the best possible manner. Man, money, machine, time and technology are some of these common resources. The managements task is to obtain the best possible output (or a set of outputs) from these given resources. You can measure the output from factors, such as the profits, the costs, the social welfare, and the overall effectiveness. In several situations, you can express the output (or a set of outputs) as a linear relationship among several variables. You can also express the amount of available resources as a linear relationship among various system variables. The managements dilemma is to optimise (maximise or minimise) the output or the objective function subject to the set of constraints. Optimisation of resources in which both the objective function and the constraints are represented by a linear form is known as a linear programming problem (LPP). Some of the advantages of Linear Programming approach: 1. Scientific Approach to Problem Solving. Linear Programming is the application of scientific approach to problem solving. Hence it results in a better and true picture of the problems-which can then be minutely analysed and solutions ascertained. 2. Evaluation of All Possible Alternatives. Most of the problems faced by the present organisations are highly complicated - which cannot be solved by the traditional approach to decision making. The technique of Linear Programming ensures thatll possible solutions are generated - out of which the optimal solution can be selected. 3. Helps in Re-Evaluation. Linear Programming can also be used in .reevaluation of a basic plan for changing conditions. Should the conditions change while the plan is carried out only partially, these conditions can be accurately determined with the help of Linear Programming so as to adjust the remainder of the plan for best results. 4. Quality of Decision. Linear Programming provides practical and better quality of decisions that reflect very precisely the limitations of the system i.e.; the various restrictions under which the system must operate for the solution to be optimal. If it becomes necessary to deviate from the optimal path, Linear Programming can quite easily evaluate the associated costs or penalty. 5. Focus on Grey-Areas. Highlighting of grey areas or bottlenecks in the production process is the most significant merit of Linear Programming. During the periods of bottlenecks, imbalances occur in the production department. Some of the machines remain

idle for long periods of time, while the other machines are unable toffee the demand even at the peak performance level. 6. Flexibility. Linear Programming is an adaptive & flexible mathematical technique and hence can be utilized in analyzing a variety of multi-dimensional problems quite successfully. 7. Creation of Information Base. By evaluating the various possible alternatives in the light of the prevailing constraints, Linear Programming models provide an important database from which the allocation of precious resources can be don rationally and judiciously. 8. Maximum optimal Utilization of Factors of Production. Linear Programming helps in optimal utilization of various existing factors of production such as installed capacity,. labour and raw materials etc.

Operations M1 M2 M3 M4 O 10 Q3. Solve the following Assignment Problem 15 12 11 O Operations 9 M1 10 Solution: M2 9 M3 12 Introducing a dummy row and applying Hungarian method, we have M4 O O 15 10 16 15 16 Row reduced Matrix and assigning 12 17 11 O 9 Hungarian Method leads to Multiple solution. Selecting (03, M2) arbitrarily 10 9 12 O 15 16 16 17 O 0 0 0 0
1 2 3 1 2 3 4

The optimum solution is 01 to M1 10 02 to M3 9 03 to M2 16 04 to M4 0 . 35 Total Wastages Therefore, the optimum assignments schedule is O to M , O to M , O to M , O to M
1 1 2 3 3 2 4 4

Q4. What is integer programming? The Integer Programming Problem (IPP) is a special case of Linear Programming Problem (LPP), where all or some variables are constrained to assume non-negative integer values. You can apply this problem to various situations in business and industry where discrete nature of the variables is involved in many decision-making situations. For instance, in manufacturing, the production is frequently scheduled in terms of batches, lots or runs; in distribution, a shipment must involve a discrete number of trucks or aircrafts or freight cars. All and Mixed Integer Programming Problem (IPP) An integer programming problem can be described as follows: Determine the value of unknowns x , x , , x So as to optimise z = c x +c x + . . .+ c x Subject to the constraints a x + a x + . . . + a x =b i = 1,2,,m and x 0 j = 1, 2, ,n
1 2 n 1 1 2 2 n n i1 1 i2 2 in n i, j

Where x being an integral value for j = 1, 2, , k n.


If all the variables are forced to take only integral value that is k = n, it is called an all (or pure) integer programming problem. If some of the variables are restricted to take integral value and the remaining (n k) variables take any non-negative value, then the problem is known as a mixed integer programming problem. An optimum solution to an IPP is obtained by using the simplex method, ignoring the restriction of integral values. In the optimum solution, if all the variables have integer values, the current solution will be the required optimum integer solution. Otherwise, the given IPP is modified by inserting a new constraint called Gomorys constraint or secondary constraint. This constraint represents necessary conditions for integrability and eliminates some non-integer solution without losing any integral solution. On addition of the secondary constraint, the problem is solved using dual simplex method to obtain an optimum integral solution. If all the values of the variables in the solution are integers, then an optimum inter-solution is obtained, or else a new constraint is added to the modified LPP and the procedure is repeated till the optimum solution is derived. An optimum integer solution will be reached eventually after introducing enough new constraints to eliminate all the superior non-integer solutions. The construction of additional constraints, called secondary or Gomorys constraints is important and needs special attention.

Q5.Explain the different steps involved in simulation methodologies? Simulation Procedure The approach to solve a gambling problem can be extended to decision-making in business where risk is a common feature. The probabilities associated with the variables can be estimated on the basis of availability of previous data or by inputting subjective values. In any simulation problem, the variables to be studied will be given with associated probabilities. The initial conditions will also be specified. You can choose random numbers from table. However, to get uniform results, the random numbers will be specified. The first step involves coding the data that is, you assign random numbers to the variable. Then you identify the relationship between the variables and run the simulation to get the results Let us illustrate this by a simple example of a queuing process. Example 1: A sample of 100 arrivals of customers at a retail sales depot is according to the following distribution:

A study of the time required to service customers by adding up the bills, receiving payment, making change and placing packages in hand trucks, yields the following distribution:

Estimate the average percentage customer waiting time and average percentage idle time of the server by simulation for the next 10 arrivals.

Solution: Step 1 : Convert the frequency distributions of time between arrivals and service time to cumulative probability distributions. Step 2 : Allocate random numbers 00 to 99 for each of the values of time between arrivals and service time, the range allocated to each value corresponding to the value of cumulative probability. . Step 3 : Using random numbers from table, sample at random the tome of arrival and service time for ten sets of random numbers. Step 4 : Tabulate waiting time of arrivals and idle time of servers. Step 5 : Estimate the percent waiting time of arrivals and percent idle time of servers corresponding to the ten samples.

Q6. Write down the basic difference between PERT &CPM. Basic Difference between PERT and CPM Though there are no essential differences between PERT and CPM as both of them share in common the determination of a critical path. Both are based on the network representation of activities and their scheduling that determines the most critical activities to be controlled so as to meet the completion date of the project. PERT Some key points about PERT are as follows: 1. PERT was developed in connection with an R&D work. Therefore, it had to cope with the uncertainties that are associated with R&D activities. In PERT, the total project duration is regarded as a random variable. Therefore, associated probabilities are calculated so as to characterise it. 2. It is an event-oriented network because in the analysis of a network, emphasis is given on the important stages of completion of a task rather than the activities required to be performed to reach a particular event or task. 3. PERT is normally used for projects involving activities of non-repetitive nature in which time estimates are uncertain. 4. It helps in pinpointing critical areas in a project so that necessary adjustment can be made to meet the scheduled completion date of the project. CPM 1. CPM was developed in connection with a construction project, which consisted of routine tasks whose resource requirements and duration were known with certainty. Therefore, it is basically deterministic. 2. CPM is suitable for establishing a trade-off for optimum balancing between schedule time and cost of the project. 3. CPM is used for projects involving activities of repetitive nature.

MB0048: Operations Research ASSIGNMENT- Set 2 Q1. What is a model in OR? Discuss different models available in OR. A model is an idealised representation or abstraction of a real-life system. The objective of a model is to identify significant factors that affect the real-life system and their interrelationships. A model aids the decision-making process as it provides a simplified description of complexities and uncertainties of a problem in a logical structure. The most significant advantage of a model is that it does not interfere with the real-life system. A broad classification of OR models You can broadly classify OR models into the following types. a. Physical Models include all form of diagrams, graphs and charts. They are designed to tackle specific problems. They bring out significant factors and interrelationships in pictorial form to facilitate analysis. There are two types of physical models: I. Iconic models II. Analog models Iconic models are primarily images of objects or systems, represented on a smaller scale. These models can simulate the actual performance of a product. Analog models are small physical systems having characteristics similar to the objects they represent, such as toys. b. Mathematical or Symbolic Models employ a set of mathematical symbols to represent the decision variable of the system. The variables are related by mathematical systems. Some examples of mathematical models are allocation, sequencing, and replacement models. c. By nature of Environment: Models can be further classified as follows: I. Deterministic model in which everything is defined and the results are certain, such as an EOQ model. II. Probabilistic Models in which the input and output variables follow a defined probability distribution, such as the Games Theory. d. By the extent of Generality Models can be further classified as follows: I. General Models are the models which you can apply in general to any problem. For example: Linear programming. II. Specific Models on the other hand are models that you can apply only under specific conditions. For example: You can use the sales response curve or equation as a function of only in the marketing function.

Q2. Write dual of Max Z= 4X1+5X2 subject to 3X1+X215 X1+2X210 5X1+2X220 X1, X20 Solution: The given problem is in its standard form. Therefore, its dual is Mini W = 15y + 10 y + 20 y
1 2 3

Subject to 3y + y + 5 y 4
1 2 3

y + 2y + 2y 5 y, y, y, 0
1 1 2 3 2 3

Q3. Write a note on Monte-Carlo simulation. Simulation is also called experimentation in the management laboratory. While dealing with business problems, simulation is often referred to as Monte Carlo Analysis. Two American mathematicians, Von Neumann and Ulan, in the late 1940s found a problem in the field of nuclear physics too complex for analytical solution and too dangerous for actual experimentation. They arrived at an approximate solution by sampling. The method they used had resemblance to the gamblers betting systems on the roulette table, hence the name Monte Carlo has stuck. Imagine a betting game where the stakes are based on correct prediction of the number of heads, which occur when five coins are tossed. If it were only a question of one coin; most people know that there is an equal likelihood of a head or a tail occurring, that is the probability of a head is . However, without the application of probability theory, it would be difficult to predict the chances of getting various numbers of heads, when five coins are tossed. Steps involved in Monte-Carlo simulation: Step 1 : Convert the frequency distributions of time between arrivals and service time to cumulative probability distributions. Step 2 : Allocate random numbers 00 to 99 for each of the values of time between arrivals and service time, the range allocated to each value corresponding to the value of cumulative probability. Step 3 : Using random numbers from table, sample at random the tome of arrival and service time for ten sets of random numbers. Step 4 : Tabulate waiting time of arrivals and idle time of servers. Step 5 : Estimate the percent waiting time of arrivals and percent idle time of servers corresponding to the ten samples.

Q4. Explain PERT PERT Some key points about PERT are as follows: 1. PERT was developed in connection with an R&D work. Therefore, it had to cope with the uncertainties that are associated with R&D activities. In PERT, the total project duration is regarded as a random variable. Therefore, associated probabilities are calculated so as to characterise it. 2. It is an event-oriented network because in the analysis of a network, emphasis is given on the important stages of completion of a task rather than the activities required to be performed to reach a particular event or task. 3. PERT is normally used for projects involving activities of non-repetitive nature in which time estimates are uncertain. 4. It helps in pinpointing critical areas in a project so that necessary adjustment can be made to meet the scheduled completion date of the project. In graphing of network Analysis, a flow network is a directed graph where each edge has a capacity and each edge receives a flow. The amount of flow on an edge cannot exceed the capacity of the edge. Often in Operations Research, a directed graph is called a network, the vertices are called nodes and the edges are called arcs. A flow must satisfy the restriction that the amount of flow into a node equals the amount of flow out of it, except when it is a source, which has more outgoing flow, or sink, which has more incoming flow. A network can be used to model traffic in a road system, fluids in pipes, currents in an electrical circuit, or anything similar in which something travels through a network of nodes. A graphing in Network Analysis consists of two major components as discussed below: a) Events: An event represents a point in time that signifies the completion of some activities and the beginning of new ones. The beginning and end points of an activity are thus described by 2 events usually known as the Tail and head events. Events are commonly represented by circles (nodes) in the network diagram. They do not consume time and Resource b) Activities: Activities of the network represent project operations or task to be conducted. An arrow is commonly used to represent an activity, with its head indicating the direction of progress in the project. Activities originating from a certain event cannot start until the activities terminating at the same event have been completed. They consume time and Resource. Events in the network diagram are identified by numbers. Numbers are given to events such that arrow head number must be greater than arrow tail number.

Activities are identified by the numbers of their starting (tail) event and ending (head) event. An arrow (i .J) extended between two events, the tail event i represents the start of the activity and the head event J represents the completion of the activity as shown in Fig.

3) 4)

Below Figure shows another example, where activities (1, and (2, 3) must be completed before activity (3, can start.

The rules for constructing the arrow diagram are as follows: 1. Each activity is represented by one and only one arrow in the network. 2. No two activities can be identified by the same head and tail events. 3. To ensure the correct precedence relationship in the arrow diagram, the following questions must be answered as every activity is added to the network: a) What activities must be completed immediately before these activity can start? b) What activities must follow this activity? c) What activity must occur concurrently with this activity? This rule is self explanatory. It actually allows for checking (and rechecking) the precedence relationships as one progresses in the development of the network.

Q5. Explain Maximini-minimax principle Maximin Minimax Principle Solving a two-person zero-sum game Player A and player B are to play a game without knowing the other players strategy. However, player A would like to maximise his profit and player B would like to minimise his loss. Also each player would expect his opponent to be calculative. Suppose player A plays. Then, his gain would be accordingly Bs choice would be.Let. Then, is the minimum gain of A when he plays ( is the minimum pay-off in the first row.) Similarly, if A plays, his minimum gain is, the least payoff in the second row. You will find corresponding to As play, the minimum gains are the row minimums. Suppose A chooses the course of action where is maximum. Then the maximum of the row minimum in the pay-off matrix is called maximin. The maximin is Similarly, when B plays, he would minimise his maximum loss. The maximum loss to B is when is. This is the maximum pay-off in the column. The minimum of the column maximums in the pay-off matrix is called minimax. The minimax is If, to Note: cannot be greater than. the maximin and the minimax are equal and the game is said have saddle point. If, then the game does not have a saddle point.

Q6. write short notes on the following: a. Linear Programming Linear Programming The LPP is a class of mathematical programming where the functions representing the objectives and the constraints are linear. Optimisation refers to the maximisation or minimisation of the objective functions. You can define the general linear programming model as follows: Maximise or Minimise: Z=c x +c x +----+c x Subject to the constraints, a x + a + + a x ~ b a x + a + + a x ~ b a x + a + - + a x ~ b and x 0, x 0, x 0
1 1 2 2 n n 11 21 1 1 12 x2 22 x2 1n n 1 2n n 2 m1 1 m2 x2 mn n m 1 2 n

Where c , b and a (i = 1, 2, 3, .. m, j = 1, 2, 3 - n) are constants determined from the technology of the problem and x (j = 1, 2, 3 - n) are the decision variables. Here ~ is either (less than), (greater than) or = (equal). Note that, in terms of the above formulation the coefficients c , b a are interpreted physically as follows. If b is the available amount of resources i, where a is the amount of resource i that must be allocated to each unit of activity j, the worth per unit of activity is equal to c .
j i ij j j i ij i ij j

b. Transportation Formulation of Transportation Problem The standard mathematical model for the transportation problem is as follows. Let x be number of units of the homogenous product to be transported from source i to the destination j

Then objective is to Minimise z = Subject to

(2) (2)

(2) With all x 0 and integrals


Theorem: A necessary and sufficient condition for the existence of a feasible solution to the transportation problem (2) is:

MB0049 Project Management ASSIGNMENT- Set 1 Q1. Define project management. Discuss the need for project management. Project Management is all about a mindset. The major characteristics of project mindset. Characteristics of project mindset a) 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. b) Responsiveness: It 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. c) 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 a key to build a healthy mindset among various stakeholders in a project. d) 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 possess greater capabilities of adaptability. e) 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 prioritisation of the activities based on resource planning. Hence having a right mindset and flexible processes in place is very important for a sound project management. Now let us have an assessment exercise.
Execution of a project is the heart of any Project Management. Many organisations fail in executing their well planned projects in spite of following various procedures. Facts reveal that the success rate is dependent on whether the company or the organisation is fundamentally strong to handle such projects or not. There are certain processes, systems and structure required for a sound execution of a project. What is essential for a project to become successful has to be clearly listed. It is extremely important that you implement each process in its entirety and that you communicate the process clearly to your project team.

Need for project management Project management is necessary because a) a project requires huge investments which should not go waste

b) a loss in any project would have direct or indirect impact on the society c) prevent failures in projects d) scope of the project activity may undergo a change e) technology used may change during the course of project execution f) consequences of negativity in project related problems could be very serious g) changes in economic conditions may affect a project

Q2. What is meant by risk management? Explain the components of risk management. Risk Management Risks are those events or conditions that may occur and whose occurrence has a harmful or negative impact on a project. Risk management aims to identify the risks and then take actions to minimise their effect on the project. Risk management entails additional cost. Hence risk management can be considered cost-effective only if the cost of risk management is considerably less than the cost incurred if the risk materialises. Components Risk management components a) Risk Assessment Identify the possible risks and assess the consequences by means of checklists of possible risks, surveys, meetings and brainstorming and reviews of plans, processes and products. The project manager can also use the process database to get information about risks and risk management on similar projects. b) Risk Control Identify the actions needed to minimise the risk consequences. This is also known as risk mitigation. Develop a risk management plan. Focus on the highest prioritised risks. Prioritisation requires analysing the possible effects of the risk event in case it actually occurs. This approach requires a quantitative assessment of the risk probability and the risk consequences. For each risk, determine the rate of its occurrence and indicate whether the risk is low, medium or of high category. If necessary, assign probability values in the ranges as prescribed based upon experience. If necessary assign a weight on a scale of 1 to 10. c) Risk Ranking Rank the risk based on the probability and effects on the project; for example, a high probability, high impact item will have higher rank than a risk item with a medium probability and high impact. In case of conflict, use judgment. d) Risk Mitigation Select the top few risk items for mitigation and tracking. Refer to a list of commonly used risk mitigation steps for various risks from the previous risk logs maintained by the project manager and select suitable risk mitigation step. The risk mitigation step must be properly executed by incorporating them into the project schedule. In addition to monitoring the progress of the planned risk mitigation steps, periodically revisit the risk perception for the entire project. The results of this review are reported in each milestone analysis report. To prepare this report, make fresh risk analysis to determine whether the priorities have changed.

Q3. Discuss the various steps in project monitoring and control. Project Monitoring and Control Any project aimed at delivering a product or a service has to go through phases in a planned manner in order to meet the requirements. It is very important to measure the performance of the current status of the project at anytime against its planned version. This helps to tackle any unexpected deviation in time, efforts and cost. It is possible to work according to the project plan only by careful and close monitoring of the project progress. It requires establishing control factors to keep the project on the track of progress. The results of any stage in a project, depends on the inputs to that stage. It is therefore necessary to control all the inputs and the corresponding outputs from a stage. This is achieved through devising proper controls for every stage. A project manager may use certain standard tools to keep the project on track. The project manager and the team members should be fully aware of the techniques and methods to rectify the factors influencing delay of the project and its product. It is important for all stakeholders to know the impact of the changes in any parameters to the overall project. Steps for monitoring and control Now let us look into detail for each of these steps. 1. Preliminary work The team members understand the project plans, project stage schedule, progress controls, tracking schedules, summary of the stage cost and related worksheets. All the members have to understand the tolerances in any change and maintain a change control log. They must realise the need and importance of quality for which they have to strictly follow a quality review schedule and frequently discuss the quality agendas. They must understand the stage status reports, stage end reports, stage end approval reports. 2. Project Progress The members must keep a track of the project progress and communicate the same to other related members of the project. They must monitor and control project progress, through the use of regular check points, quality charts, and statistical tables; control the quality factors which are likely to deviate from expected values as any deviation may result in changes to the stage schedule. The project manager ensures that these changes are made smoothly and organises review meeting with the project management group. Thus all the members are aware about the progress of the project at all times. This helps them to plan well in advance for any exigency arising due to deviation from planned schedule.

3. Stage Control The manager must establish a project check point cycle. For this, a suitable stage version control procedures may be followed. The details are to be documented stage wise. Project files have to be timely updated with appropriate version control number and revision status should be maintained for each change. Team members are identified who will exercise controls at various points of the project. 4. Resources Plan the resources required for various stage of the project well in advance. Communication is the key. Brief both the project team and the key resources about the objectives of every stage, planned activities, products, organisation, metrics and the project controls. This increases the visibility into the project performance and hence a quality control can be achieved. Allocating a right resource at the right place and the right time will significantly enhance the efficiency and effectiveness of the resource. 5. Quality Control This is very important in any project. It is a tool which helps in tracking the progress of various parameters at any stage of the project. A project manager may use a standard quality control or customise according to the requirements. Quality control is possible if the project members follow the quality charts and norms very strictly. It is also important for all the project team members to know the importance of such quality checks and should have a good visibility into project performance. 6. Schedule Quality Review Conduct quality reviews at regular intervals. It is recommended that quality review be scheduled at the beginning of the stage and also at the ending of every stage. This helps the project manager and team members to plan well in advance for any unforeseen deviation. 7. Agenda for Quality Review Create and distribute a quality review agenda specifying the objective, products, logistics, roles, responsibilities and time frame. This increases the effectiveness of the review and also reduces the time gap. 8. Conduct Quality Review Conduct the quality review in a structured and formal manner. Quality review should focus on product development and its quality factors. Focus on whether it meets the prescribed quality standard.

9. Follow Up Revise the complete quality review product status from In-progress to QR Complete. Follow up the actions planned in strict manner which ensures conformity to the standards. 10. Review Quality Control Procedure Verify that the quality objectives for each product are appropriate and that all participants are satisfied both with the process and its outcome. This is to ensure that all the stakeholders of the project are in conformity of control procedures.

Q4. What is Project Management Information System (PMIS)? What are the major aspects of PMIS? Project Management Information System (PMIS) An information system is mainly aimed at providing the management at different levels with information related to the system of the organisation. It helps in maintaining discipline in the system. An information system dealing with project management tasks is the project management information system. It helps in decision making in arriving at optimum allocation of resources. The information system is based on a database of the organisation. A project management information system also holds schedule, scope changes, risk assessment and actual results. The information is communicated to managers at different levels of the organisation depending upon the need. Let us find how a project management information system is used by different stakeholders. Who needs information and why

The four major aspects of a PMIS are a) Providing information to the major stakeholders b) Assisting the team members, stakeholders, managers with necessary information and summary of the information shared to the higher level managers c) Assisting the managers in doing what if analyses about project staffing, proposed staffing changes and total allocation of resources d) Helping organisational learning by helping the members of the organisation learn about project management

age, costs and project goals. This information helps them take decisions on the project. They should review t

ost efficient use across the organisation.

e done next.

Usually, the team members, and not the systems administrators of the company, develop a good PMIS. Organisations tend to allocate such responsibility by rotation among members with a well designed and structured data entry and analytical format.

Q5. What is PERT chart? What are the advantages of PERT chart? A number of activities make a project. Due to technological necessities, some activities can be performed only after some others have been completed. Some activities are independent of some other set of activities. Different activities have different duration for their completion. Some projects are big and a number of clearly distinguishable stages or milestones are identified. Since some activities run concurrently, there are possibilities that one set of activities end up early and have to wait for some other activities to proceed further. This means that there are more paths from the beginning to the end, and one of them takes more time than the others. We call that critical path. A PERT chart helps us to follow the critical path. Let us become familiar with the PERT chart.

PERT stands for Program (or Project) Evaluation and Review Technique. It is a popular project management model designed to analyse and represent the tasks involved in completing a given a task, assuming everything goes wrong (butminimum time required for completing the total project. project. It also helps in identifying the excluding major catastrophes).

a task, assuming everything proceeds as normal. a projects schedule, showing the sequence of tasks. It A PERT chart is a graphic representation of also shows the tasks that can be performed parallely, and the critical path of tasks which has direct can be delayed without causing a delay The tasks in the critical path must be completed as per schedule in impact on the project schedule. in Subsequent tasks or Project Completion. order for the project to meet its completion deadline. The chart can be constructed with a variety of the initial event to the terminal event. Any time delays along the critical path will delay the reaching of the attributes, such as:

pleted in order to allow latest start dates for each activities that must elapse before a specific event reaches com earliest and sufficient time for the task earliest and latest finish dates for each task w a specific event. time between tasks slack

d resources available in achievingterms event. Positiveaslack would indicate ahead of schedule; negative slac Table 1 to displays some this associated with PERT chart. Table 1: PERT terminology

Figure shows a PERT chart for a seven-month project with five milestones (10 - 50) and six activities (A - F). While making the first draft of a PERT chart, number the events sequentially in 10s (10, 20, 30). This allows you to insert additional events later. These events are also known as milestones.

ne or more tasks.

the time, effort, and resources required to move from one event to another. An activity cannot be completed

plishing a task, assuming everything proceeds better than is normally expected.

Two consecutive events in a PERT chart are linked by activities. You will represent these activities as arrows. You need to present the events in a logical sequence. No activity can commence until its immediately preceding event is completed. Represent critical path as red arrows. In PERT, we take into consideration the fact that the time allocated for all the activities might not be determinable. So, we give three time estimates optimistic, most likely and pessimistic. Giving weightage of four to the most likely period, we try to find the variance of the project. As some activities get completed earlier, there are opportunities to utilise the resources allocated to them for the critical activities to hasten the project. These are done on a continuous basis as the project is under progress. Since actual times taken for the activities are changing, reviewing helps us to meet the deadline by resource smoothing. A chart is prepared and stubs of different colours are used to indicate the progress of all activities, so that corrections can be effected.

Q6. Write brief notes on the following: (i) Re-engineering and (ii) Re-structuring i) Reengineering: This is a process by which managers redesign a bundle of tasks into roles and functions so that organisational effectiveness is achieved. By doing so dramatic improvements in critical measures of performance like cost, quality and service are expected. There will be a radical rethink about the business processes adopted. A business process may be of any activity like inventory control, product design, orders processing, and delivery systems. No reference is taken to the existing process and an entirely new process is adopted. The following rules for reengineering are effective: i) Make changes with the outcome in mind not the tasks that result in them. ii) Make the users of the results of the process effect the change. iii) Let the people on the spot decide on the solution decentralise. (ii) Re-structuring Restructuring: This is attempted with change in authority and task relationships of managers. The move from the functional form or a standard division structure to combine or divide areas of control and authority to facilitate better coordination and/or workflow can be described as restructuring. In the process, a few jobs may not be there. Few people may have multi-functional activities. The main purpose is to reduce bureaucratic costs. This is because of a change in strategy. Downsizing is also a way of restructuring.

MB0049 Project Management ASSIGNMENT- Set 2 Q1. What are the various phases of project management life cycle? Explain Project Life Cycle and Process Flows The Project Life Cycle refers to a logical sequence of activities to accomplish the projects goals or objectives. It thus outlines the important processes that are required by any project from start to end. Normally a project will go through a sequence of processes . Project process flow In the preparation stage, the project manager, along with the associates and team members, draft the outline of the project. They identify the various factors required to be taken care of in the project. Based on their discussion, they formulate the plans and model the activities for execution. They prepare the budget. After the model is approved, they recommended it for implementation. During the planning stage, roles and responsibilities of the various members involved in the project are listed out. In addition, the project team works on the feasibility report to assess the project feasibility with respect to time, finance and technicalities. A thorough risk analysis is also performed to arrive at the uncertainty factors. The findings of the risk analysis are used to establish the control factors to be exercised during the execution of the project. Various monitoring tools are set to monitor the project progress. All the key issues found at the planning stage of a project are documented in a project plan.

Next stage is the implementation stage which involves the execution of the project as agreed in the project plan, while carefully monitoring progress and managing changes. The completion stage consists of the satisfactory delivery of all the deliverables to the customer. Project Plan A project plan is documented with the following key issues Key stages of the project Project logic diagram Key stages responsibility chart

Estimates for all key stages Optimised project Gantt chart Updated and reviewed project risk log Risk management forms for new high risks E Project operating budget

A project life cycle is not complete without a review to look into the various issues which affected the project during the course of its execution. This helps in listing the best practices and documenting oject deliverables could be a set of outputs that are expected during various stages of the project. It could b the lessons learnt.

Q2. Write brief note on project planning and scoping. Project Planning and Scoping Before you create a project plan, you need to define the project scope. A project scope provides the information that you need to complete the project plan. The purpose of project planning and scoping is to first identify the areas of the project work and the forces affecting the project and then to define the boundaries of the project. In addition, the scoping has to be explicitly stated on the line of the project objectives. It also has to implicitly provide directions to the project. The planning and scoping should be such that the project manager is able to assess every stage of the project and also enabling the assessment of the quality of the deliverable of the project at every stage. Fist, let us list the steps involved in project scoping. These steps include: I. Identifying the various parametric forces relevant to the project and its stages II. Enabling the team members to work on tools to keep track of the stages and thereby proceed in the planned manner III. Avoiding areas of problems which may affect the progress of the project IV. Eliminating the factors responsible for inducing the problems V. Analysing the financial implications and cost factor at various stages of the project VI. Understanding and developing the various designs required at various stages of the project VII. Identifying the key areas to be included in the scope through various meetings, discussion, and interviews with the clients VIII. Providing a base and track to enable alignment of project with the organisation and its business objectives IX. Finding out the dimensions applicable to the project and also the ones not applicable to the project X. Listing out all the limitations, boundary values and constraints in the project XI. Understanding the assumptions made in defining the scope

Project planning processes Let us now list the steps involved in each process of project planning. a) The identification process The main steps in the identification process of any project are:

I. Identifying initial requirements II. Validating them against the project objective III. Identifying the criteria such as quality objectives and quantitative requirements for assessing the success of both the final product and the process used to create it IV. Identifying the framework of the solution V. Preparing a template of the frame work of solution to illustrate the project feasibility VI. Preparing relevant charts to demonstrate the techniques of executing the project and its different stages VII. Preparing a proper project schema of achieving the defined business requirements for the project VIII. Identifying training requirement IX. Making a list of the training program necessary for the personnel working on the project X. Identifying the training needs of the individuals working in various functions responsible in the project XI. Preparing a training plan and a training calendar XII. Assessing the capabilities and skills of all those identified as part of the project organisation b) The review Process The main steps in the review process of any project are: I. Establishing a training plan to acquaint the project team members with the methodologies, technologies and business areas under study II. Updating the project schedule to accommodate scheduled training activities III. Identifying the needs for review and reviewing the project scope IV. Reviewing a project with respect to its stages and progress by preparing a plan for the review, fixing an agenda to review the project progress and keeping the reports ready for discussion about stage performance V. Reviewing the project scope, the objective statement, the non conformances in the project stages and identifying the need to use the project plan VI. Preparing a proper project plan indicating all the requirements from start to finish of the project and also at every stage of the project VII. Preparing a checklist of items to be monitored and controlled during the course of execution of the project c) The analysis process The main steps in the analysis process of any project are:

I. Comparing the actual details with that in the plan with reference to project stages. II. Measuring various components of the project and its stages frequently to control the project from deviating and also monitor the performance. III. Deciding how the task, the effort and the defects are to be tracked, what tools to be used, what reporting structure and frequency will be followed at various stages. IV. Identifying the preventive and corrective steps to be taken in case of any variance V. Performing root cause analysis for all problems encountered. If all the above steps are performed, scoping and planning become effective and the ideal outcome are achieved.

Q3. What is Return on Investment (ROI)? Explain its importance Return on Investment (ROI) is the calculated benefit that an organisation is projected to receive in return for investing money, time and resources in a project. Within the context of the review process, the investment would be in an information system development or enhancement project. ROI information is used to assess the status of the business viability of the project at key checkpoints throughout the projects life-cycle. ROI may include the benefits associated with improved mission performance, reduced cost, increased quality, speed, or flexibility, and increased customer and employee satisfaction. ROI should reflect such risk factors as the projects technical complexity, the agencys management capacity, the likelihood of cost overruns, and the consequences of under or non-performance. Where appropriate, ROI should reflect actual returns observed through pilot projects and prototypes. ROI should be quantified in terms of money and should include a calculation of the break-even point (BEP), which is the time (point in time) when the investment begins to generate a positive return. ROI should be re-calculated at every major checkpoint of a project to see if the BEP is still on schedule, based on project spending and accomplishments to date. If the project is behind schedule or over budget, the BEP may move out in time; if the project is ahead of schedule or under budget the BEP may occur earlier. In either case, the information is important for decision-making based on the value of the investment throughout the project life-cycle. Any project that has developed a business case is expected to refresh the ROI at each key project decision point (that is, stage exit) or at least yearly.

Q4. Discuss the role of effective data management in the success of project management. The Role of Effective Data Management in the Success of Project Management Data management consists of conducting activities which facilitate acquiring data, processing it and distributing it. Acquisition of data is the primary function. To be useful, data should have three important characteristics timeliness, sufficiency and relevancy. Management of acquisition lies in ensuring that these are satisfied before they are stored for processing and decisions taken on the analysis. There should be data about customers, suppliers, market conditions, new technology, opportunities, human resources, economic activities, government regulations, political upheavals, all of which affect the way you function. Most of the data go on changing because the aforesaid sources have uncertainty inherent in them. So updating data is a very important aspect of their management.Storing what is relevant in a form that is available to concerned persons is also important. When a project is underway dataflow from all members of the team will be flowing with the progress of activities. The data may be about some shortfalls for which the member is seeking instructions. A project manager will have to analyse them, discover further data from other sources and see how he can use them and take decisions. Many times he will have to inform and seek sanction from top management. The management will have to study the impact on the overall organisational goals and strategies and convey their decisions to the manager for implementation. For example, Bill of Materials is a very important document in Project Management. It contains details about all materials that go into the project at various stages and has to be continuously updated as all members of the project depend upon it for providing materials for their apportioned areas of execution. Since information is shared by all members, there is an opportunity for utilising some of them when others do not need them. To ascertain availability at some future point of time, information about orders placed, backlogs, lead times are important for all the members. A proper MIS will take care of all these aspects. ERP packages too help in integrating data from all sources and present them to individual members in the way they require. When all these are done efficiently the project will have no hold ups an assure success.

Q5. What is Project risk management? Explain its significance. Project risk management is all about the systematic process of identifying, analysing, prioritising and responding to risk by applying risk management principles and controlling the probability and/or impact of unfortunate events at the project level. It attempts to maximise the probability and consequences of positive events and to minimise the probability and consequences of adverse events. The goal is to prevent or reduce risk in a cost-effective manner without compromising quality or harming the mission or timeline. The benefits of proper risk management in projects are huge. Organisations can generate a lot of profit if they deal with uncertain project events in a proactive manner. The result will be that they minimise the impact of project threats and seize the opportunities that exists. Proper risk management enables you to deliver the project on time, on budget and with the quality results ones project sponsor/client demands. In addition to this, other project team members can be also happy and motivated enough to perform better and better. All this would essentially boil down to increase in the productivity of team members and in the efficiency and effectiveness of the resources. In this unit you will learn more about project risk management. There is a mutual benefit for corporate and major information systems project teams and many of the programs as a result of the information exchange generated by the Project Management Reviews. Corporate and major information systems are reviewed from their inception to retirement, i.e., throughout the Capital Planning and Investment Control (CPIC) phases of Identification, Selection, Control, and Evaluate. Several of the current and future corporate and major information systems initiatives have been identified in the Departmental Information Architecture Program guidance series and in the Corporate Systems Information Architecture (CSIA) document. The templates serve as a means of standardising the reporting requirements and enabling a common set of criteria for evaluating the health and progress of the departments corporate and major information systems. Presenters may choose to develop their own set of slides as long as the requested information is covered. Performance measurements are used in project management and quality processes to determine and communicate status and accomplishments measured against specific objectives, schedules, and milestones. These measurements extend to include delivery of desired products and services. There are two things you can do to manage risk. First is to take action to reduce (or partially reduce) the likelihood of the risk occurring. For example, some projects that work on process improvement make their deadlines earlier and increase their efforts. Second, you can take action to reduce the impact if the risk does occur. Sometimes this is an action taken prior to the crisis, such as the creation of a simulator to use for testing if the hardware is late. You may decide to rerun the complete risk process if significant changes have occurred on the project. Significant changes might include the addition of new features, the changing of the target platform, or a change in project team members. Many people incorporate risk review into other regularly scheduled project reviews. By now, you understand that risk

management is the integral part of any project management and you cannot neglect it. Besides, this is not a onetime process but an evolving one and requires continuous attention till the closure of the project.

Q6. Write brief note on project management application software. Support Software While software vendors are confident of making it work, two yawning gaps still remain: 1. Business processes which are not covered in such software 2. Integration of multi vendor supported software applications The enterprise is normally in a dilemma whether to look at the same vendors to support such customisation or not. This normally works out too expensive for their comfort or within their tight budgets. Several software vendors have seized the opportunity with offerings that substantially fill these gaps effectively at a fraction of the costs quoted by the major vendors. The other carrot which these vendors offer is a unilateral transfer of the facility to customise themselves which is seen as a huge advantage. The various support software that may be used for managing projects are: 1. ARROW 2. FEDORA 3. VITAL 4. PILIN 5. MS EXCHANGE SERVER 2003 1. The ARROW Project It is a consortia of institutional repository solution, combining open source and proprietary Software 2. Why Arrow? Arrow is preferred support software because it: Provides a platform for promoting research output in the ARROW context Safeguards digital information Gathers an institutions research output into one place Provides consistent ways of finding similar objects Allows information to be preserved over the long term Allows information from many repositories to be gathered and searched in one step Enables resources to be shared, while respecting access constraints Enables effective communication and collaboration between researchers The vision of project ARROW: The ARROW project will identify and test software or solutions to support best practice institutional digital repositories comprising e-prints, digital theses and electronic publishing.

What did the ARROW project set out to achieve? ARROW project wanted to be a solution for storing any digital output. Their initial focus was on print equivalents such as thesis and journal articles among others. It provided solution that could offer on-going technical support and development past the end of the funding period of the project. What is ARROW now? Its in a development stage combining Open Source and proprietary software such as Fedora, VITAL, Open Journal Services (OJS). It is not a centralised or hosting solution. Every member has their own hardware and software. 3. Why Fedora? ARROW wanted a robust, well architected underlying platform and a flexible object-oriented data model to be able to have persistent identifiers down to the level of individual data streams. It accommodates the content model to be able to be version independent. Since the beginning of the project ARROW has worked actively and closely with Fedora and the Fedora Community. The ARROW projects Technical Architect is a member of Fedora Advisory Board and sits on Fedora Development Group. This association is reinforced by VTLS Inc. VTLS President is a member of Fedora Advisory Board and VITAL Lead Developer sits on Fedora Development Group 4. Why VITAL? VITAL refers to ARROW specified software created and fully supported by VTLS Inc. built on top of Fedora. It currently provides: 1. VITAL Manager 2. VITAL Portal 3. VITAL Access Portal 4. VALET Web Self-Submission Tool 5. Batch Loader Tool 6. Handles Server (CNRI) 7. Google Indexing and Exposure 8. SRU / SRW Support 9. VITAL architecture overview VITAL is part of creative development of ARROW institutional repositories. VITAL has the following features: 1. Inclusion of multimedia and creative works produced in Australian universities

2. Limited exposure nationally or internationally 3. Addition of annotation capability 4. Inclusion of datasets and other research output not easily provided in any other publishing channel 5. Being developed in conjunction with the DART (ARCHER) Project 6. Exploration of the research-teaching nexus tools that will allow value added services for repositories 7. Integration with or development of new tools that will allow value added services for repositories (for instance the creation of e-portfolios or CVs of research output of individual academics) 5. PILIN Persistent Identifiers and Linking Infrastructure There has been a growing realisation that sustainable identifier infrastructure is required to deal with the vast amount of digital assets being produced and stored within universities. PILIN is a particular challenge for e-research communities where massive amounts of data are being generated without any means of managing this data over any length of time. The broad objectives are to: 1. Support adoption and use of persistent identifiers and shared persistent identifier management services by the project stakeholders 2. Plan for a sustainable, shared identifier management infrastructure that enables persistence of identifiers and associated services over archival lengths of time 3. Deploy a Worldwide Site Consolidation Solution for Exchange Server 2003 at Microsoft 4. Add Picture 5. Use Microsoft Exchange Server 2003 to consolidate more than 70 messaging sites worldwide into seven physical locations