BACHELOR IN BUSINESS ADMINISTRATION

SEMESTER 3

E-COMMERCE.

ASSIGNMENT 1

Prepared for:
Lecturer’s name: Mr. Saboor
Prepared by:
Student’s Name: – ID No:
Table of Contents
1. Productivity: Importance, productivity ratio, productivity measurement, productivity index,
awareness — improvement — maintenance (A.I.M) process.........................................................1
Productivity..................................................................................................................................1
Importance of productivity...........................................................................................................1
Productivity ratio..........................................................................................................................1
Productivity index........................................................................................................................3
2. Production System Models of production system, Product vs. Services, Process-focused &
product focused systems, product strategies, product life cycle, production function....................6
Concept of Production System:....................................................................................................6
Simplified Production System.....................................................................................................7
Analysis of Production Systems..................................................................................................7
Key Features of a product............................................................................................................8
Difference between product and service......................................................................................8
Summary of Key Differences Between Services and Products...................................................9
Product Strategy.........................................................................................................................10
Goals..........................................................................................................................................11
What Is the Product Life Cycle? Stages and Examples.............................................................12
4 Stages of the Product Life Cycle.............................................................................................13
3. Forecasting: Methods — moving average, exponential smoothing, Regression analysis,
coefficient of co-relation, Delphi, Market survey.........................................................................16
Forecasting Methods..................................................................................................................16
Moving Average Formula......................................................................................................17
Regression analysis....................................................................................................................17
Correlation coefficient...............................................................................................................20
Delphi, Market survey................................................................................................................21
Understanding the Delphi Method.............................................................................................22
How the Delphi Method Works?...............................................................................................22
The Advantages and Disadvantages of the Delphi Method.......................................................22
5) Motion study in Production Management......................................................................23
Principles of Motion study......................................................................................................23
Time study in Production and Operation Management.............................................................27
6) Production Planning & Control: Aggregate planning. Sequencing, Line balancing, Flow
control, Dispatching, expediting, Gantt chart, line of balance......................................................29
Operation Sequencing................................................................................................................31
Job Sequencing Rules................................................................................................................32
Flow Control..............................................................................................................................33
Dispatching................................................................................................................................33
Expediting/follow-up /Progressing...........................................................................................34
Gantt chart.................................................................................................................................35
The Line of Balance (LOB).......................................................................................................36
 1. Productivity: Importance, productivity ratio, productivity measurement, productivity
index, awareness — improvement — maintenance (A.I.M) process.

Productivity

Productivity is a measure of the efficiency of production. It is a ratio of actual output

(production) to what is required to produce it (inputs). Productivity is measured as a total output
per one unit of a total input. Control managers in a given organization are concerned with
maximizing productivity through process-oriented observations and improvements.

For businesses, productivity growth is important because providing more goods and services to
consumers translates to higher profits. As productivity increases, an organization can turn
resources into revenues, paying stakeholders and retaining cash flows for future growth and
expansion. Productivity leads to competitiveness and potentially competitive advantages.

Importance of productivity

The concept of productivity is of great significance for undeveloped and developing countries. In
both the cases there are limited resources that should be used to get the maximum output i.e.
there should be tendency to perform a job by cheaper, safer and quicker ways.

The aim should be optimum use of resource so as to provide maximum satisfaction with
minimum efforts and expenditure. Productivity analysis and measures indicate the stages and
situations where improvement in the working of inputs is possible to increase the output.

The productivity indicators can be used for different purposes viz. comparison of performances
for various organizations, contribution of different input factors, bargaining with trade unions
etc.

Productivity ratio

Productivity ratio: a ratio of production output to the input required to produce it–is one measure
of production efficiency. Productivity is defined as a total output per one unit of a total input.
Control management must implement control processes to maintain or improve productivity.

Productivity may be evaluated in terms of the output of an employee in a specific period of time.
Typically, the productivity of a given worker will be assessed relative to an average for
employees doing similar work. Because much of the success of any organization relies upon the
productivity of its workforce, employee productivity is an important consideration for
businesses.
Productivity Measurement

Measurement of Productivity

As a prelude to an examination of productivity trends over time, this section considers various
methods of measuring the output and input components of productivity ratios and some of the
difficulties and limitations of the resulting estimates.

Output

With respect to output, ideally the numbers of units of each category of tangible commodity or
service should be counted in successive time periods and aggregated for the firm, industry, or
total economy in terms of some indicator of relative importance, usually price or cost per unit as
of a particular period. The unit value “weights”—price, cost, or other—must be held constant for
two or more periods being compared so that changes in aggregate output reflect changes in
physical volumes rather than in prices. An alternative procedure that produces the same results
with ideal data is to “deflate” current values of the various items produced by index numbers that
reflect relative price changes in order to eliminate the effects of price changes. Price deflation is
usually employed to obtain estimates of real gross product by sector and industry to be used as
numerators of productivity ratios. For tangible industrial production measures, quantities of the
various commodities are generally weighted together by constant unit values.

Unfortunately, in most countries data on quantities and prices for many outputs of the finance
and service industries are deficient. In the broader real gross product estimates, changes in
outputs of a portion of such services are approximated by estimating changes in inputs. Estimates
so derived are not suitable for productivity measurement, however. They impart a downward
bias to estimates of real product and productivity for the services sector and its affected
components and hence for the economy as a whole.

Other problems in estimating output arise in adjusting estimates of outputs to take account of
quality change, measuring quantities or prices of nonstandard custom-made products, and
estimating outputs of nonmarket goods and services. Partial adjustments for quality changes may
be made when increases in real costs per unit are associated with the improvements. But it is
generally agreed that physical-volume or real-product measures fail to capture at least part of the
improvements in product quality, as distinguished from relative shifts among alternative qualities
(price-lines) of a given product. Methods of estimating changes in the physical volume of
custom-built products, such as buildings or other major structures, have improved in recent
years. But changes in the output of nonmarket goods and services, such as those of governments,
households, and nonprofit institutions, must generally be measured by changes in inputs. In
consequence, productivity estimates are usually confined to the predominant business
(enterprise) sector of an economy.
Inputs

Labour input is relatively easy to measure if one is content to count heads of persons engaged in
production or, preferably, hours worked. But in fact, the available hours’ data often relate to
hours paid for, rather than hours worked, and these tend to rise in relation to hours at the
workplace as the number of paid holidays and leaves are increased. Official estimates generally
do not differentiate among various categories of labour. But some academic economists measure
labour inputs by occupation and/or industry and possibly other categories and weight the
aggregate in each category by a measure of the average compensation in some designated base
period. As the average levels of education, training, skills, and experience of workers increase,
the weighted measures rise relative to unweighted measures of labour input. Change in the ratio
of the two indicates change in the quality of labour input, which is an important part of the
explanation of change in productivity.

Capital input is usually assumed to change in the same direction as and proportionally to
changes in the real stocks of structures, equipment, inventories, and natural resources. The rates
of return on those capital goods in some base period are taken to be indicative of their
productivity for the purpose of weighting them together with other factor inputs. Some analysts
adjust the capital estimates to take into account changing rates of utilization of capacity;
otherwise, changes in utilization rates are reflected in the productivity estimates.

Industry purchases and sales of intermediate products—those materials, energy, and other
services that are consumed in the production process—are accounted for on a value-added basis
and cancel out in the national income and product estimates by industry (one industry’s output
being the next one’s input). But if intermediate purchases are counted as an input for
comparisons with gross output estimates, they are measured in the same manner as described for
outputs.

Productivity index

Any student of statistics knows that all index numbers are ratios standardized to a base. The base
need not necessarily be a point of time or a period. It can be a place such as a country or a
factory or a company.

It is possible to make productivity index for each factory and compare their several trends with
one another. A comparison of the several index numbers for a given period would show the
relative progress made in them since the base period.

Here we are concerned with preparing productivity index numbers for the same place but for dif-
ferent periods. In preparing productivity index numbers, a labour-weighted production index is
used as the numerator and the ratio of labour consumed or used in the given period to that in the
base period as the denominator. First, we may consider the numerator.
 i. The Labour-Weighted Production Index:

A simple example may be used to illustrate this concept.

Suppose a jam factory in Bhutan has three main processes:

 Making, including preparing fruits and boiling;

 Filling into pots each contain 1 lb. of jam; and
 Capping the pots, labelling, and packaging ready for distribution.

In 1983 the factory makes, fills, caps, etc. 100,000 lb of jam. In 1984, more sophisticated filling
and capping technologies are introduced. This enabled the factory to save labour to a great extent
in 1984.

Now it is easy to find out productivity at the process level. If the factory makes 1, 50,000 lb., in
1984, and the size of the labour force increases from 40 men in 1983 to 60 men in 1984 the
productivity in the making department remains unchanged.

If the labour force averages 50 men in 1984, then there is an increase in productivity of 20%, the
index number for 1984 being 120 to the base 1983 = 100:

Suppose demand is overestimated in 1984. So 1, 50,000 lb. of jam are made and filled into pots
then capped and labelled. But the factory succeeds in selling only 1, 20,000 lb. in 1984. Table
27.1 illustrates how to arrive at an overall labour weighted productivity index for the factory.
The ratios given in the last column of table 27.1 provide the productivity index numbers process.

Labour-weighted production index

ii. The Labour Ratio as Denominator:

We have furnished details about three processes in table 27.1. Here the appropriate labour ratio is
∑mnqn / ∑moqo, which corresponds to the value ratio, where p serves for m. Here the ratio is:
57.5/ 53.0 = 1.085, which is divided into the production index to give the productivity index.

However, as E. J. Broster has pointed out, “if the productivity index for the factory as a whole
including warehousing, labour and office staff is required, the total labour force, including these
people, in the given and base periods would be used for arriving at the labour ratio to use as the
denominator”.

iii. The Productivity Index:

Let us represent the productivity index in the given year to 1.00 in the base year by Mn.o. Then,
for the three departments or processes, we have

However, since the ratio m0/mn gives the productivity index process by process, weighted for
output, they would give a productivity index for the three processes combined.

The index derived from the weighted figures is:

This is exactly, the same as the figure derived above, we have the

 labour weighted production index

 Labour weighted production index
 Labour weighted production index

Which is the same as the above.

iv. Limitations of the Formula:

It may be noted that equation is “limited in its application to the derivation of productivity index
numbers, in respect of the labour force accounted for in the process of calculations”.

If, however, an overall productivity index for the factory is required, there is need to apply
equation (27.4) in which the labour ratio is the total factory labour force, in the base period
divided by that in the given (current) period. Suppose for our hypothetical jam factory the two
labour figures are 90 and 100 respectively, then the overall productivity index would be:

90/100 of 1.483 = 1.335.

 Production System Models of production system, Product vs. Services, Process-focused

& product focused systems, product strategies, product life cycle, production function.

2. Production System Models of production system, Product vs. Services, Process-focused

& product focused systems, product strategies, product life cycle, production function.

The production system of an organization is that part, which produces products of an

organization. It is that activity whereby resources, flowing within a defined system, are
combined and transformed in a controlled manner to add value in accordance with the policies
communicated by management. A simplified production system is shown above.The production
system has the following characteristics:

Production is an organized activity, so every production system has an objective.

The system transforms the various inputs to useful outputs.

It does not operate in isolation from the other organization system.

There exists a feedback about the activities, which is essential to control and improve system
performance.

Concept of Production System:

The production system is a part of a larger system – the business firm. The production system
can be viewed as a framework or skeleton of activities within which the creation of value can
occur. Briefly, the difference between the value of inputs and the value of outputs represents the
value created through production activities. At one end of the production system are the inputs
and at the other end are outputs. Connecting the inputs and outputs are a series of operations or
processes, storages and inspections.

Simplified Production System

The concept of production system is applicable to both production of components and production
of services as well. The production of any component or service can be viewed in terms of a
production system. For example, the manufacture of furniture involves such inputs as wood,
glue, nails, screws, paints, sand paper, saws, workers etc. After these inputs are acquired, they
must be stored until ready for use. See Fig. 2.1

Then several operations, such as

sawing, nailing, sanding and painting
can occur through which inputs are
converted into such outputs as chairs,
tables, etc. After the finishing
operation, a final inspection occurs.
Then the outputs are held in stock
rooms until they are shipped to the
customers.

Examples of service industries which

use production concepts are hospitals,
railroads, airlines, supermarkets, automobile repair shops, etc.
Analysis of Production Systems

Input Output Model of Production System:

It is one of the basic models of the production system. A production system is the set of
interconnected input-output elements and is made up of three component parts namely inputs,
process and outputs (Fig. 2.3). A wide variety of inputs are transformed so that they give out a
set of outputs. The transforming process can be complicated and the design of an actual input
and output system for manufacturing may be expensive and difficult.

Input-Output Model

The efficiency of an engineering system (a machine)

= Output/Input ≤ 1, a system with output equal to input is considered to be ideal. But in a system
of Production Management this definition of efficiency means utter failure and ultimately the
end of the business. In economic system, the efficiency has to be greater than one – which means
a state of profit. A production management system comprehends and integrates both engineering
and economic criteria in its activities.

Key Features of a product

The major key feature of a product is that it is physical and it is also tangible. This implies that a
product can be held, it can be seen, felt or smelled. As such, the sale of a product is a once off
transaction. However, it should also be noted that a product can be returned to the seller for
replacement or refund in the event that it is wrong or damaged. When the customer is not
satisfied with the product, he can return it to the seller in exchange of the right type of product
desired.

The value of the product is often created and derived from the product by the user. In other
words, the user knows what exactly he or she truly desires from a product hence the decision to
buy it. It is the same customer who can derive value from purchasing a product unlike the value
of the service that is created by the service provider.

The other important aspect about a product pertains to ownership. A product can be owned by
the purchaser since ownership is transferred the moment a transaction has been performed. The
fact that a product is tangible makes ownership transferrable unlike a service that can only be
felt. Once a product has been bought, it can then be easily separated from the provider since the
customer can take it home for personal use. Ownership of a service can therefore not be
transferred to its user.
The customer care perspective of a product is limited compared to that of a service. In a service,
it is customer care that attracts the buyers of that particular service while in a product, elements
such as branding and other product features that differentiate it from similar products that attract
the customers.

Difference between product and service

Key Features of a Service

A service is work done by another person for another individual. For instance, a person will visit
a restaurant to have the desired services performed by other people while they relax on their
tables. Legal advice is another good example of a service rendered to another person by
professional lawyers. In most cases, people are usually attracted by the quality of service they get
from a particular organization instead of the product itself. Quality service is satisfactory and
people who are satisfied will continue doing business with the company.

Mediavine

The billing process of a service is continuous unlike that of a product. For instance, a service can
be in the form of monthly subscriptions where a service is rendered upon receipt of the
subscription. The other notable aspect about a service is that it cannot be returned to the provider
since it is intangible. A service is something that can only be felt therefore cannot be returned.

The other issue about a service is about their variability. Services vary according to who provide
them, where, when and how. Usually, the quality of the service is mainly determined by the
service provider while the customer determines the value of the product upon its purchase. The
quality of the service depends on the service provider. The marketers of a service should
therefore have knowledge about what the customers really desire such that they can tailor their
services to meet those needs. The marketers need to understand the features to sell to the
customers.

Summary of Key Differences Between Services and Products

Products are tangible – they are physical in nature such that they can be touched, smelled, felt
and even seen. Services are intangible and they can only be felt not seen.

Need vs. Relationship– a product is specifically designed to satisfy the needs and wants of the
customers and can be carried away. However, with a service, satisfaction is obtained but nothing
is carried away. Essentially, marketing of a service is primarily concerned with creation of
customer relationship.
Perishability- services cannot be stored for later use or sale since they can only be used during
that particular time when they are offered. On the other hand, it can be seen that products are
perishable. For example, fresh farm and other food products are perishable and these can also be
stored for later use or sale.

Quantity- products can be numerically quantified and they come in different forms, shapes and
sizes. However, services cannot be numerically quantified. Whilst you can choose different
service providers, the concept remains the same.

Inseparability- services cannot be separated from their providers since they can be consumed at
the same time they are offered. On the other hand, a product can be separated from the owner
once the purchase has been completed.

Quality- quality of products can be compared since these are physical features that can be held.
However, it may be difficult to compare the quality of the services rendered by different service
providers.

Returnability- it is easier to return a product to the seller if the customer is not satisfied about it.
In turn, the customer will get a replacement of the returned product. However, a service cannot
be returned to the service provider since it is something that is intangible.

Value perspective- the value of a service is offered by the service provider while the value of
the product is derived from using it by the customer. Value of a service cannot be separated from
the provider while the value of a product can be taken or created by the final user of the product
offered on the market.

Shelf line- a service has a shorter shelf line compared to a product. A product can be sold at a
later date if it fails to sell on a given period. This is different with regard to a service that has a
short shelve line and should be sold earlier.

Product Focused organization is one that has a roadmap and even vision for the product based
on delivering something that the team believes will meet market demand – whatever the market
may be.  I think of iPad and Apple as a classic example.  Mr. Jobs and Apple have yet again
created a product that most likely wasn’t identified by consumers as something they must have
or even need in daily life. Instead, the focus was on creating a product Steve and team thought
was right for market (although what market, I’m still not sure).

On the other hand, a Customer Focused organization is one where decisions about the product
are made based on aligning customer needs and wants with the overall goals of the organization. 
Simple as.  Customer feedback via surveys, customer service emails, Tweets, blogs and more in-
depth qualitative research are golden nuggets in these organizations
Product Strategy

All great products start with a clear strategy that is customer and market-driven. Your strategy
defines the direction of your product and what you want to achieve. Establishing this first aligns
the organization and keeps everyone focused on the work that matters the most. It tells the team
where the product is headed and what needs to be done to get there.

Strategy definition is an important part of product planning. It aligns executives and other key
stakeholders around your desired end state and how the product will achieve your business
objectives. It also guides the implementation and to communicate the value of the product to
cross-functional teams, such as sales, marketing, and support.

A product strategy is the foundation for the entire product lifecycle. As product leaders develop
and adjust their product strategy, they zero in on target customers and what they need. This
informs the strategic positioning necessary to achieve business success. Once your strategy
definition is completed, you can use it to shape your product definition. This is when you
describe the solution your product will provide and plan what you will build and when. Product
definition includes details about key product requirements — such as releases, features, user
flow and design, and technical specifications.

Strategy definition includes three major components: vision, goals, and initiatives.

Vision

Your vision includes details on the market opportunity, target customers, positioning, a
competitive analysis, and the Go-to-Market plan. It describes who the customers are, what they
need, and how you plan to deliver a unique offering.

Goals

Goals are measurable, time-bound objectives that have clearly defined success metrics associated
with them. They help you set what you want to achieve in the next quarter, year, or 18 months.
Here are a few examples:

 Increase revenue by 30%

 Expand into 5 new countries

 Increase mobile adoption by 100%

 Enter 3 new market segments

 Reduce the number of support tickets by 15%

Initiatives

Initiatives are the high-level efforts or big themes that need to be implemented to achieve your
goals. Here are some examples:

 Better reporting

 Performance improvements

 Enhance partner portal

 Build a marketplace

 UI refresh

Your strategy provides the foundation for planning your roadmap, defining your features, and
prioritizing your work. To visualize your strategy and see how it ties to your execution plan, it
helps if you link releases and features to initiatives and goals. This allows you to analyze your
roadmap at a high level and to discover any gaps. It is easier to understand the relationships
between product lines, products, goals, initiatives, and releases when you can see them all in one
view. This also helps you to identify "orphan" goals or initiatives and adjust your plans
accordingly.

A great strategy starts with a vision, objectives, and a canvas that explains how customer and
market forces shape the product's direction. The first step is to have a north star that tells you
where your product is headed.

What Is the Product Life Cycle? Stages and Examples

The product life cycle is the course of the life of a product from when the product is in
development to after it has been removed from the market.

Whether you’re looking through your parent’s old VHS tapes or shopping for a new smartphone,
you’re participating in and experiencing different stages of the product life cycle, or PLC.

When a product enters the market, often unbeknownst to the consumer, it has a life cycle that
carries it from being new and useful to eventually being retired out of circulation in the market.
This process happens continually – taking products from their beginning introduction stages all
the way through their decline and eventual retirement.

But, how does the product life cycle actually work, and how can analyzing it help companies?

What Is the Product Life Cycle?

The product life cycle is the process a product goes through from when it is first introduced into
the market until it declines or is removed from the market. The life cycle has four stages –
introduction, growth, maturity and decline.

While some products may stay in a prolonged maturity state, all products eventually phase out of
the market due to several factors including saturation, increased competition, decreased demand
and dropping sales.

Additionally, companies use PLC analysis (examining their product’s life cycle) to create
strategies to sustain their product’s longevity or change it to meet with market demand or
developing technologies.

4 Stages of the Product Life Cycle

Generally, there are four stages to the product life cycle, from the product’s development to its
decline in value and eventual retirement from the market.

1. Introduction

Once a product has been developed, the first stage is its introduction stage. In this stage, the
product is being released into the market. When a new product is released, it is often a high-
stakes time in the product’s life cycle – although it does not necessarily make or break the
product’s eventual success.

During the introduction stage, marketing and promotion are at a high – and the company often
invests the most in promoting the product and getting it into the hands of consumers. This is
perhaps best showcased in Apple’s (AAPL) – Get Report famous launch presentations, which
highlight the new features of their newly (or soon to be released) products.

It is in this stage that the company is first able to get a sense of how consumers respond to the
product, if they like it and how successful it may be. However, it is also often a heavy-spending
period for the company with no guarantee that the product will pay for itself through sales.

Costs are generally very high and there is typically little competition. The principle goals of the
introduction stage are to build demand for the product and get it into the hands of consumers,
hoping to later cash in on its growing popularity.

2. Growth

By the growth stage, consumers are already taking to the product and increasingly buying it. The
product concept is proven and is becoming more popular – and sales are increasing.
Other companies become aware of the product and its space in the market, which is beginning to
draw attention and increasingly pull in revenue. If competition for the product is especially high,
the company may still heavily invest in advertising and promotion of the product to beat out
competitors. As a result of the product growing, the market itself tends to expand. The product in
the growth stage is typically tweaked to improve functions and features.

As the market expands, more competition often drives prices down to make the specific products
competitive. However, sales are usually increasing in volume and generating revenue. Marketing
in this stage is aimed at increasing the product’s market share.

3. Maturity

When a product reaches maturity, its sales tend to slow or even stop – signaling a largely
saturated market. At this point, sales can even start to drop. Pricing at this stage can tend to get
competitive, signaling margin shrinking as prices begin falling due to the weight of outside
pressures like competition or lower demand. Marketing at this point is targeted at fending off
competition, and companies will often develop new or altered products to reach different market
segments.

Given the highly saturated market, it is typically in the maturity stage of a product that less
successful competitors are pushed out of competition – often called the “shake-out point.”

In this stage, saturation is reached and sales volume is maxed out. Companies often begin
innovating to maintain or increase their market share, changing or developing their product to
meet with new demographics or developing technologies.

The maturity stage may last a long time or a short time depending on the product. For some
brands, the maturity stage is very drawn out, like Coca-Cola (KO).

4. Decline

Although companies will generally attempt to keep the product alive in the maturity stage as
long as possible, decline for every product is inevitable.

In the decline stage, product sales drop significantly and consumer behavior changes as there is
less demand for the product. The company’s product loses more and more market share, and
competition tends to cause sales to deteriorate.

Marketing in the decline stage is often minimal or targeted at already loyal customers, and prices
are reduced.
Eventually, the product will be retired out of the market unless it is able to redesign itself to
remain relevant or in-demand. For example, products like typewriters, telegrams and muskets are
deep in their decline stages (and in fact are almost or completely retired from the market).

Definition: The Production Function shows the relationship between the quantity of output and

the different quantities of inputs used in the production process. In other words, it means, the
total output produced from the chosen quantity of various inputs.

Generally, production is the transformation of raw material into the finished goods. These raw
materials are classified as land, labor, capital or natural resources. These may be fixed or variable
depending upon the nature of the business.

This function establishes the physical relationship between these inputs and the output. The
efficiency of this relationship depends on the different quantities used in the production process,
the quantities of output and the productivity at each point. It can be shown algebraically:

O = f (I1, I2, I3, I4……. Zn)

Where, O = quantity of output

I1, I2, I3 = Quantity of different inputs

It can be classified on the basis of the substitutability of the inputs by other inputs:

 Fixed Proportion Production Function

 Variable Proportion Production Function

 Linear Homogeneous Production Function

 Cobb. Douglas Production Function

  Constant Elasticity of Substitution 

Thus, it is a comprehensive function that involves different activities ranging from the
production of output from the given inputs and its distribution by the marketing division of the
organization.

3. Forecasting: Methods — moving average, exponential smoothing, Regression analysis,

coefficient of co-relation, Delphi, Market survey.

a. What Is Forecasting?

Forecasting is a technique that uses historical data as inputs to make informed estimates that are
predictive in determining the direction of future trends. Businesses utilize forecasting to
determine how to allocate their budgets or plan for anticipated expenses for an upcoming period
of time. This is typically based on the projected demand for the goods and services offered.

How Forecasting Works

Investors utilize forecasting to determine if events affecting a company, such as sales

expectations, will increase or decrease the price of shares in that company. Forecasting also
provides an important benchmark for firms, which need a long-term perspective of operations.

Stock analysts use forecasting to extrapolate how trends, such as GDP or unemployment, will
change in the coming quarter or year. The further out the forecast, the higher the chance that the
estimate will be inaccurate. Finally, statisticians utilize forecasting in any situation that requires
the use of forecasting. For instance, data may be collected regarding the impact of customer
satisfaction by changing business hours or the productivity of employees upon changing certain
work conditions.

Forecasting addresses a problem or set of data. Economists make assumptions regarding the
situation being analyzed that must be established before the variables of the forecasting are
determined. Based on the items determined, an appropriate data set is selected and used in the
manipulation of information. The data is analyzed, and the forecast is determined. Finally, a
verification period occurs where the forecast is compared to the actual results to establish a more
accurate model for forecasting in the future.
Forecasting Methods

Stock analysts use various forecasting methods to determine how a stock’s price will move in the
future. They might look at revenue and compare it to economic indicators. Changes to financial
or statistical data are observed to determine the relationship between multiple variables. These
relationships may be based on the passage of time or the occurrence of specific events. For
example, a sales forecast may be based upon a specific period (the passage of the next 12
months) or the occurrence of an event (the purchase of a competitor’s business).

Qualitative forecasting models are useful in developing forecasts with a limited scope. These
models are highly reliant on expert opinions and are most beneficial in the short term. Examples
of qualitative forecasting models include market research, polls, and surveys that apply the
Delphi method. Quantitative methods of forecasting exclude expert opinions and utilize
statistical data based on quantitative information. Quantitative forecasting models include time
series methods, discounting, analysis of leading or lagging indicators, and econometric
modeling.

Moving Average Formula

A moving average is a technique that calculates the overall trend in a data set. In operations
management, the data set is sales volume from historical data of the company. This technique is
very useful for forecasting short-term trends. It is simply the average of a select set of time
periods. It's called 'moving' because as a new demand number is calculated for an upcoming time
period; the oldest number in the set falls off, keeping the time period locked. Let's look at an
example of how the sales manager at ABC Inc. will forecast demand using the moving average
formula.

The formula is illustrated as follows:

Moving Average =
(n1 + n2 + n3 + ...) / n

Where n = the number of time periods in the data set. The sum of the first time period and all
additional time periods chosen is divided by the number of time periods. Bob decides to create
his demand forecast based on a 5-year moving average. This means that he will use the sales
volume data from the past 5 years as the data for the calculation.
Regression analysis

What is Regression Analysis? Regression analysis is a set of statistical methods used for the
estimation of relationships between a dependent variable and one or more independent variables.
It can be utilized to assess the strength of the relationship between variables and for modeling the
future relationship between them.

Regression analysis includes several variations, such as linear, multiple linear, and nonlinear.
The most common models are simple linear and multiple linear. Nonlinear regression analysis is
commonly used for more complicated data sets in which the dependent and independent
variables show a nonlinear relationship.

Regression analysis offers numerous applications in various disciplines, including finance.

Regression Analysis – Linear model assumptions

Linear regression analysis is based on six fundamental assumptions:

1. The dependent and independent variables show a linear relationship between the slope
and the intercept.

2. The independent variable is not random.

 3. The value of the residual (error) is zero.

4. The value of the residual (error) is constant across all observations.

5. The value of the residual (error) is not correlated across all observations.

6. The residual (error) values follow the normal distribution.

Regression Analysis – Simple linear regression

Simple linear regression is a model that assesses the relationship between a dependent variable
and an independent variable. The simple linear model is expressed using the following equation:

Y = a + bX + ϵ

Where:

 Y – Dependent variable

 X – Independent (explanatory) variable

 a – Intercept

 b – Slope

 ϵ – Residual (error)

Regression Analysis – Multiple linear regression

Multiple linear regression analysis is essentially similar to the simple linear model, with the
exception that multiple independent variables are used in the model. The mathematical
representation of multiple linear regression is:

Y = a + bX1 + cX2  + dX3 + ϵ

 
Where:

 Y – Dependent variable

 X1, X2, X3 – Independent (explanatory) variables

 a – Intercept

 b, c, d – Slopes

 ϵ – Residual (error)

Multiple linear regression follows the same conditions as the simple linear model. However,
since there are several independent variables in multiple linear analysis, there is another
mandatory condition for the model:

 Non-collinearity: Independent variables should show a minimum of correlation with each

other. If the independent variables are highly correlated with each other, it will be
difficult to assess the true relationships between the dependent and independent variables.

Regression analysis in finance

Regression analysis has several applications in finance. For example, the statistical method is
fundamental to the Capital Asset Pricing Model (CAPM). Essentially, the CAPM equation is a
model that determines the relationship between the expected return of an asset and the market
risk premium.

The analysis is also used to forecast the returns of securities, based on different factors, or to
forecast the performance of a business.

Correlation coefficient

This is used in statistics to measure how strong a relationship is between two variables. There are
several types of correlation coefficient: Pearson’s correlation (also called Pearson’s R) is a
correlation coefficient commonly used in linear regression. If you’re starting out in statistics,
you’ll probably learn about Pearson’s R first. In fact, when anyone refers to the correlation
coefficient, they are usually talking about Pearson’s.
Correlation coefficient formulas are used to find how strong a relationship is between data. The
formulas return a value between -1 and 1, where:

 1 indicates a strong positive relationship.

 -1 indicates a strong negative relationship.

 A result of zero indicates no relationship at all.

Meaning

A correlation coefficient of 1 means that for every positive increase in one variable, there is a
positive increase of a fixed proportion in the other. For example, shoe sizes go up in (almost)
perfect correlation with foot length.

A correlation coefficient of -1 means that for every positive increase in one variable, there is a
negative decrease of a fixed proportion in the other. For example, the amount of gas in a tank
decreases in (almost) perfect correlation with speed.

Zero means that for every increase, there isn’t a positive or negative increase. The two just aren’t
related.

The absolute value of the correlation coefficient gives us the relationship strength. The larger the
number, the stronger the relationship. For example, |-.75| = .75, which has a stronger relationship
than .65.

Delphi, Market survey

The Delphi method is a forecasting process framework based on the results of multiple rounds of
questionnaires sent to a panel of experts. Several rounds of questionnaires are sent out to the
group of experts, and the anonymous responses are aggregated and shared with the group after
each round.
The experts are allowed to adjust their answers in subsequent rounds, based on how they
interpret the "group response" that has been provided to them. Since multiple rounds of questions
are asked and the panel is told what the group thinks as a whole, the Delphi method seeks to
reach the correct response through consensus.

Understanding the Delphi Method

The Delphi method was originally conceived in the 1950s by Olaf Helmer and Norman Dalkey
of the Rand Corporation. The name refers to the Oracle of Delphi, a priestess at a temple of
Apollo in ancient Greece known for her prophecies.

The Delphi method allows experts to work toward a mutual agreement by conducting a
circulating series of questionnaires and releasing related feedback to further the discussion with
each subsequent round. The experts' responses shift as rounds are completed based on the
information brought forth by other experts participating in the analysis.

The Delphi method is a process of arriving at group consensus by providing experts with rounds
of questionnaires, as well as the group response before each subsequent round.

How the Delphi Method Works?

First, the group facilitator selects a group of experts based on the topic being examined. Once all
participants are confirmed, each member of the group is sent a questionnaire with instructions to
comment on each topic based on their personal opinion, experience, or previous research. The
questionnaires are returned to the facilitator who groups the comments and prepares copies of the
information. A copy of the compiled comments is sent to each participant, along with the
opportunity to comment further.

At the end of each comment session, all questionnaires are returned to the facilitator who decides
if another round is necessary or if the results are ready for publishing. The questionnaire rounds
can be repeated as many times as necessary to achieve a general sense of consensus.

The Advantages and Disadvantages of the Delphi Method

The Delphi method seeks to aggregate opinions from a diverse set of experts, and it can be done
without having to bring everyone together for a physical meeting. Since the responses of the
participants are anonymous, individual panelists don't have to worry about repercussions for their
opinions. Consensus can be reached over time as opinions are swayed, making the method very
effective.

However, while the Delphi method allows for commentary from a diverse group of participants,
it does not result in the same sort of interactions as a live discussion. A live discussion can
 sometimes produce a better example of consensus, as ideas and perceptions are introduced,
broken down and reassessed. Response times with the Delphi method can be long, which slows
the rate of discussion. It is also possible that the information received back from the experts will
provide no innate value.

KEY TAKEAWAYS

 The Delphi method is a process used to arrive at a group opinion or decision by surveying
a panel of experts.

 Experts respond to several rounds of questionnaires, and the responses are aggregated
and shared with the group after each round.

 The experts can adjust their answer each round, based on how they interpret the "group
response" provided to them.

 The ultimate result is meant to be a true consensus of what the group thinks.

b. Paste facility planning from group Assignments here

5) Motion study in Production Management

Motion study is part of method study where analysis of the motion of an operator or work will be
studied by following the prescribed methods.

Principles of Motion study

There are a number of principles concerning the economy of movements which have been
developed as a result of experience and which forms the basis for the development of improved
methods at the workplace. These are first used by Frank Gilbreth, the founder of motion study
and further rearranged and amplified by Barnes, Maynard and others. The principles are grouped
into three headings:

A. Use of the human body.

B. Arrangement of workplace.

C. Design of tools and equipment.

 USES OF HUMAN BODY
When possible:

 The two hands should begin and complete their movements at the same time.

 The two hands should not be idle at the same time except during periods of rest.

 Motions of the arms should be made simultaneously.

 Hand and body motions should be made at the lowest classification at which it is
possible to do the work satisfactorily.

 Momentum should be employed to help the worker, but should be reduced to a

minimum whenever it has to be overcome by muscular effort.

 Continuous curved movements are to be preferred to straight line motions involving

sudden and changes in directions.

 ‘Ballistic’ (i.e., free swinging) movements are faster, easier and more accurate than
restricted or controlled movements.

 Rhythm is essential to the smooth and automatic performance of a repetitive operation.

The work should be arranged to permit easy and natural rhythm wherever possible.

 Work should be arranged so that eye movements are confined to a comfortable area,
without the need for frequent changes of focus.

ARRANGEMENT OF THE WORKPLACE

1. Definite and fixed stations should be provided for all tools and materials to permit habit
formation.

2. Tools and materials should be pre-positioned to reduce searching.

3. Gravity fed, bins and containers should be used to deliver the materials as close to the
point of use as possible.

4. Tools, materials and controls should be located within a maximum working area and as
near to the worker as possible.

5. Materials and tools should be arranged to permit the best sequence of motions.
6. ‘Drop deliveries’ or ejectors should be used wherever possible, so that the operative
does not have to use his hands to dispose of finished parts.

7. Provision should be made for adequate lightning, and a chair of type and height to
permit good posture should be provided. The height of the workplace and seat should be
arranged to allow alternate standing and seating.

DESIGN OF TOOLS AND EQUIPMENTS

1. The color of the workplace should contrast with that of work and thus reduce eye
fatigue.

2. The hands should be relieved of all work of ‘holding’ the work piece where this can be
done by a jig or fixture or foot operated device.

3. Two or more tools should be combined where possible.

4. Where each finger performs some specific movement, as in typewriting, the load should
be distributed in accordance with the inherent capacities of the fingers.

5. Handles such as those used on screw drivers and cranks should be designed to permit
maximum surface of the hand to come in contact with the handle.

6. Levers, cross bars and wheel bars should be in such position that operator can
manipulate them with least body change and with greatest mechanical advantage.

Recording Techniques of Motion Study

Most of the techniques mentioned in method study is used in the motion study. They are as
follows:

Macro Motion Study

a. Flow process chart

b. Two handed process chart.

Micro Motion Study

SIMO chart.

Motion economy
Motion economy is the process of minimizing the physical and perceptual loads imposed on
people engaged in any type of work, whether it be in the office, the shop floor, the kitchen, or at
the driving wheel. It leads to a better designing of equipment, jigs and fixtures, hand tools,
furniture, and labour saving devices.

Also, it facilitates a better layout of offices, warehouses, plants, and operating areas like office
desk, work bench, aircraft, cockpit, and crew compartments of armoured fighting vehicles.
Application of the principles of motion economy eliminates or minimizes wasteful and fatiguing
movements and increases the productivity of the workers.

It minimizes the movements in respect to:

(i) Number of movements

(ii) Length of movements
(iii) Number of parts of body used
(iv) Necessity for control
(v) Muscular force
(vi) Complexity of movements
(vii) Distances between eye fixation
(viii) Time required for eye fixation

For achieving motion economy, the following principles have been evolved by different
specialists:

(a) Principle of minimum movement

(b) Principle of natural movement
(c) Principle of simultaneous movement
(d) Principle of rhythmic movement
(e) Principle of habitual movement
(f) Principle of continuous movement

Simultaneous movements reduce fatigue and increase the rate of output. More fatigue is caused
when only one hand is working while the other is idle. Simultaneous movement includes the
movements of the feet while both the hands are operating as in driving a car. Application of this
principle leads to a better designing of jigs, fixtures, and duplication of tools so that both die
hands work at similar tasks simultaneously.

The principle of symmetrical movements should be applied in conjunction with simultaneous

movements. Proper balance is achieved only when the movement of one hand is the ‘mirror
image’ of the other or it eliminates fumbling. When movements of the hands are asymmetrical,
there is a tendency on the part of the operators to interpolate additional, but non-productive
movements in order to achieve a balance.

Rhythm is the regular repetition of a movement pattern. It often incorporates the accentuation of
a specific part of a cycle. Rhythm contributes to speed, elimination of fumbling, and reduction in
fatigue. Examples of rhythmic movements are boat rowing, hammering at the smithy, and
drawing water from a well using a see-saw lift.

The pattern of movement should be so designed as to facilitate habituation. When a cycle of

activities is performed habitually, the movements are executed almost as a reflex action. Habitual
movements eliminate hesitations and increase the speed of performance. Rhythm helps in speed
habit formation.

Tools, materials, displays, and controls must always be located in the same position. The pattern
must be standardized for similar types of panels, work places and equipment. Continuous
movements, which are smooth and curved, are superior to jerky, straight line movements, which
involve sudden changes of direction and loss of momentum. Materials, tools and jigs must be so
positioned as to incorporate smooth, curved, and continuous movements and eliminate undue
changes of direction.

The above principles should be treated merely as guides and not as rigid rules. Quite often, one
principle would be in conflict with another and a proper evaluation of the principles, in their
totality, would be needed for optimization. Conditions differ from job to job. It may sometimes
be necessary to compromise load over the various muscles or to give due weightage to the
principle of continuous movement. It is, therefore, essential that the principles are applied with
flexibility

Time study in Production and Operation Management

Time study is also called work measurement. It is essential for both planning and control of
operations. According to British Standard Institute time study has been defined as “The
application of techniques designed to establish the time for a qualified worker to carry out a
specified job at a defined level of performance.”

Steps in Making Time Study

 Stop watch time is the basic technique for determining accurate time standards. They are
economical for repetitive type of work. Steps in taking the time study are:
 Select the work to be studied.
  Obtain and record all the information available about the job, the operator and the
working conditions likely to affect the time study work.
 Breakdown the operation into elements. An element is a instinct part of a specified
activity composed of one or more fundamental motions selected for convenience of
observation and timing.
 Measure the time by means of a stop watch taken by the operator to perform each
element of the operation. Either continuous method or snap back method of timing could
be used.

At the same time, assess the operators effective speed of work relative to the observer’s concept
of ‘normal’ speed. This is called performance rating

Adjust the observed time by rating factor to obtain normal time for each element

Normal =

Observed time Rating

100 Add the suitable allowances to compensate for fatigue, personal needs, contingencies etc. to
give standard time for each element.

Compute allowed time for the entire job by adding elemental standard times considering
frequency of occurrence of each element.

Make a detailed job description describing the method for which the standard time is established.

Test and review standards wherever necessary. The basic steps in time study are represented by a
block diagram in the figure “Steps in time study”

Computation of Standard Time

Standard time is the time allowed to an operator to carry out the specified task under specified
conditions and defined level of performance. The various allowances are added to the normal
time as applicable to get the standard time “Components standard time”.

Standard time Calculation time study

Standard time may be defined as the, amount of time required to complete a unit of work: under
existing working conditions, using the specified method and machinery, by an operator, able to
the work in a proper manner, and at a standard pace.
Thus basic constituents of standard time are:

 Elemental (observed time).

 Performance rating to compensate for difference in pace of working.
 Relaxation allowance.
 Interference and contingency allowance.
 Policy allowance.

6) Production Planning & Control: Aggregate planning. Sequencing, Line balancing, Flow
control, Dispatching, expediting, Gantt chart, line of balance.

Meaning:

Production planning and control is an important task of Production Manager. It has to see that
production process is properly decided in advance and it is carried out as per the plan. Production
is related to the conversion of raw materials into finished goods. This conversion process
involves a number of steps such as deciding what to produce, how to produce, when to produce,
etc. These decisions are a part, of production planning. Merely deciding about the task is not
sufficient.

The whole process should be carried out in a best possible way and at the lowest cost. Production
Manager will have to see that the things proceed as per the plans. This is a control function and
has to be carried as meticulously as planning. Both planning and control of production are
necessary to produce better quality goods at reasonable prices and in a most systematic manner.

Production planning is the function of looking ahead, anticipating difficulties to be faced and the
likely remedial steps to remove them. It may be said to be a technique of forecasting ahead every
step in the long process of production, taking them at a right time and in the right degree and
trying to complete the operations at maximum efficiency. Production control, on the other hand,
guides and directs flow of production so that products are manufactured in a best way and
conform to a planned schedule and are of the right quality. Control facilitates the task of
manufacturing and see that everything goes as per the plans.

Aggregate planning is the process of developing, analyzing, and maintaining a preliminary,

approximate schedule of the overall operations of an organization. The aggregate plan generally
contains targeted sales forecasts, production levels, inventory levels, and customer backlogs.
This schedule is intended to satisfy the demand forecast at a minimum cost. Properly done,
aggregate planning should minimize the effects of shortsighted, day-to-day scheduling, in which
small amounts of material may be ordered one week, with an accompanying layoff of workers,
followed by ordering larger amounts and rehiring workers the next week. This longer-term
perspective on resource use can help minimize short-term requirements changes with a resulting
cost savings.

In simple terms, aggregate planning is an attempt to balance capacity and demand in such a way
that costs are minimized. The term “aggregate” is used because planning at this level includes all
resources “in the aggregate;” for example, as a product line or family. Aggregate resources could
be total number of workers, hours of machine time, or tons of raw materials. Aggregate units of
output could include gallons, feet, pounds of output, as well as aggregate units appearing in
service industries such as hours of service delivered, number of patients seen, etc.

Aggregate planning does not distinguish among sizes, colors, features, and so forth. For example,
with automobile manufacturing, aggregate planning would consider the total number of cars
planned for not the individual models, colors, or options. When units of aggregation are difficult
to determine (for example, when the variation in output is extreme) equivalent units are usually
determined. These equivalent units could be based on value, cost, worker hours, or some similar
measure.

Aggregate planning is considered to be intermediate-term (as opposed to long- or short-term) in

nature. Hence, most aggregate plans cover a period of three to 18 months. Aggregate plans serve
as a foundation for future short-range type planning, such as production scheduling, sequencing,
and loading. The master production schedule (MPS) used in material requirements planning
(MRP) has been described as the aggregate plan “disaggregated.”

Steps taken to produce an aggregate plan begin with the determination of demand and the
determination of current capacity. Capacity is expressed as total number of units per time period
that can be produced (this requires that an average number of units be computed since the total
may include a product mix utilizing distinctly different production times). Demand is expressed
as total number of units needed. If the two are not in balance (equal), the firm must decide
whether to increase or decrease capacity to meet demand or increase or decrease demand to meet
capacity. In order to accomplish this, a number of options are available.

Options for situations in which demand needs to be increased in order to match capacity include:

Pricing. Varying pricing to increase demand in periods when demand is less than peak. For
example, matinee prices for movie theaters, off-season rates for hotels, weekend rates for
telephone service, and pricing for items that experience seasonal demand.

Promotion. Advertising, direct marketing, and other forms of promotion are used to shift
demand.
Back ordering. By postponing delivery on current orders demand is shifted to period when
capacity is not fully utilized. This is really just a form of smoothing demand. Service industries
are able to smooth demand by taking reservations or by making appointments in an attempt to
avoid walk-in customers. Some refer to this as “partitioning” demand.

New demand creation. A new, but complementary demand is created for a product or service.
When restaurant customers have to wait, they are frequently diverted into a complementary (but
not complimentary) service, the bar. Other examples include the addition of video arcades within
movie theaters, and the expansion of services at convenience stores.

Operation Sequencing

It is to plan the order of the operation by process, regarding the fixed orders through the
Operation Order Release Planning. It is to grasp the progress status of the operation, to consider
the priority, setup time, and etc., and to make an operation sequencing list.

Operation sequencing pertains to the determination of priority for processing jobs. The process
addresses potential scheduling issues within production that may lead to a lack of efficiency.
Examples of this would include assigning various jobs within the operation and a lack of
completing them.The main concern within a manufacturing operation is efficiency and job time

flow, which is why understanding the rules of job sequencing can aid in ensuring that jobs and
orders are being completed within the timeframe they are given. Without further ado, here are
the rules within job sequencing.
Job Sequencing Rules

Job Sequencing Rules include the following:

 Earliest Due Date - Within some organizations, they sequence jobs based off their
earliest due date. This is at times referred to as due date assignment, and it places high priority on
processing jobs with early due dates. You can measure job shop quality performance through the
number of late jobs, average tardiness across late jobs, and average tardiness among all jobs.

 Shortest Processing Time - Another common method of job sequencing based on

completion time is shortest processing time. Shortest processing time assigns jobs with the
shortest processing times first. Similar to the longest processing time scheduling method, shortest
processing time requires a time estimation for each job. Shortest processing time can effectively
reduce average flow time for jobs.

 Longest Processing Time - The longest processing time method assigns highest priority
jobs with the longest processing time. When scheduling longer jobs first, schedulers can reduce a
large amount of much more time consuming jobs at the end of the job schedule. This form of job
sequencing is extremely beneficial to manufacturers.

 First-Come, First Serve - A large sum of shops utilize the first-come, first-served job
sequencing method. This method processes orders in the order of arrival at their production
facility. Arrival time is a key component and factor within the job sequencing rule, which is what
separates it from other methods such as longest processing time and shortest processing time. No
estimation time is required for first come, first serve job scheduling.

Line-balancing strategy is to make production lines flexible enough to absorb external and
internal irregularities. There are two types of line balancing, which we have explained as –

Static Balance – Refers to long-term differences in capacity over a period of several hours or
longer. Static imbalance results in underutilization of workstations, machines and people.

Dynamic Balance – Refers to short-term differences in capacity, like, over a period of minutes,
hours at most. Dynamic imbalance arises from product mix changes and variations in work time
unrelated to product mix
Flow Control

Flow control, also called optimized production technology, focuses on the efficient flow of
material through the production process. The philosophy of flow control focuses on bottlenecks.
For example, an owner using flow control will not buy a machine capable of 1,000 units an hour
if supply is only 500 units. Examine systems and determine where lowest flow is experienced,
then address that point and make sure it operates at full capacity. Flow control applies well
where maximum productivity is required.

Dispatching is concerned with starting the processes. It gives necessary authority To start a
particular work, which has already been planned under ‘routing’ and ‘scheduling’. For starting
the work, essential orders and instructions are given. Therefore, the definition of dispatching is
‘release of orders and instructions for Starting of the production for an item in accordance with
the ‘route sheet’ and Schedule charts’. Dispatching functions include:

1. Implementing the schedule in a manner that retains any order priorities Assigned
at the planning phase.
2. Moving the required materials from stores to the machines, and from Operation to
operation.
3. Authorizing people to take work in hand as per schedule
4. Distributing machine loading and schedule charts, route sheet, and other
Instructions and forms.
5. Issuing inspection orders, stating the type of inspection at various stages.
6. Ordering tool-section to issue tools, jigs and fixture
Dispatching

Dispatching may be defined as setting production activities in motion through the release of
orders (work order, shop order) and instructions in accordance with the previously planned time
schedules and routings.

Dispatching also provides a means for comparing actual progress with planned production
progress. Dispatching functions include;

 Providing for movement of raw materials from stores to the first operation and from one
operation to the next operation till all the operations are carried out.

 Collecting tools, jigs and fixtures from tool stores and issuing them to the user
department or worker.

 Issuing job orders authorizing operations in accordance with dates and times as indicated
in schedules or machine loading charts.

 Issue of drawings, specifications, route cards, material requisitions and tool requisitions
to the user department.

 Obtaining inspection schedules and issuing them to the inspection section.

 Internal materials handling and movement of materials to the inspection area after
completing the operation, moving the materials to the next operation center after
inspection, and movement of completed parts to holding stores.

 Returning jigs and fixtures and tools to stores after use.

Expediting/follow-up /Progressing

Expediting or progressing ensures that, the work is carried out as per the plan and delivery
schedules are met.
Progressing includes activities such as status reporting, attending to bottlenecks or holdups in
production and removing the same ,controlling variations or deviations from planned
performance levels following up and monitoring progress of work through all stages of
production, co-ordinating with purchase, stores, tool room and maintenance departments and
modifying the production plans and re plan if necessary.

Need for expediting may arise due to the following reasons

 Delay in supply of materials.

 Excessive absenteeism.

 Changes in design specifications.

 Changes in delivery schedules initiated by customers.

 Break down of machines or tools, jigs and fixtures.

 Errors in design drawings and process plans.

Gantt chart

This a horizontal bar chart developed as a production control tool in 1917 by Henry L. Gantt, an
American engineer and social scientist. Frequently used in project management, a Gantt chart
provides a graphical illustration of a schedule that helps to plan, coordinate, and track specific
tasks in a project.

Gantt charts may be simple versions created on graph paper or more complex automated versions
created using project management applications such as Microsoft Project or Excel.

A Gantt chart is constructed with a horizontal axis representing the total time span of the project,
broken down into increments (for example, days, weeks, or months) and a vertical axis
representing the tasks that make up the project (for example, if the project is outfitting your
computer with new software, the major tasks involved might be: conduct research, choose
software, install software). Horizontal bars of varying lengths represent the sequences, timing,
and time span for each task. Using the same example, you would put “conduct research” at the
top of the verticle axis and draw a bar on the graph that represents the amount of time you expect
to spend on the research, and then enter the other tasks below the first one and representative
bars at the points in time when you expect to undertake them. The bar spans may overlap, as, for
example, you may conduct research and choose software during the same time span. As the
project progresses, secondary bars, arrowheads, or darkened bars may be added to indicate
completed tasks, or the portions of tasks that have been completed. A vertical line is used to
represent the report date.

Gantt charts give a clear illustration of project status, but one problem with them is that they
don’t indicate task dependencies – you cannot tell how one task falling behind schedule affects
other tasks. The PERT chart, another popular project management charting method, is designed
to do this. Automated Gantt charts store more information about tasks, such as the individuals
assigned to specific tasks, and notes about the procedures. They also offer the benefit of being
easy to change, which is helpful. Charts may be adjusted frequently to reflect the actual status of
project tasks as, almost inevitably, they diverge from the original plan.
The Line of Balance (LOB)

This process is employed when a repetitive process exists within the contract’s work scope. The
manufacturing of parts and the assembly of units in the factory are two candidates for the use of
LOB.

Line Of Balance (LOB) is a management control process for collecting, measuring and
presenting facts relating to time, cost and accomplishment – all measured against a specific plan.
It shows the process, status, background, timing and phasing of the project activities, thus
providing management with measuring tools that help:

 Comparing actual progress with a formal objective plan.

 Examining only the deviations from established plans, and gauging their degree of
severity with respect to the remainder of the project.
 Receiving timely information concerning trouble areas and indicating areas where
appropriate corrective action is required.
 Forecasting future performance.

The “Line of Balance” itself is a graphic device that enables a manager to see at a single glance
which of many activities comprising a complex operation are “in balance” – i.e., whether those
which should have been completed at the time of the review actually are completed and whether
any activities scheduled for future completion are lagging behind schedule. The Line of Balance
chart comprises only one feature of the whole philosophy which includes numerous danger
signal controls for all the various levels of management concerned.

History: LOB was devised by the members of a group headed by George E. Fouch. During 1941,
the Goodyear Tire & Rubber Company monitored production with LOB. It was successfully
applied to the production planning and scheduling of the huge Navy mobilization program of
World War ll. LOB proved to be a valuable tool for expediting production visibility during the
Korean hostilities. During this period, defense suppliers used LOB.

LOB application has been further expanded, making it suitable now across a whole spectrum of
activities ranging from research and development through job shop and process flow operations.

Specific forms and reports will be found to differ in detail, but the basic pattern and symbology
are quite uniform throughout industry.