Southeast University

Department Of BBA
Assignment on: Final exam
Course title: Production and Operations management
Course code: MGT3131
Section: 01

Submitted to:
Syeda Khadiza Akter
Lecturer
Department Of BBA
Southeast University

Submitted by:
Name: Sumon Parvej
ID: 2018010000139
Department of BBA
Southeast University

Submission date:02-02-2021
How would you apply the concept of TQM for Southeast University?

Ans to The Question no-01

Now I am going to discuss about the concept of Total quality management (TQM) for Southeast
University, there are three principle for achieving high level of (TQM).
 Customer satisfaction: we know that the Student is customer for the Southeast
University. If the Southeast University want to satisfied their Students, they have to
provide their service based on the student need and demand. That might be full fill the
student expectation. For example, they should be providing a better education and good
environment and other extra facilities after that the customer will be satisfied.
 Employee Involvement: Here, Southeast University employee are faculty member,
security guard, cleaner, programmer, accounts officers, admission officers etc. Southeast
university have to engaged between all employee to achieve a common a goal. If the
Southeast university want to well perform in the Higher education sector, all employee
has to work together and every employee should be helps each other. For achieving
employee engagement Southeast university have provides Incentive and benefit for
motivating them to achieve their desire goal.
 Continuous Improvement: Southeast University have to try to continuous improvement
and continuous Modification their activity level for quality development of their
University. They have to follow the modern trend.
For example, Southeast University always try to Improve their campus environment and always
try to provide Training and development their faculty and security guard to increase their skills,
and have to bring modern technology for provide efficient service.
Answer to the question No- 02
If you are given the responsibility of inventory manager what level of
inventory would you prefer and why? Explain with relevant examples.

Answer to the question no -03

If I get the responsibility of Inventory Manager, I will choose high level of inventory because
that will help me to get more benefit than low level of inventory. Those benefit are:
 Customer satisfaction: if my organization has high level of inventory that will help to
satisfied our valuable customer. If every product will be available in my shop then the
customer can easily able to find out.
Example: I am the inventory manager of Daily shop, here I will try to highly store all product
for customer satisfaction. I know that if my customer doesn’t get any product in my shop, they
will be dissatisfied then they move another shop. It will be a negative impact in my shop. As a
result, I prefer high level inventory.
 Supplier price discount: if I store high level of inventory in my shop, the per product
cost price ultimately reduced then the supplier will be able to get discount.
Example: As an inventory manager of Daily shop, I will store high level of Onion, Potato, Oil,
Rice because supplier per unit cost will be reduce. If I store 20 kg Onion, per unit cost will be
tk.35 on the other hand if I store 250 kg then the per unit cost will be tk.32.
 Protection against order delay: if my organization has high level of inventory that will
help me protect against delay. If any reason my product delivery delay I can easily this
situation.
Example: For the Daily shop I was placed a new order to purchased 320kg Potato but this order
not placed in just time for unintentional accident. This order will be placed 2 days later. In this
situation I can easily manage my shop because already I have 100kg potato in my organization.
As a result, I can say that high level inventory protects against order delay.
 Promotion: Fully stocked shelves or promotional displays inform customers that an
organization has good product variety. An aesthetically-pleasing store setup is integral to
keeping customers around and getting them to return to your store.
Example: As an inventory manager of Daily shop, I will show variety item in the display
because customer can easily see that and that will be highly promote our product.
 Answer to the question no--04

EOQ = Economic Order Quantity

TC = Total Annual Cost
Q = Lot Size
D = Annual Demand
S = Annual Setup Cost
H = Holding Cost per unit per year
Here,
H= 30*0.12
= 3.6
D = (1420/30) *250
= 47.33*250
= 11,832.5 Or, 11,833
S = 13
Now,
TC= {(Q/2) *H} + {(D/Q) *S}
= {(340/2) *3.6} + {(11,833/340) *13}
= {170*3.6} + {34.80*13}
= 612 + 452.4
=1,064.4 Or, 1,064
When, a lot size of 120 units-
TC= {(Q/2) *H} + {(D/Q) *S}
= {(120/2) *3.6} + {(11,833/120) *13}
= {60*3.6} + {98.61*13}
= 216 + 1,281.93

= 1,497.93 Or, 1,498

EOQ = √

=√

=√

=√
= 292.33 Or, 292
Comments:
Since, EOQ is 292 units and lot size 340 units are closer to EOQ when it is compered to lot size
120 units. Therefore, 340 units would be better. Moreover, holding cost 396 (612-216) can be
saved by sacrificing setup cost 829.53 (1,281.93-452.4). So, from both perspectives lot size 340
units would be better.
 5. Pull or push strategy? Which one is best to you and why? Cite proper
examples.

Answer to the question no -05

I will chose pull strategy; I think that will be better for me.
Pull strategy, customer also pre-order the product basis on that we delivered the product. I will
produce the product based on the customer demand or based on customer design. Basically,
customer preference must be focus. I have to produce that product which product Customer
exactly want.
For example, Tailor like Raymond.
Pull strategy better, because of that pull system produced less wastage compare to push strategy.
This also frees up space in the workplace and reduces the cost of storing excess inventory.
Businesses that use a pull system experience increased customer satisfaction as products is
manufactured specifically to fulfill their requests. Since products are made in small quantities,
quality issues will be identified faster than with a push system and, if an error is found, less
defective products would require disposal. Also, the pull system customer can customize the
product based on their requirement rather than push strategy it’s not possible. So, I can say about
that Pull strategy are more effective in my point of view.
What are the different types of processing cost? Explain for wooden furniture
producing organization like “Hatil”.

Answer to the Question No: 06

Wooden furniture company “Hatil” have four types of process costing for producing their
product. Now, I am going to discuss all types of process costing of wooden furniture company
Hatil.

Prevention cost: that means wooden furniture Hatil expense some cost before start producing,
that will minimize their defect rate. For example, when Hatil hire some new employee, they
don’t know properly how to produce a product, Here, Hatil give them training who will be
cutting wood, run the machine or furniture designer. This kind of cost are related to prevention
cost for Hatil wooden furniture.
Appraisal cost: Those are the employees (Quality Checker Team) who are the ensure the
furniture cutting shape, color shape, design check. This kind of cost are related with appraisal
cost for Hatil wooden furniture.
Internal failure cost: Hatil costs resulting from defects that are discovered during the
production of a product. Example Rework: Sometimes the furniture cutting, color combination,
shape not produce in a proper way then again rework basis on cutting, color, shape ensure proper
way to maintain after then produced. This kind of cost are related with appraisal cost for Hatil
wooden furniture.
Scrap cost- When the Hatil second time to rework the furniture after that the furniture no bring
to standard size of the furniture then lower price to sell outside local shop.
External failure cost: Hatil furniture claim the warranty. When the Hatil produced furniture not
identify the defect when the product stays the factory. After sell the furniture then customer
found the defect problem, then how many costs require for the servicing purpose, this are the
called external failure cost.
 Answer to the question no-07

We know,

IP (Inventory Position) = OH + SR - BO

= 1,200 + 250 – 190

= 1,450 – 190

= 1,260 Units

Here,

93% = 93/100

= 0.93

So, z = 1.4 + 0.08

= 1.48

[Notes- Here, I follow the z table. The closest percent value is 0.9306]

Now,

ROP = (d * L) + zσL

= (700 /7)* 4} + (1.48 * 28)

= {100 * 4} + 41.44

= 400 + 41.44

= 441.44 Units

Since, IP = 1,260 units, ROP = 441.44 units. IP > ROP. Therefore, no order will be placed.
 Answer to the question no -8

N= 3*9*5*50
= 6750
D = Demand
P = Processing
Q = Lot Size
Sp = Setup Cost
M = Machine
M = {DP+ (D/Q) *Sp1} + …… + {DP+ (D/Q) *Spn} / [ N{1-(C/100)}]
= {(80,000 * 0.04) +(80,000/280) *1.5} + {(70,000 * 0.18) +(70,000/370) *3.3} + {(105,000*0.28)
+(105,000/300) *3.5} / [6,750{1-(9/100)]
= {3200+(285.71*1.5)} + {12,600+(189.19*3.3)} + {29,400+(350*3.5)} / [6,750*{1-.09}]
= {3200+428.565} + {12,600+624.327} + {29,400+1,225} / [6,750*{1-.09}]
= 3628.565+13,224.327+30,625 / [6,750*.91]
= 47,477.892 / 6,142.5
= 7.73 Or, 8
Capacity Gap = Future Capacity – Present Capacity
=8–2=6
So, six new machines are required to complete the production.