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Subject Code: KMBN205

MBA
(SEM II) THEORY EXAMINATION 2021-22
OPERATIONS MANAGEMENT

SECTION-A Attempt All of the following Questions in brief Marks(10X2=20)

Q1(a) What is operations management?
Ans Operations management is the administration of business structure, practices, and processes to
enhance efficiency and maximize profit. It refers to the management of functions that a business needs
to run effectively day-to-day, including: Overseeing multiple departments and providing goals.
Q1(b) Define productivity.
Ans Productivity is a measure of economic performance that compares the amount of goods and services
produced (output) with the amount of inputs used to produce those goods and services.
Productivity =Output/Input
Q1(c) What are the service characteristics?
ans There are four characteristics of service: Intangibility, Inseparability, Variability, and Perishability (Kotler
and Keller, 2007). As service's nature is intangibility, therefore manufacturing and service delivery is
more complex than a product.
Q1(d) What you understand by GAP in Quality?
Ans John Coletti describe the “quality gap” as the difference between customers'
expectations for a product or service and their perception of what they actually
received.

Q1(e) What is Pareto’s Law?

ans The Pareto principle is an observation that, in general, 20% of the effort, or input, leads to 80% of the
results or output. It was discovered by Italian economist, engineer, and sociologist Vilfredo Pareto.
Q1(f) What is JIT?
ans Just-in-time, or JIT, is an inventory management method in which goods are
received from suppliers only as they are needed. The main objective of this
method is to reduce inventory holding costs and increase inventory turnover.

Q1(g) What are the various flows in SCM?

ans Supply chain management is the management of these three flows: Material (Product)
Flow. Information Flow. Financial Flow.
Q1(h) Define Push and Pull view of SCM.
ans Push and pull strategy refers to two different approaches to managing the flow of
goods in a supply chain management. A push strategy aims to keep products in
stock even before the customers order them. A pull strategy produces goods in
accordance with the demand of the customers.
Q1(i) Define inbound logistics.
Ans Inbound logistics is the way materials and other goods are brought into a
company. This process includes the steps to order, receive, store, transport and
manage incoming supplies. Inbound logistics focuses on the supply part of the
supply-demand equation.
Q1(j) What is TQM?
Ans Total Quality Management (TQM) is a management approach that seeks to provide long-term success
by providing unparalleled customer satisfaction through the constant delivery of quality IT services

SECTION-B Attempt ANY ONE of the following Case Analyses Marks(2X15=30)

Q2(a) A manufacturing firm estimated demand for material is 2500 units per year. Acquisition cost is
Rs 400 per order and the carrying cost is Rs 50 per unit. Assume 250 working days in a year
and daily usage is 10 units whereas the lead time is of 10 days. Determine:
i) The EOQ and the reorder point
Ans :- Also referred to as 'optimum lot size,' the economic order quantity, or EOQ, is a
calculation designed to find the optimal order quantity for businesses to minimize logistics
costs, warehousing space, stockouts, and overstock costs. The formula is: EOQ = square root
of: [2(setup costs)(demand rate)] / holding costs.
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ii) Draw suitable diagram showing the Inventory order cycle and reorder point.
Example Extra :-
Let’s understand this with an example. Suppose you’re a perfume retailer who sells 200 bottles of
perfume every day. Your vendor takes one week to deliver each batch of perfumes you order. You
keep enough excess stock for 5 days of sales, in case of unexpected delays. Now, what should your
reorder point be?

Lead time = 7 days

Safety stock = 5 days x 200 bottles = 1000 bottles
ROP = (200 x 7) + 1000 = 2400 bottles

The order for the next batch of perfume should be placed when there are 2400 bottles left in your
inventory.

Q2(b) The following data is related to a manufacturing company. The company follows ABC
Analysis for Inventory control:
4000 Item No. 1 2 3 4 5 6 7 8
Unit Cost 10 9 2 8 1 60 0.4 40
i) Classify
the Annual Demand 700 800 100 0 00 0 00 500 items
into 0 0 0 0 A, B and
C 60 800 20
Category.Draw suitable diagram showing the ABC Analysis in terms of cost and quantity
percentage.

SECTION-C Attempt ANY ONE following Question Marks (1X10=10)

Q3(a) What are the factors affecting productivity?

Ans
Factors That Affect Productivity
There are many barriers to productivity in the workplace. We’ve highlighted some of the most common
organizational barriers to productivity.
1. Work Environment
As you can imagine, no one enjoys working in a negative or toxic environment. Make sure to create a
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workplace atmosphere that is based on your company's values, where your employees feel supported,
valued, and safe.
Put honesty and co-operation first, remember to reward your employees when they deserve it. Give your
employees access to the right environment where they can cooperate, compete, and emphasize with their co-
workers. This type of environment helps your employees develop healthy work habits, which contributes to
creating a productive workforce.‍
2. Training & Career Development Opportunities
Every employee wants to grow in their career, so it's essential that they feel like their employer is invested in
their professional development and provides them with the relevant training opportunities throughout their
journey in the company.
If you don't have a training program yet, it might be time for you to develop one. An untrained employee
would not know what they need to do or how to do it more efficiently, which can negatively affect
productivity.
One good way of facilitating training programs is through microlearning. This human resources tool gives
your new employees the information they need and the knowledge they need to thrive in the office.
Plus, make sure each team member has a chance to grow within the company hierarchy, and won't end up
feeling stuck in the same position for too long.‍
3. Processes
From recruiting to onboarding, compensation, performance management, task delegation and more:
establishing processes for your company will allow you to provide your employees with positive
experiences from the get-go.
Developing these processes can be time-consuming and it is very much a matter of trial and error. However,
once you have them, you'll be a lot more organized and efficient - and so will the rest of the team.
Companies with high productivity levels build processes for most of their recurring tasks and projects.
For example, many organizations often overlook employee surveys. This can lead to workers feeling
neglected and unseen, which can negatively affect employee productivity. However, implementing a project
management tool can help your HR managers facilitate job satisfaction surveys easily.
Another example is employee offboarding. When a worker leaves, many managers often forget to revoke the
worker's platform access, which can lead to data privacy issues. With an employee and project management
tool, your HR personnel can easily remove the outgoing employee's ability to access confidential
information and company tools with a few clicks. This makes it easier for your HR department to offboard
an employee, as well as increase employee's productivity as it allows them to focus their time on another
particular task.‍
4. Pay Structure
Your employees have bills to pay, children to take care of, and goals to accomplish, and the monetary
benefits are obviously one of the reasons why they took a job in your company.
Use this as a motivational tool, by explaining clearly and transparently how your pay structure works and
what you consider when deciding if an employee deserves a promotion and raise.‍
5. Employee Wellness
Employee wellness has become a popular topic over the past few years, and it refers to the physical and
mental health of your team members.
As an employer, you want to provide your employees with all the tools and resources they might need
whenever they don't feel their best, as doing so will show them that you care and also prevent small
problems from developing into something more serious.
Creating a wellness program, offering healthy food options at the office cafeteria, and encouraging your
workers to put their welfare first help create a healthy and happy employee and could greatly boost
employee productivity.
Another way your company can have a positive impact on employees productivity levels is by encouraging
workers to lead a healthier lifestyle. This can be done by giving them access to physical activities that
encourage them to get off their seats and move.  You can also propose them to have a "walk to work" day or
give them more storage spaces to store their office equipment.
‍
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6. Diversity
Multi-culture is now more important than ever and it has certainly become an important factor when it
comes to employee engagement.
Having diversity in your workplace is one key factor in increasing employee productivity and benefitting
your company's success. Recruiting representatives with distinctive qualities, religions, cultures and customs
gives your employees a sense of belonging in their working environment.
Another advantage of having workplace diversity is that it gives employees an opportunity to learn and
understand others' perspectives. This plays a vital role in ensuring strong team dynamics.
Make sure you give everyone equal opportunities, no matter what their culture, religion, ethnicity, gender, or
sexuality are, and that will reflect on your employee satisfaction and productivity. Plus, with such a varied
pool of talent within your company, you'll have access to a wider range of skills, which can lead your profits
to increase significantly.
Do note that diversity in the workplace is not only limited to companies that work in a physical location.
Having diverse team members can also greatly affect productivity and job satisfaction in remote teams.
Giving your stressed employees the chance to take a quick breather is vital in combatting low productivity.
Remember, a happy and healthy employee is more likely to have enough physical and mental resources to
achieve their desired outcomes.‍
7. Technology And Production Factors
Technology has become an integral part of a modern working environment. Companies that utilize modern
technology tend to be more profitable as it helps support employees in their tasks, especially when the job
involved technical factors.
For example, installing an AI-fueled business telephone framework allows your employees to have smooth
business interchanges between different departments. It also eliminates the need for them to go back and
forth over one topic, giving them the opportunity of managing time wisely and focus on completing other
tasks.
Companies that refuse to utilize modern technology risk employee burnout, which would greatly affect
productivity.‍
8. Tools
Giving your employees the correct tools directly impact productivity in the workplace. Untrained employees
could delay the work and mismanage resources, which could cost the company. Poor management
techniques and a lack of access to important tools lead to employee disengagement, which can decrease
individual production performance, efficiency levels, and overall productivity in the work environment.‍
9. Workplace Ergonomics
Apart from organizational factor, there are also other factors in the work environment that can decrease or
increase productivity. While these aren't included in the main factors, it still affects individual productivity.
Factors that may lead to low productivity include:

 Temperature at the workplace

 Air quality
 Poor Lighting
 Hydration
 Office Space Layout and Design

Q3(b) What are the various factors taken into consideration plant location? Explain any two models
Ans used for plant locational planning?

What is Plant location?

A Plant Location is a place, where men, money, material, machinery, etc are brought together for
manufacturing products.
Hardly any location can be ideal and perfect. Decisions regarding selecting a location need a balance of
several factors affecting plant location. Now we will discuss each factor separately.
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Factors affecting Plant Location
1. Nearness to Raw Material
Availability of the raw material near the plant will reduce the cost of transporting raw material from the
vendor’s end to the plant.
Especially those plants, which consume raw material in bulk, or need heavy raw material but loses a
good amount of material in processing must be located close to the source of raw material.
2. Transport facilities
One point must be kept in mind that cost of transportation should be small in proportion to the total cost.
Depending upon the size of the raw material and finished goods, a suitable method of transport like
roads, rail, water, or air is selected, and site location is decided accordingly.
3. Nearness to market
It reduces the cost of transportation as well as the chance of finished product getting damaged and
spoiled in the way. If the industry is nearer to the market then it can catch a big market share by offering
quick services.
4. Availability of the labour
Another important factor that influences plant location decisions is the availability of labour. The
combination of an adequate number of labour with suitable skills and reasonable labour wages can
highly benefit the firm.
However, labor-intensive firms should select the plant location which is nearer to the source of
manpower.
5. Availability of fuel and power
Because of the wide spread use of electric power, in most cases, fuel has not remained a deciding factor
for plant location. Even then steel industries are located near the source of fuel to reduce fuel
transportation costs.
6. Availability of water
Water is used for processing, drinking and sanitary purpose. Depending upon the nature of the plant
water should be available in adequate quantity and proper quality.
7. Climate condition
With the development of heating, ventilating, and air conditioning climate of the region does not present
much problem for many industries.
But, for industries such as agriculture, leather, and textile, etc climate is an influencing factor. For such
industries extreme humid or dry conditions are not suitable for plant location.
8. Financial factor
In order to attract investment and large-scale industries various states offer loans, subsidies, benefits, and
sales tax exemptions to the new units.
So, choosing the state is an important factor in order to a new industries.
9. land
Area, shape of the site, cost, drainage, and other facilities, the probability of floods, chance of
earthquakes, etc influence the selection of plant location.
10. Presence of related industries
An industry can outsource some of the parts from the related industries near the plant location. It reduces
the headache of making every part within the plant.
11. Availability of facilities
Availability of basic facilities such as schools, hospitals, housing and recreation clubs, security etc can
motivate the workers to stick to the jobs.
The success of industries depends very much on the attitude of its workers, so while selecting the plant
location organization must be given preference to other facilities also.
12. Disposal of waste
Disposal of waste is becoming a major problem for industries like chemical, leather, sugar, etc. So, plant
location should have proper provision for this.
These are the factors every industries need to consider while choosing a site location.  
Types of Plant Location
Plant Location can be two types–
1. Localization or centralization
 Localization or centralization means concentration of similar types of plant at a same place.
The advantage of these types of site location is you can find raw material and production-related product
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near to your plant. The disadvantage is sometimes it increases the market competition.
Example- Pharmaceutical companies in Gujrat.
2. Delocalization /Decentralization
Delocalization means spreading the same types of industries at different places.
The advantage of this type of plant location planning is to reduce the competition and grab the market of
new places. The disadvantage is sometimes it can be hard to find the resources (man, material, machines,
etc).
Example– Banking industries.

SECTION-C Attempt ANY ONE following Question Marks (1X10=10)

Q4(a) What are the types of manufacturing process? Explain by giving suitable examples.
Ans
What Is A Manufacturing Process

A manufacturing process uses manufacturing methods, operations scheduling software, machinery, and

labor to transform raw material into the finished product. Broadly, there are five manufacturing
processes, and most businesses that create products will fall into one of these five categories.

However, how that works for each business will differ slightly, based on their individual products, the
business' ethos, and the resources and facilities they have available.
Five Types Of Manufacturing Processes:
Repetitive Manufacturing

Basic manufacturing that creates the same product on an assembly line is engaged in the repetitive
manufacturing process. These types of rapid manufacturing operations will produce the same or very
similar products en masse 24/7.

The manufacturing industries that utilize this type of production process including:

 Automotive
 Electronics
 Semiconductor
 Durable consumer goods

These mass production industries are ideal for repetitive manufacturing because the consumer demand
for the finished product is stable and predictable.  The assembly line will remain fairly constant, with few
changes as one product is manufactured over a period of time.

Master plans are created on a period of time and quantity basis.  Repetitive manufacturing is often used
for make-to-stock production or in a high volume, sales order-oriented environment like
automotive.  Robots and other automated high-volume manufacturing equipment are used to increase
throughput and decrease manufacturing costs in these types of factories.
Discrete Manufacturing

Discrete manufacturing is the cousin of repetitive manufacturing. It too runs on production lines, but the
finished goods that are created during this process often vary considerably.

When switching between different product models, the assembly line configuration must often be
changed.  In manufacturing facilities, this is known as a changeover and carries setup cost in the form of
time, labor, and resources.

For example, in the computer industry, technology not only develops at a constantly rapid rate but the
customers demand mass customization. The manufacturing process for producing newer computers and
laptops will require modifications to the assembly line to produce and assemble orders that call for the
latest electronic components.
Job Shop Manufacturing

In the job shop manufacturing process, production areas, like workstations and workshops, are used
instead of an assembly line. Each worker may add something to the product when it passes through their
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station, before it is moved on to another, and until eventually the final product is finished. This method of
manufacturing is ideal for custom manufacturing because it tends to be slower and produces a low
volume of highly customized products.

Take for example a job shop that builds custom cabinets. Workers will be stationed at their workstations,
and they will add to the cabinet as it is brought to them. One may be in charge of sawing the lumber,
another of applying resin, others in charge of polishing the varnish, and others still in charge of assembly.

Keep in mind that job shop manufacturing is not just for low technology products.  This process is also
used in the advanced manufacturing of fighter jets and rockets for the aerospace and defense industry. 
These products are produced by highly trained professionals who employ advanced manufacturing
techniques and place a strong focus on quality control to ensure a high-quality build.
Continuous Process Manufacturing

Continuous process manufacturing is very similar to repetitive manufacturing because it runs 24/7,
creates the same or similar products repeatedly, and creates larger order quantities. The key difference
here is that the raw materials used are gases, liquids, powders, and slurries, instead of solid-state
components.

It works almost exactly the same as repetitive manufacturing besides the difference in raw materials. An
example of this in practice might be a pharmaceutical company that produces painkillers in larger
quantities.

Traditional industrial manufacturing industries that widely utilize continuous processes include:

 Pharmaceutics
 Chemicals/industrial gases
 Fertilizers
 Power stations
 Oil refining
 Paper
 Furnace - Steel, Iron, and Alloys
Batch Process Manufacturing

The batch process of manufacture differs quite a bit from continuous process manufacture and is more
similar to discrete and job shop manufacturing. The number of batches that are created will be enough to
serve a particular customer's needs. In-between batches, the equipment will be cleaned and left alone
until another batch is required. The raw materials used are more similar to continuous process
manufacturing as they are liquids, gases, powders, and slurries too.

A prominent example of this is a sauce manufacturer. They may be capable of creating many sauces -
BBQ, ketchup, mayonnaise - but a customer's order may only require one of them. Whilst they make one
batch of ketchup for a customer to a specific quantity, the mayonnaise and other sauces won't be in
production - instead, the machines will be cleaned and left until it is time to create another batch of that
sauce.
Managing the Manufacturing Process
The manufacturing process you choose is dependent on your manufacturing industry and the type of
product you are looking to create.  Sometimes a hybrid manufacturing approach that combines multiple
manufacturing processes can be useful if you want to create an assortment of products.

Once you choose the right manufacturing process, it is important to leverage the right manufacturing
systems and investing in the right manufacturing technology to ensure process control. Your ERP and
MES systems are a step in the right direction, but they lack the planning and scheduling capabilities
required to become a truly lean manufacturing organization.

For 20 years Optessa has been helping Fortune 100 supply chain leaders optimize their manufacturing
processes with the help of advanced planning and scheduling manufacturing technologies. 
Please contact us for a free demo of our manufacturing software.
Examples of process manufacturing

Some of the top process manufacturing markets include:

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 food and beverage

 oil and gas

 pharmaceuticals

 personal care and cosmetics

 plastics

 metals

Beer brewing is one example of process manufacturing in the food and beverage industry. Key
ingredients in beer making include grains, malt, hops, yeast and sugar; various recipes are
available to guide the process. The basic steps include, first, steeping the grains in boiling water,
then the adding malt along with specific quantities of hops -- depending on the type of beer being
brewed -- and sugar. This mixture creates the wort, or the liquid that contains the sugars that will be
fermented by the yeast to produce alcohol. Once the wort has been created, it is added to water
with yeast and left to ferment for an extended period. Once the fermentation is complete, the beer
can be bottled; this end product cannot be broken down into its constituent parts.

Hand lotions are an example of a product created through process manufacturing for the personal
care and cosmetics industry. Much like beer brewing, hand lotion production involves mixing
specific amounts of process inputs to create a complete compound that cannot be broken apart at
the end.

Q4(b) What are the characteristics of service? Explain the difference between product and service?
Ans
Some of the important characteristics of services are as follows: 1. Perishability 2. Fluctuating Demand
3. Intangibility 4. Inseparability 5. Heterogeneity 6. Pricing of Services 7. Service quality is not
statistically measurable.

1. Perishability:
Service is highly perishable and time element has great significance in service marketing.
Service if not used in time is lost forever. Service cannot stored.
2. Fluctuating Demand:
Service demand has high degree of fluctuations. The changes in demand can be seasonal or by weeks,
days or even hours. Most of the services have peak demand in peak hours, normal demand and low
demand on off-period time.
3. Intangibility:
Unlike product, service cannot be touched or sensed, tested or felt before they are availed. A service is
an abstract phenomenon.
4. Inseparability:
Personal service cannot be separated from the individual and some personalised services are created and
consumed simultaneously.
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For example hair cut is not possible without the presence of an individual. A doctor can only treat when
his patient is present.
5. Heterogeneity:
The features of service by a provider cannot be uniform or standardised. A Doctor can charge much
higher fee to a rich client and take much low from a poor patient.
6. Pricing of Services:
Pricing decision about services are influenced by perishability, fluctuation in demand and inseparability.
Quality of a service cannot be carefully standardised. Pricing of services is dependent on demand and
competition where variable pricing may be used.
7. Service quality is not statistically measurable:
It is defined in form of reliability, responsiveness, empathy and assurance all of which are in control of
employee’s direction interacting with customers. For service, customers satisfaction and delight are very
important. Employees directly interacting with customers are to be very special and important. People
include internal marketing, external marketing and interactive marketing.

Key Differences Between Services and Products

1. 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.
2. 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.
3. 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.   
4. 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.
5. 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.  
6. 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.
7. 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.
8. 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.
9. 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.

Subject Code: KMBN205

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MBA
(SEM II) THEORY EXAMINATION 2021-22
OPERATIONS MANAGEMENT

SECTION-C Attempt ANY ONE following Question Marks (1X10=10)

Q5(a) What are the factors taken into consideration for service design?
What Are Processes Involved in Service Design and Delivery?
What is an example of service design processes? At a restaurant, processes would include as taking orders,
entering orders, serving food, c At a retail store, processes would include stacking of products, billing,
inventory, guiding a customer. At a bank, processes would include verification of details, handing over cash
and so on

Actions take place either when a service is carried out or in order to support the service. Processes may
involve only the employee, or both the employee and the customer. In other words, some processes are
behind the scenes and some takes center stage.

Success Factors when Building Service Design and Delivery Process

1. Focus on the Customer

Look at this from the point of view of the customer. Even before you decide to pen down your processes, the
first thing that needs to be mapped out is the Customer Journey – what are the various touchpoints that a
customer may have while interacting with your organization in order to experience the product/service.

The idea is to consider the customer journey throughout the service, with a focus on customer needs and
expectations during this journey. The processes should focus on adding value without being unnecessary or
overly complicated.

 Look for pain points within the customer’s journey and think of ways to making improvements to the
experience.
 Look to the parts of the process that may be interfering with the satisfaction of the entire experience.
 Consider asking for customer feedback to narrow down pain points
 When establishing processes in terms of the “what to do” and “how to do”, you may use the
SERVQUAL model – an empiric model designed by Zeithaml, Parasuraman and Berry to understand
customer expectations before translating them into service quality specifications or processes.

Discover THE Service Excellence Guide:

from Service Design to Service Recovery

2. Consider the Sequence

When determining the customer’s journey and all the steps it takes to carry out the service, consider the
sequence. The service involves steps that are connected and performed in order. It’s important to detail that
and include it within the process.

So, instead of simply listing steps that make up the process, list them in order and how they are handed off
from one member of the team to the next. For instance, a process in a restaurant could specify:

 Welcoming, greeting and seating the customer

 Introduction of server and the menu/specials of the day
 Taking the order
 Serving the order
 Taking feedback/asking for repeats
 Clearing the order
 Billing
 Farewell

Creating an effective process includes laying out the steps that make up a service. It may involve adding
steps, but it should also include taking away actions that don’t add value or that detract from the value of the
customer experience. For example, an action that makes a guest jump through an unnecessary hoop should
be removed to improve the experience. Also, take away actions that make carrying out the service more
difficult for staff members. The process should focus on simplicity and only what is necessary.
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3. Consider Each Staff Role Within the Service

Executing each service effectively depends on numerous roles within the organization, both front stage and
backstage. It's essential to determine which role is responsible for which part of the service, and how that role
should carry out that part. Giving each role a specific part of the process creates ownership within that role, as
well as responsibility for carrying it out and accountability for that stage of the process.

Since carrying out a service involves a number of different roles, it can be extremely beneficial to get
feedback on processes from the team members in those roles. This includes different levels of staff members,
and those who are front stage as well as backstage.

Also, remember the ability of your staff while designing the process, do not expect your frontline staff to be
able to execute complex processes with consistency.

SERVICE EXCELLENCE TOOLKIT

With this 7-step process, you will have all the tools you need
to master your company Customer Experience.

4. Allow for Flexibility

Back end processes can and should be rigid and regimented. When you are setting them up, keep in mind
efficiency and effectiveness, you set up the process to be performed in the simplest manner, for e.g.;-
checklists (they essentially need to be followed blindly). However, with front end processes that do involve the
customer, always remember that at the end of the day it is a human interaction, establish guidelines as far as
the process is concerned and allow for flexibility, allow for your staff to be able to adapt to the situation, do not
make front end processes so rigid and regimented that they negatively impact the customer experience.
Highly rigid and regimented processes are the door opener for the “I will hide behind the rules” sin as a part of
the Seven Sins of Customer Service.

Above all, with processes, make sure that you can streamline (as per the customers’ requirements) and track
them.

Overall, service design makes the customer experience the priority and does everything possible to ensure
that it is always a positive, and satisfying experience. Back end process support this with efficiency and
effectiveness – leading to consistency, front end processes bring in the human element, which can be
variable but setting up processes helps achieve some consistency here as well. You will face situations where
processes are not followed and there are service breakdowns - that is where Service Recovery kicks in. Error
free service in a high touch industry is close to impossible, which is why what sets organizations apart is how
they recover from these breakdowns, our article on a robust Service Recovery Model can give you further
insights into this. 

Processes tell everyone on the team exactly what they need to do to meet (and sometimes exceed) the
guest’s needs and expectations. This creates customer satisfaction, which is the ultimate goal.

Q5(b) Explain service quality gap by illustrating SERVQUAL model.

Diagram @ bottom

the Gap Model of Service Quality (sometimes also known as the Customer Service Gap Model or the
Five-Gap Model), first proposed in 1985. The importance of this model is that it demonstrates that
customer satisfaction is essentially a function of perception. In other words, if the service provided
meets or exceeds customers’ expectations, they will be satisfied;

The gaps are:

 Gap 1—knowledge gap: the difference between customer expectations and what
managers think they expect
 Gap 2—policy gap: the difference between management’s understanding of the customer’s
needs and how they translate that understanding into service delivery policies and standards for
employees
 Gap 3—delivery gap: the difference between the experience specification and the actual results
of the service
 Gap 4—communication gap: the difference between the delivery of the customer experience
and what is communicated to the customer
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 Gap 5—customer gap: the difference between the customer’s expectations2 of the service or
experience and their perception of the experience

Let’s look at each one of these gaps in a little more detail.

Gap 1: The Knowledge Gap

The knowledge gap is the difference between what customers expect and what the
company thinks they expect.  The bottom line here is that the company doesn’t know exactly
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what customers want. This could be due to a variety of factors—lack of communication

between frontline employees and management, inadequate market research, or simply a failure
to listen to customer feedback, including complaints. For example, a hotel manager may think
that guests want a hot breakfast instead of a continental breakfast, but the reality is that guests
are more concerned with the cleanliness of their rooms or the speed of the Internet service at the
hotel than they are with breakfast.

Gap 2: The Policy Gap

The policy gap reflects the difference between management’s perception of the customer’s

needs and the translation of that understanding into its service delivery policies and standards.
Typically, management has an accurate understanding of what the customer wants, but
performance standards haven’t been established that ensure the appropriate employee behaviors
are displayed.  Using the hotel example again, assume that a number of customers have
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complained that the phone rings innumerable times before it is answered. Management wants to
address this issue, so it establishes a policy that phones must be answered “quickly.” What’s
your interpretation of the word quickly—two rings, four rings, six rings? Specificity here is the
key.

Gap 3: The Delivery Gap

The delivery gap is the difference between service standards and policies and the actual
delivery of the service. In this situation, frontline service workers know what to do to delight
the customer; they simply aren’t doing it. For instance, management may have established a
policy that the front desk phones get answered on or before the second ring, but the front desk
employees are allowing phones to ring much longer before answering. This gap may arise due
to improper training, lack of capability on the part of employees, unwillingness to meet the
established service standards, or staff shortages.

Southwest Airlines is a great example of this. According to its website, the mission of the
company is “dedication to the highest quality of Customer Service delivered with a sense of
warmth, friendliness, individual pride and Company Spirit.”  The company doesn’t “overhype”
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its service, so there is no delivery gap—the difference between the experience specification and
the actual delivery of its service. This is demonstrated by the fact that, compared to other
airlines, Southwest has the greatest customer service rating, earning a 33.9 percent excellence
rating. 32

Gap 4: The Communication Gap

If marketers are doing an effective job in terms of their promotion efforts, the customer is likely
to be highly influenced by that promotion. The problem now becomes, the company had better
deliver. The communication gap is the difference between the delivery of the service and what
is communicated to the customer. In other words, what did the company promise versus what
did it deliver?

For example, if your coffee shop asserts in its advertising and on its menu that its food is
gluten-free, and it isn’t, customer expectations won’t be met. Failure to deliver on a promise
hurts the company’s credibility. Former US President Donald Trump wrote, “A brand is two
words: the ‘promise’ you telegraph, and the ‘experience’ you deliver.” 33
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Gap 5: The Customer Gap

The customer gap is the difference between the customer’s expectations of the service or
experience and their perception of the experience itself. In an ideal world, the customer’s
expectations would be nearly identical to their perception, but customer perception is totally
subjective and has been shaped by word of mouth, their personal needs, and their own past
experiences. The problem here is that each individual perceives their world through their own
eyes, and everyone perceives reality differently. In other words, while reality is a fixed factor,
perception of reality is a variable.

SECTION-C Attempt ANY ONE following Question Marks (1X10=10)

Q6(a) What is the importance of SCM? Explain drivers of SCM and reverse supply chain.
1) Reduced Operating Cost

Efficient Supply Chain Management has a trifold effect on operating cost-

 Decreased Purchasing Cost: Retailers rely on supply chains to deliver products quickly to avoid holding
costly inventories in storage units any longer than required. This ultimately brings down the purchasing
cost.
 Decreased Production Cost: Manufacturers rely on supply chains to deliver materials to assembly plants
to avoid material shortages that would shut down production, facilitating a seamless and cost-efficient
production process.
 Decreased Storage Cost: Efficient SCM optimises warehouse space and makes use of the most efficient
technology, accounting methods and inventory management tools, significantly reducing the cost of doing
business. This enables the firm to be more competitive in the market.
2) Greater Efficiency

When an organisation’s supply chain operations, including resource procurement, logistics, and delivery, are
tactically devised and executed, businesses can predict demand more precisely and formulate the most efficient
strategies to cater to it. This strengthens the efficiency of a company to respond to uncertainty, disruptions, and
fluctuating industry trends. Moreover, having real-time data on the availability of raw materials and manufacturing
delays allows companies to implement backup plans, like sourcing materials from a backup supplier, avoiding
further delays.

3) Higher Profits

Businesses tend to function at a high level of productivity when they use the best technology and practices to meet
the customer demand better, and each segment in the product’s lifecycle is optimised to the fullest capacity. In such
a situation, they experience increased sales, better brand image and ultimately greater cash inflow. This, coupled
with the benefits in costs, translates to increased profit in absolute numbers, as well as a higher profit margin.

4) Improved Financial Position

Apart from increased profit levels, efficient Supply Chain Management directly affects the company’s fixed assets
and cash flow. Optimising the warehouse layout and implementing the appropriate automation solutions to
improve productivity go a long way in optimising the company’s fixed assets, such as production units,
warehouses, and transportation vehicles in the supply chain. SCM also makes use of the most suitable accounting
methods that help reveal the liabilities or unprofitable areas in the business. Necessary decisions can be taken to
either improve or amputate such parts. Therefore, in totality, SCM improves the overall financial position of the
business.

5) Better Quality Control

Efficient Supply Chain Management directly influences the quality of a company’s products and services.
Companies with better control over their suppliers enjoy improved quality control. Process guidelines can
encourage suppliers to comply with the company’s quality requirements.  This compliance contributes to customer
gratification, standardisation and sustainability. By analysing performance data, corporations can partner with the
highest-performing suppliers and vendors to maintain strict quality control. It is a crucial factor in building and
retaining a strong brand image.

Importance of Supply Chain Management for Customers

Along with the businesses, SCM extends several benefits to their customers as well. A few of them are-
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1) Lesser Delays

Adequate SCM enables companies to optimise their logistics operations to ensure seamless order fulfilment.
Analysing the big-picture and supply chain data can reveal potential risks, allowing companies to formulate backup
plans to respond to unexpected circumstances promptly. Such a prudent approach and streamlined operations
reduce the possibility of delays in deliveries to the minimum.

2) Lower Prices

Supply Chain Management offers numerous benefits to businesses, which eventually leads to a significant
reduction in their costs in terms of production cost, purchase cost and total supply chain cost. Such cost benefits,
along with the higher profits, give them enough leeway to cut down on their market price, further transferring the
benefit to the customers. Quite understandably, a company with better SCM is in a stronger position to offer the
advantage of better prices to its customers than one with poor SCM.

3) Better Customer Experience

Supply Chain Management directly governs the two most crucial parts of customer satisfaction: price and
delivery. Building an efficient supply chain increases a company’s chances of beating its competitors on the retail
price and improving profitability. Having optimised and streamlined operations also means that it will be able to
ensure smooth and timely delivery of products. By choosing the best-suited systems, approaches, tools and partners
within the supply chain, a company can give its customers the quality of service, transparency, and visibility they
desire. It has complete command over its products’ journey from conception to delivery. It can also implement
systems to reduce errors and maximise inventory efficiency. The more optimised and managed its supply chain is,
the better the customer experience.

Conclusion
Supply Chain Management or SCM implies management of the entire production flow, but its scope extends well
beyond a singular company to all the channels involved in the process. It aims to anticipate problems in the
product’s life cycle, improve inventory and fulfilment, and optimise prices dynamically. It provides a plethora of
benefits, including better quality control, faster deliveries, lesser delays etc. Still, the ultimate goal of effective
SCM is to generate higher profits through improved customer satisfaction and a lower cost of carrying out
business, hence, benefitting both the company and its customers.
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Q6(b) What is the role of IT in SCM?

1. Financial Information Monitoring 

Financial data helps managers keep track of their company’s financial performance and determine if any
areas need improvement. Modern bookkeeping systems are a perfect tool for monitoring the financial
information of your company that might help you improve supply chain cost control. 

These tools enable you to track payments to your vendors and customers by gaining real-time updates on
each transaction’s status. This feature makes it easy to monitor your assets and expenses without
manually calculating by yourself, helping you streamline supply chain operations. 

2. Real-Time Information Sharing 

Real-time information sharing is a critical element of supply chain management. This modern approach
allows manufacturers and suppliers to share real-time data about product availability, production, and
sales. This information can help companies manage inventory levels and improve customer service and
engagement.

IT can help streamline information sharing by providing a platform for real-time communication
between all parties involved in the process. For instance, electronic data interchange (EDI) enables
seamless communication between your company and your partners using electronic forms.

This tool allows you to exchange electronic documents like orders, invoices, and shipping notices via an
electronic data network (EDN). As a result, you can eliminate paper-based processes and reduce errors
due to manual data entry.  

3. Procurement Management  
Procurement is one of the most important parts of supply chain management because it determines
which suppliers you work with and how much they charge for their products or services. As a result,
procurement managers spend a lot of time tracking down vendors, negotiating terms and prices, and
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working with accounting departments to ensure invoices get paid on time.   2

Since procurement can be time-consuming, many companies hire IT experts to create apps or platforms
that can make the process easier for the staff. Nowadays, IT professionals could even be responsible for
ordering new software licenses to keep costs down while still providing employees with the tools they
need to do their jobs. 

In turn, if an employee needs a new computer, the IT team might be liable for ordering it and ensuring
delivery as quickly as possible to prevent downtime in the procurement process.  

4. Supplier Relationship Management 

Supplier Relationship Management (SRM) involves relationships between buyers and sellers or
manufacturers and suppliers. This systematic approach helps organizations ensure that they’re receiving
high-quality materials at a reasonable price from their vendors. Aside from that, they can also minimize
delivery delays and avoid issues in compliance standards that might disrupt operations. 

As technology advances, companies are finding new ways to utilize it and the role of IT for SRM. Below
are four ways to apply it:

Data Analytics: Insights can help you interpret data to make better decisions about your business
operations. For example, if you want to improve customer satisfaction in the supply chain, you could use
data analytics to track and measure key metrics like delivery time or order accuracy rates. Then, you can
identify areas where there are problems and work on fixing them before they become severe issues that
might affect supplier partnerships. 
Automation: Automating processes helps your business save money and time by eliminating human
error, improving efficiency, and reducing labor costs. Regarding SRM, automation can help you
communicate with suppliers more effectively by automating data collection and facilitating
communication between parties. If there are any delivery delays, your suppliers will be able to update
you so you can notify your customers about them. 
Performance Metrics: Using metrics in your SRM process can help you identify areas for
improvement and opportunities for improvement. For instance, depending on their performance levels,
you may develop scorecards for each supplier. Doing so clearly indicates how well each supplier meets
their obligations, so you can negotiate contracts with those who need to improve.  
Supplier Dashboard: Another way to leverage IT in your SRM is by setting up a dashboard where all
of your suppliers’ performance metrics are displayed together so you can easily compare them against
one another. This tool helps you identify performance differences and how you can effectively work with
them as they go forward. In turn, they might be able to meet your expectations so you can eliminate
disruptions in the supply chain. 
5. Demand Planning  

Demand planning involves finding where you’ll get your items, how much you need to order, and when
to call them. This process is vital in the supply chain because it prevents your company from running out
of stock while ensuring you don’t have excess inventory. As a result, you can avoid product spoilage and
not waste company resources.  

One of the things IT systems do is use enterprise resource planning (ERP) for demand planning. With
these systems, you can generate reports that show how much inventory you have on hand, your sales
progress, and your forecasts for future sales. These insights are vital because they enable you to decide
whether you must increase or decrease production based on actual demand versus the projected one. 

6. Facilitating Return Of Goods 

Returns management is a process that ensures companies accept, receive, evaluate, and dispose of
defective products that customers have returned. This process also involves strategies that prevent
unnecessary or fraudulent returns and reduce costs associated with returns processing. 

Today, with the help of IT, companies now have access to automated reverse logistics that automates the
process of returning items, making it faster and less costly. With this modernization, customers can
return an item at any time and receive their refund instantly.
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As a result, they won’t have to wait several days to process their product returns. Aside
2 from that,
businesses can now reduce the risk of lost revenues, damages, and returns fraud.

SECTION-C Attempt ANY ONE following Question Marks (1X10=10)

Q7(a) What are Deming’s 14 principles for quality improvement?

When did Deming create the 14 points?

In the midst of his work with Ford, Deming published Quality, Productivity, and Competitive Position
(1982), which was renamed Out of the Crisis (1986) and included his now famous 14 Points for
Management

What is Deming's PDCA cycle in TQM?

The Deming cycle is a continuous quality improvement model which consists of a logical sequence of
four key stages: Plan, Do, Study, and Act.

What is Deming's definition of quality?

According to Deming: Quality is defined as a predictable degree of uniformity and dependability at low
cost. The senior management is also responsible for majority of the problems at work and a focus on an
overall approach towards continuous improvement (which also means eliminating goals).

What is the importance of Deming's theory?

The philosophy brings together an understanding of variation, theory of knowledge, psychology and
appreciation for a system. The Deming System of Profound Knowledge® promotes transformation
through an essential “lens” which will benefit anyone and any organization.
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What is the other name of Deming's cycle?

The PDSA Cycle (Plan-Do-Study-Act) is a systematic process for gaining valuable learning and
knowledge for the continual improvement of a product, process, or service. Also known as the Deming
Wheel, or Deming Cycle, this integrated learning - improvement model was first introduced to Dr.

What is the conclusion of Deming's 14 points?

Deming, through his 14 points, shows that many of the problems organizations face when trying to
achieve their goals are down to systemic errors and not employee faults. He arrived at his conclusions
through the use of statistical analysis and comparison of the effect of people and the system on
corporate performance.

Deming's Fourteen Points for Management:

1 Create constancy of purpose for improvement of product and services
2 Adopt the new philosophy
3 Cease dependence on mass inspection
4 End the practice of awarding business on price tag alone
5 Constantly and forever improve the systems of production and services
6 Institute modern methods of training on the job
7 Institute modern methods of supervision and leadership
8 Drive out fear
9 Break down barriers between departments
10 Eliminate numerical goals for the work force
11 Eliminate work standards and numerical quotas
12 Remove barriers to pride of workmanship
13 Institute a vigorous programme of education and training for everyone
14 Create a structure in top management that will push every day on the above 13 points.

Q7(b) What are the benefits of Total Productive Maintenance (TPM)? Explain the 8 pillars of TPM.

What Is Total Productive Maintenance?

A key component of Lean Management/Manufacturing, total productive maintenance embraces a

comprehensive strategy for optimizing facility maintenance with the primary goal of eliminating resource
waste, employee accidents, product defects, and unplanned downtime. These objectives are achieved
through preventive maintenance, continuous training, and effective collaboration between production and
maintenance personnel.

With equipment effectiveness at its core, total productive maintenance empowers equipment operators
with skills training, proactive maintenance programs, and productivity benchmark assessments, so that
they can fully take charge of the maintenance of assets assigned to them. Higher levels of workforce
autonomy decrease over-dependence on breakdown/reactive maintenance.
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What Are the Benefits of Total Productive Maintenance (TPM)?

By implementing and leveraging TPM principles, such as scheduling preventive maintenance tasks and
involving machine operators to perform equipment maintenance activities, organizations can reap the
following benefits of total productive maintenance:

 Minimal malfunctions of equipment

 Elimination of unforeseen downtime

 Enhanced performance and output

 Lower operating costs

 Cleaner and healthier work environment

 Improved workplace safety due to stricter adherence to safety regulations

 Intensified skill development

 Greater employee empowerment

 Higher collaboration and sharing of knowledge between departments and teams

 Reduced risks of accidents

 Better compliance with environmental laws and guidelines

 Increased satisfaction among all stakeholders

Traditional TPM Pillars

The traditional pillars of Total Preventive Maintenance (TPM) are typically grouped into the
following categories: Autonomous Maintenance (AM), Predictive Maintenance (PM),
Productive Maintenance (ProdM), and Quality Maintenance (QM). TPM efforts focus on
maximizing the Overall Equipment Effectiveness (OEE) of assets by improving these pillars. To
understand how to tackle TPM most effectively, it is first essential to understand the definition
and purpose of each of these pillars.

The 8 Pillars of TPM (Total Productive Maintenance)

TPM consists of 8 pillars that mainly focus on preventive and proactive maintenance practices
aimed at improving equipment performance and reliability. The 8 pillars of total productive
maintenance are:

Autonomous Maintenance

The concept of autonomous maintenance refers to routine, preventive maintenance activities to

be performed by operators, such as lubricating, cleaning, and servicing production lines. Giving
operators a greater level of responsibility ensures early detection of equipment issues before
they develop into critical problems.

Kaizen (Focused Improvement)

Kaizen, which means "continuous improvement" in Japanese, is a business philosophy that

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views productivity enhancements as a methodical and gradual progression. 2It promotes
collaboration among teams for incremental process improvements and problem solving through
cross-functional approaches, with the common intention of creating an organizational culture of
focused, continuous improvement.

Planned Maintenance

Scheduled maintenance activities based on failure-rate datasets. Planned maintenance extends

machine life, minimizes malfunctions, and reduces the risk of a breakdown.

Early Equipment Management

A process that capitalizes on existing knowledge of current equipment to develop improved and
more efficient new machines. Having a prior understanding of the new machines in operation
not only helps achieve optimized performance levels, but it also simplifies maintenance tasks
dramatically.

Quality Maintenance

The primary objective of quality maintenance is to enhance production quality by eliminating

the underlying cause of failures and defects. It focuses on making fault diagnosis an integral part
of the overall production process.

Training and Education

One of the main goals of total productive maintenance is to provide continuous and adequate
training to address the skills gap of all personnel. This ensures that the entire workforce, be it
production managers, machine operators, or maintenance technicians, remains highly trained to
meet TPM standards.

TPM in Office Environment

TPM is not just limited to production facilities - it also intends to improve office and
administrative operations. Companies should keep in mind that the principles of total productive
maintenance need to be adopted throughout an organizational structure, including offices, which
will facilitate waste elimination and increase administrative efficiency in procurement, order
processing, and scheduling.

SHE (Safety, Health, Environment)

The top priority of total productive maintenance is to offer a healthy and safe ecosystem for all
employees. Planned maintenance activities eliminate the risk of mishaps, ensuring accident-free
workplace environments.

How to Calculate TPM?

The calculation of Overall Equipment Effectiveness is the ideal method for determining TPM
(OEE).
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OEE = performance x Availability x Quality 2

The following is subtracted from 100% to determine availability:

Time lost due to equipment malfunction, setup and adjustment time lost, and beginning work
after breaks and weekends lost time.

Performance is determined by subtracting the following from 100%:

Minor interruption-related time losses and speed-related time losses (actual vs. optimal speed).

Quality is calculated as 100% minus any losses due to production-related flaws.

The ultimate objective of TPM is to increase OEE to 100% or to keep equipment running at
maximum efficiency with little downtime.

TPM Example

Step 1 – Identify Pilot Area

The first step in TPM’s expansion plans is identifying a pilot area. The pilot area will be used to
test TPM’s expansion models and to gather data that will be used to refine the expansion plans.
TPM has not yet identified a pilot area, but the company is considering several options. TPM is
confident that it will be able to find a suitable pilot area shortly.

Step 2 – Restore Equipment to Prime Operating Condition

TPM Step Two is to Restore Equipment to Prime Operating Condition. This is important to the
business because it ensures that all the equipment runs smoothly and at its best. This also helps
to prevent any issues that may arise in the future. Restoring the equipment to its prime operating
condition is a very important part of Total Productive Maintenance.

Step 3 – Start Measuring OEE 

The previous two steps of Total Productive Maintenance are important to establish the baseline
for the organization. The third step, however, is just as important. This step is all about
measurement. The organization needs to start measuring OEE to establish a baseline for
improvement.

Total Productive Maintenance (TPM) is a maintenance program focusing on maintaining

equipment to improve productivity. The goal of TPM is to maintain equipment so that it is
always available when needed and to prevent unscheduled downtime. There are eight steps to
TPM, and the third step is measuring OEE. OEE is a measure of the equipment’s performance
and is used to identify areas where improvement is needed.

Step 4 – Address Major Losses  

To cover the topic of Total Productive Maintenance Step Four – Address Major Losses, this
document will introduce the concept and then provide a few brief examples. Major losses
generally fall into the following categories: unplanned downtime, planned downtime, and
startup losses. A brief overview of each category will be given to provide context for the
following examples. Finally, two real-world examples will be given to help further illustrate the
concept of major losses.
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Step 5 – Introduce Proactive Maintenance Techniques 

The final step in the TPM process is to introduce proactive maintenance techniques. This
addresses minor losses that can eventually add to significant productivity gains. There are many
proactive maintenance techniques, but some of the most common ones are condition-based,
predictive, and preventive maintenance. 

What Is the Connection Between TPM and OEE? 

OEE (Overall Equipment Effectiveness) is a metric that scores the overall effectiveness or
health of equipment, as a percentage, based on its output quality, availability, and performance.

OEE represents the Key Performance Indicator (KPI) of a total productive maintenance
program. It supports TPM strategies by precisely tracking the progress, to help achieve the
"Perfect Production" - optimized operation, no downtime, no defects.
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