Spring 2012

Master of Business Administration- MBA Semester 2 MB0044 Production and Operations Management - 4 Credits (Book ID: B1133) Assignment Set - 2 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q1. What is productivity? Write a brief note on capital productivity. Answer = 1) Productivity Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input. These definitions are short but too general and insufficient to make the phenomenon productivity understandable. A more detailed theory of productivity is needed, which explains the phenomenon productivity and makes it comprehensible. Further more is needed operationalization of the concept productivity that makes it a measureable quantity. In explaining and operational zing a set of production models are used. A production model is a numerical expression of the production process that is based on production data, i.e. measured data in the form of prices and quantities of inputs and outputs. It is most advisable to examine any phenomenon whatsoever only after defining the entity the phenomenon under review forms part of. Then it will be possible to analyze the phenomenon as part of such an entity. Hence, productivity cannot be examined as a phenomenon independently but it is necessary to identify the entity it belongs to. Such amenity is defined as production process. It goes without saying that productivity is a critical factor of production process in one way or another. To define the way is the object of this article. Capital Productivity:Output per unit of value of fixed production assets (fixed capital). In a socialist economy, capital productivity characterizes the efficiency with which fixed capital stock is used. It is commonly employed in economic analysis and in the formulation of production plans and plans for capital expenditures, both for the national economy as a whole and for individual sectors, production associations, and enterprises. Data on the gross social product and on national income (from productive activities) are used in calculating capital productivity for the national economy as a whole; for calculating the productivity of individual sectors, data on gross (commodity) or net output are used. In sectors where the output is homogeneous (petroleum, coal, cement), physical units are sometimes used in the calculations. Capital productivity is calculated on the basis of the balance valuation of the fixed production assets (depreciation costs included), using either the average value over the year or the value as of the end of the year. Capital productivity is the reciprocal of the capital-output

ratio. Capital productivity differs from one branch of material production to another. Thus, the national income produced in current prices per ruble of fixed production assets in the USSR in 1975 amounted to 45 kopeks in the national economy as a whole, 50 kopeks in industry, 36 kopeks in agriculture, 13.4 kopeks in transport and communications, and 1.18 rubles in construction. Productivity is influenced by a number of factors. Its growth depends primarily on the level of technology, the organizational and technical measures employed in managing production capacities, and the proportion of capital investment earmarked for reconstruction and retooling.

Q2. Describe briefly the automated flow lines. Answer = 2) INTRODUCTION Automation is a technology concerned with the application of mechanical, electronic, and computer based systems to operate and control production. This technology includes automatic machine tools to process parts, automatic assembly machines, industrial robots, automatic material handling and storage systems, automatic inspection systems for quality control, feedback control and computer process control, computer systems for planning, data collection and decision-making to support manufacturing activities.

TYPES OF AUTOMATION Automated production systems can be classified into three basic types: 1. Fixed automation, 2. Programmable automation, and 3. Flexible automation.

1. FIXED AUTOMATION

It is a system in which the sequence of processing (or assembly) operations is fixed by the equipment configuration. The operations in the sequence are usually simple. It is the integration and coordination of many such operations into one piece of equipment that makes the system complex.

The typical features of fixed automation are: (a) High initial investment for customEngineered equipment; (b) High production rates; and (c) Relatively inflexible in accommodating product changes.

The economic justification for fixed automation is found in products with very high demand rates and volumes. The high initial cost of the equipment can be spread over a very large number of units, thus making the unit cost attractive compared to alternative methods of production. Examples of fixed automation include mechanized assembly and machining transfer lines.

2. PROGRAMMABLE AUTOMATION

In this the production equipment is designed with the capability to change the sequence of operations to accommodate different product configurations. The operation sequence is controlled by a program, which is a set of instructions coded so that the system can read and interpret them. New programs can be prepared and entered into the equipment to produce new products.

Some of the features that characterize programmable automation are: (a) High investment in general-purpose equipment; (b) Low production rates relative to fixed automation; (c) Flexibility to deal with changes in product configuration; and (d) Most suitable for batch production. Automated production systems that are programmable are used in low and medium volume production. The parts or products are typically made in batches. To produce each new batch of a different product, the system must be reprogrammed with the set of machine instructions that correspond to the new product. The physical setup of the machine must also be changed over: Tools must be loaded, fixtures must be attached to the machine table also be changed machine settings must be entered. This changeover procedure takes time. Consequently, the typical cycle for given product includes a period during which the setup and reprogramming takes place, followed by a period in which the batch is produced. Examples of programmed automation include numerically controlled machine tools and industrial robots. 3. FLEXIBLE AUTOMATION

It is an extension of programmable automation. A flexible automated system is one that is capable of producing a variety of products (or parts) with virtually no time lost for changeovers from one product to the next. There is no production time lost while reprogramming the system and altering the physical setup (tooling, fixtures, and machine setting). Consequently, the system can produce various combinations and schedules of products instead of requiring that they be made in separate batches.

The features of flexible automation can be summarized as follows: (a) High investment for a custom-engineered system. (b) Continuous production of variable mixtures of products. (c) Medium production rates. (d) Flexibility to deal with product design variations.

The essential features that distinguish flexible automation from programmable automation are: (1) The capacity to change part programs with no lost production time; and (2) The capability to change over the physical setup, again with no lost production time. These features allow the automated production system to continue production without the downtime between batches that is characteristic of programmable automation. Changing the part programs is generally accomplished by preparing the programs off-line on a computer system and electronically transmitting the programs to the automated production system. Therefore, the time required to do the programming for the next job does not interrupt production on the current job. Advances in computer systems technology are largely responsible for this programming capability in flexible automation. Changing the physical setup between parts is accomplished by making the changeover off-line and then moving it into place simultaneously as the next part comes into position for processing. The use of pallet fixtures that hold the parts and transfer into position at the workplace is one way of implementing this approach. For these approaches to be successful; the variety of parts that can be made on a flexible automated production system is usually more limited than a system controlled by programmable automation. Q3. What is meant by Total Quality Management? Mention the 14 points of Demings approach to management. Answer = 3) at its core, Total Quality Management (TQM) is a management approach to longterm success through customer satisfaction. The concept of quality has existed for many years, though its meaning has changed and evolved over time. In the early twentieth century, quality management meant inspecting products to ensure that they met specications. In the 1940s, during World War II, quality became more statistical in nature. Statistical sampling techniques were used to evaluate quality, and quality control charts were used to monitor the production process. In the 1960s, with the help of so-called quality gurus, the concept took on a broader meaning. Quality began to be viewed as something that encompassed the entire organization, not only the production process. Since all functions were responsible for product quality and all shared the costs of poor quality; quality was seen as a concept that affected the entire organization. The meaning of quality for businesses changed dramatically in the late 1970s. Before then quality was still viewed as something that needed to be inspected and corrected. However, in the 1970s and 1980s many U.S. industries lost market share to foreign competition. In the auto industry, manufacturers such as Toyota and Honda became major players. In the consumer goods market, companies such as Toshiba and Sony led the way. These foreign competitors were producing lower-priced products with considerably higher quality.

To survive, companies had to make major changes in their quality programs. Many hired consultants and instituted quality training programs for their employees. A new concept of quality was emerging. One result is that quality began to have a strategic meaning. Today, successful companies understand that quality provides a competitive advantage. They put the customer 1st and dene quality as meeting or exceeding customer expectations.

In a TQM effort, all members of an organization participate in improving processes, products, services and the culture in which they work. The methods for implementing this approach come from the teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa and Joseph M. Juran.

A core concept in implementing TQM is Demings 14 points, a set of management practices to help companies increase their quality and productivity: 1. Create constancy of purpose for improving products and services. 2. Adopt the new philosophy. 3. Cease dependence on inspection to achieve quality. 4. End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier. 5. Improve constantly and forever every process for planning, production and service. 6. Institute training on the job. 7. Adopt and institute leadership. 8. Drive out fear. 9. Break down barriers between staff areas. 10. Eliminate slogans, exhortations and targets for the workforce. 11. Eliminate numerical quotas for the workforce and numerical goals for management. 12. Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system. 13. Institute a vigorous program of education and self-improvement for everyone. 14. Put everybody in the company to work accomplishing the transformation.

The term Total Quality Management has lost favor in the United States in recent years: Quality management is commonly substituted. Total Quality Management, however, is still used extensively in Europe.

Q4. Describe briefly the Project Monitoring and control. Answer = 4) any project aimed at delivering a product or a service has to go through phases in a planned manner, in order to meet the requirements. It is possible to work according to the project plan only by careful monitoring of the project progress. It requires establishing control factors to keep the project on the track of progress. The results of any stage in a project, depends on the inputs to that stage. It is therefore necessary to control all the inputs and the corresponding outputs from a stage. A project manager may use certain standard tools to keep the project on track. The project manager and the team members should be fully aware of the techniques and methods to rectify the factors influencing delay of the project and its product. To analyze the project, methodologies such as, PERT (Program Evaluation Review Technique) and CPM (Critical Path Method) may be used. In the PERT method, one can find out the variance and use the variance to analyze the various probabilistic estimates pertaining to the project. - Using the CPM, one can estimate the start time and the finish time for every event of the project in its WBS (Work Breakdown Structure).

The analysis charts can be used to monitor, control, track, and execute a project. The various steps involved in monitoring and controlling a project from start to end are listed below. 1. Preliminary work: The team members must understand the project plans, project stage schedule, progress controls, tracking schedules, summary of the stage cost and related worksheets. All the members have to understand the tolerances in any change and maintain a change control log. They must realize the need and importance of quality for which they have to strictly follow a quality review schedule and frequently discuss the quality agendas. They must understand the stage status reports, stage end reports, stage end approval reports. 2. Project progress: The members must keep a track of the project progress and communicate the same to other related members of the project. They must monitor and control project progress, through the use of regular check points, quality charts, and statistical tables; control the quality factors which are likely to deviate from expected values as any deviation may result in changes to the stage schedule. The project manager ensures that these changes are made smoothly and organizes review meeting with the project management group. Thus all the members are aware about the progress of the project at all times. This helps them to plan well in advance for any exigency arising due to deviation from planned schedule. 3. Stage control: The project manager must establish a project check point cycle. For this, suitable stage version control procedures may be followed. The details are to be documented stage wise. Project files have to be frequently updated with suitable version control number and revision status should be maintained for each change. Team members are identified who will exercise controls at various points of the project.

4. Resources: The project manager has to plan the resources required for various stages of the project. He has to brief both the project team and the key resources about the objectives of every stage, planned activities, products, organization metrics, and the project controls. This increases the visibility into the project performance and hence a quality control can be achieved. Allocating a right resource at the right place and the right time will significantly enhance the efficiency and effectiveness of the resource. 5. Quality control: Quality control is very important in any project. Quality control is possible if the project members follow the quality charts and norms very strictly. The following lists the possible ways to control quality: - Schedule quality review: Project members are recommended to schedule the quality review at the beginning and also the end of every stage. This helps the project manager and team members to plan well in advance for any unforeseen deviation. - Agenda for quality review: The project manager should create and distribute a quality review agenda specifying the objectives, products, logistics, roles, responsibilities, and time frames. This increases the effectiveness of the review and also reduces the time gap. - Conduct quality review: The quality review is to be conducted in a structured and formal manner. Quality review should focus on product development and its quality factors. The project members should check whether the review meets the prescribed quality standards Progress control The progress control of a project can be achieved by considering the following:

A. Monitor performance: The first step for any project control mechanism is to monitor the progress. There are numerous ways to monitor and measure various project parameters. For example, the team members log in details of actual start date, actual finish date, actual hours worked per task, estimated hours to complete the task, elapsed time in hours to complete the task, any miscellaneous costs incurred during a stage. These inputs become the base to monitor the performance of the project and its stages.

B. Update schedule: Update the schedule for: - Actual start date for tasks started - Actual finish date for tasks finished - Actual hours worked per task - Latest estimated work in hours to complete the task C. Update costs: Update the stage cost summary worksheet with actual costs incurred during the period and estimated remaining costs. Miscellaneous costs will be automatically updated from the scheduler, since they are calculated from actual work. D. Re-plan stage schedule: Review the tracking Gantt and Cost workbook and identify any deviation from the baseline. Analyse the cause of the deviation. Refer back to the project control factors to help determine the appropriate corrective action and adjust the schedule accordingly. Determine if the stage has exceeded the progress, cost and quality tolerance levels agreed with the project management team. Review status of open issues and determine any further action required on these issues. Review the status of any outstanding quality reviews. Review any new change requests. E. Conduct team status review: Conduct a status meeting with the project team. This is important to bring everyone on the same page of the project progress. F. Create status report: The status report provides a record of current achievement and immediate expectations of the project. The status has to be effectively communicated to all concerned parties. G. Create flash report: Summarize the accomplishments for the month, schedule status, upcoming tasks for the month and any major issues. Distribute the same to all project team members and stakeholders.

H. Project status reports: As discussed earlier, the status report provides a record of current achievements and immediate expectations of the project. This is generated on a regular basis depending upon the type, requirements and phase of the project. Typically it is generated for a week.

I.

Approvals: In any project, it is important to have top management or project sponsors into confidence about all the aspects of the project. This project stage reviews the decisions taken and actions planned and get it approved by the top management. The goals of such review are to improve quality by finding defects and to improve productivity by finding defects in a cost effective and timely manner. The group review process includes several stages like planning, preparation, overview of a group review meeting, rework recommendations and followup.

Q5. Write a brief note on Just-In-Time (JIT). Answer = 5) Just-In-Time (JIT) manufacturing is a process by which companies don't keep lots of excess inventory; instead, they manufacture a product as an order comes in. It is a management philosophy of continuous and forced problem solving. The objective of JIT manufacturing system is to: Eliminate waste that is, minimize the amount of equipment, materials, parts, space, and workers time, which adds a great value to the product Increase productivity

JIT means making what the market demands when it is in need. It is the most popular systems that incorporate the generic elements of lean systems. Lean production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement. Deploying JIT results in decrease of inventories and increases the overall efficiencies. Decreasing inventory allows reducing wastes which in turn results in saving lots of money. There are many advantages of JIT. JIT: 1. 2. 3. 4. 5. 6. Increases the work productivity Reduces operating costs Improves performance and throughput Improves quality Improves deliveries Increases flexibility and innovativeness

For industrial organizations to remain competitive, cost efficiencies have become compulsory. JIT helps in this process. It is extended to the shop floor and also the inventory systems of the vendors. JIT has been extended to mean continuous improvement. These principles are being applied to the fields of Engineering, Purchasing, Accounting, and Data processing.

However, for organizations to completely implement JIT manufacturing system, they need to have a proper commitment along with the following basic facilities - proper material, quality, equipment, and people involvement. Q6. What is value engineering? Explain its significance. Answer = 6) Value Engineering (VE) or Value Analysis is a methodology by which we try to find substitutes for a product or an operation. The concept of value engineering originated during the Second World War. It was developed by the General Electric Corporations (GEC). Value Engineering has gained popularity due to its potential for gaining high Returns on Investment (ROI).This methodology is widely used in business re-engineering, government projects, automakers, transportation and distribution, industrial equipment, construction, assembling and machining processes, health care and environmental engineering, and many others. Value engineering process calls for a deep study of a product and the purpose for which it is used, such as, the raw materials used; the processes of transformation; the equipment needed, and many others. It also questions whether what is being used is the most appropriate and economical. This applies to all aspects of the product. Value Engineering helps your organization in: - Lowering O & M costs - Improving quality management - Improving resource efficiency - Simplifying procedures - Minimizing paperwork - Lowering staff costs - Increasing procedural efficiency - Optimizing construction expenditures - Developing value attitudes in staff - Competing more successfully in marketplace

Value Engineering helps you to learn how to: - Improve your career skills - Separate "Symptoms" from "problems" - Solve "root cause" problems and capture opportunities - Become more competitive by improving "benchmarking" process - Take command of a powerful problem solving methodology to use in any situation