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INVENTORY MANAGEMENT
QUALITY ASSURANCE
STRATEGY MANAGEMENT
Lead time also fluctuates at around an average of 21 working days. To facilitate a desired
service level of 95% and avoiding lockout condition / late delivery penalty, company
spends Rs 150000 per year in administering a perpetual review system (Fixed Quantity
interval system).
To avoid the high monitoring costs for the perpetual system, Rohit, a young Industrial
Engineer, has proposed to change to a Periodic Review system (Fixed order Interval
system). Without any additional investment, Rohit found that administrative costs would
drop by 75% approximately. But management was in a dilemma whether to implement the
proposed solution or not. The review period for the system was one month.
A local supplier promises to deliver any order within 7 working days. It reduces the Order
cost to Rs 25000 per order, but the unit price increases by 2%.
Rohit checked for scientific inventory control method. The excess inventory is already
eating up the company liquidity. The expenses are in the form of raw material cost ,in
process work ,finished goods ready to sale .It also include the expenses incurring to meet
storage, transportation, approximation for losses arising out of pilferage , insurance and
damages. He wanted to minimise this cost (holding cost or carrying cost)
On the other hand, if he thoughts for opting very less or no inventory then company face
lockout situation. In that case with addition to late delivery Penalty Company may suffer
from the important order /customer losing and the company reputation is also on the stack
in the market.
• Priority to customer
• Effective Capital utilisation
• Economy in buying
The different methodology adopted is
(a) Fixed Order Quantity system.
(b) Fixed Order Interval System.
In each methodology again evaluation is done for both Local supplier and manufacturer
(from china) for the feasibility. The results are tabulated below after the calculations.
= 2 x 36500 x 65000
4200 x 0.2
= 2377
Annual Total Cost: = Basic cost + Procurement cost + Carrying cost
Ordered quantity
= (65000 x 36500)
2377
= 998223
Carrying Cost(Rs.) = (Inventory carrying cost in decimal x Unit cost x Order quantity)
2
= (0.2 x 4200 x 2377)
2
= 998223
Annual Total Cost (Rs.) =153300000 +998223 + 998223 =155296447
= 2 x 36500 x 250000
4284 x 0.2
= 1459
Annual Total Cost: = Basic cost + Procurement cost + Carrying cost
Basic cost (Rs.)= Unit cost x Annual consumption
Ordered quantity
= (250000 x 365000)
14595
= 625232
Carrying Cost (Rs.) =(Inventory carrying cost in decimal x Unit cost x Order quantity)
2
= (0.2 x 4284 x 14595)
2
= 625232
Re Order quantity (Units) = Maximum stock – Stock held at the time of review
= 5600-500 = 5100
Average Inventory (Units) =0.5 x (minimum stock + maximum stock)
= 0.5 x (500+5600) = 3050
Annual Inventory cost (Rs.) =0.2 x 3050 x 4200 = 2562000
Annual procurement cost = (Procurement cost per review x No. of days in Year)
Review period
= (16250 x365)/30 =197708
Total Annual Ordering & Procurement cost (Rs.) = 197708 + 150000 = 347708
Carrying Cost (Rs.) = Inventory carrying cost in decimal x Unit cost x Avg. Inventory
Annual Total Cost (Rs.) = Basic cost + Procurement cost + Carrying cost
Basic cost(Rs.) = Unit cost x Annual consumption
Annual Total ordering & Procurement Cost (Rs.) = 150000 + 76042 =226042
Carrying Cost (Rs.) = Inventory carrying cost in decimal x Unit cost x Avg. Inventory
CLOSE
Objective:
The company Vice President called the Chief Manager QC Mumbai for the business
review meeting. In the meeting Regional sales manager, South raised the issue of
rejection and complained that he has lost a number of customers and large money is also
blocked in the payment due to the same reason. Next day, Mr. Mahesh instructed his
Engineer (Mr. Vineet Dhiman) to do the method study.
Mr. Vineet made the check sheet to gather the information regarding various elements of
the defective material returned from all over the branches in terms of branch, model,
under guarantee, problem. The compiled data is as follow.
The Process of making Tank for water heater starts from drawing the two identical half
tanks from Copper sheet circle, trunking the hole in one doom in flat portion, fitting the
Cast iron ring in cut-out part. Then two halves are put over each other and brazing with
Oxy-acetylenes torch.
The tank is immediately put in the water for cooling. Then tank is fitted with apparatus
plate and checked for leakage by filling the water at pressure 6 kg/cm2.The tank which
are passed in leakage test assembled with other subassembly to make finish product.
Start
PROCESS 1
Copper Sheet circle
PROCESS 4
Fitting of Cast Iron ring
PROCESS 7
Fitting of Apparatus Plate
Open the Apparatus
plate
Leakage Testing
PROCESS 8
PROCESS 9 NO
Is Test Passed
YES
END
Brazing Brazing
Tank
After compiling the result from check sheet the major problem found was leakage from
brazing. Its Share is 71.5%.
Mr. Vineet, at the vendor place conducted brainstorming meeting. In the session
major cause come up and then listed down for future reference.
Mr. Vineet checked for each cause to determine the potential effect one by one.
The first cause state that brazing rod is of poor quality. The currently using
material has 6 % phosphorous content. The suggested material is brazing rod with
2% silver composition. It is 30 % costlier than earlier used one.
Ten water heaters were manufactured using the silver brazing rod
and installed in coastal area for testing. The result was collected after one month.
It was found that three of the heaters started leaking from the brazing.
For the second cause, the close monitoring of process revealed that before
brazing no oil/dirt/grease was removed from the surface.
Practically before brazing there should be no any oil/grease over the surface as
this would create the problem in adhesion of two metals. In manufacturing
process before brazing fifty tanks were thoroughly cleaned then brazed using old
Phosphorous rod, with aceton to remove the oil/dirt.
The cooling of joined halves carried out in normal air rather than cooling in the
water (as it was done previously practiced) because immediate cooling affects the
brazing strength. During the pressure testing there was improvement in the
outcome. As earlier, in a lot of fifty there used to be five to seven rejections during
leakage testing. But implementation of the before said two processes (Precleaning
and cooling in air) reduced the rejection to half of the previous rejection.
For the third cause, time and motion study of brazing process was done to find
the discrepancy in observed time and standard time. The comparison of this
report with earlier report showed no abnormal variation.
In actual practice after usage of water heater in coastal areas the leakage starts at
brazing. This is mainly due to the high salt concentration in the water. This salt
after evaporation of water comes in directly contact with brazing material and
start deteriorating it. A new interlocking mechanism was developed so as to
minimize the water contact with brazing material. Again, ten samples were made
with new interlocking system and installed in coastal areas. The Tank interlocking
is given in Figure 2 & figure 4.
After one month of continues operation no leakage was observed in any of the
samples.
The revised process of manufacturing is also presented. The Highlighted process are
added as part of the improvement and to provide Quality assurance rather than
Quality control
Brazing Brazing
START
PROCESS 1
Copper Sheet circle
Pre-cleaning
PROCESS 5
PROCESS 10 Is Test
Passed
END
DELTACOM GmBH
Objective: The case study helps to understand the perception & application of
strategy formulation.
The company is established in Germany and it is into the business of IT solution provider
to various customers all over the globe. Recently in Chine, the company has participated in
the International Bidding and awarded the contract. The company has made huge effort to
get the order as it was very competitive, financially as well as from Technical specification
point of view.
The project duration is within the range of 7 to 10 years and it also outlay larger chunk of
money. So after winning the contract, management called for Executive level meeting in
Berlin for overall framework. The agenda of the meeting distributed to them was to decide
upon the formulation & evaluation of various strategies to be adopted for the project.
SLI
TCS BP
MISSION OF BUSINESS
CUSTOMER TARGETING
AGGREGATE/GRANULAR METRICS
EXPERIMENTATION AND FEEDBACK
LEGENDS :->
BP – BEST PRODUCT
DELTACOM GmBH has to choose the partner for project operation in Chins. Every
business Partner has some strength & weakness in terms of their competency in
different field. So the Company made the business dimension & value proposition
analysis for each partners. So the cost comparison, Timely delivery as well as Quality
of operation can be judged on the same platform.
Systems Lock-In
Dominant Exchange
Exclusive Channel
Customer Integration
Total customer solution Low Cost
Redefining Experience
2. Low Cost Wage differential with Chinese wages are very low.
reference to US, Europe,
Japan & India.
A large pool of computer
Availability of Large pool of science graduate for long term
skill in that Area.
Expertise in managing in
Experience Leveraging sudden change in demand and
workloads & resource supply profitability
profitability.
(E) Mission
The major objectives behind taking the project are outlined below.
SCOPE:
• The purpose of the project is to study the self managed team concept.
• What are the limitations & constraint during its realization
• How to measure the effectiveness of model?
The self-managed team or SMT is a special kind of team. It can be highly effective. It can
be phenomenally productive. And it is an autonomous entity. An entity with the endurance
and power of a machine and the cunning and adaptability of an animal.
A SMT isn't just a group of people working together but a genuine collaboration: A team
in the true sense of the word. And it is a team which is measured by its results, not the
performance of its individual members.
OBJECTIVES OF TRAINING
1) To impart basic knowledge and skill to the new entrants and enable them to
perform their jobs well.
2) To equip the employees to meet the changing requirements of the job and the
organization.
3) To teach the employees the new techniques and ways of performing the job or
operations.
4) To prepare the employees for higher level tasks and built up a second line of
component managers.
AREAS OF TRAINING
The areas in which training is offered can be classified into following categories:
SOCIAL SKILL Employee is made to learn him and other develop a right
mental attitude towards the job, colleagues and the company.
5. The training aids provided during the training period were sufficient & helpful.
(a)Strongly agree. (b)Agree
(c) Strongly disagree. (d) Disagree.
(e) Can’t say.
6. The coordination training was enough:
(a)Strongly agree. (b)Agree
(c) Strongly disagree. (d) Disagree.
(e) Can’t say.
7. The time allotted to every subject was enough:
(a)Strongly agree. (b)Agree
(c) Strongly disagree. (d) Disagree.
(e) Can’t say.
8. I feel improvements in my communication after the training:
(a)Strongly agree. (b)Agree
(c) Strongly disagree. (d) Disagree.
(e) Can’t say.
9. There is improvement in my personality during the training program:
(a)Strongly agree. (b)Agree
(c) Strongly disagree. (d) Disagree.
(e) Can’t
Strongly Grand
AGE Agreed % Agreed % Total
Strongly Grand
SBU Agreed % Agreed % Total
Energy
meter 2 6.67% 8 26.67% 5 16.67% 15
Strongly Grand
GENDER Agreed % Agreed % Total
Strongly Grand
AGE Agreed % Agreed % Total
Strongly Grand
SBU Agreed % Agreed % Total
Strongly Grand
GENDER Agreed % Agreed % Total
Grand
Total 21 70.00 9 30.00 30
Strongly Grand
AGE Agreed % Agreed % Total
Strongly
SBU Agreed % Agreed % Grand Total
Strongly Grand
GENDER Agreed % Agreed % Total
Strongly Grand
AGE Years Agreed % %
Agreed Total
18 2 6.67 3 10.0 5
19 2 6.67 7 23.3 9
20 2 6.67 4 13.3 6
21 4 13.33 4 13.3 8
22 0.00 2 6.67 2
Strongly Grand
SBU Agreed % Agreed % Total
7. The perception of SMT’s about time allotted to each subject was enough.
Grand
Total 1 3.33 19 63.33 10 33.33 30
Strongly Grand
GENDER Agreed % Agreed % Total
Strongly Grand
AGE Agreed % Agreed % Total
Grand
Total 21 70.00 9 30.00 30
Strongly Grand
SBU Agreed % Agreed % Total