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BACHELOR OF ENGINEERING
(PRODUCTION SANDWICH)
BY
1
ALL INDIA SHRI SHIVAJI MEMORIAL SOCIETY’S
COLLEGE OF ENGINEERING, PUNE – 01
DEPARTMENT OF PRODUCTION ENGINEERING
CERTIFICATE
This is to certify that the Project Report entitled
is a bonafide work carried out under the supervision and guidance of Prof. V.
Y. SONAWANE and it is approved for the partial fulfillment of the
requirements of University of Pune, Pune for the award of the Degree of
Bachelor of Engineering (Production Sandwich). The Project Report has not
been earlier submitted to any other Institute or University for the award of any
Degree or Diploma.
(External Examiner)
Place: Pune
Date:
2
3
ACKNOWLEDGEMENT
We wish to thank Mr. Vijay Nimse (Sr. Er. Q&A) and Mrs. Vrunda
Zende (HR Manager) for constant guidance, co-operation, inspiration, practical
approach and constructive criticism, which provided me the much needed
impetus to work hard. I also thank all other persons who directly and indirectly
contributed in successful completion of the Project.
.. MR.ANAND VIJAY
4
CONTENTS
TITLE PAGE I
CERTIFICATE OF COLLEGE II
CERTIFICATE OF COMPANY III
ACKNOWLEDGEMENT IV
CONTENTS V
LIST OF TABLE VII
LIST OF PHOTOS VII
LIST OF FIGURES VIII
LIST OF GRAPHS VIII
LIST OF CHARTS VIII
ABSTRACT IX
SR NO TITLE PAGE
NO
1. INTRODUCTION 1
1.1 INTRODUCTION 1
1.2 AIM OF PROJECT 1
1.3 WHY WE TOOK THIS PROJECT 1
1.4 ACTION PLAN 2
2. TUBE WATER BYPASS 3
2.1 INTRODUCTION 3
2.2 PROCESS DESCRIPTION 4
2.2.1 CASTING 4
2.2.2 BRAZING 8
2.2.2.1 HOW DOES BRAZING JOIN MATERIALS 8
2.2.2.2 DIFFERENCES BETWEEN SOLDERING, WELDING, 9
AND BRAZING
2.2.2.3 BRAZE WELDING 10
2.2.2.4 BRAZING FUNDAMENTALS 11
2.2.2.5 FLUX 11
2.2.2.6 BRAZING STRENGTH AND JOINT
GEOMETRY 12
2.2.2.7 FILLER MATERIALS 13
2.2.2.8 ADVANTAGES OF BRAZING 14
2.2.3 PIPE BEADING 15
2.2.4 PIPE BENDING 16
2.3 PROCESS FLOW DIAGRAM 18
2.4 INSPECTION 22
2.4.1 DIMENSIONAL SPECIFICATIONS 22
2.4.2 CHECKING AIDS LIST 23
2.4.3 LAYOUT INSPECTION 24
3. PARETO ANALYSIS 25
5
3.1 INTRODUCTION 25
3.2 PROBLEMS OF PARETO ANALYSIS 28
3.3 PARETO ANALYSIS STEP BY STEP 29
3.4 COMPARATIVE STUDY 31
3.4.1 PARETO ANALYSIS IN THE MONTH OF FEB 31
3.4.2 PARETO ANALYSIS IN THE MONTH OF JUNE 31
3.5 PROCESS STUDY 32
3.6 IDENTIFICATION OF PROBLEMS 32
3.7 GAP ANALYSIS 32
3.8 SOLUTIONS TO THE PROBLEMS 33
3.9 AFTERMATH OF IMPLEMENTATION 36
4. ACTIVITY BASED COSTING 37
4.1 INTRODUCTION 37
4.2 NON VALUE ADDING ACTIVITY 40
4.2.1 DEFINITION 40
4.3 ACTIVITY BASED COSTING METHODOLOGY 40
4.4 CALCULATION 42
4.4.1 TOTAL ABC COSTING FOR THE
PRODUCT WATER TUBE BYPASS 42
5. OVERALL BENEFITS 45
6. LEARNINGS 45
7. CONCLUSION 46
8. REFERENCES 47
LIST OF TABLE
LIST OF PHOTOS
6
PHOTO NO TITLE PAGE NO
2.1 WATER TUBE BYPASS ATTACHED TO THE 3
ENGINE KTA 50G
2.2 PARTS OF WATER TUBE BYPASS 4
2.3 CASTED CHILD PART 7
2.4 BEADING OF THE PIPE OF WATER TUBE 15
BYPASS
2.5 CNC PIPE BENDING MACHINE 16
3.1 SPOT FACE AND THEIR BOLTS 35
LIST OF FIGURES
LIST OF GRAPHS
7
LIST OF CHARTS
8
ABSTRACT
One of the biggest challenges the industry faces today is to cope with the
ongoing development and technological advances. Thus Innovation is the most
valued characteristic in any development. New products are thus very essential
for improving market share.
The project deals with reducing the rejection of the product water tube bypass.
In conventional system each and every time the desired productivity is not
attained. This leads to decrementation in customer desire.
Sometimes the deteriorating quality of the product also leads in the short of
target. In our product case we were achieving the target but because of poor
quality, there were lots of rejections. Thus we took the project to find out the
pain area of water tube bypass production. We used pareto analysis to
highlight the problems. Through pareto analysis we targeted the major problem
causing rejections. we provided solutions to them. While analysing through
pareto we observed a lot of non value activities in the production process. We
used gap analysis to determine the gap in actual time being spent and the ideal
time. We had to bridge the gap in the actual and ideal time, thus providing
solutions to the problem was not sufficient, so we used activity based costing
to reduce non value added activities and estimate the actual profit obtained by
eliminating them.
1. INTRODUCTION
9
1.1 INTRODUCTION
One of the most important decisions that a manufacturing company should
make is to determine its productivity which will maximize profit. Given that a
company has capacity constraints, it may not be able to produce every unit of
product demanded by the market. The best action to take in this case is to focus
on the most profitable products for the company and to use all the existing
resources of the company to produce these products. In this way the company
can increase its profitability because it will use its existing resources to
produce the most profitable products.
Thus in the similar way water tube bypass is one of the hero product of
company BHOR ENGINEERING PRIVATE LIMITED. It has a continuous
demand and in order to fulfil those we took this project.
Bhor is the sole supplier of tube water bypass to Cummins India limited. As
bhor is the sole supplier of this specific product attached in Cummins heavy
engines , thus any kind of irregularities in the product will affect the Cummins
production. As the no of rejections were increasing, there was an urgent need
to look into the problems associated with this product.
Thus in order to reduce the rejections and rework performed we took this
project, and as it the law of nature and policy of any firm to get maximum
output at minimum investment .
Thus the various possible ways to reduce rejections and reworks being
performed are as follows-
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1. increasing man power
2. increasing working hours
3. outsourcing
4. improving the prevailing conditions
Thus keeping in mind the guidelines and the boundaries given by the company
guide we decided to focus on the prevailing working conditions.
An action plan was thus prepared which included all the problems identified,
improvements required for them and savings in the estimated cost.
11
2.1 INTRODUCTION
Tube water bypass is a connector between the thermostat and water pump in a
generator produced by Cummins India Ltd. The generator has an output of
1200 kva. When the engine heats upto 850c mouth of thermostat opens and
water circulation starts from engine to radiator and vice-versa. This activity
ends when the temperature of water falls below 80 0c. this generator is the heart
of engine having model no KTA SDG. This engine is used fro construction
and boring purpose at a very massive magnitude. The connector water from the
radiator to engine, water in the engine gets heated because of the running
temperature. As the temperature of the water reaches 800 c it starts melting the
waxed placed at the mouth of the thermostat. Hence the mouth of the
thermostat automatically opens and water rushes through the water bypass
back to radiator. Thus the water bypass needs to withstand a temperature of
about 800c to 1000c. the tube water bypass is termed as part no
3055712( Which we are going to use as reference from now onwards).
Photo 2.1 Water Tube Bypass attached to the engine KTA 50G
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Photo 2.2 Parts of Water Tube Bypass
2.2.1 CASTING
Grey iron sand casting is an easy and economical process to create basic part
shape. Sand casting is the oldest, most common, and simplest of the casting
processes. The sand casting process is also the least costly of the casting
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processes. Normally the sand casting process is used for low temperature
alloys, such as aluminum, copper, grey iron, magnesium, and nickel alloys.
However, the sand casting process can be used for higher temperature metal,
such as steel and stainless steel alloys, when other production processes would
not be practical. Grey Iron sand castings are often used to produce prototypes,
due to the speed and relative low cost of production when compared to other
manufacturing techniques.
The grey iron sand casting process is very simple. A pattern is made in the
shape of the desired part. The pattern can be made in wood, plastic, or metal.
Simple grey iron sand castings can be made in a single piece, called a solid
pattern. More complex designs are made in two parts, called split patterns.
The patterns are then packed into sand, mixed with a binder, which helps
harden the sand into a semi-permanent shape. Once the sand mold is cured, the
pattern is removed, leaving a hollow space in the sand in the shape of the
desired grey iron part. Cores can be inserted into the mold to create holes and
to improve the net shape. Simple molds are open at the top and the melted grey
iron is poured into the mold. When the grey iron cools the sand is removed and
the grey iron sand casting is ready for secondary operations, such as machining
and finishing.
The grey iron sand casting process is used to obtain only the basic shape of
the part, or used for parts when larger tolerances are acceptable, such as
manhole covers or storm drain grates. Grey iron will not bend, and is also
frequently used for housing where tensile strength is not critical, such as
engine blocks, pump housings, valve bodies, and decorative castings.
This section provides a brief description of the major casting processes, for the
benefit of readers who are unfamiliar with the industry. Metal casting involves
pouring molten metal into a mould containing a cavity of the desired shape to
produce a metal product. The casting is then removed from the mould and
excess metal is removed, often using shot blasting, grinding or welding
processes. The product may then undergo a range of processes such as heat
treatment, polishing and surface coating or finishing. The casting techniques
described in this section are variations of the process
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described in the previous paragraph. The different techniques have been
designed to overcome specific casting problems or to optimise the process for
specific metals, product designs and scales or other operational considerations
such as automation.
All casing processes use a mould, either permanent or temporary, which is a
‘negative’ of the desired shape. Once the metal is poured and has solidified it
forms the ‘positive’ shape of the desired product. Processes differ in the
number of stages that are required to produce the final casting. Die casting is
the simplest technique in terms of the number of stages used. The process uses
a permanent mould (-ve) to produce the final casting (+ve). Processes, such as
sand moulding and shell casting, use a temporary mould (-ve) which is
typically produced using a permanent pattern or die (+ve). Investment casting
and lost foam casting techniques use a temporary mould (-ve) that is build
around a temporary pattern (+ve). For repetitive work, patterns are often
produced using a permanent mould or die (-ve). Table 1 summarises the
patterns and moulds typically used for these five common casting techniques
Sand moulding systems use sand as a refractory material and a binder that
maintains the shape of the mould during pouring. A wide range of sand/binder
Cleaner Production Manual for the Queensland Foundry Industry November
1999 Page 7 systems are used. Green (wet) sand systems, the most common
sand system, use bentonite clay as the binder, which typically makes up
between 4% and10% of the sand mixture. Water, which makes up around 2–
4% of the sand mixture, activates the binder. Carbonaceous material such as
charcoal (2–10% of total volume) is also added to the mixture to provide a
reducing environment. This stops the metal from oxidising during the pouring
process. Sand typically comprises the remaining 85–95% of the total mixture
(Environment Canada, 1997). Other sand moulding processes utilise a range of
chemical binders. Oil binders are combinations of vegetable or animal oils and
petrochemicals.Typical synthetic resin binders include phenolics,
phenolformaldehyde, ureaformaldehyde, urea-formaldehyde/furfuryl alcohol,
phenolic isocyanate, and alkyl isocyanate. Chemical resin binders are
frequently used for foundry cores and less extensively for foundry moulds
(Environment Canada, 1997).
15
Advantages of casting
• when heated.
o Process is suitable for both ferrous and non-ferrous metal castings.
o Handles a more diverse range of products than any other casting
method.
o Produces both small precision castings and large castings of up to
1 tonne.
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Photo 2.3 Casted Child Part
2.2.2 BRAZING
17
2.2.2.2 Differences Between Soldering, Welding, And Brazing
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2.2.2.4 Brazing fundamentals
In order to attain the highest strengths for brazed joints, parts must be
closely fitted and the base metals must be exceptionally clean and free of
oxides. For capillary action to be effective joint clearances of 50 to 150 µm
(0.002 to 0.006 inch) are recommended. In braze-welding, where a thick bead
is deposited, tolerances may be relaxed to 0.5 mm (0.020 inch). Cleaning of
surfaces can be done in several ways. Whichever method is selected, it is
vitally important to remove all grease, oils, and paint. For custom jobs and part
work, this can often be done with fine sand paper or steel wool. In pure brazing
(not braze welding), it is vitally important to use sufficiently fine abrasive.
Coarse abrasive can lead to deep scoring that interferes with capillary action
and final bond strength. Residual particulates from sanding should be
thoroughly cleaned from pieces. In assembly line work, a "pickling bath" is
often used to dissolve oxides chemically. Diluted sulfuric acid is often used.
Pickling is also often employed on metals like aluminum that are particularly
prone to oxidation.
Using an abrasive to clean oil or grease physically removes some of it
just as any wiping would. However to get the parts clean it is necessary to use
a saponifier that will change the oils and greases to soap. Oven cleaners and
detergents work well.
2.2.2.5 Flux
In most cases, flux is required to prevent oxides from forming while the
metal is heated and also helps to spread out the metal that is used to seal the
joint. The most common fluxes for bronze brazing are borax-based. The flux
can be applied in a number of ways. It can be applied as a paste with a brush
directly to the parts to be brazed. Commercial pastes can be purchased or made
up from powder combined with water (or in some cases, alcohol). Brazing
pastes are also commercially available, combining filler metal powder, flux
powder, and a non-reacting vehicle binder. Alternatively, brazing rods can be
heated and then dipped into dry flux powder to coat them in flux. Brazing rods
can also be purchased with a coating of flux, or a flux core. In either case, the
20
flux flows into the joint when the rod is applied to the heated joint. Using a
special torch head, special flux powders can be blown onto the workpiece
using the torch flame itself. Excess flux should be removed when the joint is
completed. Flux left in the joint can lead to corrosion. During the brazing
process, flux may char and adhere to the work piece. Often this is removed by
quenching the still-hot workpiece in water (to loosen the flux scale), followed
by wire brushing the remainder.
The flux chars and adheres to the workpiece when it is used up and / or
overheated. Warm flux can be extremely tenacious. Once the flux has cooled
to room temperature it is much easier to remove. The goal is to use enough
flux and a proper heating cycle so that the flux is not all used up.
The flux does not interact with the materials being brazed but serves as
a barrier and oxygen interceptor. It often has some cleaning properties
including the ability to remove oxides but should not be counted on for this.
When hot quenching remember that you are in effect, heat treating the
materials. Quenching will change material properties.
Many types of brazing flux contain toxic chemicals, sometimes very
toxic. Silver brazing flux often contains Cadmium, which can cause very fast
onset of metal fume fever (within minutes in extreme cases), especially if
brazing fumes are inhaled due to inadequate ventilation.
21
equivalent in strength to a weld a general rule of thumb is to make the overlap
equal to 3 times the thickness of the pieces of metal being joined.
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2.2.2.8 Advantages Of Brazing
Although there is a popular belief that brazing is an inferior substitute
for welding, it has advantages over welding in many situations. For example,
brazing brass has a strength and hardness near that of mild steel and is much
more corrosion-resistant. In some applications, brazing is highly preferred. For
example, silver brazing is the customary method of joining high-reliability,
controlled-strength corrosion-resistant piping such as a nuclear submarine's
seawater coolant pipes. Silver brazed parts can also be precisely machined
after joining, to hide the presence of the joint to all but the most discerning
observers, whereas it is nearly impossible to machine welds having any
residual slag present and still hide joints.
• The lower temperature of brazing and brass-welding is less likely to
distort the work piece, significantly change the crystalline structure (create a heat
affected zone) or induce thermal stresses. For example, when large iron castings
crack, it is almost always impractical to repair them with welding. In order to
weld cast-iron without recracking it from thermal stress, the work piece must be
hot-soaked to 870°C (1600 °F). When a large (more than 50 kg (100 lb)) casting
cracks in an industrial setting, heat-soaking it for welding is almost always
impractical. Often the casting only needs to be watertight, or take mild
mechanical stress. Brazing is the preferred repair method in these cases.
• The lower temperature associated with brazing vs. welding can increase
joining speed and reduce fuel gas consumption.
• Brazing can be easier for beginners to learn than welding.
• For thin workpieces (e.g., sheet metal or thin-walled pipe) brazing is less
likely to result in burn-through.
• Brazing can also be a cheap and effective technique for mass production.
Components can be assembled with preformed plugs of filler material positioned
at joints and then heated in a furnace or passed through heating stations on an
assembly line. The heated filler then flows into the joints by capillary action.
• Braze-welded joints generally have smooth attractive beads that do not
require additional grinding or finishing. The most common filler materials are
gold in colour, but fillers that more closely match the color of the base materials
can be used if appearance is important.
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2.2.3 PIPE BEADING
A tube beading apparatus for cold forming an annular external bead on
a metal tube, the apparatus having a clamp to secure the tube, a beading die to
form the bead and a powered ram to advance the die against the end of the
tube. The beading die has a tube receiving channel surrounding a central
mandrel which extends past the forward wall of the beading die, with the
mandrel sized to fit into the bore of the tube to prevent deformation of the bore
and with the tube receiving channel sized equal or smaller than the outer
diameter of the tube, so that when the die is forced onto the end of the tube the
tube wall is deformed into the annular bead. The shoulder of the clamp
aperture holding the tube and the shoulder of the tube receiving channel are
rounded to properly form the bead.
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Photo 2.5 Cnc Pipe Bending Machine
Bending is done using Press Brakes. Press Brakes normally have a capacity of
20 to 200 tons to accommodate stock from 1m to 4.5m (3 feet to 15 feet).
Larger and smaller presses are used for specialized applications.
Programmable back gages, and multiple die sets available currently can make
for a very economical process.
25
Air Bending is done with the punch touching the workpiece and the workpiece,
not bottoming in the lower cavity. This is called air bending. As the punch is
released, the work piece ends up with less bend than that on the punch (greater
included angle). This is called spring-back. The amount of spring back
depends on the material, thickness, grain and temper. The spring back usually
ranges from 5 to 10 degrees. Usually the same angle is used in both the punch
and the die to minimize setup time. The inner radius of the bend is the same as
the radius on the punch.
Bottoming or Coining is the bending process where the punch and the
workpiece bottom on the die. This makes for a controlled angle with very little
spring back. The tonnage required on this type of press is more than in air
bending. The inner radius of the work piece should be a minimum of 1
material thickness in the case of bottoming; and up to 0.75 material thickness,
in the case of coining.
26
Received machined casting
Casting inspection
as per drawing
27
Pipe cutting
Deburring
Pipe bending
Inspection
28
Pipe beading
Deburring
Pressure testing
Part identification
Assembly phosphating ,
29
cleaning and oiling
Final inspection
2.4. INSPECTION
30
2.4.1 DIMENSIONAL SPECIFICATIONS
31
Figure 2.5 Height And Length Of Water Tube Bypass
32
2.4.3 Layout inspection
Parameters on Method of
Sr No . Specification
Drg Inspection
33
3. PARETO ANALYSIS
3.1 INTRODUCTION
34
vital few and the trivial many’. A vital few customers may account for a very
large percentage of total sales. A vital few taxes produce the bulk of total
revenue. A vital few improvements can produce the bulk of the results.
The Pareto effect is named after Vilfredo Pareto, an economist and sociologist
who lived from 1848 to 1923. Originally trained as an engineer he was a one
time managing director of a group of coalmines. Later he took the chair of
economics at Lausanne University, ultimately becoming a recluse. Mussolini
made him a senator in 1922 but by his death in 1923 he was already at odds
with the regime. Pareto was an elitist believing that the concept of the vital few
and the trivial many extended to human beings.
Much of his writing is now out of favour and some people would like to re-
name the effect after Mosca, or even Lorenz. However it is too late now – the
Pareto principle has earned its place in the manager’s kit of productivity
improvement tools.
This method stems in the first place from Pareto’s suggestion of a curve of the
distribution of wealth in a book of 1896. Whatever the source, the phrase of
‘the vital few and the trivial many’ deserves a place in every manager’s
thinking. It is itself one of the most vital concepts in modern management. The
results of thinking along Pareto lines are immense.
For example, we may have a large number of customer complaints, a lot of
shop floor accidents, a high percentage of rejects, and a sudden increase in
costs etc. The first stage is to carry out a Pareto analysis. This is nothing more
than a list of causes in descending order of their frequency or occurrence. This
list automatically reveals the vital few at the top of the list, gradually tailing off
into the trivial many at the bottom of the list. Management’s task is now clear
and unavoidable: effort must be expended on those vital few at the head of the
list first. This is because nothing of importance can take place unless it affects
the vital few. Thus management’s attention is unavoidably focussed where it
will do most good. Another example is stock control. You frequently find an
elaborate procedure for stock control with considerable paperwork flow. This
is usually because the systems and procedures are geared to the most costly or
fast-moving items. As a result trivial parts may cost a firm more in paperwork
than they cost to purchase or to produce. An answer is to split the stock into
three types, usually called A, B and C. Grade A items are the top 10 percent or
35
so in money terms while grade C are the bottom 50-75 percent. Grade B are
the items in between. It is often well worthwhile treating these three types of
stock in a different way leading to considerable savings in money tied up in
stock.
Production control can use the same principle by identifying these vital few
processes, which control the manufacture, and then building the planning
around these key processes. In quality control concentrating in particular on
the most troublesome causes follows the principle. In management control, the
principle is used by top management looking continually at certain key figures.
Thus it is clear that the Pareto concept – ‘the vital few and the trivial many’ –
is of utmost importance to management.
The Pareto chart
A Pareto chart is a graphical representation that displays data in order of
priority. It can be a powerful tool for identifying the relative importance of
causes, most of which arise from only a few of the processes, hence the 80:20
rule. Pareto Analysis is used to focus problem solving activities, so that areas
creating most of the issues and difficulties are addressed first.
36
3.2 PROBLEMS OF PARETO ANALYSIS
37
3.3 PARETO ANALYSIS STEP BY STEP
Pareto Analysis is a statistical technique in decision making that is used for the
selection of a limited number of tasks that produce significant overall effect. It
uses the Pareto Principle (also know as the 80/20 rule) the idea that by doing
20% of the work you can generate 80% of the benefit of doing the whole job.
Or in terms of quality improvement, a large majority of problems (80%) are
produced by a few key causes (20%). This is also known as the vital few and
the trivial many.
In the late 1940s quality management guru Joseph M. Juran suggested the
principle and named it after Italian economist Vilfredo Pareto, who observed
that 80% of income in Italy went to 20% of the population. Pareto later carried
out surveys on a number of other countries and found to his surprise that a
similar distribution applied.
The 80/20 rule can be applied to almost anything:
• 80% of customer complaints arise from 20% of your products or
services.
• 80% of delays in schedule arise from 20% of the possible causes of
the delays.
• 20% of your products or services account for 80% of your profit.
• 20% of your sales-force produces 80% of your company revenues.
• 20% of a systems defects cause 80% of its problems.
The Pareto Principle has many applications in quality control. It is the basis for
the Pareto diagram, one of the key tools used in total quality control and Six
Sigma.
In PMBOK Pareto ordering is used to guide corrective action and to help the
project team take action to fix the problems that are causing the greatest
number of defects first.
• Pareto Analysis Seven steps to identifying the important causes
using Pareto Analysis Form a table listing the causes and their frequency
as a percentage.
38
• Arrange the rows in the decreasing order of importance of the
causes, i.e. the most important cause first.
• Add a cumulative percentage column to the table.
• Plot with causes on x-axis and cumulative percentage on y-axis.
• Join the above points to form a curve.
• Plot (on the same graph) a bar graph with causes on x-axis and
percent frequency on y-axis.
• Draw a line at 80% on y-axis parallel to x-axis. Then drop the line
at the point of intersection with the curve on x-axis. This point on the x-
axis separates the important causes on the left and less important causes
on the right.
This is a simple example of a Pareto diagram using sample data showing the
relative frequency of causes for errors on websites. It enables you to see what
20% of cases are causing 80% of the problems and where efforts should be
focussed to achieve the greatest improvement.
The value of the Pareto Principle for a project manager is that it reminds you to
focus on the 20% of things that matter. Of the things you do during your
39
project, only 20% are really important. Those 20% produce 80% of your
results. Identify and focus on those things first, but don't totally ignore the
remaining 80% of causes.
3.4 COMPARATIVE STUDY
3.4.1 Pareto analysis in the month of feb.
40
Graph 3.3 Pareto Analysis In June
3.5 PROCESS STUDY
The basic principles that are associated with the process study are:-
1. dimensional inaccuracy
2. damages while storage
41
3. abnormalities in bending
4. leakages
5. rust and foreign material
6. improper packing,painting
7. improper beading
8. improper casting
42
5. Cleaning and painting 0.16
6. casting 0.16
4. Problem- leakages
Cause-improper brazing
Action plan - generating awareness, Brazing fixture with brazing attachment
43
Action plan - applying rust preventive oil by using spray gun
8 . Problem – casting problem various casting problems and their respective action
and reaction plan -
a) not appropriate spot face
action plan- rework being done
reaction plan- to check cautiously while reciving the casted product
b) undersize chamfering
action plan – rework done in house
reaction plan – providing specific tolerance to the vendor
44
c) flatness error
action plan – grinding to have desired flatness
reaction plan – maintaining the flatness from the early stage
d) excess casting
action plan – in house reworking
reaction plan – checking while receiving the report
e) problem- improper fitment - due to defects in casting chamfering was not upto
the mark which prohibited the tube to fit properly.
action plan -rework on casting , foolproofing the fixture so that if there is any
misalignment in the fitting it won’t set in the fixture
45
S.No. Activities Time in hours
1. Pipe cutting 0.08
2. Pipe bending 0.03
3. Pipe beading 0.03
4. brazing 0.10
5. Cleaning and painting 0.15
6. casting 0.03
4.1 INTRODUCTION
Activity Based Costing (ABC) is a method for developing cost estimates in
which the project is subdivided into discrete, quantifiable activities or a work
unit. The activity must be definable where productivity can be measured in
units (e.g., number of samples versus manhours). After the project is broken
into its activities, a cost estimate is prepared for each activity. These individual
cost estimates will contain all labour, materials, equipment, and subcontracting
costs, including overhead, for each activity.
Each complete individual estimate is added to the others to obtain an overall
estimate. Contingency and escalation can be calculated for each activity or
after all the activities have been summed. ABC is a powerful tool, but it is not
appropriate for all cost estimates. This project outlines the ABC method and
using it
46
Activity-based costing involves the creation of models of the actual costs
incurred by a company at each stage of its core processes. In fact, a cost is
attached to every activity, such that the cost of executing each activity may
built into the cost of producing the products or services offered by the
company. As a result, the cost contribution of each activity to the total cost
incurred by the company to manufacture its goods or render its services is
determined, and a better understanding of the company's cost structures is
achieved. The drawback of implementing ABC is that it requires time and
resources to implement it properly.
An activity is defined as a process, function, task, or step that occurs over time
and generates results that the company uses to produce and sell its products
and services. An activity consumes resources as it transforms its inputs into
outputs, and therefore incurs a 'cost' every time it occurs. Allowing an
organization, or even every employee involved, to understand the cost of doing
each activity gives it a better chance to perform the activity better while
minimizing costs. In fact, the cost attached to an activity may be used as a
metric for organizational or personnel performance.
ABC entails the complex task of identifying discrete activities and identifying
the measure of output for each of these activities. Each activity also needs to
be classified as either 'value-added' or 'non-value-added.' Value-added
activities are activities that add value to the product or service that the
customer is willing to pay for. Thus, all steps required to manufacture a
product or enhance its quality or reliability are value-added activities. On the
other hand, non-value-added activities are activities that do not contribute any
value to the final product, and are other activities that the customer doesn't
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really want to pay for. Staging of products and unnecessary inspection are
examples of non-value-added activities. Non-value added activities, in general,
must be eliminated if possible.
Cost data gathering involves the determination of the costs incurred by the
activities being analyzed. These costs include salaries of the people
performing the activities, material costs, equipment and furniture costs, and
even R&D costs. Actual cost data are preferred but if they're unavailable,
estimates based on cost formulas may be used.
The tracing of costs to activities refers to the process of determining where the
total cost of each output comes from. Every output of an organization was
produced by one or more activities, each of which incurred costs when
undertaken. This step aims to determine where the costs are being incurred in
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producing an output, by determining which activities are needed to produce
that output and what costs are incurred in each of these activities.
The analysis of costs is the step wherein the activity unit costs and bills of
activities are analyzed to identify areas for further improvement in the
companies' business processes. This is where non-value added activities are
properly identified for elimination, resulting in better business performance
and greater efficiency.
4.2.1 Definition
Activity or task that incurs expenditure of time and/or money, but does not
contribute to the customer satisfaction, service, or value. All such activities,
however, are not unnecessary but include essential functions such as
accounting, inspection, storage, transportation, etc. Other non value adding
activities such as recall, rework, and waste of effort, must be minimized or
eliminated.
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For many years, construction firms and industry trade groups have collected
cost data from a multitude of different construction projects. The amount of
work associated with that cost was also collected with the cost data. For
example, collected data included the cost of the paint, labour, equipment, and
overhead to paint a room, the amount of surface area painted, and the
manpower required to paint the room. This practice allows construction
professionals to obtain a cost per area and manpower per area. These costs are
based on an activity, such as painting, and are known as ABC.
A. Activity Based Costing Definition
ABC can be defined by the following equation:
C/A = HD + M + E + S
The total cost for performing the activity will be based on the number of times
the activity is performed during a specific time frame. Cost estimators have
assembled large databases of activity based cost information. The R.S. Means
Company updates its published cost references on a yearly basis, and they are
an excellent source of ABC information for the construction industry.
B. Use of Activity Based Costing Methodology
ABC methodology is used when a project can be divided into defined
activities. These activities are at the lowest function level of a project at which
costs are tracked and performance is evaluated. Depending on the project
organization, the activity may coincide with an element of the work breakdown
structure (WBS) or may combine one or more elements of the WBS. However,
the activities must be defined so there is no overlap between them. After the
activity is defined, the unit of work is established. All costs for the activity are
estimated using the unit of work. The estimates for the units of work can be
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done by performing detailed estimates, using cost estimating relationships,
obtaining outside quotes for equipment, etc. All costs including overhead,
profit, and markups should be included in the activity cost.
C. Identification of Activities
When defining an individual activity, the cost estimator must balance the need
for accuracy with the amount of time available to prepare the estimate. An
estimator may be able to develop an extremely accurate cost estimate by
defining smaller and smaller activities; however, the amount of time required
to prepare ABC estimates for each of these activities may not justify the
increased accuracy. The total estimated project cost may be sufficiently
accurate if 10 activities are used instead of 15. On the other hand, reliable cost
information may not be accessible if the activity categories are too general.
Since the activity is the basis for the estimate, it
is very important that the activity be selected correctly.
4.4 CALCULATION
C/A = HD + M + E + S
A1 =PIPE CUTTING
A2 = PIPE BENDING
A3 = PIPE BEADING
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A4 = BRAZING
A5 = ACID PHOSPHATING
A6= CASTING
= Rs 96
= Rs 21.2
= Rs( 4/60 * 24 + 0 + 2 + 0)
= Rs 3.6
= Rs 19.8
= Rs (10/60 * 24 + 15 + 5 + 0)
= Rs 24
= Rs (10/60 * 24 + 0 + 0 + 150)
= Rs 154
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=318.60
JUNE
= Rs 96
= Rs 20.8
= Rs (2/60 * 24 + 0 + 2 + 0)
= Rs 2.8
= Rs 18.40
= Rs ( 9/60 * 24 + 15 + 5 + 0)
= Rs 23.6
= Rs (2/60 * 24 + 0 + 0 + 150)
= Rs 150.80
= Rs 312.4
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NET SAVINGS
= Rs 6.20
= 16742.17
5. OVERALL BENEFITS
7. Company got the clear idea of their exact profit being made, thus to
recover their nva cost either they are going to add it internally in their costing or
they are targeting nva reduction at large
6. LEARNINGS
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• Understanding of pareto analysis, activity based costing TPM and other
world class manufacturing methods such as KANBAN.
• Supervision skills
CONCLUSION.
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we used gap analysis and later on with the activity based costing we calculated
the total cost incurred by the company in manufacturing tube water bypass.
REFERENCES
[1]. Arkansas Business and Economic Review (Winter 1997), pp. 1-8.
Hubbell,
[2]. Blair, Alistair “EVA Fever,” Management Today (January 1997),
pp. 42-45.
[3]. Cooper, Robin “The Rise of Activity-Based Costing – Part One:
What is an Activity-Based Cost System?”
[4]. Harvard Business Review (September-October 1988), pp. 96-102.
Dodd, James L. and Chen, Shimin “EVA: A New Panacea?” B&E Review (July-
September 1996), pp. 26-28. Dodd, James L. and Chen, Shimin “Economic Value
Added (EVA),”
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[7]. Journal of Cost Management (Winter 1989a), pp. 34-46. Cooper,
Robin “The Rise of Activity-Based Costing – Part Four: What Do Activity-Based
Cost Systems Look Like?”
[8]. Journal of Cost Management (Spring 1989b), pp. 38-49. Cooper,
Robin and Kaplan, Robert S. “Measure Cost Right: Make the Right Decisions,”
[9]. Journal of Cost Management (Spring 1996a), pp. 18-29. Hubbell,
William W. “A Case Study in Economic Value Added and Activities-Based
Management”
[10]. Journal of Cost Management (Summer 1996b), pp. 20-29.
Reimann, Bernard. C. “Managing for The Shareholder: An Overview of Value-
Based Planing”,
[11]. Planing Review (January-February 1988), pp. 10-22. Stewart, G.
Benett, The Quest for Value: A Guide for Senior Managers, Harper Business,
New York (1991).
[12]. William W. “Combining Economic Value Added and Activities-
Based Management,”
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[1]. http://www.emeraldinsight.com/Insight/viewContentItem.do;jsess
ionid=7674ED017AA9530EBF9BD2065DAFB634?
contentType=Article&contentId=1558494
[2]. http://www.bestpracticehelp.com/Problem_Management_and_Par
eto_Analysis.pdf
[3]. http://www.mindtools.com/pages/article/newTED_01.htm
[4]. http://ocw.mit.edu/NR/rdonlyres/Civil-and-Environmental-
Engineering/1-040Spring-2004/55BC6C7D-6489-4717-BA26-
4B06AFDFE047/0/l16diagnsprjctrl.pdf
[5]. http://www.projectsmart.co.uk/pareto-analysis-step-by-step.html
[6]. http://owic.oregonstate.edu/pubs/EM8771.pdf
[7]. http://www.gogetpapers.com/Tutorials/Pareto_Analysis
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