PRODUCTION &

OPERATIONS
MANAGEMENT

MB0044

SET I

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1. Explain in brief the origins of Just in Time. Explain the
different types of wastes that can be eliminated using
JIT.
Just-in-Time (JIT) is a production strategy that strives to improve a business'
return on investment by reducing in-process inventory and associated
carrying costs. Just In Time production method is also called the Toyota
Production System. To meet JIT objectives, the process relies on signals or
Kanban between different points in the process, which tell production when
to make the next part. Kanban are usually 'tickets' but can be simple visual
signals, such as the presence or absence of a part on a shelf. Implemented
correctly, JIT focuses on continuous improvement and can improve a
manufacturing organization's return on investment, quality, and efficiency.
To achieve continuous improvement key areas of focus could be flow,
employee involvement and quality.

Quick notice that stock depletion requires personnel to order new stock is
critical to the inventory reduction at the center of JIT. This saves warehouse
space and costs. However, the complete mechanism for making this work is
often misunderstood.

For instance, its effective application cannot be independent of other key

components of a lean manufacturing system or it can "...end up with the
opposite of the desired result." In recent years manufacturers have
continued to try to hone forecasting methods (such as applying a trailing 13
week average as a better predictor for JIT planning, however some research
demonstrates that basing JIT on the presumption of stability is inherently
flawed.

Philosophy of JIT is simple: inventory is waste. JIT inventory systems expose

hidden causes of inventory keeping, and are therefore not a simple solution
for a company to adopt. The company must follow an array of new methods
to manage the consequences of the change. The ideas in this way of
working come from many different disciplines including statistics, industrial
engineering, production management, and behavioral science. The JIT
inventory philosophy defines how inventory is viewed and how it relates to
management.

Inventory is seen as incurring costs, or waste, instead of adding and storing

value, contrary to traditional accounting. This does not mean to say JIT is
implemented without awareness that removing inventory exposes pre-
existing manufacturing issues. This way of working encourages businesses
to eliminate inventory that does not compensate for manufacturing process
issues, and to constantly improve those processes to require less inventory.
Secondly, allowing any stock habituates management to stock keeping.
Management may be tempted to keep stock to hide production problems.

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These problems include backups at work centers, machine reliability, and
process variability, lack of flexibility of employees and equipment, and
inadequate capacity.

In short, the Just-in-Time inventory system focus is having “the right

material, at the right time, at the right place, and in the exact amount”-Ryan
Grabosky, without the safety net of inventory. The JIT system has broad
implications for implementers.

Transaction cost approach JIT reduces inventory in a firm. However, a

firm may simply be outsourcing their input inventory to suppliers, even if
those suppliers don't use Just-in-Time (Naj 1993). Newman (1994)
investigated this effect and found that suppliers in Japan charged JIT
customers, on average, a 5% price premium.

Environmental concerns During the birth of JIT, multiple daily deliveries

were often made by bicycle. Increased scale has required a move to vans
and trucks. Cusumano (1994) highlighted the potential and actual problems
this causes with regard to gridlock and burning of fossil fuels. This violates
three JIT waste guidelines:

• Time—wasted in traffic jams

• Inventory—specifically pipeline (in transport) inventory
• Scrap—fuel burned while not physically moving

Price volatility JIT implicitly assumes a level of input price stability that
obviates the need to buy parts in advance of price rises. Where input prices
are expected to rise, storing inventory may be desirable.

Quality volatility JIT implicitly assumes that input parts quality remains
constant over time. If not, firms may hoard high quality inputs. As with price
volatility, a solution is to work with selected suppliers to help them improve
their processes to reduce variation and costs. Longer term price agreements
can then be negotiated and agreed-upon quality standards made the
responsibility of the supplier. Fixing up of standards for volatility of quality
according to the quality circle

Demand stability Karmarker (1989) highlights the importance of relatively

stable demand, which helps ensure efficient capital utilization rates.
Karmarker argues that without significantly stable demand, JIT becomes
untenable in high capital cost production.

Supply Stability In the U.S., the 1992 railway strikes caused General
Motors to idle a 75,000-worker plant because they had no supply.

Wastes that can be eliminated using JIT

1. Over production: Over production is to manufacture products before it
is actually needed. If the demand for that product decreases, the extra parts
or products produced may not be useful or needed. Also over production
results in high storage costs and is also difficult to detect defects. So, over
production is considered a waste.

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2. Inventory: Excess procurement or production builds up stock of
materials which are not immediately used, thus locking space and funds
carrying heavy costs. The figure 13.2, illustrates the inventories at different
levels of an organisation – Supplier distribution, Production, and Customer
distribution.

3. Waiting time: Waste of time happen when goods are not moving or
being processed. The operator, the machine or the part will either be not
working or be worked upon. The duration of waiting is can be said to be
unproductive and may create more serious consequences.

4. Movement: Any unnecessary movement is a waste of energy; it causes

blockages, disrupting movements and delaying the flow of other items
creating delays.

5. Effort: The people, who work, do not make a study as to how the
products on which they are making are utilized and do not realize the
purpose for which they are made. This lack of education will lead to waste of
resources. Finally, they end up in shortage of resources when needed.

6. Defective products: The defective products lead to a tremendous loss

to the company. This is because they use up the same equipments,
workmen and the time that would be used to make good products. Thus
defective products use up resources and result in losses.

7. Over Processing: Some steps like unnecessary processing or production

do not add value to the final output. As a result, it is waste of all the inputs
that go into the process.

2. What is Value Engineering or Value Analysis?

Elucidate five companies which have incorporated VE
with brief explanation.
Value engineering (VE) is a systematic method to improve the "value" of
goods or products and services by using an examination of function. Value,
as defined, is the ratio of function to cost. Value can therefore be increased
by either improving the function or reducing the cost. It is a primary tenet of
value engineering that basic functions be preserved and not be reduced as a
consequence of pursuing value improvements.

In the United States, value engineering is specifically spelled out in Public

Law 104-106, which states “Each executive agency shall establish and
maintain cost-effective value engineering procedures and processes."

Value engineering is sometimes taught within the project management or

industrial engineering body of knowledge as a technique in which the value
of a system’s outputs is optimized by crafting a mix of performance
(function) and costs. In most cases this practice identifies and removes
unnecessary expenditures, thereby increasing the value for the
manufacturer and/or their customers.

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VE follows a structured thought process that is based exclusively on
"function", i.e. what something "does" not what it is. For example a screw
driver that is being used to stir a can of paint has a "function" of mixing the
contents of paint can and not the original connotation of securing a screw
into a screw-hole. In value engineering "functions" are always described in a
two word abridgment consisting of an active verb and measurable noun
(what is being done - the verb - and what it is being done to - the noun) and
to do so in the most non-prescriptive way possible. In the screw driver and
can of paint example, the most basic function would be "blend liquid" which
is less prescriptive than "stir paint" which can be seen to limit the action (by
stirring) and to limit the application (only considers paint.) This is the basis
of what value engineering refers to as "function analysis".

Value engineering uses rational logic (a unique "how" - "why" questioning

technique) and the analysis of function to identify relationships that increase
value. It is considered a quantitative method similar to the scientific method,
which focuses on hypothesis-conclusion approaches to test relationships,
and operations research, which uses model building to identify predictive
relationships.

Value engineering is also referred to as "value management" or "value

methodology" (VM), and "value analysis" (VA). VE is above all a structured
problem solving process based on function analysis—understanding
something with such clarity that it can be described in two words, the active
verb and measurable noun abridgement. For example, the function of a
pencil is to "make marks". This then facilitates considering what else can
make marks. From a spray can, lipstick, a diamond on glass to a stick in the
sand, one can then clearly decide upon which alternative solution is most
appropriate.

I. IBM
International Business Machines (IBM) is an American multinational
technology and consulting firm headquartered in Armonk, New York. IBM
manufactures and sells computer hardware and software, and it offers
infrastructure, hosting and consulting services in areas ranging from
mainframe computers to nanotechnology.

The company was founded in 1911 as the Computing Tabulating Recording

Corporation through a merger of four companies: the Tabulating Machine
Company, the International Time Recording Company, the Computing Scale
Corporation, and the Bundy Manufacturing Company. CTR adopted the
name International Business Machines in 1924, using a name previously
designated to CTR's subsidiary in Canada and later South America. Its
distinctive culture and product branding has given it the nickname Big Blue.

In 2011, Fortune ranked IBM the 18th largest firm in the U.S.,[5] as well as
the 7th most profitable.[6] Globally, the company was ranked the 33rd
largest firm by Forbes for 2010.[7] Other rankings for 2010 include #1
company for leaders (Fortune), #2 best global brand (Interbrand), #3 green
company (Newsweek), #15 most admired company (Fortune), and #18
most innovative company (Fast Company).IBM employs more than 425,000

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employees (sometimes referred to as "IBMers") in over 200 countries, with
occupations including scientists, engineers, consultants, and sales
professionals

IBM holds more patents than any other U.S.-based technology company and
has nine research laboratories worldwide. Its employees have garnered five
Nobel Prizes, four Turing Awards, nine National Medals of Technology, and
five National Medals of Science. The company has undergone several
organizational changes since its inception, acquiring companies like SPSS
(2009) and PwC consulting (2002) and spinning off companies like Lexmark
(1991).

The Business Value Analysis

IBM provides Maximo, one of the world’s most highly-rated asset
management solutions. It is used by many well known and highly respected
enterprises around the world.
A Business Value Analysis (BVA) is a quick way to understand where you
stand today and if you need to do anything to move towards performing
smarter asset management in your enterprise.
A BVA is a fast and easy analysis of your asset management business
practices. It is based on a third party Alinean financial modeling tool that
was developed by a leading independent analyst. It is configured to
compare leading practices built into IBM Maximo.

II. PHILIPS

Koninklijke Philips Electronics N.V. (Royal Philips Electronics), most

commonly known as Philips, (Euronext: PHIA, NYSE: PHG) is a multinational
Dutch electronics company.
Philips is one of the largest electronics companies in the world. In 2010, its
sales were €25.42 billion. The company employs 119,000 people in more
than 60 countries.
Philips is organized in a number of sectors: Philips Consumer Lifestyle
(formerly Philips Consumer Electronics and Philips Domestic Appliances and
Personal Care), Philips Lighting and Philips Healthcare (formerly Philips
Medical Systems).
The Philips Company was founded in 1891 by Gerard Philips and his father
Frederik as a family business. Frederik Philips, being a banker in
Zaltbommel, financed the purchase and setup of an empty modest factory
building in Eindhoven where Philips started the production of carbon-
filament lamps and other electro-technical products in 1892. This first
factory survives as a Museum devoted to light sculpture.[2]

In 1895, after the first difficult years and going nearly bankrupt, Gerards 16
years younger brother Anton entered on request of father Frederik the
family business as a sales representative. Since then, due to Antons brilliant
business talent, the family business began to expand rapidly resulting in
1907 in the foundation of the N.V. Philips’ Metaalgloeilampfabriek (the
Philips Lightwire-bulb Factory Inc) in Eindhoven, followed in 1912 by the
foundation of the N.V. Philips' Gloeilampenfabrieken. (the Philips Light-bulbs
Factories Inc) After Gerard and Anton Philips, who were first cousins once
removed of Karl Marx, changed their family business by founding the Philips
Incorporation, they laid the base of the later electronics multinational.

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In recent years, Philips has transformed its activities from Purchasing to
Supply Management. Today, they look beyond traditional ‘purchasing’
boundaries to the entire value chain. And act as One Philips, using
standardized programs and tools that are aligned company-wide.

The ever more rapid pace of innovation means also work closely with
suppliers. We involve them early in product development to help us
innovate quickly and to meet our customers’ expectations. Where possible
they design in standard solutions to better capture value and reduce the
lifetime costs of the products. To do this effectively, they constantly review
the supply base and build strong relationships with strategic suppliers.

Creating value together

To address these challenges, Philips Supply Management organizes its
processes in multi-disciplinary, commodity teams. We work with a limited
and clearly classified set of suppliers in both business-to-business and
business-to-consumer markets. Our formalized relationship management
enables us to embed sustainable joint value creation through strong
relationships with strategic suppliers.

Leveraged supply management

We leverage Philips’ supply management through consolidated commodity
buying at corporate level and aim for operational excellence through best-
in- class processes. We focus on world-class management through a detailed
organization of the entire supply chain, selecting the best suppliers in terms
of total cost of ownership, including quality, reliability and timely delivery.
This allows us to create a solid supply base and intensify our relationships.

Supply Markets
Philips work with a limited, carefully-selected supply base of Non-Product
Related (NPR) and Bill Of Materials (BOM) suppliers. And outsourcing is a key
part of our Supply Management strategy.Outsourcing reduces Philips’
operating and capital costs while increasing flexibility, and decreasing time
to market and to volume. It allows us to leverage our core competencies,
and provides access to our suppliers’ technologies and skills.
Most of the top 20 suppliers are Electronic Manufacturing Services (EMS),
Original Design Manufacturers (ODMs) or Original Equipment Manufacturers
(OEMs). We focus on suppliers that can work closely with us through early
involvement in the innovation process. Our goal is to build long-term
relationships with key strategic suppliers who share in the risks and rewards
of innovation.

III. FRITO – LAY

Frito-Lay is the snack food division of Pepsico and the largest supplier of
potato and corn chips in the world, currently holding 60% of the market
share domestically, 40% globally, and selling its products in 120 countries.
Frito-Lay sells eight of the top 10 selling snack chips nation-wide, and as a
global player, Frito-Lay is succeeding against a multitude of competitors in a
fierce, yet slow-growth industry, selling approximately 4.5 billion packages
of snacks per year. In order to achieve this, the company has learned how to
masterfully create, innovate and manage all aspects of its supply chain
using high-tech IT systems that allow it greater control over its production
processes and distribution network.

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 Frito-Lay’s supplier network for potato chip production has fewer than 100
individual suppliers. Several years ago, Frito-Lay approached its potato
suppliers to seek those farmers willing to concentrate on cultivating a
limited number of potato varieties, with a focus on producing the most
appealing taste and quality potato chip for the consumer. Frito-Lay then
offered these farmers long-term contracts, which made it easier for the
farmers to get financing and for Frito-Lay to achieve more efficient,
profitable economies of scale in other areas of the value chain. It is
noteworthy to mention that steps like these that insure a stable supply of
raw material are important to a company who purchases 2.3 billion pounds
of potatoes and 775 million pounds of corn annually.

Furthermore, Frito-Lay tracks the logistical movement of products

throughout the supply chain, from acquiring the raw materials to final
delivery, by utilizing its 848 tractors, 2,251 trailers, and a fleet of thousands
of local computer-equipped delivery trucks. As this example shows, Frito-Lay
has gone to extensive lengths to incorporate information technologies
throughout its organization’s value chain, further empowering its regional
managers with access to vast amounts of information on their databases
that can be used to effectively guide them in their distribution decisions.

In the next step, Frito-Lay takes the raw materials of potatoes, corn, and
packaging materials to one of there 41 manufacturing plants in 26 states,
including the world’s largest snack food plant in Frankfort, IN. Together,
these plants produce 30,000 packages of snacks per minute. Because Frito-
Lays operates at such economies of scale, their high volume allows for the
company to invest in the most efficient, low-cost equipment available to the
market, insuring that maximum value is added to the product without
relinquishing time or quality.

After this, Frito-Lay traditionally relied upon its in-house fleet of trucks to
transport products from its plants to its 1,900 warehouses or 200
distribution centers. However, as the company expanded, operations
managers realized that it was not economical to produce every product at
every plant, and thus began specializing at particular locations. On the other
hand, logistics became increasingly difficult and distances grew longer, and
thus, Frito-Lay learned to exploit the benefits of truck carrier services,
employing Menlo Logistics to handle route planning. Menlo was able to
reduce the carrier base by 50% and negotiate nation-wide discounts with
other carriers.

The last stop involved is the 400,000 stores across the nation that carry
Frito-Lay’s snack food products. The company utilizes their own
technological systems to show stores how reallocating shelf space, for
example, can produce larger profits. Retailers are also provided with Frito-
Lay’s “Profit-Vision Program”, which allows retailers to analyze their sales
and compare it to national performance statistics. At the same time, Frito-
Lay benefits from the program because it convinces retailers to allocate
more shelf-space to their products.

The supply chain execution process is the cornerstone of Frito-Lay’s

success. In managing its supply chain, Frito-Lay is able to correctly assess

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demands across all of its products due to the availability of point-of-sale
data and an impeccable IT system, giving planners the ability to discern
consumer trends and appropriately prepare production plans. Consequently,
Frito-Lay’s managers can be proficient in determining levels of inbound
supplies, raw materials, the allocation of the company’s production capacity,
and logistical details for truck routing. The company’s ability to target local
demand patterns with effective promotion and delivery systems results in
continuously optimizing profit margins and reducing inventory and
unneeded costs.

In general, observations and analysis demonstrate that Frito-Lay

strongly believes that the value in their services for grocery stores and third-
party distribution centers stems from the company’s ability to utilize
innovative information technologies to efficiently and effectively deliver
their products to the appropriate markets with maximized demand and
minimized costs. According to Mr. Thurgood, Director of Strategic Sourcing
at Frito-Lay:
“whether purchasing freight, negotiating contracts or working through a
difficult marketing proposition, logisticians are at the core of the connected
economy and are increasingly looked to as the innovators that drive ‘great’
business results…They lead integrated teams that provide new sources of
logistics value add (LVA) via their re-conceptualization of the business
system.”

Mr. Thurgood’s perspective gives us insight into Frito-Lay’s competitive

advantage over its adversaries. First, the company tries to captivate its
customers by developing extensive databases that record who their
customers are and exactly what they want. Then, they focus on being the
most reliable, quality-driven suppliers who provide services through the
retail channel by means of collecting as much information along the way
and utilizing it to address their weaknesses and capitalize on their strengths.
Frito-Lay, despite only delivering potato and corn chips, relies on its ability
to add unparalleled value in its distribution channel. Its customers know that
when they do business with Frito-Lays, they aren’t simply buying a product
to shelve in their stores, but incorporating an advanced information system
with hopes of increasing sales and profits.

IV. COMERICA

Comerica Incorporated is a financial services company headquartered in

Dallas, Texas, USA. It has retail banking operations in Arizona, California,
Florida, Michigan and Texas; and select business operations in several other
U.S. states, as well as in Canada and Mexico.

Comerica is among the twenty largest banking companies in the U.S., and
has $55.9 billion in total assets and $39.8 billion in total deposits as of 30
June 2010; it is the largest bank holding company headquartered in Texas.
Comerica's operating units include corporate banking, small business
banking and personal financial services.

Comerica employs 9,100 people. Its major operations are located in Dallas,
Detroit, Michigan and Auburn Hills, Michigan. Currently, Ralph W. Babb, Jr. is
the Chairman of the Board of Directors and CEO; Elizabeth Acton is the CFO.

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Comerica was founded in Detroit by Elon Farnsworth in 1849 as the Detroit
Savings Fund Institute. The company's name changed to The Detroit Savings
Bank in 1871 and to simply The Detroit Bank in 1936, being one of the few
area banks to survive the Great Depression. In 1956, it merged with
Birmingham National Bank, Ferndale National Bank and Detroit Wabeek
Bank and Trust Company to form The Detroit Bank & Trust Company. The
current name was adopted in 1982.

In 1982, Comerica entered the Florida market. In 1983, it acquired its

hometown rival Bank of the Commonwealth. It entered the Texas market in
1988 when it acquired Grand Bancshares. California was added to its
footprint in 1991 when Plaza Commerce Bancorp and In Bancshares were
acquired.

In 1992, Comerica merged with Manufacturers National Corporation. Both

banks were approximately the same size in assets ($14.3 billion and $12.5
billion, respectively) and employees (7,000 and 6,000). The headquarters of
the merged bank was relocated to the newly constructed Comerica Tower at
Detroit Center in downtown Detroit in 1993.

In 1996, Comerica sold off its Illinois operation, which was acquired through
its merger with Manufacturers, to ABN-AMRO Holdings. In 2000, Comerica
sold its credit card division to MBNA. In 2001, it acquired Imperial Bank of
California.

In 1998 Comerica purchased the naming rights to the baseball stadium in

downtown Detroit, home to the Detroit Tigers of Major League Baseball. The
bank will pay $66 million over a period of thirty years for the naming rights
to Comerica Park.

On March 6, 2007, Comerica announced its decision to relocate its corporate

headquarters to Dallas, ending its reign of 158 years in Detroit. The decision
was attributed to its long-term strategy of growth in the South and
Southwest regions of the United States.[3] The move was completed in
August 2007 when Comerica moved into 1717 Main Street in downtown
Dallas.[4] The building has since been renamed Comerica Bank Tower.[5]

In January 2008, Comerica was selected by the Department of the Treasury

as the financial agent for its Direct Express debit card program.

In December 2009, Comerica announced that by 2012, it will consolidate its

Detroit operations into the 411 Building, which will be renamed the
Comerica Bank Center.[6] The 411 Building is the former headquarters of
Manufacturers Bank and is wholly owned by Comerica.

On January 18, 2011, Comerica announced the acquisition of Sterling Bank

of Texas for $1.03 billion.

V. FORD MOTOR COMPANY

Ford Motor Company is an American multinational automaker based in

Dearborn, Michigan, a suburb of Detroit. The automaker was founded by
Henry Ford and incorporated on June 16, 1903. In addition to the Ford and

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Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston
Martin in the UK. Ford's former UK subsidiaries Jaguar and Land Rover were
sold to Tata Motors of India in March 2008. In 2010 Ford sold Volvo to Geely
Automobile. Ford discontinued the Mercury brand at the end of 2010.

Ford introduced methods for large-scale manufacturing of cars and large-

scale management of an industrial workforce using elaborately engineered
manufacturing sequences typified by moving assembly lines. Henry Ford's
methods came to be known around the world as Fordism by 1914.

Ford is the second largest automaker in the U.S. and the fifth-largest in the
world based on annual vehicle sales in 2010.[3] At the end of 2010, Ford
was the fifth largest automaker in Europe.[4] Ford is the eighth-ranked
overall American-based company in the 2010 Fortune 500 list, based on
global revenues in 2009 of $118.3 billion.[5] In 2008, Ford produced 5.532
million automobiles[6] and employed about 213,000 employees at around
90 plants and facilities worldwide. During the automotive crisis, Ford's
worldwide unit volume dropped to 4.817 million in 2009. In 2010, Ford
earned a net profit of $6.6 billion and reduced its debt from $33.6 billion to
$14.5 billion lowering interest payments by $1 billion following its 2009 net
profit of $2.7 billion. Starting in 2007, Ford received more initial quality
survey awards from J. D. Power and Associates than any other automaker.
Five of Ford's vehicles ranked at the top of their categories and fourteen
vehicles ranked in the top three.

The value chain of the Ford Motor Company is not all that different from
other manufacturers in the automobile industry. Many years of increased
arbitrary demands on suppliers has led to poor supplier relations and so the
100 year-old company is taking a new approach to reinvent its’ value chain.
Procurement makes up more than a quarter of the value chain and so Ford
has focused its efforts there. In the past, Ford lowered its’ supply chain
costs by demanding lower prices from its suppliers, in effect obtaining
savings at the supplier’s expense. It is now taking a different approach.
Ford is working closely with its suppliers to eliminate waste and thereby
lower costs for both organizations. This should be a “win-win” situation for
both companies and should help lift Ford from its near-last ranking in
supplier relations.
Another high value impact of the Ford value chain is the design phase. Ford
has begun to understands the value of consumer input in successful modern
design technologies. They have initiated tailoring design models after public
demand. This method has proven highly successful in recent financial
periods.
Marketing is also a very important aspect of the Ford automotive value
chain and is considered a high value-added part in the value chain. Ford
has been working together with dealers to create marketing strategies that
help boost sales. This is proven to be the primary basis for the consumers'
perceived values.

3. Explain different types of Quantitative models.

Differentiate between work study and motion study.

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Quantitative Models consider the ways of solving problems using
quantitative approach and the various models we use. The business
implications are wide as the solutions are used for decision making in all
aspect of business – procurement of material, allocating funds, scheduling
production, carrying of inventory etc. The aim is to optimize so that costs
are reduced and profits are increased.

Quantitative approach Solving a problem using models consists of the

following steps:

Definition of the problem

In the beginning, we have to determine the purpose of studying the
problem, the various factors that have to be considered like resources,
constraints, the uncertainties involving them, the costs involved, time
available, the issues that have utmost importance, etc. We will determine
which problem needs our attention most and the factors that affect it and
the interrelationships.

Constructing a mathematical model

We reformulate the physical problem into a form which can be analysed. We
convert it into a model. The models play a vital role in engineering, science
and business. We make models of dams, a steel structure, chemical
reactions, organisation structure, graphs showing variation of share prices,
etc. Many of these are being capable of being expressed in terms of
mathematical equations which can be solved and the values of some the
variables are known or presumed. By solving these equations, we will solve
the problem.

Testing the model and its solution

In business we do not have complete or reliable data most of the times. We
would have formulated the equations with presumptions. So we verify
whether the solution we have obtained is acceptable by testing the solutions
by using some known outcomes for known variables. This tests the model as
well the presumptions, we might have made. We may have to change the
model or the presumptions.

Quantitative Models

• Linear Programming : This technique is often used for optimizing a

given objective like profit
or revenue maximization or cost or outgo minimization. When
there are limited resources
and the have to meet competing demands, distribution of the
resources is the critical issue.
• Transportation Model : This is concerned goods with from
manufacturing centres or warehouses which have to be supplied to
depots or retail outlets. The demand and supply position of the
places where they are required or produced and the cost of
transportation is considered in the model. To economise we use this
model.
• Assignment Model : Allocating jobs or persons to machines,
awarding different projects to contractors, so that maximum returns
occur or less expenses are incurred calls for the use of this model.

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 • Inventory Control Model : Inventory models consider the frequency of
placing orders, the quantities per order considering the cost of
placing an order, the number of pieces that are to be kept in reserve,
the rate of consumption, the lead time required for the supplier,
costs involved in storage .Depending upon the probabilities of
patterns of consumption and supply, we have different models which
give solutions to optimize.
• Waiting Line Models Queues are formed when the rate of service is at
variance with the rate of arrival. They are formed when rate of
production is less at particular points compared to the previous ones.
Some times we see multiple service points and a single queue is
formed for feeding them. Number of items – including people – to be
serviced, the rate of service and the type of queue discipline that is
intended to be followed, policy of priority, tolerable amounts of
waiting etc. are studied with some special techniques.
• Simulation Models : These models are used when we will not be able
to formulate mathematical models. So, we develop a model which
resembles a real life situation. And based on the pattern, we predict
and plan our procurement, production, delivery etc.

• PERT and CPM Models : When projects are undertaken with a number
of activities some happening in sequence, with gaps of weeks or
months and some happening simultaneously and resources are of
great variety needing a lot of coordination, it is important to estimate
the time required for completion. It is also equally important to
identify the bottlenecks and smoothen resources so that time
schedules are maintained. Delayed completion may entail penalties.
In this model we adopt special methods to make the system efficient.

WORK STUDY

When analysis of work methods is conducted during the period when a job is
done on a machine or equipment, we say that work study is being conducted.
The study helps in designing the optimum work method and standardization of
the work method. This study enables the methods engineer to search for better
methods, higher utilization of man and machine and accomplishment of higher
productivity. The study gives an opportunity to the workmen to learn the
process of study and will be able to offer suggestions for improved methods.
This encourages workmen participation and they can be permitted to make
changes and report the advantages that can be derived from those. This course
is in alignment with the principle of continuous improvement and helps the
organisation in the long run. Reward systems may be implemented for
recognizing contributions from the workmen. Work study comprises of Work
Measurement and Method study. Work measurement focuses on the time
element of work, while Method study focuses on the methods deployed and
development of better methods.

MOTION STUDY

A time and motion study (or time-motion study) is a business efficiency

technique combining the Time Study work of Frederick Winslow Taylor with the
Motion Study work of Frank and Lillian Gilbreth (not to be confused with their
son, best known through the biographical 1950 film and book Cheaper by the

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Dozen). It is a major part of scientific management (Taylorism). After its first
introduction, time study developed in the direction of establishing standard
times, while motion study evolved into a technique for improving work methods.
The two techniques became integrated and refined into a widely accepted
method applicable to the improvement and upgrading of work systems. This
integrated approach to work system improvement is known as methods
engineering and it is applied today to industrial as well as service organizations,
including banks, schools and hospitals.

Time and motion study have to be used together in order to achieve rational
and reasonable results. It is particularly important that effort be applied in
motion study to ensure equitable results when time study is used. In fact, much
of the difficulty with time study is a result of applying it without a thorough
study of the motion pattern of the job. Motion study can be considered the
foundation for time study. The time study measures the time required to
perform a given task in accordance with a specified method and is valid only so
long as the method is continued. Once a new work method is developed, the
time study must be changed to agree with the new method.

Time study is a direct and continuous observation of a task, using a

timekeeping device (e.g., decimal minute stopwatch, computer-assisted
electronic stopwatch, and videotape camera) to record the time taken to
accomplish a task and it is often used when:

• There are repetitive work cycles of short to long duration,

• Wide variety of dissimilar work is performed, or
• Process control elements constitute a part of the cycle.

The Industrial Engineering Terminology Standard defines time study as "a work
measurement technique consisting of careful time measurement of the task
with a time measuring instrument, adjusted for any observed variance from
normal effort or pace and to allow adequate time for such items as foreign
elements, unavoidable or machine delays, rest to overcome fatigue, and
personal needs."

The main objective of a time and motion study is to determine reliable time
standards for the efficient and effective management of operations. Through
the establishment of reliable and accurate time standards, companies can
better define their capacity or output, thus increasing the efficiency of
equipment and obtaining optimum utilization of the workforce.

Time standards can be used to investigate the difference between actual and
standard performance and take appropriate action where necessary. It can also
be used to facilitate job design as a basis for comparing different work methods,
introducing sound production controls, designing an efficient workplace layout,
and balancing between work schedules and available manpower. Other benefits
include budgetary control, development of incentive plans, and ensuring that
quality specifications are met.

4. What is Rapid Prototyping? Explain the difference

between automated flow line and automated
assembly line with examples.

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Rapid prototyping is the automatic construction of physical objects using
additive manufacturing technology. The first techniques for rapid
prototyping became available in the late 1980s and were used to produce
models and prototype parts. Today, they are used for a much wider range of
applications and are even used to manufacture production-quality parts in
relatively small numbers. Some sculptors use the technology to produce
complex shapes for fine arts exhibitions.

The use of additive manufacturing for rapid prototyping takes virtual designs
from computer aided design (CAD) or animation modeling software,
transforms them into thin, virtual, horizontal cross-sections and then creates
successive layers until the model is complete. It is a WYSIWYG process
where the virtual model and the physical model are almost identical.

With additive manufacturing, the machine reads in data from a CAD drawing
and lays down successive layers of liquid, powder, or sheet material, and in
this way builds up the model from a series of cross sections. These layers,
which correspond to the virtual cross section from the CAD model, are joined
together or fused automatically to create the final shape. The primary
advantage to additive fabrication is its ability to create almost any shape or
geometric feature.

The standard data interface between CAD software and the machines is the
STL file format. An STL file approximates the shape of a part or assembly
using triangular facets. Smaller facets produce a higher quality surface.

The word "rapid" is relative: construction of a model with contemporary

methods can take from several hours to several days, depending on the
method used and the size and complexity of the model. Additive systems for
rapid prototyping can typically produce models in a few hours, although it
can vary widely depending on the type of machine being used and the size
and number of models being produced simultaneously.

Some solid freeform fabrication techniques use two materials in the course
of constructing parts. The first material is the part material and the second
is the support material (to support overhanging features during
construction). The support material is later removed by heat or dissolved
away with a solvent or water.

Traditional injection molding can be less expensive for manufacturing

polymer products in high quantities, but additive fabrication can be faster
and less expensive when producing relatively small quantities of parts. 3D
printers give designers and concept development teams the ability to
produce parts and concept models using a desktop size printer.

Rapid prototyping is now entering the field of rapid manufacturing and it is

believed by many experts that this is a "next level" technology.

A large number of competing technologies are available in the marketplace.

As all are additive technologies, their main differences are found in the way
layers are built to create parts. Some are melting or softening material to
produce the layers (SLS, FDM) where others are laying liquid materials

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thermosets that are cured with different technologies. In the case of
lamination systems, thin layers are cut to shape and joined together.
As of 2005, conventional rapid prototype machines cost around £25,000.
In 2006, John Balistreri and others at Bowling Green State University began
research into 3D Rapid Prototyping machines, creating printed ceramic art
objects. This research has led to the invention of ceramic powders and
binder systems that enable clay material to be printed from a computer
model and kiln fired for the first time.

AUTOMATED FLOW LINE

When several automated machines are linked by a transfer system which

moves the parts by using handling machines which are also automated, we
have an automated flow line. After completing an operation on a machine,
the semi finished parts are moved to the next machine in the sequence
determined by the process requirements a flow line is established. The parts
at various stages from raw material to ready for fitment or assembly are
processed continuously to attain the required shapes or acquire special
properties to enable them to perform desired functions. The materials need
to be moved, held, rotated, lifted, positioned etc. for completing different
operations.
Sometimes, a few of the operations can be done on a single machine with a
number of attachments. They are moved further to other machines for
performing further operations. Human intervention may be needed to verify
that the operations are taking place according to standards. When these can
be achieved with the help of automation and the processes are conducted
with self regulation, we will have automated flow lines established. One
important consideration is to balance times that different machines take to
complete the operations assigned to them. It is necessary to design the
machines in such a way that the operation times are the same throughout
the sequence in the flow of the martial. In fixed automation or hard
automation, where one component is manufactured using several
operations and machines it is possible to achieve this condition – or very
nearly. We assume that product life cycles are sufficiently stable to invest
heavily on the automated flow lines to achieve reduced cost per unit. The
global trends are favouring flexibility in the manufacturing systems. The
costs involved in changing the set up of automated flow lines are high. So,
automated flow lines are considered only when the product is required to be
made in high volumes over a relatively long period. Designers now
incorporate flexibility in the machines which will take care of small changes
in dimensions by making adjustments or minor changes in the existing
machine or layout. The change in movements needed can be achieved by
programming the machines. Provision for extra pallets or tool holders or
conveyors are made in the original design to accommodate anticipated
changes. The logic to be followed is to find out whether the reduction in cost
per piece justifies the costs of designing, manufacturing and setting up
automated flow lines. Group Technology, Cellular Manufacturing along with
conventional Product and Process Layouts are still resorted to as they allow
flexibility for the production system. With methodologies of JIT and Lean
Manufacturing finding importance and relevance in the competitive field of
manufacturing, many companies have found that well designed flow lines
suit their purpose well. Flow lines compel engineers to put in place
equipments that balance their production rates. It is not possible to think of

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inventories (Work In Process) in a flow line. Bottlenecks cannot be
permitted. By necessity, every bottleneck gets focused upon and solutions
found to ease them. Production managers see every bottleneck as an
opportunity to hasten the flow and reduce inventories. However, it is
important to note that setting up automated flow lines will not be suitable
for many industries

AUTOMATED ASSEMBLY LINE

All equipments needed to make a finished product are laid out in such a way
as to follow the sequence in which the parts or subassemblies are put
together and fitted. Usually, a frame, body, base will be the starting point of
an assembly. The frame itself consists of a construction made up of several
components and would have been ‘assembled’ or ‘fabricated’ in a separate
bay or plant and brought to the assembly line. All parts or subassemblies
are fitted to enable the product to be in readiness to perform the function it
was designed to. This process is called assembly.
Methodologies of achieving the final result may vary, but the basic principle
is to fit all parts together and ensure linkages so that their functions are
integrated and give out the desired output. Product Layouts are designed so
that the assembly tasks are performed in the sequence they are designed.
You will note that the same task gets repeated at each station continuously.
The finished item comes out at the end of the line

The material goes from station 1 to 5 sequentially. Operation 2 takes longer

time, say twice as long. To see that the flow is kept at the same pace we
provide two locations 2a and 2b so that operations 3, 4 an 5 need not wait.
At 5, we may provide more personnel to complete operations. The time
taken at any of the locations should be the same. Otherwise the flow is
interrupted. In automated assembly lines the moving pallets move the
materials from station to station and moving arms pick up parts, place them
at specified places and fasten them by pressing, riveting, screwing or even
welding. Sensors will keep track of these activities and move the assemblies
to the next stage. An operator will oversee that the assemblies are
happening and there are no stoppages. The main consideration for using
automated assembly lines is that the volumes justify the huge expenses
involved in setting up the system.

5. Explain Break Even Analysis and Centre of Gravity

methods. Explain Product layout and process layout
with examples.

BREAK EVEN ANALYSIS:

An analysis to determine the point at which revenue received equals the
costs associated with receiving the revenue. Break-even analysis calculates
what is known as a margin of safety, the amount that revenues exceed the
break-even point. This is the amount that revenues can fall while still
staying above the break-even point.

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Break-even analysis is a supply-side analysis; that is, it only analyzes the
costs of the sales. It does not analyze how demand may be affected at
different price levels.

For example, if it costs $50 to produce a widget, and there are fixed costs of
$1,000, the break-even point for selling the widgets would be:

If selling for $100: 20 Widgets (Calculated as 1000/(100-50)=20)

If selling for $200: 7 Widgets (Calculated as 1000/(200-50)=6.7)

In this example, if someone sells the product for a higher price, the break-
even point will come faster. What the analysis does not show is that it may
be easier to sell 20 widgets at $100 each than 7 widgets at $200 each. A
demand-side analysis would give the seller that information.

CENTRE OF GRAVITY METHOD:

The center of gravity method is used to determine the location of a single

distribution center that will minimize distribution costs. It treats distribution
cost as a linear function of the distance and the quantity shipped, which is
assumed to be fixed, although an acceptable variation is that quantities are
allowed to change as long as their relative amounts remain the same.

It is helpful in a limited number of situations – primarily service entities –

where geography and transportation costs are important; as opposed to the
critical factor method, which is more qualitative and general.

The method includes the use of a map that shows the locations of
destinations. The map must be accurate and drawn to scale. A coordinate
system is then overlaid on the map to determine relative locations. Once
done, coordinates for each destination can then be placed.

If the quantities to be shipped to every location are equal, the solution is

straightforward, as you can simply average the x and y coordinates. When
they are not (as is usually the case), a weighted average must be applied,
with the weights being the quantities to be shipped. The center of mass of a
system of particles is defined as the average of their positions weighted by
their masses:

PRODUCT LAYOUT:
In a product layout, the workstations and equipment are located along the
line of flow of the work units. Usually, work units are moved along a flow line
which is powered by a conveyor. Work is done in small amounts at each of
the workstations on the work unit. This means that to use the product layout
the total work must be dividable into small tasks that can be assigned to the
workstations. Product Layout is one of the three basic types of plant layouts;
the other two are process layout, and the fixed-position layout.

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 When the workstations are relatively few in number, they can be arranged in
one straight line. In more complicated plants such as the automobile final
assembly plant, they can be arranged into a series of connected line
segments.

Because the workstations do small amounts of work, the stations are

specialized in their tasks with specialized equipment and tooling, which
leads to high proficiency and reduced cycle time. And this also leads to a
higher production rate.

PROCESS LAYOUT:
Process Layout is represented in a grid. Typically, a process includes several
areas. Each area may contain information to be updated to one or more
tables.

The detail area can contain one or more lines for each composite group. For
example, in processing customer names and addresses, you may want rows
processed one per line. For a medical record, you may need more than one
line for each composite group.

Note that some processes, for example, processes that only summarise
information from your tables, will have no detail area at all.

Many processes contain totaling information that appears in group footer.

For example, in a sales process, where rows have been grouped by state,
the group footer occurs after all rows for a state have been processed. Each
group footer contains total for that state.

Snap Proc provides nine levels for grouping rows (breaks), with group
headers and/or group footers for each level. For example, by using two
levels of footers, the sales process could contain total information by city,
within state. In a more complex sales process, you might use several levels
of group footers to contain totals for each product, product line, territory,
region and division.

A process can contain an area called the summary that is processed once
for the entire process. The summary area that appears at the end of a
process is the area where grand totals typically appear.

Finally, you can include a title area in your process which occurs once at the
beginning of the process.

6. Explain Juran’s Quality Trilogy and Crosby’s absolutes

of quality. List out the pillars of Total Productive
Maintenance.

JURAN’S QUALITY TRIOLOGY

According to Juran, the definition of quality has two aspects from the
customer’s perspective:
• A greater number of features that meet customer needs

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 • Fewer defects

To attain quality you must begin by establishing the vision, policies and
goals of the organization. Converting these goals into results is done
through three managerial processes called the JURAN TRILOGY.

1. Quality Planning: The structured process for designing products and

services that meet new breakthrough goals and ensure that customer
needs are met.

2. Quality Control: a universal managerial process for conducting

operations so as to provide stability--to prevent adverse change and to
“maintain the status quo” Quality control can also be described as “a
process for meeting the established goals by evaluating and
comparing actual performance and planned performance, and taking
action on the difference”

3. Quality Improvement : The process for creating breakthrough levels

of performance by eliminating wastes and defects to reduce the cost of
poor quality.

CROSBY’S ABSOLUTE QUALITY

Phillip Crosby, established four absolutes for quality performance.

1. Quality is defined as conformance to customers’ requirements.

2. The system for improving quality is prevention.

3. The performance standard is zero defects—a commitment to conform to

requirements each and every time.

4 . The measurement of quality is the price of non conformance.

Most, if not all, of us recognize that none of us is perfect, but the concept of
quality is continuous improvement to make what we do a little bit better every
time we do it. A company that has embraced quality and Crosby's four
absolutes of quality is Sunny Fresh Foods. You may say, "I've never heard of
them. Who is Sunny Fresh Foods?" If you have ever had an Egg McMuffin from
McDonald’s, you are a customer of Sunny Fresh Foods. Sunny Fresh produces
more than 160 products for the food service industry. Their products include
omelets, precooked scrambled eggs, peeled hard-cooked eggs, liquid egg
products, sandwich patties and breakfast wraps. You won't find them on your
grocery shelf because Sunny Fresh only sells to food service providers, such as
cafeterias, healthcare facilities and McDonald’s.

Sunny Fresh Foods has won the Malcolm Baldrige National Quality Award twice,
in 1999 and 2005. When Sunny Fresh started their quality journey, they
adopted the approach of Philip Crosby, PhD and his four absolutes of quality.

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Their key to zero defects is preventing defects from ever occurring, and Sunny
Fresh aggressively manages its processes. Working with egg and dairy products
provides a great number of opportunities for problems and high regulatory
standards from the U.S. Department of Agriculture. Standing operating
procedures and work instructions have been developed to ensure high food
safety standards are maintained. Not only are business and manufacturing
processes continually reviewed by senior leaders and department managers,
but also the operators on the line are empowered to control their work
processes to insure conformance to the high-quality standard, as determined by
their customers.

To ensure the customer's requirements are being met, Sunny Fresh takes a
systematic approach. All customer complaints are logged into a database
immediately and tracked for prompt corrective action and follow up. Their
current average response time is 0.8 day. Their resolution satisfaction increased
from 92 percent to 100 percent in 2002. They conduct customer satisfaction
surveys and distribute the results to sales and marketing managers so they can
use these data for continuous improvement.

The measurement of quality is the price of non conformance, and is sometimes

referred to as the cost of quality. A colleague of mine once described the cost of
quality in this manner:

a. A cost of $10 to "mistake-proof" an operation so no defects are produced

b. A cost of $100 to find the defect and fix it during the operation so it enters
the final assembly without defect

c. A cost of $1,000 to find the defect before it is shipped to the customer and
replace it with a good item

d. A cost of $10,000 to have the customer find the defect, complain about it and
ship them a replacement

e. A cost of $100,000 to have to do a recall of a large number of defective parts

f. A cost of $1 million to handle the lawsuit that results from injury caused by
the malfunction of the defective item

So the cost of quality, the price of non conformance, can range from $10 to$1
million depending on where the mistake or defect is dealt with.

Also consider the cost of acquiring the customer in the first place. What is the
cost of advertising to entice the customer to use your product or service for the
first time? Now compare the initial cost to the lesser cost of keeping the
customer as a loyal consumer. If you fail to meet or exceed your customers’
expectations and requirements, how much will it cost to get them back, and to
counter the negative image you have created in their minds—and in the minds
of all of their friends and associates whom they have told about your poor
performance?

The cost of quality, of non conformance, is high.

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Following one of W. Edwards Deming's 14 Points, maintain a constancy of
purpose, Sunny Fresh uses this mission statement to hold true to their
principles.

Sunny Fresh Foods’ mission statement is, "Sunny Fresh Foods will be the
preferred suppliers of quality, value added food products serving primarily the
foodservice industry. We will be a best cost producer and a leader in developing
and implementing innovative products, processes and services to meet the
needs of an evolving global workplace."

In an article in the July 2006 issue of Quality Digest, Scott Dattalo, of Sunny
Fresh, said, "Our whole business structure, our whole climate, has changed. It's
much more technologically savvy. But I think even in the light of all of this
change, our processes really haven't changed, which is a validation of the
Baldrige process—that you can change a business model somewhat and still be
successful."

In the same article, Sunny Fresh President Mike Luker went on to say that most
of the people that were employed by Sunny Fresh when they won the Baldrige
the first time had moved on to other positions, and were no longer around when
Sunny Fresh won the Baldrige the second time. "This second win is a testament
to the company's solid processes,” he said. “I think this shows we have the
processes in place to sustain our high performance.”

Crosby titled his four points "absolutes" because they must absolutely be met to
be successful as a business or non profit organization.

TOTAL PRODUCTIVE MAINTENANCE (TPM)

A set of techniques originally pioneered by Mr. DENSO in the Toyota Group in

Japan, TPM is to "Optimize the effectiveness of manufacturing equipment and
tooling"

TPM is based on eight Pillars, they are:

1. Focused Equipment & Process Improvement: Measurement of equipment- or

process-related losses & specify improvement activities to reduce the losses.
2. Autonomous Maintenance: Operator involvement in regular cleaning,
inspection, lubrication & learning about equipment to maintain basis conditions
& spot early signs of trouble.
3. Planned Maintenance: A combination of preventive, predictive & proactive
maintenance to avoid losses & planned responses to fix breakdowns quickly.
4. Quality Maintenance: Activities to manage product quality by maintaining
optimal operating conditions.
5. Early Equipment Management: Methods to shorten the lead time for getting
new equipment online & making defect-free products.
6. Safety: Safety training; integration of safety checks, visual controls &
mistake-proofing devices in daily work.
7. Equipment investment & maintenance prevention design: Purchase & design
decisions informed by costs of operation & maintenance during the machine's
entire life cycle.
8. Training & skill building: A planned program for developing employee skills &
knowledge to support TPM implementation.

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 Each and every pillar of the TPM is suitably considered to provide utmost
stability and strength to the objective and principle of TPM. Each pillar shall
prove to be a mile stone if meticulously understood and applied during entire
life span of equipment.

The TPM can be adopted at any juncture of equipment life and puts no
limitations on usage but instead will support increasing the life span and
improve output quality.
The eight Pillars may be termed as vital organs to keep system (TPM) operating
at its best to ensure that every machine in a production process is always
available to perform desired task with optimum qualitative efficiency.

TPM focus on equipment and process improvement through qualitative

autonomous and planned maintenance by imparting necessary and appropriate
training and skill to the operator with entire team who have ownership of the
machine. Early equipment management is vital and important along with
involvement of equipment investment and maintenance prevention design.

TPM is a wholesome system guarantees Maximum equipment effectiveness and

availability, if all the eight pillars (Principles) of the system are practiced in
totality following Six Big Losses will be avoided:
•Breakdowns / failures
•Setups / changeovers
•Minor stoppages
•Reduced speed
•Defects / rework
•Start-up / yield loss

…………………………………………….
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