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Industrial Engineering and Management

Tutorial Sheet
(Numerical Problems)
A. Plant Location
1. Select the most advantageous location based on the following information.
S.N. Particulars Site A (Rs.) Site B (Rs.)
1. Total investment 30,00,000 30,00,000
2. Total sales 45,00,000 37,50,000
3. Total expenses 28,00,000 32,00,000

2. A new young entrepreneur wants to set up a small plant. There are three different possible sites
with different advantages. The total initial investment is going to be of order of Rs. 2, 00,000.
Calculate rates of return of the three sites and choose the optimal location for the purpose of
locating the small plant.
S.N. Particulars Site A (Rs.) Site B (Rs.) Site C (Rs.)
1. Expected sales 2,50,000 2,50,000 3,00.000
2. Distribution expenses 40,000 40,000 75,000
3. Raw material cost 90,000 80,000 70,000
4. Cartage 20,000 25,000 35,000
5. Power and water supply 20,000 30,000 30,000
6. Wages and salaries 25,000 30,000 25,000
7. Other expenses 15,000 15,000 20,000

3. From the following data select the most advantageous location for setting a plant for making
transistor radios.
S.N. Particulars Site – X (Rs.) Site – Y (Rs.) Site – Z (Rs.)
1. Initial investment 2,00,000 2,00,000 2,00,000
2. Expected sales 2,50,000 3,00,000 2,50,000
3. Distribution expenses 40,000 40,000 75,000
4. Raw material expenses 70,000 80,000 90,000
5. Power and water supply expenses 40,000 30,000 20,000
6. Wages and salaries 20,000 25,000 20,000
7. Other expenses 25,000 40,000 30,000
8. Community attitude Indifferent Want business Indifferent
9. Employment housing Poor Excellent Good

Industrial Engineering and Management Numerical Problems Prepared by: Khem Gyanwali
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4. Potential location A, B and C have the cost structure shown below for manufacturing of product
expected to sale for Rs. 2700/unit. Find the most economical location for an expected volume
of 2000 units/year. Also find out volume of production for each unit.
Site Fixed cost/year (Rs.) Variable cost/unit (Rs.)
A 60,00,000 1500
B 70,00,000 500
C 50,00,000 4000

5. Potential location A, B and C have the cost structure shown in following table. Find out the
yearly economic volume of production for each location. Assume the following data as
economic volume of production.
a. 0 -500 units b. 500 -1000 units c. more than 1000 units
Location sites Fixed cost/year (Rs.) Variable cost/unit (Rs.)
A 20,000 140
B 60,000 60
C 80,000 40

B. Process Planning
1. Calculate the number of machines required to manufacture three components from the
following data. The plant is working for 8 hrs. per day in one shift.
S.N. Components A B C
1. Setting time per lot. 25 min. 55 min. 45 min.
2. Operating cycle time/piece 1.75 min 3 min. 2.1 min.
3. Lot size 350 550 575
4. Production per month 2450 4400 2875

2. Determine the economical machine for a particular component using the following data:
S.N. Particulars Capston Lathe Auto Lathe
1. Set up time 1 hr. 6 hr.
2. Operating time 10 min. 2 min.
3. Set up labor cost 7 Rs./hr 7 Rs./hr
4. Operating labor cost 5 Rs./hr 2 Rs./hr
5. Tooling cost NIL 200 Rs.
6. Machine overheads 15 Rs./hr 28 Rs./hr
7. Lot size 1500 nos. 1500 nos.

Industrial Engineering and Management Numerical Problems Prepared by: Khem Gyanwali
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3. Three different products are to be manufactured on the following machines. Calculate the
number of machines required for processing these products if the plant works 45 hrs per week.
S.N. Equipment Time Product I Product II Product III
1. Center Lathe Set up 30 min. 55 min. 40 min.
Operating 2 min. 2.5 min. 1.5 min.
2. Milling Machine Set up 45 min. 30 min. -
Operating 8 min. 4 min. -
3. Cylindrical grinding M/C Set up 50 min. - 54 min.
Operating 10 min. - 7.2 min.
Lot size 350 400 600
Quantity required per 1750 4500 3000
month

4. Find out the “break even” quantity, if the estimated time and cost for the two alternative
methods is as given below:
Method Set up time Machining time/piece Set up cost/hour Machining cost/ hr
Turret Lathe 4.5 hr 4 min. Rs. 35/- Rs. 15/-
Center Lathe 10 min. 35 min. Rs. 15/- Rs. 25/-

5. Following data refer to three different machines A, B and C. The output is expected to be 9,000
products per month. Factory works for 48 hrs per week. Find out the machine which will satisfy
the required capacity.
S.N. Particulars Machines
A B C
1. Machine set up time in min 9 4 6
2. Machine operation time in min (per piece) 1.2 2.0 1.5
3. Lot size 450 300 360

C. Critical Path Method (CPM)

1. Draw the network diagram for the project in which pre-operations and post-operations are as
given below:
OPERATION PRE-OPERATION POST-OPERATION
A None C
B None D
C A E
D B E
E C,D None

2. Draw the network diagram for the project in which pre-operations and post-operations are as
given below:

Industrial Engineering and Management Numerical Problems Prepared by: Khem Gyanwali
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OPERATIONS PRE-OPERATION POST-OPERATION

A None D, F
B None G
C None E, H
D A G
E C G
F A None
G A, B, C, D, E None
H C None

3. To start a factory in a building available in industrial area, the various activities and their
timings are shown in the following table.
Activity Particulars Time in days
A Machine foundation 10
B Electric fitting 15
C Repair of floor 20
D Installation of machine 12
E Procurement of workshop 15
F Building white wash 05
G Clean up 02
Draw the network diagram and calculate EST, LST, EFT, LFT and floats. Mark the critical path
and find out the total project duration.
4. A small scale industrial unit consists of 6 activities as given below:
ACTIVITY TIME IN DAYS PRE-OPERATION
A 5 None
B 6 A
C 5 B
D 4 A
E 3 D
F 4 C, E
Draw the network diagram and calculate EST, LST, EFT, LFT and floats. Mark the critical path
and find out the total project duration.
5. Calculate EST and LFT, total float and project duration for the network given in figure below,
also calculate the total project duration and show the critical path.

Industrial Engineering and Management Numerical Problems Prepared by: Khem Gyanwali
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6. Draw the network diagram for the following logic:

(i) A is the first operation on the project.
(ii) B & C can be done concurrently and both must follow A.
(iii) B must precede A.
(iv) E cannot begin until both B and C are completed.
(v) F is dependent on the completion of D and E.
(vi) F is the last operation on the project.

7. A project schedule has the following characteristics:

Activity Duration Activity Duration
1-2 3 4-8 6
1-4 2 5-6 5
1-7 1 6-9 4
2-3 3 7-8 4
3-6 2 8-9 5
4-5 4

Construct a network and find critical path, total duration of the project and various time
estimates.

8. Consider the following project.

Activity Immediate Predecessor Time (days)
A 6
B 4
C A 3
D A 5
E A 1
F B,C 4
G B,C 2
H E,F 6
I E,F 5
J D,H 3
K I 5
Draw the network diagram and find out EST, LST, EFT, LFT, critical path, float and critical
time.

D. Program Evaluation and Review Techniques (PERT)

1. A small engineering project consists of six activities. The three time estimates in number of
days for each activity are given below:
A) Calculate the values of expected time (te), standard deviation and variance for each activity.
B) Draw the network diagram and mark te for each activity.
C) Calculate EST and LFT and mark them on the network diagram.

Industrial Engineering and Management Numerical Problems Prepared by: Khem Gyanwali
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Activity to tm tp
D) Calculate total slack for each activity. 1-2 2 5 8
E) Identify the critical path and mark on the network 2-3 1 1 1
diagram. 3-5 0 6 18
5-6 7 7 7
1-4 3 3 3
4-5 2 8 14

2. For a particular activity of a project, time estimates received from two engineers A and B are
as follows: to tm tp
State who is more certain about the time of Engineer A 3 6 7
completion of the job. Engineer B 4 5 9

E. Inventory Control
1. A company requires 16000 units of raw material costing Rs. 2 per unit. The cost of placing an
order is Rs. 45 and the carrying costs are 10% per year per unit of the average inventory.
Determine:
A) The economic order quantity.
B) Cycle time
C) Total variable cost of managing the inventory.

2. ABC manufacturing company needs all ball bearings of worth Rs. 28,800 per year. The cost
of placing an order is Rs. 48 and inventory carrying cost of a percentage of average investment
is 12%. Determine:
A) Value of each assignment.
B) Number of orders per year.

3. A company needs 600 units per month, the procurement cost is Rs. 36 per order, the cost of
holding it in stock is Rs. 1.20 per unit per year, determine the quantity that should be procured
at a time to optimize the cost involved. If the consumption of the above item increases to 40
numbers per day and its actual inventory cost is Rs. 0.50 per unit per month, what will be the
revised EOQ?

4. A company needs 2000 units per month. Cost of placing an order is Rs. 40. In addition to Re.
0.50 the carrying costs are 10% per unit of average inventory per year. The purchase price of
Rs. 10.00 per unit. Find the economic lot size to be ordered and the total minimum cost.

5. A manufacturer purchases items in lots of 800 units which is a four months’ requirement. The
cost per unit is Rs. 100 and the ordering cost is Rs. 120 per patch order. The inventory carrying
cost is estimated as 20 % of the average inventory investment:
A) Determine the annual variable cost managing the inventory.
B) How much saving can be obtained from the EOQ purchases?

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6. A manufacturing company purchases 9,000 parts of a machine for its annual requirements,
ordering one month usage at a time. Each part costs Rs. 20. The ordering cost per order is Rs.
15 and the carrying charges are 15% of the average inventory per year. You have been assigned
to suggest a more economical purchasing policy for the company. What advice would you
offer and how much would it save for the company per year?

7. The annual demand of a particular item by a company is 10,000 units. This item may be
obtained from either an outside supplier or subsidiary company. The relevant data for the
procurement of the item is given below:
Costs From outside supplier From subsidiary Co.
Cost per unit 12 13
Cost of placing an order 10 10
Cost of receiving an order 20 15
Storage and all carrying costs, including 2 2
capital cost per unit per annum
A) What purchase quantity and from which source would you recommend to procure?
B) What should be the minimum total cost in that case?

8. The annual demand for an item is 3200 parts. The unit cost is Rs. 6 and the inventory carrying
charges are estimated as 25% per annum. If the cost of one procurement is Rs. 150, find:
A) Economic order quantity.
B) Time between two consecutive orders.
C) Number of orders per year.
D) The optimal cost.

9. The XYZ manufacturing company requires 1000 units of particular item per month; the
average demand occurs at the rate of 30 units per day. The production process is capable of
producing 50 units per day. Each item produced in the plant costs Rs. 10. The set up cost per
order is Rs. 100. The inventory carrying cost is 15% of the average inventory cost. Calculate:
A) The quantity to be produced in each production run.
B) Number of productions runs per year.

F. Forecasting Year Sales(1000) Year Sales(1000)

1. The following series relates to the annual sales 1975 16 1983 25
in thousands of a product during the period 1976 18 1984 28
1975-1990. Find the trend of sales using 1977 15 1985 26
A) 3 yearly moving averages 1978 17 1986 22
B) 5 yearly moving averages 1979 20 1987 28
C) 7 yearly moving averages 1980 22 1988 24
1981 25 1989 25
1982 24 1990 30

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2. Based on the data given below, find the forecasted sales using
A) Simple moving average.
B) Weighted moving average where weights are 3/6, 2/6, 1/6.
Month 1 2 3 4 5 6
Sales (1000) 4 6 5 3 7 ?

3. Based on the given weekly demand data, what are the exponential smoothing forecasts for
periods 2-10 using α = 0.1? What if α constant equals to 0.6? Assume F1 = D1
Week (i) 1 2 3 4 5 6 7 8 9 10
Demand (Di) 820 775 680 655 750 802 798 689 775 ?

4. Forecast the demand for the following series using exponential smoothing method (α = 0.3).
Period 1 2 3 4 5 6 7 8 9 10
Actual Demand (Di) 10 12 8 11 9 10 15 14 16 15
Based on the above data, find the double exponential forecasted demand taking α = 0.3, β = 0.1.
Base and trend for period 1 are 10 and 0.5 respectively.
5. The annual sales of a company are as given below. By the method of least squares find the
trend values for each of the five years. Also estimate the annual sales for the year 1985.
Year 1980 1981 1982 1983 1984
Sales in Rs. 50000 65000 75000 52000 72000

6. Find MAD, MSE and RMSE from the following data.

T Jan Feb Mar April May June
At 120 90 101 91 115 83
Ft 100 106 102 101 98 103

G. Quality Management
1. Control charts for X and R maintained on the tensile strength for a certain yarn. The subgroup
size is 5. The values of X and R are computed for each subgroup, after 25 subgroups. ∑X =
514.8 and ∑R = 120. Compute the values of 3 sigma limits for X and R charts, and estimate
the value of σ on the assumption that the process is in statistical control.

2. In an automatic filling, 175 gms of certain chemical is to be packed in certain container. The
permissible variation is ± 5gms. To investigate the capacity of a process, samples of 5 each
were drawn from 10 successive batches, and data were recorded as given below.

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Batch 1 2 3 4 5 6 7 8 9 10
Mean 177 177 176 176 174 177 175 176 176 174
Range 3 5 3 8 2 8 5 7 3 2
Assuming the process to be within control, establish the capability of the process and compare it
with the stipulated specifications. Take d2 = 2.326.
3. The following are the X and R values of 4 subgroups of 5 readings.
X = 10.2, 12.1, 10.8 and 10.5
R = 1.1, 1.3, 0.9, and 0.8

The specifications limits for the components are 10.7 ±0.2. Establish the control limits for X and
R chart. Will the product be able to meet its specifications?
Given A2 (factor for X chart) = 0.58, D4 (factor for R chart) = 2.11,
D3 (factor for R chart) = 0.00.

4. The following are the inspection results of 20 lots of magnets, each lot having 750 magnets.
Number of defective magnets in each lot are 48, 83, 70, 85, 45, 56, 48, 67, 37, 52, 47, 50, 47,
57, 51, 71, 53, 34, 29 and 30. Calculate the average fraction defective and three sigma is control
limits for p chart.

5. A manufacturer purchases small bolts in cartons that usually contain several thousand bolts.
Each shipment consists of number of cartons, as part of the acceptance procedure for these
bolts, 400 bolts are selected at random from each carton and are subjected to visual inspection
for certain defects. In a shipment of 10 cartons the respective percentages of defectives in the
samples from each carton are 0, 0, 0, 5, 0.75, 0, 2, 0.25, 0, 0.25 and 1.25. Does the shipment
of bolts appear characteristics examined in this inspection?

6. In a factory producing spark plugs the number of defectives found in inspection of 20 lots of
100 each is given below:
Lot No. No. of defectives Lot No. No. of defectives Lot No. No. of defectives
1 5 8 3 15 3
2 10 9 3 16 4
3 12 10 5 17 5
4 8 11 4 18 8
5 6 12 7 19 6
6 4 13 8 20 10
7 6 14 2
Construct appropriate control chart and state whether the process is under control.

Industrial Engineering and Management Numerical Problems Prepared by: Khem Gyanwali