Course Subject Assignment

MBA 2nd Semester

Production and Operations Management

MB0044 Set 2

1. Take an example of any product or service industry and explain the factors considered while taking the decision on plant location.
Facility Planning Process Planning is the most important function of management. It is important especially, when we have to deal with lands, buildings, and machineries. Lands, buildings and machineries are costly and once fixed cannot be moved easily. Planning, therefore, requires a lot of thought, data gathering, and estimates for the future. These considerations are vital for the success of any firm. Now to deeply understand the importance of planning in operations management, we consider the planning into two parts. 1. Planning the location of the plant 2. Planning the manufacturing facility layouts Planning the location of the plant You will now study about planning for the location of a plant. You will also study the various factors that affect the economics of competing locations and helps in choosing the most optimal location. Factors influencing Plant Location can be broadly divided into two types namely: general factors and special factors (See Figure Factors influencing plant location).

Figure: Factors influencing plant location Below are the factors influencing plant location: General factors The general factors that influence the plant location are listed below (See Figure 5.2 General factors influencing plant location). 1. Availability of land: Availability of land plays an important role in determining the plant location. Many-a-time, our plans, calculations and forecasts suggest a particular area as the best to start an organisation. However, availability of land may be in question. In such cases, we will have to choose the second best location. 2. Availability of inputs: While choosing a plant location, it is very important for the organisation to get the labour at the right time and raw materials at good qualities. The plant should be located: Near to the raw material source when there is no loss of weight At the market place when there is a loss of weight in the material Close to the market when universally available, so as to minimise the transportation cost

Figure: General factors influencing plant location

3. Closeness to market places: Organisations can choose to locate the plant near to the customers market or far from them, depending upon the product they produce. It is advisable to locate the plant near to the market place, when: The projection life of the product is low The transportation cost is high The products are delicate and susceptible to spoilage After sales services are promptly required very often

The advantages of locating the plant near to the market place are: Consistent supply of goods to the customers Reduction of the cost of transportation 4. Communication facilities: Communication facility is also an important factor which influences the location of a plant. Regions with good communication facilities viz. Postal and Tele communication links should be given priority for the selection of sites. 5. Infrastructure: Infrastructure plays a prominent role in deciding the location. The basic infrastructure needed in any organisation are: a. Power: For example, industries which run day and night require continuous power supply. So they should be located near to the power stations and should ensure continuous power supply throughout the year. b. Water: For example, process industries such as, paper, chemical, and cement, requires continuous water supply in large amount. So, such process industries need to be located near to the water. c. Waste disposal: For example, for process industries such as, paper and sugarcane industries facility for disposal of waste is the key factor. 6. Transport: Transport facility is a must for facility location and layout of location of the plant. Timely supply of raw materials to the company and supply of finished goods to the customers is an important factor. The basic modes of transportation are by Air, Road, Rail, Water, and Pipeline. The choice of location should be made depending on these basic modes. Cost of transportation is also an important criterion for plant location.

7. Government support: The factors that demand additional attention for plant location are the policies of the state governments and local bodies concerning labour laws, building codes, and safety. 8. Housing and recreation: Housing and recreation factors also influence the plant location. Locating a plant with the facilities of good schools, housing and recreation for employees will have a greater impact on the organisation. These factor seems to be unimportant, but have a difference as they motivate the employees and hence the location decisions. 5.2.1.2 Special factors The special factors that influence the plant location are: 1. Economic stability outside investments 2. Cultural factors 3. Wages 4. Joint ventures support of big time players

2. What is Business Process? Explain with an example as to why a business process is to be modelled.
Business Process is a total response that a business undertakes utilizing resources and delivering outputs that create value for the customer. The same can be listed as under. The Business Process (i) has a goal (ii) uses specific inputs (iii) delivers specific outputs (iv) collects resources (v) performs a number of activities in some order (vi) creates value for the customer. Business Process Management refers to a set of activities undertaken to optimise the business process for improving their performance, deliver better value for the customer, maximize the earnings and keep its head above competition. The business system contains a combination of people and the applications organised to meet business objectives. The applications are automated to enable information and reporting system to be accurate, timely and efficient. Designers and programmers put together the data and processes to provide optimum

benefits, and put in place the architecture which is capable of addressing these needs. The architecture should be flexible to adapt new methods, processes and even business plans. All the elements activities, parts, products, data, people, processes, software tools, delivery systems, performance measurement have to be structured and controlled the for purposes of analysis, evaluation, modification, implementation and correction. This is what we study under Business Process Modeling. Because of the extensive use of various software programmes for all these activities, BPM is used synonymously used for the software tools also. BPM is not rigid in the path the activities or the way entities need to align, makes it more flexible. Therefore it not any more necessary to define the total process initially. The flow of the activities need not be fitted into a model to be followed continuously, but can be adapted to suit the situations the process is in. The user has choices of subsequent activities and take advantage of the flexibility the process is allowed to have. Logical Process Modeling is the representation of putting together all the activities of business process in detail and making a representation of them. The initial data collected need to be arranged in a logical manner so that links are made between nodes for making the workflow smooth. The steps are as under: (a) Capturing relevant data in detail to be acted upon (b) Establishing controls and limiting access to the data during process execution (c) Determining as which task in the process to be done and subsequent tasks in that process (d) Making sure that all relevant data are available for all the tasks that need to be in the order determined (e) Making available the relevant and appropriate data for that task (f) Establishing a mechanism to indicate acceptance of the results after every task or process to have the assurance that flow is going ahead with accomplishments in the desired path. Some of the activities may occur in sequential order whereas some of them may run parallel. There may be circular paths, like rework loops. Complexities arise out of the manner in which process activities are connected together. Logical Process Model consists only of the business activities and shows the connectivity among them. The process model is a representation of the business activities different from the technology dependent ones. Thus we have a model that is

singularly structured only for business activities. Since computer programmes are also present in the total system, to allow the business oriented executives to be in control of the inputs, processes and outputs, this unique model is helpful. Logical Process Model improves control on the access to data and identifies who is in possession of data at different nodes in the dataflow network that has been structured. A few of the logical modeling formats are given below a) Process Descriptions with task sequences and data addresses b) Flow Charts with various activities and relationships c) Flow Diagrams d) Function hierarchies e) Function dependency diagrams. Every business activity when considered as a logical process model and represented by a diagram. It can be decomposed and meaningful names given to the details. Verb and Noun combinations can be used to described at each level. Nouns give the name of the activity uniquely and used for the entire model meaning the same activity.

3. What is Value Engineering? Explain briefly its origins and objectives.

Value Engineering (VE) or Value Analysis is a methodology by which we try to find substitutes for a product or an operation. The concept of value engineering originated during the Second World War. It was developed by the General Electric Corporations (GEC). Value Engineering has gained popularity due to its potential for gaining high Returns on Investment (ROI). This methodology is widely used in business re-engineering, government projects, automakers, transportation and distribution, industrial equipment, construction, assembling and machining processes, health care and environmental engineering, and many others. Value engineering process calls for a deep study of a product and the purpose for which it is used, such as, the raw materials used; the processes of transformation; the equipment needed, and many others. It also questions whether what is

being used is the most appropriate and economical. This applies to all aspects of the product. For the above example, studies can be conducted to verify whether any operation can be eliminated. Simplification of processes reduces the cost of manufacturing. Every piece of material and the process should add value to the product so as to render the best performance. Thus, there is an opportunity at every stage of the manufacturing and delivery process to find alternatives which will increase the functionality or reduce cost in terms of material, process, and time. The different aspects of value engineering can be encapsulated into a sequence of steps known as a Job Plan. Value Engineering in organisations helps to identify: The problem or situation that needs to be changed/improved All that is good about the existing situation The improvements required in the situation The functions to be performed The ways of performing each function The best ways among the selected functions The steps to be followed to implement the function The person who executes the function It should be remembered that we are not seeking a cost reduction sacrificing quality. It has been found that there will be an improvement in quality when systematic value analysis principles are employed.

4. Discuss the difference between work study and motion study. Explain with an example.
Work practices are ways of doing any work which has been in vogue and found to be useful. These are determined by motion and time study conducted over years and found to be efficient and practiced. Any method improvement that is conducted may be adopted to change the practice, but only after trials they have shown that, they increase the comfort of the worker and get the job done faster. Work study

We say that work study is being conducted when analysis of work methods is conducted during the period when a job is done on a machine or equipment. 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 for 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 thus making them 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 organization 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. Work measurement Work measurement can be defined as a systematic application of various techniques that are designed to establish the content of work involved in performing a specific task. The task is performed by a qualified worker. With this we arrive at the standard time for a task. This will be used to fix performance rating of other workers. It forms the basis of incentives, promotion, and training for workmen and assessment of capacity for the plant. Hence, training the workers is very important. (See figure 15.3) ILO defines a qualified worker as one who is accepted as having the necessary physical attributes, possessing the required intelligence and education, and having acquired the necessary skill and knowledge to carry out the work in hand to satisfactory standards of safety, quantity, and quality.

Figure Training workers

Methods study Method study focus is on studying the method currently being used and developing a new method of performing the task in a better way. Operation Flow charts, Motion Charts, Flow Process charts, which are the elements of the task, are studied to find the purpose of each activity, the sequence in which they are done, and the effect of these on the work. The study may help in changing some of them and even eliminate some of them to effect improvements. The new method should result in saving of time, reduced motions, and simpler activities. Machine worker interaction Machine worker interaction study consists of studying the amount of time an operator spends on the machine before it is activated and the time he has nothing to do. In many modern manufacturing centres, where we have automated systems of manufacturing, the role of the worker is limited to, observing various screens, dials, indicator lamps to see that the process is going on smoothly. In some cases, his job may be to load the jobs on the machines and check the settings. What is of concern to us, is to see whether the operations permit for enabling an operator to look after two or three machines, without affecting of the performance of the machine or man. Ergonomics Ergonomics is the study of physical human factors and their functioning. We study the movements, the amount of energy that is required for certain activities, and the coordination among them. In operations management, we use these factors at two places. The first is when we design the machines which are operated, the way the operator does the tasks on the machine using different controls. Levers, wheels, switches, pedals (See figure) have to be positioned so that the operators have maximum comfort for long working hours.

Figure: Equipment positioned to enable maximum comfort The other factor is the consideration given for the type of loads the body can take at various positions. When doing jobs like lifting, clamping, moving, and holding, energy is expended by different organs for which racks, tables, pallets, are positioned and designed to suit workers physical features.

5. Time taken by three machines on five jobs in a factory is tabulated below in table below. Find out the optimal sequence to be followed to minimise the idle time taken by the jobs on the machines.
Job A B C D E Ans: Consider M1 and M3 Job A B C D E Machi ne 1 (M1) 6 4 5 3 4 Machi ne 3 (M3) 7 3 7 6 4 Machi ne 1 (M1) 6 4 5 3 4 Machi ne 2 (M2) 8 5 5 4 3 Machi ne 3 (M3) 7 3 7 6 4

JOB = D E C A B

6. List the seven principles of SCM. Discuss Bullwhip effect, its effects and countermeasures.
Seven Principles of SCM: 1. Group customer by needs Effective SCM groups customer by distinct service needs, regardless of industry and then tailors services to those particular segments. 2. Customize the logistics network In designing their logistics network, companies need to focus on the service requirement and profit potential of the customer segments identified.

3. Listen to signals of market demand and plan accordingly Sales and operations planners must monitor the entire supply chain to detect early warning signals of changing customer demand and needs. This demand driven approach leads ot more consistent forecast and optimal resource allocation. 4. Differentiate the product closer to the customer Companies today no longer can afford to stock pile inventory to compensate for possible forecasting errors. Instead , they need to postpone product differentiation in the manufacturing process closer to actual consumer demand. This strategy allows the supply chain to respond quickly and cost effectively to changes in customer needs. 5. Strategically manage the sources of supply by working closely with their key suppliers to reduce the overall costs of owning materials and services, SCM maximizes profit margins both for themselves and their suppliers. 6. Develop a supply chain wide technology strategy as one of the cornerstones of successful SCM information technology must be able to support multiple levels of decision making. It also should afford a clear view and ability to measure the flow of products, services and information. 7. Adopt channel spanning performance measures Excellent supply chain performance measurement systems do more than just monitor internal functions. They apply performance criteria to every link in the supply chain criteria that embrace both service and financial metrics, including as each accounts true profitability. Bullwhip Effect in SCM An organization will always have ups and downs. It is necessary that the managers of the organization keep track of the market conditions and analyze the changes. They must take decisions on the resources and make necessary changes within the organization to meet the market demands. Failing to do so may result in wild swings in the orders. This may adversely affect the functioning of the organization resulting in lack of coordination and trust among supply chain members. The changes may affect the information and may lead to demand amplification in the supply chain. The Bullwhip effect is the uncertainty caused from distorted information flowing up and down the supply chain. This has its affect on almost all the industries, poses a risk to firms that experience large variations in demand, and also those firms which are dependent on suppliers, distributors and retailers.

A bullwhip effect may arise because of increase in the lead time of the project due to increase in variability of demand increase in the stocks to accommodate the increasing demand arising out of complicated demand models and forecasting techniques reduced service levels in the organization inefficient allocation of resources increased transportation cost How to prevent it? Bullwhip effect may be avoided by one or more of the following measures: Avoid multiple demand forecasting Breaking the single orders into number of batches of orders Stabilize the prices, avoid the risk involved in overstocking by maintaining a proper stock. Reduce the variability and uncertainty in point of sale (POS) and sharing information. Reduce the lead time in the stages of the project. Always keep analyzing the past figures and track current and future levels of requirements Enhance the operational efficiency and outsourcing logistics to a capable and efficient agency.