IV/IV B.Tech (Mech. Engg.) 7th sem, Regular Exam, Nov Sub: OPERATIONS MANAGEMENT [14ME705/A] Scheme of valuation cum Solution set

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1 IV/IV B.Tech (Mech. Engg.) 7th sem, Regular Exam, Nov 2017 Sub: OPERATIONS MANAGEMENT [14ME705/A] Scheme of valuation cum Solution set 1 1 x 12 = 12 M a) Forecasts are estimates of occurrence, timing or magnitude of future events. b) Manufacture of discrete parts or assemblies using a continuous process are called mass production. c) Plant layout ideally involves allocation of space and arrangement of equipment in such a manner that overall operating costs are minimized. d) Vital, Essential and Desirable (VED) analysis is used primarily for the control of spare parts. The spare parts can be divided into three categories: (i) Vital (ii) Essential (iii) Desirable e) Materials requirements planning (MRP) is a means for determining the number of parts, components, and materials needed to produce a product. f) Bill of materials is a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product. g) Aggregate planning is an operational activity which gives an overall plan for the production process, in advance of 2 to 18 months, to give an idea to management as to what quantity of materials and other resources are to be procured and when, so that the total cost of the organization is kept to the minimum over that period. h) Loading means assigning tasks to work centers or machines. i) Objectives of Scheduling (any two) Demand forecasts/customer s firm orders Aggregate scheduling Production plan Master production schedule Priority planning Capacity planning Facility loading or machine loading Evaluation of workload Sequencing j) Supply Chain Management is the strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating supply and demand management. k) EOQ (economic-order quantity) occurs at an order quantity in which the ordering cost is equal to the carrying costs and total cost is minimum. l) Just-in-time (JIT) production aims to avoid the waste associated with overproduction, waiting and excess inventory.

2 UNIT-I 2(a) (any three) 2 x 3 = 6M Qualitative methods of forecasting: Jury of executive opinion i. Delphi method ii. iii. Sales force composite Consumer market survey i. Jury of executive opinion: It is a forecasting technique that uses the opinion of a small group of high-level managers to form a group estimate of demand. Here opinions of experts are invited about the sale in future. It is simple & fast but not scientific. ii. Delphi method It is a forecasting technique that uses a group process that allows experts to make forecasts. iii. Sales force composite It is a forecasting technique based on salespersons estimates of expected sales. In this forecast, all the marketing & sales peoples (Sales-man, traders middle men etc ) express their considered opinion of the volume of the sales expected in the future. These opinions are then collected & evaluated. iv. Consumer market survey It is a forecasting technique that uses the inputs from customers or potential customers regarding future purchasing plans. In this method, representative sample of customers are approached & asked, what they intend to buy. By doing so, it is possible to predict, with some degree of certainty, how the population will respond. Here economic, political, changes, customs, habits, social requirements are considered.

3 2 (b) 2 x3 = 6M TYPES OF PRODUCTION SYSTEM Broadly one can think of three types of production systems which are mentioned here under: - i. Continuous production ii. Job or unit production iii. Intermittent production i. Continuous production: - It refers to the production of standardized products with a standard set of process and operation sequence in anticipation of demand. It is also known as mass flow production or assembly line production. This system ensures less work in process inventory and high product quality but involves large investment in machinery and equipment. The system is suitable in plants involving large volume and small variety of output e.g. oil refineries, cement manufacturing etc. ii. Job or Unit production: - It involves production as per customer's specification each batch or order consists of a small lot of identical products and is different from other batches. The system requires comparatively smaller investment in machines and equipment. It is flexible and can be adapted to changes in product design and order size without much inconvenience. This system is most suitable where heterogeneous products are produced against specific orders. Eg: Boilers, chimneys, ship, aircraft etc. iii. Intermittent Production: Under this system the goods are produced partly for inventory and partly for customer's orders. E.g. components are made for inventory but they are combined differently for different customers. Automobile plants, printing presses, electrical goods plant are examples of this type of manufacturing.

4 3 (a) 6M Comparison of Rural and Urban sites 3 (b) 6M Plant layout may be of four types: i. Product or line layout ii. Process or functional layout iii. Fixed position or location layout iv. Combined or group layout i. Product or line layout: Under this, machines and equipments are arranged in one line depending upon the sequence of operations required for the product. The materials move from one workstation to another sequentially without any backtracking or deviation. Under this, machines are grouped in one sequence. Therefore materials are fed into the first machine and finished goods travel automatically from machine to machine, the output of one machine becoming input of the next, e.g. in a paper mill, bamboos are fed into the machine at one end and paper comes out at the other end. The raw material moves very fast from one workstation to other stations with a minimum work in progress storage and material handling. ii. Process layout: In this type of layout machines of a similar type are arranged together at one place.

5 E.g. Machines performing drilling operations are arranged in the drilling department, machines performing casting operations be grouped in the casting department. Therefore the machines are installed in the plants, which follow the process layout. iii. Fixed Position or Location Layout In this type of layout, the major product being produced is fixed at one location. Equipment labour and components are moved to that location. All facilities are brought and arranged around one work center. iv. Combined layout Certain manufacturing units may require all three processes namely intermittent process (job shops), the continuous process (mass production shops) and the representative process combined process [i.e. miscellaneous shops]. 4(a) UNIT-II Inventory is the stock of any item or resource used in an organization. Inventory includes: raw materials, finished products, component parts, supplies, and work-in-process. FUNCTIONS OF MATERIALS MANAGEMENT: 1M 5M The important functions of materials management can be classified as 1. Materials planning and control 2. Purchasing 3. Stores management and 4. Inventory control 1. Materials planning and control Materials planning based on sales forecast and production plans for quantity and time Estimating the individual requirement of parts Preparation of materials budget Forecasting the inventory levels Scheduling the orders

6 Monitoring the performance in relation to sales and production Standardization and evaluation of all products 2. Purchasing Selection of source of supply. (Internal or External supplier) Developing new sources of supply at competitive way Finalization of terms of purchase i. Time of delivery ii. iii. iv. Unit cost Installation charges Training charges v. Taxes Placement of Purchase order Follow-up Developing relationships with vendors Approval of payments to suppliers Evaluating and rating the suppliers Make or Buy decisions 3. Stores management Stores is a place where the material is stacked Physical control of materials Codification and Preservation of goods in stores Removal of obsolescence and damage through timely disposal and efficient handling Disposal of over stock, surplus, scrap and salvage of materials Transportation, distribution and material handling Maintenance of store records Proper location and stocking of materials Stock verification and reconciling the verified figures with the figures in the book

7 Warehousing 4. Inventory control Setting of inventory levels Inspection and Quality control Cost reduction through value analysis Carryout ABC analysis Fixing economic order quantities Setting safety stock and reorder levels Lead time analysis and reporting 4 (b) 3M 3M

8 5(a) I/p + o/p+ fig = = 6M The inputs to the MRP system are: (1) A master production schedule, (2) An inventory status file and (3) Bill of materials (BOM). Using these three information sources, the MRP processing logic (computer program) provides three kinds of information (output) for each product component: order release requirements, order rescheduling and planned orders. 1. MASTER PRODUCTION SCHEDULE (MPS) MPS is a series of time phased quantities for each item that a company produces, indicating how many are to be produced and when. MPS is initially developed from firm customer orders or from forecasts of demand before MRP system begins to operate. The MRP system whatever the master schedule demands and translates MPS end items into specific component requirements. Many systems make a simulated trial run to determine whether the proposed master can be satisfied. 2. INVENTORY STATUS FILE Every inventory item being planned must have an inventory status file which gives complete and up to date information on the on-hand quantities, gross requirements, scheduled receipts and planned order releases for an item. It also includes planning information such as lot sizes, lead times, safety stock levels and scrap allowances. 3. BILL OF MATERIALS (BOM) BOM identifies how each end product is manufactured, specifying all subcomponents items, their sequence of build up, their quantity in each finished unit and the work centres performing the build up sequence. This information is obtained from product design documents, workflow analysis and other standard manufacturing information. 2M

9 MRP INPUTS AND OUTPUTS 5 (b) Basic Economic Order Quantity (EOQ) Model This model is applied when objective is to minimize the total annual cost of inventory in the organization. Economic order quantity is that size of the order which helps in attaining the above set objective. EOQ model is applicable under the following conditions. 2M Total annual cost of the inventory (TC) is given by the following equation in EOQ model. 2M

10 UNIT-III 6(a) Types of implementing Aggregate planning strategies 1. Pure strategy 2. Mixed strategy A pure strategy is one that varies only one factor for example, maintain a constant work force level or maintain a constant inventory. 3M Mixed strategy is a planning approach in which two or more options, such as overtime, subcontracting, hiring and layoff, etc., are used. There are both inventory changes and work force and production rate changes over the planning horizon. Typically, mixed strategies are better (result in lower costs) than pure strategies 3M 6 (b) The basic types of aggregate planning strategies available for organization are as follows. Line Strategy As the name suggests, level strategy looks to maintain a steady production rate and workforce level. In this strategy, organization requires a robust forecast demand as to increase or decrease production in anticipation of lower or higher customer demand. Advantage of level strategy is steady workforce. Disadvantage of level strategy is high inventory and increase back logs. 2M

11 Chase Strategy As the name suggests, chase strategy looks to dynamically match demand with production. Advantage of chase strategy is lower inventory levels and back logs. Disadvantage is lower productivity, quality and depressed work force. 2M 2M 7(a) 6M Scheduling strategies vary widely among firms and range from no scheduling to very sophisticated approaches. These strategies are grouped into four classes: 1. Detailed scheduling: Detailed scheduling for specific jobs that are arrived from customers is impracticable in actual manufacturing situation. Changes in orders, equipment breakdown, and unforeseen events deviate the plans. 2. Cumulative scheduling: Cumulative scheduling of total work load is useful especially for long range planning of capacity needs. This may load the current period excessively and under load future periods. It has some means to control the jobs. 3. Cumulative detailed: Cumulative detailed combination is both feasible and practical approach. If master schedule has fixed and flexible portions. 4. Priority decision rules: Priority decision rules are scheduling guides that are used independently and in conjunction with one of the above strategies, i.e., first come first serve. These are useful in reducing Work-In-Process (WIP) inventory. These are,

12 7(b) FCFS - First Come, First Served SPT - Shortest Processing Time EDD - Earliest Due Date LPT - Longest Processing Time LS - Least Slack Rush - emergency Standard Scheduling techniques Forward Scheduling starts processing when a job is received Backward Scheduling begin scheduling the job s last activity so that the job is finished on due date. Forward scheduling means assigning customer orders or jobs to various work centers based on the approach as early as possible. Forward scheduling is commonly used in job shops where customers place their orders on needed as soon as possible basis. Forward scheduling determines start and finish times of next priority job by assigning it the earliest available time slot and from that time, determines when the job will be finished in that work centre. Since the job and its components start as early as possible, they will typically be completed before they are due at the subsequent work centers in the routing. The forward method generates in the process inventory that are needed at subsequent work centers and higher inventory cost. Forward scheduling is simple to use and it gets jobs done in shorter lead times, compared to backward scheduling. 3M Backward scheduling is a way of scheduling which is based on the approach as late as possible with the condition that the jobs are finished by their due dates of delivery to the customer. Backward scheduling is often used in assembly type industries and commit in advance to specific delivery dates. Backward scheduling determines the start and finish times for waiting jobs by assigning them to the latest available time slot that will enable each job to be completed just when it is due, but done before. By assigning jobs as late as

13 possible, backward scheduling minimizes inventories since a job is not completed until it must go directly to the next work centre on its routing. 3M UNIT-IV 8. (a) Deterministic Inventory Models: (any three) 2 x3 = 6M

14 8 (b) M = 19,500 units/yr Co = Rs 25/order Cc = Rs 4/unit/yr 2 M Co i. EOQ = Cc 2 x x 25 = 4 = 494 units 4M ii. Annual Holding costs = x 4 = Rs 78,000/- 1M iii. Annual ordering costs = (m/q) x Co = 40 x 25 = Rs 1000/- 1M 9 (a) 2M 2M

15 2M 9 (b) Enterprise Resource Planning (ERP): 6M Integration of financial, manufacturing, and human resources on a single computer system. ERP Software: ERP software provides a system to capture and make data available in real time to decision makers and other users in the organization Provides tools for planning and monitoring various business processes Includes Production planning and scheduling Inventory management Product costing Distribution

16 ERP in Services: Service applications such as: Professional services Postal services Retail Banking Healthcare Higher education Engineering Logistical services Real estate ERP Strategy Considerations: High initial cost High cost to maintain Future upgrades Training ****THE END**** Prepared by S.Krugon Assistant Professor, Dept. of Mechanical Engg., Bapatla Engineering College, Bapatla , Guntur District, Andhra Pradesh, India E mail: seelamkrugon@gmail.com Cell: