Q1: A large number of forecasting methods are available. Discuss the categories/classification of forecasting methods.

A1: Classification of Forecasting Methods a) Opinion and judgemental (Predictive) methods The qualitative or judgment method is a method that translates the opinions of managers, experts in the field, consumer surveys, and sales force estimates into quantitative estimates. These methods range from a scientifically conducted opinion survey to the nominal group technique. These are commonly used techniques in business and industries, where they rely heavily on the past experiences and skills of people. There are four methods adopted under this category, namely: 1.Opinion survey method: This is a simple and practical method used for FC for new products, where the opinions are collected from prospective buyers regarding why they buy and what they expect out of those products. 2.Market research/trial method: When a product is new to the customer or market, it is difficult to anticipate its acceptability. In such a case, a trial run of the new product in the market as a controlled experiment in a carefully selected place is practised. Market research is a systematic approach used to determine the consumer interest in a product and decisions taken based on the testing hypotheses. (This type is recommended in consumer goods like cosmetics, software, and other fast selling consumer goods). 3.Delphi technique: Delphi technique is an interactive learning process through the group of experts in the field responding to a set of questionnaire and hence is a subjective method of relying on the opinion of a few experts. As many experts are involved in the consensus developing process, it minimises the bias and error of judgement compared to other opinion methods. 4.Nominal group technique: Here, the panel of experts work together to arrive at a consensus through discussions. Success of the nominal group process lies in identifying questions, allowing creativity, encouraging discussions and ultimately arriving at a consensus. b) Time series methods or quantitative methods In this method, it is assumed that the past data is a good indicator of the future, and hence a lot of assumptions are made here while making a quantitative forecast. With the experience of the operation managers, they can master the prediction from the historic data of the product. For this, the operations managers use the time series model to forecast the demand for their goods or services. Time series method addresses the horizontal trend and seasonal patterns of demand. The following are the time series methods that are normally used 1.Simple Average: A simple average is the average demand occurring in all previous periods, which are weighed equally. This method uses the average demand time series and thereby removes the negative effect of random fluctuations. Specifically, the forecast for the period say [t+1], can be calculated as SA = Sum of demands for all periods] / Number of periods 2.Simple Moving Average: This is an average of demands occurring in a fixed number of recent periods and the forecast as the future demand. MSA= [(Sum of demands for periods)/ [(chosen number of periods)] 3.Weighted Moving Average: In both simple and simple moving average, equal weights are given to all the previous periods. However, in practice, the planner wants to give more importance to the recent demands than the old ones that are served. The weighted moving average is obtained by assigning different weights to different periods, but the sum is equal to one. WMA= [Sum of demands for the chosen number of periods each multiplied by its respective Weights]. 4.Simple Exponential Smoothing: SES is a weighted moving average, which weighs the past data in the exponential manner. Here, the most recent data carries more weight than the older ones. The weights given to the older ones decreases progressively. 5.Exponential Smoothing With Trend Adjustment: While the exponential smoothing takes into account the seasonal effects along with regular trend forecasts, exponential smoothing with trend or adjusted exponential smoothing model projects into the future to the time period i.e. t=1, by adding a trend correction increment Tt to the current smoothed average Ft Trend Forecast = New forecast + Possible Trend correction FTA = Ft +Tt Q2: Explain how economic order quantity can be calculated by Model 1: EOQ with Uniform Rate of Demand and Instantaneous Replenishment. A2: Model 1: EOQ with Uniform Rate of Demand and Instantaneous Replenishment This model is analytical. Initially a cost model is developed and inventory model is developed from it. In this model the assumptions made are: The demand is certain and constant over time. the consumption reaches a point.

let the stock at time 0 be Q. This stock is consumed at a rate of d units/day. If the lead time is 0, then stock is replenished immediately at time T1. Point A is the reorder point. It clearly indicates the point at which an order should be placed, so as to avoid stock out. The average inventory level is Q/2 when the maximum inventory is Q. Total annual inventory cost T (Q) = H (Q) + O (Q) where T (Q): total annual inventory cost H (Q): annual holding cost

O (Q): annual ordering cost Total annual ordering cost O (Q) = N X A where O (Q): total annual ordering cost This stock is consumed at a rate of d units/day. If the lead time is 0, then stock is replenished immediately at time T1. Point A is the reorder point. It clearly indicates the point at which an order should be placed, so as to avoid stock out. The average inventory level is Q/2 when the maximum inventory is Q. Total annual inventory cost T(Q) = H(Q) + O (Q) where T (Q): total annual inventory cost H (Q): annual holding cost O (Q): annual ordering cost Total annual ordering cost O (Q) = N X A where O (Q): total annual ordering cost N: frequency of order A: cost per order We can write since where D: annual demand Total Annual Holding Cost: h: unit holding cost Determination of EOQ for Model 1: The total cost equation for this model is To determine EOQ we need to differentiate equation (1) with reference to Q

To verify that the point is the minimum point, we need to check for the 2nd derivative 0 3 Q2AD 2 dQ(Q) T 2d Since A, D, and Q are positive and the second derivative is positive, the point is the minimum point. Worked example on model 1: Ryan stores his inventory in special containers. The space occupied by each container is about 20sq ft. The total storage space available is only 6500 sq ft. The price of the container is Rs 10 per container and the annual demand is 8500 containers. The ordering cost is estimated at Rs 50 per order, and the annual carrying costs amount to 25% of the inventory value. Calculate the economic order quantity. Solution: Given: D = 8500 A = Rs50/order h = 25% of Rs 10 = Rs 2.50/unit/year Therefore, Units EOQ 583 Q3: The priority rule is a systematic procedure for assigning priorities for awaiting jobs. The common problem faced in most of the companies is assigning priority with respect to the job on hand for production. When there is a set of orders to be executed, the question of prioritising arises. Priority rules give the solution to the priority problems faced by companies. Explain in brief about priority rules for scheduling? A3: Following are the major criteria for selecting priority rules:

-process inventory.

The priority rules can be classified as: rules.

Now, we will define the major criteria rules: First Come First Served (FCFS): In this method the job that comes first is served by scheduling first. Shortest Processing Time (SPT): In this method, the job that requires the least of shortest time is processed first. Longest Processing Time (LPT): In this method, the job that requires the longest time is processed first. Least slack: In this method, the top priority is given to the waiting job whose slack time is the least. Slack time is calculated as the difference of the length of time remaining until the job is due and the length of its operation time. For example, if the job requires 6 days and the time left is 8 days, then the slack for that job is only 2 days. Random Selection (RS): This is a rule that selects jobs randomly. There is no basis and it is done with pure chance. Next Queue (NQ): Next queue is based on machine utilisation. The idea is to consider queues at each of the succeeding work centres at which the job goes. The worker then selects the job that is going to the smallest queue, measured either in hours or jobs. Mathematical Programming Methods: It is applied to situations where there are n number of supply sources and n number of demand uses (Example: five jobs on five machines) and the objective is to minimise or maximise the effectiveness. Least Stup (LSU): This rule maximises utilisation. The process calls for scheduling the job first that minimises the changeover time on a given machine. DS/RO (Dynamic Slack per Remaining Operation): In this method, for each job waiting, DS/RO computes value as the amount of dynamic slack remaining divided by the number of operations remaining. The rule then selects the job with the least DR/RO value. Now, we will define the priority criteria rules: Single criterion rule: This rule is to assign jobs on the basis of single criterion-say supply to most preferred customer by following any of the above criteria rules. Critical ratio: It is calculated by dividing the time remaining to the jobs due date by the total shop time remaining for the job. It also includes all set ups, waiting time and so on. Critical Ratio= [(Due date-Todays date) / (Total shop time remaining) Index method: This assigns the job to the best machine until its capacity is exhausted, and then the remaining jobs are assigned to the next best machines. If processing time is the criterion, and if the jobs can be processed in different work centres, indices are calculated for the different likely process time that a job takes in each work center with a lowest index time of 1.0. Critical path method: It is used for scheduling large and unique projects in which relationship between the activities are quite intricate. This method overcomes the deficiencies of Gantt chart. Here a network of work center and processing routes of each job is drawn graphically and PERT (Program Evaluation and Review Technique) or CPM (Critical Path Method) charts are made to identify the critical path. Q4: A Flexible Manufacturing System (FMS) is a manufacturing system comprising a set of similar and/or corresponding numerically controlled machines, which are connected through an automated transportation system. What are the fundamental building blocks and benefits of FMS? A4: Workstations: Nowadays, workstations are typically computer numerical control (CNC) machine tools that perform machining operation on families of parts. An FMS is being incorporated with other type of processing machines like, assembly works, inspection stations, and sheet metal presses. The various workstations are:

Automated material handling and storage system: There are different automated material handling systems that are used to transport sub-assembly parts and other work parts between the workstations. Sometimes storage is incorporated as a function also. The functions of automated material handling and storage system are: The fundamental building blocks of FMS are:

Workstations: Nowadays, workstations are typically computer numerical control (CNC) machine tools that perform machining operation on families of parts. An FMS is being incorporated with other type of processing machines like, assembly works, inspection stations, and sheet metal presses. The various workstations are: nload stations.

Automated material handling and storage system: There are different automated material handling systems that are used to transport sub-assembly parts and other work parts between the workstations. Sometimes storage is incorporated as a function also. The functions of automated material handling and storage system are:

Computer control system: The functions of the processing stations and the material handling system in the FMS are coordinated by the computer control system. The various functions of a computer control system are: tion to work station.

FMS is suitable for the production of mid value, mid variety range. Q5: Supply chain management is essential for the success of every company and to satisfy customer demand. Supply chain management plays a critical role in the success of the company. Supply chain management is equipped to deal with anything from flow of products to unexpected natural disasters. Supply chain management diagnoses the problem and innovatively works around the problems. Explain the impact Supply chain management has on business. A5: Supply chain management has the following impact on business: Reduce operating costs: The operating cost can be reduced by decreasing the purchasing cost, production cost, and total supply chain cost. The purchasing cost can be reduced by depending on supply chains to deliver goods when needed and thereby avoid holding costly inventories. The production costs can be reduced by using reliable sources for delivery of raw materials. Efficient supply chain management reduces costs and enables the firm to be more competitive. Improve financial position: The financial position can be improved by increasing profit leverage and cash inflow and decreasing fixed assets. The supply chain costs can be controlled and reduced hence the profits of a firm can be improved by efficient supply chain management. The investment on fixed assets such as plants, transportation vehicles, and warehouses are eliminated by the use of supply chain management. The cash flow is increased since supply chain management speeds up product flow to customers. Boost customer service: Customer service can be boosted by having the right product assortment and quantity, the right stock location, right delivery time, and right after sale report. Supply chain management ensures that the right product assortment and quantity is delivered to customers. The location of stock and delivery should be appropriate. Customers expect after sale service to be quick and this is done by having an efficient supply chain management. Q6. Quality Planning is defined as a Systematic process that translates the quality policy into measurable objectives and requirements, and lays down a sequence of steps for realising them within a specified timeframe. Explain the elements associated with quality plan. A6: What needs to be checked? h need to be checked. It is mandatory to have a standardised quality check to be carried to any of the significant deliverables. It will be good, if a timely document is maintained. This is because; a weekly report or a memo will not be that effective. For example, in a project, it will be suitable to have the project managements practices to review the quality after the ini tiation of an established project. This will help the organisation to provide a level of confidence for the sponsors and steering committee. What is the most suitable way to check?

standard, then one of the parts of quality check should be focused on fulfilment of that standard. This indicates that a standard audit is the best approach and the most suitable way to check. o follow, but may not check everything. On the other hand, a test plan may check everything, but it may not be easy to be followed. Therefore, quality checking can be made for both correct and engineered aspects or for any one of the aspects. When should the check be carried out? ions that most of the quality events are conducted just before the manufacturing completion of the deliverable. However, it is reasonable to hold early quality events for any long progress lead times of a deliverable. or a car takes 5 weeks, it may be worth holding a part inspection after two weeks to check and identify any issues and minimise the rework. Who should be involved in the checking? roduction should be involved in the checking process. Involving other people from different sectors depends upon the sort of quality event. What quality materials should be used? , quality materials, which are used, will be self evident. It will be useful if the standards are transformed into checklists to track the materials used. For example, if a reviewer is aware of the specifications of a product called as AAA, produced under a standard LKB, then the reviewer can check only the AAA specifications. There is no need to go through the entire LKB standard as a whole quality material, as it can just be used as a reference.