SPRING 2014

Master of Business Administration MBA Semester 2

MB 0044 Production and Operation Management 4 Credits
Book ID B1627
Roll No. 1308002393
Q.No.1 Explain briefly elements of operations strategy?
ANS. ELEMENTS OF OPERATION STRATEGY
1.
2.
3.
4.
5.

Designing of the production system

Facilities for production and services
Product or service design and development
Allocation of resources
Focus on facilities planning

Designing of the production system:

It involves the selection of the type of product design, processing system, inventory plan for
finished goods, etc.
It has two varieties customized product design and standard product design.
Facilities for production and services:
Certain specialization in production allows the firm to provide the customers with products of
lower cost, faster delivery, on-time delivery, high product quality and flexibility. While
planning the specialized lines, the economies of scale and the continuous demand are to be
looked into.
Product or service design and development:
Development of product involve the following stages
1.
2.
3.
4.
5.
6.
7.

Generating the idea.

Creating the feasibility report.
Designing the prototype and testing.
Preparing a production model.
Evaluating the economies of scale for production.
Testing the product in the market.
Obtaining feedback.
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8. Creating the final decision and starting the production.

The various stages of life cycle of any product designed and introduced into the market are
1. In the introduction stage, the sales depend on promotion and marketing efforts.
2. In the growth stage, the organization takes the decisions on the capacity to be
augmented and the investments to be made.
3. During the maturity stage, the organization focuses on improving the efficiency of the
processes, minimizing the costs, etc.
4. At the declining stage, the product may meet the obsolescence both in technology and
in customer requirements, thus warranting the stop of production.
Technology selection and process development:
Combining high technology production equipments with conventional machines and using
robotics, flexible manufacturing systems, automated devices for material movements, etc
have given an edge to the production units to excel in quality, flexibility, production at
economic costs, etc thus enabling the firm to meet the competitions.
Allocation of Resources:
Allocation of resources at the right time to the right place of production indicates the
efficiency of the production planners. Optimal use of resources will enable economical
production.
Facility, capacity and layout planning:
The location, layout and facilities creation for the production are the key decision areas for
the operation manager. The production process adopted and the technology pursued dictates
the volume, quality and cost of production.
Q.No.2 Describe the general factors that influence the plant location decision.
ANS. General factors that influence the plant location decision are:
1.
2.
3.
4.
5.
6.
7.
8.

Availability of land
Availability of inputs
Closeness to market places
Communication facilities
Infrastructure
Transport
Government support
Housing and recreation

AVAILABILITY OF LAND It plays an important role in determining the plant location.

On several occasions, our plans, calculations and forecasts suggest a particular area as the
best to start an organization.
AVAILABILITY OF INPUT It is very important for the organization to get the labour at
the right time and good quality raw materials. The plant should be located near to the raw
material source, at the market place, close to the market when universally available so as to
minimize the transportation cost.

CLOSENESS TO MARKET PLACES It is advisable to locate the plant near to the

market place when:
1.
2.
3.
4.

The projected life of the product is low

The transportation cost is high
The products are delicate and susceptible to spoilage
After sales services have to be prompt.

COMMUNICATION FACILITIES Regions with good communication facilities namely

postal and telecommunication links should be given priority for the selection of sites.
INFRASTRUCTURE The basic infrastructure needed in any organization are:
1. Power Industries which run day and night require continuous power supply. So,
they should be located near the power stations and should ensure continuous power
supply throughout the year.
2. Water Process industries such as paper, chemical and cement require continuous
water supply in large amount. So, such process industries need to be located near the
source of water supply.
3. Waste disposal For process industries such as paper and sugarcane industries,
facility for disposal of waste is the key factor.
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.
GOVERNMENT SUPPORT The factors that demand additional attentions for plant
location are the policies of the state governments and local bodies concerning labour laws,
building codes and safety.
HOUSING AND RECREATION Locating a plant with or near to the facilities of good
schools, housing and recreation for employees will have a greater impact on the organization.
Q.No.3 Write short notes on
1.
2.
3.
4.

Total productive maintenance

GNATT Chart
Bullwhip effect in SCM
Scheduling in services

ANS. 1. TOTAL PRODUCTIVE MAINTENANCE Maintenance is a function in any

operation system. It keeps the equipments in good condition. Total productive maintenance
puts the responsibility of maintenance where it belongs to and on the operator who uses the
equipment. It is a company-wide activity which involves all the people. The main thrust is
eliminating all break downs. The principles of 5S the housekeeping activities which
improve efficiency at workplace, is considered a measurable standard to aid the
implementation of total productive maintenance even in the office room.
2. GNATT CHART It is a graphical representation of the duration of tasks against the
progression of time. It lays out the order in which the tasks need to be carried out. It helps in
planning the time required for completion of a project. A GNATT chart shows dependencies
between tasks. It allows planning for the remedial actions, if any delay, to complete the

project back on time. Along with a milestone chart, it helps to represent the planned bar
which indicates the deadlines and other significant events of the project.
3. BULLWHIP EFFECT IN SCM The Bullwhip effect is the uncertainty caused from
distorted information flowing up and down the supply chain. This affects 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. It may arise because of the
reduced service levels in the organization, inefficient allocation of resources, increased
transportation cost, etc. Four rational factors that create the bullwhip effect are demand signal
processing, the rationing game, order batching and manufacturer price variations.
4. SCHEDULING IN SERVICES Scheduling basically assigns different jobs to different
facilities called shop loading, sequencing the jobs and operations and then monitoring and
revising the schedules through controlling. Providing the required manpower and skills for
the sudden demand in scheduling a service activity is challenging and sometimes becomes
crucial. In order to provide timely service and utilize the capacity to the maximum extent, the
scheduler has to adopt certain systems or methodologies. There are three methods normally
used by the scheduler in services: backlogs, reservations and appointments.
Q.No.4 Explain the steps and tools for changing project management process.
ANS. The steps for changing project management process are as follow:
Request for a
change

Identify
Alternate
Solutions

Decide on
the actions
for the
change

Implement
change

1. REQUEST FOR A CHANGE Based on the need a formal request is made. This
request can come from either a member of the project team or a client or a coordinator
or key stakeholder.
2. IDENTIFY ALTERNATE SOLUTIONS The change request is evaluated and
several alternative solutions are identified. The alternatives are assessed with respect
to the functional scope, schedule, effort and cost.
3. DECIDE ON THE ACTIONS FOR THE CHANGE The project management team
is required to accept the recommendation, choose an alternative solution, or request
further investigation. Based on this, a final action plan for the change is selected.
4. IMPLEMENT CHANGE Once the project management approves a solution for the
change, make appropriate schedule and other project plan adjustments to
accommodate the change, communicate these to team members, monitor progress and
execute quality control on the changes.
There are various tools which can be used to bring about a change in a process. They are:
Tools for Changing a
Process

Change Management
System (CMS)

Configuration
Management (CM)

1. CHANGE MANAGEMENT SYSTEM (CMS) It is a methodology which requires

collection of all formal documented procedures.
It defines: i. how project performance is monitored and evaluated.
ii. how project plans are updated.
iii. how various measures are implemented to control the change process.
These procedures may be unique to an organization based on their project needs. It also
includes procedures to handle the changes that may be approved without prior review, so that
the evolution of baseline can be documented.
2. CONFIGURATION MANAGEMENT (CM) It involves:
i.
Identifying the configuration items.
ii.
Defining the naming and numbering scheme.
iii. Structuring the changes.
iv.
Defining a backup procedure.
v.
Following the methods for tracking the status of configuration items.
vi.
Defining the responsibility and authority of the CMS.
Q.No.5 Under capacity options the company decides to vary the production output by
varying the time, workforce or outsourcing. What are the basic capacity options a company
can choose to meet them?
ANS. Under the capacity option, the company decides to vary the production output by
varying the time, workforce or by outsourcing. A company can choose from any one of the
following basic capacity option to meet demand:
1. CHANGING INVENTORY LEVELS The inventory is increased during periods
of low demand to meet high demand in future periods. If this strategy is selected,
costs associated with storage, insurance, handling, obsolescence, pilferage and capital
invested increase. These costs typically range from 15 percent to 40 percent of the
value of an item annually.
2. VARYING WORKFORCE SIZE BY HIRING OR LAYOFFS One way to meet
demand is to hire or layoff production workers to match production rates. New
employees often need to be trained and the average productivity drops temporarily as
they are absorbed into the firm. Layoffs of termination lower the morale of all
workers and can lead to lower productivity. Further, it is not correct to expect people
to be available whenever there is a requirement and to terminate their services when
not required.
3. VARYING PRODUCTION RATES THROUGH OVERTIME OR IDLE TIME
It is sometimes possible to keep a constant workforce while varying working hours,
reducing the number of hours worked when demand is low and increasing them when
it rises. When there is a large or high demand there is a limit on how much overtime is
possible. Also, such overtime work requires incentives and extra pay which is at least
one and a half times more than the normal pay.
4. SUBCONTRACTING A firm can acquire temporary capacity by subcontracting
work during peak demand periods. Subcontracting, however, has several pitfalls like
it may be expensive, it risks opening the clients door to a competitor, etc. However,
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of late outsourcing has become a complete business policy and cost of operation may
be cited as the main reason. It is possible to partly produce the items outside or
completely procure from outside. Depending on who is stronger and controlling the
whole process the subcontracting costs will vary and could be even low.
5. USING PART-TIME WORKERS Part-time workers can fill unskilled labour
needs, especially in the service sector. It is common in restaurants, retail stores and
supermarkets. The question of getting the right type of temporary workers is a major
issue and there are many agencies that specialize in supplying temporary workers.
Q.No.6 Write short notes on:
1.
2.
3.
4.

Relevance of Value Engineering in manufacturing

Vendor Managed inventory
Rating methods for locating a plant
Importance of business process modeling

ANS.
1. RELEVANCE OF VALUE ENGINEERING IN MANUFACTURING Modern
manufacturing can be seen from two important perspectives. First is the management
approach which consists of adopting techniques like TQM, JIT, Kanban, concurrent
engineering, lean manufacturing, TPM, group technology, cellular manufacturing and
others. To aid the process, we have computers and software written to collect data,
process them, distribute them and analyze them. Second important perspective is the
Management Information Systems which help in decision making.
2. VENDOR MANAGED INVENTORY It is a process in which a supplier generates
order for its distributor based on demand information sent by the distributor. VMI was
first applied to the grocery industry, between companies like Procter & Gamble
(supplier) and Wal-Mart (distributor). With VMI, suppliers and distributors can both
focus on the same issue how to sell more product to the end user more efficiently.
This changes the suppliers focus from how to get the distributor to buy more, to how
to get the distributor to sell more. This change in the supplier/distributor relationship
is the most exciting feature of vendor managed inventory.
3. RATING METHOD FOR LOCATING PLANT In the case of general factors or
special factors, each factor has its own importance in determining the location of a
plant. Therefore, ranking them and giving them weight age is one of the ways of
determining the location. The score or points for each location for each factor
considered can be a raw score on an arbitrary scale. The number of factors considered
varies on the type of industry and also the relevant factors based on the location. .
The methods which determine the most likely location are:
i.
Rating plan method
ii.
Factor rating method
iii. Point rating method
iv.
Break even analysis
v. Centre of gravity method
4. IMPORTANCE OF BUSINESS PROCESS MODELING Business process
modeling refers to a set of activities undertaken to optimize the business process. It
can be categorized into two parts: Logical process modeling and Physical process
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modeling. Logical process modeling is the representation of putting together all the
activities of business process in detail and making a representation of them. Logical
process model consists of only the business activities and shows the connectivity
among them. Physical process modeling is concerned with the actual design of
database meeting the requirements of the business. Physical modeling deals with the
conversion of the logical model into a relational model.