ASSIGNMENT-1 ON (CP-206)

SUBMITTED FOR MBA

UN012789
MBA, 2nd Semester

1. (a) Classify and discuss on the Production system.

Answer:
Classification of Production system: Production system is classified in four categories
based on product variety and production operation volume. Those are as follows:

CONTINUOUS

MASS
Production
Operation
Volume BATCH

JOB-SHOP

Output/
Production
Variety

1. Job-shop production: It is featured by manufacturing one or more quantity of

products designed and produced as per the specification of customers within prefixed time
and cost. The distinguishing feature of this is low volume and a high variety of products. A
job-shop comprises of general-purpose machines arranged into different departments. Each
job demands unique technological requirements that demands to process on machines in a
certain sequence.
Features-
a) A high variety of products and low volume.
b) Use of general-purpose machines and facilities.
c) Highly skilled operators who can take up each job as a challenge because
of uniqueness.
d) Large inventory of materials, tools, parts.

Advantages:
i) Because of the general-purpose machines and facilities, a variety of
products can be produced.
ii) Operators will become more skilled and competent, as each job gives them
learning opportunities.
iii) The full potential of operators can be utilized.
iv) An opportunity exists for Creative methods and innovative ideas.
 Limitations:
i) Higher cost due to frequent setup changes.
ii) A Higher level of inventory at all levels and hence higher inventory
cost.
iii) Production planning is complicated.
iv) Larger space requirements.

2. Batch production: Batch Production is a form of manufacturing in which the job

pass through the functional departments in lots or batches and each lot may have a
different routing. It is characterized by the manufacture of a limited number of products
produced at regular intervals and stocked stored for sales.
Features-
a) Shorter production runs.
b) Plant and machinery are flexible.
c) Plant and machinery set up are used to produce the item in a batch and
change of set up is required for processing the next batch.
d) Manufacturing lead-time and cost are lower as compared to job order
production.

Advantages:
i) Better utilization of plant and machinery.
ii) Promotes functional specialization.
iii) A Cost per unit is lower as compared to job order production. 4. Lower
investment in plant and machinery.
iv) Flexibility to accommodate and process several products.
v) Job satisfaction exists for operators.

Limitations:
i) Material handling is complex because of irregular and longer flows.
ii) Production planning and control is very complex.
iii) Work in process inventory is higher compared to continuous production.
iv) Higher set up costs due to frequent changes in set up.

3. Mass production: The manufacturer of discrete parts or assemblies using a

continuous process is called Mass Production. This production system is justified by a very
large volume of production. The machines are arranged in a line or product layout. Product
and process standardization exists, and all outputs follow the same path.
Features-
a) Standardization of product and process sequence.
b) Dedicated special purpose machines having higher production capacities
and output rates.
c) A large volume of products.
d) The shorter cycle time of production.
e) Lower in process inventory.
f) Perfectly balanced production lines.
 Advantages:
i) The higher rate of production with reduced cycle time.
ii) Higher capacity utilization due to line balancing.
iii) Less skilled operations are required.
iv) Low process inventory.
v) The manufacturing cost per unit is low.
Limitations:
i) The breakdown of one machine will stop an entire production line.
ii) The line layout needs a major change with the changes in the product
design.
iii) High investment inn production facilities.
iv) The cycle time is determined by the slowest operation.

4. Continuous production: Production facilities are arranged as per the sequence of

production operations from the first operations to the finished product. The items are made
to flow through the sequence of operations through material handling devices such as
conveyors, transfer devices, etc.
Features-
a) Dedicated plant and equipment with zero flexibility.
b) Material handling is fully automated.
c) The process follows a predetermined sequence of operations.
d) Component materials can’t be readily identified with the final product.
e) Planning and scheduling is a routine action.

Advantages:
i) Standardization of product and process sequence.
ii) The higher rate of production with reduced cycle time.
iii) Higher capacity utilization due to line balancing.
iv) Manpower isn’t required for material handling as it is completely
automatic.
v) A person with limited skills can be used on the production line.
vi) Unit cost is lower due to the high volume of production.

Limitations:
i) Flexibility to accommodate and process several products does not exist.
ii) Very high investments for setting flow lines.
iii) Product differentiation is limited.
1. (b) “Production and Operation Management (POM) is basically concerned with
transformation of inputs into outputs that, when distributed, meet the needs of
customers.”- Justify the statement with practical examples.

Answer:
Operations management transforms inputs (labor, capital, equipment, land, buildings,
materials and information) into outputs (goods and services) that provide added value to
customers.
Environment
Customers Suppliers Competitors
Regulation Economy Technology

Inputs Transformation System

• Capital • Alteration
• Materials • Transportation
• Equipment • Storage
Outputs
• Facilities Facilitating goods
• Inspection
• Labour Services
• Suppliers
• Knowledge
• Time

Action Data Action Data Data

Monitoring
and
Control

This above picture summarizes the transformation process. The arrow labelled
“Transformation System” is the critical element in the model that will determine how well the
organization produces goods and services that meet customer needs. It does not matter
whether the organization is a for-profit company, a non-profit organization (religious
organizations, hospitals, etc.), or a government agency; all organizations must strive to
maximize the quality of their transformation processes to meet customer needs.

Example: The 3M Company is a good example of the strategic importance of

transforming inputs into outputs that provide competitive advantage in the
marketplace.

3M manufactures a top-quality adhesive tape called “Magic Tape”. Magic Tape is

used for everyday taping applications, but it offers attractive features that most other
tapes do not, including:
• Smooth removal from the tape roll
• An adhesive that is sticky enough to hold items in place (but not too sticky that it
cannot be removed and readjusted if necessary!)
• A non-reflective surface
 For several decades, 3M has enjoyed a substantial profit margin on its Magic Tape
product because 3M engineers make the manufacturing equipment and design the
manufacturing processes that produce Magic Tape. In other words, 3M enjoys a
commanding competitive advantage by controlling the transformation processes that
turn raw material inputs into the high value-added Magic Tape product.
Controlling the transformation process makes it extremely difficult for competitors to
produce tape of the same quality as Magic Tape, allowing 3M to reap significant
profits from this superior product.

An opposite example of the strategic implications of the input/output transformation

process is 3M’s decision in the 1980s to stop manufacturing VHS tape for video
players and recorders.

In the VHS tape market 3M had no proprietary manufacturing advantage, as there

were many Asian competitors that could produce high-quality VHS tape at lower
cost. Since 3M had no proprietary control over the transformation process for VHS
tape that would allow the company to protect its profit margins for this product, it
dropped VHS tape from its offerings.

The two 3M examples of Magic Tape and VHS tape show how important the
transformation process and operations management can be to provide and protect
an organization’s competitive advantage.

2. (a) Discuss the factors which can affect the decision of a location selection.

Answer:
Factors affecting the decision of a location selection: Decisions regarding selecting a
location need a balance of several factors. These are divided into primary factors and
secondary factors; here both the factors can influence the business in the long run.

Primary factors-
i) Availability of raw materials: Availability of raw materials is the most important
factor in plant location decisions. Usually, manufacturing units where there is the
conversion of raw materials into finished goods is the main task then such
organizations should be in a place where the raw materials availability is maximum
and cheap.
ii) Nearness to the market: Nearness of market for the finished goods not only
reduces the transportation costs, but it can render quick services to the customers. If
the plant is located far away from the markets, then the chances of spoiling and
breakage become high during transport. If the industry is nearer to the market, then
it can grasp the market share by offering quick services.
iii) Availability of labour: Another most important factor which influences the plant
location decisions is the availability of labour. The combination of the adequate
number of labours with suitable skills and reasonable labour wages can highly
benefit the firm. However, labour-intensive firms should select the plant location
which is nearer to the source of manpower.
iv) Transport facilities: In order to bring the raw materials to the firm or to carrying
the finished goods to the market, transport facilities are very important. Depending
on the size of the finished goods or raw materials a suitable transportation is
necessary such as roads, water, rail, and air. Here the transportation costs highly
increase the cost of production, such organizations can not complete with the rival
firms. Here the point considered is transportation costs must be kept low.
v) Availability of fuel and power: Unavailability of fuel and power is the major
drawback in selecting a location for firms. Fuel and power are necessary for all most
all the manufacturing units, so locating firms nearer to the coal beds and power
industries can highly reduce the wastage of efforts, money and time due to the
unavailability of fuel and power.
vi) Availability of water: Depending on the nature of the plant firms should give
importance to the locations where water is available. For example, power plants
where use water to produce power should be located near the water bodies.

Secondary factors-
i) Suitability of climate: Climate is really an influencing factor for industries such as
agriculture, leather, and textile, etc. For such industries extreme humid or dry
conditions are not suitable for plant location. Climate can affect the labour efficiency
and productivity.
ii) Government policies: While selecting a location for the plant, it is very important
to know the local existed Government policies such as licensing policies, institutional
finance, Government subsidies, Government benefits associated with establishing a
unit in the urban areas or rural areas, etc.
iii) Availability of finance: Finance is the most important factor for the smooth
running of any business; it should not be far away from the plant location. However,
in the case of decisions regarding plant location, it is the secondary important factor
because financial needs can be fulfilled easily if the firm is running smoothly. But it
should be located nearer to the areas to get the working capital and other financial
needs easily.
iv) Competition between states: In order to attract the investment and large-scale
industries various states offer subsidies, benefits, and sales tax exemptions to the
new units. However, the incentives may not be big, but it can help the firms during
its start-up stages.
v) Availability of facilities: Availability of basic facilities such as schools, hospitals,
housing and recreation clubs, etc can motivate the workers to stick to the jobs. On
the other hand, these facilities must be provided by the organization, but here most
of the employees give preference to work in the locations where all these
benefits/facilities are available outside also. So, while selecting plant location,
organizations must give preference to the location where it is suitable for providing
other facilities also.
vi) Disposal of waste: Disposal of waste is a major problem particularly for industries
such as chemical, sugar, and leather, etc. So that the selected plant location should
have provision for the disposal of waste.
2. (b) What is acceptance of sampling? Write down its benefits in production
management.

Answer:
Acceptance of sampling: Acceptance of sampling is a statistical measure used in
quality control. It allows a company to determine the quality of a batch of products by
selecting a specified number for testing. The quality of this designated sample will be
viewed as the quality level for the entire group of products.

Benefits of acceptance of sampling in production management:

(i) The method is applicable in those industries where there is mass production and
the industries follow a set production procedure.
(ii) The method is economical and easy to understand.
(iii) Causes less fatigue boredom.
(iv) Computation work involved is comparatively very small.
(v) The people involved in inspection can be easily imparted training.
(vi) Products of destructive nature during inspection can be easily inspected by
sampling.
(vii) Due to quick inspection process, scheduling and delivery times are improved.

3. (a) ABC analysis:

ABC analysis is a type of inventory categorization method in which inventory
is divided into three categories, A, B, and C, in descending value. A has the highest
value items, B is lower value than A, and C has the lowest value.
Inventory management and optimization in general is critical for business to
help keep their costs under control. ABC analysis works towards this goal by letting
management focus most of their attention on the few highest value goods (the A-
items) and not on the many low value, trivial goods (the C-items).
ABC analysis may be seen to share similar ideas as the Pareto principle, which
states that 80% of overall consumption value comes from only 20% of items. Plainly,
it means that 20% of your products will bring in 80% of your revenues.

ABC analysis works by breaking it down in the following ways:

A-items: 20% of all goods contribute to 70-80% of the annual consumption
value of the items
B-items: 30% of all goods contribute to 15-25% of the annual consumption
value of the items
C-items: 50% of all goods contribute only 5% of the annual consumption
value of the items

In order to calculate the annual consumption value of any item or items:

Annual consumption value = annual demand x item cost per unit

That way, the manager can determine which goods bring in the most value
and separate those from the numerous goods that provide little profit.
3. (c) Prevention Maintenance Vs. Breakdown Maintenance:
Basis of comparison Prevention Maintenance Breakdown Maintenance
1. Definition Prevention Maintenance (PM) Breakdown Maintenance (BM)
is work that is scheduled based is work that is only performed
on calendar time, asset when a piece of equipment
runtime, or some other period. breaks down or has a
downtime event.
2. Trigger Time Downtime event
3. Cost Low Low
4. Cost Savings 12%-18% [1] Dependent on equipment and
breakdown maintenance plan
5. Resources Needed • Maintenance software • Maintenance software
for scheduling. for downtime triggers
• Maintenance • Necessary replacement
scheduler (for larger equipment
organizations)
• Preventive
maintenance checklists
6. Pros • Extends the lifetime of • Lowers overall costs of
assets non-critical
• Optimizes planning of manufacturing
maintenance and equipment
resources • Minimizes preventive
maintenance costs on
nonessential
equipment

7. Cons • Can be expensive to • Can’t be used for many

keep up over the long types of equipment,
term especially safety
• Labour intensive due to equipment
constant maintenance • Requires careful
tasks planning and execution
to work effectively

8. Use Case An organization wants to An organization wants to lower

decrease unplanned downtime the cost of constantly
and emergency maintenance replacing a variety of light
but does not have a large bulbs in a facility. Instead of
maintenance budget. As a replacing them at designated
solution, they implement a PM intervals, the organization
program for select assets. decides to adopt a breakdown
Work orders are scheduled for maintenance plan, only
inspections, lubrication, filter replacing light bulbs when
replacements, and parts they are completely burned
replacements based on out. This saves time and
recommendations from OEMs. reduces the overall cost of
buying light bulbs as the
necessary number of spares is
lower.