OPERATIONS MANAGEMENT

Assignment-2

RAHUL GUPTA
18021141087
Section-B
 Q.No.1a

A bank processes and issues credit cards from four branches (A,B,C,D) sequentially. The
individual branch capacity and average issues are shown below. Find system’s capacity and
efficiency.

A B C D
130 120 180 220 100
Applications verifications Processing Approvals Issues
/day

Ans:

Q.No.1b
Certain products like bottled water, ice cream cones, school bags undergo a cyclic demand with
high and low seasons if you are operations manager of one of such manufacturing company
how will you manage the high and low demand seasons?

Ans- 1b-
Demand of products:
Ice Cream: High demand season: Summers, Low demand Season: Winters
Bottled Water: High demand season: Summers, Low demand Season: Winters
School Bags: High demand Season: New Session Beginning, Low demand Season:
Middle of session
So, it may be economical for the firm to build inventory during low demand season to take care
of peak season demand.
• Companies may not like to work with varying production rates to avoid labor and supplier
implications
Q.No.1c
Dunkin Donuts bakes popular Jumbo chocolate doughnuts. Doughnuts are made fresh every
morning at 4.00 am. And sold through the day. Leftover doughnuts are put in a grab bag and
sold at discounted rate for Rs 90.00 next day. Fresh doughnuts are sold for Rs 120.00 each. The
cost to make each doughnut is Rs 45.00. The bakery has recorded first day sales data for the
last 200 days. Determine how many doughnuts should be made in the morning.

Dozens of doughnuts Frequency

2 14
3 18
4 26
5 32
6 30
7 26
8 20
9 18
10 12
11 2
12 2

Total 200
Ans:

As the value we get 0.2 which is nearest to 0.16 that is 4 dozen of doughnuts
Q.No.2
SIBM Hyderabad sports department wants to prepare its budget for 2018 using a forecast for
football attendance. The athletics director believes attendance is directly related to the number
of wins by the team. Past eight years attendance are as follows. The director believes the team
will win at-least seven games this year.

Wins Attendance
4 36.3
6 40.1
6 41.2
8 53.0
6 44.00
7 45.6
5 39.00
7 47.5
Total 49 346.7

Develop a simple regression equation for this data to forecast attendance for 7 wins this year.

Ans:
 Q.3 What are the objectives of method study? What type of charts and diagrams are useful in
conducting the method study?
Ans 3. Method-study concerned with “the way in which work is done (i.e., method)”. It is used
to simplify the way to accomplish a work and to improve the method of production. Method-
study results in a more effective use of material, plant, equipment and manpower.
Objectives of Method Study
Method study is essentially concerned with finding better ways of doing things. It adds value and
increases the efficiency by eliminating unnecessary operations, avoidable delays and other forms
of waste. The improvement in efficiency is achieved through:

1. Improved layout and design of workplace.

2. Improved and efficient work procedures.
3. Effective utilization of men, machines and materials.
4. Improved design or specification of the final product.
The objectives of method study techniques are:
1. Present and analyze true facts concerning the situation.
2. To examine those facts critically.
3. To develop the best answer possible under given circumstances based on critical examination
of facts.
 Types of Charts
It can be broadly divided into (A) Macro motion charts and (B) Micro motion charts. Macro
motion charts are used for macro motion study and micro motion charts are used for micro
motion study. Macro motion study is one which can be measured through ‘stop watch’ and
micro motion study is one which cannot be measured through stop watch.

MACRO MOTION CHARTS

Following four charts are used under this type:

1. Operation Process Chart

It is also called outline process chart. An operation process chart gives the bird’s eye view of
the whole process by recording only the major activities and inspections involved in the
process. Operation process chart uses only two symbols, i.e., operation and inspection.
Operation, process chart is helpful to:
a. Visualize the complete sequence of the operations and inspections in the process.
b. Know where the operation selected for detailed study fits into the entire process.
c. In operation process chart, the graphic representation of the points at which materials are
introduced into the process and what operations and inspections are carried on them are
shown.

2. Flow Process Chart

Flow process chart gives the sequence of flow of work of a product or any part of it through
the work centre or the department recording the events using appropriate symbols. It is the
amplification of the operation process chart in which operations; inspection, storage, delay
and transportation are represented. However, process charts are of three types:

a. Material type— which shows the events that occur to the materials.
b. Man type—Activities performed by the man.
c. Equipment type— how equipment is used.
The flow process chart is useful:
to reduce the distance travelled by men (or materials).
to avoid waiting time and unnecessary delays.
to reduce the cycle time by combining or eliminating operations.
to fix up the sequence of operations.
to relocate the inspection stages.
Like operation process chart, flow process chart is constructed by placing symbols one
below another as per the occurrence of the activities and are joined by a vertical line. A
brief description of the activity is written on the right hand side of the activity symbol and
time or distance is given on the left hand side.
3. Two Handed Process Chart
A two handed (operator process chart) is the most detailed type of flow chart in which the
activities of the workers hands are recorded in relation to one another. The two handed
process chart is normally confined to work carried out at a single workplace. This also gives
synchronized and graphical representation of the sequence of manual activities of the worker.
The application of this charts are:
To visualize the complete sequence of activities in a repetitive task.
To study the work station layout.

4. Multiple Activity Chart

It is a chart where activities of more than subject (worker or equipment) are each recorded on
a common time scale to show their inter-relationship. Multiple activity chart is made:
to study idle time of the man and machines,
to determine number of machines handled by one operator, and
to determine number of operators required in teamwork to perform the given job.

Diagrams Used in Method Study

The flow process chart shows the sequence and nature of movement but it does not clearly show
the path of movements. In the paths of movements, there are often undesirable features such as
congestion, back tracking and unnecessary long movements. To record these unnecessary
features, representation of the working area in the form of flow diagrams, string diagrams can be
made:
1. To study the different layout plans and thereby; select the most optimal layout.
2. To study traffic and frequency over different routes of the plant.
3. Identification of back tracking and obstacles during movements.
Diagrams are of two types:
1. Flow diagram and
2. String diagram.

1. FLOW DIAGRAM
Flow diagram is a drawing, of the working area, showing the location of the various activities
identified by their numbered symbols and are associated with particular flow process chart
either man type or machine type. The routes followed in transport are shown by joining the
symbols in sequence by a line which represents as nearly as possible the path or movement of
the subject concerned. Following are the procedures to make the flow diagram:

1. The layout of the workplace is drawn to scale.

2. Relative positions of the machine tools, work benches, storage, and inspection benches are
marked on the scale.
3. Path followed by the subject under study is tracked by drawing lines.
4. Each movement is serially numbered and indicated by arrow for direction.
5. Different colors are used to denote different types of movements.

2. STRING DIAGRAM
The string diagram is a scale layout drawing on which, length of a string is used to record the
extent as well as the pattern of movement of a worker working within a limited area during a
certain period of time. The primary function of a string diagram is to produce a record of a
existing set of conditions so that the job of seeing what is actually taking place is made as
simple as possible.
One of the most valuable features of the string diagram is the actual distance travelled during
the period of study to be calculated by relating the length of the thread used to the scale of
drawing. Thus, it helps to make a very effective comparison between different layouts or
methods of doing job in terms of the travelling involved. The main advantages of string
 diagram compared to flow diagram is that respective movements between work stations
which are difficult to be traced on the flow diagram can be conveniently shown on string
diagram.

Following are the procedures to draw string diagram:

1. A layout of the work place of factory is drawn to scale on the soft board.
2. Pins are fixed into boards to mark the locations of work stations, pins are also driven at the
turning points of the routes.
3. A measured length of the thread is taken to trace the movements (path).
4. The distance covered by the object is obtained by measuring the remaining part of the
thread and subtracting it from original length.

MICRO-MOTION STUDY CHART

Micro-motion study provides a technique for recording and timing an activity. It is a set of
techniques intended to divide the human activities in a groups of movements or micro-motions
(called Therbligs) and the study of such movements helps to find for an operator one best
pattern
of movements that consumes less time and requires less effort to accomplish the task. Therbligs
were suggested by Frank O. Gilbreth, the founder of motion study. Micro-motion study was
mainly employed for the job analysis. Its other applications include:
1. As an aid in studying the activities of two or more persons on a group work?
2. As an aid in studying the relationship of the activities of the operator and the machine as a
means of timing operations.
3. As an aid in obtaining motion time data for time standards.
4. Acts as permanent record of the method and time of activities of the operator and the
machine.
SIMO chart symbols

The micro-motion group of techniques is based on the idea of dividing human activities into
division of movements or groups of movements (Therbligs) according to purpose for which they
are made. Gilbreth differentiated 17 fundamental hand or hand and eye motions. Each Therbligs
 has a specific color, symbol and letter for recording purposes. The Therbligs are micro-motion
study involves the following steps:
1. Filming the operation to be studied.
2. Analysis of the data from the film.
The recording of the data through SIMO chart is done as micro motion chart.
SIMO Chart
Simultaneous motion cycle chart (SIMO chart) is a recording technique for micro-motion study.
A SIMO chart is a chart based on the film analysis, used to record simultaneously on a common
time scale the Therbligs or a group of Therbligs performed by different parts of the body of one
or more operators.
It is the micro-motion form of the man type flow process chart. To prepare SIMO chart, an
elaborate procedure and use of expensive equipment are required and this study is justified when
the saving resulting from study will be very high.

Q.No.4
The responsibility of a procurement manager is to get the right price, right quality, right
quantity, right time and right source, what factors he need to consider in supplier selection?

Ans:
Factors in Selecting Suppliers:
To get right price, right quality, right quantity, right time and right source we should
consider the factors such as:

1. Technical capabilities and ability of supplier – evaluate supplier’s technical capabilities

• If suppliers are involved in design specifications, sometimes the supplier can suggest
changes in product specification that will improve the product and reduce cost.

2. Manufacturing capability - Supplier’s manufacturing facilities must be able to supply the

quality and quantity of the products wanted.

3. Reliability - It is desirable to pick a supplier who is reputed, stable, and financially strong
enough to stay in business.

4. After-sales service - If the product is of a technical nature or likely to need replacement

parts or technical support, the supplier must have a good after-sales service.

5. Supplier location - Sometimes it is desirable that the supplier be located near the buyer,
or at least maintain an inventory locally.
• A close location helps shorten delivery times and means emergency shortages can be
delivered quickly.

6. Other considerations - Credit terms, reciprocal business, and willingness of the supplier
to hold inventory, Just in Time (JIT) delivery capabilities, technical support in using
supplier goods, Supply of know-how.
Q.No.5a
Give a brief note on types of costs that are important for inventory related decisions
Ans:
Inventory related costs:
Three types of costs are important for inventory related decisions:

1. Ordering cost
2. Carrying cost
3. stock out cost

1. Ordering cost – ordering costs are fixed costs that do not vary with the size of the order
• Administrative cost involved in placing the order
• Transportation cost
• Receiving cost
• all fixed costs that are associated with the ordering should be included in the ordering cost

2. Inventory carrying cost – Capture all the actual and opportunity costs that are incurred
because of holding inventory
• Financing cost / borrowing cost / opportunity cost directly proportional to value of items
• Storage and handling cost
• Inventory risk / obsolescence / theft / damage / perishable /

3. Stock out cost – Economical consequences of running out of stock

• These costs are intangible and difficult to measure
• lost sales cost – In lost sales a company loses potential sales because of the non-availability
of finished goods, and the cost incurred in the opportunity of making profit
• apart from being lost opportunity, it may affect the goodwill of the firm and future sales
• Back order cost – cost incurred in a situation where the customer is willing to wait for
the order to be filled.
• Back order may result in additional administrative costs, transportation cost and
handling cost when the material is rushed through to meet the situation.
 Q.No 5b
An office supplies store sees a uniform demand rate of 10 boxes of pencils per week. Each
box costs Rs.5.00. If the fixed cost of placing an order is Rs. 10.00 and the holding cost rate
is Rs. 2.00 per year, determine the optimal order quantity using the EOQ model. Assume 52
weeks per year.

Ans:

Q.No.6
One of the main approaches of Toyota Production System (TPS) is to reduce the timeline
from receiving an order to collecting cash by removing non vale added wastes. What type of
wastes are removed in TPS
 Ans 6:
The seven wastes consist of:

1. Overproduction
Simply put, overproduction is to manufacture an item before it is actually required.
Overproduction is highly costly to a manufacturing plant because it prohibits the smooth flow of
materials and actually degrades quality and productivity. The Toyota Production System is also
referred to as “Just in Time” (JIT) because every item is made just as it is needed.
Overproduction manufacturing is referred to as “Just in Case.” This creates excessive lead times,
results in high storage costs, and makes it difficult to detect defects. The simple solution to
overproduction is turning off the tap; this requires a lot of courage because the problems that
overproduction is hiding will be revealed. The concept is to schedule and produce only what can
be immediately sold/shipped and improve machine changeover/set-up capability.
2. Waiting
Whenever goods are not moving or being processed, the waste of waiting occurs. Typically more
than 99% of a product's life in traditional batch-and-queue manufacture will be spent waiting to
be processed. Much of a product’s lead time is tied up in waiting for the next operation; this is
usually because material flow is poor, production runs are too long, and distances between work
centers are too great. Goldratt (Theory of Constraints) has stated many times that one hour lost in
a bottleneck process is one hour lost to the entire factory’s output, which can never be recovered.
Linking processes together so that one feeds directly into the next can dramatically reduce
waiting.
3. Transporting
Transporting product between processes is a cost incursion which adds no value to the product.
Excessive movement and handling cause damage and are an opportunity for quality to
deteriorate. Material handlers must be used to transport the materials, resulting in another
organizational cost that adds no customer value. Transportation can be difficult to reduce due to
the perceived costs of moving equipment and processes closer together. Furthermore, it is often
hard to determine which processes should be next to each other. Mapping product flows can
make this easier to visualize.
4. Inappropriate Processing
Often termed as “using a sledgehammer to crack a nut,” many organizations use expensive high
precision equipment where simpler tools would be sufficient. This often results in poor plant
layout because preceding or subsequent operations are located far apart. In addition they
encourage high asset utilization (over-production with minimal changeovers) in order to recover
the high cost of this equipment. Toyota is famous for their use of low-cost automation, combined
with immaculately maintained, often older machines. Investing in smaller, more flexible
equipment where possible; creating manufacturing cells; and combining steps will greatly reduce
the waste of inappropriate processing.
5. Unnecessary Inventory
Work in Progress (WIP) is a direct result of overproduction and waiting. Excess inventory tends
to hide problems on the plant floor, which must be identified and resolved in order to improve
operating performance. Excess inventory increases lead times, consumes productive floor space,
delays the identification of problems, and inhibits communication. By achieving a seamless flow
between work centers, many manufacturers have been able to improve customer service and
slash inventories and their associated costs.
6. Unnecessary / Excess Motion
This waste is related to ergonomics and is seen in all instances of bending, stretching, walking,
lifting, and reaching. These are also health and safety issues, which in today’s litigious society
are becoming more of a problem for organizations. Jobs with excessive motion should be
analyzed and redesigned for improvement with the involvement of plant personnel.
7. Defects
Having a direct impact to the bottom line, quality defects resulting in rework or scrap are a
tremendous cost to organizations. Associated costs include quarantining inventory, re-inspecting,
rescheduling, and capacity loss. In many organizations the total cost of defects is often a
significant percentage of total manufacturing cost. Through employee involvement and
Continuous Process Improvement (CPI), there is a huge opportunity to reduce defects at many
facilities.
In the latest edition of the Lean Manufacturing classic Lean Thinking, Underutilization of
Employees has been added as an eighth waste to Ohno’s original seven wastes. Organizations
employ their staff for their nimble fingers and strong muscles but forget they come to work
everyday with a free brain. It is only by capitalizing on employees' creativity that organizations
can eliminate the other seven wastes and continuously improve their performance.
Many changes over recent years have driven organizations to become world class organizations
or Lean Enterprises. The first step in achieving that goal is to identify and attack the seven
wastes. As Toyota and other world-class organizations have come to realize, customers will pay
for value added work, but never for waste.

Q.No 7

A project has been defined to have the following list of activities, along with their required
times for completion

Activity Immediate predecessors Time days

A - 1
B A 4
C A 3
D A 7
E B 6
F C,D 2
G E,F 7
H D 9
I G, H 4

a). Draw the critical path diagram

b). Show early start, early finish, late start, late finish times
c). Show the critical path

Ans:

Gantt Chart:
Forward Pass and Backward Pass
Q.No 8
Universal Bank is considering opening a drive in window for customer service. Management
estimates that customers will arrive at the rate of 15 per hour. The teller whom it is considering
to staff the window can service customers at the rate of one every three minutes.

Assuming Poisson arrivals and exponential service find

1. Average number in the waiting line.
2. Average number in the system.
3. Average waiting time in line.
4. Average waiting time in the system.