ASSIGNMENT - MB0017

Q1. Explain the classification of inventory items and control techniques? ANS. Items are classified on several bases; here we shall consider the following: Always Better Control (ABC) Classification. High, Medium and Low (HML) Classification. Vital, Essential and Desirable (VED) Classification. SDE Classification. (Scarce, Difficult, Easy) Fast moving, Slow moving and Non-moving (FSN). Maximum Minimum System. Two-Bin System. Economic Order Quantity (EOQ).

Always Better Control (ABC): The classification in this system is based on the usage in terms of monetary value. ABC classification is based on the idea that only a small percentage of materials represent the majority of inventory value. The three categories are as follows: High consumption value items. Moderate consumption value items. Low consumption value items.

HML analysis: In HML analysis, the items are classified according to their unit cost rather than usage value. The classification is based on their cost per-unit as H-high, M-medium and L-low. Material consumption at the departmental level can be monitored by this analysis. VED analysis: In VED analysis, items are classified according to their importance to the production process. In this system, V stands for vital, consisting of those items without which, production would stop. E denotes essential items whose absence could affect the efficiency of the production process. D stands for desirable items. These items are required but do not cause immediate loss to production. SDE classification: In SDE analysis, items are classified based on availability. Here, S stands for scarce items, D for difficult items and E for easily available items. FSN analysis: FSN classification is based on the consumption pattern of items. In the FSN classification, F stands for fast moving, S for slow moving, and N for non moving items. This helps in the arrangement of stocks and determination of distribution patterns.

Minimum maximum technique: Manual inventory controls are used for this system. The reordering level indicates the minimum quantity. The effectiveness depends on the precision on how the minimum and maximum parameters are established. Hence if the minimum and maximum decided are based on an objective and rational basis, the system will be effective. Two Bin techniques: Here the stock of each item is separated into two bins. One bin contains stock just enough to last from the date a new order is placed until it is received in inventory, and the other bin contains a quantity of stock enough to satisfy probable demand during the period of replenishment. To start with, stock is issued from bin-1. When the first bin is empty, an order for replenishment is placed and the stock in the second bin is utilised until the ordered material is received. This system is ideal if the rate of consumption is constant and the lead- time for items is well established, short and regular. Economic Order Quantity: The lot size ordering of materials that minimises the total annual inventory holding and ordering cost is called the Economic Order Quantity, popularly known as EOQ. Keeping and managing the determined EOQ and ordering the right quantity to strike a balance between the two opposite costs has been emphasised.

Q2. Elucidate capacity scheduling and aggregate capacity scheduling? ANS. Concept of capacity scheduling:Capacity scheduling is nothing but a scheduling method that matches resource needs to a fixed supply of available resources in order to develop a realistic production plan. In the future, if you are given the responsibility to do capacity scheduling, then you should be in the position to ask some of the following questions to yourself: 1. What is the reason behind production scheduling? 2. What does capacity mean? 3. What kinds of resources, if unavailable, could put a stop to the manufacturing operation from proceeding as scheduled? 4. What else can hinder orders? 5. What type of scheduling problems can be encountered? Aggregate capacity scheduling:Aggregate capacity scheduling is nothing but the manufacture quantity and timing of production for intermediate future. It combines the production to make an average product, which is expressed in common units such as hours, dollars and so on.

Objectives of aggregate capacity scheduling: Meet the demand. Use capacity efficiently. Meet the inventory policy. Minimise the cost of labour, inventory, plant and equipment, and subcontract.

Components in the aggregate capacity scheduling: Aggregator. Scheduler. Maintainer.

a. The Aggregator aggregates the requests into types. It updates the data structure and it informs the maintainer about the new event. b. The scheduler calculates the request types with the maximum value. It also calculates the aggregate request for all request types and schedules the request types to the application. c. The maintainer uses an optimisation purpose for the request types. It maintains the alternative property for new events.

The aggregate capacity scheduling also has two main options. They are capability and demand. The capability of an aggregate capacity planning determines the overtime, subcontract, part-time workers, outsourcing, and inventories. The demand determines the promotion, price, back ordering, and counters seasonal product mixing.

Types of strategies in aggregate capacity scheduling:-

Level scheduling strategy: This strategy makes sure that the production of the same quantity is carried out every day. It keeps the work force level constant. It varies non-work force capacity or demand. This strategy results in lowest production costs. Chase strategy: This strategy is used to recruit or terminate employees to make the production capacity meet the necessary production. Mixed strategy: This strategy combines two or more aggregate scheduling options.

Q3. Describe lean and agile manufacturing?

ANS. Lean manufacturing: Lean manufacturing is an organised approach in identifying and eliminating waste through continuous development of manufacturing the product at the demand of the customer. In other words, lean manufacturing is a scheme that looks to produce a high level of output with a minimum of inventory. In the earlier days, lean manufacturing centres focused on placing small stocks of inventory in planned locations around the assembly line, instead of a centralised warehouse. These small stocks are known as kanban. The usage of the kanban considerably minimises waste and improves productivity on the factory floor. There are a lot of similarities between lean manufacturing and the Total Quality Management techniques. Both of these techniques provide authorisation to the workers at the assembly line with the confidence that those close to the manufacturing have superior knowledge on how the manufacturing or the production system should work. Under the lean manufacturing technique, suppliers deliver small amounts of materials on a daily basis. In addition, the machines may not respond to their full capacity. As you already know, the main objective of lean manufacturing is to eliminate waste, which means anything which does not add value to the end product is eliminated. With reference to this, large inventories are seen as a type of waste, which carry a huge cost. Another major focus under lean manufacturing is the process of allowing the workers to make the manufacturing decisions at the lowest level possible. Let us discuss about the implementation of lean manufacturing technique. Well, in order to implement the lean manufacturing process, it is important that each employee or worker is provided with significant training or has required competency. After this training, implementing the following steps will help in implementation of successful lean manufacturing. Deciding which characteristics of lean manufacturing apply to your organisation and prioritising according to your requirements and capabilities.

Classifying your workers into groups according to similar training requirements. Recognising your production programs and making a matrix, or a chart. Making a decision, whether you will hire an external consultant or take the suggestions of internal employees.

Planning a time frame or listing according to work area or personnel. Setting up an immediate schedule and beginning the task according to the schedule.

Agile manufacturing: Agility is defined as the capacity of changing quickly or adapting to change quickly. The production technology used by the manufacturing units decides the capability of designers, marketers and production personnel to share the common database of parts and products. This is a major and one of the vital contributing factors, which a manufacturer must possess in order to be an agile manufacturer. Therefore, the agile manufacturing technique can be explained as the ability of surviving and flourishing in a competitive atmosphere of constant and unpredictable change by reacting swiftly and effectively to changing markets, driven by customer-designed products, demands, and services. The organisations or the companies, which have implemented agile manufacturing techniques, always have a very strong bonding or network with the vendors, suppliers, and other related companies. In addition, the companies also have a strong network with many other supportive teams that work together with the same organisation with reference to the manufacturing of a quality product. The organisation can retool facilities swiftly, discuss upon new agreements with suppliers and other partners with reference to the changing market, and take other initiative steps to fulfil customer demands. This means that the organisation can increase manufacturing of products with a high consumer demand as well as redesign products to respond to issues that have emerged in the open market. In the case, where an organisation or a company plans to shift to agile manufacturing technique, the companies can always take advantage of specialists, who provide solutions to companies and who help in improving or converting the existing manufacturing techniques into agile manufacturing. These specialists can offer a tailored solution with reference to the type of sector that a company is involved in. The specialists make a company to be competitive as quickly as possible with their tested agile manufacturing techniques. It will also be useful for you to know that there are some key issues in agile manufacturing. The key issues in agile manufacturing are: The "I am a Horse" Syndrome. The Existing Culture of Manufacturing. Q4. Outline scheduling guidelines and constraints? ANS. Scheduling guidelines:- If a system were to be credible, realistic scheduling is a must. For a firm to be successful, the following guidelines for job scheduling and loading work centres are essential. Following are the scheduling guidelines:

Provide a realistic schedule considering practical possibilities. Allow adequate time for operations/production. Allow adequate time before, between, and after each operation so that provision is made for transit or queue time of work in progress or finished goods. Do not release all available jobs to the workshop, which may overload the capacity, hence increasing lead time and work in progress inventory. Do not schedule all available capacity and retain some capacities for exigencies. Load only selected work centres, which are fit to be selected for operations. Allow for necessary changes and open to necessary alterations in the products. Gear up the entire shop to stick to the schedule with the cooperation of the workforce.

Scheduling constraints:It is important to know that even scheduling has some constraints. Scheduling production can be a slow and cumbersome process when done manually. Scheduling can be improved by using computer-based tools and software. Following are some of the scheduling constraints. Precise information needed for proper scheduling is often not available. Random changes in the plans and schedules. The necessity for human input in scheduling. Schedule preparation can be affected by system problems. Efficient scheduling is disturbed by organisational problems.

Q5. What are the chief elements to be considered while implementing the production control functions/tasks in an organisation? ANS. Following are the elements or scope of production control: Control on Timing of Production: Observes stoppages, delays, rushes in operation and regulates the flow of production for executing as per delivery dates. Quality Control: Makes all the quality observations in the process and checks whether the right quality of acceptable work has been processed. Replacement Control: Observes rejected materials and work In progress. Replaces the quality standards which do not fulfil the required purpose. Labour Efficiency Control: Observes labour operations, timings and maintains labour efficiency.

Control on Machines and Equipments: Strives to attain maximum utilisation of installed capacity and keeps machines in good condition through proper coordination with the maintenance department. Control on Progress of Orders: Controls progress of work orders and its effective adjustments. Control of Material Handling: Releases orders for material movements for work in different work centres and ensures availability of materials at the right place. Control on due dates: After checking actual and planned schedules and delays or stoppages, control section will revise the schedule or adjust so as to ensure delivery to customers within due dates. Control of Information: Ensures the required information is provided to the concerned work centres. If any deviations occur, then it provides the data on production performance for future planning.

Q6. What are the problems or criticisms of outsourcing? ANS. Criticism of outsourcing:Some of the problems or criticisms of outsourcing are: Quality risks: The operational issues result in defective product or service. Quality risk in outsourcing can be due to many factors such as differences in understanding between the buyer and the supplier about exact quality requirement, information asymmetry, high supplier switching costs, poor buyer-seller communication, lack of suppliers capability, buyer-supplier contract enforceability and so on. Public opinion: It is a known concern that outsourcing has severe impact on the inhouse labour market. The country outsourcing its businesses affects its own country, in terms of its job, as well as its individuals. Even though outsourcing affects individuals, supporters still believe that outsourcing helps to reduce the labour costs and provide economic benefits to all. Language skill: The linguistic feature, which is generally concerned with accents, use of jargons and phraseology are different in different countries. The outsourcing agents thus find difficulty in grasping these words when compared to face-to-face interaction. Social responsibility: Outsourcing helps the lower-income areas or the developing countries to increase the economic status by providing them jobs. Some criticise that lower paid workers are exploited by outsourcing and some argue that more people are employed by outsourcing. However, it is sure that the outsourcing has displaced many domestic workers, which has resulted in many social issues. . Quality of service: Service Level Agreement (SLA)1 helps to measure the quality of services in outsourcing contracts. The customer satisfaction survey is used to

evaluate the quality based on end user experience. This is basically done through questionnaires that help to get an impartial view of quality. This enables you to track the quality of services and take appropriate actions. Staff turnover: The staff turnover of employees both at the outsourcer and outsourced firms is a concern for many companies. Basically, the outsourcers companies call centres face a severe issue of staff turnover. Every year, such companies substitute their entire workforce. This controls the employees knowledge resulting in maintaining the quality at low level. Company knowledge: Employees who are transferred to another country generally face communication problems. Communicating properly across the organisation for information on new products, policies, and procedures may help solve the problems and improve the company knowledge as desired. Qualifications of outsourcers: The outsourcer may replace staff with the employees having less qualification or non-equivalent qualifications. Appropriate qualification for each type of job outsourced must be quantified in the contract itself.