Ignou MBA Solved Assignment MS 05 2013 Capacity Planning Work Sampling Line Balancing Acceptance Sampling Waste Management

Question. 6)  Write short notes on:

a)      Capacity Planning

b)      Work Sampling

c)      Line Balancing

d)     Acceptance Sampling

e)      Waste Management

Ans :

a)      Capacity Planning

The production system design planning considers input requirements, conversion process and output. After considering the forecast and long-term planning organization should undertake capacity planning.

Capacity is defined as the ability to achieve, store or produce. For an organization, capacity would be the ability of a given system to produce output within the specific time period. In operations, management capacity is referred as an amount of the input resources available to produce relative output over period of time.

In general, terms capacity is referred as maximum production capacity, which can be attained within a normal working schedule.

Capacity planning is essential to be determining optimum utilization of resource and plays an important role decision-making process, for example, extension of existing operations, modification to product lines, starting new products, etc.

Strategic Capacity Planning

A technique used to identify and measure overall capacity of production is referred to as strategic capacity planning. Strategic capacity planning is utilized for capital intensive resource like plant, machinery, labor, etc.

Strategic capacity planning is essential as it helps the organization in meeting the future requirements of the organization. Planning ensures that operating cost are maintained at a minimum possible level without affecting the quality. It ensures the organization remain competitive and can achieve the long-term growth plan.

Capacity Planning Classification

Capacity planning based on the timeline is classified into three main categories long range, medium range and short range.

Long Term Capacity: Long range capacity of an organization is dependent on various other capacities like design capacity, production capacity, sustainable capacity and effective capacity. Design capacity is the maximum output possible as indicated by equipment manufacturer under ideal working condition.

Production capacity is the maximum output possible from equipment under normal working condition or day.

Sustainable capacity is the maximum production level achievable in realistic work condition and considering normal machine breakdown, maintenance, etc.

Effective capacity is the optimum production level under pre-defined job and work-schedules, normal machine breakdown, maintenance, etc.

Medium Term Capacity: The strategic capacity planning undertaken by organization for 2 to 3 years of a time frame is referred to as medium term capacity planning.

Short Term Capacity: The strategic planning undertaken by organization for a daily weekly or quarterly time frame is referred to as short term capacity planning.

Goal of Capacity Planning

The ultimate goal of capacity planning is to meet the current and future level of the requirement at a minimal wastage. The three types of capacity planning based on goal are lead capacity planning, lag strategy planning and match strategy planning.

Factors Affecting Capacity Planning

Effective capacity planning is dependent upon factors like production facility (layout, design, and location), product line or matrix, production technology, human capital (job design, compensation), operational structure (scheduling, quality assurance) and external structure ( policy, safety regulations)

Forecasting v/s Capacity Planning

There would be a scenario where capacity planning done on a basis of forecasting may not exactly match. For example, there could be a scenario where demand is more than production capacity; in this situation, a company needs to fulfill its requirement by buying from outside. If demand is equal to production capacity; company is in a position to use its production capacity to the fullest. If the demand is less than the production capacity, company can choose to reduce the production or share it output with other manufacturers.

b)     Work sampling

       Work sampling is a method of finding the percentage occurrence of a certain activity

by statistical sampling and random observations.In order to obtain a complete and

accurate picture of the productive time and idle time of the machines in a specific

production area, it would be necessary to observe continuously all the machines in that

area and to record when and why any of the machines were stopped. It would of course be

quite impossible to do this unless a large of workers spent the whole of their time on this

task alone – an unrealistic proposition.

     If it were possible to note at a glance of every machine, it may be found that, 80% of

machines are working and 20% were stopped. If this action was repeated 20 or more times

at different times of the day and if each time the proportion of machines working was

always 80%, it would be possible to say with confidence that at any given time there were

always 80% of the machines working.

   As it is not generally possible to do this either, the next best method has to be adopted;

that of making tours of the factory at random intervals, noting which machines are working

and which are stopped, an noting the cause of each stoppage. This data capturing method is

known as work sampling.

     The larger the size of the sample, the more accurate or representative it becomes with

respect to the original “population”, or group of items under consideration.

c) Line Balancing

       Line Balancing is leveling the workload across all processes in a cell or value

stream to remove bottlenecks and excess capacity. A constraint slows the process down and results if waiting for downstream operations and excess capacity results in waiting and absorption of fixed costs.

Objective

Match the production rate after all wastes have been removed to the takt time at each process of the value stream.

Here is a simple definition and example of line balancing :
Everyone is doing the same amount of work
Doing the same amount of work to customer requirement
Variation is 'smoothed'
No one overburdened
No one waiting
Everyone working together in a BALANCED fashion
Here we see operator number 1 over-producing, thus creating the other 6 wastes.

Takt Time & Standard Work

Takt Time :
Takt Time is the production "Drumbeat" based on customer demand

Standard Work :

Whether you use Standard work combination tables, Standard work instruction sheets or any other Standard work documentation will depend upon the type of work involved

Standard Work instruction sheets provide a detailed description of HOW to do a particular step of a work operation

Benefits of the pre requisites:

Takt time maximises the productivity due to:
· Easily managed processes
· Output of each process matches customer demand
Standard Operations provide:
· Capable and repeatable processes
· Process control at source
· Improves accuracy of planning
· Better adherence to plans
· A platform from which continuous improvement can be made
· Reduced costs
· Improved quality
· Basis for training

d)     Acceptance Sampling

     Acceptance sampling is an important field of statistical quality control that was

popularized by Dodge and Romig and originally applied by the U.S. military to the testing

of bullets during World War II. If every bullet was tested in advance, no bullets would be

left to ship. If, on the other hand, none were tested, malfunctions might occur in the field of

battle, with potentially disastrous results.

     Dodge reasoned that a sample should be picked at random from the lot, and on the basis

of information that was yielded by the sample, a decision should be made regarding the

disposition of the lot. In general, the decision is either to accept or reject the lot. This

process is called Lot Acceptance Sampling or just Acceptance Sampling.

    Acceptance sampling is "the middle of the road" approach between no inspection and

100% inspection. There are two major classifications of acceptance plans:

by attributes ("go, no-go") and by variables. The attribute case is the most common for

acceptance sampling, and will be assumed for the rest of this section.

A point to remember is that the main purpose of acceptance sampling is to decide whether

or not the lot is likely to be acceptable, not to estimate the quality of the lot.

Acceptance sampling is employed when one or several of the following hold: 

• Testing is destructive
• The cost of 100% inspection is very high
• 100% inspection takes too long

It was pointed out by Harold Dodge in 1969 that Acceptance Quality Control is not the

same as Acceptance Sampling. The latter depends on specific sampling plans, which when

implemented indicate the conditions for acceptance or rejection of the immediate lot that is

being inspected. The former may be implemented in the form of an Acceptance Control

Chart. The control limits for the Acceptance Control Chart are computed using the

specification limits and the standard deviation of what is being monitored (see Ryan,

2000 for details).

In 1942, Dodge stated:

"....basically the "acceptance quality control" system that was developed encompasses the

concept of protecting the consumer from getting unacceptable defective product, and

encouraging the producer in the use of process quality control by: varying the quantity and

severity of acceptance inspections in direct relation to the importance of the characteristics

inspected, and in the inverse relation to the goodness of the quality level as indication by

those inspections."

To reiterate the difference in these two approaches: acceptance sampling plans are one-shot

deals, which essentially test short-run effects. Quality control is of the long-run variety, and

is part of a well-designed system for lot acceptance.

Schilling (1989) said:

"An individual sampling plan has much the effect of a lone sniper, while the sampling plan

scheme can provide a fusillade in the battle for quality improvement."

According to the ISO standard on acceptance control charts (ISO 7966, 1993), an

acceptance control chart combines consideration of control implications with elements of

acceptance sampling. It is an appropriate tool for helping to make decisions with respect to

process acceptance. The difference between acceptance sampling approaches and

acceptance control charts is the emphasis on process acceptability rather than on product

disposition decisions.

e)      Waste Management

Waste management and handling of waste materials has seen some dramatic changes over the past few decades. In years gone by we were all dependent on landfills for disposal of most waste materials, including garbage, discarded furniture and appliances, and even hazardous materials such as batteries and items that contained mercury. The planet definitely needed some sort of waste management system in order to remain healthy. Before it is too late we all must learn to:

Reduce the amount of waste materials we need to dispose of
Recycle as much as we can as often as possible
Reuse as much as we possibly can
Recover as much as possible from waste by making it a source of energy

Incineration

Incineration can remove waste and create an energy source at the same time. Burning waste materials converts waste into flue gases, particulates, incinerator bottom ash, and heat. This heat source can be used in turn as a generator of electric power. Flue gases and particulates are filtered free from pollutants before dispersed into the atmosphere. This form of waste to energy technology is “a win win” situation.
While incinerators are found to reduce the amount of original waste by eighty to eighty five percent, compared to compression (in garbage trucks) which is ninety five to ninety six percent, there is less overall to dispose of because it has been burned up and not merely compressed. Ultimately incineration reduces the volume of waste that would otherwise go into the landfill by some seventy percent.

Landfill

Waste disposal into a landfill (dump) entails burying the waste materials and this is still commonly practiced throughout the world. Many landfills were set up in previously unused or abandoned mines, quarries, or pits that had already been dug. When properly managed, a landfill can be an inexpensive and hygienic means of the disposal of waste materials. The majority of the materials buried will eventually break down into gases and dissipate into the atmosphere. Some gases may be pumped from landfills and burned in gas engines, creating electricity. This is cause for concern now days however; as there is concern the gases create greenhouse gas.

Recycling

For the past several decades recycling has come into vogue and is proving to be quite effective when practiced. The idea is to reuse as many items as possible either in their original form or transforming them into something equally useful. Paper products are a popular item to recycle and have proven a most effective means of preserving trees. Plastics and glass are effectively recycled, saving space at the local landfills. Oil used for cooking and frying can be used for a fuel source in many vehicles.

Waste Avoidance

Preventing waste materials from being created in abundance is important as a form of waste management. Reuse of second hand items, repairing instead of replacing with new, manufacturing longer lasting products (cotton bags instead of plastic bags for groceries, etc.), designing items that use less material (smaller, thinner). Less wastage created in food and food handling materials. All can be utilized to achieve less waste of many materials.

Composting (anaerobic digestion)

Many materials such as plant, food scraps, and various paper products can successfully be recycled or even eliminated through composting. An effective compost heap in ones back yard can be turned into mulch and feed for plants and grasses. This biological form of waste management can even be useful as an energy source when the gases (methane) are processed and used to generate electricity. Composting speeds up the process of decomposition of the organic matter.

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Ignou MBA Solved Assignment MS 05 2013 What is value Engineering and Analysis. Explain

Question. 3)What is value Engineering and Analysis.  Explain how to organize value engineering function in shoe manufacturing organization

Ans :

The concept of value engineering originated during the Second World War. It was

developed by the General Electric Corporations (GEC). Value Engineering has gained

popularity due to its potential for gaining high Returns on Investment (ROI). This

methodology is widely used in business re-engineering, government projects, automakers,

transportation and distribution, industrial equipment, construction, assembling and

machining processes, health care and environmental engineering, and many others. Value

engineering process calls for a deep study of a product and the purpose for which it is

used, such as, the raw materials used; the processes of transformation; the equipment

needed, and many others. It also questions whether what is being used is the most

appropriate and economical. This applies to all aspects of the product.

Simplification of processes reduces the cost of manufacturing. Every piece of material and

the process should add value to the product so as to render the best performance. Thus,

there is an opportunity at every stage of the manufacturing and delivery process to find

alternatives which will increase the functionality or reduce cost in terms of material,

process, and time.

The different aspects of value engineering can be encapsulated into a sequence of steps

known as a ‘Job Plan’. Value Engineering in organisations helps to identify:

·                     The problem or situation that needs to be changed/improved

·                     All that is good about the existing situation

·                     The improvements required in the situation

·                     The functions to be performed

·                     The ways of performing each function

·                     The best ways among the selected functions

·                     The steps to be followed to implement the function

·                     The person who executes the function

It should be remembered that we are not seeking a cost reduction sacrificing quality. It has

been found that there will be an improvement in quality when systematic value analysis

principles are employed

      Value analysis in Value engineering (VE) is an efficient method to develop the value

of goods or products and services by using an assessment of function. Value, as defined is

the relation of function to cost. Value can consequently be increased by either improving

the function or reducing the cost. It is a primary principle of value engineering that basic

functions be preserved and not be reduced as a result of pursuing value improvements.

1.                  Manufacturing: Systematic analysis that identifies and selects the best value alternatives for designs, materials, processes, and systems. It proceeds by repeatedly asking "can the cost of this item or step be reduced or eliminated, without diminishing

the effectiveness, requiredquality, or customer satisfaction?" Also called value

engineering, its objectives are (1) to distinguish between the incurred costs (actual use

of resources) and the costs inherent (locked in) in a particular design (and which

determine the incurring costs), and (2) to minimize the locked-in costs.

2.      Purchasing: Examination of each procurement item to ascertain its total cost of acquisition, maintenance, and usage over its useful life and, wherever feasible, to replace it with a more cost effective substitute. Also called value-in-use analysis.

VALUE ENGINEERING CAN BE APPLIED TO A SHOE MANUFACTURING
FIRM IN THE FOLLOWING AREAS

1.SHOES DESIGN
-make the design simple
- long lastinge
-
---------------------------------------------------------
2.SHOES RAW MATERIAL / PARTS PROCUREMENT
-establish the demand planning system [ reduce the fluctuations in production]
-establish the inventories of raw materials [ reduce the cost of stock holding]
-establish the economic order quantity [ """"""""""""""""""""""""""""""]
------------------------------------------------------------------------------
3. SHOE PRODUCTION PLANNING
-establish an effective / efficient production planning system [ cost savings]
------------------------------------------------------------------------------
4.SHOE PRODUCTION
-establish a lean production [ cost effective]
----------------------------------------------------------------------
5. SHOES TOTAL QUALITY ASSURANCE.
-set up quality assurance system to reduce quality problems/ rejections]
[ cost savings ]
-------------------------------------------------------------
6.SHOES FINISHED GOOD INVENTORY
-match the finished stock inventory to market demand / sales requirements]
[ cost saving in stock holding ]
--------------------------------------------------------------------
7.SHOES CUSTOMER SERVICE
-provide effective customer order processing/order service/
timely despatch to customers.
[ adds value to customers / reduces distribution cost]
----------------------------------------------------------------------------
8.SHOES AFTER SALES SERVICE
-offer warranty/ after sales service to customers
[ adds value to the product and increases sales ]
============================================
SHOES MANUFACTURER CAN ADD VALUE/ REDUCE COST
BY APPLYING THE VALUE ANALYSIS -JOB PLAN TO EACH
OF THE ABOVE LISTED 8 STAGES OF SHOES MANUFACTURING.

VALUE ANALYSIS -- The Job Plan
Value Engineering is often done by systematically following a multi-stage Job Plan. IT IS a 8-step procedure , called the Value Analysis Job Plan. Others have varied the Job Plan to fit their constraints. One modern version has the following eight steps:
PREPARATION
INFORMATION
ANALYSIS
CREATION
EVALUATION
DEVELOPMENT
PRESENTATION
FOLLOW-UP

Question. 5)Explain with the help of block diagram the purchasing decision making process

in an engineering organization. Briefly discuss the process of vendor rating.

Ans :

         Buyers who face a new-task buying situation are likely to adopt a formal decision-making process (DMP), which may involve up to eight separate stages. Purchases that are modified or straight re-buys may skip some of these stages.

       Following is the DMP for the typical new-task purchase. Although the DMP is shown to be a linear sequence of progressive stages, in practice the stages are rarely neatly sequential or discrete. Sometimes the stages may occur out of sequence or simultaneously, or not at all if it is a fairly straightforward re-buy. None the less, the DMP does provide a helpful guide to the distinguishing features of each of the typical buying stages.

  

Vendor rating

A vendor rating, also known as a supplier rating, is based on a formal system of evaluating

the companies that supply materials or services to an organization. The process is meant to

encourage a high-quality, efficient vendor-to-customer relationship. Overall, vendors are

typically judged by both the services they offer and what capabilities they possess. A

variety of factors, which depend on the particular vendor, are reviewed and the results are

usually quantified with either a numerical score — possibly expressed as a percentage — or

a rating from poor to excellent.

     There are several common elements that are factored into a typical vendor rating. An

organization will usually evaluate the overall vendor experience, including the quality of

service, the timeliness of delivery, the quality of the product type, and the accuracy of the

amount delivered. Evaluations will also often consider what the vendor has to offer as far as

the ability to provide certain materials and services and at what cost. Issues such as billing

accuracy and timeliness, warranty, and whether or not services and products conform to the

market average are also often considered.

        The complexity of a vendor rating program depends upon the size of the organization.

Many companies have a supplier relationship management program which handles

the rating process on an ongoing basis. Smaller companies may not conduct as frequent or

as thorough evaluations, though they will often use several of the same criteria. Whatever

the size of the organization, one of the key factors of developing an

effective vendor rating system is to determine which elements are critical to the success of

the organization being served before starting an evaluation.

        A vendor rating system can be used to determine whether or not a supplier relationship

is worth pursuing. If a vendor falls below a certain level of quality, an organization may

issue a warning that certain aspects of service must be improved in order to sustain the

relationship. An organization may also use a particularly low score or rating as the grounds

for terminating a vendor relationship.

         In order for a vendor rating program to be effective, the details of the evaluation and

the expectations of the organization must be made clear to the supplier. Many companies

accomplish this with a formalvendor education program. After initial communication about

the parameters of the vendor reviewprocess, the organization will typically establish some

sort of regular system of communication in which the vendor is informed of any issues that

may have changed the rating, whether in a positive or negative direction.

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