Production and Operation Management: MB0044

Registration No:1502009130
Q1 Write short notes on:
Outsourcing strategies for capital productivity
Implementation of operations
Basic competitive priorities
Market survey method of forecasting
Solution:
Outsourcing strategies for capital productivity: When capacity requirements are determined,
it is easy to figure out whether some goods or services can be out sourced. Outsourcing can
reduced the capital and man power requirement s. Also, the available capacities can be used to
augment the core competencies thus reducing the cost of the product or service with the
customer. Further outsourcing helps in improved product design and even enables better
networking and demand and cost factors may restrict outsourcing.
Lack of Expertise: The outsource firm may have not have the required expertise to do the job.
Quality considerations: Loss of control over operations may result in lower quality.
Nature of demand: When the load is uniform and study, it may not be worthwhile to outsource.
Absence of supervision and control may be a hindrance to meet any urgent requirements of the
customer. This affects the business, if no production facilities are built in the organization.
Cost: It may not be worthwhile when the fixed cost that go along with making the product does
not get reduced considerably.
Implementation of operations:
Implementation is the process of executing the planned operations. When planning and
controlling functions are put together, we call it as implementations of operations. The planning
is a process of estimating, routing and scheduling. The controlling functions are conducted while
the manufacturing is going on, like dispatching and expedition.
Estimating: it gives the quantities to be made at each workstation depending on the sales
forecast, provision for buffer stock, quantities bought out, services outsourced, likely short falls
and others. It is made on the basics of capacity.
Routing: It determines the sequence of operation and the machines that do them, so that
workflow, as determined by the processes, is smoothly resulting in minimum inventory.
Scheduling: It is mainly concerned with allocating time slots for different jobs. It specifies as to
when the job starts and ends at particular workstation. The purpose is to prevent imbalances
among work centers and to utilize the labor hours in such a way that establish lead times are
maintained.

Dispatching: It is concerned with moving of the materials with tools, jigs and fixtures to specific
machines along with the drawings and ensuring inspections at specific notes, so that the
materials move in a supplied chain.
Expediting: It ensures that all the above are being done properly. Reports are generated and any
bottleneck that gets created is removed.
Basic competitive priorities

Cost.
Quality.
Time.
Flexibility.

Cost: It is one of the primary considerations while marketing a product or a service. Being a low
cost producer, the product accepted by the customer offers sustainability and can outperform
competitors. Low price and better quality of a product will ensure higher demand and higher
profitability. To estimate the actual cost of production, the operation manager must address labor,
material, scrap generation, overhead and other initial cost of design, development, etc.
Quality: It is defined by the customer. The operation manager looks into the important aspects
mainly highly performance design and consistent quality. High performance design induces
superior quality, greater durability, convenience to services. Whereas consistence design
measures the frequency with which the product meets its design specifications and performs best.
Time: Faster delivery time, on time delivery and speedy development cycle are the time factors
that operation strategy looks into. Faster delivery time is the time elapsed between the customer
order and the delivery. On time delivery is the frequency with which the product is delivered on
time. The development speed is the elapsed time from the idea generation and up to the final
design and production of products.
Flexibility: Flexibility is the ability to provide a wide variety of products, and measures how fast
the manufacturer can convert its process line used for one product to produce another product
after making the required changes. The two types of flexibilities are:

Customization
Volume flexibility

While customization is the ability of the firm to satisfy the specific needs of each its customer,
the volume flexibility is the ability to accelerate or decelerate the rate of production to handle the
fluctuation in demand.
Market survey method of forecasting: Conducting the surveys among the prospective buyers
or users is a very old method of forecasting. Here, a questionnaire is prepared and circulated
among the people and their responses are obtained. The responses are collected and analyzed to
reveal possible clues towards acceptance or otherwise about new product or services. Based on
the overall decision, the forecasting is done. This method is typically done for new product or
new places where the product is to be launched. In this method the number of respondents and
how responses are gathered like through oral interviews, personal talks, internet based, postal

ballots, etc, has to be established before survey. The common limitations are sample size and
way of drawing the sample like random, convenient or judgmental.
Q2 Gujarats emergence as an auto hub is a positive for the economy
Saturday, 17 September 2011 - 8:00am IST | Place: Mumbai | Agency: DNA
Several domestic and foreign auto manufacturers have either announced plans to establish
manufacturing plants in Gujarat or are considering it as a possible location.
Several domestic and foreign auto manufacturers have either announced plans to establish
manufacturing plants in Gujarat or are considering it as a possible location.
Those establishing the plants include the US-based Ford Motor and PSA Peugeot Citroen
from France, joining Indias Tata Motors, General Motors of US, Bombardier of Canada
and Asia Motor Works (AMW), a heavy commercial vehicle manufacturer.
Auto ancillary hubs, which are critical for a thriving auto hub, are located in Rajkot,
Ahmedabad and Vadodara, and more to come in Kutch and Sanand
districts. A precision engineering park is planned to come up in Dahej.
Domestic companies that are considering to enter Gujarat, with the exception of Maruti
Suzuki, include Hero MotorCorp (formerly Hero Honda), Bajaj Auto and Hindustan
Aeronautics Ltd (HAL), a public sector company specialising in production of aircraft and
helicopters. (Recently Maruti
Gujarats auto hub thus goes beyond the production of cars. The mix of domestic and
foreign auto companies also provides opportunities for skills transfer and learning.
Total installed capacity of Tamil Nadu, mainly around Chennai, is 1.28 million units, and is
among the top 10 centres globally for car manufacturing, while that of Maharashtra,
mainly around Pune, is 0.61 million units. With the entry of Ford and Peugeot, Gujarats
production capacity, mainly around Sanand, is projected at 0.76 million by 2014. This will
rise significantly if Marutis production, largely for export, comes on stream.
Gujarats currently established but relatively mid-sized auto ancillary units are getting a
boost from these automakers, referred to as OE (original equipment) procedures, asking
their tier I, II and III vendors to locate manufacturing and assembly facilities in and
around their main production sites. Tata, for example, is encouraging and facilitating key
vendors to locate to Sanand and set up a facility within a reasonable time horizon.
Gujarats emergence as an auto hub is not an accident, but an outcome of leveraging its
strengths through sound economic policies and competent management by the state
government.
Gujarat has leveraged its locational advantages, with relatively low transaction costs for
accessing markets in the western and northern India. Good rail connectivity is slated to
improve significantly with the opening of the dedicated freight corridors to Dahej and
Nhava Sheva passing through large parts of Gujarat. Sanand is also a part of the Delhi-

Mumbai Industrial Corridor (DMIC), a multi-billion dollar India-Japan initiative. The

Delhi-Mumbai freight corridor project will provide excellent rail connectivity for the auto
sector in Sanand and for other industries.
Gujarats port development initiatives are closely coordinated with rail transport. These
provide access for exports to the West, a favoured market for Indian OE. Since 2009,
Maruti has been shipping cars by rail from Manesar to the Mundra Port, where there is a
roll-on-roll-off (RORO), terminal for receiving and prepping new cars for exports. Korean
automakers are also exploring this option.
Gujarats port development also could permit economical transportation to other parts of
the country, through viable coastal shipping routes which is yet to take
off, thus diversifying transport modes.
Developing domestic and international financial services, improving road and air
connectivity and focusing on affordable housing and other amenities could further add to
Gujarats locational advantage.
One of the advantages of Gujarat is the larger share of non-fertile agricultural land. This
potentially makes managing the requirements of industry for land easier. Gujarat
Industrial Development Corporation (GIDC) deserves credit for turning the above
potential into actual accomplishments.
As many of the established tier I, II and III manufacturers in Tamil Nadu and Delhi are
faced with space and environmental constraints in expanding their operations in their
historic sites, they are exploring alternate avenues. Gujarats land bank could thus be an
attractive factor.
Sanand is a part of special investment region, which permits firms investing there to avail
various fiscal and non-fiscal benefits, reducing project costs, including time for completing
the project cycle.
The Gujarat government recognises the importance of overall conducive investment
environment in attracting investments rather than merely relying on tax incentives. This
policy lesson is applicable to the investment and manufacturing zones (NIMZs) under the
national manufacturing policy (NMP) which is being finalised. It envisages around five
greenfield integrated industrial townships.
Another noteworthy policy initiative is establishment of an automotive skills development
institute at Sanand on a public private partnership basis by Gujarat government and
Peugeot Citroen. This approach to human capital development will serve, India, Gujarat
and the new entrants well as they will have access to a younger work force, well trained in
modern manufacturing techniques with skills honed around the productivity needs of the
future.
There are several reasons why Gujarats emergence as an auto hub is a positive for Indias
economy. First, the auto sector is a mother industry and for every direct job in the OE,
minimum 5-7 indirect jobs are created in tier I, II and III, not including jobs for drivers,

service station attendants and mechanics that form a well paying proposition for many
relatively less skilled, but aspirational Indians.
Secondly, importance of transport equipment, which includes all types of motorised
vehicles, in Indias trade has been increasing. Its share in Indias exports rose from 2.3% in
2000-01 to 7.8% in April-February 2010-11; while the corresponding share for imports soar
from 1.4% to 2.5%. The emergence of Gujarat as an auto hub is expected to assist in
Indias external trade in transport equipment as exports are likely to constitute a
significant proportion of auto
sectors output from Gujarat.
Many European OE are building their design and engineering back offices in India,
providing job opportunities for the design, hardware and software engineers. This will help
India to develop a niche position globally and diversify its export basket.
Thirdly, healthy competition among auto hubs in Tamil Nadu, Maharashtra and Gujarat
will be a positive for the manufacturing productivity. This is because such competition will
mitigate against complacency by each of them and contain costs.
Finally, it would assist India in progressing towards the goal of increasing the share of
manufacturing in GDP from 16% in 2010 to 25% by 2022. It could also assist in Indias
international competitiveness in manufacturing as PTAs (preferential trade agreements)
with economic partners with strong manufacturing sectors, such as China, Japan, and
Korea, are implemented.
Source: http://www.dnaindia.com/money/report-gujarat-s-emergence-as-an-auto-hub-is-apositive-for-the-economy1588052, accessed 24th Oct, 2014
Instructions: Read the above article and hyperlinked articles to answer the question given
below
Question
Evaluate the factors that favor Gujarat as a location for manufacturing automobiles.
Solution:
General factors that favor Gujarat as a destination for automobile manufacturing:

Gujarats currently established but relatively mid-sized auto ancillary units are getting a
boost from these automakers, referred to as OE (original equipment) procedures, asking
their tier I, II and III vendors to locate manufacturing and assembly facilities in and
around their main production sites.
Gujarats emergence as an auto hub is not an accident, but an outcome of leveraging its
strengths through sound economic policies and competent management by the state
government.

Gujarats port development initiatives are closely coordinated with rail transport. These
provide access for exports to the West, a favoured market for Indian OE. Korean
automakers are also exploring this option.
Gujarats port development also could permit economical transportation to other parts of
the country, through viable coastal shipping routes which is yet to take off, thus
diversifying transport modes.

Special factors that favor Gujarat as a destination for automobile manufacturing:

Gujarat has leveraged its locational advantages, with relatively low transaction costs for
accessing markets in the western and northern India. Good rail connectivity is slated to
improve significantly with the opening of the dedicated freight corridors to Dahej and
Nhava Sheva passing through large parts of Gujarat. Sanand is also a part of the DelhiMumbai Industrial Corridor (DMIC), a multi-billion dollar India-Japan initiative. The
Delhi-Mumbai freight corridor project will provide excellent rail connectivity for the auto
sector in Sanand and for other industries.
Developing domestic and international financial services, improving road and air
connectivity and focusing on affordable housing and other amenities could further add to
Gujarats locational advantage.
One of the advantages of Gujarat is the larger share of non-fertile agricultural land. This
potentially makes managing the requirements of industry for land easier. Gujarat
Industrial Development Corporation (GIDC) deserves credit for turning the above
potential into actual accomplishments.

Comparison of Gujarat with other states like Tamil Nadu or Haryana in terms of
locating a automobile manufacturing plant

Total installed capacity of Tamil Nadu, mainly around Chennai, is 1.28 million units, and
is among the top 10 centres globally for car manufacturing, while that of Maharashtra,
mainly around Pune, is 0.61 million units. With the entry of Ford and Peugeot, Gujarats
production capacity, mainly around Sanand, is projected at 0.76 million by 2014. This
will rise significantly if Marutis production, largely for export, comes on stream.
As many of the established tier I, II and III manufacturers in Tamil Nadu and Delhi are
faced with space and environmental constraints in expanding their operations in their
historic sites, they are exploring alternate avenues. Gujarats land bank could thus be an
attractive factor.

Summarizing of Gujarat is a better location for manufacturing automobiles

There are several reasons why Gujarats emergence as an auto hub is a positive for Indias
economy. First, the auto sector is a mother industry and for every direct job in the OE,
minimum 5-7 indirect jobs are created in tier I, II and III, not including jobs for drivers,
service station attendants and mechanics that form a well paying proposition for many
relatively less skilled, but aspirational Indians.
Secondly, importance of transport equipment, which includes all types of motorised
vehicles, in Indias trade has been increasing. Its share in Indias exports rose from 2.3%
in 2000-01 to 7.8% in April-February 2010-11; while the corresponding share for imports

soar from 1.4% to 2.5%. The emergence of Gujarat as an auto hub is expected to assist in
Indias external trade in transport equipment as exports are likely to constitute a
significant proportion of auto sectors output from Gujarat.
Many European OE are building their design and engineering back offices in India,
providing job opportunities for the design, hardware and software engineers. This will
help India to develop a niche position globally and diversify its export basket.
Thirdly, healthy competition among auto hubs in Tamil Nadu, Maharashtra and Gujarat
will be a positive for the manufacturing productivity. This is because such competition
will mitigate against complacency by each of them and contain costs.
Finally, it would assist India in progressing towards the goal of increasing the share of
manufacturing in GDP from 16% in 2010 to 25% by 2022. It could also assist in Indias
international competitiveness in manufacturing as PTAs (preferential trade agreements)
with economic partners with strong manufacturing sectors, such as China, Japan, and
Korea, are implemented.
Considering all the above points we can say that Gujarat is a better location for
manufacturing automobiles
Q3 Write short notes on:

5Ss system of waste elimination

Scheduling in services
Vendor managed inventory
Subcontracting capacity (production) option

Solution:
5Ss system of waste elimination: Historically, production managers have used housekeeping
for a neat orderly and efficient work place and as a means of reducing waste. Operation
managers have improved housekeeping to include in a checklist commonly known as 5S. The
Japanese developed the initial 5S where each 5S standard for Japanese word.
Sort/Segregate: Keep what is required and remove everything from the work area; when
in doubt, through it out identify the non-value things and remove them. Getting rid of
these items will make more work space and usually improves the work flow.
Simplify/Straighten: Arrange and use the analysis tools to improve the work flow and
reduce the wasted motion. Consider long run and short run ergonomic issues. Label and
display for easy use only what is needed in the immediate work area.
Shine/Sweep: Clean daily, remove all forms of dust, contamination from the work area.
Standardize: Remove the variations from the process of developing OPS and check
sheet. Develop good standards. Standardize the equipment and tools so that the crosstime for training and cost are reduced. Training and retraining the work team reduces the
deviation
Sustain/Self-discipline: Review periodically to recognize the efforts and motivate the
work force to sustain the progress. Use visuals wherever it is essential for easy
communication and implementation.

Scheduling in services: There are distinctive difference between the scheduling followed for the
manufacturing and services. All these differences have been direct impact on scheduling. These
differences are:

Service operations cannot create the inventories to provide buffer for demand
uncertainties.
Demand in service operations cannot be predicted accurately.
Demand in service is initiated mostly as unplanned event and hence, there may be certain
distortions in scheduling.
Providing the required manpower and skills for sudden demand in the scheduling in
service activity is challenging and sometimes becomes crucial.

Vendor managed inventory: the very purpose of JIT is to reduce inventory at all times in the
supply chain. Inventory is considered as waste because inventory is created by using man,
machine and materials. All of these are resources which have already been used up and that
portion of it which is not consumed and sent up the value chain causes a drag in the system.
However, inventories are inevitable because uncertainty exists at every stage, making it
necessary to provide a buffer so that demand don not go unfilled. The challenge is that to keep it
to the minimum. To make this happen, the calculations involving the following necessary.

Work casts of the market demand.

Capacities of the equipments
Worker absenteeism
Suppliers lead time
Quality of produced components

Each of these will have many factors which affect them. JIT depends upon the accurate
assessment of them and based on the decision taken, activities are initiated. These should result
in holding material as small as number of components or product feasible to maintain the flow of
material without disruption. Many companies make their suppliers hold their inventories and
request them to make timely supplies. The most important requirement of a successful vendor
managed inventory system is good communication system.
Subcontracting capacity (production) option: A firm can acquire temporary capacity by
subcontracting work during peak demand periods. Subcontracting however has several pitfalls.
First it may be expensive; secondly it risks opening the clients door to competitor. Third, it is
often hard to find the perfect subcontractor supplier, one who always delivers the quality product
on time. However, of late outsourcing has become a complete business policy and cost of
operation may be cited as main reason. Thus, it is possible to partly produce the items outside or
completely produce from outside. Depending on who is stronger and controlling the whole
process the subcontracting costs will vary and could be even low.

Q4. Describe the post implementation review of a project. Explain the tools that may be considered
for post implementation review.
Solution:
Description of the four parts of the post implementation review of a project.
Final product view: The product obtained after every stage must objectives then focus on the issues of
maintenance of the processes and product performance. If the final product does not completely meet the
objectives then identify the variations in the product an analysis the variation. Study the factors
responsible for the change an evaluate each on separately.
Outstanding project work review: Many times it is found that there may be insignificant as it may be a
byproduct of that stage which may not be required immediately for the next stage. Then the items that are
open should be resolved and necessary steps be taken to close such open items.
Project review: Every aspect of a project form start to end has to be reviewed. The objectives
performance criteria financial criteria resource utilization slips and gains to time adherence to the project
definition and plans a\have to be reviewed. All such review details and reports have to be well
documented for future use.
Process review: every process is important in any project. One may review the process to see if any
changes can be made to improve its performance.
Explanation of the four tools that may be considered for post implementation review: Some of the
tools may be considered for post implementation review are the final product evaluation, outstanding
project work evaluation project review questionnaire and project as evaluation.
1. Final product evaluation: final product evaluation may be done through regularly organized meeting
and quality reviews.
2. Outstanding project work evaluation: All outstanding works of a project can be reviewed to check
its output quality and performance.
3. Project review questionnaire: project review questionnaire may become important if the reviews are
to be structured. Group discussion may be initiated depending upon the points to be discussed.
4. Process evaluation: Evaluation of any process is on e of key issues of project.

Q5. Explain the steps of set data in logical order so that the business process may be defined.
List the ingredients of a business process.
Solution:
Explanation of the steps of set data in a logical order.
Steps of set data in a logical order.
1. Check whether the participants in the process are sufficient or any changes and additions need to be
made.

2.
3.
4.
5.
6.

Ensure all the data expected is included or not.

Check whether the data is sufficient for the implementation of the process of not.
State the rules used to define the various part of process
Determine the disposition of data at the end of the process and to decide
Collect other details depending upon the business process and the need using process definition.

The following steps should be considered for setting the data in a logical order.
1. Check whether the participants in the process that is people teams and electronic applications are
sufficient or any changes and additions need to be made.
2. Ensure that all the data expected is included or not. Generally we start with an initial set of data
which we have. When we check them with the requirements of the process for the desired
outcomes we fine gaps. These gaps help us in determining which subset of the data is appropriate
at each task in the process.
3. Check whether the data is sufficient for the implementation of the process. This can be achieved
by answering the following questions:
1 What is the pat the process should take?
2 What decision are to be made at any point in the process
3 Are data available at those points?
4 State the rules used to define the various parts of the process. At this stage the
naming conventions are also included. This is important to be included at t process
stage.

definitions

5 Determine the disposition of data at the end of the process and decide the following
A Do we plan to keep the data or delete them?
B If they are to be stored where and in what form will e used?
C What are the measures of security for access?
6. Determine the other elements depending upon the business process and te need. The elements
added must be questioned to collect a detail data. It is better to go deeper into the details and collect
data, and make them available at this initial stage so that a better model can be prepared. Then the
processes will be more successful in delivering the desired output. Process definition enables us to go
into details at every stage of the process and verify the adequacy of data the sequential steps in the
process and fill the gaps before attempting implementation.
3

.The purpose of setting the data in a logical order is to locate deficiencies and remove them.
Therefore the decision about process and sequence can be taken and a model can be designed
which is useful in all perspectives.

Q6. Describe the dimensions of quality

Explain the four dimensions of quality
Solution:
Dimensions of quality: Quality in the product or service that is rendered to the customer. Since we are
attempting to measure the same, we will look into those aspects of quality, called dimensions of quality.
Quality of design- a product is designed keeping in view the customers requirement for designing a
product the manufacturer or service provider should be aware of te specification of different features
required to incorporate in the product. Some of the features to be known for designing a product. Some of
the features to be known for designing a product include material dimensions and characteristics. The
quality of the product is introduced by the design of these features. Inspection of the manufacturing
process is of utmost importance in ensuring quality of performance.

Conformance to design- Conformance to design is the degree to which the manufactured product or
delivered service meets the parameters that have been incorporated in the design. It verifies that the
variability in the process is within acceptable limits so as not to compromise the functionalities that the
designer wanted
Utilization conditions- Utilization conditions refer to the necessity of the customer being informed or
trained so that the purpose for which the product was made is realized by the customer in total thus
enhancing the customers satisfaction. Instructions manuals help lines and onsite training by the
manufacturers personnel improve the perception of quality.
After sales service- There are so many reasons why products do not function to the expected levels. It
may be improper use unexpected or additional demands improper assembly or even manufacturing
def4ects. There is a need to rectify these and make products or services perform up to the expected
standard. The firm should be put in place a system by which these possibilities are anticipated and
attended to give customer satisfaction. This is an important but often neglected dimension of quality