Birla Institute of Technology & Science, Pilani Work-Integrated Learning Programmes Division First Semester 2011-2012 Comprehensive Examination

(EC-3 Regular Solution Key) Course No. Course Title Nature of Exam Weightage Duration Date of Exam Note:
2. 3. 4.

: MM ZG511 : MANUFACTURING ORGANIZATION & MANAGEMENT : Open Book : 60% No. of Pages =2 : 3 Hours No. of Questions = 8 : //2012 (AN)

1. Please follow all the Instructions to Candidates given on the cover page of the answer book.
All parts of a question should be answered consecutively. Each answer should start from a fresh page. Mobile phones and computers of any kind should not be used inside the examination hall. Use of any unfair means will result in severe disciplinary action.

Q.1. Sharp, Inc., a company that markets painless hypodermic needles to hospitals, would like to reduce its inventory cost by determining the optimal number of hypodermic needles to obtain per order. The annual demand is 1,000 units; the setup or ordering cost is $10 per order; and the holding cost per unit per year is $.50. Calculate the optimal number of units per order? Assuming a 250-day working year, Find the number of orders (N) and the expected time between orders (T)? Determine the total annual inventory costs? [8] Solution 1:

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[2] Q.2. A company is planning to introduce a new product. It must select one product from three available and has estimated the data shown in the table. Which product would you recommend? [6] Factor A Product B 900 $900 $1000 $350000 C 1200 $1200 $1290 $500000 8 [3]

Expected sales each year 600 Unit cost of production $680 Unit selling price $760 Fixed cost incurred before $200000 production Expected product life 3 5 Solution 2: i) The breakeven point for each product are calculated from

N = FC/(UP UC) So for each product we have A : N = 200,000/(760 - 680) = 2500 B : N = 350,000/(1000 900) = 3500 C : N = 500,000/(1290 1200) = 5556 If the company wants the lowest break even point it would select product A. ii) Time taken to break even: MM ZG511 (EC-3 Regular) of 8 Second Semester 2011-2012

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Time taken to break even = break-even point/demand For each product this gives: A : 2500/600 = 4.2 years B : 3500/900 = 3.9 years C : 5556/1200 = 4.6 years In this case, product B would be least. iii) To maximize long term profit Total profit = revenue total cost With : Revenue = lifetime * annual demand * unit profit Total cost = lifetime * annual demand * unit cost + fixed cost So: Total profit = L * D * (UP - UC) FC Where : L = lifetime D = Demand

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For each product the lifetime profit is: A : 3 * 600 * ( 760 680) 200,000 = -56,000 B : 5 * 900 * (1000 900) 350,000 = 100,000 C : 8 * 1200 * (1290 1200) 500,000 = 364,000 Product A would make a net loss over its expected life while producer C would give the best profit. Overall, we can only say that the best decision would depend on the objectives of the company, but product B seems useful. [1] Q.3. Discuss the principals of motion economy. Discuss the strength and weakness of line and staff type organization. [8] Kindly check the text book, reference book and slides. Q.4. Differentiate between intermittent and continuous manufacturing with respect to volume of production, product variety, frequency to change the setup, equipment, labor force, capital cost and unit cost in a tabular form. [6] Solution 4:
Intermittent Manufacturing Volume of production Low to medium Product variety Many, varied Frequency to change the setup Very easy to change the set up for different product variety Continuous Manufacturing Volume of production Very high Product variety Very few Frequency to change the setup It is fixed and cannot be modified easily and involves top management commitment based on demand of the product /market

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Equipment It uses general purpose equipment Labor force Workers are required to have wide range of skills so as to handles all types of equipment involved in the layout Work force is more Capital cost Initial cost of the equipment is high

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Unit cost Cost of the unit is very high because of slow operation speed of the general purpose equipment used

Equipment It uses special purpose equipment Labor force As here most of the process is automated the workers are expected to serve as a equipment monitor Work force is less as compared to intermittent process Capital cost It involves high investment in plant & equipment installation as the process is to be highly automated Unit cost Cost of the unit is low as the volume of production is high but may increase if there is a dis- economies of scale

Q.5. A project has activities with duration and precedence requirement as given in Table. Draw the network diagram for this project. [8] Activity A B C D E F G H Solution 5: Predecessors A A,B C C D,E F,G Duration 2 3 2 4 4 3 5 2

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Q.6. A manufacturing unit has six departments A, B, C, D, E and F. they are located as shown in figure. The daily expected load transaction are: From A to B 20 tons, From B to A 10 tons, From B to C 15 tons, From A to F 25 tons, From C to D 30 tons, From D to C 50 tons, From E to F 10 tons, From E to A 10 tons. Check whether the given arrangement of department is optimal or not. If not suggest a best layout. [8] A D Solution 6: To From A B C D E F 10 20 25 15 50 30 10 A B C D E F B E C F [4]

10

Assumption: Load from B A = A B To From A B C D E F Given Layout is: A D B E C F A B 30 C D E 10 15 80 10 [4] F 25

Total Non Adjacent load = 115 tonnes (CD + AF +AE) Hence, the best lay out is the layouts below as the Non adjacent load is reduced from 115 tonnes to 10 tonnes(AE). OR MM ZG511 (EC-3 Regular) of 8 C D B E A F Page 5

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B A

E F

Q.7. Discuss the steps required for good purchasing with a suitable example. Draw a chart of the process involved when a person goes to a bank and ask for a personal loan. [8] Solution 7: (a) The primary objective of a good purchasing is to contribute towards the profits of the manufacturing activity. Another important objective is to ensure the availability of materials so that delivery schedules can be maintained, thus keeping the customer satisfied. [4] The complete purchasing cycle consists of the following steps Receipt and analysis of the purchase requisition Selection of potential sources of supply Issuance of requests for quotations Receipt and analysis of quotations Selection of the right source Determination of the right price Issuance of the purchase order Follow up to ensure scheduled delivery Analysis of receiving reports Analysis and approval of vendors invoice for payment For example, when purchasing a standard item from an old and established source, it is often assumed that price and terms of purchase are right and the purchase order will be placed upon receipt of the purchase requisition.

6 (b) Process chart:

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Process chart : Personal bank loan Movement Operation Step number Description Inspection Storage Delay Time (min) distance Comment ( meters)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Customer selects banks & visits Initial screening Move to loans office Wait Discuss with loans officer Complete application forms Carry forms to verifier Forms are checked Wait as credit analysis verification is done Supply further information Move back to loans office Wait Forms are checked Complete arrangement Leave

X X X X X X X X X X X X X X X

5 2 10 15 15 2 2 25

15

10

5 2 20 5 15

15

Sno : Operation Movements Inspections Delays Storage Total : Time : 123 min Distance : 40 meters

No 5 5 2 3 0 15

Time 55 6 7 55 0 123

Summary:

Q.8. Prepare Left and Right hand operations chart for bolt-washer assembly.

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