Course Folder Winter19

Department of Electrical Engineering
Engineering Economics and Management

Quiz # 1 CLO2-C3-PLO11 Section-B
Instructor: Tanzeela Siddiqui
Question #1
Illustrate the difference between needs, wants, desires and demands with examples.
Question #2
Demonstrate with examples that forward and backward integration strategy can save the
cost/ profit of the company.
Question #3
Write down the tangible and intangible attributes of any five tangible products.
Quiz # 1 CLO2-C3-PLO11 Section-A
Question #1
Illustrate the difference between Economics at individual, organizational and economy
level with respect to resources and wants.
Question #2
Write down the characteristics of a partnership firm.
Question #1
Sheharyar autos manufactures and sale 2000 tri-vehicles every year. Company purchases
tires for the production of vehicles from Ahmed and Sons at the rate of $10 per tire. The
cost for placing the order is $60 and inventory carrying cost is 5% per quarter. Solve for the
following;
a. Economic order quantity\
b. Optimal no. of orders per year
c. Annual holding cost= Annual Ordering cost
Question #1
Sheharyar autos manufactures and sale 3000 bi-cycles every year. Company purchases tires
for the production of vehicles from Ahmed and Sons at the rate of $10 per tire. The cost for
placing the order is $60 and inventory carrying cost is 10% semi-annualy. Solve for the
following;
a. Economic order quantity\
b. Optimal no. of orders per year
c. Annual holding cost= Annual Ordering cost
Question #1
At the end of the year 2018 company holds
- Cash Rs. 500,000
- Machinery Rs. 700,000
- Furniture Rs. 200,000
- Loan Rs. 700,000
- Debtors Rs. 200,000
- Inventories Rs. 300,000
- Creditors Rs. 300,000
- Capital Rs. 800,000
Solve for the balance sheet.

Question #1
Revenue, Rs. 500,000; utility bills, Rs. 17,000; salaries Rs. 60,000; machinery Rs. 170,000;
loan Rs. 200,000; tax Rs. 2,000 upto 200,000 plus 5% of any amount above 200,000;
income from other sources Rs. 300,000; cost of sales, Rs. 200,000; interest, 7% of the
amount of loan, depreciation on machinery is 10% annually.
Solve for the following;
a) Gross profit b) Operating profit
c) Earnings before interest and tax d) Taxable profit
Question #1
Identify which of the following transactions and events are product costs and which are
period costs:
 Storage and material handling costs for raw materials.

 Gains or losses on the disposal of factory equipment.
 Lubricants for machinery and equipment used in production.
 Depreciation of a factory building.
 Depreciation of manufacturing equipment.
 Depreciation of the company president’s automobile.
 Leasehold costs for land on which factory buildings stand.
 Inspection costs of finished goods.
 Direct labor cost.
 Raw-materials cost.
 Advertising expenses.
Question #1
Identify which of the following transactions and events are product costs and which are
period costs:
 Storage and material handling costs for raw materials.

 Gains or losses on the disposal of factory equipment.
 Lubricants for machinery and equipment used in production.
 Depreciation of a factory building.
 Depreciation of manufacturing equipment.
 Depreciation of the company president’s automobile.
 Leasehold costs for land on which factory buildings stand.
 Inspection costs of finished goods.
 Direct labor cost.
 Raw-materials cost.
 Advertising expenses.
Assignment # 2 CLO1-C3-PLO7
Question #1
Illustrate the different methods of disposal of scraps in the following industry.
- Textile
- Beverage
- Fast food restaurant
- Food Processing
- Electronic
- Sports
- Sugar\
- Cement
- Fertilizers
- Furniture
- Agriculture
- Chemical
- Paint
- Construction
- Electric power
- Petroleum
- Edible oil
- Poultry farms
- Dairy farms
- Pharmaceutical
- Defence and arms
- Healthcare
- Automotive
- Paper
- Steel
Question #1
- Textile
- Beverage
- Food Processing
- Electronic
- Sports
- Sugar\
- Cement
- Fertilizers
- Furniture
- Agriculture
- Chemical
- Paint
- Construction
- Electric power
- Petroleum
- Edible oil
- Poultry farms
- Dairy farms
- Pharmaceutical
- Defence and arms
- Healthcare
- Automotive
- Paper
- Steel
Instructor: Tanzeela Siddiqui Section-A
WEGMANS FOOD MARKETS

Wegmans Food Markets, Inc., is one of the premier grocery chains in the United States.
Headquartered in Rochester, NY, Wegmans operates over 70 stores. The company employs
over 23,000 people, and has annual sales of over Rs. 2.0 billion. Wegmans has a strong
reputation for offering its customers high product quality and excellent service. Through a
combination of market research, trial and error, and listening to its customers, Wegmans
has evolved into a very successful organization. In fact, Wegmans is so good at what it does
that grocery chains all over the country send representatives to Wegmans for a firsthand
look at operations.
SUPERSTORES
Many of the company’s stores are giant 100,000 square foot superstores, double or triple
the size of average supermarkets. A superstore typically employs from 500 to 600 people.
Individual stores differ somewhat in terms of actual size and some special features. Aside
from the features normally found in supermarkets, they generally have a large bakery
Section (each store bakes its own bread, rolls, cakes, pies, and pastries), and extra large
produce sections. They also offer film processing a complete pharmacy, a card shop and
video rentals. In-store floral shops range in size up to 800 square feet of space, and offer a
wide variety of fresh-cut flowers, flower arrangements, varies and plants. In-store card
shops covers over 1000 square feet of floor of floor space. The bulk foods department
provides customers with the opportunity to select what quantities they desire from a vast
array of foodstuffs and some nonfood items. Each store is a little different. Among the
special features in some stores are a dry cleaning department, a wokery, and a salad bar.
Some feature a Market Cafe that has different food stations, each devoted to preparing and
serving a certain type of food. For example, one station has pizza and other Italian
specialties, and another oriental food. There are also being a sandwich bar, a salad bar and a
dessert station. Customers often wander among stations as they decide what to order. In
several affluent locations, customers can stop in on their way home from work and choose
from a selection of freshly prepared dinner entrees. Some stores have a coffee shop section
with tables and chairs where shoppers can enjoy regular or specialty coffees and variety of
tempting pastries.
PRODUCE DEPARTMENT
The company prides itself on fresh produce. Produce is replenished as often as 12 times a
day. The larger stores have produce sections that are four to five times the size of a produce
section of an average supermarket. Wegmans offers locally grown produce a season.
Wegmans uses a ’farm to market’ system whereby some local growers deliver their produce
directly to individual stores, bypassing the main warehouse. That reduces the company’s
inventory holding costs and gets the produce into the stores as quickly as possible. Growers
may use specially designed containers that go right onto the store floor instead of large
bins. This avoids the bruising that often occurs when fruits and vegetables are transferred
from bins to display shelves and the need to devote labor to transfer the produce to shelves.
MEAT DEPARTMENT
In addition to large display cases of both fresh and frozen meat products, many stores have
a full-service butcher shop that offers a variety of fresh meat products and where butchers
are available to provide customized cuts of meat for customers.
ORDERING
Each department handles its own ordering. Although sales records are available from
records of items scanned at the checkouts, they are not used directly for replenishing stock.
Other factors, such as pricing, special promotions, local circumstances must all be taken
into account. However, for seasonal periods, such as holidays, managers often check
scanner records to learn what past demand was during a comparable period.
The superstores typically receive one truckload of goods per day from the main warehouse.
During peak periods, a store may receive two truckloads from the main warehouse. The
short lead-time greatly reduces the length of the time an item might be out of stock, unless
the main warehouse is also out of stock.The company exercises strict control over
suppliers, insisting on product quality and on-time deliveries.
EMPLOYEES
The company recognizes the value of good employees. It typically invests an average of
Rs.7000 to train each new employee. In addition to learning about stores operations, new
employees learn the importance of good customer service and how to provide it. The
employees are helpful, cheerfully answering customer questions or handling complaints.
Employees are motivated through a combination of compensation, profit sharing, and
benefits.
QUALITY
Quality and Customer satisfaction are utmost in the minds of Wegmans management and its
employees. Private label food items as well as name brands are regularly evaluated in test
kitchens, along with the potential new products. Managers are responsible for checking and
maintaining products and service quality in their departments. Moreover, employees are
encouraged to report problems to their managers.
If a customer is dissatisfied with an item and returns it, or even a portion of the item, the
customer is offered a choice of a replacement or a refund. If the item is a Wegmans brand
food item, it is then sent to the test kitchen to determine the cause of the problem. If the
cause can be determined, corrective action is taken.
Questions
1. Illustrate that how do customers judge the quality of a supermarket?
2. How and why each of these factors is employed to the successful operation of a
supermarket:
(a) Customer satisfaction.
(b) Forecasting.
(c) Capacity planning.
(d) Location
(e) Inventory management.
(f) Layout of the store.
(g) Scheduling.
Instructor: Tanzeela Siddiqui Section-B
Read the case study below and answer the questions that follow.
Background
T-Sole Ltd produce fashion boots and industrial footwear, which are sold under the brand
name of MDs. This footwear brand can only be bought in specialist retail outlets
throughout the UK or from their own shop, which is situated in the heart of London.
During the mid 1980s to the mid 1990s the company achieved huge
successes. Their footwear range was particularly popular with
the student segment of the market, because of their durability.
Sales to other segments of the market were also increasing, as
were their profits.
The managers of the company decided to expand their factory to cope with this increased
demand, which also meant doubling their workforce.
The present situation

Their factory is situated in a rural area approximately 200 miles from their London store.
New employees were recruited from the locality and are given one day’s training in the
production process when they first started. Management introduced a ‘piecework’ rate,
which means employees are paid for each item of footwear they produce. The managers
believed this system is an incentive to increasing productivity. However, the new recruits
made many mistakes and a lot of the footwear produced had to be rejected.
The experienced workers started rushing their work in order to increase their wages and
this led to an increased number of consumer complaints regarding faulty or poor quality
goods. Added to this was the increased competition from trainer manufacturers. The
MDs brand saw its sales figures drop by 50 per cent within three years, which was a huge
loss of market share.
Two-thirds of the workforce have now been made redundant. Those remaining feel very
insecure and are unhappy with their current working conditions. Production has been
limited, which means they are losing out on wages. The equipment they use is constantly
breaking down, leading to further time lost for which they are not being paid.
The remaining workers have asked the management to change their payment system to a
guaranteed weekly wage for the hours they work. They have threatened to withdraw their
labour if conditions do not improve.
Options for the future

The managers of T-Sole Ltd have discussed the following options.
1. Change the payment system for the employees and improve maintenance procedures
on the machinery. This would eat into their already reduced profits and would not
be popular with the shareholders.
2. Keep the present payment system for the employees and instead move into the
casual footwear range and hope that the employees will accept the change. This
would involve some modification and upgrading of existing machinery. Finance
could be a problem.
3. Have a combination of both options. Give the employees a guaranteed wage and
diversify into the casual footwear market.
After careful consideration the management choose Option 3.
Questions
1. Challenges for business can come from internal and/or external pressures.
Illustrate two such pressures affecting the current situation of T-Sole Ltd.
(4)
2. Illustrate the stages in the product life cycle of the MDs footwear brand and state
which stage it is now at. (4)
3. Employee relations at T-Sole Ltd suffered because of the new payment system.
What strategies the Human Resources Department of T-Sole Ltd could have used to
avoid these problems. (4)
4. In today’s competitive markets quality products are extremely important. Illustrate

what measures T-Sole Ltd could have introduced to ensure a high quality product
reached the consumer. (4)
Mid-term Exam
Section: A Instructor:Tanzeela Siddiqui
Time Allowed: 80 Minutes Max Marks: 30
Date: 08-04-2019 Reg. No: ________________
Note: Read and follow the INSTRUCTIONS carefully.

a) DO NOT write anything on question paper.
b) Attempt all questions.
c) Exchange of any material is strictly prohibited during the examination.
d) No student, IN ANY CASE, is supposed to leave the examination hall during
examination.
e) Understanding the question is part of examination. So, NO QUERIES ARE
ALLOWED.
Question # 1 CLO2-C3-PLO11 (15)

Suppose that you are going to start a manufacturing business, How you would decide to
choose for the following:
a. Product
b. Production process
c. Business Location
d. Business Layout
e. Materials Management

What are the different types of waste items and what methods would be employed for the
disposal of scraps in a restaurant?
Question #3 CLO2-C3-PLO11 (5+5)

a. A juicse manufacturing company orders 300,000 kgs of fruit every year. Ordering
cost per order is Rs. 30. Cost of carrying the fruits is 18% of the value of average inventory.
Solve for the Economic order Quantity and the quantity Q if the shelf life of fruits is 21
days.
b. Demand = 650,000 units/ year

Ordering Cost = Rs. 25/order
Holding Cost = Rs. 18/unit/month
Solve for the Following:
i. Economic order quantity
ii. Optimal Number of orders
iii. Total inventory cost
iv. Length of supply in days
v. If the ordering cost per order was over-stated by Rs.8, What is the corrected value
of EOQ.
Mid-term Exam
Section: B Instructor:Tanzeela Siddiqui
Time Allowed: 80 Minutes Max Marks: 30
Date: 08-04-2019 Reg. No: ________________
Note: Read and follow the INSTRUCTIONS carefully.

a) DO NOT write anything on question paper.
b) Attempt all questions.
c) Exchange of any material is strictly prohibited during the examination.
d) No student, IN ANY CASE, is supposed to leave the examination hall during
examination.
e) Understanding the question is part of examination. So, NO QUERIES ARE
ALLOWED.

Suppose that you are going to start a manufacturing business. What location and layout you
will choose for your organization.


a. A juice manufacturing company orders 10,000 kgs of fruit every year. Ordering cost per
order is Rs. 50. Cost of carrying the fruits is 8%/year of the value of average inventory.
Per unit cost id Rs. 2/kg. Solve for the Quantity Q if the shelf life of fruits is 30 days.
b. Demand = 6,000 units/ year

Inventory carrying cost = 5%/quarter
Per unit cost = Rs. 10
i. Economic order quantity
ii. Optimal Number of orders
iii. Total inventory cost
iv. Length of supply in days
v. If the manager asks to place 2 orders per year, how you are going to justify for the
optimal number of orders.
Solution
Question #1
Illustrate the difference between needs, wants, desires and demands with examples.
Answer:
Need is the basic human requirements like shelter, clothe, food, water, etc. These are
essential for human beings to survive. In addition, needs aren’t only physical. Needs can be
a social thing, for example, social class, belonging to a certain society and need of self-
expression.
This is quite different from needs.
Wants aren’t permanent and it regularly changes.
As time passes, people and location change, wants change accordingly.
Wants aren’t essential for humans to survive, but it’s associated with needs.
For example, if we always manage to satisfy our wants, it transforms into a need.
There are two options, you either buy a Samsung’s or Apple’s product.
Though, the prices are really different. The Samsung’s phone costs $150 and the Apple’s
iPhone $780.
We’d prefer to purchase the Apple product, but the question is, can we?
If we, financially, are strong enough and can allow ourselves to buy a $780 iPhone, it
means that we’ve transformed our want/need into a demand.
So, the key difference between wants and demand is desire. Consequently, for people, who
can afford a desirable product are transforming their wants into demands.
In other words, if a customer is willing and able to buy a need or a want, it means that
they have a demand for that need or a want.
Question #2
Demonstrate with examples that forward and backward integration strategy can save the
cost/ profit of the company.
Forward integration is a operational strategy implemented by a company that wants to
increase control over its suppliers, manufacturers or distributors, so it can increase
its market power. For a forward integration to be successful, a company needs to gain
ownership over other companies that were once customers. his differs from backward
integration in which a company tries to increase ownership over companies that were once
its suppliers.
For example, the company Intel supplies Dell with intermediate goods - its processors - that
are placed within Dell's hardware. If Intel wanted to move forward in the supply chain, it
could conduct a merger or acquisition of Dell in order to own the manufacturing portion of
the industry. Additionally, if Dell wanted to engage in a forward integration, it could seek to
take control of a marketing agency that the company previously used to market its end-
product. However, Dell cannot seek to take over Intel if it wants to integrate forward. Only
a backward integration allows a movement up the supply chain.
A general example of backward integration is when a bakery business moves up the supply
chain to purchase a wheat processor or a wheat farm. In this scenario, a retail supplier is
purchasing one of its manufacturers, therefore cutting out the middleman, and hindering
competition.
Question #3
Write down the tangible and intangible attributes of any five tangible products.
Answer:
A product attribute is a characteristic that defines a particular product and will affect a
consumer's purchase decision. Product attributes can be tangible (or physical in nature) or
intangible (or not physical in nature).
Tangible Attributes
Tangible attributes can include such product characteristics as size, color, weight, volume,
smell, taste, touch, quantity, or material composition.
For example, when you want to buy a new car, you might consider tangible attributes such
as its size, color, and material composition. If you are looking for a 2-door, red sports car
with a leather interior, you are searching for a product based on its tangible attributes.
Intangible Attributes
Intangible attributes may include such characteristics as price, quality, reliability, beauty or
aesthetics, and je ne sais quoi (an indefinable, elusive pleasing quality).
Again, if you are looking to buy a new car, you might also consider intangible attributes
such as price, quality, and safety test scores. If you want a new car that is relatively
inexpensive but has garnered high marks on performance tests, you are searching for a
product based on its intangible attributes.
Question #1
Illustrate the difference between Economics at individual, organizational and economy
level with respect to resources and wants.
Answer: Economics is the efficient utilization of scarce resources to satisfy unlimited
human wants.
Economics at: Resources Wants
Individual level Income, Salary, Pocket To meet basic needs, daily
money expenditures etc
Organizational level Financial, Human, Physical To maximize profits
Economy level Financial, Human, To be a better economy
Physical/Natural
Question #2
Write down the characteristics of a partnership firm.
Question #1
Sheharyar autos manufactures and sale 2000 tri-vehicles every year. Company purchases
tires for the production of vehicles from Ahmed and Sons at the rate of $10 per tire. The
cost for placing the order is $60 and inventory carrying cost is 5% per quarter. Solve for the
following;
d. Economic order quantity\
e. Optimal no. of orders per year
f. Annual holding cost= Annual Ordering cost
Answer:
EOQ= 600 units/ order
N= 10 orders/ year
Annual Holding Cost = Rs. 600
Annual Ordering Cost = Rs. 600
Question #1
Sheharyar autos manufactures and sale 3000 bi-cycles every year. Company purchases tires
for the production of vehicles from Ahmed and Sons at the rate of $10 per tire. The cost for
placing the order is $60 and inventory carrying cost is 10% semi-annualy. Solve for the
following;
d. Economic order quantity\
e. Optimal no. of orders per year
f. Annual holding cost= Annual Ordering cost
Answer:
EOQ= 600 units/ order
N= 10 orders/ year
Annual Holding Cost = Rs. 600
Annual Ordering Cost = Rs. 600
Question #1
At the end of the year 2018 company holds
- Cash Rs. 500,000
- Machinery Rs. 700,000
- Furniture Rs. 100,000
- Loan Rs. 700,000
- Debtors Rs. 200,000
- Inventories Rs. 300,000
- Creditors Rs. 300,000
- Capital Rs. 800,000
Solve for the balance sheet.
Solution:
Balance Sheet
As on December 31, 2018
Assets Amount Liabilities and Amount

(Rs.) Owner’Equity (Rs.)
Currents Assets: Current Liabilities:
Cash in hand 500000 creditors 300000
Debtors 200000 Long-term Liabilities:
Stock 300000 Loan 700000
Fixed Assets: Owner’s Equity

Machinery 700000 Capital 800000
Furniture 100000
1800000 1800000
Question #1
Revenue, Rs. 500,000; utility bills, Rs. 17,000; salaries Rs. 60,000; machinery Rs. 170,000;
loan Rs. 200,000; tax Rs. 2,000 upto 200,000 plus 5% of any amount above 200,000;
income from other sources Rs. 300,000; cost of sales, Rs. 200,000; interest, 7% of the
amount of loan, depreciation on machinery is 10% annually.
Solve for the following;
e) Gross profit f) Operating profit
g) Earnings before interest and tax h) Taxable profit
Solution:
Amount Amount
Particulars
Dr (Rs.) Cr (Rs.)
Sales/ Revenues 500,000
less: Cost of Goods Sold (200,000)
Gross Profit 300,000
less: Operating Expenses:
salaries 60,000
Utilities 17,000
Depreciation 17,000
(94,000)
Operating Income 206,000
Add: Income from other sources 300,000
Income before interest and tax 506,000
less: Interest (14,000)
Earning before Tax 492,000
less: Tax (16,600)
Net Profit 475,400
Question #1
- Textile
- Beverage
- Food Processing
- Electronic
- Sports
- Sugar\
- Cement
- Fertilizers
- Furniture
- Agriculture
- Chemical
- Paint
- Construction
- Electric power
- Petroleum
- Edible oil
- Poultry farms
- Dairy farms
- Pharmaceutical
- Defence and arms
- Healthcare
- Automotive
- Paper
- Steel
Question #1
- Textile
- Beverage
- Food Processing
- Electronic
- Sports
- Sugar\
- Cement
- Fertilizers
- Furniture
- Agriculture
- Chemical
- Paint
- Construction
- Electric power
- Petroleum
- Edible oil
- Poultry farms
- Dairy farms
- Pharmaceutical
- Defence and arms
- Healthcare
- Automotive
- Paper
- Steel
Instructor: Tanzeela Siddiqui Section-A
Questions
1. Illustrate that how do customers judge the quality of a supermarket?
Customers judge the quality of supermarket (Wegmans Food Markets) in the following
mentioned ways:
1. Large selection of choices. If customers can find everything they want under
one roof.
2. Systematic way to placing products the supermarket offers. For example, a shelf
of biscuits in one place whereas the shelf of edible oil in the other.
3. Timely/ scheduled checking of products whether they are okay or not, and if any
issues found, reporting to the managers.
4. Maintained counter for payment of bills. Customers find no lines or queues to
pay the bills.
5. Higher quality products in comparatively low price than any other
supermarkets.
6. The neat and tidiness of the supermarket too adds quality of it.
7. Timely/ scheduled checking of products whether they are okay or not, and if any
issues found, reporting to the managers (Stevenson, 2012).
2. Indicate how and why each of these factors is important to the successful operation
of a supermarket:
a. Customer Satisfaction
Any business firm that is successful is because of its customer satisfaction. The satisfied
customer visits the supermarket time and again and so does irregular customers who
eventually become regular customer because of the satisfaction with the supermarket. The
satisfaction could either be because of suitability, or quality of the service they offer or the
planned and mannered structure of the supermarket. The time and visit of customer helps in
gaining more of revenues to the supermarket which makes the supermarket successful.
b. Forecasting
Indeed, forecasting helps in the successful operation of a supermarket. Analyzing the

current scenario and customers demand, a manager can act according and have great
impact on the profitability of the supermarket.
For example, in the season of FIFA World Cup, a manager can predict that the demand of
large number of jersey will exist. And the manager accordingly can act so as to increase
profitability/ successful operation of a supermarket.
c. Capacity planning
The proper capacity planning helps for the successful operation of the supermarket. The
process required to set products in the supermarket and the capacity available to have these
products in the supermarket have direct impact on successful operation of the supermarket.
More spaces in the supermarket with wide range of choices of products available to the
customers helps is yielding high return to the supermarket.
d. Location
Supermarket location influence visiting supermarket frequency of the customers. The more
near and at appropriate the supermarket lies, the more customers visit the supermarket
which is another important factor for the successful operation of the supermarket.
Moreover the questions like where should the facility should be put or on what criteria
should the location of the supermarket base should be address by the operation managers.
e. Inventory Management
Inventory required for the supermarkets should be maintained in timely order so as to meet
the day to day operation and create successive operation of the supermarket. The planning
of materials requirements must be made for the efficiency in operation of the supermarket
as well.
f. Layout of the Store
The layout of the supermarket also plays important role in the successful operation of the
supermarket. The proper arrangement of physical assets and determining how large the
facility is required by the operation managers helps in actual and efficient operation of the
supermarket. This too leads in the convenience for the supermarket as well as customers.
g. Scheduling
Scheduling the number of work force required in the supermarket, when are they required,
how long they should be kept etc also helps in the successful operation of the supermarket.
It is because scheduling is directly related to the out flow of finance with the supermarket.
Proper scheduling helps reducing the costs and hence in the profitability of the
supermarket.
What are some of the ways Wegmans uses technology to gain an edge over its competition?
One of the top grocery operating in the US market, Wegmans Food Markets, Inc.,
employing over 37,000 people and very successful in maintaining customer satisfaction,
resulting the sales of over $3 billion is very successful in its operation (Stevenson, 2012).
It is possible because of the Wegmans uses of the technology continuously to gain edge
over its competition. Wegmans use the technologies in order to determine the level of
inventory required as well to manage the supply change in the firm. Moreover, the use of
technology is in maintaining the freshness of the meat too. Also, the technologies are used
to determine if any departments are to be added in the firm (Stevenson, 2012).
Assignment # 01 CLO2-C3-PLO11(Solution)
Instructor: Tanzeela Siddiqui Section-B
1. Internal pressures could include:
 Workforce unwilling to continue with present working conditions.

 Lack of training in making casual footwear.
 Lack of finance to adapt existing machinery/buy new machinery.
 Existing shareholders who will have reduced dividends.
External pressures could include:
 Market is already near saturation – lots of competition.

 Political – e.g. introduction of the minimum wage (i.e. laws protecting people at
work).
 Economic –any change to interest rates could affect loan repayments of
machinery/factory etc.
 Social – changing attitudes to pollution/green issues/animal rights e.g. ensuring
it is only man made fibres used in production.
 Technical -use of the internet for faster communications, etc.
2. Product Life Cycle
Development/introduction – product is being designed
 Introduction when product is new on market.

 Sales are usually low at this stage.
 Length of stage varies according to product.
Growth – product is becoming established
 Consumers are more aware of its existence.

 Sales start to increase as more consumers buy it.
 Product starts to make a profit.
Maturity/saturation – product has become fully established
 Sales are at a maximum.

 Product has a huge market share.
 No more sales growth possible unless product changed in some way.
Decline – sales start to decline – possibly because of more competition
 Product is no longer required by consumers.

 Product is forced out of the market.
MDs is in the decline stage.
3. The human resources department could have:
 prepared job descriptions (specifications) for the organisation

 prepared person specifications – used these to match to the job description
 offered more than one day’s training – perhaps an induction training to
emphasise the culture of the organisation
 used a better system of remuneration to ensure all employees were paid fairly
 had a better system for the whole recruitment and selection process
 introduced a staff appraisal system – emphasising how this could help
promotion/pay etc
 introduced a formal grievance and discipline procedure
4. Measures to ensure quality:
 Introduce a quality control programme.

 Introduce Total Quality Management system (if student says TQM without
expansion, only give ½ mark).
 Monitor the production process at each stage to eliminate substandard goods.
 Give the workers more responsibility for ensuring quality/solving production
problems.
 Introduce quality circles.
 Investigate how your competitors maintain quality (benchmarking).
Mid-term Exam
Solution
Section: A Instructor:Tanzeela Siddiqui

Suppose that you are going to start a manufacturing business, How you would decide to
choose for the following:
f. Product
g. Production process
h. Business Location
i. Business Layout
j. Materials Management
Answer:
Product:
Product is defined as a "thing produced by labor or effort" or the "result of an act or a
process"
For a consumer: Combination of Utilities
For a product manager: Combination of Processes
For a Financial Manager: Mix of various cost elements,
For an HR Manager: Mix of various skills
In general we can define the product as a bundle of tangible and intangible attributes which
along with the service is meant to satisfy the customer wants.
Production Process:
Production is Step-by-step conversion of one form of material into another form through
chemical or mechanical process to create or enhance the utility of the product to the user.
It’s a value addition process
PLANT LOCATION:
Every entrepreneur is faced with the problem of deciding the best site for location of his
plant or factory. Plant location refers to the choice of region and the selection of a particular
site for setting up a business or factory. But the choice is made only after considering cost
and benefits of different alternative sites. It is a strategic decision that cannot be changed
once taken.
An ideal location is one where the cost of the product is kept to minimum, with a large
market share, the least risk and the maximum social gain.
Location Analysis
Location analysis is a dynamic process where entrepreneur analyses and compares the
appropriateness or otherwise of alternative sites with the aim of selecting the best site for a
given enterprise. It consists the following:
1. Demographic Analysis:
It involves study of population in the area in terms of total population (in no.), age composition, per
capita income, educational level, occupational structure etc.
2. Competitive Analysis:
It helps to judge the nature, location, size and quality of competition in a given trade area.
3. Traffic analysis:
To have a rough idea about the number of potential customers passing by the proposed site during
the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of
pedestrian and vehicular traffic passing a site.
4. Site economics:
Alternative sites are evaluated in terms of establishment costs and operational costs under this.
Costs of establishment is basically cost incurred for permanent physical facilities but operational
costs are incurred for running business on day to day basis, they are also called as running costs.
Two sites A and B are evaluated in terms of above mentioned two costs as follows:
The above cost statement indicates that site B is preferable to site A keeping in mind
economic considerations only although in some respects site A has lower costs. By
applying the definition of ideal location which is the place of maximum net advantage or
which gives lowest unit cost of production and distribution, site
B would be preferred.
PLANT LAYOUT:
Plant layout refers to the arrangement of physical facilities such as machinery, equipment,
furniture etc. within the factory building in such a manner so as to have quickest flow of
material at the lowest cost and with the least amount of handling in processing the product
from the receipt of material to the shipment of the finished product.
It may be defined as a technique of locating machines, processes and plant services within
the factory so as to achieve the right quantity and quality of output at the lowest possible
cost of manufacturing.
Essentials
An efficient plant layout is one that can be instrumental in achieving the following
objectives:
 Proper and efficient utilization of available floor space
 To ensure that work proceeds from one point to another point without any
 Delay
 Reduce material handling costs
 Reduce hazards to personnel
 Utilize labour efficiently
 Increase employee morale
 Reduce accidents
 Allow ease of maintenance
Types of Layout
In case of manufacturing unit, plant layout may be of four types:
Product or line layout: Under this, machines and equipments are arranged in one line
depending upon the sequence of operations required for the product. The materials move
from one workstation to another sequentially without any backtracking or deviation. Under
this, machines are grouped in one sequence.
Manufacturing units involving continuous manufacturing process, producing few
standardized products continuously on the firm’s own specifications and in anticipation of
sales would prefer product layout e.g. chemicals, sugar, paper, rubber, refineries, cement,
automobiles, food processing and electronics etc.
Process or functional layout:
In this type of layout machines of a similar type are arranged together at one place. E.g.
Machines performing drilling operations are arranged in the drilling department, machines
performing casting operations be grouped in the casting department. The work has to be
allocated to each department in such a way that no machines are chosen to do as many
different job as possible i.e. the emphasis is on general purpose machine.
Process layout is shown in the following diagram.
Thus, process layout or functional layout is suitable for job order production involving non-
repetitive processes and customer specifications and non-standardized products, e.g.
tailoring, light and heavy engineering products, made to order furniture industries, jewelry.
Fixed position or location layout:

In this type of layout, the major product being produced is fixed at one location. Equipment
labour and components are moved to that location. All facilities are brought and arranged
around one work center. This type of layout is not relevant for small scale entrepreneur.
The following figure shows a fixed position layout regarding shipbuilding.
In case of Trade unit, plant layout may be
1. Self service layout: The self-service layouts allow customers to select merchandise for
themselves. Customers should be led through the store in a way that will expose them to as
much display area as possible, e.g. Grocery Stores or department stores.
2. Full service layout: Certain specialty enterprises sell to fewer numbers of customers or higher
priced product, e.g. Apparel, office machines, sporting goods, fashion items, hardware, good
quality shoes, jewelry, luggage and accessories, furniture and appliances are all examples of
products that require time and personal attention to be sold. These full service layouts provide
area and equipment necessary in such cases.
3. Special layouts: Some layouts depend strictly on the type of special store to be set up, e.g. TV
repair shop, soft ice cream store, and drive-in soft drink stores are all examples of business
requiring special design. Thus, good retail layout should be the one, which saves rent, time and
labour.
In case of Services centers and establishment plant layout may be:

Services establishments such as motels, hotels, restaurants, must give due attention to client
convenience, quality of service, efficiency in delivering services and pleasing office
ambience. In today’s environment, the clients look for ease in approaching different
departments of a service organization and hence the layout should be designed in a fashion,
which allows clients quick and convenient access to the facilities offered by a service
establishment.
FUNCTIONS OF MATERIALS MANAGEMENT
The functions of materials management can be categorized in the following ways:

Answer:
Waste Management
The industrial waste and scrap consists of spoiled raw-materials, rejected components,
defective parts, waste from production departments etc. involves some commercial values.
They should be disposed of periodically and proper credit of the amount should be taken in
the books of accounts.
Hence, waste management places an important role in managing operations. Wastes can be
categorized into obsolete, surplus and scrap items.
1. Obsolete items:
These are those materials and equipments which are not damaged and which have economic worth
but which are no longer useful for the Company’s operation owing to many reason such as, changes
in product line, process, materials, and so on.
2. Surplus items:
These are those materials and equipments which have no immediate use but have accumulated due
to faulty planning, forecasting and purchasing. However, they have a usage value in future.
3. Scrap:
It is defined as process wastage, such as, turnings, borings, sprues and flashes. They may
have an end-use within the plant having commercial values. Hence, should be disposed of
periodically.
Disposal of Scrap
Disposal action follows when the scrap cannot be utilized within the organization. In
practice, it has been found that it is profitable to dispose the scrap directly to end-users
rather than to middlemen who normally form a cartel of their own which leads to lower
returns. Before disposal action it is essential that the scrap is segregated according to metal,
size, etc. when the scrap is mixed, the return is even lower than the lowest element in the
mixture.
Auction and Tender methods are frequently used for disposal of scrap. Parties in both the
cases are normally required to inspect the scrap in the scrap yard and deposit earnest
money. It is necessary that optimum usage of materials is made and funds tied up in
obsolete surplus and scrap items minimized. This is only possible when top management
shows commitment and support. The employees of the organizations are naturally the best
people to suggest improvements in materials, processes and new end users for scrap. It is
they who can minimize the accumulation of scrap through coordination.
Therefore, top management should work out formal reward systems to promote employee
participation in this matter.

c. A juice manufacturing company orders 300,000 kgs of fruit every year. Ordering
cost per order is Rs. 30. Cost of carrying the fruits is 18% of the value of average inventory.
Solve for the Economic order Quantity and the quantity Q if the shelf life of fruits is 21
days.
Answers:
EOQ= 10000 Kg/ order
Q if the shelf life is 21 days
Q = 17260 Kg/ order
d. Demand = 650,000 units/ year

Holding Cost = Rs. 18/unit/month

vi. Economic order quantity
vii. Optimal Number of orders
viii. Total inventory cost
ix. Length of supply in days
x. If the ordering cost per order was over-stated by Rs.8, What is the corrected value
of EOQ.
Answers:
EOQ = 387 units/order
N= 1679 orders/ per year
T.C=83,950
t= 0.2172 days
EOQ= 319 units/order
Mid-term Exam
Solution
Section: B Instructor:Tanzeela Siddiqui

Suppose that you are going to start a manufacturing business. What location and layout you
will choose for your organization.
Answer:
PLANT LOCATION:
Every entrepreneur is faced with the problem of deciding the best site for location of his
plant or factory. Plant location refers to the choice of region and the selection of a particular
site for setting up a business or factory. But the choice is made only after considering cost
and benefits of different alternative sites. It is a strategic decision that cannot be changed
once taken.
An ideal location is one where the cost of the product is kept to minimum, with a large
market share, the least risk and the maximum social gain.
Location Analysis
Location analysis is a dynamic process where entrepreneur analyses and compares the
appropriateness or otherwise of alternative sites with the aim of selecting the best site for a
given enterprise. It consists the following:
5. Demographic Analysis:
It involves study of population in the area in terms of total population (in no.), age composition, per
capita income, educational level, occupational structure etc.
6. Competitive Analysis:
It helps to judge the nature, location, size and quality of competition in a given trade area.
7. Traffic analysis:
To have a rough idea about the number of potential customers passing by the proposed site during
the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of
pedestrian and vehicular traffic passing a site.
8. Site economics:
Alternative sites are evaluated in terms of establishment costs and operational costs under this.
Costs of establishment is basically cost incurred for permanent physical facilities but operational
costs are incurred for running business on day to day basis, they are also called as running costs.
Two sites A and B are evaluated in terms of above mentioned two costs as follows:
The above cost statement indicates that site B is preferable to site A keeping in mind
economic considerations only although in some respects site A has lower costs. By
applying the definition of ideal location which is the place of maximum net advantage or
which gives lowest unit cost of production and distribution, site
B would be preferred.
PLANT LAYOUT:
Plant layout refers to the arrangement of physical facilities such as machinery, equipment,
furniture etc. within the factory building in such a manner so as to have quickest flow of
material at the lowest cost and with the least amount of handling in processing the product
from the receipt of material to the shipment of the finished product.
It may be defined as a technique of locating machines, processes and plant services within
the factory so as to achieve the right quantity and quality of output at the lowest possible
cost of manufacturing.
Essentials
An efficient plant layout is one that can be instrumental in achieving the following
objectives:
 Proper and efficient utilization of available floor space
 To ensure that work proceeds from one point to another point without any
 Delay
 Reduce material handling costs
 Reduce hazards to personnel
 Utilize labour efficiently
 Increase employee morale
 Reduce accidents
 Allow ease of maintenance
Types of Layout
In case of manufacturing unit, plant layout may be of four types:
Product or line layout: Under this, machines and equipments are arranged in one line
depending upon the sequence of operations required for the product. The materials move
from one workstation to another sequentially without any backtracking or deviation. Under
this, machines are grouped in one sequence.
Manufacturing units involving continuous manufacturing process, producing few
standardized products continuously on the firm’s own specifications and in anticipation of
sales would prefer product layout e.g. chemicals, sugar, paper, rubber, refineries, cement,
automobiles, food processing and electronics etc.
Process or functional layout:
In this type of layout machines of a similar type are arranged together at one place. E.g.
Machines performing drilling operations are arranged in the drilling department, machines
performing casting operations be grouped in the casting department. The work has to be
allocated to each department in such a way that no machines are chosen to do as many
different job as possible i.e. the emphasis is on general purpose machine.
Process layout is shown in the following diagram.
Thus, process layout or functional layout is suitable for job order production involving non-
repetitive processes and customer specifications and non-standardized products, e.g.
tailoring, light and heavy engineering products, made to order furniture industries, jewelry.
Fixed position or location layout:

In this type of layout, the major product being produced is fixed at one location. Equipment
labour and components are moved to that location. All facilities are brought and arranged
around one work center. This type of layout is not relevant for small scale entrepreneur.
The following figure shows a fixed position layout regarding shipbuilding.
In case of Trade unit, plant layout may be
4. Self service layout: The self-service layouts allow customers to select merchandise for
themselves. Customers should be led through the store in a way that will expose them to as
much display area as possible, e.g. Grocery Stores or department stores.
5. Full service layout: Certain specialty enterprises sell to fewer numbers of customers or higher
priced product, e.g. Apparel, office machines, sporting goods, fashion items, hardware, good
quality shoes, jewelry, luggage and accessories, furniture and appliances are all examples of
products that require time and personal attention to be sold. These full service layouts provide
area and equipment necessary in such cases.
6. Special layouts: Some layouts depend strictly on the type of special store to be set up, e.g. TV
repair shop, soft ice cream store, and drive-in soft drink stores are all examples of business
requiring special design. Thus, good retail layout should be the one, which saves rent, time and
labour.
In case of Services centers and establishment plant layout may be:

Services establishments such as motels, hotels, restaurants, must give due attention to client
convenience, quality of service, efficiency in delivering services and pleasing office
ambience. In today’s environment, the clients look for ease in approaching different
departments of a service organization and hence the layout should be designed in a fashion,
which allows clients quick and convenient access to the facilities offered by a service
establishment.

Answer:
Waste Management
The industrial waste and scrap consists of spoiled raw-materials, rejected components,
defective parts, waste from production departments etc. involves some commercial values.
They should be disposed of periodically and proper credit of the amount should be taken in
the books of accounts.
Hence, waste management places an important role in managing operations. Wastes can be
categorized into obsolete, surplus and scrap items.
4. Obsolete items:
These are those materials and equipments which are not damaged and which have economic worth
but which are no longer useful for the Company’s operation owing to many reason such as, changes
in product line, process, materials, and so on.
5. Surplus items:
These are those materials and equipments which have no immediate use but have accumulated due
to faulty planning, forecasting and purchasing. However, they have a usage value in future.
6. Scrap:
It is defined as process wastage, such as, turnings, borings, sprues and flashes. They may
have an end-use within the plant having commercial values. Hence, should be disposed of
periodically.
Disposal of Scrap
Disposal action follows when the scrap cannot be utilized within the organization. In
practice, it has been found that it is profitable to dispose the scrap directly to end-users
rather than to middlemen who normally form a cartel of their own which leads to lower
returns. Before disposal action it is essential that the scrap is segregated according to metal,
size, etc. when the scrap is mixed, the return is even lower than the lowest element in the
mixture.
Auction and Tender methods are frequently used for disposal of scrap. Parties in both the
cases are normally required to inspect the scrap in the scrap yard and deposit earnest
money. It is necessary that optimum usage of materials is made and funds tied up in
obsolete surplus and scrap items minimized. This is only possible when top management
shows commitment and support. The employees of the organizations are naturally the best
people to suggest improvements in materials, processes and new end users for scrap. It is
they who can minimize the accumulation of scrap through coordination.
Therefore, top management should work out formal reward systems to promote employee
participation in this matter.

c. A juice manufacturing company orders 10,000 kgs of fruit every year. Ordering cost per
order is Rs. 50. Cost of carrying the fruits is 8%/year of the value of average inventory.
Per unit cost id Rs. 2/kg. Solve for the Quantity Q if the shelf life of fruits is 30 days.
Answers:
Quantity Q if the shelf life of fruits is 30 days
Q = 821 units/order
d. Demand = 6,000 units/ year
Inventory carrying cost = 5%/quarter
Per unit cost = Rs. 10
vi. Economic order quantity
vii. Optimal Number of orders
viii. Total inventory cost
ix. Length of supply in days
x. If the manager asks to place 2 orders per year, how you are going to justify for the
optimal number of orders.
Answers:
EOQ= 600 units/order
N=10 orders/year
T.C= 1200
T= 36.5 days
T.C for 2 orders is 3120 which is 5 times greater than the total cost for optimal number of
orders
Solution
Quiz # 4 CLO3-C3-PLO9
Question #1
Answer:
.
 Storage and material handling costs for raw materials: product cost
 Gains or loss on disposal of factory equipment: period income (costs)
 Lubricants for machinery and equipment used in production: product cost (mfg.
Overhead)
 Depreciation of a factory building: product cost (mfg. Overhead)
 Depreciation of manufacturing equipment: product cost (mfg. Overhead)
 Depreciation of the company president’s automobile: period cost
 Leasehold costs for land on which factory buildings stand: period cost
 Inspection costs of finished goods: product cost
 Direct labor cost: product cost
 Raw materials cost: product cost
 Advertising expenses: period cost
Solution
Quiz # 4 CLO3-C3-PLO9
Question #1
Answer:
.
 Storage and material handling costs for raw materials: product cost
 Gains or loss on disposal of factory equipment: period income (costs)
 Lubricants for machinery and equipment used in production: product cost (mfg.
Overhead)
 Depreciation of a factory building: product cost (mfg. Overhead)
 Depreciation of manufacturing equipment: product cost (mfg. Overhead)
 Depreciation of the company president’s automobile: period cost
 Leasehold costs for land on which factory buildings stand: period cost
 Inspection costs of finished goods: product cost
 Direct labor cost: product cost
 Raw materials cost: product cost
 Advertising expenses: period cost

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Department of Electrical Engineering

Engineering Economics and Management

Solve for the balance sheet.

 Storage and material handling costs for raw materials.

 Storage and material handling costs for raw materials.

WEGMANS FOOD MARKETS

The present situation

Options for the future

After careful consideration the management choose Option 3.

4. In today’s competitive markets quality products are extremely important. Illustrate

Note: Read and follow the INSTRUCTIONS carefully.

Question # 1 CLO2-C3-PLO11 (15)

Question # 2 CLO1-C3-PLO7 (5)

Question #3 CLO2-C3-PLO11 (5+5)

b. Demand = 650,000 units/ year

Note: Read and follow the INSTRUCTIONS carefully.

Question # 1 CLO2-C3-PLO11 (15)

Question # 2 CLO1-C3-PLO7 (5)

Question #3 CLO2-C3-PLO11 (5+5)

b. Demand = 6,000 units/ year

Solve for the balance sheet.

Assets Amount Liabilities and Amount

Fixed Assets: Owner’s Equity

Indeed, forecasting helps in the successful operation of a supermarket. Analyzing the

f. Layout of the Store

1. Internal pressures could include:

 Workforce unwilling to continue with present working conditions.

External pressures could include:

 Market is already near saturation – lots of competition.

2. Product Life Cycle

Development/introduction – product is being designed

 Introduction when product is new on market.

Growth – product is becoming established

 Consumers are more aware of its existence.

Maturity/saturation – product has become fully established

 Sales are at a maximum.

 Product is no longer required by consumers.

MDs is in the decline stage.

3. The human resources department could have:

 prepared job descriptions (specifications) for the organisation

4. Measures to ensure quality:

 Introduce a quality control programme.

Question # 1 CLO2-C3-PLO11 (15)

Fixed position or location layout:

In case of Services centers and establishment plant layout may be:

Question # 2 CLO1-C3-PLO7 (5)

Question #3 CLO2-C3-PLO11 (5+5)

d. Demand = 650,000 units/ year

Solve for the Following:

Question # 1 CLO2-C3-PLO11 (15)

Fixed position or location layout:

In case of Services centers and establishment plant layout may be:

Question # 2 CLO1-C3-PLO7 (5)

Question #3 CLO2-C3-PLO11 (5+5)

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