UNIT-III

Marketing Management

Marketing Management is a business discipline which is focused on the

practical application of marketing techniques and the management of a
firm's marketing resources and activities. Rapidly emerging forces of
globalization have compelled firms to market beyond the borders of their
home country making International marketing highly significant and an
integral part of a firm's marketing strategy Marketing managers are often
responsible for influencing the level, timing, and composition of customer
demand accepted definition of the term.

The 4P's of Marketing - The Marketing Mix

These are the basic elements of the MARKETING PLAN for any business:

PRODUCT
The business has to produce a product that people want to buy. They have to
decide which ‘market segment’ they are aiming at – age, income,
geographical location etc. They then have to differentiate their product so
that it is slightly different from what is on offer at present so that people can
be persuaded to ‘give them a try’.

PROMOTION
Customers have to be made aware of the product. The two main
considerations are target market and cost. A new business will not be able to
afford to advertise on national television, for instance and would not wish to
because its market will be local to start with. Leaflets, billboards,
advertisements in local newspapers, Yellow Pages and ‘word of mouth’
would be more appropriate.

PRICE
The price must be high enough to cover costs and make a profit but low
enough to attract customers. There are a number of possible pricing
strategies. The most commonly used are:

• PENETRATION PRICING – charging a low price, possibly not

quite covering costs, to gain a position in the market. This is quite
popular with new businesses trying to get a ‘toehold’.
 • CREAMING – the opposite to penetration pricing, this involves
charging a deliberately high price to persuade people that the product
is of high quality. Luxury car makers often use this strategy
• COST PLUS PRICING – this is the most common form of pricing.
Costs are totalled and a margin is added on for profit to make the total
price.

PLACE
The business must have a location that it can afford, and that is convenient
and suitable for customers and any supplier.

Product life cycle (PLC)

Like human beings, products also have a life-cycle. From birth to death,
human beings pass through various stages e.g. birth, growth, maturity,
decline and death. A similar life-cycle is seen in the case of products. The
product life cycle goes through multiple phases, involves many professional
disciplines, and requires many skills, tools and processes. Product life cycle
(PLC) has to do with the life of a product in the market with respect to
business/commercial costs and sales measures. To say that a product has a
life cycle is to assert three things:
 • Products have a limited life,
• Product sales pass through distinct stages, each posing different
challenges, opportunities, and problems to the seller,
• Products require different marketing, financing, manufacturing,
purchasing, and human resource strategies in each life cycle stage.

The four main stages of a product's life cycle and the accompanying
characteristics are:

Stage Characteristics
1. costs are very high
2. slow sales volumes to start
3. little or no competition
1. Market
4. demand has to be created
introduction stage
5. customers have to be prompted to try the product

6. makes no money at this stage

1. costs reduced due to economies of scale
2. sales volume increases significantly
3. profitability begins to rise
4. public awareness increases
2. Growth stage
5. competition begins to increase with a few new
players in establishing market

6. increased competition leads to price decreases

1. costs are lowered as a result of production
volumes increasing and experience curve effects
2. sales volume peaks and market saturation is
reached
3. increase in competitors entering the market
4. prices tend to drop due to the proliferation of
3. Maturity stage
competing products
5. brand differentiation and feature diversification
is emphasized to maintain or increase market
share

6. Industrial profits go down

4. Saturation and 1. costs become counter-optimal
decline stage 2. sales volume decline or stabilize
 3. prices, profitability diminish

4. profit becomes more a challenge of

production/distribution efficiency than increased
sales

Marketing Research Techniques

Marketing research is the systematic gathering, recording, and analysis of

data about issues relating to marketing products and services. The goal of
marketing research is to identify and assess how changing elements of the
marketing mix impacts customer behavior. The term is commonly
interchanged with market research; however, expert practitioners may wish
to draw a distinction, in that market research is concerned specifically with
markets, while marketing research is concerned specifically about marketing
processes.[1]

Marketing research is often partitioned into two sets of categorical pairs,

either by target market:

• Consumer marketing research, and

 • Business-to-business (B2B) marketing research

Or, alternatively, by methodological approach:

• Qualitative marketing research, and

• Quantitative marketing research

Market research can provide critical information about the buying habits,
needs, preferences and opinions of current and prospective customers. There
are many ways to perform market research, but most businesses use one or
more of five basic methods:

1. Surveys
2. Focus Groups
3. Personal Interviews
4. Observation
5. Field Trials

The nature of information required and the amount of money you’re willing
to spend would determine which techniques you choose for your business.

1. Surveys

Using concise, straightforward questionnaires, you can analyze a sample

group that represents your target market. The larger the sample, the more
reliable the results.

a. In-person surveys are one-on-one interviews. They allow you to present

people with samples of products, packaging or advertising and gather
immediate feedback. While In-person surveys can generate response rates of
more than 90 percent they are also costly.

b. Telephone surveys are less expensive than in-person surveys, but costlier
than mail. However, due to consumer resistance to relentless telemarketing,
getting people to participate in phone surveys is difficult.

c. Mail surveys are a relatively inexpensive way to reach a broad audience.

They're much cheaper than in-person and phone surveys; however they only
generate response rates of 3 percent to 15 percent. Despite the low return,
mail surveys are still a cost-effective choice for small businesses.
d. Online surveys usually generate unpredictable response rates and
unreliable data because you have no control over the pool of respondents.
But an online survey is a simple, inexpensive way to collect anecdotal
evidence and gather customer opinions and preferences.

2. Focus Groups

In focus groups, a moderator or facilitator uses a discussion guideline to lead

a discussion among a group of people. These sessions are usually conducted
at neutral locations, using videotaping techniques or tape recorders to record
the discussion session. A focus group usually lasts for one to two hours, and
it takes at least three groups to get balanced results.

3. Personal Interviews

Like focus groups, personal interviews include unstructured, open-ended

questions. They usually last for about an hour and are typically recorded.
These type of surveys provide more subjective information than surveys do.
The results usually don't represent a large segment of the population;
nevertheless provides valuable insights into customer attitudes and are
excellent ways to uncover issues related to new products or service
development.

4. Observation

Individual responses to surveys and focus groups are sometimes at odds with
people's actual behavior. By observing consumers in action by videotaping
them in stores, at work or at home, you can observe their actual buying
behavior. This gives you a more accurate picture of customers' usage habits
and shopping patterns.

5. Field Trials

Placing a new product in selected stores to test customer response under

real-life selling conditions can help you with information regarding product
modifications, price adjustments or package improvements. Building rapport
with local store owners and Web sites can help Small business owners test
their products.
Sales promotion Methods:

Sales promotion is one of the four aspects of promotional mix. (The other
three parts of the promotional mix are advertising, personal selling, and
publicity/public relations.) Media and non-media marketing communication
are employed for a pre-determined, limited time to increase consumer
demand, stimulate market demand or improve product availability.
Examples include:

• premium
• coupon
• contests
• point of purchase displays
• rebate (marketing)
• free travel, such as free flights

Sales promotions can be directed at either the customer, sales staff, or

distribution channel members (such as retailers). Sales promotions targeted
at the consumer are called consumer sales promotions. Sales promotions
targeted at retailers and wholesale are called trade sales promotions. Some
sale promotions, particularly ones with unusual methods, are considered
gimmick by many.
The main methods of sales promotion are:

Money off coupons – customers receive coupons, or cut coupons out of

newspapers or a products packaging that enables them to buy the product
next time at a reduced price.

Competitions – buying the product will allow the customer to take part in a
chance to win a prize (e.g. Coca Cola ring pulls).

Discount vouchers – a voucher (like a money off coupon).

Free gifts – a free product when buy another product.

Point of sales materials – e.g. posters, display stands – ways of presenting

the product in its best way or show the customer that the product is there.

Loyalty cards – e.g. Nectar and Air Miles; where customers earn points for
buying certain goods or shopping at certain retailers – that can later be
exchanged for money, goods or other offers.

Examples of recent sales promotions are:

Tesco computers for schools

Cadbury’s sport in the community

Café Nero free coffee card

Loyalty cards have recently become an important form of sales promotion.

They encourage the customer to return to the retailer by giving them
discounts based on the spending from a previous visit.

Loyalty cards can offset the discounts they offer by making more sales and
persuading the customer to come back. They also provide information about
the shopping habits of customers – where do they shop, when and what do
they buy? This is very valuable marketing research and can be used in the
planning process for new and existing products.

Financial management

Financial management means planning of events (transactions)

Financial management may refer to:

• Managerial finance, the branch of finance that concerns itself with the
managerial significance of finance techniques
• Corporate finance, an area of dealing with the corporate financial
decisions

Element of cost

The process of determining, managing, and maintaining

project costs. The ultimate goal of cost element or cost control is to achieve
project success while maintaining the allotted budget expenditures. Factors
which are taken into account while attempting to control the cost element
include: projected risks associated with the project, budget maintenance,
resource costs, time and labor, etc…

Selling price of a product

Fixing the selling price can be based upon a value basis or a cost plus basis
with either basis subject to modification according to market conditions. Not
exactly scientific and true in all cases but the most profitable businesses tend
to be managed by accountants while the best sales growth companies have a
sales oriented manager at the helm.

Value basis is used to set selling prices according to the amount the
customer will pay for the product and the value of products or services being
provided. A strong influence when using a value basis are the benefits a
customer will derive from purchasing the product from each business
compared with alternative suppliers and the general market rate for that type
of product.

Using a value basis that prices products above the general market level
requires support and a marketing strategy to demonstrate to the market place
the benefits and advantages a prospective client receives. Pricing a product
or service below the accepted market price requires to be supported with
ensuring as wide an audience as possible is aware of the bargain prices and
the reasons why a lower price is being offered.

To establish the most profitable level at which selling prices should be

pitched it is important to conduct market research to determine the general
level of pricing within the product area. Also list the benefits and advantages
within the context of other competitive products of the specific products
being offered to enable the business to use these factors in support of the
price structure adopted.

To maximum level at which value basis prices can be set is dependent upon
the value the target customer places on that product or service taking into
consideration the quality, service, availability and benefits provided.

Cost based pricing is a financial accounting calculation based upon fixing a

gross profit margin that the business requires given the expected sales
volume and fixed overhead or operating costs to produce a net profit.
Normally a sales price set using a cost basis would be the amount paid for
the product plus an incremental percentage.

Cost based pricing usually occurs in areas where competition is often

working on the same cost basis and by selling similar products and services
the volume of sales is sensitive to competitive prices. Market research
should establish the range of competitive prices.

There are a number of influences that impact on setting the selling price of a
product in addition to the cost and competition. Sales location, added values,
buying policy, operational costs and others all require factoring into the
calculation. Business size also has an influence as small business accounting
is less sophisticated than accounting and financial control in larger
businesses.

The tow single most important factors in setting the selling price of a
product or service to generate the highest profit margin attainable are the
competition and the original cost of the product.

In many cases the existing competition has already set a price for the
product. Each business has to decide whether to accept this price according
to the expected volume and the gross profit margin generated or charge a
higher or lower price with the consequential effect on sales volume.

The purchase price paid drives the competitive edge. Larger business have
greater opportunities to buy in larger quantities and obtain cheaper prices
and many high volume businesses will search to source products from
overseas markets to obtain even cheaper products.
If the purchase price paid by competitors is low then that cost must be either
matched by adopting similar business practises or the products sold into a
niche area of the market where more flexible prices can be obtained at the
required volume to generate the gross margin required to cover fixed
operating costs and achieve the target net profit.

Different prices can be set for different customers to exploit higher profit
margins where possible and achieve higher volumes in market conditions
where the price has a major influence on quantities bought. A manufacturer
will often set different prices for each customer dependent on volumes
purchased and the negotiation skills of the client purchasing function.

Market conditions often determine a range of pricing policies including

offering quantity discounts for higher volumes, cash discounts for faster
settlement, lower than normal prices to allow a market to be penetrated and
established more easily and higher than normal prices in situations where
supply may exceed demand. The accounting software or bookkeeping
system employed should identify gains and losses due to different pricing
structures.

The levels of supply and demand may change over time and a flexible
pricing policy to take advantage of these changes is desirable. It is an
economic fact that when demand exceeds supply prices will increase and
when supply exceeds demand prices go lower. Failure to react quickly has a
major impact on the total gross margin attained.

The overriding decision to be taken on setting selling prices is the amount of

gross profit generated by the sales volume of those products in relation to
current business policy and fixed operating costs and profit requirements
that business needs to achieve and demonstrate through the accounting
figures produced by the final bookkeeping reckoning.

Time value of money

The time value of money is the value of money figuring in a given amount
of interest earned over a given amount of time.

For example, 100 dollars of today's money invested for one year and earning
5 percent interest will be worth 105 dollars after one year. Therefore, 100
dollars paid now or 105 dollars paid exactly one year from now both have
the same value to the recipient who assumes 5 percent interest; using time
value of money terminology, 100 dollars invested for one year at 5 percent
interest has a future value of 105 dollars. This notion dates at least to Martín
de Azpilcueta (1491-1586) of the School of Salamanca.

The method also allows the valuation of a likely stream of income in the
future, in such a way that the annual incomes are discounted and then added
together, thus providing a lump-sum "present value" of the entire income
stream.

All of the standard calculations for time value of money derive from the
most basic algebraic expression for the present value of a future sum,
"discounted" to the present by an amount equal to the time value of money.
For example, a sum of FV to be received in one year is discounted (at the
rate of interest r) to give a sum of PV at present: PV = FV − r·PV = FV/
(1+r).

Some standard calculations based on the time value of money are:

Present value The current worth of a future sum of money or stream

of cash flows given a specified rate of return. Future cash flows are
discounted at the discount rate, and the higher the discount rate, the
lower the present value of the future cash flows. Determining the
appropriate discount rate is the key to properly valuing future cash
flows, whether they be earnings or obligations.
Present value of an annuity An annuity is a series of equal payments
or receipts that occur at evenly spaced intervals. Leases and rental
payments are examples. The payments or receipts occur at the end of
each period for an ordinary annuity while they occur at the beginning
of each period for an annuity due.
Present value of a perpetuity is an infinite and constant stream of
identical cash flows.
 Future value is the value of an asset or cash at a specified date in the
future that is equivalent in value to a specified sum today.
Future value of an annuity (FVA) is the future value of a stream of
payments (annuity), assuming the payments are invested at a given
rate of interest.

Formula

Present value of a future sum

The present value formula is the core formula for the time value of money;
each of the other formulae is derived from this formula. For example, the
annuity formula is the sum of a series of present value calculations.

The present value (PV) formula has four variables, each of which can be
solved for:

1. PV is the value at time=0

2. FV is the value at time=n
3. i is the interest rate at which the amount will be compounded each
period
4. n is the number of periods (not necessarily an integer)

The cumulative present value of future cash flows can be calculated by

summing the contributions of FVt, the value of cash flow at time=t

Note that this series can be summed for a given value of n, or when n is .[7]
This is a very general formula, which leads to several important special
cases given below.

Present value of an annuity for n payment periods

In this case the cash flow values remain the same throughout the n periods.
The present value of an annuity (PVA) formula has four variables, each of
which can be solved for:

1. PV(A) is the value of the annuity at time=0

2. A is the value of the individual payments in each compounding period
3. i equals the interest rate that would be compounded for each period of
time
 4. n is the number of payment periods.

To get the PV of an annuity due, multiply the above equation by (1 + i).

Present value of a growing annuity

In this case each cash flow grows by a factor of (1+g). Similar to the formula
for an annuity, the present value of a growing annuity (PVGA) uses the
same variables with the addition of g as the rate of growth of the annuity (A
is the annuity payment in the first period). This is a calculation that is rarely
provided for on financial calculators.

Where i ≠ g :

To get the PV of a growing annuity due, multiply the above equation by (1 +

i).

Where i = g :

Present value of a perpetuity

When , the PV of a perpetuity (a perpetual annuity) formula becomes simple

division.

Present value of a growing perpetuity

When the perpetual annuity payment grows at a fixed rate (g) the value is
theoretically determined according to the following formula. In practice,
there are few securities with precise characteristics, and the application of
this valuation approach is subject to various qualifications and
modifications. Most importantly, it is rare to find a growing perpetual
annuity with fixed rates of growth and true perpetual cash flow generation.
Despite these qualifications, the general approach may be used in valuations
of real estate, equities, and other assets.

This is the well known Gordon Growth model used for stock valuation.

Future value of a present sum

The future value (FV) formula is similar and uses the same variables.
Future value of an annuity

The future value of an annuity (FVA) formula has four variables, each of
which can be solved for:

1. FV(A) is the value of the annuity at time = n

2. A is the value of the individual payments in each compounding period
3. i is the interest rate that would be compounded for each period of time
4. n is the number of payment periods

Future value of a growing annuity

The future value of a growing annuity (FVA) formula has five variables,
each of which can be solved for:

Where i ≠ g :

Where i = g :

1. FV(A) is the value of the annuity at time = n

2. A is the value of initial payment paid at time 1
3. i is the interest rate that would be compounded for each period of time
4. g is the growing rate that would be compounded for each period of
time
5. n is the number of payment periods

Techniques of capital budgeting

There are a number of techniques of capital budgeting. Some of the methods

are based on the concept of incremental cash flows from the projects or
potential investments. There are some other techniques of capital budgeting
that are based on the accounting rules and accounting earnings. However,
the techniques based on the accounting rules are considered to be improper
by the economists. The hybrid and simplified techniques of capital
budgeting are also used in practice.

Capital budgeting is the process of managing the long-term capital of a firm

in the most profitable way.
 The prime task of the capital budgeting is to estimate the requirements of
capital investment of a business.

The capital allocation to various projects depending on their needs and

selection of proper project for the business also fall under the canopy of
capital budgeting concept.

Some of the major techniques of capital budgeting are:

• Profitability index
• Net present value
• Modified Internal Rate of Return
• Equivalent annuity
• Internal rate of return

Profitability Index

The profitability index is a technique of capital budgeting. This holds the

relationship between the investment and a proposed project's payoff.
Mathematically the profitability index is given by the following formula:

Profitability Index = (Present Value of future cash flows) / (Present Value of

Initial investment)

The profitability index is also sometimes called as value investment ratio or

profit investment ratio. Profitability index is used to rank various projects.

Net Present value

Net present value (NPV) is a widely used tool for capital budgeting. NPV
mainly calculates whether the cash flow is in excess or deficit and also gives
the amount of excess or shortfall in terms of the present value. The NPV can
 also be defined as the present value of the net cash flow.

Mathematically,

NPV = ?(Ct / (1+r)t) - C0 , where the summation takes the value of t ranging
from 1 to n

Here,

n stands for the total project time

t stands for the cash flow time

r stands for the rate of discount

Ct stands for net cash flow at time t

C0 stands for capital outlay when t = 0

Modified Internal Rate of Return

The Modified Internal Rate of Return (MIRR) gives the measure of an

investment's attractiveness in a business. The prime use of the modified
internal rate of return in the capital budgeting process is to rank various
choices of projects.

Equivalent Annuity

Equivalent Annual Cost is widely used in capital budgeting as a decision

making tool. This is mainly used to compare different projects having
unequal project lifetime.
 Internal Rate of Return

The internal rate of return (IRR) is a metric used by the capital budgeting in
order to determine whether the firm should make investments or not. The
IRR indicates the efficiency of a particular investment.

UNIT-V INFORMATION SYSTEMS

MANAGERIAL FUNCTIONS AND ROLES:

Basic Functions

Management operates through various functions, often classified as

planning, organizing, staffing, leading/directing, and
controlling/monitoring.i.e

• Planning: Deciding what needs to happen in the future (today, next

week, next month, next year, over the next 5 years, etc.) and
generating plans for action.
• Organizing: (Implementation) making optimum use of the resources
required to enable the successful carrying out of plans.
• Staffing: Job Analyzing, recruitment, and hiring individuals for
appropriate jobs.
• Leading/Directing: Determining what needs to be done in a situation
and getting people to do it.
• Controlling/Monitoring: Checking progress against plans.
• Motivation : Motivation is also a kind of basic function of
management, because without motivation, employees cannot work
effectively. If motivation doesn't take place in an organization, then
employees may not contribute to the other functions (which are
usually set by top level management).
Basic Roles

• Interpersonal: roles that involve coordination and interaction with

employees.
• Informational: roles that involve handling, sharing, and analyzing
information.
• Decisional: roles that require decision-making.

Management Skills

• Technical: used for specialized knowledge required for work.

• Political: used to build a power base and establish connections.
• Conceptual: used to analyze complex situations.
• Interpersonal: used to communicate, motivate, mentor and delegate.

Business Planning Levels: Strategic, Tactical, and Operational

Business planning is multi level, cyclical and overlapping. Managers must

be able to operate at all levels.

btw, You can apply this methodology to everything in life. Not just the
business world, but in you own personal environment as well.

Strategic Planning - This is the highest level and usually done by senior
management. The decisions on the objectives, committing resources such as
money, time, and people in general is done here.

Examples: In business, it means how much money is going to be dedicated

to a project, and by when you expect the project complete. In personal life,
suppose you plan a wedding, it means deciding on the budget and the date.

Tactical Planning - This is the implementation of the strategic plan stage.

Combining your available resources, look at obstacles, review alternatives

Examples: In business, it means an analysis of resource combination,

planning for obstacles, and general timetable. In personal life, for the
wedding, it means, finding the place, developing a guest list, deciding on a
menu and music.
Operational Planning - This is a much more detailed level of strategic and
tactical plan. Here, managers chosen to work the plan develop a specific
plan to execute the strategic plan.

Examples: In business, it means engaging the team, develop and answer the
who, what, when, where, how management questions. In personal life, for
the wedding, it means, choosing the band, finding the caterer, decide on
flowers, etc.

Concepts of systems and organizations

Most systems share common characteristics, including:

• Systems have structure, defined by components and their

composition;
• Systems have behavior, which involves inputs, processing and outputs
of material, energy, information, or data;
• Systems have interconnectivity: the various parts of a system have
functional as well as structural relationships between each other.
• Systems may have some functions or groups of functions

Organisations

An organization is a social arrangement which pursues collective goals,

controls its own performance, and has a boundary separating it from its
environment. The word itself is derived from the Greek word organon, itself
derived from the better-known word ergon. There are a variety of legal types
of organizations, including: corporations, governments, non-governmental
organizations, international organizations, armed forces, charities, not-for-
profit corporations, partnerships, cooperatives, and universities. A hybrid
organization is a body that operates in both the public sector and the private
sector, simultaneously fulfilling public duties and developing commercial
market activities. As a result the hybrid organization becomes a mixture of a
government and a corporate organization.

In the social sciences, organizations are the object of analysis for a number
of disciplines, such as sociology, economics, political science, psychology,
management, and organizational communication. The broader analysis of
organizations is commonly referred to as organizational structure,
organizational studies, organizational behavior, or organization analysis. A
number of different perspectives exist, some of which are compatible:
 • From a process-related perspective, an organization is viewed as an
entity is being (re-)organized, and the focus is on the organization as a
set of tasks or actions.
• From a functional perspective, the focus is on how entities like
businesses or state authorities are used.
• From an institutional perspective, an organization is viewed as a
purposeful structure within a social context.

MODEL OF AN INFORMATION SYSTEM

Information Systems (IS) is an academic/professional discipline bridging

the business field and the well-defined computer science field that is
evolving toward a new scientific area of study.[4][5][6][7] An information
systems discipline therefore is supported by the theoretical foundations of
information and computations such that learned scholars have unique
opportunities to explore the academics of various business models as well as
related algorithmic processes within a computer science
discipline.Typically, information systems or the more common legacy
information systems include people, procedures, data, software, and
hardware (by degree) that are used to gather and analyze digital information.
Specifically computer-based information systems are complementary
networks of hardware/software that people and organizations use to collect,
filter, process, create, & distribute data (computing). Computer Information
System(s) (CIS) is often a track within the computer science field studying
computers and algorithmic processes, including their principles, their
software & hardware designs, their applications, and their impact on society.
Overall, an IS discipline emphasizes functionality over design.
As illustrated by the Venn Diagram on the right, the history of information
systems coincides with the history of computer science that began long
before the modern discipline of computer science emerged in the twentieth
century. Regarding the circulation of information and ideas, numerous
legacy information systems still exist today that are continuously updated to
promote ethnographic approaches, to ensure data integrity, and to improve
the social effectiveness & efficiency of the whole process In general,
information systems are focused upon processing information within
organizations, especially within business enterprises, and sharing the
benefits with modern society.

INPUT/OUTPUT DEVICES

I. Introduction

The computer will be of no use unless it is able to communicate with the

outside
world. Input/Output devices are required for users to communicate with the
computer.
In simple terms, input devices bring information INTO the computer and
output
devices bring information OUT of a computer system. These input/output
devices are
also known as peripherals since they surround the CPU and memory of a
computer
system.
Some commonly used Input/Output devices are listed in table below.
Input Devices Output Devices
Keyboard
Mouse
Joystick
Scanner
Light Pen
Touch Screen
Monitor
LCD
Printer
Plotter
II. Input Devices
(a) Keyboard
It is a text base input device that allows the user to input alphabets, numbers
and
other

characters. It consists of a set of keys mounted on a board.

2 Alphanumeric Keypad

It consists of keys for English alphabets, 0 to 9 numbers, and special

characters like +
− / * ( ) etc.
Function Keys

There are twelve function keys labeled F1, F2, F3… F12. The functions
assigned to
these keys differ from one software package to another. These keys are also
user
programmable keys.

Special-function Keys

These keys have special functions assigned to them and can be used only for
those
specific purposes. Functions of some of the important keys are defined
below.

Enter

It is similar to the ‘return’ key of the typewriter and is used to execute a

command or
program.

Spacebar

It is used to enter a space at the current cursor location.

Backspace

This key is used to move the cursor one position to the left and also delete
the
character in that position.

Delete

It is used to delete the character at the cursor position.

Insert
Insert key is used to toggle between insert and overwrite mode during data
entry.

Shift

This key is used to type capital letters when pressed along with an alphabet
key. Also
used to type the special characters located on the upper-side of a key that has
two
characters defined on the same key.

Caps Lock

Cap Lock is used to toggle between the capital lock features. When ‘on’, it
locks the
alphanumeric keypad for capital letters input only.

Tab

Tab is used to move the cursor to the next tab position defined in the
document. Also,
it is used to insert indentation into a document.

Ctrl

Function Keys
Numeric Keypad
Cursor Movement
Keys
Alphanumeric Keypad/
Special-function Keys

3Control key is used in conjunction with other keys to provide additional

functionality
on the keyboard.

Alt

Also like the control key, Alt key is always used in combination with other
keys to
perform specific tasks.

Esc

This key is usually used to negate a command. Also used to cancel or abort
executing
programs.

Numeric Keypad

Numeric keypad is located on the right side of the keyboard and consists of
keys
having numbers (0 to 9) and mathematical operators (+ − * /) defined on
them. This
keypad is provided to support quick entry for numeric data.
Cursor Movement Keys
These are arrow keys and are used to move the cursor in the direction
indicated by the
arrow (up, down, left, right).

(b) Mouse

The mouse is a small device used to point to a particular place on the screen
and
select in order to perform one or more actions. It can be used to select menu
commands, size windows, start programs etc.
The most conventional kind of mouse has two buttons on top: the left one
being used
most frequently.

Mouse Actions

Left Click : Used to select an item.

Double Click : Used to start a program or open a file.

Right Click : Usually used to display a set of commands.
Drag and Drop : It allows you to select and move an item from one location
to
another. To achieve this place the cursor over an item on the screen, click
the left
mouse button and while holding the button down move the cursor to where
you want
to place the item, and then release it.

(c) Joystick

The joystick is a vertical stick which moves the graphic cursor in a direction
the stick
is moved. It typically has a button on top that is used to select the option
pointed by
the cursor. Joystick is used as an input device primarily used with video
games,
training simulators and controlling robots

(d)Scanner

Scanner is an input device used for direct data entry from the source
document into
the computer system. It converts the document image into digital form so
that it can
be fed into the computer. Capturing information like this reduces the
possibility of
errors typically experienced during large data entry.

Hand-held scanners are commonly seen in big stores to scan codes and price
information for each of the items. They are also termed the bar code readers.

(e) Bar codes

A bar code is a set of lines of different thicknesses that represent a number.

Bar Code
Readers are used to input data from bar codes. Most products in shops have
bar codes
on them.Bar code readers work by shining a beam of light on the lines that
make up
the bar code and detecting the amount of light that is reflected back

(f) Light Pen

It is a pen shaped device used to select objects on a display screen. It is quite
like the
mouse (in its functionality) but uses a light pen to move the pointer and
select any
object on the screen by pointing to the object.
Users of Computer Aided Design (CAD) applications commonly use the
light pens to
directly draw on screen.
(g) Touch Screen
It allows the user to operate/make selections by simply touching the display
screen.
Common examples of touch screen include information kiosks, and bank
ATMs.
(h)Digital camera
A digital camera can store many more pictures than an ordinary camera.
Pictures
taken using a digital camera are stored inside its memory and can be
transferred to a
computer by connecting the camera to it. A digital camera takes pictures by
converting the light passing through the lens at the front into a digital image.

(i) The Speech Input Device

The “Microphones - Speech Recognition” is a speech Input device. To

operate it we
require using a microphone to talk to the computer. Also we need to add a
sound card
to the computer. The Sound card digitizes audio input into 0/1s .A speech
recognition
program can process the input and convert it into machine-recognized
commands
or input.

III. Output Devices

(a) Monitor
Monitor is an output device that resembles the television screen and uses a
Cathode
Ray Tube (CRT) to display information. The monitor is associated with a
keyboard
for manual input of characters and displays the information as it is keyed in.
It also
displays the program or application output. Like the television, monitors are
also
available in different sizes.
(b) Liquid Crystal Display (LCD)
LCD was introduced in the 1970s and is now applied to display terminals
also. Its
advantages like low energy consumption, smaller and lighter have paved its
way for
usage in portable computers (laptops).

(c) Printer
Printers are used to produce paper (commonly known as hardcopy) output.
Based on
the technology used, they can be classified as Impact or Non-impact printers.
Impact printers use the typewriting printing mechanism wherein a hammer
strikes
the paper through a ribbon in order to produce output. Dot-matrix and
Character
printers fall under this category.
Non-impact printers do not touch the paper while printing. They use
chemical, heat
or electrical signals to etch the symbols on paper. Inkjet, Deskjet, Laser,
Thermal
printers fall under this category of printers.
When we talk about printers we refer to two basic qualities associated with
printers:
resolution, and speed. Print resolution is measured in terms of number of
dots per
inch (dpi). Print speed is measured in terms of number of characters printed
in a unit
of time and is represented as characters-per-second (cps), lines-per-minute
(lpm), or
pages-per-minute (ppm).

(d) Plotter
Plotters are used to print graphical output on paper. It interprets computer
commands
and makes line drawings on paper using multicolored automated pens. It is
capable of
producing graphs, drawings, charts, maps etc.
Computer Aided Engineering (CAE) applications like CAD (Computer
Aided
Design) and CAM (Computer Aided Manufacturing) are typical usage areas
for
plotters.

(e) Audio Output: Sound Cards and Speakers:

The Audio output is the ability of the computer to output sound. Two
components are
needed: Sound card – Plays contents of digitized recordings, Speakers –
Attached tosound card.

PRIMARY AND SECONDARY STORAGE

Primary storage (or main memory or internal memory),

often referred to simply as memory, is the only one directly
accessible to the CPU. The CPU continuously reads instructions
stored there and executes them as required. Any data actively
operated on is also stored there in uniform manner.

Historically, early computers used delay lines, Williams tubes,

or rotating magnetic drums as primary storage. By 1954,
those unreliable methods were mostly replaced by magnetic
core memory. Core memory remained dominant until the
1970s, when advances in integrated circuit technology allowed
semiconductor memory to become economically competitive.

This led to modern random-access memory (RAM). It is small-

sized, light, but quite expensive at the same time. (The
particular types of RAM used for primary storage are also
volatile, i.e. they lose the information when not powered).

As shown in the diagram, traditionally there are two more sub-

layers of the primary storage, besides main large-capacity
RAM:
 • Processor registers are located inside the processor. Each register
typically holds a word of data (often 32 or 64 bits). CPU instructions
instruct the arithmetic and logic unit to perform various calculations
or other operations on this data (or with the help of it). Registers are
the fastest of all forms of computer data storage.
• Processor cache is an intermediate stage between ultra-fast registers
and much slower main memory. It's introduced solely to increase
performance of the computer. Most actively used information in the
main memory is just duplicated in the cache memory, which is faster,
but of much lesser capacity. On the other hand it is much slower, but
much larger than processor registers. Multi-level hierarchical cache
setup is also commonly used—primary cache being smallest, fastest
and located inside the processor; secondary cache being somewhat
larger and slower.

Main memory is directly or indirectly connected to the central

processing unit via a memory bus. It is actually two buses (not
on the diagram): an address bus and a data bus. The CPU
firstly sends a number through an address bus, a number
called memory address, that indicates the desired location of
data. Then it reads or writes the data itself using the data bus.
Additionally, a memory management unit (MMU) is a small
device between CPU and RAM recalculating the actual memory
address, for example to provide an abstraction of virtual
memory or other tasks.

As the RAM types used for primary storage are volatile

(cleared at start up), a computer containing only such storage
would not have a source to read instructions from, in order to
start the computer. Hence, non-volatile primary storage
containing a small startup program (BIOS) is used to bootstrap
the computer, that is, to read a larger program from non-
volatile secondary storage to RAM and start to execute it. A
non-volatile technology used for this purpose is called ROM, for
read-only memory (the terminology may be somewhat
confusing as most ROM types are also capable of random
access).

Many types of "ROM" are not literally read only, as updates are
possible; however it is slow and memory must be erased in
large portions before it can be re-written. Some embedded
systems run programs directly from ROM (or similar), because
such programs are rarely changed. Standard computers do not
store non-rudimentary programs in ROM, rather use large
capacities of secondary storage, which is non-volatile as well,
and not as costly.

Recently, primary storage and secondary storage in some uses

refer to what was historically called, respectively, secondary
storage and tertiary storage.[2]

[edit] Secondary storage

A hard disk drive with protective cover removed.

Secondary storage (also known as external memory or

auxiliary storage), differs from primary storage in that it is not
directly accessible by the CPU. The computer usually uses its
input/output channels to access secondary storage and
transfers the desired data using intermediate area in primary
storage. Secondary storage does not lose the data when the
device is powered down—it is non-volatile. Per unit, it is
typically also two orders of magnitude less expensive than
primary storage. Consequently, modern computer systems
typically have two orders of magnitude more secondary
storage than primary storage and data is kept for a longer
time there.

In modern computers, hard disk drives are usually used as

secondary storage. The time taken to access a given byte of
information stored on a hard disk is typically a few
thousandths of a second, or milliseconds. By contrast, the time
taken to access a given byte of information stored in random
access memory is measured in billionths of a second, or
nanoseconds. This illustrates the significant access-time
difference which distinguishes solid-state memory from
rotating magnetic storage devices: hard disks are typically
about a million times slower than memory. Rotating optical
storage devices, such as CD and DVD drives, have even longer
access times. With disk drives, once the disk read/write head
reaches the proper placement and the data of interest rotates
under it, subsequent data on the track are very fast to access.
As a result, in order to hide the initial seek time and rotational
latency, data is transferred to and from disks in large
contiguous blocks.

When data reside on disk, block access to hide latency offers a

ray of hope in designing efficient external memory algorithms.
Sequential or block access on disks is orders of magnitude
faster than random access, and many sophisticated paradigms
have been developed to design efficient algorithms based upon
sequential and block access . Another way to reduce the I/O
bottleneck is to use multiple disks in parallel in order to
increase the bandwidth between primary and secondary
memory.[3]

Some other examples of secondary storage technologies are:

flash memory (e.g. USB flash drives or keys), floppy disks,
magnetic tape, paper tape, punched cards, standalone RAM
disks, and Iomega Zip drives.

The secondary storage is often formatted according to a file

system format, which provides the abstraction necessary to
organize data into files and directories, providing also
additional information (called metadata) describing the owner
of a certain file, the access time, the access permissions, and
other information.

Most computer operating systems use the concept of virtual

memory, allowing utilization of more primary storage capacity
than is physically available in the system. As the primary
memory fills up, the system moves the least-used chunks
(pages) to secondary storage devices (to a swap file or page
file), retrieving them later when they are needed. As more of
these retrievals from slower secondary storage are necessary,
the more the overall system performance is degraded.

Tertiary storage

Large tape library. Tape cartridges placed on shelves in the front, robotic arm moving in
the back. Visible height of the library is about 180 cm.

Tertiary storage or tertiary memory,[4] provides a third

level of storage. Typically it involves a robotic mechanism
which will mount (insert) and dismount removable mass
storage media into a storage device according to the system's
demands; this data is often copied to secondary storage before
use. It is primarily used for archival of rarely accessed
information since it is much slower than secondary storage
(e.g. 5–60 seconds vs. 1-10 milliseconds). This is primarily
useful for extraordinarily large data stores, accessed without
human operators. Typical examples include tape libraries and
optical jukeboxes.

When a computer needs to read information from the tertiary

storage, it will first consult a catalog database to determine
which tape or disc contains the information. Next, the
computer will instruct a robotic arm to fetch the medium and
place it in a drive. When the computer has finished reading the
information, the robotic arm will return the medium to its place
in the library.

Off-line storage

Off-line storage is a computer data storage on a medium or

a device that is not under the control of a processing unit.[5]
The medium is recorded, usually in a secondary or tertiary
storage device, and then physically removed or disconnected.
It must be inserted or connected by a human operator before
a computer can access it again. Unlike tertiary storage, it
cannot be accessed without human interaction.

Off-line storage is used to transfer information, since the

detached medium can be easily physically transported.
Additionally, in case a disaster, for example a fire, destroys the
original data, a medium in a remote location will probably be
unaffected, enabling disaster recovery. Off-line storage
increases general information security, since it is physically
inaccessible from a computer, and data confidentiality or
integrity cannot be affected by computer-based attack
techniques. Also, if the information stored for archival
purposes is accessed seldom or never, off-line storage is less
expensive than tertiary storage.

In modern personal computers, most secondary and tertiary

storage media are also used for off-line storage. Optical discs
and flash memory devices are most popular, and to much
lesser extent removable hard disk drives. In enterprise uses,
magnetic tape is predominant. Older examples are floppy
disks, Zip disks, or punched cards.
INTRODUCTION TO OPERATING SYSTEM

An OS is a program that acts an intermediary between the user of a

computer and computer hardware.
�Major cost of general purpose computing is software.
�OS simplifies and manages the complexity of running application
programs efficiently.

Need for an OS:

The primary need for the OS arises from the fact that user needs to be
provided withservices and OS ought to facilitate the provisioning of these
services. The central part of a computer system is a processing engine called
CPU. A system should make it possible
for a user’s application to use the processing unit. A user application would
need to store information. The OS makes memory available to an application
when required. Similarly,user applications need use of input facility to
communicate with the application. This isoften in the form of a key board, or
a mouse or even a joy stick (if the application is a game for instance).
The output usually provided by a video monitor or a printer as some times
the user may
wish to generate an output in the form of a printed document. Output may be
available
in some other forms. For example it may be a video or an audio file.
Let us consider few applications.
• Document Design
• Accounting
• E-mail
Unit –II Forecasting

Dependent versus independent demand

Dependent versus independent demand

The choice of how to control inventory depends upon the fact of whether or
not the demand of the items has a dependent or an independent character.
This difference is important in selecting an adequate inventory management
approach.

Dependent demand exists for those items for which demand is linked
to the use of other items (for example, subassemblies which go into a higher-
level component or finished item, such as the motherboard for a computer).

The essential aspect of dependent demand is that inventory items can be

calculated.
Controlling can take place by means of the ‘MRP’ system (see chapter 5).

Independent demand exists where the rate of use for an item does not
relate directly to the use of another item (for example, finished goods such
as a computer).
Controlling can take place by means of an ‘Order Point’ system (see chapter
4.5).

It is obvious that most organizations have items which fall into each
category, namely
the category of dependent and independent demand.
If this is the case, then the organization will have to use both systems,
because it would be a mistake to suppose that you can use a dependent
system for an independent item and, the other way around, to use an
independent system for a dependent item.
To control the inventory of independent items:

• you need the past demand in connection with future requirements

• you need a mechanism for initiating the order to replenish inventory

To lay down the character of controls to use here, one has to understand the
relative values of inventory. In understanding this, it is possible to decide the
type of controls to apply to each item of inventory.
This is due to maximizing the return (i.e. reduced inventory investment
versus the involved control costs).
For the organization it is important to know where to put most effort in
controlling inventory, in other words which items are - in this respect - the
most important ones.
In achieving this, the organization can make use of a ‘Pareto’ diagram.
The organization can take a sample at random of its total inventory.
From such a sample you make a list with the inventory items placed in order
of decreasing Annual Dollar Usage (ADU). ADU stands here for the product
of the
‘unit value’ and ‘annual usage’ of each item of inventory.

FORECAST ERROR

In statistics, a forecast error is the difference between the actual or real and
the predicted or forecast value of a time series or any other phenomenon of
interest.

In simple cases, a forecast is compared with an outcome at a single time-

point and a summary of forecast errors is constructed over a collection of
such time-points. Here the forecast may be assessed using the difference or
using a proportional error. By convention, the error is defined using the
value of the outcome minus the value of the forecast.

In other cases, a forecast may consist of predicted values over a number of

lead-times; in this case an assessment of forecast error may need to consider
more general ways of assessing the match between the time-profiles of the
forecast and the outcome. If a main application of the forecast is to predict
when certain thresholds will be crossed, one possible way of assessing the
forecast is to use the timing-error—the difference in time between when the
outcome crosses the threshold and when the forecast does so. When there is
interest in the maximum value being reached, assessment of forecasts can be
done using any of:

• the difference of times of the peaks;

• the difference in the peak values in the forecast and outcome;
• the difference between the peak value of the outcome and the value
forecast for that time point.
Forecast error can be a calendar forecast error or a cross-sectional forecast
error, when we want to summarize the forecast error over a group of units. If
we observe the average forecast error for a time-series of forecasts for the
same product or phenomenon, then we call this a calendar forecast error or
time-series forecast error. If we observe this for multiple products for the
same period, then this is a cross-sectional performance error. Reference class
forecasting has been developed to reduce forecast error.

FORECAST MODELS FOR OPERATIONS

Demand forecasting is the activity of estimating the quantity of a product

or service that consumers will purchase. Demand forecasting involves
techniques including both informal methods, such as educated guesses, and
quantitative methods, such as the use of historical sales data or current data
from test markets. Demand forecasting may be used in making pricing
decisions, in assessing future capacity requirements, or in making decisions
on whether to enter a new market.

Necessity for forecasting demand

Often forecasting demand is confused with forecasting sales. But, failing to

forecast demand ignores two important phenomena. There is a lot of debate
in demand-planning literature about how to measure and represent historical
demand, since the historical demand forms the basis of forecasting. The
main question is whether we should use the history of outbound shipments
or customer orders or a combination of the two as proxy for the demand.

Stock effects

The effects that inventory levels have on sales. In the extreme case of stock-
outs, demand coming into your store is not converted to sales due to a lack
of availability. Demand is also untapped when sales for an item are
decreased due to a poor display location, or because the desired sizes are no
longer available. For example, when a consumer electronics retailer does not
display a particular flat-screen TV, sales for that model are typically lower
than the sales for models on display. And in fashion retailing, once the stock
level of a particular sweater falls to the point where standard sizes are no
longer available, sales of that item are diminished.
Market response effect

The effect of market events that are within and beyond a retailer’s control.
Demand for an item will likely rise if a competitor increases the price or if
you promote the item in your weekly circular. The resulting sales a change
in demand as a result of consumers responding to stimuli that potentially
drive additional sales. Regardless of the stimuli, these forces need to be
factored into planning and managed within the demand forecast.

In this case demand forecasting uses techniques in causal modeling. Demand

forecast modeling considers the size of the market and the dynamics of
market share versus competitors and its effect on firm demand over a period
of time. In the manufacturer to retailer model, promotional events are an
important causal factor in influencing demand. These promotions can be
modeled with intervention models or use a consensus to aggregate
intelligence using internal collaboration with the Sales and Marketing
functions

Methods

No demand forecasting method is 100% accurate. Combined forecasts

improve accuracy and reduce the likelihood of large errors. Reference class
forecasting was developed to reduce error and increase accuracy in
forecasting, including in demand forecasting.

Methods that rely on qualitative assessment

Forecasting demand based on expert opinion. Some of the types in this

method are,

• Unaided judgment
• Prediction market
• Delphi technique
• Game theory
• Judgmental bootstrapping
• Simulated interaction
• Intentions and expectations surveys
• Conjoint analysis
Methods that rely on quantitative data

• Discrete Event Simulation

• Extrapolation
• Reference class forecasting
• Quantitative analogies
• Rule-based forecasting
• Neural networks
• Data mining
• Causal models
• Segmentation

DELPHI TECHNIQUE

The delphi technique is another way of obtaining group input for ideas
and problem-solving. Unlike the nominal group process, the delphi does not
require face-to-face participation. It uses a series of carefully designed
questionnaires interspersed with information summaries and feedback from
preceding responses.
In a planning situation, the delphi can be used to:

- Develop a number of alternatives;

- Assess the social and economic impacts of rapids
community growth;
- Explore underlying assumptions or background information
leading to different judgments;
- Seek out information on which agreement may later be
generated;
- Correlate informed judgments on a subject involving many
disciplines;
- Educate respondents on the diverse and interrelated
elements of a topic.
The delphi begins with the initial development of a questionnaire focusing
on the identified problem. An appropriate respondent group is selected, then
the questionnaire is mailed to them. Each participant answers
the questionnaire independently and returns it. The initiators of the
questionnaire summarize responses, then develop a feedback summary and a
second questionnaire for the same respondent group. After reviewing the
feedback summary, respondents independently rate priority ideas
included in the second questionnaire, then mail back the
responses. The process is repeated until investigators feel positions are firm
and agreement on a topic is reached. A final summary report is issued to
the respondent group. the delphi can be modified in many ways.
In assessing community needs, the delphi technique could be used for
many of the same things as the nominal group process - determining and
prioritizing community problems; setting goals; designing needs
assessment strategies; planning a conference or community forum;
developing improved community services; evaluating
alternative plans for community development; or aggregating
judgments of special-interest or mutually hostile group.

Advantages and Disadvantages of the Delphi Technique for

community needs assessment.

Advantages
- Allows participants to remain anonymous
- Inexpensive
- Free of social pressure, personality influence and
individual dominance
- A reliable judgment or forecast results
- Allows sharing of information and reasoning among
participants
-Conducive to independent thinking and gradual formulation
- A well-selected respondent panel - a mix of local
official, knowledgeable individuals, members of impacted
community regional officials, academic social officials
academic social scientists.etc. - can provide a broad
analytical perspective on potential growth impacts
- Can be used to reach consensus among groups hostile to
each other

Disadvantages

- Judgements are those of a selected group of people and

may not be representative
- Tendency to eliminate extreme positions and force a
middle-of-the-road consensus
- More time-consuming than the group process method
- Should not be viewed as a total solution to forecasting
- Requires skill in written communication
- Requires adequate time and participant commitment (about
30-45 days) .

Nominal group technique

The nominal group technique (NGT) is a decision making method for use
among groups of many sizes, who want to make their decision quickly, as by
a vote, but want everyone's opinions taken into account (as opposed to
traditional voting, where only the largest group is considered) . The method
of tallying is the difference. First, every member of the group gives their
view of the solution, with a short explanation. Then, duplicate solutions are
eliminated from the list of all solutions, and the members proceed to rank the
solutions, 1st, 2nd, 3rd, 4th, and so on.

Some Facilitators will encourage the sharing and discussion of reasons for
the choices made by each group member, thereby identifying common
ground, and a plurality of ideas and approaches. This diversity often allows
the creation of a hybrid idea (combining parts of two or more ideas), often
found to be even better than those ideas being initially considered.

In the basic method, the numbers each solution receives are totaled, and the
solution with the lowest (i.e. most favored) total ranking is selected as the
final decision. There are variations on how this technique is used. For
example, it can identify strengths versus areas in need of development,
rather than be used as a decision-making voting alternative. Also, options do
not always have to be ranked, but may be evaluated more subjectively.

This technique was originally developed by Delbecq and VandeVen,.

Advantages and disadvantages

One major advantage of NGT is that it avoids two problems caused by group
interaction. First, some members are reluctant to suggest ideas because they
are concerned about being criticized. Second, some members are reluctant to
create conflict in groups. (Many people want to maintain a pleasant climate.)
NGT overcomes these problems. NGT has the clear advantage of
minimizing differences and ensuring relatively equal participation. It may
also, in many cases be a time-saving technique. Other advantages include
producing a large number of ideas and providing a sense of closure that is
often not found in less-structured group methods.

Major disadvantage of NGT is that the method lacks flexibility by being able
to deal with only one problem at a time. Also, there must be a certain
amount of conformity on the part of the members involved in NGT.
Everyone must feel comfortable with the amount of structure involved.
Another disadvantage is the amount of time needed to prepare for the
activity. There is no spontaneity involved with this method. Facilities must
be arranged and carefully planned. Opinions may not converge in the voting
process, cross-fertilization of ideas may be constrained, and the process may
appear to be too mechanical

Time series
In statistics, signal processing, econometrics and mathematical finance, a
time series is a sequence of data points, measured typically at successive
times spaced at uniform time intervals. Examples of time series are the daily
closing value of the Dow Jones index or the annual flow volume of the Nile
River at Aswan. Time series analysis comprises methods for analyzing time
series data in order to extract meaningful statistics and other characteristics
of the data. Time series forecasting is the use of a model to forecast future
events based on known past events to predict data points before they are
measured. An example of time series forecasting in econometrics is
predicting the opening price of a stock based on its past performance. Time
series are very frequently plotted via line charts.

Time series data have a natural temporal ordering. This makes time series
analysis distinct from other common data analysis problems, in which there
is no natural ordering of the observations (e.g. explaining people's wages by
reference to their education level, where the individuals' data could be
entered in any order). Time series analysis is also distinct from spatial data
analysis where the observations typically relate to geographical locations
(e.g. accounting for house prices by the location as well as the intrinsic
characteristics of the houses). A time series model will generally reflect the
fact that observations close together in time will be more closely related than
observations further apart. In addition, time series models will often make
use of the natural one-way ordering of time so that values for a given period
 will be expressed as deriving in some way from past values, rather than from
future values (see time reversibility.)

Methods for time series analysis may be divided into two classes: frequency-
domain methods and time-domain methods. The former include auto-
correlation, cross-correlation analysis, spectral analysis and recently wavelet
analysis; auto-correlation and cross-correlation analysis can also be
completed in the time domain.

Average

In mathematics, an average, or central tendency of a data set is a measure

of the "middle" value of the data set.

There are many different descriptive statistics that can be chosen as a

measurement of the central tendency of the data items. These include
arithmetic mean, the median and the mode. Other statistical measures such
as the standard deviation and the range are called measures of spread and
describe how spread out the data is.

An average is a single value that is meant to typify a list of values. If all the
numbers in the list are the same, then this number should be used. If the
numbers are not the same, the average is calculated by combining the values
from the set in a specific way and computing a single number as being the
average of the set.

The most common method is the arithmetic mean but there are many other
types of central tendency, such as median (which is used most often when
the distribution of the values is skewed with some small numbers of very
high values, as seen with house prices or incomes).

Single Moving Average

Taking a An alternative way to summarize the past data is to compute the

moving mean of successive smaller sets of numbers of past data as follows:
average is a Recall the set of numbers 9, 8, 9, 12, 9, 12, 11, 7, 13, 9, 11, 10
smoothing which were the dollar amount of 12 suppliers selected at random.
process Let us set M, the size of the "smaller set" equal to 3. Then the
average of the first 3 numbers is: (9 + 8 + 9) / 3 = 8.667.
This is called "smoothing" (i.e., some form of averaging). This
 smoothing process is continued by advancing one period and
calculating the next average of three numbers, dropping the first
number.
Moving The next table summarizes the process, which is referred to as
average Moving Averaging. The general expression for the moving average
example is
Mt = [ Xt + Xt-1 + ... + Xt-N+1] / N
Results of Moving Average
Supplier $ MA Error Error squared
1 9
2 8
3 9 8.667 0.333 0.111
4 12 9.667 2.333 5.444
5 9 10.000 -1.000 1.000
6 12 11.000 1.000 1.000
7 11 10.667 0.333 0.111
8 7 10.000 -3.000 9.000
9 13 10.333 2.667 7.111
10 9 9.667 -0.667 0.444
11 11 11.000 0 0
12 10 10.000 0 0

The MSE = 2.018 as compared to 3 in the

previous case.

Exponential smoothing is a technique that can be applied to time series

data, either to produce smoothed data for presentation, or to make forecasts.
The time series data themselves are a sequence of observations. The
observed phenomenon may be an essentially random process, or it may be
an orderly, but noisy, process. Whereas in the simple moving average the
past observations are weighted equally, exponential smoothing assigns
exponentially decreasing weights over time.

Exponential smoothing is commonly applied to financial market and

economic data, but it can be used with any discrete set of repeated
measurements. The raw data sequence is often represented by {xt}, and the
output of the exponential smoothing algorithm is commonly written as {st},
which may be regarded as a best estimate of what the next value of x will be.
When the sequence of observations begins at time t = 0, the simplest form of
exponential smoothing is given by the formulas

SUPPLY CHAIN MANAGEMENT

Supply chain management (SCM) is the management of a network of
interconnected businesses involved in the ultimate provision of product and
service packages required by end customers (Harland, 1996).[1] Supply chain
management spans all movement and storage of raw materials, work-in-
process inventory, and finished goods from point of origin to point of
consumption (supply chain).

Another definition is provided by the APICS Dictionary when it defines

SCM as the "design, planning, execution, control, and monitoring of supply
chain activities with the objective of creating net value, building a
competitive infrastructure, leveraging worldwide logistics, synchronizing
supply with demand and measuring performance globally."

• Supply chain management is the systemic, strategic coordination of

the traditional business functions and the tactics across these business
functions within a particular company and across businesses within
the supply chain, for the purposes of improving the long-term
performance of the individual companies and the supply chain as a
whole
• A customer focused definition is given by Hines (2004:p76) "Supply
chain strategies require a total systems view of the linkages in the
chain that work together efficiently to create customer satisfaction at
the end point of delivery to the consumer. As a consequence costs
must be lowered throughout the chain by driving out unnecessary
costs and focusing attention on adding value. Throughput efficiency
must be increased, bottlenecks removed and performance
measurement must focus on total systems efficiency and equitable
reward distribution to those in the supply chain adding value. The
supply chain system must be responsive to customer requirements

Several models have been proposed for understanding the activities required
to manage material movements across organizational and functional
boundaries. SCOR is a supply chain management model promoted by the
Supply Chain Council. Another model is the SCM Model proposed by the
Global Supply Chain Forum (GSCF). Supply chain activities can be grouped
into strategic, tactical, and operational levels . The CSCMP has adopted The
American Productivity & Quality Center (APQC) Process Classification
FrameworkSM a high-level, industry-neutral enterprise process model that
allows organizations to see their business processes from a cross-industry
viewpoint.

Strategic level

• Strategic network optimization, including the number, location, and

size of warehousing, distribution centers, and facilities.
• Strategic partnerships with suppliers, distributors, and customers,
creating communication channels for critical information and
operational improvements such as cross docking, direct shipping, and
third-party logistics.
• Product life cycle management, so that new and existing products can
be optimally integrated into the supply chain and capacity
management activities.
• Information technology chain operations.
• Where-to-make and make-buy decisions.
• Aligning overall organizational strategy with supply strategy.
• It is for long term and needs resource commitment.

Tactical level

• Sourcing contracts and other purchasing decisions.

• Production decisions, including contracting, scheduling, and planning
process definition.
• Inventory decisions, including quantity, location, and quality of
inventory.
• Transportation strategy, including frequency, routes, and contracting.
• Benchmarking of all operations against competitors and
implementation of best practices throughout the enterprise.
• Milestone payments.
• Focus on customer demand and Habits.

Operational level

• Daily production and distribution planning, including all nodes in the

supply chain.
• Production scheduling for each manufacturing facility in the supply
chain (minute by minute).
 • Demand planning and forecasting, coordinating the demand forecast
of all customers and sharing the forecast with all suppliers.
• Sourcing planning, including current inventory and forecast demand,
in collaboration with all suppliers.
• Inbound operations, including transportation from suppliers and
receiving inventory.
• Production operations, including the consumption of materials and
flow of finished goods.
• Outbound operations, including all fulfillment activities, warehousing
and transportation to customers.
• Order promising, accounting for all constraints in the supply chain,
including all suppliers, manufacturing facilities, distribution centers,
and other customers.
• From production level to supply level accounting all transit damage
cases & arrange to settlement at customer level by maintaining
company loss through insurance company.

Unit-1 INVENTORY CONTROL

Thus the basic motive of implementing inventory control methods is:

• To minimize wastage and over consumption

• To keep a good and even flow of the intake and issue of stock

The art of costing probably originated during the world wars, when war
profiteers realized that controlling an expenditure even before it is incurred,
is much more profitable and saves a lot of resources. This nature of cost
accounting has proved to be advantageous as it overcomes the demerits of
financial accounting, which aims at just recording transactions, after they
have taken place.

Methods of Inventory Control

The following are the primary stock control methods that are often used by
companies in their production operations. All these methods are well
established and have been used in production industry for quite a long period
of time.
Min-Max Plan: In min-max plan, the cost accountant who is in charge of
the inventory control, establishes two levels, the minimum and maximum
level of stock. When the items/materials/units, reach the minimum level, the
order to replenish the stock is placed. The maximum level is the level that
the stock quantity should not exceed, as it will put a considerable strain on
the finances of the company and will also create problems such as storage,
wastage and over consumption.

Two Bin System: The two bin system is used to establish a connection
between the order and reorder procedures. As mentioned above, from the
point of view of a producer, uneven supply of stock and odd consumption is
not very healthy. Such unevenness is sorted by two-bin system. In such a
system, the stock is sorted into two bins, or piles. The first stock (bin 1), is
the larger of the two and is used up between the time period that lasts from
purchase of stock till the reorder. The second stock (bin 2), can be used from
the time when the reorder is placed till the order is actually received. The
second stock, has a considerable amount of stand by that can be used for
emergencies.

Order Cycling System: This system is based upon a review timetable.

According to this system, a review of the entire inventory is done at regular
intervals, such as 30 days, 60 days or 90 days. After the review is done, the
cost accountant views stock items with low quantities that will not last up to
the next review interval. The purchase order for such a stock item is placed
immediately. The order cycling system is not exactly foolproof and one
requires a rather experienced cost accountant to efficiently conduct it.

ABC Analysis: Any stock is segregated into different different sections.

These items are classified into 3 sections, A, B and C. The logic of
segregating these items into sections is that section A consists of limited
number of items that are very expensive. Section B has items that are not
expensive and the number of units that is to be ordered is also not very large.
The section C consists of numerous items, that have a low monetary value.
The logic behind such segregation is that every section is viewed differently
by the cost accountant, due the difference in order time, reorder time and
delivery period. For example, though the unites in section A are less, their
monetary value is also high and so is their delivery period. The ABC
analysis is a simple and probably the most effective of all stock control
methods.
Definition of ABC classification: A sorting of the items in an inventory in
decreasing order of annual dollar volume or other criteria. This array is then
split into three classes, called A, B, and C. Class A contains the items with
the highest annual dollar volume and receives the most attention. The
medium Class B receives less attention, and Class C, which contains the low-
dollar volume items, is controlled routinely. The ABC principle is that effort
saved through relaxed controls on low-value items will be applied to reduce
inventories of high-value items.

"ABC classification (ABC ranking) is a method of ranking items held in

inventory enabling particular attention to be given to those that, if correctly
managed, will be most damaging to the effectiveness or the efficiency of an
operation. Items are categorized according to their value of usage, i.e. their
individual value multiplied by their usage rate."

" The ABC classification process is an analysis of a range of items, such as

finished products or customers into three categories: A - outstandingly
important; B - of average importance; C - relatively unimportant as a basis
for a control scheme. Each category can and sometimes should be handled in
a different way, with more attention being devoted to category A, less to B,
and less to C."

MANUFACTURING RESOURCE PLANNING (MRP II)

Manufacturing resource planning (MRP II) is defined by APICS as a

method for the effective planning of all resources of a manufacturing
company. Ideally, it addresses operational planning in units, financial
planning in dollars, and has a simulation capability to answer "what-if"
questions and extension of closed-loop MRP.

This is not exclusively a software function, but a marriage of people skills,

dedication to data base accuracy, and computer resources. It is a total
company management concept for using human resources more productively

Benefits

MRP II systems can provide:

• Better control of inventories

• Improved scheduling
• Productive relationships with suppliers
For design / engineering:

• Improved design control

• Better quality and quality control

For financial and costing:

• Reduced working capital for inventory

• Improved cash flow through quicker deliveries
• Accurate inventory records

MATERIAL REQUIREMENTS PLANNING (MRP)

Material requirements planning (MRP) is a production planning and

inventory control system used to manage manufacturing processes. Most
MRP systems are software-based, while it is possible to conduct MRP by
hand as well.

An MRP system is intended to simultaneously meet three objectives:

• Ensure materials are available for production and products are

available for delivery to customers.
• Maintain the lowest possible level of inventory.
• Plan manufacturing activities, delivery schedules and purchasing
activities

The scope of MRP in manufacturing

The basic function of MRP system includes inventory control, bill of

material processing and elementary scheduling. MRP helps organizations to
maintain low inventory levels. It is used to plan manufacturing, purchasing
and delivering activities.

"Manufacturing organizations, whatever their products, face the same daily

practical problem - that customers want products to be available in a shorter
time than it takes to make them. This means that some level of planning is
required."

Companies need to control the types and quantities of materials they

purchase, plan which products are to be produced and in what quantities and
ensure that they are able to meet current and future customer demand, all at
the lowest possible cost. Making a bad decision in any of these areas will
make the company lose money. A few examples are given below:

• If a company purchases insufficient quantities of an item used in

manufacturing (or the wrong item) it may be unable to meet contract
obligations to supply products on time.

• If a company purchases excessive quantities of an item, money is

wasted - the excess quantity ties up cash while it remains as stock and
may never even be used at all.
• Beginning production of an order at the wrong time can cause
customer deadlines to be missed.

MRP is a tool to deal with these problems. It provides answers for several
questions:

• What items are required?

• How many are required?
• When are they required?

MRP can be applied both to items that are purchased from outside suppliers
and to sub-assemblies, produced internally, that are components of more
complex items.

The data that must be considered include:

• The end item (or items) being created. This is sometimes called
Independent Demand, or Level "0" on BOM (Bill of materials).
• How much is required at a time.
• When the quantities are required to meet demand.
• Shelf life of stored materials.
• Inventory status records. Records of net materials available for use
already in stock (on hand) and materials on order from suppliers.
• Bills of materials. Details of the materials, components and sub-
assemblies required to make each product.
• Planning Data. This includes all the restraints and directions to
produce the end items. This includes such items as: Routings, Labor
and Machine Standards, Quality and Testing Standards, Pull/Work
Cell and Push commands, Lot sizing techniques (i.e. Fixed Lot Size,
Lot-For-Lot, Economic Order Quantity), Scrap Percentages, and other
inputs.
Outputs

There are two outputs and a variety of messages/reports:

• Output 1 is the "Recommended Production Schedule" which lays out

a detailed schedule of the required minimum start and completion
dates, with quantities, for each step of the Routing and Bill Of
Material required to satisfy the demand from the Master Production
Schedule (MPS).
• Output 2 is the "Recommended Purchasing Schedule". This lays out
both the dates that the purchased items should be received into the
facility AND the dates that the Purchase orders, or Blanket Order
Release should occur to match the production schedules.