MS-5

1. Elaborate the concept of systems Life-cycle in operations Management

Ans: Concept of systems Life-cycle: The life-cycle concept or `womb to tomb' concept draws
analogy from living organisms. It assumes that every system (product) has a definite life-cycle
and it passes through growth, maturity, saturation and decline phases. Figure V shows a
typical life-cycle of a product. Similar pattern could exist for the entire production systems. Life-
cycle concept enables us to understand various decisions and their inter-dependence in a
better perspective. For example if some of the strategic decisions like product selection or plant
location, which are made at the early stages of systems life-cycle are wrong, then these would
continue to influence day-to-day operations planning and control decisions adversely and no
amount of day-to-day effectiveness will be able to undo the damage done by poor decisions at
initial stages of life-cycle. This concept also enables us to be alert to the external environment
and start phasing out a dying product and substitute, it with a new product well in time so that
continued survival of the organisation can be planned. Figure V shows how introducing new
product well in time can cause long-term survival of the organisation even if individual products
follow life-cycle pattern. Life span of a product may vary from few months (such as fashion
goods) to few decades.

Stages in Systems Life-cycle: The eight stages of the system life-cycle along with the
associated key decisions to be made at each stage. Some of the initial decisions like product
selection, technology selection, location and layout selection are of strategic importance. Once
the system has achieved steady state-most on-going organisation we work in are probably at
that stage-then most problems of operations management are of tactical or operational nature.
Short-term planning and control and cost reduction strategies are the main focus at that stage.
The steady state experiences minor perturbations due to external and internal factors.
Moderate level changes can be accommodated by updating and revising of the previous
decisions. When the system cannot adjust to even major revisions due to extreme changes in
external environment, then the systems must come to end-through liquidation or through sale
or merger. Termination or phasing out of operations may be sometimes deliberate.

Life-cycle Costing: A very important concept in costing has emerged in recent years-that of
life-cycle costing. It says that when we evaluate the cost implications of our decisions we
should not consider the short-term cost alone but the entire costs during the life-cycle of the
system and equipment. Thus long-term cost repercussion must be examined rather than
immediate short-term alone. Such a concept may change our perspectives and seemingly
good decisions may not remain attractive if life-cycle costs are computed. For example while
purchasing a machine, the short-term cost may mean only initial purchase price and we may
be tempted to buy a cheaper equipment or machine. It may however require too much repair,
maintenance and operating expenses. If all these costs including initial costs are compared
during the life-cycle of the machine, we may find that an expensive machine with very little
maintenance repair and operating cost may be preferred alternative over initially inexpensive
but `costly-to maintain' machine. Thus while making important decisions regarding design and
planning aspects of production systems we should consider life-cycle costs. These could even
be converted to present values by discounted cash flow techniques, accounting for the time
value of money.

Stages of Life cycle and key decisions

Stage Key decisions

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 1. Birth of the system Identification of corporate goals selection of the
Product

2. Production design and Technological design of product, selection of

process selection manufacturing technology sequence of manufacturing

3. Design of the production Facility location/layout, design for quality, demand

System forecasting

4. Manning the system Job structuring allocation, assignment method design,

Work measurement, payment systems

5. System start up How to overcome initial problems, how to achieve full

capacity.

6. System in steady state Operational decisions, cost reduction studies,

Improving system performance to look after day-to-
day problems

7. Revision of the system Updating various decisions in the light of external

Changes

8. Death of the system How to phase out, salvage resources, sustain by

starting new product etc.

2. Define work measurement. What are the various methods of work measurement?
Discuss work sampling.

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Ans: Work measurement: Work measurement is concerned with the determination of the amount
of time required to perform a unit of work. It provides management with a basis for comparison
of alternative methods, and also a basis for initial manning. Moreover, it makes available the
necessary data for effective planning and scheduling and provides a basis for wage and salary
administration especially for devising sound incentive schemes.

Various methods of work measurement: The various methods and techniques of work
measurement are as follows:

(a) Time study

(b) Work sampling

(c) Pre-determined motion-time system (PMTS)

(d) Analytical estimating

(e) Synthesis from standard data

(f) MOST

Time study: Basic time study equipment consists of a stop watch, a study board, pencils, a
pocket calculator (optional) and measuring instruments for distance and speed (such as a ruler,
tape measure, micrometer and technometer/revolution counter).

The decimal-minute stop watch has been adopted as standard equipment. It may take you
some time to get used to this system as most of us are used to the seconds system Regular
checks are necessary for monitoring the accuracy of the watch at regular intervals. In some
situations, much more expensive type of equipment like motion picture camera could be used.
But we don't think it to be feasible in our country, as yet. As regards the time study board, an
ordinary clip-board used by us when appearing in examinations could suffice. However, do not
forget to keep at least two or three sharpened pencils or pens/dot-pens along with you while
conducting the study. If one pencil point breaks, then you have the other one ready. We can’t
afford to go in for sharpening the pencil because this would lead to erroneous recording of the
elements. Perhaps we might not be able to appreciate this trivial point now. But we will realise
your helplessness. If we experience such a situation while conducting a time study yourself.

Work sampling: The origin of this technique is credited to L.H.C. Tippet. He used the method
of ‘snap reading for determining the causes of loom stoppages in Textile factories in 1935 while
working for the British Cotton Industry Research Institute. Since then, the technique has been
successfully applied in many different situations under such names as Ratio Delay Study,
Random Observation Method, Observation Ratio Study, Activity Sampling and Work Sampling.
Work Sampling is a fact-finding tool. It is a measurement technique for quantitative analysis, in
terms of time, of the activity of operators, machines, or of any observable state or condition of
operation. This tool is particularly useful when information is urgently needed about men or
machines, especially in the analysis of non-repetitive or irregularly occurring activity where no
complete method and frequency description is available. Work sampling can be used to study
almost any type of work: repetitive and non-repetitive, factory or office, executive or
supervisory, clerical or engineering, handlers, salesmen, nurses and what have you.

Work sampling is a method of randomly observing work, noting state or condition of the object
being studied. From the proportions of observations in each category, inferences are drawn
concerning the total work activity under study. It can be used for fact-finding, work
measurement and methods analysis.

Some uses of Work Sampling: Work Sampling provides a way to:

(i) obtain information about either certain long cycle work or non repetitive type of jobs
for which it would be clearly impractical to use continuous observation methods.
(ii) indicate if certain activities should be studied in detail.
(iii) help design the work load distribution in formulating a new work system.
(iv) study any operation for possible methods improvement.
(v) help establish job content as an aid to job evaluation and employment purposes.
(vi) aid supervisors to organise their time.
(vii) aid appraisal of shop effectiveness, efficiency, safety performance etc.
(viii) provide feedback information about compliance to stated management policies.
(ix) assist in establishing standards of performance.
(x) establish controls on labour, material or machine utilisation.

Predetermined Motion Time System (PMTS): Every element of work is composed of some
combination of basic human motions. Apart from mental activity, all work can be broken down

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 into elements that are usually a fundamental movement of the body or body members. After
this analysis stage, the basic motions that have been isolated have a time allotted to them on
the basis of predetermined motion times. This is the measurement (or rather premeasured)
stage. The synthesis stage involves combining the basic motions in specific combinations and
frequencies to form basic elements which would go to complete the total work operation. This
method is particularly suited to situations where direct observations may not be possible or it
may be some entirely new method of working which, however, is composed of work of basic
elements which are standard with a new combination or mix. It is suited to both repetitive as
well as non-repetitive work.

Analytical Estimating: After the job has been broken down into its constituent elements in
certain types of non-repetitive work, we find that analytical estimating serves as best for
measuring work. In the analysis stage we find that usually these basic elements are much
larger as compared to the elements in PMTS or time study. For the measuring stage, the time,
which will be occupied by the element at a specific speed of working, is estimated. Many
values may be obtained from the records of previous studies. The synthesis of all such records
or data can be clubbed together for meaningful purpose.

Synthesis from Standard Data: Now here we find yet another technique of work
measurement to obtain synthetic times (or synthesised time standards) that are synthesised
from element times previously obtained from direct time studies. The analysis and
measurement stages are thus conducted prior to the actual study. The technique primarily
focuses on the synthesis stage. Most organisations that have had work studies conducted for
some time usually build up synthetic tables covering the common elements in their own type of
work. You could also refer to some standard tables, but be cautious in adapting it to your own
organisations by duly keeping the framework in mind for which the standards might be
applicable.

MOST Measurement System: The word MOST stands for Maynard Operation Sequence
Technique. The basic assumption here is that for an overwhelming majority of work, there is a
common denominator from which work can be studied: the displacement of objects: In fact, all
basic units of work are organised for the purpose of accomplishing some useful result by
simply moving objects. MOST is a system to measure work by concentrating on the movement
of objects. Consequently, MOST technique is composed of the following basic sequence
models:
• The General Move Sequence
• The Controlled Move
• The Tool Use Sequence (for the use of common hand tools).
In contrast to Methods Time Measurement, PMTS etc., the primary work units are no longer
basic motions, but fundamental activities (collections of basic motions) dealing with moving
objects.

3. What are the objectives of value Engineering? Discuss how to organize VE/VA function
in a tractor manufacturing firm.

Ans: Objectives of value engineering: We Should able to

(i) Understand the concept of value engineering
(ii) Differentiate between value and cost

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 (iii) See value engineering in historical perspective
(iv) Appreciate the role of value engineering in cost reduction and performance
improvement
(v) Identify poor value areas in products and systems
(vi) Learn about the value engineering job plan
(vii) Appreciate the role of some of the techniques of value engineering
(viii) Study some cases to see the improvements in product value through value
engineering techniques.
(ix) Identify the behavioural and organisational issues involved in value engineering.

Value Engineering and Value Analysis in a tractor manufacturing firm: Value Engineering
(VE) or Value Analysis (VA) is an important and powerful approach for improvement in the
performance of the products, systems or procedures and reduction in costs without
jeopardising their function. The terms VE and VA are used almost interchangeably. Other
terms used to convey the same concepts are Value Assurance and Value Management (VM).
L.D. Miles defined Value Analysis in his book Techniques of Value Analysis and Engineering
(1961) as "an organised creative approach which has for its purpose the efficient identification
of unnecessary cost i.e., cost which provides neither quality, nor use, nor life, nor appearance,
nor customer features". Various other definitions are proposed such as "an organised
systematic study of the function of a material, component, product or service, with the objective
of yielding value improvement through the ability to accomplish the desired function at the
lowest cost without degradation in quality". Thus the basic objective of VE/VA is to achieve
equivalent or better performance at a lower cost while maintaining all functional and quality
requirements of tractor. It does this largely by identifying and eliminating hidden, invisible and
unnecessary costs. We may simply perceive VE as the systematic application of recognised
techniques to identify the functions of a product or service and provide those functions at the
lowest total cost.

Value Engineering should not be 'treated as a mere cost reduction technique or cheapening of
the product. It is more comprehensive and the improvement in value is attained without any
sacrifice in quality, reliability, maintainability, availability, aesthetics, etc. It was traditionally
applied in the area of hardware projects, such as product design, though these concepts are
equally applicable in software projects, in the systems and procedures. Recently these
concepts have been applied to non traditional areas `such as urban slum development
programmes, staff welfare motivation enhancement and courtesy improvement plans.

One of the important reasons behind poor value in products, systems and procedures that we
come across is the lack of organised effort in devising such systems. Many times the designs
are created under highly compressed time frame and the designer may play safe by giving
product designs with sole emphasis on technical feasibility and may prescribe thicker, costlier
materials and other unnecessary features which are not needed by the customer. Sometimes,
ad hoc decisions get permanency due to lack of review of product designs. Often lack, of
consultation with others contributes to poor value. Lack of information, wrong beliefs, habits
and attitudes are some of the other reasons.

4. Write an essay on Statistical Quality Control

Ans: Statistical quality control: The some of the statistical quality control methods are as follows:

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 Variability: All products and services have a certain amount of natural variability because of
variations in the input as well as imperfections in the process. For example, different quality of
raw materials could have been used and different quantities of chemicals could have been
used in the process. This process variability may be measured by the process standard
deviation v, which indicates how much the products will vary even if the process is in control.
Products have to meet specified tolerances imposed by their intended use. Accordingly the
natural variability must be substantially smaller than the specified tolerance. Within the
specified tolerances, a certain amount of process variability is to be expected. However, It is
the goal of the statistical process control to determine when the process variability is getting
out of hand; so that corrective action can be taken, preferably before the required tolerances
are violated. This is generally achieved by a Control Chart.

Control Chart: In order to provide rapid feedback to an ongoing production process, methods
somewhat different from acceptance sampling are appropriate. Samples are taken as soon as
they are available, rather than waiting for the completion of a lot. This affords the opportunity to
detect unplanned changes in the process, shortly after they occur and take .a quick action,
such as adjusting the machine. The most common device used for this purpose is Shewart
Control Chart introduced in 1931. The control chart is a visual display of the result of an
inspection process incorporating carefully derived limits to indicate unusual behaviour. A
control chart can be based on categorical information or actual measurement. Accordingly,
they are called control chart for variables and control chart for attributes. Since control
chart for variables are more commonly used and more powerful, we will describe them first.
The control chart is based on the idea that the average of a sample of several items will tend to
cancel out the normal process variability, so that undesirable changes in the process will be
more visible.

Other Control Charts: There are several other control charts, including the p-chart which is
used to control the process when the measurement is by attributes. In other words the decision
is only to decide whether or not the sample item is acceptable. No measurement is taken. For
example in using the GO/NO GO gauges one gets only such a measurement. The p-chart is
based on the fraction defective, p, in a sample of n items. If P o represents the normal process
defective (i.e. when the process is in control). This is based on the fact that the number of
defectives has the binomial probability. The control chart is used just like an X chart, except
that the fraction defective p is calculated rather than X for each sample of n items and a lower
control limit is often omitted.

P0 3

This is based on the fact that the number of defectives has the binomial probability. The control
chart is used just like an X chart, except that the fraction defective p is calculated rather than X
for each sample of n items and a lower control limit is often omitted. Sample sizes are typically
larger for p-charts then for X-charts. Since the information content of a yes/no measurement is
much smaller than the actual variable measurement, it can only be expected.

5. Discuss the various vendor evaluation and rating

Ans: Vendor evaluation and rating: It is not always easy to identify good suppliers. Records
maintained or procured from some other, sources about the vendors help in their evaluation
and rating. Usually a combination of price, quality, quantity, delivery time, service etc. giving

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relevant weightages to these factors is used to rate the vendors. In addition, a checklist can be
used to facilitate rating from department standpoints. Some of the points are mentioned below:

Reliability
1 Is the supplier reputable, stable and financially strong? ,
2 Are the supplier's integrity and ability above doubt?
3 Is the supplier going along with product improvement?
4 Is the supplier's competitive strength. As to price, quality, etc. proved by past experience?

Technical Capabilities
1 Can the supplier provide assistance as to application engineering?
2 Can the supplier provide assistance as to analytical engineering?
3 Can the supplier provide design assistance?
4 Can the supplier handle special needs. and contribute to improve product efficiency/basic
processes?

Convenience
1 Can the supplier help reducing acquisition costs through personal visits, telephone calls,
incoming inspections, rejection of defects, spoilage, etc?
2 Can he offer other related products?
3 Is he qualified to help in solving difficult problems?
4 Does the supplier package his product conveniently?

Availability
1 Does the supplier assure delivery in time?
2 Are his stocks locally available, and or at short notice?
3 Is the supplier's location advantageous?
4 Can he plan his supply to minimise inventory?
5 Can he be depended on for a steady flow of materials?

After-sales Service

1 Does the supplier have a service organisation?

2 Is an emergency service available?
3 Are parts available, when needed

Sales Assistance
1 Can the supplier help building mutual markets?
2 Will he recommend our products?
3 Does the use of supplier's product enhance appearance of our products?

Vendor Evaluation: Recognising that there is a need for having good vendor, it is essential
that supplies, are obtained from vendors after an evaluation of his capabilities. The buyer, who
has to do the evaluation, is faced with two different situations;
1 Evaluating the performance before the vendor has delivered anything.
2 Evaluating the performance of vendor after the deliveries have been made. The latter one is
normally called Vendor Monitoring and the former Vendor Evaluation. In case of Vendor
Evaluation the buyer lacks the direct evidence on the results achieved by the vendor and must
get his information in other ways. This includes (1) general reputation of vendor, (2) data from
other buyers, (3) vendor surveys.

Vendor Rating: Product quality submitted by vendors has always been evaluated and used as
a factor in making purchasing decisions. Recently, the evaluation has been formalised by the
use of vendor rating formulas which provide a quantitative measure of vendor quality. These
ratings are primarily meant to provide an overall quality rating of a vendor for use in reviewing,
comparing, and selecting vendors. Vendor rating is not a tool for making decisions on
submitted lots.

To create a single numerical quality score is difficult because there are several inputs, each
involving its own unit of measure:
1 The lot quality, expressed as lots rejected versus lots inspected.
2 The parts qualities, expressed as per cent defective.
3 The characteristic qualities, expressed in numerous natural units, e.g., rupees per square
cm., per cent active ingredient, MTBF, etc.
4 The economic consequences of bad quality, expressed in rupees. The National Association
of Purchasing Agents, New York, has published three alternative vendor rating plans:

1 Categorical Plan: This is a non-quantitative system in which buyers hold a monthly meeting
to discuss vendors and rate each as plus, minus, or neutral.

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 2 Weighted-point Plan: Each vendor is scored on various factors like quality, price, service
etc. These factors are weighted and a composite rating is then calculated for each vendor. The
details of this performance evaluation scheme are as follows:

i) Quality Rating: Quality Rating for a consignment

RQ = x 100

where,
Q = Quantity supplied
Q1 = Quantity accepted
Q2 = Quantity accepted with concession
Q3 = Quantity accepted with rectification
Q4 = Quantity rejected
And Q = Q1 +Q2+Q3 -+Q4

X1 and X2 are weightage factors each less than 1.

6. Explain how would you proceed in designing a waste disposal system for a steel plant

Ans: The adoption of poor disposal practices have resulted in severe environmental pollution in
different parts of the world, particularly in the big industrial centres and have posed serious
threat to human life. Some of the developed countries have taken the problem on war footing
and have started developing and adopting latest technology in this regard. In India the
awareness has grown recently and the design of effective waste disposal system has become
a challenging problem area. From disposal viewpoint wastes may be categorised into:
(i) Salvable waste and
(ii) Non-salvable waste

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The waste that have got some salvage value are termed as salvable waste. The scrap,
rejected goods, surplus/obsolete items and equipments etc., fall under this category. The well
designed disposal system for salvable wastes may provides best return to the organisation;
contribute to cost reduction and higher profit and aid to material conversation. Wastes which do
not have any salvage value, but need further processing and treatment for disposal are termed
as non-salvable waste. The non-salvable wastes may amount to resource recovery and
reduced environment and other social costs.

Waste disposal system for a steel plant: The salvage waste, e.g. scrap, surplus/obsolete
stores and equipment is generated in almost all sorts of manufacturing and service
establishments. The steel plant waste is disposed off through auction. Another mode of
disposal is to salvage scrap through specialised agencies. A special surplus disposal
committee was set up for analysing the large quantities of accumulated surplus. For disposal of
steel plant scrap, a committee in consultation with Metal scrap trade Corporation and MMTC.
Here some broad guidelines have been suggested to aid the design of systems and
procedures for disposal of steel plant waste are as follows:

(i) The feasibility of recycling should be analysed to dispose the scrap.

(ii) Try to use scrap for producing by-products.
(iii) Try to transfer the surplus from one plant to another
(iv) Analyse the feasibility to sell the scrap as raw material to other plants.
(v) Analyse the feasibility to sell the scrap/surplus to external export agencies
dealing with it.
(vi) Selling the scrap through advertising and through auctioning.
(vii) The auction should based on the scrap carrying cost and auction cost.
(viii) The surplus may be sold to the own company employees or in the open
market.
(ix) If the product is not meeting the required standard, it should be sold to
company employees as secondary quality item. Which can give the incentive
to the employees.
(x) To consult the vendor and return the surplus to vendor.
(xi) To sell surplus/obsolete equipment through advertisement and invite the
offers from other parties
(xii) In case of damaged equipment try to sell after the parts after classifying into
good serviceable, repairable or reclaimable, and scrap.
(xiii) If the scrap is useful for charitable organisation, it should be donated to it.