5 marks

1. Consequences of location of a production facility not planned.

Ans:
2. Steps in production planning and control.
Ans:
Production planning and control is one of the most important phases
of production management, it is, as a matter of fact, the nervous system of a
manufacturing organization. In manufacturing organization, it is essential that
production is carried on in the best manner at the lowest cost, and the goods are
of right quality and are produced at the proper time. This can be ensured only
through proper planning of production. but mere planning of production will
not solve the problem because production plans are not capable of self-actuating
and do not lead to automatic accomplishment. For that the production manager
has to take certain steps like, he has to regulate work assignment, review the
work progress, and devise methods to bring conformity between the actual
performance and planned performance – so that plans chalked out are adhered
to and the standards set at the planning stage are properly attained and
improved. This is the function of production control. Production control,
therefore, is a directive function which involves the coordination and integration
of operations and activities of different factors of production with a view to
optimizing efficiency. Optimum efficiency is attainable by proper planning of
work, laying down of exact routes which operations shall follow, correct fixing
of time-table within which productive operations shall start and come to a close,
uninterrupted releasing of orders and work facilities, and timely initiation of
appropriate follow-up steps to ensure smooth functioning of the enterprise. In
other words, production control involves planning, routing, scheduling,
dispatching and follow-up.
Steps in Production Planning and Control
1. Planning
The first important step in production planning and control is concerned with
the careful preparation of production plans. Production plans determine what
will be produced and where, at what type, by whom, and how. For detailed
planning of operations, the relevant information may be obtained from several
sources in the enterprise. Information about quantity and quality of products to
be manufactured may be obtained from customers orders and the sales budget,
and information about production facilities may be obtained from the
management and the engineering department. Thus, the planning function
formulates production plans, and translates them into requirements for men,
machinery and materials.
Whatever be the planning period, production planning helps in avoiding
randomness in production, providing regular and steady flow of production
activities, utilizing production facilities to its maximum for minimizing
operating costs and meeting delivery schedules; coordinating various
departments of the enterprise for maintaining proper balance of activities, and
above all, providing the basis for control in the enterprise.

2. Routing
The next important function of production planning and control is routing which
involves the determination of the path (i.e. route) of movement of raw materials
through various machines and operations in the factory. “Routing includes the
planning of where and by whom work shall be done, the determination of the
path that work shall follow, and the necessary sequence of operations”. To find
this path, emphasis is placed on determining operating data, which usually
includes planning of ‘where’ and ‘by whom’ work should be done, the
determinations of the path that work shall follow, and the necessary sequence of
operations. These operating data are contained in the standard process sheet
which helps in making out a routing in the standard process sheet which helps in
making out a routing chart showing the sequence of operations and the
machines to be used. If the machine loan chart indicates the non-availability of
certain machines, alternate routing may also be included on the routing chart.
The most efficient routing may have to be compromised with the availability of
the machines at a particular time. In other words, “routing establishes the
operations, their path and sequence, and the proper class of machines and
personnel required for these operations.”
From the above, it can be inferred that routing is one of the highly essential
elements and prime considerations of production control because many
production control functions are closely related processes and are dependent on
routing functions. Thus, it is essential to solve the different problems
concerning: appropriate personnel; full utilization of machines; and determining
with precise degree the time required in the production process.
 3. Scheduling
Scheduling is planning the time element of production – i.e. prior determination
of “when work is to be done”. It consists of the starting and completion times
for the various operations to be performed. In other words, scheduling function
determines when an operation is to be performed, or when work is to be
completed, the difference lies in the details of the scheduling procedure. To
work out effectively, the scheduling, as a part of production control function,
determines the time when each operation called for on the route sheet is to be
done on the specified machine in order to meet the desired delivery dates. Good
control function directs not only the time that each particular operation should
start but also indicates the progress of each manufacturing part, the amount of
work ahead of each machine, and the availability of each machine for the
assignment of new work.
Schedules are of two types: Master schedule and Detailed schedule. Activities,
if recorded on plant-wise basis, would be preparing master schedule, while mere
detailed schedules are employed to plan the manufacturing and assembly
operations required for each product.
4. Dispatching
Dispatching is the part of production control that translates the paper – work
into actual production. It is the group that coordinates and translates planning
into actual production. Dispatching function proceeds in accordance with the
details worked out under routing and scheduling functions. As such, dispatching
sees to it that the material is moved to the correct work place, that tools are
ready at the correct place for the particular operations, that the work is moving
according to routing instructions. Dispatching carries out the physical work as
suggested by scheduling. Thus, dispatching implies the issuance or work orders.
These work orders represent authority to produce. These orders contain the
following information:

 The name of the product;

 The name of the part to be produced, sub-assembly or final assembly;
 The order number;
 The quantity to be produced;
 Descriptions and numbers of the operations required and their sequence,
 The departments involved in each operation
 The tools required for particular operation; and
 Machines involved in each operation and starting dates for the operations.
5. Expediting
Expedition or follow-up is the last stage in the process of production control.
This function is designed to keep track of the work effort. The aim is to ensure
that what is intended and planned is being implemented. “Expediting consists in
reporting production data and investigating variances from predetermined time
 schedules. The main idea behind expedition is to see that promise is backed up
by performance”. It includes the following functions:

1. Check-up to ensure that all materials, tools, component parts, and accessories
are available at all work centers in specified quantities for starting and carrying
out manufacturing operations.
2. Check-up on the status of work-in-progress and completed work at various
work stations. This includes collecting information relating to the starting and
completion time and date of work completed, status of work-in-progress relative
to scheduled completion dates, position of movements of materials, component
parts, and sub-assemblies within the plant, and inspection results.
3. Preparation of progress records and keeping the control boards up-to-date.
4. Reporting to manufacturing management on all significant deviations so that
corrective action may be taken. It also includes reporting to production
planning department so that future plans may be adjusted.

3. Write a short note on Material Requirement Planning.

Ans: Materials requirements planning (MRP) system is a software-based
solution that works backwards from customer orders to determine when
materials will be needed for production and then initiates their purchase to have
delivery coincide with upcoming manufacturing runs and scheduled product
delivery dates. It plans production, schedules raw material purchase and
delivery, and manages completed inventory levels.
Since customers want and expect products to be delivered in a timely manner,
manufacturers work to ensure they have enough inventory on hand to meet that
demand, without going overboard.

4. Steps of developing P-Chart.

Ans:

5. Selective inventory Control, Importance of ABC Classification in inventory

control.
Ans:
Selective inventory Control
To identify items, which bring significant benefit by proper management
from among hundreds and thousands of items managed by an organization
Determine the importance of items and thus allows different levels of control
based on the relative importance of items.
ABC Classification in inventory control.

ABC analysis of inventory is a process of classifying the products based on

the value of importance. This concept is derived from the Pareto principle of
80/20 rule which focuses on vital few from trivial many. Not all items in an
inventory are of the same value, therefore these items are broken down into
three categories A, B and C. Class A consists of most valuable items, although
these items constitute only 10% of quantity they account for 70% - 80% of
consumption value. Class B consists of items with moderate importance
accounting for 10% - 20% of revenue. And class C consists of least valuable
items that contribute to only 10% of revenue. This classification helps managers
in prioritizing and monitoring items of high importance closely.

An organization can benefit by adapting the ABC analysis in inventory

management. Here are some of them:

1. End of life management:

Every product goes through four phases during its lifespan: launch,
growth, maturity and decline. Once the product reaches the maturity stage
it is bound to decline sooner or later. Customer demand plays a vital role
in end of life management. With the concept of ABC analysis, inventory
planners can forecast the demand for products beforehand and manage
the stock levels accordingly. The maturity and decline period is different
for different products, with decrease in demand the sales will fall and
therefore it would be wise to reduce the inventory levels to minimize the
carrying costs on the items and also avoid having obsolete stock.

2. Supplier negotiation:

It is obvious that the company would make most money by negotiating

with suppliers of the class A category since 70% - 80% of the money is
spent on them. An offer may look lucrative from afar but never accept
the very first one. Make a counter offer in return. Wait for the supplier to
revise his numbers. If the supplier is not willing to budge, you can still
make the most of the deal by negotiating other features like providing
post purchase services, reducing the down payment, free shipping etc.
The negotiation needs to be a win-win approach, the supplier needs to
make reasonable profit from the deal while helping your company get
desired quality product and services.

3. Inventory optimization:

Optimizing inventory is a popular benefit of ABC analysis as it allows

inventory planners to organize high priority items aligning to customer
requirement. Depending on the demand fluctuations the inventory is
stocked to cater to high demand items and also carrying low stock for
undesirable items.
 4. Strategic Pricing:

ABC analysis of inventory helps in setting the prices very strategically

for products which bring more value to the company. The company will
have to monitor those products which are highly desirable to customers
and have an escalating demand. Based on that data, the company can
increase the price of these items by a few extra dollars which will make a
huge impact on the profit. Another strategic pricing option to consider is
to consolidate suppliers or consider transferring business to a single
supplier. Purchasing more goods from a single supplier will reduce
carrying costs and complexity costs associated with them.

5. Resource Allocation:

Resource allocation with ABC analysis is a continuous process requiring

periodic tracking of class A items. Since these items are of utmost value,
the stock level must always align with the customer demand. In case a
class A item is no longer desired by the customers or has fairly lower
demand, the item needs to be moved to a lower classification B or C.

6. Customer Service Levels:

Not all products can be treated the same or achieve same customer
service levels. The service levels for different products depends on
multiple factors like the item cost, quantity sold and margin on the
product. There is no point crowding your warehouse with low margin
products which are sold once in a while. ABC analysis allows planners to
set service levels based on the product classification, which improves the
overall supply chain performance carrying less safety stock.

6. Short note on statistical quality control.

Ans: Statistical Quality Control (SQC) is the term used to describe the set of
statistical tools used by quality professionals. SQC is used to analyze the
quality problems and solve them.
Statistical quality control refers to the use of statistical methods in the
monitoring and maintaining of the quality of products and services.
All the tools of SQC are helpful in evaluating the quality of services. SQC
uses different tools to analyze quality problem.

7. Mention the important factor to be considered in deciding about the location

for
 a) Research & Development Organization.
Ans:
1. Accessibility
Does your business rely on frequent deliveries? If so, it’s important to consider
local transport links, particularly main roads and motorways. Property rental
and purchase prices are often steeper in higher density, more commercialised
areas, so there are certainly cost benefits to seeking a more out of town location,
providing your daily business operations won’t be hampered by poor transport
links. Equally, if you rely on high customer footfall, then ensuring your location
is accessible by car, bus and even train will all be important considerations.
Don’t forget your employees too, as a good location is often a critical factor in
recruiting the right people into your business, particularly if they have been
offered several jobs and need to evaluate the pros and cons of each.

2. Security
Believe it or not, your location can increase your odds of being affected by
crime, which in turn can influence your insurance premiums, as well as the
additional security measures you made need to take to keep your premises safe.
It’s fair to say that in business, we all make decisions based on information,
intuition and probability mixed in with a little luck. But knowing the chances of
crime in the areas you are considering is an important part of the decision
making process. We recently analysed released statistics from the UK
government crime report and compared this to population data to help
businesses make an informed decision about where to set up a new shop, office
or warehouse. This report conveniently provides a quick snapshot of how safe a
particular area is - simply enter your postcode here for your stats summary.
Knowing the risks of potential criminal activity can help you better prepare and
take adequate precautions.
3. Competition
Your proximity to other competing businesses could be crucial to your success.
Could they provide a benefit to your business or cause a hindrance?
Establishing which competitors are in your area and their offering could help
guarantee you choose the right location for your business. If there is too much
competition then it may be a warning sign to expand your horizons to a new
location. There are exceptions to this such as car dealerships who want to be
near each other as customers compare and choose the best car deal, hence their
close proximity. Likewise, if you have an element of your offering that is
unique or offers some kind of new innovation, then choosing an area that
already has a ripe market could be the ideal way to pick up customers very
quickly and establish a presence in a new area in a relatively short time frame.
4. Business Rates
Cash is king! Cash flow is critical as it determines the viable ability for a
business to survive and pay its bills. Therefore, it is important to research the
average Business Rates including rent, utility bills and taxes in the area to
ensure you can afford the premises. Simple hidden costs such as deposits and
whether you need to pay to park need to be snuffed out before committing to a
location. Estimating the living cost of the location will prevent a commitment
outside your means.
5. Skill base in the area
Find out the skill base in the area - can it fulfill your needs? Take into account
employment rates as well. If you rely on skilled workers it is best to go to where
there is a healthy bank of talent. Employees are often a business’s biggest asset
thus choosing a location that’s lacking in required talent may be the start of your
business’s downfall. Some recruitment agencies will happily send you CVs on
spec to gauge the market, only charging if you subsequently decide to interview
and hire someone. Alternatively, posting a free job via an online jobsite will
quickly show you the calibre of employees in a particular area.
6. Potential for growth
Will the premises be able to accommodate business growth or a spike in
demand? Moving premises is a big upheaval and can be time consuming and
costly. A decision needs to be made as to whether the premise you are choosing
is a short-term location or if you would like to stay there for the long haul.
Consequently, a location’s flexibility could be a very important factor regarding
the premises’ suitability for your business needs.
Whilst a perfect business location is different for every business, covering these
crucial areas will certainly give you the best chance of beating the odds and
keeping your business on track for future success.

b) Steel Plant.
Ans:
. Selection of Region:
The selection of a region or area in which plant is to be installed requires
the consideration of the following:
Availability of Raw Materials:
Proximity of sources of raw materials is the obvious explanation of the location
of majority of sugar mills in Uttar Pradesh. This means that the raw material
should be available within the economical distance. Easy availability of supplies
required for maintenance and operation of the plant should also be considered.
Proximity to Markets:
ADVERTISEMENTS:
Cost of distribution is an important item in the overhead expenses. So it will be
advantageous to be near to the center of demand for finished products.
Importance of this is fully realized if the material required for the manufacturing
of products are not bulk and fright charges are small.
Consumer industries like cycles, sewing machines, radio televisions and other
luxury goods etc. are set up near the marketing centers whereas producer
industries like steel mills are located near the vicinity of raw material.
For this purpose market analysis should be carried out keeping in view the
following points:
(a) Market trend and competition regarding product to be manufactured.
ADVERTISEMENTS:
(b) Industrial market
(c) Consumer habits and income
(d) Population
(e) Scope of export to neighbouring countries.
Transport Facilities:
ADVERTISEMENTS:
Since freight charges of raw materials and finished goods enter into the cost of
production, therefore transportation facilities are becoming the governing factor
in economic location of the plant. Depending upon the volume of the raw
materials and finished products, a suitable method of transportation like rail,
road, water transportation (through river, canals or sea) and air transport is
selected and accordingly plant location is decided. Important consideration
should be that the cost of transportation should remain fairly small in
comparison to the total cost of production.
Availability of Power, Fuel or Gas:
Because of the wide spread use of electrical power the availability of fuel or gas
has not remained a deciding factor in most of the cases for plant location. The
location of thermal power plants (like Bokaro Thermal Plant) and steel plants
near coal fields are for cutting down cost of the fuel transportation. The
reliability of continuous supply of these facilities is an important factor.
Water Supply:
Water is required for processing as in chemical, sugar and paper industries and
is also used for drinking and sanitary purposes. Investigation for quality and
probable source of supply is important, since the cost of treating water is
substantial so the chemical properties like hardness, alkalinity and acidity.
Presence of dissolved gases and organic material etc. should be thoroughly
investigated. In case of water supply form an external source such as
municipality, dependability of the source, pumping and storage capacity for
present and future demands should be found out.
Disposal Facility for Waste Products:
ADVERTISEMENTS:
Thorough study should be made regarding disposal of water like effluents,
solids, chemicals and other waste products likely to be produced during the
production process.
Climatic and Atmospheric Conditions:
The climate of the region/ area where the plant is to be located has an important
bearing on both the capital and operational costs.
Normally following aspects are considered:
(a) Rain fall or snow fall in the area concerned
ADVERTISEMENTS:
(b) Ambient temperatures
(c) Humidity
(d) Wind velocities and direction
(e) Incidence of cyclones, storms etc.
Availability of Labour:
Potential supply of requisite type of labour governs plant location to major
extent. Some industries need highly skilled labour while other need unskilled
and intelligent labour. But the former type is difficult in rural areas in
comparison with industrially developed location.
Momentum of an Established Industry:
Already established industry in a certain area will produce skilled labour in that
trade. Thus future industries in that area will have no difficulty with respect to
the skilled labour e.g. Ludhiana is famous for cycle industries and Faridabad for
engineering industries.
Preference of Outstanding Businessmen and Government Subsidies:
Some of the factory locations do not consider the above factors but locate
industries in a particular district or area just to develop that area. It may be due
to State Government policies regarding workers, pollution and smoke control
requirements, waste disposal rules for industries etc.
2. Township Selection:
The factors to be considered regarding township selection are:
(i) Availability of men power of requisite skill
(ii) Competitive wage rates of workers
(iii) Other enterprises which are complementary or supplementary regarding
raw materials, other input, labour and skill required.
(iv) Moderate taxes and the absence of restricting laws.
(v) A favourable cooperative and friendly attitude towards the industry.
(vi) Favourable living conditions and standards keeping in view the availability
of medical and educational facilities, housing, fire service, recreational
facilities, cost of living etc.
ADVERTISEMENTS:
3. Question of Urban and Rural Area:
Question of urban and rural area should be decided in view of the
following:
Advantages of Rural Area:
(i) The initial cost of land, erection cost of building and plant is less in rural area
as compared to urban or city area.
(ii) Acquisition for additional area for extension work expansion of plant is
possible without much difficulty whereas urban area being congested; the
additional land is not easily available.
ADVERTISEMENTS:
(iii) Rural areas are free form labour trouble which is most common in towns
and cities.
(iv) Over crowding of working class population in cities is avoided.
Advantages of Urban Area:
(i) Better modes of transportation for collection and distribution of materials
and finished products.
(ii) Availability to requisite type of labour for special and specific jobs is there.
(iii) Utilities like water, power, fuels etc. are easily available.
(iv) Industries do not need to construct colonies to provide residential facilities
to their workers since houses are available on rental basis whereas in rural areas,
houses have to be build for workers.
4. Location of a Factory in a Big City:
Generally factories are located in big cities for obvious reasons of skilled
labour, market proximity for both raw materials and end products.
Its advantages and disadvantages are mentioned below:
Advantages:
(i) Existence of educational and recreational facilities is advantageous for
children and dependents of workers.
(ii) Facilities for technical/ industrial education and training for children of
workers are available.
(iii) Evening classes facilities are available.
(iv) Discussion opportunities and facilities for exchange of thoughts are
available for interested people in societies and clubs.
(v) All types of skilled man power is available.
(vi) Repair, maintenance and service facilities for various utilities are available
in abundance.
(vii) Banking facilities regarding finance (loan etc.) for industry in case of
necessity are available.
(ix) Big markets for sale of products available.
(x) Better transport facilities for movement of raw materials, finished products
and workers are available.
(xi) Many similar industries/plants exist in nearby areas.
(xii) Housing facilities workers & employees.
(xiii) Police and fire protection facilities available in near by area.
Disadvantages:
(i) Insurance and taxation rates are high.
(ii) Due to higher living standards, cost of consumer goods and wage rates are
high.
(iii) Possibilities of expansion are minimum due to scarcity of land.
(iv) Cost of land is more if needed for expansion of the plant etc.
(v) Building costs very high in comparison to rural or semi urban areas.
(vi) Atmospheric conditions not very pleasant rather suffocating.
(vii) Local bye laws present a problem for future, working & expansion etc.
Thus, small plants may find location in big cities that too in upper stories of the
buildings. Such accommodation may be utilized in view of availability of
requisite type of labour in big cities.
5. Location of an Industry in Small Town:
There are some industries which are located in the rural areas or small towns
specifically for the want of raw material and cheap labour.
Its advantages and disadvantages are mentioned below:
Advantages:
(i) Less labour trouble and co-ordinal employee-employer relation.
(ii) Suitable land for current and future requirements easily available.
(iii) Local bye laws do not impose problem in working of the unit.
(iv) No resistance from existing industries.
(v) Possibility of tax exemptions exist.
(vi) Not much congestion.
(vii) Lower rents in comparison to big cities and urban areas.
(viii) Lower wage rates for labour/ employees / workers.
(ix) Less fire risks.
(x) Noise not much problem.
Disadvantages:
(i) Scarcity of skilled labour of requisite type.
(ii) Lack of recreational and amusement facilities for staff.
(iii) Facilities like evening classes and industrial training do not exist.
(iv) Employees, workers do not get accustomed to factory life easily.
(v) Specialized services needed for various purposes are not available.
(vi) Police and fire protection less satisfactory.
(vii) Transportation and marketing facilities not satisfactory as required.
6. The Sub-urban Location for a Factory:
Such a location generally provides advantages of both the large city and small
towns.
Benefits of such a locality may be summarized as follows:
(i) Land is easily and cheaply available in comparison to big cities.
(ii) Lower tax rates in comparison to big cities and urban areas.
(iii) Transportation facilities equal to big cities available.
(iv) Good living accommodation to enjoy advantages of big cities available for
workers/employees.
(v) Unskilled labour cheaply available.
(vi) Recreational facilities of cities available due to easy transport facilities.
7. Site Selection:
The third step is to select the exact plant site with the following
considerations:
(i) The cheap availability of land for current and future requirements, soil
characteristics sub soil water, availability or possibility of economic drainage
and waste disposal system are desirable parameters.
(ii) The site should be easily accessible to various modes of transport as
required so that apart from input materials, employees can also reach the site
conveniently.
(iii) The site should be free from zonal restrictions like from railways or civil
aviation restrictions.
8. Current Trends in Pant Location:
1. Location in Proximity of Cities:
First tendency is to locate the industries or enterprises in the proximity of cities
rather than in rural or urban areas. These sub-urban sites offer today practically
all advantages, facilities and services available in cities and towns with the
added advantage of land required for future expansion on cheap rates.
2. Planned Industrial Centres:
While industrial towns may be planned and developed by big industrial houses
or govt., the late trend is to develop areas as industrial estates and sell these to
people interested in starting their units at various places. Noida and Faridabad
are the examples of this type of development.
3. Competition for Development of Industries:
In order to generate the employment opportunities the state and central govt.
offer concessions to attract industrialists to set up industries in their states or
territories.
9. Appropriate Site Selection:
Appropriate site selection is important because of the following:
(i) A good location may minimize the cost of production and distribution to a
considerable extent. Such reduction in the cost of production helps in elevating
either the competitive strength or the profit margin of the business.
(ii) Initiation of an enterprise involve a relatively large permanent investment. If
the selected site is not proper, all the money invested on factory building,
installation of machinery etc. will go waste and the owner will have to suffer a
great loss.
(iii) Location put constraints for the physical factors of the overall plant designs
heating, ventilation requirements, storage capacity for raw materials,
transportation requirements for input material and finished products, energy
requirements cost of labour, taxes and construction costs.
(iv) Location of plant decides the nature of investment cost to be incurred.
(v) Government policies sometimes play an important role in site selection.
(vi) Probably no location is so perfect as to guarantee success but locations can
be so bad as to bankrupt an enterprise.
10. The Design of Factory Plant Building:
After a plant location has been decided upon, management’s next problem deals
with the design of building. A building is designed and built to protect the
property and employees of an organization. This basic fact is mostly overlooked
in planning the requirement for building structures.
For those plants where employees, materials and infrastructure facilities require
protection, the problems involved in designing and constructing effective and
economical structures are many.

8. Different types of cost associated with inventory control.

Ans:
1. Ordering Cost
Cost of procurement and inbound logistics costs form a part of Ordering
Cost. Ordering Cost is dependant and varies based on two factors - The
cost of ordering excess and the Cost of ordering too less.
Both these factors move in opposite directions to each other. Ordering
excess quantity will result in carrying cost of inventory. Where as
ordering less will result in increase of replenishment cost and ordering
costs.
These two above costs together are called Total Stocking Cost. If you plot
the order quantity vs the TSC, you will see the graph declining gradually
until a certain point after which with every increase in quantity the TSC
will proportionately show an increase.
This functional analysis and cost implications form the basis of
determining the Inventory Procurement decision by answering the two
basic fundamental questions - How Much to Order and When to Order.
How much to order is determined by arriving at the Economic Order
Quantity or EOQ.

2. Carrying Cost
Inventory storage and maintenance involves various types of costs
namely:

 Inventory Storage Cost

 Cost of Capital

Inventory carrying involves Inventory storage and management either

using in house facilities or external warehouses owned and managed by
third party vendors. In both cases, inventory management and process
involves extensive use of Building, Material Handling Equipments, IT
 Software applications and Hardware Equipments coupled managed by
Operations and Management Staff resources.
c. Inventory Storage Cost
Inventory storage costs typically include Cost of Building Rental
and facility maintenance and related costs. Cost of Material
Handling Equipments, IT Hardware and applications, including
cost of purchase, depreciation or rental or lease as the case may be.
Further costs include operational costs, consumables,
communication costs and utilities, besides the cost of human
resources employed in operations as well as management.
d. Cost of Capital
Includes the costs of investments, interest on working capital, taxes
on inventory paid, insurance costs and other costs associate with
legal liabilities.
The inventory storage costs as well as cost of capital is dependant
upon and varies with the decision of the management to manage
inventory in house or through outsourced vendors and third party
service providers.
Current times, the trend is increasingly in favor of outsourcing the inventory
management to third party service provides. For one thing the organizations find
that managing inventory operations requires certain core competencies, which
may not be inline with their business competencies. They would rather
outsource to a supplier who has the required competency than build them in
house.
Secondly in case of large-scale warehouse operations, the scale of investments
may be too huge in terms of cost of building and material handling equipments
etc. Besides the project may span over a longer period of several years, thus
blocking capital of the company, which can be utilized into more important
areas such as R & D, Expansion etc. than by staying invested into the project.

9. Control Chart. How they make?

Ans:
Control Chart
Control chart, also known as Shewhart chart or process-behavior chart, is
widely used to determine if a manufacturing or business process is in a state
of statistical control.
Create A Control Chart In Excel

For example, you have below base data needed to create a control chart in
Excel

1. Firstly, you need to calculate the mean (average) and standard deviation.
Select a blank cell next to your base data, and type this
formula =AVERAGE(B2:B32), press Enter key and then in the below cell,
type this formula =STDEV.S(B2:B32), press Enter key.
Note: In Excel 2007, please enter this formula =STDEV(B2:B32) to calculate
the standard Deviation. In the above formulas, B2: B32 is the base data range.

2. Then go to the Control Line column, and in the first cell below the header,
cell C2, type this formula =$H$1 (cell $H$1 is the average result), and drag
the fill handle to fill the data range you need.

3. In the first cell below Up Control Line column, cell D2, type this
formula =$H$1+($H$2*3) ($H$1 is the average result and $H$2 is the
standard deviation result), then drag the auto fill handle to the range you need.

4. Under Below Control Line column, type =$H$1-($H$2*3) ($H$1 is the

average result and $H$2 is the standard deviation result), then drag the auto
fill handle to the range you need.

Now you can insert a chart.

5. Select Date and Sample Measure columns and
click Insert > Line > Line to insert a line chart. See screenshot:

6. Then right click on the line chart and click Select Data from context menu.

7. In the Select Data Source dialog, click Add button, then in the Edit
Seriesdialog, select Control Line as the Series Name, and select the relative
data into the Series values text box.
8. Click OK, then repeat step 7 to add Up Control Line and Lower Control
Lineas the series in the Legend Entries (Series) section.
 9. Click OK to exit the dialog, now a control chart is created.

10.Principles made in material handling.

Ans:

Material handling, a science of loading, moving, packing, storing and unloading

of materials, is a critical process in an industrial environment. It is performed
either manually or through an automated process. Why is it important to
establish and follow material handling principles? Moving heavy objects
manually from one place to another can arise a number of safety and health
concerns and increase production cost.

A systematic and practical approach towards manufacturing operations not only

ensures employees’ safety but also streamlines work. This is why the modern
manufacturing industry takes material handling operations seriously and
implement automated processes to reduce production cost and time.

Loading, unloading, moving, and other such processes do not add value to the
product. Resources spent on material handling, therefore, should be eliminated
or at least reduced. What follows are some common material handling
principles:

Planning

Thorough planning is essential when it comes to streamlined and profitable

manufacturing processes. All material handling activities should be planned. A
consultation among managers, suppliers, engineers, consultants, labor, etc. can
help you develop a practical material handling plan. Plant layout, location, and
storage space should also be considered in the planning process.

Material flow

Material flow can be optimized through equipment arrangement and plant

operation sequence. Consider the following steps in the material flow principle:

 Elimination of obstacles
 A direct path for material movement
 Minimum movement between floors
 Processing of heavy materials close to exit

Automation

Automated handling has become enormously important in the contemporary

competitive environment. You should consider the automated material handling
equipment to manage the following:

 Hazardous material
 Heavy equipment
 Repetitive movements
 Large quantities of material

Ergonomics

A growth-oriented manufacturing environment demands from workers the

ability to adapt to evolving working conditions. In material handling, the
capabilities and limitation of the workforce should be recognized and
documented.

System

A coordinated and operational system can be developed by integrating all the

material movements and storage activities. The system principle refers to well-
integrated and interdependent entities that work coherently.

Work

Work related to material handling (MH) can be minimized without

compromising productivity. Businesses should focus more on implementing
automated MH operations to reduce manual work.
Safety

Safety conditions in a workplace can directly affect the productivity of workers.

Safe MH methods and equipment in accordance with existing safety codes can
certainly ensure a safe working environment.

Maintenance

Maintenance is an inseparable component of a healthy production process. A

regular inspection and maintenance of MH equipment can save time and money.

Space utilization

Available space in a facility should be utilized in the best possible way.

Following are some suggestions in this regard:

 Reduce temporary storage

 Stack material by using racks
 Remove scrap and unnecessary objects regularly
 Economic order quantities can help reduce inventory

Mechanical handling of materials from inbound raw material to outgoing

finished product help reduce production cost and safety concerns. At BP
Automation, we design and manufacture automated material handling systems
for a broad range of industries. We will help you manage your MH activities in
a unified and efficient way so that you can make a good use of your space and
resources.

11.Principles of Material Requirement Planning & Total Quality Management.

Ans:
Principles of Material Requirement Planning
The initials MRP stand for Material Requirements Planning or
Manufacturing Resource Planning. MRP is a control system for inventory
and production planning. An MRP system must accomplish three goals.
The first is to ensure that materials are available for production and
products are available for consumers when required. The MRP also needs
to keep inventory levels as low as possible. Finally, the MRP must plan
delivery schedules, manufacturing activities and purchasing activities.

Inventory Control

From the point of view of a business, finished products sitting in inventory are
a waste of money, because they cost money to store. Ideally the business
should be able to manufacture products and then immediately transfer them to
the customer. MRP works to keep inventory levels as low as possible by
optimizing manufacturing processes on the basis of empirically derived
knowledge about how long manufacturing processes take.

Inputs

Several types of data and information need to be fed into the MRP process.
You need to know the type of end item that needs to be created, as well as how
many of these items you require at a particular point in time. In addition to
this, you need to consider the "shelf life" of the item. Assemble a bill of
materials, which includes details about the components, materials and sub-
items needed to make each item.

Outputs

Once the MRP system processes all of the input, you can produce two primary
forms of output. The first output consists of the Recommended Production
Shedule. This describes the minimum beginning and finishing dates of each
step in the manufacturing process. It also includes the bill of materials required
for each manufacturing step. The second major output is the Recommended
Purchasing Schedule. This describes the dates on which the factory should
receive the inputs to the manufacturing process and the dates that the purchase
orders should be made.

Issues with MRP Systems

A key issue with MRP systems lies in the integrity of the data fed into the
MRP system. If there are any errors in the inventory information then the
information produced by the MRP system will also contain errors. This is an
example of the GIGO principle, or "Garbage In Garbage Out" principle. In
addition, MRP systems lack flexibility when products take different amounts
of time to be manufactured. MRP also does not take into account capacity, and
so can produce solutions that are practically impossible to implement.

12.What is kaizen?
Ans:
Kaizen
Kaizen is an approach to creating continuous improvement based on the idea
that small, ongoing positive changes can reap major improvements. Typically, it
is based on cooperation and commitment and stands in contrast to approaches
that use radical changes or top-down edicts to achieve transformation. Kaizen is
core to lean manufacturing, or The Toyota Way. It was developed in the
manufacturing sector to lower defects, eliminate waste, boost productivity,
encourage worker purpose and accountability, and promote innovation.

As a broad concept that carries myriad interpretations, it has been adopted in

many other industries, including healthcare. It can be applied to any area of
business, and even to personal life. Kaizen can use a number of approaches and
tools, such as value stream mapping, which documents, analyzes and improves
information or material flows required to produce a product or service, and
Total Quality Management (TQM), a management framework that enlists
workers at all levels to focus on quality improvements. Regardless of
methodology, in an organizational setting, the successful use of Kaizen rests on
gaining support for the approach across the organization, and from the CEO
down.

13.Definition of Acceptance Sampling.

Ans: One method of controlling the quality of a product is 100% inspection
which requires huge expenditure in terms of time, money and labour. Moreover
due to boredom and fatigue involved in repetitive inspection process, there
exists a possibility to overlook and some defective products may pass the
inspection point.
Also when the quality of a product is tested by destructive testing (e.g., life of a
candle or testing of electrical fuses) then 100% inspection shall destroy all the
products.

The alternative is statistical sampling inspection methods. Here from the whole
lot of products/items to be inspected, some items are selected for inspection.
If that sample of items conforms to be desired quality requirements then the
whole lot is accepted, if it does not, the whole lot is rejected. Thus the sample
items are considered to be the representative of the whole lot. This method of
acceptance or rejection of a sample is called Acceptance Sampling.
In general acceptance sampling method proves to be economical and is used
under the assumption when the quality characteristics of the item are under
control and relatively homogeneous.
 15 Marks:
1. Methods,study and its objectives. How does it differ from work
measurement?
Ans:
2. Steps involved in carrying out a method study,
Ans:
3. Discuss the concept of acceptance sampling with a help of OC curve.
Ans:
4. What is economic order quantity? Discuss its impact on inventory control.
Ans:
Economic order quantity
Economic order quantity (EOQ) is the ideal order quantity a company should
purchase for its inventory given a set cost of production, a certain demand rate,
and other variables. This is done to minimize inventory holding costs and order-
related costs.
The equation for EOQ also takes into account inventory holding costs such as
storage, ordering costs and shortage costs. This production-scheduling model
was developed in 1913 by Ford W. Harris and has been refined over time. The
formula assumes that demand, ordering, and holding costs all remain constant.
 Impact on inventory control.
Match the inventory control system to the type of product
Inventory control policies should be prioritized around the nature of the
inventory moving through the supply chain. Products with a short shelf life,
such as perishables, need to turnover at a much higher rate than manufactured
goods or textiles. In such cases a First-In First-Out (FIFO) policy is adopted to
ensure that goods move down the supply chain in accordance with their expiry
date.
Of course, without the ability to track, trace and account for inventory in real-
time by using an online inventory control system, errors in order quantities due
to inaccurate data driven purchases will not be able to be rectified by a FIFO
system alone.
Manufactured goods or goods that consist of sub-assemblies and multiple
components require more complex inventory management systems. Here it is
vital to label, itemize and store goods accurately and efficiently. An inventory
management software solution is often the only way businesses dealing with
more complex inventory management challenges can cope. This way every
component used in the production of a product can accurately be traced, tracked
and accounted for in real time.
Lead-times
Lead-time is the amount of time it takes for a product to move from order
placement to manufacturing to final delivery to your warehouse or facility.
Different suppliers have different lead-times, and it pays to research and check
with various suppliers what their lead-times are before settling with the right
one for your business.
Generally, the shorter the lead-time the better it is for your business, however
sometimes it pays to endure a slightly longer lead-time from a supplier if the
quality is notably improved. Knowing the lead-times of your suppliers makes
the job of your purchasing managers that much easier.
This helps to ensure that goods are re-ordered in time to meet fluctuations in
customer demand. A good inventory management software system can be
programmed to alert managers to low or high inventory levels and prompt
timely re-ordering based off supplier lead-times.
Inventory levels – they need to be accurate
Fluctuations in consumer demand means that inventory levels need to be
constantly fluctuating too. The key is to have your inventory levels fluctuating
in synergy with demand. This comes down to accurate demand forecasts driven
by up-to-date, accurate data, timely re-ordering and a detailed, precise and exact
overview of all inventory – on order, in storage and en route to customer.
When inventory levels are poorly managed one of two costly situations will
manifest. The first occurs if not enough inventory is on hand to meet demand.
Stock-outs are every inventory manager’s worst nightmare because when there
is not enough inventory to meet demand, customers walk away empty handed.
Lost sales equals lost revenues, but also lost customer loyalty.
If inventory levels are too high, costs resulting from storage, labor and losses
suffered from damaged, stolen or obsolete goods skyrocket. Not only does this
place a burden on overall efficiency, but also more importantly, available cash
flow gets pooled into maintaining these new costly demands. This in turn means
less working capital is available to capitalize on new opportunities should they
arise, giving the advantage over to your competitors.
Inventory control software – or a lack thereof
Many small businesses are hesitant to invest in a sophisticated software package
to effectively manage their inventory control demands. What they fail to
account for however is their business’s capacity to scale as it grows. Whereas
top of the line inventory management software used to require a sizeable capital
investment up front, today’s cloud-based inventory management software
service providers are affordable for businesses of all shapes and sizes.
This is because the paradigm has shifted to offering on-site inventory software
that requires a large capital investment, to actually looking at inventory software
as a service to be provided. It is now possible for small business owners to
instantly integrate their business operations with a sophisticated, constantly
evolving inventory management software solution, which is able to manage
their inventory with pinpoint accuracy and full functionality.
5. Write a short note on:
a. ABC analysis.
Ans: If you have ever heard of the 80/20 rule, there is a good chance that the
person talking about it was referring to a form of ABC Analysis. ABC Analysis
is a comprehensive way of segmenting your customers or products to make sure
that you get the most out of your time and your resources when you’re servicing
them by breaking the items down into three easily distinguishable categories.

Save

ABC ANALYSIS DEFINED

ABC analysis is a method of analysis that divides the subject up into three
categories: A, B and C.
Category A represents the most valuable products or customers that you have.
These are the products that contribute heavily to your overall profit without
eating up too much of your resources. This category will be the smallest
category reserved exclusively for your biggest money makers.
For example, a software company might engineer different pieces of software,
but one is a niche software that can be sold at a significantly higher price than
the others. That’s why it accounts for about 60% of the overall revenue,
although the company sells far less of these products compared to other
software categories. Hence, this specific software is a category A product.
Category B represents your middle of the road customers or products. Many
wrongly approach this group as those who contribute to the bottom line but
aren’t significant enough to receive a lot of attention.
Yet, category B is all about potential. The members of this category can, with
some encouragement, be developed into category A items.
Category C is all about the hundreds of tiny transactions that are essential for
profit but don’t individually contribute much value to the company. This is the
category where most of your products or customers will live. It is also the
category where you must try to automate sales as much as possible to drive
down overhead costs.

THE PARETO PRINCIPLE

ABC analysis is based on what is called the Pareto Principle, an economic
principle created by the economist Vilfredo Pareto. Pareto gained notoriety for
saying that most economic productivity comes from only a small part of the
economy. Essentially, it shows that there is an unequal relationship between
your input and your output.
For example, a business might get 80% of its results from only 20% of its staff.
This demonstrates that 20% of the staff are more productive than the other 80%
of the team.
Another common example of the Pareto Principle suggests that you get 80% of
your sales from only 20% of your customers. In this case, these 20% would be
your category A customers, hence, those who make the biggest contribution to
your revenue. Basically, only 20% of your customers are valuable enough that
losing one would significantly hurt the business.
You can bring the Pareto Principle even further into ABC analysis when you
consider lifetime value. The relationship between your input and output plays a
major contribution in a customers’ lifetime value. It also forms the foundation
of ABC analysis by providing guidelines for breaking down customers into
different groups (A, B and C).

WHY USE ABC ANALYSIS?

The main use of ABC analysis is to improve your ability to deal with large and
complex data sets by breaking them down into three segments. These segments
define the priority of the data within whatever area you are using them in.
Once the data is broken down into segments, it is easier to focus on the data and
use it in a meaningful way. Breaking down the data into these segments makes
specific issues in the data more obvious. It also helps in prioritizing the different
segments.
For example, ABC analysis can be used to segment your customers and break
down customer-specific data.
First, you would divide the customers into each of the three categories based on
the sales volume the customer provides. Then, you would consider how that
volume relates to your margin contribution.
If you segment the customers successfully, the customers with the most value
will go into the high priority category A, while less important customers would
be placed in the bottom category C. Customers that are somewhere in between
will stay in category B.
The segmentation allows you to pinpoint your most valuable customers. It then
allows you to examine them separately so that you can form a plan of action.
When you can look at things in three different categories, it is easier to allocate
your resources in a more strategic way than it is if you’re flitting back and forth
between charts or just trying to make sense of heaps of raw data. The benefit of
taking this extra step is that it makes it easier to analyze the data strategically
which in turn makes it easier to maximize your profits.

EXAMPLE 1: HOW TO USE ABC ANALYSIS IN CUSTOMER

SEGMENTATION
ABC Analysis is performed within customer segmentation as a way to pinpoint
your most valuable customers. Here’s how to use ABC analysis when creating
customer segments based on value:

Performing the ABC Analysis

To perform the analysis, you’ll need to start by looking at four primary metrics
for each of your customers: sales revenue, revenue potential, contribution
margin and support costs.
Use these four categories to create four different charts. Rank your customers
according to each category and place them on the chart.
Then, compare the charts, specifically the sales revenue and contribution margin
charts. With this comparison, you can begin to break down your customers into
the three groups: A, B or C.
Your most valuable customers will live in A. These customers will bring in a lot
of revenue and make up a significant portion of the contribution margin. Ideally,
they’ll be close to the limit in terms of revenue potential.
The second tier customers will live in B. These customers will be loyal
customers and they will spend a good amount of money with you on a regular
basis. However, these customers will not be spending as much as they could be.
Category C is made up of the rest of your customers. Category C includes
people who turn up every once in a while and make a purchase. It might also
include those consistent customers who make a lot of small purchases. These
customers will spend money but won’t contribute very much to your overall
sales and profit. These customers also tend not to have much potential.
By looking at your customers in terms of profit margin and potential, you’re
creating a multi-dimensional view of your customers. Sales figures alone can be
misleading. Seeing a customer who makes a weekly purchase for a small
amount might trick you into thinking they are a valuable customer when they
really are not.
This perspective is particularly useful for dealing with the customers who lie in
the no man’s land that is category B. These are the customers that you know are
valuable. But until you analyze their potential, you’re not sure how valuable
they really are. Using ABC analysis gives you a better idea of not only what
they spend but how they spend it. Better yet, it tells you if the customer could be
spending more.
Rather than looking at sales figures, you’re looking at data that is actionable.
Using this data enables you to make real decisions that will increase your
revenue.

b. Time study
Ans: Time study may be defined as “the art of observing and recording the
time required to do each detailed element of an industrial operation”.
The term industrial operation includes manual, mental and machining
operations, where:
(i) Manual time is divided into three types of operations, i.e. handling of tools,
machines and materials.
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(ii) Mental time includes time taken by the worker for thinking over some
operations.
(iii) Machining time includes time taken by the machines in doing its share of
work.
Thus time study standardizes the time taken by average worker to perform these
operations.
It can also be defined in the following words “work measurement” is the
application of techniques designed to establish the time for a qualified worker to
carry out a specified job at a definite level of performance.
Use of Time Study:
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(i) It is useful in determining the standard time for various operations, which
helps in fixing wages and incentives.
(ii) It is useful to estimate the cost of a product accurately.
(iii) It helps in production control.
(iv) It helps in predicting accurately as to when the work will be completed and
hence customers can be promised to take delivery on a fixed date.
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(v) Using the time study techniques, it can be found that how much machines an
operator can run.
Procedure for Time Study:
For conducting time study, average workers and average machines are selected.
This study is conducted by the Time Study expert, who should be familiar with
all information’s related to the job and the conditions in which it is being done.
The location of the expert should be such that he can watch all the operations
and the movement of the workers without disturbing them from suitable
distance.
He performs time study in the following stages:
(a) Analysis of Work:
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The complete job and its operations are split up into various elements. These
elements are finalised after conducting motion study. In the end, time required
for the job preparation, cleaning of machine and oiling etc. should be included.
Thus time study includes all the tasks performed by the worker and not only the
effective work.
(b) Standardisation of Methods:
Before conducting time-study, all the constituents of the job such as materials,
equipment, tools, working conditions and methods are standardised. The
method should be easy, safe and quickest in the given conditions, so that it can
be accepted by workers.
(c) Making Time Study:
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The study is done on a printed time study record sheet as shown below which is
fixed on a board known as Time Study Board. On one corner generally right
hand top corner a stop watch is placed. This stop watch should have a decimal
scale dial so that it can read up to 0.001 minute.
Different time readings of one element are recorded in the corresponding
column of the record sheet. Several sets of readings are taken to arrive at an
accurate result. After noting all these readings, average time is calculated,
neglecting abnormal values, if any.
This average time is multiplied by a levelling factor also called ‘Rating Factor’,
which is generally assumed as 90-120% to get the time required by a normal
worker. The multiple of average time and rating factor is known as “Normal
Time”.
Some allowances such as personal allowance (20%), fatigue allowance (5%),
preparation allowance (5%) are added in normal time to obtain the standard
time. The standard time is the basis for the calculation of wages and incentives.
Thus, Standard time = Average Time × Rating factor + Other allowances.
Standard Time:
It is the time, which is taken by a normal worker for a specific task or job,
working under moderate conditions and includes other allowances such as
fatigue, setting of tool and job, repairing of tool, checking of job etc.

c. Six Sigma
Ans: Six Sigma is a business management strategy which aims at improving the
quality of processes by minimizing and eventually removing the errors and
variations. The concept of Six Sigma was introduced by Motorola in 1986, but
was popularized by Jack Welch who incorporated the strategy in his business
processes at General Electric. The concept of Six Sigma came into existence
when one of Motorola’s senior executives complained of Motorola’s bad
quality. Bill Smith eventually formulated the methodology in 1986.
Quality plays an important role in the success and failure of an organization.
Neglecting an important aspect like quality, will not let you survive in the long
run. Six Sigma ensures superior quality of products by removing the defects
in the processes and systems. Six sigma is a process which helps in improving
the overall processes and systems by identifying and eventually removing the
hurdles which might stop the organization to reach the levels of perfection.
According to sigma, any sort of challenge which comes across in an
organization’s processes is considered to be a defect and needs to be eliminated.
Organizations practicing Six Sigma create special levels for employees within
the organization. Such levels are called as: “Green belts”, “Black belts” and so
on. Individuals certified with any of these belts are often experts in six sigma
process. According to Six Sigma any process which does not lead to
customer satisfaction is referred to as a defect and has to be eliminated
from the system to ensure superior quality of products and services. Every
organization strives hard to maintain excellent quality of its brand and the
process of six sigma ensures the same by removing various defects and errors
which come in the way of customer satisfaction.
The process of Six Sigma originated in manufacturing processes but now it
finds its use in other businesses as well. Proper budgets and resources need to
be allocated for the implementation of Six Sigma in organizations.
Following are the two Six Sigma methods:

 DMAIC
 DMADV
DMAIC focuses on improving existing business practices. DMADV, on the
other hand focuses on creating new strategies and policies.
DMAIC has Five Phases

D - Define the Problem. In the first phase, various problems which need to be
addressed to are clearly defined. Feedbacks are taken from customers as to what
they feel about a particular product or service. Feedbacks are carefully
monitored to understand problem areas and their root causes.
M - Measure and find out the key points of the current process. Once the
problem is identified, employees collect relevant data which would give an
insight into current processes.
A - Analyze the data. The information collected in the second stage is
thoroughly verified. The root cause of the defects are carefully studied and
investigated as to find out how they are affecting the entire process.
I - Improve the current processes based on the research and analysis done in
the previous stage. Efforts are made to create new projects which would ensure
superior quality.
C - Control the processes so that they do not lead to defects.
DMADV Method

D - Design strategies and processes which ensure hundred percent customer

satisfaction.
M - Measure and identify parameters that are important for quality.
A - Analyze and develop high level alternatives to ensure superior quality.
D - Design details and processes.
V - Verify various processes and finally implement the same.

d. JIT.
Ans: Just-In-Time (JIT) Manufacturing is a philosophy rather than a technique.
By eliminating all waste and seeking continuous improvement, it aims at
creating manufacturing system that is response to the market needs.
The phase just in time is used to because this system operates with low WIP
(Work-In-Process) inventory and often with very low finished goods inventory.
Products are assembled just before they are sold, subassemblies are made just
before they are assembled and components are made and fabricated just before
 subassemblies are made. This leads to lower WIP and reduced lead times. To
achieve this organizations have to be excellent in other areas e.g. quality.
According to Voss, JIT is viewed as a “Production methodology which aims to
improve overall productivity through elimination of waste and which leads to
improved quality”.

Jit in Production and Operation Management

JIT provides an efficient production in an organization and delivery of only the
necessary parts in the right quantity, at the right time and place while using the
minimum facilities”.
Seven Wastes
Shiego Shingo, a Japanese JIT authority and engineer at the Toyota Motor
Company identifies seven wastes as being the targets of continuous
improvement in production process. By attending to these wastes, the
improvement is achieved.
1. Waste of over production eliminate by reducing set-up times, synchronizing
quantities and timing between processes, layout problems. Make only what
is needed now.
2. Waste of waiting eliminate bottlenecks and balance uneven loads by flexible
work force and equipment.
3. Waste of transportation establishes layouts and locations to make handling
and transport unnecessary if possible. Minimize transportation and handling
if not possible to eliminate.
4. Waste of processing itself question regarding the reasons for existence of the
product and then why each process is necessary.
5. Waste of stocks reducing all other wastes reduces stocks.
Wastes in operations

6. Waste of motion study for economy and consistency. Economy improves

productivity and consistency improves quality. First improve the motions,
 then mechanize or automate otherwise. There is danger of automating the
waste.
7. Waste of making defective products develop the production process to
prevent defects from being produced, so as to eliminate inspection. At each
process, do not accept defects and makes no defects. Make the process fail-
safe. A quantify process always yield quality product.
Benefits of JIT
The most significant benefit is to improve the responsiveness of the firm to the
changes in the market place thus providing an advantage in competition.
Following are the benefits of JIT:
1. Product cost—is greatly reduced due to reduction of manufacturing cycle
time, reduction of waste and inventories and elimination of non-value added
operation.
2. Quality —is improved because of continuous quality improvement
programs.
3. Design—Due to fast response to engineering change, alternative designs can
be quickly brought on the shop floor.
4. Productivity improvement.
5. Higher production system flexibility.
6. Administrative and ease and simplicity.

6. What do you mean by PERT analysis? What are the three-time estimate
related to PERT? What is the difference between PERT & CPM?
Ans:
PERT analysis
Program Evaluation and Review Technique (PERT) is a method used to
examine the tasked that are in a schedule and determine a variation of
the Critical Path Method (CPM). It analyzes the time required to complete each
task and its associated dependencies to determine the minimum time to
complete a project. It estimates the shortest possible time each activity will take,
the most likely length of time, and the longest time that might be taken if the
activity takes longer than expected. The method was developed by the US
Navy in 1957 on the Polaris nuclear submarine project.
To conduct PERT Analysis, three time estimates are obtained (optimistic,
pessimistic, and most likely) for every activity along the Critical Path. Then use
those estimates in the formula below to calculate how much time for each
project stage:
Formula: (P+4M+O)/6
The three-time estimate related to PERT
 Optimistic Time (O): the minimum possible time required to accomplish a
task, assuming everything proceeds better than is normally expected.
 Pessimistic Time (P): the maximum possible time required to accomplish a
task, assuming everything goes wrong (excluding major catastrophes).
 Most likely Time (M): the best estimate of the time required to accomplish a
task, assuming everything proceeds as normal.

Difference between PERT & CPM

BASIS FOR
PERT CPM
COMPARISON

Meaning PERT is a project management CPM is a statistical technique

technique, used to manage project management that mana
uncertain activities of a project. defined activities of a project.

What is it? A technique of planning and A method to control cost and t

control of time.

Orientation Event-oriented Activity-oriented

Evolution Evolved as Research & Evolved as Construction proje

Development project

Model Probabilistic Model Deterministic Model

Focuses on Time Time-cost trade-off

Estimates Three time estimates One time estimate

Appropriate for High precision time estimate Reasonable time estimate

Management of Unpredictable Activities Predictable activities

Nature of jobs Non-repetitive nature Repetitive nature

Critical and Non- No differentiation Differentiated

critical activities

Suitable for Research and Development Project Non-research projects like civ
construction, ship building etc

Crashing concept Not Applicable Applicable

7. Discuss the various types of maintenance practices with examples.
Distinguish between predictive, preventive and break down maintenance.
What do you mean by material handling? State the function and importance
in material handling in manufacturing plant.
Ans:
 various types of maintenance practices with examples.
 Proactive types of maintenance
Preventive maintenance
Preventive maintenance is the most popular type of proactive maintenance. To
start conducting preventive maintenance tasks (PMs), an organization does not
need to purchase new technology if it already has a CMMS. This is not the case
with predictive maintenance which requires condition monitoring sensors and
new software integrations. However, with preventive maintenance, the
organization runs the risk of over-scheduling maintenance tasks because tasks
are scheduled based on time rather than actual conditions. That said, preventive
maintenance achieves 12% to 18% cost savings over reactive maintenance.
Predictive maintenance
Predictive maintenance (PdM) is what savvy maintenance teams aspire to have
or are already implementing. The major barrier to PdM is the time it takes to
implement rather than the cost of the technology itself. For instance, a vibration
sensor that can identify imbalance, misalignment, and resonance issues only
costs around $200. But the time it takes to install, integrate with other
maintenance software, and adopt a culture around is not time that all
organizations are willing to allocate. For those that do allocate the time, PdM
provides an 8% to 12% cost savings over preventive maintenance.

Condition-based maintenance
Condition-based maintenance (CBM) is at the core of predictive maintenance
but, on its own, does not rely on technology to determine the condition of an
asset like PdM does. For instance, a manager may instruct an operator to
monitor the condition of an asset and submit a work request when a specific
condition is met. This approach may, or may not be, as reliable as predictive
maintenance. An organization that has highly-trained operators may spot
hazardous conditions better than an organization using PdM technology that
doesn’t know what to look for.

Scheduled maintenance
Scheduled maintenance includes work that is scheduled on a calendar for
completion. The most common type of scheduled maintenance is calendar-
based preventive maintenance tasks. These are scheduled well in advance of
completion. For instance, an asset with a monthly PM has twelve instances of
scheduled maintenance in a given year. However, just because maintenance is
scheduled does not mean it’s planned. Planned maintenance implies that a
maintenance planner or other type of maintenance worker has fully planned for
parts, materials, skills, and other resources to be available during the scheduled
time window.

Planned maintenance
Planned maintenance is work that’s prepared for in advance of it taking place.
According to an UpKeep survey, it’s also the most popular key performance
indicator (KPI) to track. A high planned maintenance percentage indicates that a
maintenance team will have resources available to complete work for the
time/day the work is scheduled for. Having a high planned maintenance
percentage also helps boost other maintenance KPIs like schedule compliance.
More planned maintenance means more successful completion of scheduled
maintenance.

Routine maintenance
Routine maintenance is a form of time-based maintenance and preventive
maintenance, though some organizations differentiate between routine
maintenance and preventive maintenance. They use the latter for smaller tasks
(i.e. cleaning) performed at higher frequencies (hourly, daily) and the former for
larger tasks (i.e. inspections) performed at lower frequencies (weekly, monthly,
annually). Additionally, routine maintenance is performed by operators,
janitors, and other staff member while preventive maintenance is performed by
technicians. Non-routine maintenance includes maintenance that is performed
reactively or only when needed based on an asset’s conditions.
Reactive types of maintenance

Emergency maintenance
Emergency maintenance occurs when an asset requires immediate attention in
order to keep a facility operational or safe. This is the most reactive and
intrusive type of maintenance as it pulls technicians away from other jobs and
lowers schedule compliance. In extreme circumstances, emergency maintenance
can set an organization back days depending on the scope of the repair,
available parts, and the asset’s level of importance. To reduce the amount of
emergency maintenance that is both unplanned and unscheduled, organizations
adopt various forms of proactive maintenance.
Corrective maintenance
Corrective maintenance is inherently part of emergency maintenance because,
when there is an emergency, something needs corrected or fixed. In this way,
corrective maintenance is mostly reactive. However, it can also be proactive. If
an asset with a condition monitoring sensor detects an issue, a work order is
created and a technician is sent to correct it. Similarly, preventive maintenance
is considered corrective maintenance if there is an issue to fix. This is rare
though as PMs are often conducted when an asset is in good working order.
Other types of maintenance
Deferred maintenance
Deferred maintenance includes repairs and inspections that are put into a
backlog due to limited budget and resources. While deferring maintenance
saves money up front, the costs of not performing important maintenance
compounds at 7% annually. Rising costs come from fines resulting from missed
inspections and unscheduled downtime that brings production to a standstill. By
far, deferred maintenance and emergency maintenance are the least desired
types of maintenance.

Total productive maintenance

Total productive maintenance (TPM) is the broadest type of maintenance that
targets more than the assets that need maintained. It also aims to improve
employee satisfaction and overall morale in the workplace, specifically in
manufacturing plants. TPM does this by increasing overall equipment
effectiveness (OEE) and the amount of planned maintenance. More planned
work means more workers have the resources they need to do their job, which
means higher levels of satisfaction. TPM also leverages machine operators to
participate in maintenance and take ownership of their equipment.

Distinguish between predictive, preventive and break down maintenance

Ans:
Preventative Maintenance
Example: Scheduled maintenance. Replacing filters on an HVAC every 6
months.
Preventative maintenance is work done on a repeating schedule to prevent
failures or breakdowns. This could include monthly inspections, parts
replacements, or detection reporting. The goal of preventative maintenance is to
detect and avoid issues before they become an issue.
Breakdown or Reactive Maintenance
Example: Wait until your HVAC stops working and call a technician to come
fix it.
Breakdown maintenance is reacting defensively to breakdowns and unexpected
occurrences.
Predictive Maintenance
Example: Having sensors installed in the HVAC machine to tell us operating
efficiency and expected efficiency to tell us when we need to replace filters

Predictive maintenance is understanding a piece of equipment, why it may be

failing, and addressing issues before they become a problem. Predictive
maintenance is becoming proactive and measuring when a piece of equipment
could fail and the different modes of failure.
The difference really is in being reactive or proactive. Breakdown maintenance
(reactive) occurs only when a machine stops functioning while
Predictive (proactive) seeks to ensure the machine is always working through
regular check ups.
Most of the time reactive maintenance takes longer for a technician to tend to as
the technician has to trouble shoot what's going on. the parts needed can be
extremely expensive (sometimes the entire machine needs to be replaced).
We encourage predictive because you can gauge the health of your equipment
and always be informed about its well being.
Materials Handling
Moving goods or materials within short distances in a storage area is known as
material handling (called by some materials handling).
The activity includes loading, unloading, palletizing (storing and transporting
goods stacked on pallets, shipped as unit loads), as well as, de-palletizing and a
number of similar operations.
Fork-lift trucks are the equipment used most frequently in material handling.

The function and importance in material handling in manufacturing plant.

 Importance
1. To increase equipment and space utilization.

2. To reduce costs

3. To increase capacity

4. To improve working conditions.

5. To improve customer service.

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In order to realise the above objectives, certain principles of materials handling

need to be observed by the management.
  Functions of Materials Handling:
The basic function of material handling is to choose most appropriate materials
handling equipment which is safe and can fulfill material handling requirements
at the minimum possible overall cost and to choose production machinery and
assist in plant layout so as to eliminate, as far as possible, the need of materials
handling. In general, the functions of good materials handling system include:

(a) Using the principles of centralization, unit load or cartelization, aim at

moving optimum number of pieces in one unit.

(b) Safe, standard, efficient, effective, appropriate, flexible and proper sized
materials handling equipments should be selected.

(c) To employ mechanical aids in place of manual labour in order to speed up

the materials movement.

(d) To minimize the movement involved in a production operation.

(e) Changes in sequence of production operations may be suggested in order to

minimize backtracking and duplicate handling.

(f) Handling equipments’ arrangement should minimize distance moved by

products and at the same time handling equipments should not interfere with the
production line.

(g) To minimize the distances moved, by adopting shortest routes.

(h) To design containers, packages, drums etc., to economise handling and to

reduce damage to the materials in transit.

(i) To utilize gravity for assisting materials movement wherever possible.

(j) Materials handling equipments should periodically be resorted to check ups,

repairs and maintenance.

8. Briefly discuss about the motion study & time study.

Ans:
 Time Study
Time study is defined as a work measurement technique for recording the times
and rates of working for the elements of a specified job carried out under
specified conditions and for analysing the data to determine the time necessary
for carrying out the job at a defined level of performance.
  Motion Study

Motion study implies dividing the work into fundamental elements or basic
operations of a job or a process with the object of eliminating unnecessary or
defective elements in a job. After investigating all movements in a job, process
or operation it finds out the most scientific and systematic method of
performing the operation or completing the job.

Objectives of time and motion study are:

1. They eliminate unnecessary motions, fatigue, and seek to improve human
efforts in doing a job.

2. They bring about improvement in method, procedure, techniques and

processes relating to a job.

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3. They make effective utilisation of materials, machines, human resources.

4. They also improve layout and design of plant and equipment and working
environment.

Benefits of Time and Motion Study:

The following benefits are derived by the Management from time and
motion study:
1. Optimum utilisation of materials, plant, labour and financial resources is
possible.

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2. Labour requirements can be properly assessed.

3. Determination of fair wage rates and effective wage incentive schemes can be
determined.

4. Setting of labour cost standards and control of the labour cost are possible.

5. Labour budgets can be prepared.

6. Job can be standardised.

7. Improvement in work methods by making comparison between time taken to
complete a job and time taken to complete the same type of job under different
methods.

8. Effective cost control and proper planning can be made with the help of time
and motion study.

Treatment of Some Items of Motion Study:

(i) Overtime:
Overtime is the work put in by a worker beyond normal working hours. The
wage rate for overtime is generally 1½ times of usual rate. It is double or triple
if the work is performed on any holiday or Sunday or on weekly holiday. In
costing, the cost of overtime premium must be separated from regular earnings.

Additional payment for overtime may be charged to the:

(i) Job directly if overtime is worked at the customer’s request with the object of
completing the job within a specified period;

(ii) To the department which has been responsible for causing delay;

(iii) To the Costing Profit & Loss Account if overtime is necessary to make up
the time lost due to breakdown of machinery, power failure etc.;

(iv) To the prime cost if the work is on a peak load due to seasonal rush in the
factory.

Of late, it has been a regular feature to grant overtime work to the workers for
the reasons beyond the control of the management, so it will be logical and
rational to charge the extra payment for overtime direct to production.

(ii) Holiday and Vacation Pay:

Workers enjoy some holidays like Independence Day, Republic Day, Mahatma
Gandhiji’s birthday and other Festival holidays with full pay. Production on
these days remains suspended. Though payment for holidays is unproductive,
the expense is treated as direct labour cost and charged to production.

(iii) Leave with Pay:

According to the Factories Act. workers are entitled to annual leave with pay for
some days as specified. This leave is known as earned leave. Moreover, they are
entitled to casual leave, medical leave, special leave etc. with full pay.
Practically speaking, the wages paid to workers for the period in which they do
not contribute to production may be treated as unproductive wages.

It is not generally treated as a direct charge to a product or to a job but is treated

as factory overhead and recovered through departmental overhead rates.
Alternatively, an inflated rate of direct wages cost can be applied to absorb both
normal wages and an appropriate portion of leave with pay.

(iv) Attendance Bonus:

Sometimes workers are paid extra wages for their regular and punctual
attendance. This extra payment of wage is known as attendance bonus. It is
generally treated as direct wages and charged to a product or job. But it can also
be treated as factory overhead and may be recovered through departmental
overhead rates.

(v) Apprentices’ Wages:

In many factories it is the practice that new workers have to work as apprentice
for some time before they are absorbed in regular work-force. As they are
novice they are less efficient than the skilled and regular workers.

During training period they are likely to cause more scrap and wastes.
Moreover, they take more time than normal to complete a job assigned to them.
For the reasons stated earlier they are paid a lower rate of wage per hour.

The wages paid to them are treated as production overhead and should be
charged to the annual output by including it in the factory overheads. But, if
learners’ wages can be easily identified with a job, they should be treated as
direct wages.

(vi) Shift Premium:

When there is an unusual pressure of work, workers may be asked to work in
the evening or night shifts. Generally, higher rate of wages or additional
payment is made for night shift work.

This additional payment can be treated in two ways:

1. Where workers are asked to work in night shift at the request of the
customers to complete their job within a specified time, extra payments are
charged directly to the job concerned.
2. When the workers are paid extra for working in night shifts in order to
increase the output of a whole or to make up production backlog, the premium
element should be separated from direct wages and is to be treated as a
production overhead.

(vii) Fringe Benefits:

An employee’s pay roll generally consists of basic wages, dearness allowance,
house rent allowance, city compensatory allowance etc. Besides these, a variety
of benefits are provided to the workers. These benefits are known as fringe
benefits. Fringe benefits are not directly related to the direct efforts of the
employee.

Fringe benefits may comprise:

(i) Holiday pay;

(ii) Leave pay;

(iii) Sick pay;

(iv) Employer’s contribution to provident fund;

(iv) State insurance and medical benefits;

(v) Gratuity;

(vi) Good attendance bonus;

(vii) Cheap canteen supplies etc.

Treatment in Cost Accounts:

The expenses in way of fringe benefits cannot be treated as direct labour cost
and, as such, cannot be allocated to cost units as direct cost. They may be
treated as items of departmental overhead and booked to standing order
numbers allotted to each type of such expenditure.

If the amounts are not uniform in each accounting period, an amount is

estimated in advance for the whole year and a proportionate charge is made for
each period.

In some companies, however, cost of fringe benefits related to direct labour are
charged as an additional direct labour cost. Horngren suggests that the latter
approach is conceptually preferable because these costs are a fundamental part
of acquiring labour services.

(viii) Idle Time:

Idle time is the difference between the time for which workers are paid and the
time for which the workers do work. So, idle time represents the time for which
the employer makes payment but from which the employer does not gain
anything in terms of production.

Virtually, during idle time, the workers remain idle and contribute nothing to
the production.

Idle time includes some unavoidable losses like time taken in travelling between
the factory gate and the department in which the worker concerned is engaged;
time lag between the completion of one job and the commencement of the next;
tea breaks, tiffin breaks; personal needs and the time when production is
stopped or interrupted for machine maintenance.

The wastage of time for the above reason or reasons cannot be avoided and the
employer has to bear the financial loss arising out of such reasons. Idle time that
results from unavoidable causes is treated as normal idle time. Abnormal idle
time is the result of causes which are avoidable.

The following are the examples of abnormal idle time:

(i) Time lost through the breakdown of machinery due to inefficiency or bad
maintenance or for power failure which is frequent in our country;

(ii) Time lost through non-availability of materials;

(iii) Time lost due to stoppage of work on account of strikes, fire etc.;

(iv) Bottlenecks in production;

(v) Time lost for waiting for instruction from the superior.

These above causes are also known as administrative and productive causes.
Idle time due to productive and administrative causes can be avoided if little
care is taken in respect of maintenance of machineries ; proper store control,
performance of purchase department and coordination between store and
purchase department.
All the above factors responsible for controllable and avoidable idle time can be
regulated in favour of increased production if every aspect is planned well
ahead.

(ix) Casual Workers:

A worker who is employed on a temporary basis is known as casual worker. A
casual worker is employed as a substitute of- a worker who is on leave or may
be employed to perform a specific job for a short period of time. When casual
worker is employed on production job, job card should be issued in his name
and work done by him should be certified by the authority i.e. by the foreman or
by the supervisor.

In the event casual workers are employed for miscellaneous indirect jobs, time
sheets should be issued and a proper check on them should be kept. At the time
of termination of service prior intimation to this effect should be sent to time
keeping and wage departments so that no over-payment is made.

(x) Out Workers:

Out workers Eire sent to sites or customers’ premises for performing work. A
close control over the work performed and payment made to these workers is
necessary. If the workers employed are few in number and for a short period of
time, the record for their attendance may be kept by the foreman in charge.

9. Write a short note on:

a. Difference between PERT & CPM (done above)
b. Six Sigma (done above)
c. Make or buy decision
Ans: Make-or-Buy decision is a choice between manufacturing in-house or
outsourcing a part in the product to ensure a performance of any manufacturing
industries. There are several factors involved in making such decision. Most
manufacturing industries use cost as a main factor to decide whether to make-or
buy a part in the product. However other factors also considered for taking
making make-or buy decision. Therefore how the manufacturing capacity
influencing make-or-buy decision for profitability and technology of the
industry as important issue. In order to study this survey method is employed to
determine how capacity plays the role in taking make-or-buy decision in
manufacturing industries. The results obtained and reported are useful ratios of
make parts to total number of parts (in percentage) and its relation with capacity
utilization for profitability and technology based classified batch manufacturing
industries. These results are also useful to know the performance of
manufacturing industries with available capacity and technology.

d. Time study. (done above)

10.“Production planning act is an integral part of corporate planning process”.

Explain.
Ans:
Production planning as an integral part of corporate planning
Planning and control are the two important components of the management
process. Planning involves the consideration of all input variables to achieve
defined output goals. Control involves the corrective actions taken when the
actual output varies from the desired one by bringing the actual output in line
with the planned output.

Production planning, in particular would therefore consist mainly of the

evaluation and determination of production-inputs such as labor (manpower),
machinery and equipment materials and utilities to achieve the desired goals.
The definition of the goals is also, of course, a part of the production planning
process;

We may break down the planning process into various stages as follows:

(1) Defining objectives and setting priorities to attain these.

(2) Studying the environment external the system being planned. Studying the
internal environment of the system being planned.
(3) Determining reliable targets (quantified as far as possible).
(4) Gearing the inputs to achieve these targets.

Importance of Time Horizon:

Plans have a time dimension and to the extent the time span is limited, the scope
of functioning plans for also remains limited with less interaction from other
functional plans. The longer the time span of the plan, the more integrative
organizations wide the plan has to be. The wider time horizon plants cover a
wider organizational perspective.

That is why very often the corporate planning process is synonymous with Long
Range planning. As the time horizon of the production plan widens, from a
short range plan (annual or five yearly), the flexibility available to change the
variables and allow modifications when found necessary also increase. The five
year range plan allows a company the flexibility of increasing the production
capacity by purchasing new equipment locating new plants, acquiring new
technology, or recruiting adequate technical manpower.

This is not applicable for a one year plan. Here, much of the flexibility in
procuring new plants and machinery or acquiring the technology and know how
is lost. Coming to the weekly or daily plans, hardly any flexibility is left except
to assign different jobs to the available machines and manpower. As the
flexibility decreases the strategic or tactical options also decrease and the nature
of planning itself assumes a different character. The planning problems for
different time horizons are therefore different and the solutions are also
different.

Dovetailing of Plans:

One important fact is that the short, medium and long range plans to dovetail
into one another. Shorter range plans are always made within the framework of
the longer range plans. Production planning as it is generally understood is
really the intermediate range and short range plan. The long range production
plan has lost its identity with the overall corporate planning process. That is
why production planning is said to follow from marketing plan. Or, as is usually
said, the production plan is the translation of the market demands into
production orders. The market demands have to be matched with the production
capacities.

Market demand — Match the two optimally – Production capacities

The keyword is ‘optimally’. Market demands are either known or are forecasted
but we do know them, and the production capacities are also known. But how
these two are matched will generate different cost structures and utility (e.g.
time) structures. Optimization o the cost or other utilities is the concern of
production planning.

The Market demands (actual and forecasted) will not usually be level and steady
over time. At different points of time the market will demand differently. It is,
not always possible for the production department to follow the market
fluctuations as and when they arise (or even if they are known in advance) and
very often it is not ‘optimal’ (economical cost wise) to do so. Therefore, the
production plan will many a time, look very different from the marketing or
sales plan, although the total production figures will be more or less in
agreement with the market requirements.
Bad on purely cost comparisons Plan III seems attractive. But if we place a high
value on the delay to the customer, Plan I would probably be the best plan. The
various alternative production plans are the intermediate range production
strategies available which could be used to suit the corporation’s needs in a
competitive environment.

11.What is JIT.(Done above)

12.Discuss VED analysis.
Ans: VED stands for vital, essential and desirable. This analysis relates to the
classification of maintenance spare parts and denotes the essentiality of stocking
spares.

The spares are split into three categories in order of importance. From the view-
points of functional utility, the effects of non-availability at the time of
requirement or the operation, process, production, plant or equipment and the
urgency of replacement in case of breakdown.

Some spares are so important that their non-availability renders the equipment
or a number of equipment in a process line completely inoperative, or even
causes extreme damage to plant, equipment or human life.

On the other hand some spares are non-functional, serving relatively

unimportant purposes and their replacement can be postponed or alternative
methods of repair found. All these factors will have direct effects on the stocks
of spares to be maintained.

Therefore, it is necessary to classify the spares in the following categories:

V:
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Vital items which render the equipment or the whole line operation in a process
totally and immediately inoperative or unsafe; and if these items go out of stock
or are not readily available, there is loss of production for the whole period.

E:
Essential items which reduce the equipment’s performance but do not render it
inoperative or unsafe; non-availability of these items may result in temporary
loss of production or dislocation of production work; replacement can be
delayed without affecting the equipment’s performance seriously; temporary
repairs are sometimes possible.

D:
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Desirable items which are mostly non-functional and do not affect the
performance of the equipment.

As the common saying goes “Vital Few — trivial many”, the number of vital
spares in a plant or a particular equipment will only be a few while most of the
spares will fall in ‘the desirable and essential’ category.

However, the decision regarding the stock of spares to be maintained will

depend not only on how critical the spares are from the functional point of view
(VED analysis) but also on the annual consumption (user) cost of spares (ABC
— analysis) and, therefore, for control of spare parts both VED and ABC
analyses are to be combined.