MB0044 : Productions & Operations Management

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MB0044_MBA_Sem2_Fall/August 2012

Master of Business Administration - MBA Semester 2

MB0044 – Productions & Operations Management- 4 Credits

Assignment Set- 1 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q.1 What do you understand by Vendor-Managed Inventory (VMI)?

Answer :  Vendor-managed inventory (VMI) is a family of business models in which the buyer of a product provides certain information to a supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location (usually a store). A third-party logistics provider can also be involved to make sure that the buyer has the required level of inventory by adjusting the demand and supply gaps.

As a symbiotic relationship, VMI makes it less likely that a business will unintentionally become out of stock of a good and reduces inventory in the supply chain. Furthermore, vendor (supplier) representatives in a store benefit the vendor by ensuring the product is properly displayed and store staff are familiar with the features of the product line, all the while helping to clean and organize their product lines for the store.

One of the keys to making VMI work is shared risk. In some cases, if the inventory does not sell, the vendor (supplier) will repurchase the product from the buyer (retailer). In other cases, the product may be in the possession of the retailer but is not owned by the retailer until the sale takes place, meaning that the retailer simply houses (and assists with the sale of) the product in exchange for a predetermined commission or profit (sometimes referred to as consignment stock). A special form of this commission business is scan-based trading whereas VMI is usually applied but not mandatory to be used.

This is one of the successful business models used by Wal-Mart and many other big box retailers. Oil companies often use technology to manage the gasoline inventories at the service stations that they supply (see Petrolsoft Corporation). Home Depot uses the technique with larger suppliers of manufactured goods (i.e. Moen, Delta, RIDGID, Paulin). VMI helps foster a closer understanding between the supplier and manufacturer by using Electronic Data Interchange formats, EDI software and statistical methodologies to forecast and maintain correct inventory in the supply chain.

Vendors benefit from more control of displays and more customer contact for their employees; retailers benefit from reduced risk, better store staff knowledge (which builds brand loyalty for both the vendor and the retailer), and reduced display maintenance outlays.

Consumers benefit from knowledgeable store staff who are in frequent and familiar contact with manufacturer (vendor) representatives when parts or service are required. Store staff have good knowledge of most product lines offered by the entire range of vendors. They can help the consumer choose from competing products for items most suited to them and offer service support being offered by the store.

Q.2 Explain briefly the four classification of scheduling strategies & its approaches.

Q.3 Define production management. What are the various functions involved in production management?

Q.4 Explain the various phases in project management life cycle.

Q.5 Explain the ingredients of a business process. Explain Physical Modelling.

Q.6 Define the term quality. Explain the concept of quality at source.

MB0044_MBA_Sem2_Fall/August 2012

Master of Business Administration - MBA Semester 2

MB0044 – Productions & Operations Management - 4 Credits

Assignment Set- 2 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q.1 What is value engineering? Explain the steps involved in Value analysis.

Answer :  Value engineering (VE) is a systematic method to improve the "value" of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements.[1]

In the United States, value engineering is specifically spelled out in Public Law 104-106, which states “Each executive agency shall establish and maintain cost-effective value engineering procedures and processes." [2]

Value engineering is sometimes taught within the project management or industrial engineering body of knowledge as a technique in which the value of a system’s outputs is optimized by crafting a mix of performance (function) and costs. In most cases this practice identifies and removes unnecessary expenditures, thereby increasing the value for the manufacturer and/or their customers.

VE follows a structured thought process that is based exclusively on "function", i.e. what something "does" not what it is. For example a screw driver that is being used to stir a can of paint has a "function" of mixing the contents of a paint can and not the original connotation of securing a screw into a screw-hole. In value engineering "functions" are always described in a two word abridgment consisting of an active verb and measurable noun (what is being done - the verb - and what it is being done to - the noun) and to do so in the most non-prescriptive way possible. In the screw driver and can of paint example, the most basic function would be "blend liquid" which is less prescriptive than "stir paint" which can be seen to limit the action (by stirring) and to limit the application (only considers paint.) This is the basis of what value engineering refers to as "function analysis".[3]

Value engineering uses rational logic (a unique "how" - "why" questioning technique) and the analysis of function to identify relationships that increase value. It is considered a quantitative method similar to the scientific method, which focuses on hypothesis-conclusion approaches to test relationships, and operations research, which uses model building to identify predictive relationships.

Value engineering is also referred to as "value management" or "value methodology" (VM), and "value analysis" (VA).[4] VE is above all a structured problem solving process based on function analysis—understanding something with such clarity that it can be described in two words, the active verb and measurable noun abridgement. For example, the function of a pencil is to "make marks". This then facilitates considering what else can make marks. From a spray can, lipstick, a diamond on glass to a stick in the sand, one can then clearly decide upon which alternative solution is most appropriate.

The Value Analysis process

Value Analysis is based on the application of a systematic work plan that may be divided in six steps, as shown in figure 3.

Figure 3

Steps involved in the application of Value Analysis

1: orientation/preparation

Identify what is to be analysed. This will typically be one of:

·         A manufactured item. This can be anything from a screw to an engine, although a more complex item is likely to result in a more complex and time-consuming analysis.

·         A process or service. Again, all levels can be analysed, from a hand assembly process to a complete customer service organisation.

2: information

Identify and prioritise the customers of the item from step 1. This may include external customers, such as 'auto suppliers' and internal customers, such as 'finance manager'.

Note that external customers are usually more important than internal customers, and that seniority does not necessarily equate with priority. A customer's preference for a product feature should be more important than the opinion of a senior designer.

3: analysis

In this phase the functions of the product are analysed by Functional Analysis, which is aimed at identifying functions given by a product or part of it. Functions have an importance (weight) and a cost. These costs are quantified and this leads to a list of functions ordered by their importance and value. This means that there is an analysis of how each function satisfies customer needs, and then, an analysis of what the cost of those functions is.

This phase of Value Analysis may be considered as the key one of the whole methodology as it represents the translation of needs to functions (see the specific technique).

4: innovation/creativity

For this phase it is necessary to use creative techniques that generate alternatives. Starting from the analysis of functions and costs, there is a search for means that allow elimination, change or improvement of components and functions.

It is important to look for different ways of satisfying the basic functions, even if it means rejecting the current approach and starting again with a clean drawing board. This requires the product or process to be 'mentally destroyed' and then rebuild a new one.

5: evaluation

It represents a confrontation of ideas, a collection of information about the feasibility and cost of those ideas, and measures the value of the best alternatives.

This analysis or evaluation uses the same techniques of value measurement that have been used in previous steps. At this point an examination is done about the grade of functional accomplishment and the economical analysis of those alternatives that offer the higher value. Some of the techniques are well-known such as Cash-flow analysis and break-even point.

The team involved in Value Analysis needs an objective analysis of the ideas generated through the innovation phase. The evaluation phase is carried out in two main steps:

·         A qualitative analysis of value regarding objectives in design, cost, implementation facilities, etc.

·         A quantitative analysis using numerical techniques of value measurement that leads to a few alternatives of high value that will be analysed in depth.

This process usually involves determining the cost and select those ideas that can be practically implemented. This may include work to develop and refine promising ideas into practical and optimum solutions.

6: implementation and monitoring

In this phase it is necessary to prepare a report that summarizes the work that has been done, including conclusions and specific proposals. It will be also necessary to describe actions plans for implementation, in which project management techniques would be useful.

Finally a plan should be included for monitoring of the actions. This should be based in the accomplishment of objectives.

The application of Value Analysis only needs to make use of Basic Techniques such as matrixes, pare to chart, pert and Gantt diagrams, etc., in most of the Value Analysis steps.

Table 2

Specific techniques to be applied in Value Analysis

Value analysis step		Specific technique
1	orientation/preparation	basic techniques
2	information
3	analysis	functional analysis, basic techniques
4	innovation/creativity	basic techniques
5	evaluation
6	implementation and monitoring

Nevertheless, there is one very specific technique worth to be mentioned, such as Functional Analysis, described in a specific section.

Q.2 Describe dimensions of quality. Which are the quality control tools?

Q.3 What are the objectives of layout? Explain the classification of layouts.

Q.4 List the benefits of forecasting. Discuss the role of forecasting in modern business context.

Q.5 Mention the significance of plant location decision. Explain the location decision sequence.

Q.6 What is meant by business process? Explain logical process modelling?

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