Contents

Sl. Chapter Name Page No.

No
1. Forecasting 2
2. Simulation 7
3. Queuing Theory 11
4. Replacement Theory 16
5. Maintenance Management 20
6. Line Balancing 26
7. Scheduling and Sequencing 28
8. Linear Programming 33
9. Assignment 35
10. Transportation 40
11. Project Management 43
12. Economic Batch Quantity 51
13. Indifference Point Analysis 53
14. Bottleneck Operations 54
15. Number of Machines 56
16. Capacity Planning 58
17. Time and Work Study 61
18. Plant Layout 63
19. Miscellaneous 67
20. Objectives 70
21. Theories 91
 Forecasting

Chapter 1
Forecasting

Forecasting

Forecasting Techniques

Qualitative Quantitative

Cannot be measured Can be measured

Chit chat Time Series Casual Simulation

relationship
1. Historical Analysis
2. Panel Consensus - Group
3. Grass root - lower level
4. Focused analysis - specic point
5. Delphi method

1. TIME-SERIES ANALYSIS:
It is an analysis where a forecast is made for an uncertain event by expressing it into a
relation with time using the past data.
Components/Characteristics/features of time series:-
In time series it is said that the data behaviour in relation to time is composed of:-
(a) Trend Variation. (T)
(b) Seasonal Variation (S)
(c) Cyclical Variation. (C)
(d) Irregular/erratic Variation. (I)
Models or assumption in time series:-
a) Multiplicative Model = Forecasted value[Y] = T*S*C*I
b) Additive Model = Forecasted value[Y]= T+S+C+I
Method of measuring Trend Variations:-
i) Method of least square or regression method or line of best fit method
ii) Moving Averages method.
iii) Semi-Averages method.

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 Forecasting

iv) Free hand graphical method.

v) Exponent smoothing method.
Method of least-squares:-
Here we plot the experience data of sales, profit etc in several years on a plane of graph by
dividing the data into two equal halves.
A line is drawn to pass in between the non-collinear points in such a manner that the
square of difference between value on the line and the actual value is minimum or least.
Such line is called as Line of Best fit or Regression line.
The line of Best fit i.e. drawn can be either a straight line or a quadratic/curved line.
Thus there are two situations:-
a) Straight line trend or linear trend
b) Quadratic Trend or Curvy Linear Trend
Situation 1:-Straight line Trend:
A Straight line Trend equation is written as :
Y = a + bx
Where Y = Forecasted value/Trend value.
y = given value/past value.
x = time in years.
X = (x – origin)/scale

Origin and scale:- These are used to reduce the data of time.
Case1:- Given number of years is an odd number.
X = 2010 2011 2012 2013 2014
Origin = 2012 [middle year]
Scale = 1 year.
Case2:-Given number of years is an even number.
X = 2010 2011 2012 2013
Origin = 2011.5
Scale = 0.5 year [determine from the origin]
X = –3 –1 0 1 3

a and b are constants and can be obtained by solving the following two equations :
i) Σy= na + bΣX
ii) ΣXy = aΣX + bΣX2

Operation Management |3
 Forecasting

Situation 2:- Quadratic / parabolic / curvi-linear Trend equation:

The quadratic trend equation is written as:-
Y = a + bx + cx2
a, b, c are constant and can be obtained by solving the following three normal equation.
i. ∑y = na + b∑X + c∑X2
ii. ∑Xy = a∑X +b∑X2 + c∑X3
iii. ∑X2y = a∑X2 + b∑X3 + c∑X4
Moving Average:-
Average

Simple = Weighted =

Simple moving Average

No Panga Case Panga Case

Number of observation = ** Number of observation = * *

(–) Number of Average = ** (–) Number of Average = * *
Even number ** Odd number **

Exponential smoothing method :

Under this method forecasted and actual value of previous period is use to forecast value
of current period.
Forecasted value t = α × Actual value (t – 1) + (1 – α) × Forecased value of (t – 1)
Where,
t = current period
t – 1= previous period
α = smoothing co-efficient: - It is used to smooth / minimize the effect of error / abnormalities
involved in the forecast. Higher smoothing co-efficient is better for new product. This
would give more weightage to the latest value.
α= lies between 0 to 1.

2. CASUAL RELATIONSHIP :
Here we express two independent variables into a regression equation or line of Best fit or
straight line Trend equation and else the equation to get the forecast.
E.g. Heights, Marks
Rainfall, Hours of study

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 Forecasting

Calculation is same as straight line equation.

It can be of two types
1. Y on X : Y = a + bX
a and b are constants and can be obtained by solving the following two equations:-
i) Σy= na + bΣX
ii) ΣXy = aΣX + bΣX2
2. X on Y : X = a + bY
a and b are constants and can be obtained by solving the following two equations:-
i) Σx= na + bΣY
ii) ΣYx = aΣY + bΣY2

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 Forecasting

1 Dec’18
With the help of following data, project the trend of sales for the next 5 years: 6 + 10 = 16

Years 2002 2003 2004 2005 2006 2007

Sales in Lakhs of Rupees 120 130 135 140 150 165

Answer
Computation of trend values of sales:
Year Time deviations from the Sales (in lakhs Squares of time Product of time
middle of 2004 and 2005 of `) deviation deviation and
assuring 5 years = 1 sales
X Y X2 XY
2002 -5 120 25 -600
2003 -3 130 9 -390
2004 -1 135 1 -135
2005 +1 140 1 +140
2006 +3 150 9 +450
2007 +5 165 25 +825
n=6
∑x = 0 ∑ x = 840 ∑x 2
= 70 ∑ XY = 290
Regression equation of Y on X:
∑ Y = a + bX
To find the values of a and b:
a = ∑Y/n = 840/6 = 140
b = ∑XY/∑X2 = 290/70 = 4.143 approx.
Sales forecast for the next five years, i.e., 2008 to 2012:
Y2008 = 140 + [29/7 × (+7)] = 169 lacs
Y2009 = 140 + [29/7 × (+9)] = 177.28 lacs
Y2010 = 140 + [29/7 × (+11)] = 185.57 lacs
Y2011 = 140 + [29/7 × (+13)] = 193.85 lacs
Y2012 = 140 + [29/7 × (+15)] = 202.14 lacs

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 Simulation

Chapter 2
Simulation

1. IT IS A PROCESS OF FORECASTING I.E., PREDICTION OF AN

UNCERTAIN EVENTS.

2. STEPS FOR MONTE CARLO SIMULATION :

i) Experienced data and probability distribution
ii) Cumulative probability
iii) Cumulative probability × 10, 100, 1000 as the case may be
iv) Assigning Random interval starting from zero
v) Random selection using given random numbers
vi) Further calculation based on random selection

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 Simulation

1 Jun’17; Dec’18; Dec’19

A Bakery shop sells bakery items. Past data of demand per week in hundred kilograms with
frequency is given below:

Demand/Week 0 6 12 18 24 30
Frequency 1 12 19 8 6 4

Using the following sequence of random numbers, generate the demand for the next 10 weeks.
Also find out the average demand per week. [10]

Random numbers 12 27 18 58 43 75 31
62 47 35 53 42 68 71

Answer
Random No. Range Table for Demand
Demand per Frequency Probability Cumulative Range
week Probability
0 1 0.02 0.02 0-1
6 12 0.24 0.26 2-25
12 19 0.38 0.64 26-63
18 8 0.16 0.80 64-79
24 6 0.12 0.92 80-91
30 4 0.08 1.00 92-99
Σf = 50 1.00

Simulated values for next 10 weeks

Weeks R. Nos. Demand
1 12 6
2 27 12
3 18 6
4 58 12
5 43 12
6 75 18
7 31 12
8 62 12
9 47 12
10 35 12
Total: 114

Average Weekly demand =114/10= 11.4

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 Simulation

2 Dec’17-Set II; Jun’20

After observing heavy congestion of customers over a period of time in a petrol station, Mr.
Petro has decided to set up a petrol pump facility on his own in a nearby site. He has compiled
statistics relating to the potential customer arrival pattern and service pattern as given below.
He has also decided to evaluate the operations by using the simulation technique.
Arrivals Services
Inter-arrival time Probability Service time (minutes) Probability
(minutes)
2 0-22 4 0-28
4 0-30 6 0-40
6 0-24 8 0-22
8 0-24 10 0-10

Assume:
(i) The clock starts at 8 : 00 hours.
(ii) Only one pump is set up.
(iii) The following 12 Random Numbers are to be used to depict the customer arrival pattern:
78, 26, 94, 08, 46, 63, 18, 35, 59, 12, 97 and 82
(iv) The following 12 Random Numbers are to be used to depict the service pattern:
44, 21, 73, 96, 63, 35, 57, 31, 84, 24, 05 and 37
You are required to find out the
(i) probability of the pump being idle, and
(ii) average time spent by a customer waiting in queue.

Answer
Inter-arrival Service
lime time
Minutes Probability Cumulative Range Minutes Probability Cumulative Range
probability probability
2 0.22 0.22 00-21 4 0.28 0.28 00-17
4 0.30 0.52 22-51 6 0.40 0.68 28-67
6 0.24 0.76 52-75 8 0.22 0.90 68-89
8 0.24 1.00 76-99 10 0.10 1.00 90-99

Operation Management |9
 Simulation

Sl. Random Inter Entry Service Random Service Service Waiting Idle
No No. for arrival lime in start no for lime end time Time of time
inter time queue time service customer
arrival
1 78 8 8.08 8.08 44 6 8.14 - 8
2 26 4 8.12 8.14 21 4 8.18 2 -
3 94 8 8.20 8.22 73 8 8.30 - 9
4 08 2 8.22 8.30 96 10 8.40 8 -
5 46 4 8.26 8.40 63 6 8.46 14 -
6 63 6 8.32 8.46 35 6 8.52 14 -
7 18 2 8.34 8.52 57 6 8.58 18 -
8 35 4 8.38 8.58 31 6 9.04 20 -
9 59 6 8.44 9.04 84 8 9.12 20 -
10 12 0 8.46 9.12 24 4 9.16 26 -
11 97 8 8.54 9.16 05 4 9.20 22 -
12 82 8 9.02 9.20 37 6 9.26 18 -
Total 162 10
time

Average waiting time spent by the customer = 162/12= 13.5 minutes

Probability of idle time of petrol station = 10/86 = 0.1 163

10 |Operation Management
 Queuing Theory

Chapter 3
Queuing Theory

1. QUEUE – LINE
Queue means the waiting line to avail a service. Formation of queue is generally comes
true construct as deficiency in service.

2. ACT OF CUSTOMERS AGAINST THE QUEUE.

a) Balking :- When customer gets discouraged seeing the queue and decides not to join
the queue
b) Reneging :- The customer who dropout of the queue after waiting in the queue for
sometime.

3. QUEUE MANAGEMENT
It is the application of managerial skills and technique in order to reduce the queue timing
and losses due to it.

4. QUEUING THEORY
It was developed by Mr. A K Erlang, a Danish Engineer. The theory was also named as
Erlang’s theory.

5. A QUEUE SYSTEM MAY HAVE –

a) Single Channel
b) Multi Channel
c) Mixed Channel -> Single to multi or multi to single.

6. ASSUMPTION OF QUEUING THEORY :

i) Arrival are served on first come first served basis.
ii) There is no balking or reneging.
iii) Arrival are independent of previous arrival but avg. no of arrival do not change.

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 Queuing Theory

iv) Arrival are described by poisson probability distribution and come from a very large
and infinite population.
v) Service time vary from one customer to another but avg. service time do not vary.
vi) Service time are described by a negative exponential probability distribution.
vii) Average service rate must be greater than average arrival rate.

7. SYMBOLS
i) λ = Average number of arrivals of units per time period.
ii) μ = Average number of item being served or average service rate per time period.
λ
iii) ρ = Utilization factor or proportion of time the serves are busy =
µ
λ
∴ Proportion of time server would be idle = 1− µ
λ
iv) Utilization factor if there are ‘m’ servers (multi channels ) =
m. µ
v) Probability that there are ‘n’ units in the system :-
n
 λ λ
 1−  ×  
 µ µ

vi) Average number of units or customers in the entire system per time period Ls = λ
µ −λ

vii) Average number of units or customers waiting in the queue per time period.
λ2  λ  λ
Lq = or  ×
µ (µ − λ )  µ −λ  µ
viii) Average waiting time in the entire system per customer.
1
Ws =
µ −λ
ix) Average waiting time in the queue per customer
 1  λ
Wq =  ×
 µ −λ  µ

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 Queuing Theory

1 Dec’17
Workers come to a tool store room to enquire about special tools (required by them) for
accomplishing a particular project assigned to them. The average time between the two arrivals
is 60 seconds and the arrivals are assumed to be in Poisson distribution. The average service
time (of the tool room attendant) is 48 seconds.
Determine: 3x3=9
(i) Average Queue Length
(ii) Average Length of non-empty queues
(iii) Average number of workers in system including the worker being attended

Answer
Arrival Rate: λ = 60/60 per second = 1 per minute
Service Rate: μ = 60/48 per second= 1.25 per minute
(i) Average Queue Length: Lq = (λ/μ)×[λ/(μ - λ)] = (1/1.25)x[(1/(1.25 - 1)]
=1/(1.25x0.25) = 16/5
= 3.2 workers
(ii) Average Length of non-empty queues:
Ln = [μ/(μ - λ)] = 1.25/(1.25-1) = 1.25/0.25 = 5 workers
(iii) Average number of workers in system:
Ls = [λ/(μ - λ)] = 1/(1.25-1) = 1/0.25 = 4 workers

2 Jun’18
At a tool service centre, the arrival rate is 3 per hour and the service potentials 4 per hour.
Simple queue conditions exist. The hourly wage paid to the attendant at the service centre is
` 2 per hour and the hourly cost of a machinist away from his work is ` 5.
Calculate: 2x4=8
(i) The average number of machinists being served or waiting to be served at any given time.
(ii) The average time a machinist spends waiting for service.
(iii) The total cost of operating the system for an eight-hour day.
(iv) The cost of the system if there were two attendants working together as a team, each paid
` 2 per hour and each able to service on average 3 per hour.

Answer
At a tool service centre, the arrival rate is 3 per hour and the service potentials are 4 per hour.
Arrival Rate: = λ = 3 per hour

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 Queuing Theory

Service Rate: = μ = 4 per hour

(i) The average number of machinists being served or waiting to be served at any given time:
Ln = [λ /( μ - λ)] = 3/(4-3) = 3
(ii) The average time a machinist spends waiting for service:
Wq = [(λ/μ) x 1/(μ - λ)] = (3/4) x 1/(4-3) = 0.75 hours = 45 minutes.
(iii) Average time in the system:
WS = [1 / μ - λ)] = 1/(4-3) = 1 hr.
Average number of machinists in the system = 3 [As per (i) above]
Cost of three machinists being away from work = 5 x 3 = 15 per hour.
Attendant cost = 2 per hour
Total Cost / hour = 17 per hour
The total cost of operating the system for an eight - hour day: 17 x 8 = 136
(iv) It is assumed that there is still a single service point, but the average service rate is now
= 6 per hour.
=> Now λ = 3 per hour
μ = 6 per hour
=> Average number in the system Ln = [λ /(μ - λ)] = 3/(6-3) = 1
Average time spent in the system WS = 1/(μ - λ)] = 1/(6-3)
= 1/3 hours.
= (1/3) x 60 = 20 minutes.

Machinists cost = 1/3 hour x 5 = 1.67

Attendant cost 4.00
Total Cost 5.67

Cost per 8 hour day = 5.67 x 8 = 45.36

3 Jun’19
A Taxi operator is planning to open a computerised ticket counter in the center of the city,
staffed by one ticket agent. It is estimated that requests for tickets and information will average
18 per hour, and requests will have a Poisson distribution.
Service time is assumed to be exponentially distributed. Previous experience with similar
computerised operations suggests that mean service time should average about 2-5 minutes
per request.
Determine each of the following:
(i) System utilization

14 |Operation Management
 Queuing Theory

(ii) Percentage of time the server (agent) will be idle.

(iii) The expected number of customers waiting to be served
(iv) The average time customers will spend in the system. 8 + (2 × 4) = 16

Answer
Arrival Rate = λ = 18 customers per hour
Service Rate = μ = 1 / service time = (1 customer / 2.5 minutes) × 60 minutes per hour = 24
customers per hour
(i) System Utilisation = p = λ Mμ = 18 / (1× 24) = 0.75
(ii) Percentage idle time = 1 – p = 1– 0.75 = 0.25, or 25 percent
(iii) Expected no. of customers waiting to be served = Lq = λ2/μ(μ – λ)
= (18)2 / [24 × (24 – 18)] = 2.25 customers
(iv) Average time customers will spend in the system =
Ws = (Lq / λ) + (1/μ) = (2.25/18) + (1/24) = 0.1667 hrs = 10 minutes.

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 Replacement Theory

Chapter 4
Replacement Theory

Replacement Theory

Items & machines that Items parts that

fails gradually fails gradually

Haule Haule Hataak se

Indication of Failure
Regressive & Retrossive
[fails at start]
Reduction in Increased cost Increase in e.g. - Aircraft engine
performance or running and resale value
or efficiency maintenence Progressive Case 3
[fails in earlier stage]
eg. bulb

Without Time Value With Time Value Sudden & Random

Case 1 Case 2 e.g. - Vacuum pipe

Case 1:
• Replacement of item failing Haule Haule without time value of money:-
The objective here is to determine the optimum replacement period for the machine
which has to be continuously followed by the company.
Optimum replacement period:-
It is the line period with respect which the average cost per year is minimum.
Steps:-
i. Depreciation or capital cost = purchase cost – resale value.
ii. Cumulative running cost.
iii. Total cost = i + ii.
iv. Average cost = total cost / number of years
v. Optimum replacement period= where average cost/year is minimum
Case 2:
• Replacement of machines failing gradually with time value of money :-
Whenever any financial decision involves a time period of more than a year, time value
of money must be considered. For this purpose all the future values are to be brought
to the zero year index or present value by using–

16 |Operation Management
 Replacement Theory

 1 
Present value = Future Value ×  
 (1+ r )n 
 
• Steps:-
i. a. Present value of resale value.
b. Depn = purchase cost – p.v of resale value.
ii. a. P.v of running and maintenance cost.
b. Cumulative of p.v of running and maintenance cost.
iii. Total cost = step(i) (b) + step (ii) (b)
iv. Avg. cost = equivalent annual cost [EAC]
a. Cumulative discounting factor.
TC
b. = EAC
C.DF
Case 3 :
• Replacement of items failing suddenly:-
Progressive:- High chance of failure at later stage of life.
E.g. bulb
i. Uncertainty or sudden failure is studied by using probability.
Number of failuer
Probability of failure =
Total number of ittems
ii. Time horizon under the evaluation is within one year. Therefore, no time value of
money is understood.
iii. Objective:- The objective of this study is to determine the optimum time period
for group replacement .
iv. There are two type of cost involved in this analysis:-
a. Individual replacement cost:- i.e. replacement of an item during the period
as and when it fails. It is an expensive method as the rate of replacement is
high and it effect the production time as well leading to huge idle time cost.
b. Group replacement cost:- i.e. replacement of all the items at once irrespec-
tive of their failure. This is executed during off time. And involves low rate of
replacement cost
The items are to be individually replaced until the group replacement is
undertaken to keep the production running.
The optimum group replacement period is the time where the average cost
of period is minimum.

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 Replacement Theory

v. Steps:
a. Find number of failures for each period using probability- in the form of a
table [chain system]
b. Cumulative number of failure.
c. Cumulative individual replacement cost = cumulative number of failure *
individual replacement cost per unit
d. Group Replacement Cost
e. Total Cost = Step c + b
f. Average Cost = Total cost / n

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 Replacement Theory

1 Dec’18; MTP Jun’20 - 1

An automotive firm is using a machine whose purchase price is ` 18,000.
The Installation charges amount to ` 3,800 and the machine has a scrap value of only ` 1,800
because the firm has a monopoly of this type of work. The maintenance cost in various years is
given in the following table:

Year 1 2 3 4 5 6 7 8 9
Maintenance cost (`) 250 720 1200 1700 2300 3200 4300 4800 6300

The firm wants to determine after how many years should the machine be replaced on economic
considerations, assuming that the machine replacement can be done only at the year end.

Answer
An automotive firm is using a machine...
Cost of machine, C = ` 18,000 + 3,800 = 21,800
Scrap Value, S = ` 1,800
Year Maintenance Cumulative C - S (`) Total Cost T(n) Annual Cost
Cost, Mj (`) Maintenance (`) A(n) (`)
Cost, ∑Mj (`)
(i) (ii) (iii) (iv) (v)=(iii)+(iv) (vi)=(v)/n
1 250 250 21,800 – 1,800 20,250 20,250
= 20,000
2 720 970 20,000 20,970 10,485
3 1,200 2,170 20,000 22,170 7,390
4 1,700 3,870 20,000 23,870 5,967.5
5 2,300 6,170 20,000 26,170 5,234
6 3,200 9,370 20,000 29,370 4,895
7 4,300 13,670 20,000 33,670 4,810
8 4,800 18,470 20,000 38,470 4,808.8
9 6,300 24,770 20,000 44,770 4,974.4

Lowest average cost is ` 4808.8 approx., which corresponds to n = 8 in above table. Thus
machine needs to be replaced every 8th year.

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 Maintenance Management

Chapter 5
Maintenance Management

1. DECIDING BREAKDOWN AND PREVENTIVE MAINTENANCE :

• Breakdown Maintenance :-
Repairing or Reworking on assets after it has broken down. This involve high cost, due
to emergency rush, idle time cost, contribution cost on production etc.
• Preventive Maintenance :-
It implies routine maintenance conducted in regular intervals. It may involve some
additional cost but it is expected to minimize or eliminate the breakdown maintenance
cost.
• Steps for comparison :-
i) Probability distribution of past breakdown.
ii) Expected number of average number of breakdown p.a.
iii) Breakdown maintenance cost p.a.
= expected number of breakdown p.a. × breakdown cost each time
iv) Preventive maintenance cost p.a.
= preventive maintenance cost p.a. + minimum breakdown cost p.a.
v) Compare step 3 and step 4 to decide the best policy.

2. OPTIMUM GROUP PREVENTIVE MAINTENANCE TIME PERIOD

[ Refer replacement theory chapter – situation II – for items failing suddenly – group
replacement ]
Steps 1 :- Months of failure and its probability.
Steps 2 :- Number of breakdowns
Steps 3 :- Cumulative numbers of breakdown
Steps 4 :- Cumulative breakdown cost
Steps 5 :- Preventive maintenance cost
Steps 6 :- Total cost
Steps 7 :- Average cost

20 |Operation Management
 Maintenance Management

Optimum preventive maintenance time period is the period where average cost is
minimum.
Note :- Breakdown cost has to be incurred until a preventive maintenance is carried out.

3. TYPES OF SPARES
(a) Regular spares
(b) Insurance spares
(c) Capital spares
(d) Rotable spares

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 Maintenance Management

1 Jun’17
Product A has a Mean Time Between Failures (MTBF) of 35 hours and a Mean Time to Repairs
(MTTR) of 6 hours. Product B has a MTBF of 45 hours, and has a MTTR of 3 hours.
(i) Which product has higher reliability?
(ii) Which product has greater maintainability?
(iii) Which product has greater availability? [3+3+4=10]

Answer
(i) Product B, with the higher MTBF (i.e. 45 hours) than product A (i.e. 35 hours), is more reliable
since it has lesser chances for failure during servicing.
(ii) The MTTR means time taken to repair a machine. Thus lesser MTTR (of 3 hours) pertaining
to Product B vis-a-vis of 6 hrs of Product A makes Product B to have greater maintainability.
(iii) Availability of a machine/product = MTBF/(MTBF+MTTR)
Thus Availability of Product A = 35/(35+6) = 35/41 = 85.366%
Availability of Product B = 45/(45+3)=45/48 = 93.75%
Hence, Product B has more availability.

2 Dec’17; Jun’18
A Public Transport Company is experiencing the following number of breakdowns for months
over the past 2 years in their new fleet of vehicles:

Number of breakdowns 0 1 2 3 4
Number of months this occurred 3 6 9 4 2

Each breakdown costs the company an average of ` 2,500. For a cost of ` 1,700 per month,
preventive maintenance can be carried out to limit the breakdowns to an average of one per
month. Which policy is suitable for the company? [10]

Answer
After converting the frequencies to a probability distribution and determining the expected
cost/month of breakdowns, we get:
Number of Frequency in Frequency in Expected value
breakdowns months percent
0 3 3/24 = 0.125 0
1 6 6/24 = 0.25 0.25
2 9 9/24 = 0.375 0.75
3 4 4/24 = 0.167 0.5

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 Maintenance Management

4 2 2/24 = 0.083 0.334

Total : 1 Total: 1.834

Breakdown cost per month; Expected cost = 1.834 x ` 2500 = ` 4,585.

Preventive maintenance cost per month:
Average cost of one breakdown/month = ` 2,500
Maintenance contract cost/month = ` 1,700
Total = ` 4,200.
Thus, preventive maintenance policy is suitable for the firm.

3 Dec’17-Set II; Jun’18

A workshop has 25 nos. of identical machines. The failure pattern of the machine is given below:
Elapsed time after maintenance attention (in month) Probability of failure
1 0-20
2 0-15
3 015
4 0-15
5 0-15
6 0-20

It costs ` 200 to attend a failed machine and rectify the same. Compute the yearly cost of
servicing the broken down machines. [8]

Answer
Expected time before failure.
= 0.20x1 +0.15x2 -0.15x3 + 0.15x4 + 0.15x5 + 0.20x6
= 3.5 months Therefore number of repair/machine/annum
= 12/3.5
Considering 25 machines and ` 200 to attend a failed machine the yearly of servicing
= 12/3.5 x 25 x 200
= ` 17.142.86

4 Dec’19
RST Company has kept records of breakdown of its machines for 300 days work year as shown
below:

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 Maintenance Management

No. of Breakdown Frequency in days

0 50
1 140
2 60
3 30
4 20
Total 300

The company estimates that each breakdown costs `600 and is considering adopting a
preventive maintenance program which would cost ` 250 per day and limit the number of
breakdown to an average of one per day. What is the expected annual savings from preventive
maintenance program? [10]

Answer
Step-1:
No. of Frequency of Probability distribution of Expected value of
Breakdowns breakdowns in days; break downs; i.e. p(x) breakdown X p(x)
(X) i.e. f(x)
0 50 50/300 = 0.167 Nil
1 140 140/300 = 0.466 0.466
2 60 60/300 = 0.200 0.400
3 30 30/300 = 0.100 0.300
4 20 20/300 = 0.067 0.268
Total: 300 1.000 1.434

Step - 2 :
Total no. of breakdowns per day = 1.434
Cost of breakdown per day = 1.434×600 = 860.4/-
Cost of preventive maintenance program per day = ` 250 + 600 = 850/- Expected annual savings
from the preventive maintenance program = (860.4 – 850) × 300 = 10.4 × 300 = ` 3,120

5 Jun’19
An electronic device components manufacturing company carries out the ‘A’ components
testing for 2500 hours. A sample of 100 ‘A’ components was put through this quality test during
which two components failed. If the average usage of the electronic device by the customer is
5 hours/day and if 12,000 such devices were sold, then in one year how many ‘A’ components
were expected to fail and what is the mean time between failures for these components?
(2 × 5) + 6 = 16

24 |Operation Management
 Maintenance Management

Answer
The total test time = (100 components) × 2500 hours = 250,000 component-hours.
There are two components which have failed and hence the total time is to be adjusted for the
number of hours lost due to the failures during the testing.
The lost hours are computed as = (2×2500) / 2 = 2500 hours.
The assumption is made here is that each of the failed tubes have lasted an average of half of
the test period.
Therefore, the test shows that there are two failures during (2,50,000 - 2500) = 2,47,500 compo-
nent hours of testing.
During 365 days a year (four hours a day) for 12,000 components the number of expected fail-
ures = (2 × 12,000 × 365 × 5)/2,47,500 = 176.97 =177 components approximately.
Mean time between failures = 2,47,500 components hrs. of testing / 2 failures = 1,23,750 compo-
nents hours per failure = 1,23,750 / (5/365) = 67.8 components year per failure.

| 25
Operation Management
 Line Balancing

Chapter 6
Line Balancing
Line Balancing

Production Line Balance of Line

• Line:-Production Line or Assembly line Discovered by Henry Ford in a large production
process the works is done by dividing the total processing in several steps or tasks allocated
to workers or machines or work stations arranged sequentially along a line called as
production line or assembly line.
• Balancing:-balancing stand for balancing the line in such a manner that the middle man
at the work station is minimized. This can be done by :-
i. Allowing tasks of equal time to the workstation
ii. Increase capacity at workstation by more investment
• Steps for line balancing:-
I. Schematic diagram:-it is a diagrammatic presentation of link between various tasks
for steps in manufacturing a product in their precedence
Relationship. The task are numbered or named by alphabets and are shown in circles.
The link between two tasks may be sequential or parallel and is shown arrows from
left to right.
II. Workstation cycle time:-This refers to the time allowed per unit of the product in
order to achieve the targeted output. If every workstation is allocated task up to the
time allowed per unit than with all the requisite number of workstation the targeted
amount can be achieved.
Workstation Time =time allowed / unit
Total time available in a period
Targeted output in a period d
III. Theoretical Number of workstation:-It is the minimum required number of station
to get the actual work done within its time allowed per unit. The actual number of
workstation may vary from theoretical number.

Theoretical number of workstation = Total of all task time

Work station time

IV. Primary and secondary rule for selection of tasks:-

Primary rule: For selection of task to assign them to a workstation we select a rule such
as largest number of following task rule [or any other]
Secondary rule: This is used to break ties in primary rule .The rule can be say largest
task time to be selected. If there is tie in the largest task time then select anyone

26 |Operation Management
 Line Balancing

V. Assignment of task to the workstation: - Assign a task to the 1st workstation selected
in order of primary and secondary rule ranking. Multiple tasks may be assigned to a
workstation subject to a workstation cycle time. If after assigning a task the workstation
cycle time is exceeded then assign that tasks to the next workstation.
VI. Compute line efficiency :- Balance efficiency
Total of task time
=
No of workstation × work station cycle tim
me
VII. Line delay or balance delay or line idle time:-
Total idle time
=
No workstation × work station cycle time
= 100%
% − line efficiency
VIII. Smoothness index :-

∑ (Idle time)2

Note:-line is efficiently balanced if the line efficiency is 100% line delay is 0% and smoothness
index is 0.

| 27
Operation Management
 Scheduling and Sequencing

Chapter 7
Scheduling and Sequencing

• Sequencing:- ranking for executing the job

• Scheduling :-
Time schedule of the job sequenced

Situation 1 Situation 2 Situation 3

[One job one machine] [One job two machine] [One job three machine]

[JOHNSON’S ALGORITHM]
• Situation 1 :- One job one machine:-
Case 1:- SPT-Shortest processing time
Case 2:- LPT-Longest processing time
Case 3:- Weighted SPT
Case 4:- EDD- Earliest due date
Case 5:- STR-slack time remaining
Case 6:- MCR-Minimum critical ratio
Case 7:- FIFO
Case 8:- LIFO
• Situation 2 :- One job two machines:-
Assumptions:-
i. Two machine have different function.
ii. Time taken in each machine should be known for all the jobs.
iii. No movement time from 1st machine to 2nd machine.
iv. 2nd machine will wait until 1st machine finishes the job.
v. Both the machine will start and stop together.
Solution technique: - Johnson’s algorithm
• Algorithm means a repetitive mathematical process.
• Objective of the algorithm is to minimize the idle time of machines.
• Method of sequencing is followed by algorithm – SPT

28 |Operation Management
 Scheduling and Sequencing

Steps to be followed for algorithm:-

1. Select minimum time along all the given time.
If the minimum time is from the 1st machine do that job first
If the minimum time is from the 2nd machine then do that job first
2. Apply the above step on remaining job until all job are sequenced
3. Prepare time schedule for the sequenced job to show the idle time for first and second
machine.
4. Represent the time schedule on graph or Gantt chart
• Situation 3:- One job three machines
Solution technique –Johnson’s algorithm
[Additional assumptions – (Above situations)]
i. Job to be processed in order --- 1st on machine A 2nd on machine B and third on
machine C.
ii. Conditions to be met to use Johnson algorithm :-
Any of the following conditions must be fulfilled or satisfied:-
a) Minimum time of machine A ≥ maximum time of machine B
b) Minimum time of machine C ≥ maximum time of machine B
iii. Expected time of a job on each of the 3 machine are known
Steps :
I. Convert the given problem of 3 machines into a problem of 2 machines
Machine 1 = process time of machine A + machine B
Machine 2 = process time of machine B + machine C
II. Solve the problem of two machine using normal steps of Johnson algorithm
III. Prepare time schedule – keeping in mind that machine B would be idle until machine
a finishes the work and machine C would be idle until machine B finishes the work.

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Operation Management
 Scheduling and Sequencing

1 Dec’17; Jun’20
The below Table shows the time remaining (number of days until due date) and the work
remaining (number of days’ work) for 5 jobs which were assigned the Letters A to E as they
arrived to the shop. Sequence these jobs by priority rules viz., 2 x 5 = 10
(i) FCFS (ii) EDD (iii) LS (iv) SPT (v) LPT.
Job Number of days until due date Number of days’ work remaining
A 9 5
B 4 7
C 5 3
D 6 6
E 8 2

Answer
Numerical: The below Table shows the time remaining
Job Number of days until due date Number of days work remaining
A 9 5
B 4 7
C 5 3
D 6 6
E 8 2
(i) FCFS (First come first served): Since the jobs are assigned letters A to E as they arrived to
the shop, the sequence according to FCFS priority rule is ABCDE.
(ii) EDD (Early Due Date job first) rule: Taking into account the number of days until due date,
the sequence of jobs as per EDD rules is B C D E A (4568 9).
(iii) L.S. (Least slack) rule also called as Minimum slack rule.
Calculation of slack:
Slack = (Number of days until due date) - (Number of days work remaining)
Job Slack (Days)
A 9-5 =4
B 4-7 = (-3)
C 5-3 =2
D 6-6 =0
E 8-2 =6

Sequence = BDCAE
(-3 0 2 4 6)

30 |Operation Management
 Scheduling and Sequencing

(iv) SPT (Shortest Processing Time job first) also referred as SOT (Shortest Operation time job
First) rule or MINPRT (Minimum Processing time job first) rule.
Sequence: E C A D B
(2 3 5 6 7)
(v) LPT (Longest Processing time job first) also referred to as LOT (Longest operation time job
first) rule.
Sequence: B D A C E
(7 6 5 3 2)

2 Jun’18
The following jobs have to be shipped a week from now(week has 5 working days)

Job A B C D E F
Number of day’s work remaining 4 5 8 7 6 3

Sequence the jobs according to priority established by: 4x2=8

(i) Least slack rule
(ii) Critical ratio rule

Answer
(i) Calculation of slack:
Number of days until due date is 5 days for all jobs:
Job Slack (Days)
A 5-4 1
B 5-5 0
C 5-8 (-3)
D 5-7 (-2)
E 5-6 (-1)
F 5-3 2

C D E B A F
-3 -2 -1 0 1 2
(ii) Calculation of Critical ratio:
Critical ratio = Available time / Operation time
Critical Ratio for job A = 5/4 = 1.25
Critical Ratio for job B = 5/5 = 1.00
Critical Ratio for job C = 5/8 = 0.625

| 31
Operation Management
 Scheduling and Sequencing

Critical Ratio for job D = 5/7 = 0.714

Critical Ratio for job E = 5/6 = 0.833
Critical Ratio for job F = 5/3 = 1.667
Job having least critical ratio is given the first priority and so on.

Sequence C D E B A F
Critical Ratio 0.625 0.714 0.833 1.00 1.25 1.667

32 |Operation Management
 Linear Programming

Chapter 8
Linear Programming

1. CONDITION TO BE MET TO USE L.P.

(a) There must be an Objective
Maximisation / Minimisation
(b) There must be constraints
Maximum availability / Minimum requirement
(c) There must be Linear variables that achieves the objectives (more than one)
The variable that varies with unitary method

2. FLOW OF L.P.

3. FORMULATION OF LPP
1. Write Objective Functions
Maximise Z or Minimise Z (Z represents Maximise Z = 20x + 50y
the objective) It is represented by
equation

| 33
Operation Management
 Linear Programming

2. Write Constraints inequation Subject to constraints

Maximum available → ≤ (i) 3x + 2y ≤ 500
Minimum requirement → ≥ (ii) 5x + 4y ≤ 1,000
3. Non negativity assumptions
Decision variable value must be positive (iii) x ≥ 0
or zero y≥0

4. FORMULATION USING SLACK VARIABLE

• Slake variable used in inequation of type
x ≤ a to convert them into equations
e.g. x + 2y ≤ 60
x + 2y + S1 = 60
• The Slake Variable should not affect the objective function. i.e. in objective function
we introduce slake with 0 as coefficient.
e.g. Max Z = 20x + 50y + 0S1
• Slake variable must also be non negative

34 |Operation Management
 Assignment

Chapter 9
Assignment

• Part of linear programming

• One of the method to solve a L.P.P
• Objective → Minimization of time / cost
• Condition → One row can be assigned only to one column
• Solution steps → It is called as “Hungarian Rule”

Flow Chart on Assignment

Courtesy : Miss Anuradha Chitlagia

Start

Balance the Problem

Reducing Rows

Reducing Columns

Drawings Lines

Is No. of lines =
Order of matrix ?
No.

Adjustments
Select the least uncovered element and
(a) Subtract it from all uncovered element
(b) Add it to junction elements. Yes
(c) Do not touch the covered element

Drawings Lines

No Is the solution Yes

optimum ? Boxing the zeros

Optimum Assignment

Stop

• Unbalanced Assignments :- Rows ≠Columns

We introduce either a dummy row or a column with zero value of time or cost to balance
the problem.

Operation Management | 35
 Assignment

1 Jun’18
A blacksmith supervisor in his workshop is considering how he should assign the four jobs
that are to be performed, to four of the workers under him. He wants to assign the jobs to the
workers such that the aggregate time to perform the jobs is the least.
Based on previous experience, he has the information on the time taken by the four workers in
performing these jobs and the same is given in the table below:
Time Taken (in minutes) by 4 Workers
Worker Job
A B C D
1 46 40 51 68
2 57 42 63 55
3 49 53 48 64
4 41 45 61 55

Solve the assignment problem for optimal solution using Hungarian Method. [8]

Answer
Step - 1 : The minimum value of each row is subtracted from all elements in the row. It is shown
in the reduced cost table, also called opportunity cost table, given below:
Table-1: Reduced Cost Table - 1
Worker Job
A B C D
1 6 0 11 28
2 15 0 21 13
3 1 5 0 16
4 0 4 20 14

Step 2:
For each column of this table, the minimum value is subtracted from all the other values. The
columns that contain a zero would remain unaffected by this operation. Hence, only the fourth
column values would change. Table-2 shows this.
Table - 2: Reduced Cost Table - 2
Worker Job
A B C D
1 6 0 11 15
2 15 0 21 0

36 |Operation Management
 Assignment

3 1 5 0 3
4 0 4 20 1

Step 3:
Draw the minimum number of lines covering all zeros. As a general rule, we should first cover
those rows/columns which contain larger number of zeros.
Table 3 shows this.
Worker Job
A B C D
1 6 0 11 15
2 15 0 21 0
3 1 5 0 3
4 0 4 20 1

Step 4:
Since the number of lines drawn is equal to 4 (= n), the optimal solution is obtained. The
assignments are made after scanning the rows and columns for unit zeros. Assignments made
are shown with squares as shown in Table 4.
Table - 4: Assignment of Jobs
Worker Job
A B C D
1 6 0 11 15
2 15 0 21 0
3 1 5 0 3
4 0 4 20 1

Assignments are made in the following order. Rows 1, 3, and 4 contain only one zero each. So
assigned 1-B, 3-C, and 4-A. Since worker 1 has been assigned job B, we cross the zero in the
second column of the second row. After making these assignments, only worker 2 and job D are
left for assignment. The final pattern of assignments is 1-B, 2-D, 3-C, and 4-A, involving a total
time of 40 + 55 + 48 + 41 = 184 minutes. This is the optimal solution to the problem.

2 Jun’19
A Project consists of four major jobs, for which four contractors have submitted tenders. The
tender amounts, in thousands of Rupees, are given below:
Contractor Jobs
A B C D
1 110 98 75 95

Operation Management | 37
 Assignment

2 85 95 115 65
3 105 135 125 98
4 95 95 75 95

Find the assignment, which minimizes the total cost of the Project. Each contractor has to be
assigned one job.

Answer
The given problem is a standard minimization problem. Subtracting the minimum element of
each row from all its elements in turn, the given problem reduces to:
Contractor Jobs
A B C D
1 35 23 0 20
2 20 30 50 0
3 7 37 27 0
4 20 20 0 20

Now subtract the minimum element of each column from all of its elements in turn. Draw the
minimum number of lines, horizontal or vertical, so as to cover all zeros:
Contractor Jobs
A B C D
1 28 3 0 20
2 13 10 50 0
3 0 17 27 0
4 13 0 0 20

Since the minimum number of lines to cover all zeroes is equal to 4 (= order of the matrix), this
matrix will give optimal solution. The optimal assignment is made in the matrix below:
Contractor Jobs
A B C D
1 28 3 0 20
2 13 10 50 0
3 0 17 27 0
4 13 0 0 20

38 |Operation Management
 Assignment

The optimal assignment is:

Contractors Job Cost (in thousands of Rupees)
1 C 75
2 D 65
3 A 105
4 B 95

Hence, total minimum cost of Project will be ` 3,40,000.

| 39
Operation Management
 Transportation

Chapter 10
Transportation

• Solutions technique from LPP related to transportation of goods from source to destination.
• Objective of the problem must be minimization of transportation cost.
• Flow chart of the algorithm process.

Start
NWCR

Get the matrix [Balanced] LACM

VAM
Inial soluon
SSM
Test for opmality
MODI
no yes
Is it opmum

Improve the last soluon

Test for opmally

Is it opmum Stop
yes

• Methods of initial solutions:-

I. North west corner rule
II. Least Cost allocation method
III. Vogel’s approximation method
• Methods for optimality test:-
I. Stepping stone method
II. Modified distribution method or U+V method
• Initial solution using north west corner rule:-
Steps:-
I. Allocate the maximum quantity possible to the North West corner cell of the matrix.
II. If a factory is exhausted move downward to the next factory for allocation. If warehouse
is exhausted move rightward to the next warehouse for allocation.

40 |Operation Management
 Transportation

III. Continue the above steps until all the available and required units are allocated.
• Initial solution using least cost allocation method:- [LCAM]
Steps:-
I. Select the cell with the least cost among all the given cost and allocate the maximum
quantity to that cell [lower of available and required].
{If there is a tie in two least cost cell then allocate to the cell where more quantity can
be allocated}
II. Strike off the exhausted factory or warehouse.
III. Apply the above steps on remaining factories or warehouse until all are exhausted.
• Initial solution using Vogel approximation method [VAM].
Steps:-
I. Take the difference of least cost and 2nd least cost from each row and column. This
difference is called as plenty to be paid of the least cost allocation is missed. If there
are two least cost cell in a row or column then penalty would be zero.
II. Select the highest difference among all the rows and columns and allocate maximum
possible units to the least cost cell in its row or column.
* If there is a tie in the highest difference then locate least cost cell inside all the tied
highest differences row and column.
* If there is a tie in the least cost cell then select the cell where more units can be
allocated.
* If equal units can be allocated to the tied least cost cell then select anyone.
III. Strike off the exhausted row and column
IV. Continue the above until all the rows and columns are striked off.

Operation Management | 41
 Transportation

1 Dec’18; Dec’20
Find initial Feasible Solution by North-West Corner method.

W1 W2 W3 W4 SUPPLIES
F1 47 59 55 57 150
F2 44 54 52 59 270
F3 49 64 59 61 370
F4 51 63 54 60 230
DEMAND 210 330 260 220

Wj → Warehouse
Fj → Factory, and
Cell entries are unit costs

Answer
Initial Feasible Solution by North- West Corner method.
W1 W2 W3 W4 SUPPLIES
F1
150 150
47 59 55 57
F2
60 210 270
44 54 52 59
F3
120 250 370
49 64 59 61
F4
10 220 230
51 63 54 60
DEMAND 210 330 260 220

42 |Operation Management
 Project Management

Chapter 11
Project Management

1. MEANING OF PROJECT MANAGEMENT :

Project means a work with the following characteristics:-
a) Customized
b) Uniqueness
c) Requires time and resource
d) Divided into several activities
The project management is the use of tools and techniques of management to satisfy the
need and expectations of stakeholders.
The objective of project management is twofold:-
a) Deliver the project within time
b) Satisfy the stakeholder from the quality

2. NETWORK DIAGRAM/ARROW DIAGRAM :

It is a diagrammatic presentation of work to be done in a project.
It is to be understood in the following aspects :-
a) Activities :-
i) Activity is represented by an arrow in left to right direction.
ii) An activity must consume some time and resources.
iii) The name of an activity is written above or below its arrow.
iv) The duration of an activity is written in brackets besides its name.
v) The length of arrow of the activity has no relation to its duration.
vi) Activities can be parallel or sequential.
vii) Every activity must start from and end to an event.
viii) All the preceding activities must be completed before the succeeding activities is
to be started.
b) Events/Nodes :- These are the indicators of start and end of an activity. It is shown by
a circle in network diagram.
Event can be of following types :-
i) Start Event and End Event :- W.r.t an activity

| 43
Operation Management
 Project Management

ii) First Event and Last Event :- W.r.t a project

Start of project = First event
End of project = Last event
There can be only one first and last event
iii) Merge Event and Burst Event
Merge Event
Burst Event
c) Error in Network Diagram :-
i) General Rule 1 :- All event should be numbered in such a manner that a higher
number event would be towards the right side of lower number events or in the
same vertical direction of lower number event.
If this rule is not follow, then there would be an error – “Looping”
ii) General Rule 2 :- Every event must have at least one activity entering into it and
one activity leaving from it, except the first and last event.
If this rule is not followed, then the error is called as “DANGLING” Error.
iii) General Rule 3 :- No two activities can have same head event and tail event.
If this rule is not followed, the error is called as “Duplicating” Error.
d) Rectification of Errors :-
i) Looping Error:- Rectified by correcting the event numbers or re sizing the arrows.
ii) Dangling Error:- Rectified by using a dummy activity. Dummy activity is used to
rectify errors or to link two or more activities in order to make a network logical.
It is shown by dotted arrows.
Dummy does not consume any time or resource.
iii) Duplicating Error :- Else dummy activities.
iv) Redundancy Error :- Do not use dummy unnecessarily

3. CRITICAL PATH AND FLOAT ANALYSIS :

Example :
Activities Duration Days
1–2 5
1–3 6
2–4 3
2–5 7
3–5 8
4–5 4
5–6 11

44 |Operation Management
 Project Management

1) Network Diagram :-

8
3 4
5 10 highest [wait for all]
2 4
5 7 7
0 14 25
1 maximum 11 6
[no delay]
5 25
0 minimum 14
6 8
6 3
6

2) List of all the paths and their duration

Paths means the link of several activities that would join its event to the last event.
Paths Duration
1–2–4–5–6 23 [ 5+3+4+11 ]
1–2–5–6 23 [ 5+7+11 ]
1–3–5–6 25 [ 6+8+11 ]
3) Which is the critical path :
• Critical path is the path with longest duration.
• It is shown in network by bold or shaded arrows.
• The activities on the critical path are called as critical activities.
The critical path is 1 – 3 – 5 – 6 as its duration is longest at 25 days.
4) What is the minimum project duration :
The minimum project duration is the duration of critical path = 25 days.
5) Earliest start time or Forward pass for each activity.
• Earliest start time is donated by “E”
• For 1St event E = 0 and for next event duration of activity leading to it is added. If
there are multiple activities leading to the event, take the highest duration.
• To check the E of an activity – check E of its Tail Event.
Earlier Finish Time = Earlier start time + Duration.
6) Latest Finish Time or Backward Pass :-
• Latest Finish Time is denoted by “L”
• For last event L = E, and for preceding events duration of activity emanating from
it is subtracted.
• If there are multiple activity, emanating then take the last duration i.e. min. value
• To check the L of an activity – Check L of its Head Event
• Latest Start Time = Latest Finish Time – Duration.

Operation Management | 45
 Project Management

7) Float of the path :-

It is applicable only for the non-critical path. It is the combincal float of all the activities
of the path.
Float of a path = Duration of critical path – Duration of non- critical path.
Float of path 1 – 2 – 4 – 5 – 6 = 25 – 23 = 2 days
Float of path 1 – 2 – 5 – 6 = 25 – 23 = 2 days
8) Float of an Activity or Total Float :-
• It is applicable only for non-critical activities.
• For critical activity it must be zero.
Total float = [ Latest Finish Time – Earliest Start Time ] – Duration
OR
= Latest Start Time – Earliest Start Time
OR
= Latest Finish Time – Earliest Finish Time
Time Schedule
Activity Duration ( D ) Earliest Earliest Latest Latest Start Total Float
(TE) (HE) Start Finish Time Finish Time (L – D) [LFT – EST] or
Time ( E ) (E+D) Time ( L ) [LST – EST]
1–2 5 0 5 7 2 2
1–3 6 0 6 6 0 0
2–4 3 5 8 10 7 2
2–5 7 5 12 14 7 2
3–5 8 6 14 14 6 0
4–5 4 8 12 14 10 2
5–6 11 14 25 25 14 0

4. CRASHING THE PROJECT :

(a) Crashing means completing a project earlier than schedule.
This is done by increasing the man power or other resources.
(b) Benefits of crashing –
i) Savings in overhead cost allocated to the project
ii) Reward for early completion
(c) Cost of Crashing –
Additional cost of overtime, extra machine, hiring, etc.

46 |Operation Management
 Project Management

(d) Crash – cost slope –

It means additional cost to reduce one day of the project
Crash Cost − Normal Cost Change in Cosst
= =
Normal Time − Crash Time Change in time
(e) Problems are solved within two objectives :-
i) Optimum completion time –
Crash cost slope should be less than or equal to [ < = ] overhead cost saved due
to crashing.
ii) Minimum Completion Time –
Crash cost slope may exceed the indirect cost saved.
(f ) Ultimately the objective of crashing is to reduce the project duration
↓
Project duration is determined from critical path duration
↓
And critical path duration is determined from critical activity duration. Therefore, the
focus of crashing should be to reduce the critical activity duration.

| 47
Operation Management
 Project Management

1 Jun’17
A project consists of eleven activities A, B, C, D, E, F, G, H, I, J and K. The relationship among
various activities is as follows:
Activity Preceding Activity
A —
B A
C A
D B
E C
F D,E
G F
H F
I G
J I,H
K J

Draw the network diagram.

Answer
The network diagram:

7
3
B D G I

A F J K
1 2 5 6 8 9 10
H
C E
4

2 Dec’17-Set II; Dec’20

Draw the network for the following activities and find critical path and total duration of the
project. 2+2+2=6
Activity Duration (months)
1-2 2
2-3 3
2-4 1

48 |Operation Management
 Project Management

3-4 2
4-5 3
5-6 2
5-7 4
6-8 1
7-8 3
8-9 4

Answer
Network diagram:

3 3 2 4 6 3
2 3 4
1 2 4 5 8 8
1
2 1
7

Paths Duration (months)

1-2-3-4-5-7-8-9 2+3+2+3+4+3+4=21 (Critical path)
1-2-3-4-5-6-8-9 2+3+2+3+2+1+4=17
1-2-4-5-7-8-9 2+1+3+4+3+4=17
1-2-4-5-6-8-9 2+1+3+2+1+4=13

3 Dec’19
Draw the network for the following activities and find the Critical Path and Total duration of the
project. [6]
Activity Predecessor Duration (months)
A - 2
B - 3
C - 5
D A 4
E B 1
F B 5
G C 8
H D 1
I E 2
J F, G 4

| 49
Operation Management
 Project Management

K H, I 3
L K, J 2

Answer

Calculation of Critical path:

(i) A-D-H-K-L = 2+4+1+3+2 = 12
(ii) B-E-I-K-L = 3+1+2+3+2 = 11
(iii) B-F-J-L = 3+5+4+2 = 14
(iv) C-G-J-L- = 5+8+4+2 = 19 = Critical Path (Project duration)

50 |Operation Management
 Economic Batch Quantity

Chapter 12
Economic Batch Quantity

Cost associated with production in a batch

Production Cost Setup cost Carrying cost

Annual production unit Average inventory ×
× No. of setup × Cost/setup Carrying Cost/unit p.a.
COP/unit
Qty & batch
Avg. Inventory =
No. of setup = 2
Irrelevant cost as it would
Annual production
not change with qty & batch
Qty & batch

Relevant cost as would change

with change in quantity/batch

• Economic batch quantity: It is the quantity per batch which when produced would
minimize total relevant batch cost.
Thus, the total or sum of set up and carrying cost is minimized at the level where both costs
are equal.
Total set-up cost = total carrying cost
A Q
×S = ×C
Q 2
 2AS 
Q2 =  
 C 
2AS
Q=
C
Annual Production
Optimum number of batches p.a =
EBQ
• Time Interval between two-batches or setup or runs = 360 days/No. of batch period

Operation Management | 51
 Economic Batch Quantity

• EBQ when quantity produced are sold gradually :

Let the sales units per day = d and production units per day = p
Therefore, % of unit sold everyday = d/p and
% of unit in inventory everyday = 1 – (d/p)
Q  d
The average inventory carrying cost will be computed as ×  1−  × C
2  p
For EBQ,
Total setup cost = Total Carrying cost
A Q  d 2AS 2AS
× S = ×  1−  × C or , Q2 = or , Q =
Q 2  p  d  d
C ×  1−  C ×  1− 
 p  p

52 |Operation Management
 Indifference Point Analysi

Chapter 13
Indifference Point Analysis

• Applicability: - when there are 2 or 3 options of costs to do a work which are mutually
exclusive.

• Indifference point:-it is the level of sales at which total cost or total profit of 2 options
would be equal.
∆F.C.
Indifference point (units) =
∆V.C / Unit or contribution / Unit
• Interpretation :-
Expected sales (units) Selection
= I/D point Any option
> I/D point High F.C option
< I/D point Low F.C option

• For 3 options:-
1. I/D point between option A and option B
2. I/D point between option B and option C
3. I/D point between option A and option C
Then interpretations are combined.

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Operation Management
 Bottleneck Operations

Chapter 14
Bottleneck Operations

Dept B
=20 Units
Dept A
Input
=100 Units

Output of
bottleneck
When a department is a bottleneck?
1. hours available is less
2. time unit is higher

System Capacity
System capacity = Output of bottleneck

System Efficiency
Actual output
System efficiency =
System capacity

How to remove bottleneck?

1. Share the work with non-bottleneck
2. Increase the capacity by making more investment

54 |Operation Management
 Bottleneck Operations

1 Dec’17; Dec’19
A firm has four work centres, A, B, C & D, in series with individual capacities in units per day
shown in the figure below.
Work Centres

Raw A B C D Actual
Materials output
(400) (310) (370) (340) (260)
(i) Identify the bottle neck centre.
(ii) What is the system capacity?
(iii) What is the system efficiency? [9]

Answer
(i) The bottle neck centre is the work centre having the minimum capacity. Hence, work centre
‘B’ is the bottleneck centre.
(ii) System capacity is the maximum units that are possible to produce in the system as a
whole. Hence, system capacity is the capacity of the bottle neck centre i.e., 310 units.
(iii) System efficiency = Actual output/ System capacity
= (260/310) x 100 (i.e., maximum possible output)
= 83.87%

2 Dec’17-Set II
A firm has four work centres, A, B, C & D, in series with individual capacities in units per day
shown in the figure below:
Raw A B C D Actual
Materials output
(450) (420) (360) (390) (310)
(i) Identify the bottle neck centre.
(ii) What is the system capacity?
(iii) What is the system efficiency? 3x3=9

Answer
(i) The bottle neck centre is the work centre having the minimum capacity. Hence, work centre
‘C is the bottleneck centre.
(ii) System capacity is the maximum units that are possible to produce in the system as a
whole. Hence, system capacity is the capacity of the bottle neck centre i.e., 360 units.
(iii) System efficiency = Actual output/ System capacity = (310/360) × 100 (i.e.. maximum
possible output) = 86.11%

Operation Management | 55
 Number of Machines

Chapter 15
Number of Machines

Effective Time Available for production

Number of Machines =
Time required per unit

1 Dec’17
A department works on 8 hours shift, 285 days a year and has the usage data of a machine, as
given below:
Product Annual Demand (units) Processing time (Standard time in hours)
A 360 7-0
B 435 5-0
C 570 60

Calculate:
(i) Processing time needed in hours to produce products A, B and C,
(ii) Annual production capacity of one machine in standard hours, and
(iii) Number of machines required. 2×3=6

Answer
(i) The processing time needed in hours to produce products A, B and C in the quantities
demanded visiting the standard time data;
Product Annual Demand Processing time Processing time
(units) (Standard time in hours) needed (hours)
A 360 7.0 360 x 7 = 2,520
B 435 5.0 435 x 5 = 2,175
C 570 6.0 570 x 6 = 3,420
Total = 8,115 hrs.
(ii) Annual production capacity of one machine in standard hours = 8 x 285 = 2,280 hours/year
(iii) Number of machines required = Work load per year/Production capacity per machine =
8,115/2,280 = 3.5592 machines = 4 Machines

56 |Operation Management
 Number of Machines

2 Dec’17-Set II
A manager has to decide about the number of machines to be purchased. He has three options
i.e., purchasing one or two or three machines. The data are given below:
Number of machine Annual fixed cost Corresponding range of
output
One ` 14,000 0-350
Two ` 17,000 351-550
Three ` 23,000 551-900

Variable cost is ` 30 per unit and revenue is ` 70 per unit.

(i) Determine the break-even point for each range.
(ii) If projected demand is between 540 and 570 units, how many machines should the
manager purchase? 3+4=7

Answer
(i) Break-even point
Let QBEP be the break-even point.
FC = Fixed Cost. R = Revenue per unit, VC = Variable Cost
Then QBEP R = FC + (VC) QBEP
QBEP = FC/(R-VC)
Let Q1 be the break-even-point for one machine option
Then, Q1 = 14000/(70 – 30) = 14000/40 = 375 units (Not within the range of 0 to 300)
Let Q2 be the break-even-point for two machines option.
Then, Q2 = 17000/(70 - 30) = 17000/40 = 425 units (within the range of 351 to 550)
Let Q3 be the break-even-point for three machines option.
Then, Q3 = 23000 / (70 - 30) = 23000 / 40 = 575 units (within the range of 551 to 900)
(ii) The projected demand is between 540 to 570 units. The breakeven point for single machine
option (i.e., 375 units) is not feasible because it exceeds the range of volume that can be
produced with one machine (i.e., 0 to 350).
Also, the break-even point for 3 machines is 575 units which is more than the upper limit
of projected demand of 540 to 570 units and hence not feasible. For 2 machines option the
break even volume is 425 units and volume range is 351 to 550. Hence, the demand of 540
can be met with 2 machines and profit is earned because the production volume of 550 is
more than the break even volume of 425. If the manager wants to produce 570 units with
3 machines, there will be loss because the break even volume with three machines is 575
units. Hence, the manager would choose two machines and produce 540 units and meet
demand upto 550 units.

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Operation Management
 Capacity Planning

Chapter 16
Capacity Planning

• Capacity: - It means time available to do a work or the work that can be done in available
time.
• Types of capacity:-
1. Installed capacity or designed capacity or theoretical capacity or maximum
capacity: - as claimed by the manufacturer of machine.
Installed capacity = No of Machines × hours /day × days/period × units/hr.
2. Practical or achievable or planned capacity:-
It is calculated based on efficiency and utilization of a development.
Planned capacity = Designed capacity × efficiency ratio × utilization ratio
Standard hours for actual production
Efficiency ratio =
Actuaal Hours
Actual Hours
Utilization ratio =
Budgeted hours or scheduled available hours
3. Normal or average demonstrated capacity: - it is the average of past actual capacity
utilization ignoring too high or too low figures.
• Productivity ratio = efficiency ratio × utilization ratio
Actual output
Efficiency ratio based on units =
Standard outp
put

Actual output
Utilization ratio based on units =
Budgeted outtput

58 |Operation Management
 Capacity Planning

1 Dec’17-Set II
The following data is available for a manufacturing unit:

No. of operators 12
Daily working hours 8
No. of days per month 25
Std. Labour hours per unit 8

The following information was obtained for November 2016:

Man-days lost due to absenteeism 25

Unit produced 240

Find the following:

(i) Percent absenteeism
(ii) Efficiency of utilisation of labour 3+3=6

Answer
No. of days per month = 25
Daily working hrs. = 8
No. of operators = 12
No. of Man days= 12x25 = 300
Man days. Total working hrs.= 300 x 8 = 2.400
Hours lost in absenteeism = 25 x 8 = 200
(i) Percent absenteeism = (200 hrs./2400 hrs.) x 100 = 8.33%
(ii) Efficiency of utilisation of labour:
Standard labour hour to produce 240 units 240 x 8 = 1920 hrs.
Total labour hour = 2400
Efficiency of utilisation of labour
= (Standard labour hours/ Total labour hours) x 100
= (1920/2400) × 100 = 80%

2 Dec’19
The following data is available for a manufacturing unit:

No. of operators 16
Daily working hours 8

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Operation Management
 Capacity Planning

No. of days per month 25

Standard production per month 400 units
Standard labour hours per units 8

The following information was obtained for June 2019:

Man days lost due to absenteeism 36

Units produced 300
Idle time 260 man hours

Find the following: 2×4=8

(i) Percent absenteeism
(ii) Efficiency of utilization of labour
(iii) Productive efficiency of labour
(iv) Overall productivity of labour in terms of units produced per man per month.

Answer
(i) Percent absenteeism = [(No. of Hrs. lost in absenteeism in a month)/(Total working hours
per month)] x 100 = (36 x 8)/ (16 x 25 x 8) = 0.09 x 100 = 9%
(ii) Efficiency of utilization of labour = [(Standard labour hour to produce 300 units) / (Total
labour hour)] x 100 = [(300 x 8) / (16 x 25 x 8)] x 100 =75%
(iii) Determination of Productive efficiency of labour:-
Standard time required to produce 300 units = 300 x 8 = 2400 labour hours. In June 2019,
man hours lost = 36 x 8 = 288
In June 2019, Idle time (in hours) = 260 Total loss of time = 548 hrs.
Productive hours available in June 2019 = 16 x 25 x 8 = 3,200 hrs. Less, Total loss of time:
548 hrs.
Actual Labour hours = 3200 - 548 = 2,652 hrs
Productive efficiency of labour = [(Standard Labour hours) / (Actual labour hours)] x 100
= (2400/2652) x 100
= 90.497 %
= 90.50 % (approx.)
(iv) Overall productivity of labour in terms of units produced per man per month: 16 men
produce 400 units, Standard labour productivity = 400/16 = 25 units In June 2019, overall
productivity = 300/16 = 18.75 units
i.e. productivity falls by [(25-18.75)/25] x 100 = 25%

60 |Operation Management
 Time and Work Study

Chapter 17
Time and Work Study

• Time Study: -time study means study of time taken to produce in several occupation by a
machine on a worker.
• Work study: - work study means that the study of time required to do a work or Standard
time to do the work.

Time Study
• Time study involves study of a standard time and actual time.
• The comparison of standard or actual time for a work done by a worker of a department
is called as a efficiency rating or performance rating or productivity rating or
point rating system.
• The actual time considered above is the actual productive time i.e. net of down-time
or idle-time. If actual productive time varies in different counts then average of such
count may be taken.
NOTE: - while computing average of actual time do not consider too high or too low
value.
• The standard time taken above is also the productive Standard Time. In general, the
time allowed or standard time also include the Standard allowance for rest and idle
time of the workers.
It is shown as below:-
Standard available time ✓
Less: allowance ✓
Standard Productive time for efficiency rating. ✓

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Operation Management
 Time and Work Study

1 Jun’17
Calculate the standard time per article produced from the following data obtained by a work
sampling study: [10]
Total no. of observations = 2,600
No. of working observations = 2,000
No. of units produced in 100 hours duration = 5,000 numbers
Proportion of manual labour = ¾
Proportion of machine time = ¼
Observed rating factor = 120%
Total allowances =15% of normal time

Answer
(1) Actual working time in the duration of 100 hours = 100×(2,000/2,600) = 76.923 hours
(2) Time taken per article = (76.923×60)/5,000 = 0.923 minute
(3) Observed manual labour time per article = 0.923×(3/4) = 0.6922 minute
(4) Observed machine time per article = 0.923×(1/4) = 0.230 minute
(5) Normal labour time per unit = Observed time/unit × Rating factor = 0.6922×1.20 = 0.8306
minute
(6) Standard labour time per unit = 0.8306+(15/100)×0.8306 = 0.9552 minute
(7) Standard time per unit of article produced = 0.9552 + 0.230 =1.185 minutes.

62 |Operation Management
 Plant Layout

Chapter 18
Plant Layout

1. LAYOUT
Positioning of plants within an infrastructure

2. TYPES OF LAYOUT :
a) Product layout :- Eg :- sugar, biscuit, etc.
b) Process layout :- Eg :- hospitals
c) Fixed layout :- Eg :- ship or aircraft building

3. OBJECTIVE OF LAYOUT :
To minimize the movement cost between two department or two plants.

4. MOVEMENT COST :
= Load (units ) × distance × cost/unit for transportation or movement
[ The analysis is called as load distance analysis ]

5. CRAFT
Computerised Relative Allocation of facilities technique. Here the allocation is done by
exchanging the position on a pair of department having a common border or having the
same area. By way of Trail and Error, an optimum layout is determined.

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 Plant Layout

1 Dec’17-Set II; Dec’19

A defence Contractor is evaluating its machine shops current process layout. The figure below
shows the current layout and the table shows the trip matrix for the facility. Health and Safety
regulations require departments E and F to remain at their current positions.

E B F
A C D

Current Layout
From/To A B C D E F
A 8 3 9 5
B 3
C 9 10
D 3
E 3
F

Can layout be improved? Also evaluate using load distance (Id) score. [8]

Answer
Keep the departments H and Fat the current locations. Because C must be as close as possible
to both E and F, put C between them. Place A directly south of E. and B next to A. All of the heavy
traffic concerns have been accommodated. Department D is located in the remaining place.
The proposed layout is shown in figure below:
Proposed Layout

E C F
A B D

Evaluation of (Id) score for existing and proposed layout

Dept. Pair 1 No. of trips (1) Existing Layout Proposed Layout
Distance Load x Distance Distance Load x Distance
(2) (1)x(2) (3) (1)x(3)
A-B 8 2 16 1 8
A-C 3 1 3 2 6
A-E 9 1 9 1 9
A-F 5 3 15 3 15
B-D 3 2 6 1 3
C-E 9 2 18 1 9
C-F 10 2 20 1 10

64 |Operation Management
 Plant Layout

Dept. Pair 1 No. of trips (1) Existing Layout Proposed Layout

Distance Load x Distance Distance Load x Distance
(2) (1)x(2) (3) (1)x(3)
D-F 3 1 3 1 3
E-F 3 2 6 2 6
Total 96 69

The load distance (Id) scores for the existing and proposed layout are shown above. As Id score
for proposed layout is less, the proposed layout indicates improvement over existing.

2 Jun’19
The present layout is shown in the figure. The manager of the department is intending to
interchange the departments C and F in the present layout. The handling frequencies between
the departments is given. All the departments are of the same size and configuration. The
material handling cost per unit length travel between departments is same. What will be the
effect of interchange of departments C and F in the layout? 6 + 10 = 16

A C E
B D F

From / To A B c D E F
A — 0 80 150 60 10
B — — 90 0 90 110
C — — — 40 0 5
D — — — — 160 20
E — — — — — 60
F — — — — — —

Answer
(i) The distance matrix of the present layout:
From / To A B c D E F
A 1 1 2 2 3
B 2 1 3 2
C 1 1 2
D 2 1
E 1
F -
(ii) Computation of total cost matrix (combining the inter-departmental material handling
frequencies and distance matrix).

Operation Management | 65
 Plant Layout

From / To A B c D E F Total
A 0 80 300 120 30 530
B 180 0 270 220 670
C 40 0 10 50
D 320 20 340
E 60 60
F –
Total 1,650

If the departments are interchanged, the layout will be represented as shown below.

A F E
B D C
(iii) The distance matrix and the cost matrix of the new layout are shown:
From / To A B c D E F
A 1 3 2 2 1
B 2 1 3 2
C 1 1 2
D 2 1
E 1
F -
(iv) Total cost matrix for the modified layout.
From / To A B c D E F Total
A 0 240 300 120 10 670
B 180 0 270 220 670
C 40 0 10 50
D 320 20 340
E 60 60
F –
Total 1,790
(v) Interpretation and conclusion: The interchange of departments C and F increases the total
material handling cost. Thus, it is not a desirable modification.

66 |Operation Management
 Miscellaneous

Chapter 19
Miscellaneous

1 Jun’17
[Labour Costing]
An incentive scheme allows proportionate production bonus beyond 100% performance level.
Calculate the amount of
(i) Incentive bonus and
(ii) Total payment received by an operator on a particular day during which the following
particulars apply:
Operation : Assembling a table clock set
Work Content : 40 Standard minutes per assembled set
Attended Time : 8 Hours
Time spent on unmeasured work : 3 Hours
Number of sets assembled during the day : 10
Wage rate : ` 5 per hour
(iii) What is the net labour productivity achieved by the operator during the day?

Answer
Total standard minutes worked during the day = 40×10 = 400, working time = 8-3 = 5 hours =
300 minutes.
Performance = (400×100)/300 = 133.34% or 0.3333
(i) Incentive bonus = 0.3333×5×5= ` 8.33 for five hours on measured work
(ii) Guaranteed wage for 8 hours = 8×5 = ` 40; Total earnings for the day = ` (8.33+40) =
` 48.33
(iii) Net labour productivity = Output in units/Net person hours = 10/5 = 2 sets per hour.

2 Jun’18
[Material Costing]
The monthly requirement of raw material for a company is 3200 units. The carrying cost is
estimated to be 25% of the purchase price per unit, in addition to ` 2.5 per unit.
The purchase price of raw material is ` 24 per unit.
The ordering cost is ` 28 per order.

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 Miscellaneous

(i) You are required to find EOQ and Total cost.

(ii) What is the total cost when the company gets a concession of 6% on the purchase price if
it orders 3200 units or more but less than 6200 units per month?
(iii) What happens when the company gets a concession of 15% on the purchase price when it
orders 6,200 units or more?
(iv) Which of the above three ways of orders the company should adopt?
4 + 2 + 2 + 2 = 10

Answer
(i) D=3200 × 12 = 38,400 units per annum
C0 = 28
Ch=2.5 + 25% of 24 = 8.5
EOQ = √[(2 × 28 × 38,400)/8.5] = 502.97 = 503 units (approx.)
Total Cost = Co + Crm + Ch
= [(38,400 × 28)/503)] + (38,400 × 24) + [(503 × 8.5)/2]
= 2,137.57 + 9,21,600 + 2,137.75
= 9,25,875.32
(ii) When the company has an option to order between 3200 and 6200 units, the EOQ should
be calculated with a reduction in price by 6% (due to concession); The purchase price =
94% of 24 = 22.56.
D = 38,400 units per annum;
C0 = 28;
Ch = 2.5 + 25% of 22.56 = 8.14
EOQ = √[(2 × 28 × 38,400)/8.14] = 513.98 = 514 units (approx.)
Total Cost = C0 + Crm + Ch
= [(38,400 × 28)/514)] + (38,400 × 22.56) + [(514 × 8.14)/2]
= 2091.828 + 8,66,304 + 2,091.98 = 8,70,487.8
(iii) When the company orders more than 6,200 units purchase price = 85% of 24 (because
15%) concession) = 20.4;
D = 38,400 units per annum;
Co = 28
Ch= 2.5 + 25% of 20.4 = 7.6
EOQ = √[(2 × 28 × 38,400)/7.6] = 531.92 = 532 units (approx.)
Total Cost = C0 + Crm + Ch
= [(38,400 × 28)/532)] + (38,400 × 20.4) + [(532 × 7.6)/2]

68 |Operation Management
 Miscellaneous

= 2021.052 + 7,83,360 + 2,021.6 = 7,87,402.65

(iv) Comparing these costs, we notice that the cost is minimum (7,87,402.65) for (iii) order.
Therefore the company should adopt a policy of ordering 532 units per order.

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Operation Management
 Objectives

Objectives

1 Jun’17
(a) Choose the correct answer: 1 x 10 = 10
(i) Out of the following trends in production/operations management, which one is
sometimes called as agile manufacturing?
(A) Re-engineering
(B) Supply-Chain Management
(C) Lean Production
(D) Flexibility
(ii) Out of the following factors that are affecting Capacity Planning, which one is Less
Controllable one?
(A) Machine break-downs
(B) Amount of labour employed
(C) Facilities installed
(D) Shifts of work per day
(iii) Which of the following stages of Product Life Cycle does attribute beginning of
substantial increase in Sales and Profits?
(A) Introduction
(B) Growth
(C) Maturity
(D) Decline
(iv) This aims at finding the best and most efficient way of using the available resources -
men, materials, money and machinery:
(A) Time Study
(B) Work Study
(C) Method Study
(D) Job Evaluation

(v) Which one is NOT an index of Productivity?

(A) Man-hour output
(B) Productivity ratio
(C) TQM
(D) Use of Financial Ratios

70 |Operation Management
 Objectives

(vi) The time by which an activity can be rescheduled without affecting the other activities
- preceding or succeeding is called as
(A) Slack
(B) Independent Float
(C) Free Float
(D) Total Float
(vii) Reliability and per unit cost of which of the following spares are less?
(A) Regular spares
(B) Insurance spares
(C) Capital spares
(D) Rotable spares
(viii) For a marketing manager, the sales forecast is
(A) estimate of the amount of unit sales for a specified future period.
(B) arranging the salesmen to different segments of the market.
(C) to distribute the goods through transport to satisfy the market demand.
(D) to plan the sales methods.
(ix) The activity of specifying when to start the job and when to end the job is known as
(A) Planning
(B) Scheduling
(C) Timing
(D) Follow-up
(x) The lead time is
(A) Time for placeholders for materials
(B) Time of receiving materials
(C) Time between receipt of material and using materials
(D) Time between placing the order and receiving the materials
(b) Match Column-I with Column-II: 1×6=6
I II
(A) Aviation Fuel (i) Value Analysis
(B) Brainstorming (ii) Machine Shop
(C) Forgings (iii) Turbo-Alternator
(D) Tools (iv) Refinery
(E) Hydro-electricity (v) Job Evaluation
(F) Ranking Method (vi) Smithy
(c) State whether the following statements are ‘True’ or ‘False’: 1× 6 = 6
(i) Merit Rating is used to determine the cost of a product.

Operation Management | 71
 Objectives

(ii) Project costs increase as the duration of the project increases.

(iii) In carrying out Job Evaluation studies, point system is the best method.
(iv) Production planning and control is essentially concerned with the control of Finished
goods.
(v) A Productivity Index is a device of expressing the ratio between outputs and the inputs
of the resources numerically.
(vi) If the total float value is zero, it means the resources are just sufficient to complete the
activity without delay.

Answer
(a) (i) (d) Flexibility
(ii) (a) Machine break-downs
(iii) (b) Growth
(iv) (b) Work Study
(v) (c) TQM
(vi) (b) Independent Float.
(vii) (a) Regular Spares.
(viii) (a) Estimate of the amount of unit sales for a specified future period.
(ix) (b) Scheduling.
(x) (d) Time between placing the order and receiving the materials.
(b)
I II
(A) Aviation Fuel (iv) Refinery
(B) Brainstorming (i) Value Analysis
(C) Forgings (vi) Smithy
(D) Tools (ii) Machine Shop
(E) Hydro-electricity (iii) Turbo-Alternator
(F) Ranking Method (v) Job Evaluation
(c) (i) False
(ii) True
(iii) True
(iv) False
(v) True
(vi) True

72 |Operation Management
 Objectives

2 Dec’17-Set I
(a) Choose the correct answer: 1 x 10 = 10
(i) The effective capacity is NOT influenced by which of the following factors:
(a) Forecasts of demand
(b) Plant and labour efficiency
(c) Subcontracting
(d) None of the above
(ii) Key aspects in process strategy does NOT include which of the following:
(a) Make or buy decisions
(b) Capital intensity
(c) Process flexibility
(d) Packaging
(iii) The example of worker involvement, as a recent trend in production/operations
management is
(a) SCM
(b) Just-in-Time
(c) Quality Circle
(d) MRP
(iv) In an organization, the Production Planning and Control department comes under
(a) Planning department
(b) Manufacturing department
(c) Personnel department
(d) R & D department
(v) JIT stands for
(a) Just In Time Purchase
(b) Just In Time Production
(c) Just In Time use of Materials
(d) Just In Time Order the Material
(vi) In route sheet or operation layout, one has to show
(a) a list of materials to be used
(b) a list of machine tools to be used
(c) every work center and operation to be done at that work center
(d) the cost of product
(vii) One of the important charts used in Programme control is
(a) Material chart

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 Objectives

(b) Gantt chart

(c) Route chart
(d) Inspection chart
(viii) Production planning in the intermediate range of time is termed as
(a) Production planning.
(b) Long range production planning.
(c) Scheduling.
(d) Aggregate planning.
(ix) Preventive maintenance is useful in reducing
(a) Inspection Cost
(b) Cost of premature replacement
(c) Shutdown Cost
(d) Set-up Cost of machine
(x) Which one of the following standards is associated with the “Quality Assurance in
Production and Installation”?
(a) ISO 9001
(b) ISO 9002
(c) ISO 9003
(d) ISO 9004
(b) Match Column A with Column B: 1x6=6
Column A Column B
(A) Fixture (i) Conversion of Inputs into outputs
(B) Process layout (ii) Network Analysis
(C) Capital Intensity (iii)General purpose machines
(D) Operations Management (iv) Mix of equipment and labour which will be used
by the firm
(E) Crashing (v) Appliance for holding the work
(F) Less prone to Obsolescence (vi) Grouping together of similar machines in one
department
(c) State whether the following statements are ‘True’ or ‘False’: 1 x 6 = 6
(i) Customer service is a key objective of operations management.
(ii) In general short term forecasting will be more useful in production planning.
(iii) If the total float value is zero, it means the resources are just sufficient to complete the
activity without any delay.
(iv) Job Evaluation is a systematic approach to ascertain the labour worth of a job.
(v) Load control is typically found wherever a particular bottleneck machine does not
exist in the process of manufacturing.

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(vi) The term “aesthetics” which appeals to the human sense does not add value to the
product.

Answer
(a) (i) (d)
(ii) (d)
(iii) (c)
(iv) (b)
(v) (b)
(vi) (c)
(vii) (b)
(viii) (d)
(ix) (c)
(x) (b)
(b)
I II
(A) Fixture (v) Appliance for holding the work
(B) Process layout (vi) Grouping together of similar machines in one
department
(C) Capital Intensity (iv) Mix of equipment and labour which will be
used by the firm
(D) Operations Management (i) Conversion of Inputs into outputs
(E) Crashing (ii) Network Analysis
(F) Less prone to Obsolescence (iii) General purpose machines
(c) (i) True
(ii) True
(iii) True
(iv) True
(v) False
(vi) False

3 Dec’17-Set II
(a) Choose the correct answer: 1 x 10 = 10
(i) Number of product varieties that can be manufactured in Mass production is
(A) one only
(B) two only
(C) large varieties in small volumes

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(D) few varieties in large volumes

(ii) The act of assessing the future and make provisions for it is known as
(A) Planning
(B) Assessment *
(C) Forecasting
(D) Scheduling

(iii) Generally in continuous production, the production is carried out to:

(A) meet customer’s order
(B) provide for stock and supply
(C) meet Government orders only
(D) satisfy a few rich customers

(iv) Which one of the following activities does not fall into special project control under a
production control system?
(A) Construction of bridges
(B) Construction of office building
(C) Construction of hospitals
(D) Internal order for general stock in anticipation of orders

(v) Transportation models typically arise in situations involving physical movement of

(A) goods from one shop to another within the plant as and when required.
(B) goods from different plants to different warehouses.
(C) goods requisitioned by an important customer to be delivered instantly.
(D) goods resulting from excess stock to be shifted to a distant warehouse owned by
the company.
(vi) Which of the following statements is not correct in case of a Network Analysis in
Project Management?
(A) A job for which the slack is zero is known as critical job.
(B) An activity having independent float can be rescheduled without affecting the
other activities—preceding or succeeding.
(C) Negative float signifies increase in target time to finish the work in time.
(D) Free float is total float minus slack time of the head event.

(vii) Which one of the following is a disadvantage of Material Requirements Planning?

(A) Reduced Inventory
(B) Better customer service
(C) Lack of top management commitment
(D) Ability to price more competitive

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 Objectives

(viii) To plan for future manpower requirement

(A) long range forecasting is used.
(B) short term forecasting is used.
(C) medium range forecasting is used.
(D) there is no need to use forecasting, as future is uncertain.

(ix) Most suitable layout for continuous production is

(A) Process layout
(B) Line layout
(C) Group technology
(D) Matrix layout

(x) Which one of the following standards is associated with the “Quality Assurance in
Design, Production, Installation and Servicing”?
(A) ISO 9001
(B) ISO 9002
(C) ISO 9003
(D) ISO 9004
(b) Match Column A with Column B: 1x6=6
Column A Column B
(A) Environmental Issues (i) Customer satisfaction
(B) Plant Location (ii) Examination of human work
(C) Process Design (iii) Social responsibility
(D) Work Study (iv) Availability of labour
(E) TQM Focus (v) Discipline of organising resources
(F) Project Management (vi) Sequences of operations
(c) State whether the following statements are ‘True’ or ‘False’: 1x6=6
(i) Operations management in an organisation is not responsible for producing goods
and/or services.
(ii) One of the important steps in forecasting is gathering information to be used in
forecasting both from primary and secondary sources.
(iii) The concept of product failure is applicable only for existing products and not for new
products.
(iv) Simulation models are useful for determining optimal solutions.
(v) The most common financial ratio for measuring productivity is Added Value/ Labour
Costs.
(vi) A good product design does not ensure maintainability.

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Answer
(a) (i) (d)
(ii) (c)
(iii) (b)
(iv) (d)
(v) (b)
(vi) (c)
(vii) (c)
(viii) (a)
(ix) (b)
(x) (a)
(b)
Column A Column B
(A) Environmental Issues (iii) Social responsibility
(B) Plant Location (iv) Availability of labour
(C) Process Design (vi) Sequences of operations
(D) Work Study (ii) Examination of human work
(E) TQM Focus (i) Customer satisfaction
(F) Project Management (v) Discipline of organising resources
(c) (i) False
(ii) True
(iii) False
(iv) False
(v) True
(vi) False

4 Jun’18
(a) Choose the correct answer: 1 x 10 = 10
(i) The recent trend in the Production/Operations management which suggests the use
of minimal amount of resources to produce a high volume of high quality goods with
some variety is referred to as:
(a) SCM
(b) TQM
(c) Lean Production
(d) Just-In-Time
(ii) Effective capacity can NOT be determined by which of the following factors?

78 |Operation Management
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(a) Product design and product-mix

(b) Quantity and quality capabilities
(c) Facilities
(d) None of the above
(iii) In which of the following stages the management should try to change its approach
by changing its strategy from “buy my product” to “try my product”?
(a) Introduction
(b) Growth
(c) Maturity
(d) Decline
(iv) Conducting occasional check-ups of the products manufactured or assembled to
ensure high quality of the production is known as:
(a) Planning
(b) Scheduling
(c) Inspection
(d) Routing
(v) Which one of the following standards is associated with the “Quality Assurance in Final
Inspection Test”?
(a) ISO 9001
(b) ISO 9002
(c) ISO 9003
(d) ISO 9004
(vi) With reference to project management, identify which of the following statement is
NOT correct?
(a) Gantt chart is a principal tool used in scheduling and also in some methods of
loading.
(b) Routing is the first step in the production planning.
(c) The cost of any activity is proportional to its time of completion.
(d) The free float can be calculated by subtracting EFT from EST.
(vii) Identify which one of the following statement is NOT correct?
(a) Preventing maintenance includes lubrication, cleaning, periodic overhaul, etc.
(b) The two types of cost-cost of premature replacement and cost of breakdown-
need to be balanced.
(c) Wear and obsolescence are the two main causes of replacement of machinery in
every aspect of life.
(d) A machine is technically obsolete when another machine can do the same job
more efficiently with reduced time and also at a lower cost.
(viii) To determine where the plant should be located for maximum operating economy
and effectiveness, refers to which one of the following?

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(a) Plant layout

(b) Facility location
(c) Capacity planning
(d) Capacity requirement
(ix) Which of the following models deals with the physical movement of goods from
different supply origins to a number of different demand destinations?
(a) Simulation
(b) Transportation
(c) Lean operations
(d) Line balancing
(x) One of the objectives of maintenance is:
(a) to prevent obsolescence.
(b) to ensure spare parts management.
(c) to satisfy customers.
(d) to extend the useful life of Plant & Machinery without sacrificing the level of
performance.
(b) Match Column A with Column B: 1x6=6
Column A Column B
(A) The ability to adapt quickly to changes in volume of (i) Method Study
demand, in the product mix demanded and in product
design or in delivery schedules
(B) To address the planning and controlling of a (ii) Maintenance Stores
manufacturing process and all of its related support
functions
(C) Degree to which the system can be adjusted to changes (iii) Flexibility
in processing requirements
(D) Eliminating unnecessary motions or by changing the (iv) Network Analysis
sequence of operation or the process itself
(E) Certain specific techniques which can be used for (v) MRP-II
planning, management and control of project
(F) Availability of vital spare parts needs to be ascertained (vi) Process Flexibility
to meet an emergency like breakdown
(c) State whether the following statements are ‘True’ or ‘False’: 1 x 6 = 6
(i) The primary concern of production planning and control is the delivery of products to
customers or to inventory stocks according to some predetermined schedule.
(ii) Capacity refers to the minimum load an operating unit can handle.
(iii) Job-shop process is used when a very highly standardized product is desired in high
volumes.
(iv) The productivity is a measure of how much input is required to achieve a given output.

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(v) One of the limitations of Gantt Chart is that it does not clearly indicate the details
regarding progress of activities.
(vi) Preventive maintenance ensures greater safety to workers.

Answer
(a) (i) (c) Lean Production
(ii) (d) None of the above
(iii) (b) Growth
(iv) (c) Inspection
(v) (c) ISO 9003
(vi) (d) The free float can be calculated by subtracting EFT from EST.
(vii) (a) Preventive maintenance includes lubrication, cleaning, periodic overhaul,
etc.
(viii) (b) Facility location
(ix) (b) Transportation
(x) (d) To extend the useful life of Plant & Machinery without sacrificing the level
of performance
(b)
Column A Column B
(A) The ability to adapt quickly to changes in volume (iii) Flexibility
of demand, in the product mix demanded and in
product design or in delivery schedules
(B) To address the planning and controlling of a (v) MRP-II
manufacturing process and all of its related support
functions
(C) Degree to which the system can be adjusted to (vi) Process Flexibility
changes in processing requirements
(D) Eliminating unnecessary motions or by changing the (i) Method Study
sequence of operation or the process itself
(E) Certain specific techniques which can be used for (iv) Network Analysis
planning, management and control of project
(F) Availability of vital spare parts needs to be ascertained (ii) Maintenance Stores
to meet an emergency like breakdown
(c) (i) True
(ii) False
(iii) False
(iv) True
(v) True
(vi) True

Operation Management| 81
 Objectives

5 Dec’18
(a) Choose the correct answer: 1×10 =10
(i) Which one of the following recent trends in Production/Operations management
involves drastic measures or break through improvements to improve the performance
of a firm?
(A) Corporate Downsizing
(B) Re-Engineering
(C) Technology
(D) TQM
(ii) The starting point of Production cycle is
(A) Product design
(B) Production planning
(C) Routing
(D) Market research
(iii) Which of the following process types is used when a very highly standardized product
is desired in high volumes?
(A) Repetitive Process
(B) Batch Process
(C) Project Process
(D) Continuous Process
(iv) Which of the following aims at finding the best and most efficient way of using the
available resources¡Xmen, materials, money and machinery?
(A) Method Study
(B) Work Study
(C) Time Study
(D) Motion Study
(v) Generally the size of the order for production in Job production is
(A) small
(B) large
(C) medium
(D) very large
(vi) Which one of the following statements is NOT correct?
(A) LFT is calculated from the LFT of the head event.
(B) Slack can be calculated by adding EFT and LFT of any job.
(C) EFT is the sum of the EST and the time of duration for any event.

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(D) The Total Project time is the shortest possible time required in completing the
project.
(vii) Which one of the following is NOT the advantage of Preventive Maintenance?
(A) Better product quality
(B) Greater safety to workers
(C) Increased breakdowns and downtime
(D) Fewer large-scale repairs
(viii) Which one of the following establishes time sequence of operations?
(A) Routing
(B) Sequencing
(C) Scheduling
(D) Dispatching
(ix) MRP stands for
(A) Material Requirement Planning
(B) Material Reordering Planning
(C) Material Requisition Procedure
(D) Material Recording Procedure
(x) With reference to Aggregate Planning, identify which of the following statements is
NOT correct?
(A) It is an Intermediate-term planning.
(B) It is made operational through a master schedule, that gives the manufacturing
schedule.
(C) Facility planning and scheduling are closely related with the aggregate planning.
(D) It deals with the strategic decisions, such as purchase of facilities, introduction of
new products, processes, etc.
(b) Match Column A with Column B: 1×6=6
Column A Column B
(A) Any place in a production process where materials (i) Assignment
tend to pile up or produced at rates of speed less rapid
than the previous or subsequent operations
(B) It is used when a low volume of high variety goods are (ii) Globalisation
needed
(C) A special Linear Programming Problem (iii) Bottleneck
(D) Steep increase in the level of competition among (iv) Maintenance Request
manufacturing firms throughout the world

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(E) Systematic Quantitative structural approach to the (v) Job-Shop Process

problem of managing a project through to successful
completion
(F) This must be made in writing to a central point in the (vi) Network Analysis
organization
(c) State whether the following statements are ‘True’ or ‘False’: 1 × 6 = 6
(i) Short-term forecasting is useful to serve the purpose of estimating the inventory
requirement.
(ii) The life cycle of a product has many points of similarity with the human life cycle.
(iii) The Linear Programming problem has two basic parts: the objective function and the
constraint set.
(iv) The most widely used index of productivity is to work out the output per machine-
hour.
(v) PERT is designed for repetitive projects, whereas CPM is suitable for non-repetitive
projects.
(vi) Wear and obsolescence are two main causes for replacement of machinery in every
aspect of life.

Answer
(a) (i) (B) Re-engineering
(ii) (D) Market Research
(iii) (D) Continuous Process
(iv) (B) Work Study
(v) (A) Small
(vi) (B) Slack can be calculated by adding EFT and LFT of any job.
(vii) (C) Increased breakdowns and downtime
(viii) (C) Scheduling
(ix) (A) Material Requirement Planning
(x) (D) It deals with the strategic decisions, such as purchase of facilities, introduction
of new products, processes, etc.
(b)
Column A Column B
(A) Any place in a production process where materials (iii) Bottleneck
tend to pile up or produced at rates of speed less
rapid than the previous or subsequent operations
(B) It is used when a low volume of high variety goods (v) Job-Shop Process
are needed
(C) A special Linear Programming Problem (i) Assignment

84 |Operation Management
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(D) Steep increase in the level of competition among (ii) Globalisation

manufacturing firms throughout the world
(E) Systematic Quantitative structural approach to the (vi) Network Analysis
problem of managing a project through to successful
completion
(F) This must be made in writing to a central point in the (iv) Maintenance
organization Request
(c) (i) True
(ii) True
(iii) True
(iv) False
(v) False
(vi) True

6 Jun’19
(a) Choose the correct answer: 1×10=10
(i) Inventory cost per product in intermittent production is
(A) Higher
(B) Lowest
(C) Medium
(D) Abnormal
(ii) The act of assessing the future and make provisions for it is known as
(A) Planning
(B) Forecasting
(C) Assessment
(D) Scheduling
(iii) One of the important charts used in Programme control is
(A) Material chart
(B) Gantt chart
(C) Route chart
(D) Inspection chart
(iv) Cost reduction can be achieved through
(A) Work sampling
(B) Value analysis
(C) Quality assurance
(D) Supply chain management
(v) Linear Programming is a technique used for determining

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(A) Production Programme

(B) Plant Layout
(C) Product Mix
(D) Manufacturing Sequence
(vi) (Total station time/cycle time x Number of work stations) × 100 is known as
(A) Line efficiency
(B) Line smoothness
(C) Balance delay of line
(D) Station efficiency
(vii) Arrangement of machines depending on sequence of operations happens in
(A) Process Layout
(B) Product Layout
(C) Hybrid Layout
(D) Group Technology Layout
(viii) Line of Best fit is another name given to
(A) Method of Least Squares
(B) Moving Average Method
(C) Semi Average Method
(D) Trend Line Method
(ix) In route sheet or operation layout, one has to show
(A) A list of materials to be used.
(B) A list of machine tools to be used.
(C) Every work center and the operation to be done at that work center.
(D) The cost of product.
(x) Computers are used in Production control in this area
(A) follow-up activity.
(B) to control labour.
(C) to disseminate information.
(D) Loading, Scheduling and Assignment works.
(b) Match Column A with Column B: 1×6=6
Column A Column B
(A) Cost Benefit Analysis (i) Crashing
(B) Network Analysis (ii) Product Design
(C) Television Set (iii) Plant Layout
(D) Use of Templates (iv) Method Study
(E) Computer Aided Design (v) Project Viability Checking
(F) Motion Economy (vi) Assembly Line

86 |Operation Management
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(c) State whether the following statements are ‘True’ or ‘False’: 1×6=6
(i) A work stoppage generally reduces the cost of production.
(ii) Depending on the need, the maintenance activity may be centralized or decentralized.
(iii) Piece wage system is a substitute for proper supervision.
(iv) Most suitable layout for continuous production is Matrix Layout.
(v) Addition of value to raw materials through application of technology is production.
(vi) Breakdown maintenance doesn’t require use of standby machines.

Answer
(a) (i) (A) Higher
(ii) (B) Forecasting
(iii) (B) Gantt Chart
(iv) (B) Value analysis
(v) (C) Product Mix
(vi) (A) Line efficiency
(vii) (B) Product Layout
(viii) (A) Method of Least Squares
(ix) (C) Every work center and the operation to be done at that work center
(x) (D) Loading, Scheduling and Assignment works.
(b)
A - (v) Project viability checking
B - (i) Crashing
C - (vi) Assembly Line
D - (iii) Plan Layout
E - (ii) Product design
F - (iv) Method Study
(c) (i) False
(ii) True
(iii) False
(iv) False
(v) True
(vi) False

7 Dec’19
(a) Choose the correct answer: 1 × 10 = 10
(i) Conversion of inputs into outputs is known as
(A) Application of technology

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(B) Manufacturing products

(C) Product
(D) Operation management
(ii) Which of the following is NOT the Plant Layout Principle?
(A) Principle of sequence
(B) Principle of usage
(C) Principle of maximum travel
(D) Principle of minimum investment
(iii) Number of product varieties that can be manufactured in Mass production is
(A) one only.
(B) few varieties in large volume.
(C) two only.
(D) large varieties in small volumes.
(iv) Scheduling shows.
(A) which resource should do which job and when.
(B) total cost of production.
(C) total material cost.
(D) the flow line of materials.
(v) Which one of the following standards is associated with the “Quality Management
and Quality System Elements-Guidelines”?
(A) ISO 9001
(B) ISO 9002
(C) ISO 9003
(D) ISO 9004
(vi) In a network diagram, the activity that must be completed prior to the start of an
activity is called as
(A) Successor activity
(B) Predecessor activity
(C) Concurrent activity
(D) Dummy activity
(vii) Identify which one of the following is NOT the objective of the maintenance:
(A) To keep all production facilities and allied facilities in an optimum working
condition.
(B) To ensure specified accuracy to products and time schedule of delivery to
customers.
(C) To keep the down time of the machine at the maximum.
(D) To keep the production cycle within the stipulated range.

88 |Operation Management
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(viii) One of the important charts used in Programme control is

(A) Gantt chart
(B) Material chart
(C) Distribution chart
(D) Maintenance chart
(ix) The act of going round the production shop to note down the progress of work and
feedback the information is known as
(A) Dispatching
(B) Routing
(C) Follow up
(D) Trip card
(x) With reference to the characteristics of a good product design, which one of the
following is referred to “the ease of manufacture with minimum cost”?
(A) Reliability
(B) Productibility
(C) Specification
(D) Simplification
(b) Match Column A with Column B: 1×6=6
Column A Column B
(A) Use of minimal amounts of resources to produce a (i) KAIZEN
high volume of high quality goods with some variety
(B) Arranging and grouping of machines which are (ii) Network
meant to produce goods
(C) The extent to which a firm will produce goods or (iii) Monte Carlo Method
provide services in-house or go for outsourcing
(D) A given problem is solved by simulating the original (iv) Lean Production
data with random number generators
(E) The principle of continuous improvement (v) Make or Buy Decisions
(F) A graphical representation of all the activities and (vi) Layout
events arranged in a logical and sequential order
(c) State whether the following statements are ‘True’ or ‘False’: 1×6=6
(i) The full form of the word MRP in the term “MRP II” is Material Requirements Planning.
(ii) Strikes and lock-out are controllable factors affecting Capacity Planning.
(iii) Queue Discipline refers to the order in which customers are processed.
(iv) ISO Standards are reviewed every four years and revised if needed.
(v) The CPM has the advantage of decreasing completion times by probably spending
more money.
(vi) The rotable spares are spare parts which are required regularly and in substantial
number.

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Answer
(a) (i) (D) Operation management
(ii) (C) Principle of maximum travel
(iii) (B) few varieties in large volume.
(iv) (A) which resource should do which job and when.
(v) (D) ISO 9004
(vi) (B) Predecessor activity
(vii) (C) To keep the down time of the machine at the maximum.
(viii) (A) Gantt chart
(ix) (C) Follow up
(x) (B) Productibility
(b) (A) (iv) Lean Production
(B) (vi) Layout
(C) (v) Make or Buy Decisions
(D) (iii) Monte Carlo Method
(E) (i) KAIZEN
(F) (ii) Network
(c) (i) False
(ii) False
(iii) True
(iv) False
(v) True
(vi) False

90 |Operation Management
 Theories

Theories

1 Jun’17
[Resource Utilisation Objective of Operations Mgmt and Scope]
‘An important objective of Operations Management is Resource Utilization.’ Enumerate. Also list
the scope of Operations Management. 3+3=6

Answer
2. (a) A major objective of Operations Management is to utilize resources for the satisfaction
of customer wants effectively, i.e., customer service must be provided with the
achievement of effective operations through efficient use of resources. Inefficient
use of resources or inadequate customer service leads to commercial failure of
an operating system. Operations management is concerned essentially with the
utilization of resources, i.e., obtaining maximum effect from resources or minimizing
their loss, underutilization or waste. The extent of the utilization of the resources’
potential might be expressed in terms of the proportion of available time used or
occupied, space utilization, levels of activity, etc. Each measure indicates the extent to
which the potential or capacity of such resources is utilized. This is referred to as the
objective of resource utilization.
The following are the scope of Operation Management:
1. Location of facilities.
2. Plant layouts and Material Handling.
3. Product Design.
4. Process Design.
5. Production and Planning Control.
6. Quality Control.
7. Materials Management.
8. Maintenance Management

2 Jun’17
[Methods of Forecasting]
Briefly explain various methods of sales forecasting. [10]

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Answer
(1) Survey of buyer’s inventions or the user’s expectation method
(2) Collective opinion or sales force composite method
(3) Group executive judgment or executive judgment method
(4) Experts’ opinions
(5) Market test method
(6) Trend projection method

3 Jun’17
[Process Strategy]
Discuss the term ‘Process Strategy’. What does it involve? [3]

Answer
A process strategy is an organisation’s approach to process selection for the purpose of
transforming resource inputs into goods and services (outputs). The objective of a process
strategy is to find a way to produce goods and services that meet customer requirement
and product specification (i.e., design specifications) within the constraints of cost and other
managerial limitations. The process selected will have a long-term effect on efficiency and
production as well as flexibility, cost, and quality of the goods produced. Hence it is necessary
that a firm has a sound process strategy at the time of selecting the process.
Key aspects in process strategy include:
(i) Make or buy decisions - It refers to the extent to which a firm will produce goods or
provide services in-house or go for outsourcing (buying or subcontracting).
(ii) Capital intensity - It refers to the mix of equipment and labour which will be used by the
firm.
(iii) Process flexibility - This refers to the degree to which the system can be adjusted to
changes in processing requirements due to such factors as changes in product or service
design, changes in volume of products produced and changes in technology.

4 Dec’17-Set I
[Modern Production System]
Briefly explain the characteristics of the modern production system. [7]

Answer
‘The production management of today presents certain characteristics which make it look
totally different from what it was during the past as follows:
1. Manufacturing as Competitive Advantage: In the past production was considered to be
like any other function in the organisation. When the demand was high and production

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 Theories

capacities were inadequate, the concern was to somehow muster all inputs and use them
to produce goods which would be grabbed by market. But today’s scenario is contrasting.
Plants have excess capacities, competition is mounting and firms look and gain competitive
advantage to survive and succeed. Production system offers vast scope to gain competitive
edge and firms intend to exploit the potential. Total Quality Management (TQM), Time-
Based Competition, Business Process Re-engineering (BPRE), Just-in-Time (JIT), Focused
Factory, Flexible Manufacturing Systems (FMS), Computer Integrated Manufacturing (CIM),
and The Virtual Corporation are some techniques which the companies are employing to
gain competitive advantage.
2. Services Orientation: Service sector is gaining greater relevance these days. The production
system, therefore, needs to be organised keeping in mind the peculiar requirements of the
service component. The entire manufacturing needs to be geared to serve (i) intangible
and perishable nature of the services, (ii) constant interaction with clients or customers,
(iii) small volumes of production to serve local markets, and (iv) need to locate facilities
to serve local markets. There is increased presence of professionals on the production,
instead of technicians and engineers.
3. Disappearance of Smokestacks: Protective labour legislation, environmental movement
and gradual emergence of knowledge based organisations have brought total
transformation in the production system. Today’s factories are aesthetically designed and
built, environment friendly - in fact, they are homes away from homes. Going to factory
every day is no more excruciating experience, it is like holidaying at a scenic spot.
4. Small has Become Beautiful: It was E.F. Schumacher who, in his famous book Small
is Beautiful, opposed giant organisations and increased specialisation. He advocated
instead, intermediate technology based on smaller working units, community ownership,
and regional workplaces utilising local labour and resources. For him, small was beautiful.
Businessmen, all over the world, did not believe in Schumacher’s philosophy. Inspired by
economies of scale, industrialists went in for huge organisations and mass production
systems.

5 Dec’17-Set I
[Batch Process and Repetitive process]
Discuss about the following process types to be implemented by a Production Manager as a
strategy: 3+4=7
(i) Batch Process,
(ii) Repetitive Process.

Answer
(i) Batch process: Batch processing is used when a moderate volume of goods or services
is required and also a moderate variety in products or services. A batch process differs
from the job process with respect to volume and variety. In batch processing, volumes are
higher because same or similar products or services are repeatedly provided, examples of
products produced in batches include paint, ice cream, soft drinks, books and magazines.

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(ii) Repetitive process: This is used when higher volumes of more standardised goods or
services are needed. This type of process is characterised by slight flexibility of equipment
(as products are standardised) and generally low labour skills. Products produced include
automobiles, home appliances, television sets, computers, toys etc. Repetitive process is
also referred to as line process as it includes production lines and assembly lines in mass
production. Resources are organised around a product or service and materials move in
a line flow from one operation to the next according to a fixed sequence with little work-
in-progress inventory. This kind of process is suitable to “manufacture-to-stock” strategy
with standard products held in finished goods inventory. However, “assemble-to-order”
strategy and “mass customisation” are also possible in repetitive process.

6 Dec’17-Set II
[Recent Trends in Operations Management]
List recent trends in Production/Operations Management as a result of global competition and
the impact on manufacturing firms. Explain in one or two sentences the implication of any four
of such trends as listed. 4+4=8

Answer
Recent trends in production/operations management relate to global competition and the
impact it has on manufacturing firms. Some of the recent trends are:
i) Global Market Place Globalisation of business has compelled many manufacturing firms
to have operations in many countries where they have certain economic advantage. This
has resulted in a steep increase in the level of competition among manufacturing firms
throughout the world.
ii) Production/Operations Strategy: More and more firms are recognising the importance
of production/ operations strategy for the overall success of the business and the necessity
for relating it to their overall business strategy.
iii) Total Quality Management (TQM): TQM approach has been adopted by many firms to
achieve customer satisfaction by a never-ending quest for improving the quality of goods
and services.
iv) Flexibility: The ability to adapt quickly to changes in volume of demand, in the product
mix demanded, and in product design or in delivery schedules, has become a major
competitive strategy and a competitive advantage to the firms. This is sometimes called as
agile manufacturing.
v) Time Reduction: Reduction of manufacturing cycle time and speed to market for a new
product provides competitive edge to a firm over other firms. When companies can provide
products at the same price and quality, quicker delivery (short lead times) provide one firm
competitive edge over the other.
vi) Technology: Advances in technology have led to a vast array of new products, new
processes and new materials and components. Automation computerization, information
and communication technologies have revolutionised the way companies operate.

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Technological changes in products and processes can have great impact on competitiveness
and quality, if the advanced technology is carefully integrated into the existing system.
vii) Worker Involvement: The recent trend is to assign responsibility for decision making
and problem solving to the lower levels in the organisation. This is known as employee
involvement and empowerment. Examples of worker involvement are quality circles and
use of work teams or quality improvement teams.
viii) Re-engineering: This involves drastic measures or break-through improvements to
improve the performance of a firm. It involves the concept of clean-slate approach or
starting from scratch in redesigning the business processes.
ix) Environmental Issues: Today’s production managers are concerned more and more with
pollution control and waste disposal which are key issues in protection of environment
and social responsibility. There is increasing emphasis on reducing waste, recycling waste,
using less-toxic chemicals and using biodegradable materials for packaging.
x) Corporate Downsizing (or Right Sizing) : Downsizing or right sizing has been forced
on firms to shed their obesity. This has become necessary due to competition, lowering
productivity, need for improved profit and for higher dividend payment to shareholders.
xi) Supply-Chain Management: Management of supply-chain from suppliers to final
customers reduces the cost of transportation, warehousing and distribution throughout
the supply chain.
xii) Lean Production: Production systems have become lean production systems which use
minimal amounts of resources to produce a high volume of high quality goods with some
variety. These systems use flexible manufacturing systems and multi-skilled workforce to
have advantages of both mass production and job production (or craft production).

7 Jun’18
[Objective of Operations Management]
Categorise the objectives of operations management and discuss about each category.
2+4=6

Answer
Objectives of operations management can be categorised into:
(i) Customer service, and
(ii) Resource utilization
(i) Customer service
The first objective is the customer service for the satisfaction of customer wants.
Customer service is therefore a key objective of operations management. The Operations
Management must provide something to a specification which can satisfy the customer in
terms cost and timing. Thus, primary objective can be satisfied by providing the ‘right thing
at the right price at the right time’. These three aspects of customer service - specification,
cost and timing - are the principal sources of customer satisfaction and must, therefore,

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be the principal dimension of the customer service objective for operation managers.
Generally an organization will aim reliably and consistently to achieve certain standards,
or levels, on these dimensions, and operations managers will be influential in attempting
to achieve these standards.
Hence, this objective will influence the operations manager’s decisions to achieve the
required customer service.
(ii) Resource Utilization
Another major objective is to utilize resources for the satisfaction of customer wants
effectively, i.e., customer service must be provided with the achievement of effective
operations through efficient use of resources. Inefficient use of resources or inadequate
customer service leads to commercial failure of an operating system. Operations
management is concerned essentially with the utilization of resources, i.e., obtaining
maximum effect from resources or minimizing their loss, under-utilization or waste. The
extent of the utilization of the resources’ potential might be expressed in terms of the
proportion of available time used or occupied, space utilization, levels of activity, etc.
Each measure indicates the extent to which the potential or capacity of such resources is
utilized. This is referred to as the objective of resource utilization.
Operations management is also concerned with the achievement of both satisfactory
customer service and resource utilization. An improvement in one will often give rise to
deterioration in the other. Often both cannot be maximized, and hence a satisfactory
performance must be achieved on both objectives. All the activities of operations
management must be tackled with these two objectives in mind, and many of the problems
will be faced by operations managers because of this conflict. Hence, operations managers
must attempt to balance these basic objectives.

8 Jun’18
[Process Strategies]
“Virtually all goods or services are made by using some variation of one of three process
Strategies”. Discuss about each of the three process strategies. Also state the situation during
the decline stage of a product life cycle. (2 x 3) + 2 = 8

Answer
The process strategies are: (i) process focus (ii) repetitive focus and (iii) product focus. Each of
these three strategies are discussed below:
(i) Process Focus: Majority (about 75 per cent) of global production is devoted to low
volume, high variety products in manufacturing facilities called job shops. Such facilities
are organised around performing processes. For example, the processes might be welding,
grinding or painting carried out in departments devoted to these processes. Such facilities
are process focussed in terms of equipment, machines, layout and supervision. They
provide a high degree of product flexibility as products move intermittently between
processes. Each process is designed to perform a wide variety of activities and handle

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frequent changes. Such processes are called intermittent processes. These facilities have
high variable costs and low utilisation of facilities.
(ii) Repetitive Focus: A repetitive process is a product oriented production process that uses
modules. It falls between product focus and process focus. It uses modules which are parts
or components prepared often in a continuous or mass production process. A good example
of repetitive process is the assembly line which is used for assembling automobiles and
household appliances and is less flexible than process-focused facility. Personal computer
is an example of a repetitive process using modules in which the modules are assembled
to get a custom product with the desired configuration.
(iii) Product Focus: It is a facility organised around products, a product oriented, high-volume
low-variety process. It is also referred to as continuous process because it has very long
continuous production run. Examples of product focussed processes are steel, glass, paper,
electric bulbs, chemicals and pharmaceutical products, bolts and nuts etc. Product-focussed
facilities need standardisation and effective quality control. The specialised nature of the
facility requires high fixed cost, but low variable costs requiring high facility utilisation.
Situation during the decline stage of a product life cycle:
At the final stage of decline, profit margins touch a low level, competition becomes severe
and customers start using newer and better products. It is here that the story of a product
ends - a natural but hard end.

9 Jun’18
[Principles of Scheduling, Routing and Scheduling]
Discuss the principles of scheduling. Explain briefly the relationship between routing and
scheduling. 6+2=8

Answer
The principles of scheduling are:
(i) The principle of optimum task size: Scheduling tends to achieve its maximum efficiency
when the task sizes are small and all tasks are of the same order of magnitude.
(ii) The principle of the optimum Production plan: Scheduling tends to achieve its maximum
efficiency when the work is planned, so that it imposes an equal/even load on all the plant.
(iii) The principle of the optimum operation sequence: Scheduling tends to achieve its
maximum efficiency when the work is planned so that the work centers are normally used
in the same sequence.
The first principle has a tendency when applied, not only give good results but also to be self-
correcting if it is ignored. For example, if in a functional batch production machine shop the
loads imposed by different operations vary greatly in length it is possible that it will be necessary
to break many of the long operations into one or more small batches, in order to get the other
orders completed by due date. In effect, this principle only repeats the known advantage of
maintaining a high rate of stock turn over, and of single phase ordering. The second principle

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merely states that the obvious fact that there will be less idle time and waiting time, if all the
plant is evenly loaded by the production planners, then if some of the machines are over loaded
perhaps because direct labour cost on them are lower and others are idle for part of the time
due to shortage of work. The third principle says about principle of flow. Sometimes it is also
true if we sequence some jobs, which need the same machine set up, at a time, this avoids
machine ancillary time needed, in case, the jobs of the above type are done at different times.
For example, consider drilling a 10 mm hole in five different jobs may be done at a time so that
the set up time required for five jobs can be once only.
Relationship between Routing and Scheduling:
Both routing and scheduling are interconnected as scheduling is difficult without routing and
routing is also not effective without scheduling. Routing is a prerequisite for scheduling while
time to be taken may form the basis of routing and that is fixed by scheduling.

10 Dec’18
[Concept of Operating System]
Explain the concept of Operating System in order to have a clear idea of Operations Management.

Answer
In order to have a clear idea of Operations Management, one must have an idea of ‘Operating
Systems’.
An Operating System is defined as a configuration of resources combined for the provision of
goods or services.
Retail organizations, hospitals, bus and taxi services, tailors, hotels and dentists are all examples
of operating systems. Any operating system converts inputs, using physical resources, to create
outputs, the function of which is to satisfy customers wants. The creation of goods or services
involves transforming or converting inputs into outputs. Various inputs such as capital, labour,
and information are used to create goods or services using one or more transformation processes
(e.g., storing, transporting, and cutting). To ensure that the desired output are obtained, an
organization takes measurements at various points in the transformation process (feedback)
and then compares with them with previously established standards to determine whether
corrective action is needed (control).
It is important to note that goods and services often occur jointly. For example, having the oil
changed in your car is a service, but the oil that is delivered is a good. Similarly, house painting
is a service, but the paint is a good.
The goods-service combination is a continuum. It can range from primarily goods, with little
service, to primarily service, with few goods. Because there are relatively few pure goods or
pure services, companies usually sell product packages, which are a combination of goods and
services. There are elements of both goods production and service delivery in these product
packages. This makes managing operations more interesting, and also more challenging.

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11 Dec’18
[Activities and Responsibilities of Product Design]
What are the various activities and responsibilities of product design? [6]

Answer
(i) Translating customer needs and wants into product and service requirements (marketing).
(ii) Refining existing products (marketing).
(iii) Developing new products (marketing, product design and production).
(iv) Formulating quality goals (quality assurance, production).
(v) Formulating cost targets (accounting).
(vi) Constructing and testing prototype (marketing, production).
(vii) Documenting specifications (product design).

12 Dec’18
[Production Planning and Control]
Describe the objectives of Production Planning and Control. [10]

Answer
(i) Analysing the orders to determine the raw materials and parts that will be required for
their completion,
(ii) Answering questions from customers and salesmen concerning the status of their orders,
(iii) Assisting the costing department in making cost estimates of orders,
(iv) Assisting the human resource departments in the manpower planning and assignment of
men to particular jobs,
(v) Controlling the stock of finished parts and products,
(vi) Determining the necessary tools required for manufacturing,
(vii) Direction and control of the movement of materials through production process,
(viii) Initiating changes in orders as requested by customers while orders are in process,
(ix) Issuing requisitions for the purchase of necessary materials,
(x) Issuing requisitions for the purchase or manufacture of necessary tools and parts,
(xi) Keeping the up-to-date records scheduled and in process,
(xii) Maintaining stocks of materials and parts,
(xiii) Notifying sales and accounting of the acceptance of orders in terms of production feasibility,
(xiv) Preparing the route sheets and schedules showing the sequence of operation required to
produce particular products,
(xv) Production of work orders to initiate production activities,

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(xvi) Receiving and evaluating reports of progress on particular orders and initiating corrective
action, if necessary, (xvii) Receiving orders from customers,
(xviii) Revising plans when production activities cannot conform to original plans and when
revisions in scheduled production are necessary because of rush orders.

13 Jun’19
[Factors Underlying Production and Operation Management]
List down various activities lying under Production and Operations Management function.

Answer
Various activities lying under Production and Operations Management functions:
(i) Location of facilities.
(ii) Plant layouts and Material Handling.
(iii) Product Design.
(iv) Process Design.
(v) Production Planning and Control.
(vi) Quality Control.
(vii) Materials Management.
(viii) Maintenance Management.

14 Jun’19
[Job Shop and Project Process]
Examine the following types of Process decisions:
(i) Job Shop Process
(ii) Project Process [3 × 2 = 6]

Answer
Examination of the following types of Process decisions:
(i) Job shop process: It is used in job shops when a low volume of high-variety goods are
needed. Processing is intermittent, each job requires somewhat different processing
requirements. A job shop is characterised by high customisation (made to order), high
flexibility of equipment and skilled labour and low volume. A tool and die shop is an
example of job shop, where job process is carried out to produce one-of-a kind of tools.
Firms having job shops often carry out job works for other firms. A job shop uses a flexible
flow strategy, with resources organised around the process.
(ii) Project process: It is characterised by high degree of job customisation, the large scope
for each project and need for substantial resources to complete the project. Examples of
projects are building a shopping centre, a dam, a bridge, construction of a factory, hospital,

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developing a new product, publishing a new book etc. Projects tend to be complex, take
a long time and consist of a large number of complex activities. Equipment flexibility and
labour skills can range from low to high depending on the type of projects.

15 Jun’19
[Types of Production Control]
Describe the different types of Production Control. [10]

Answer
Production control can be of six types:
(i) Block control
This type of control is most prominent in textiles and book and magazine printing. In these
industries it is necessary to keep things separated and this is the fundamental reason why
industries resort to block control.
(ii) Flow control
This type of control is commonly applied in industries like chemicals, petroleum, glass,
and some areas of food manufacturing and processing. Once the production system is
thoroughly designed, the production planning and control department controls the rate
of flow of work into the system and checks it as it comes out of the system. But, under this
method, routing and scheduling are done when the plant is laid out. That is to say, the
production line which is established is well balanced and sequenced before production
operations begin; this type of control is more prevalent in continuous production systems.
(iii) Load control
Load control is typically found wherever a particular bottleneck machine exists in the
process of manufacturing.
(iv) Order control
The most, common type of production control is called order control. This type of control
is commonly employed in companies with intermittent production systems, the so-called
job-lot shops. Under this method, orders come into the shop for different quantities for
different products. Therefore, production planning and control must be based, on the
individual orders.
(v) Special project control
Special production control is necessary in certain projects like the construction of bridges,
office buildings, schools, colleges, universities, hospitals and any other construction
industries. Under this type of control, instead of having sets of elaborate forms for tooling
and scheduling, a man or a group of men keeps in close contact with the work.
(vi) Batch control
Batch control is another important, type of production control which is frequently found in
the food processing industries.

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16 Dec’19
[Process Design and Selection]
What do you understand by Process Design and Selection? 3+5=8

Answer
Process Design is concerned with the overall sequences of operations required to achieve
the product specifications. It specifies the type of work stations to be used, the machines and
equipment necessary to carry out the operations. The sequence of operations is determined by
(i) the nature of the product, (ii) the materials used, (iii) the quantities to be produced, and (iv)
the existing physical layout of the plant. The process design is concerned with the following:
(i) Characteristics of the product or service offered to the customers.
(ii) Expected volume of output.
(iii) Kinds of equipments and machines available in the firm.
(iv) Whether equipments and machines should be of special purpose or general purpose.
(v) Cost of equipments and machines needed.
(vi) Kind of labour skills available, amount of labour available and their wage rates.
(vii) Expenditure to be incurred for manufacturing processes.
(viii) Whether the process should be capital-intensive or labour-intensive.
(ix) Make or buy decision.
(x) Method of handling materials economically.

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