MBA 2020

VU 2nd Semester Examination

Paper Code: MBA- 206

Subject: Production Management

Total Marks: 100

Read the following case study and answer the questions given below in your
own words.

The automobile sector of India is one of the largest in the world and accounts for over 7.1%
of India’s GDP. It also contributes to nearly 22% of the country’s manufacturing GDP. If we
consider the location of automobile factories in India there are five major automobile hubs:

 Patnagar
 NCR
 Gujarat
 Pune
 Chennai

Driving the most luxurious car has been made possible by the stiff competition in the
automobile industry in India, with overseas players gathering the same momentum as the
domestic participants.

Segments of Indian Automobile Market

Two-wheeler automobile segment

In this segment, motorcycles accounts for major Indian Automobile market share. The chief
players in this segment is Hero Honda which delivers 50% motorbikes to the Indian market
besides sharing 46% in scooter market and TVS for 82% in moped market.
Three-wheeler automobile segment
Around 41% of the three-wheelers in India are utilized for merchandise transfer purpose. In
this segment Piaggio and Bajaj are the leading players with 40% and 68% of market share
respectively.

Car segment
Accounting to 79%, Cars rule the passenger automobile in India. The chief players in this
segment are Maruti Suzuki and Mahindra. While Maruti Suzuki enjoys full-fledged
monopoly in multi-purpose automobiles sector with 52% of market share, Mahindra have
42% market share in utility vehicles. However in the area of commercial automobiles, Tata
Motors rule the Automobile Industry of India with 60% of market share besides being the
fifth biggest producer in the world of medium & heavy marketable vehicles.

Top Automobile Companies in India

Tata Motors
Tata Motors is the largest automobile manufacturing companies in India. Established way
back in 1945 Tata Motors is a multinational automobile company with its headquarters in
Mumbai. Previously known as Telco TATA Engineering and Locomotive Company Tata
Motors belongs to Tata Group. This company manufactures compact medium sized utility
vehicles. Over the last few decades it has stood as the undisputed leader in the commercial
vehicles segment. It is also the third largest producer of passenger cars in India. This
automobile company in India is listed on both the Bombay Stock Exchange and the New
York Stock Exchange. The revenues earned by Tata Motors in 2010 accounted to $20.572
billion. Some of the well known cars manufactured by Tata Motors are: Tata Indigo, Tata
Indica, Tata Sumo Tata Indigo Marina and Tata safari.

Hindustan Motors Limited

Hindustan Motors Limited was founded in the year 1942 by B.M Birla. It is an operative
subsidy of the Birla Technical Services group. This company held the title of the biggest
manufacturer of cars in India before Maruti Udyog. Hindustan Motors was the pioneer in
manufacturing automobiles in India. The company accounted for a sales turnover of Rs
150.66 crore in 2010. Some of the important cars and multi utility vehicles manufactured by
Hindustan Motors Limited include; Mitsubishi Lancer, Trekker, Contessa, Ambassador,
Porter, Pushpak and the Mitsubishi.

Mahindra and Mahindra

Established in the year 1945, this company has given a cutting-edge dimension to the Indian
automobile industry. It began as a general-purpose utility vehicle manufacturing unit and
expanded its business to automotive, tractor, MSL and inter trade. Presently, the largest
company in the private sector, this company boasts of an advanced technological
infrastructure and manpower.
Ashoke Leyland
Ashoke Leyland is a leading commercial vehicle manufacturer in India. It was established in
1948. The company over the years has become synonymous with the production of trucks,
passenger buses and emergency military vehicles. It happens to be the second largest
commercial vehicle producer in India holding a market share of almost 30 percent. The
company holds a record for selling almost 60, 000 vehicles and almost 7000 engines per
years. Ashok Leyland accounted for consolidated revenues of US$ 1.4 billion in 2009. Some
of the popular products by this company are; Panther BS-II Multi-axle Vehicles, Cheetah
Bus-III, Tractors and Ecomet, Lynx BS-II, Diesel and Natural Gas gensets from 15KVA to
250KVA.

Maruti Suzuki India Limited

Maruti Suzuki India Limited was established in 1981. A part of this company is owned by
Suzuki Motor Corporation of Japan. It is the country's largest passenger car manufacturing
company. Credited for having brought in the automobile revolution in the country Maruti
Suzuki India Limited was known as Maruti Udyog Limited till 2007. With its headquarters in
Delhi this automobile company in India happens to be the largest producer and market share
holder of cars. The company accounted for consolidated revenues of US$4.8 billion in 2010.
Maruti Suzuki India Limited is credited for manufactures a variety of passenger cars SUVs,
and Sedans. Some of Maruti's most popular cars are: Alto, Gypsy, Omni, Wagon R, Maruti
800, Versa, Zen, Esteem, Baleno and Swift.

Hyundai Motor India Limited

Hyundai Motor India Limited (HMIL) is owned entirely by Hyundai Motors of South Korea.
Hyundai Motors happens to be the largest car manufacturer in South Korea and the sixth
largest in the world. This automobile company in India is also the largest passenger cars
exporter in India. Established on May 6 1996 this company in a short span of time has taken
the Indian automobile industry by storm. Some of the popular cars manufactured by this
company are; Santro, Getz Prime, Hyundai i10, Hyundai i20 Accent and the Verna and
Sonata.

Bajaj Auto
Bajaj Auto is another important automobile manufacturing company in India. It is one of the
India's most trusted car manufacturers. It is an operative subsidy of the Bajaj Group. Bajaj
Auto happens to be the largest two and three wheeler manufacturer in India and also ranks in
this field across the globe. This automobile company was established on 2 November 1945.
The company was then known as M/s Bachraj Trading Corporation Private Limited. The
company made a modest beginning by importing and then selling two and three wheelers in
India. Today Bajaj Auto has become synonymous with two and three wheelers in the country.
Some of its popular two wheelers are; Pulsar 220DTS and Kawasaki Ninja 250R.

Line of Balancing
Increasing productivity has become a buzz word nowadays on the basis of industry. There are
several methods for increasing productivity and Line Balancing is one of them. Increase in
production volume by decreasing cycle time is the main task of line balancing. Tasks related
to the motor bike assembly of ABC Bikes are given below:

Operation Description Duration(sec) Immediate predecessor

number

PA 1 Unpacking & placing 190 -------

of all parts
PA 2 Joining hydraulic plate 55 PA 1
to wheel
PA 3 Blowing air to wheel. 32 PA 1,PA 2

PA 4 Joining rubber to the 145 PA 1

mat-guard
PA 5 Joining light to the 150 PA 1,PA 4
mat-guard
PA 6 Joining parts of handle 137 PA 1
bar
PA 7 Joining parts of 90 PA 1
speedometer
PA 8 Joining light to head 100 PA 1

PA 9 Preparation of chassis 180 PA 1

PA 10 Assembling engine to 196 PA 1,PA 9

chassis
A1 Assembling shock 210 PA 1,PA2,PA 3
absorber & front wheel

A2 Assembling chain & 60 PA 1

chain guard
A3 Assembling back 120 PA 1,PA 2, PA 3
wheel
A4 Assembling mat-guard 118 PA 1,PA 4,PA 5
Screw tightening

A5 Assembling handle bar 140 PA 1,PA 6

A6 Assembling muffler 215 PA 1

A7 Assembling gear lever 160 PA 1

A8 Assembling 180 PA 1,PA 7

speedometer
A9 Assembling electric 193 PA 1
wire
A10 Assembling Head & 222 PA 1,PA 8
 pumping point
A11 Assembling seat lock 167 PA 1
and saree guard

A12 Assembling fuel tank 130 PA 1

cover
A13 Assembling side cover 109 PA 1
and seat

PA = Pre Assembly A = Assembly

Answer any EIGHT of the following questions. (Each carry 10 Marks –

8 x10=80 Marks)

Q.1.For any business its location plays a very big role in profitability and sustainability.
Discuss.

Q.2.Analyse the locations of above mentioned five major automobile hubs and hence discuss
the important factors which influence the location of an automobile plant.

Q.3.Select three major automobile plants in India of your choice and compare their locations
based on the important influencing factors.

Q.4.Discuss the type of layout used by an automobile plant. Discuss the factory layout of any
one of the plant of your choice.

Q.5.Compare and contrast between the layouts of automobile plant with that of an
automobile service station.

Q.6.In modern time industries are moving towards cellular layout. With appropriate example
discuss the benefit of cellular layout over two basic layouts.

Q.7.From the data of ABC Bikes given above find out the cycle time and number of work
stations required to perform the assembling activities.

Q.8. Draw the line of balance and find the efficiency of the production system of ABC Bikes.

Q.9.Seven major automobile brands of India have been mentioned above. Find out the
production capacity and current production in units. Based on the data calculate the capacity
utilization of each of them and arrange them from highest to lowest.

Q.10.What is the function of demand forecasting in production planning? Discuss the various
techniques of demand forecasting.
Q.11.Based on past ten year’s data forecast the demand of automobiles (any two segments)
for the year 2021. You can use linear trend for forecasting the demand.

Q.12.Discuss the quality measures taken by automobile companies across the world.

[Internal Assessment: 20 Marks]

Q.1.For any business its location plays a very big role in profitability and sustainability.

Ans: A company's location strategy should conform with, and be part of, its overall corporate
strategy. Hence, if a company strives to become a global leader in any category, for example,
it must consider establishing plants and warehouses in regions that are consistent with its
strategy and that are optimally located to serve its customers. A company's executives and
managers often develop location strategies, but they may select consultants (or economic
development groups) to undertake the task of developing a location strategy, or at least to
assist in the process, especially if they have little experience in selecting locations.
Formulating a location strategy typically involves the following factors:

1. Facilities. Facilities planning involves determining what kind of space a company will need
given its short-term and long-term goals.
2. Feasibility. Feasibility analysis is an assessment of the different operating costs and other
factors associated with different locations.
3. Logistics. Logistics evaluation is the appraisal of the transportation options and costs for the
prospective manufacturing and warehousing facilities.
4. Labour. Labour analysis determines whether prospective locations can meet a company's
labour needs given its short-term and long-term goals.
5. Community and site. Community and site evaluation involves examining whether a
company and a prospective community and site will be compatible in the long-term.
6. Trade zones. Companies may want to consider the benefits offered by free-trade zones,
which are closed facilities monitored by customs services where goods can be brought
without the usual customs requirements. In India has about 238 across 15 state free-trade
zones and other countries have them as well.
7. Political risk. Companies considering expanding into other countries must take political risk
into consideration when developing a location strategy. Since some countries have unstable
political environments, companies must be prepared for upheaval and turmoil if they plan
long-term operations in such countries.
8. Governmental regulation. Companies also may face government barriers and heavy
restrictions and regulation if they intend to expand into other countries. Therefore, companies
must examine governmental—as well as cultural—obstacles in other countries when
developing location strategies.
9. Environmental regulation. Companies should consider the various environmental
regulations that might affect their operations in different locations. Environmental regulation
also may have an impact on the relationship between a company and the community around a
prospective location.
10. Incentives. Incentive negotiation is the process by which a company and a community
negotiate property and any benefits the company will receive, such as tax breaks. Incentives
may place a significant role in a company's selection of a site.

Depending on the type of business, companies also may have to examine other aspects of
prospective locations and communities. Based on these considerations, companies are able to
choose a site that will best serve their needs and help them achieve their goals.

The initial part of developing a location strategy is determining what a company

will require of its locations. These needs then serve as some of the primary criteria a
company uses to evaluate different options. Some of the basic requirements a company must
consider are:

 Size. A company must determine what size property or facility it needs.

  Traffic. If it is in the service business, a company must obtain statistics on the amount of
traffic or the number of pedestrians that pass by a prospective location each day.
 Population. Whether a service or manufacturing operation, a company must examine the
population of prospective locations to ensure that there is a sufficient number of potential
customers (if a service business) or a sufficient number of skilled or trainable workers. In
addition, manufacturers also benefit from being close to their customers, because proximity to
customers reduces shipment time and increases company responsiveness to customers.
 Total costs. Companies must determine the maximum total costs they are willing to pay for a
new location. Total costs include distribution, land, labour, taxes, utilities, and construction
costs. More obscure costs also should be considered, such as transportation costs to ship
materials and supplies, and the loss of customer responsiveness if moving further away from
the customer base.

Q.2.Analyse the locations of above mentioned five major automobile hubs and hence
discuss the important factors which influence the location of an automobile plant.

Ans.

PATANAGAR

Pantnagar is a town in Udham Singh Nagar district, Uttarakhand. The State is close to the National
Capital Region (NCR) and has excellent connectivity with its neighbouring states. With levels of
literacy rate(above 75%) higher than the national average and the presence of institutes of
international repute, the State has abundant availability of quality human resources.

ADVANTAGES:

 The Industrial electricity tariff in Uttarakhand is one of the lowest across the States in India
with ample availability of land, providing enabling environment for doing business in the
State.
 Uttarakhand offers locational advantage with close proximity to the National Capital region
including advanced as well as emerging markets.
 Uttarakhand has large no. of ancillary units in the districts of Udham Singh Nagar, Haridwar
etc.
 Uttarakhand has a well-established Industrial base of long-standing and reputed business
houses like Mahindra & Mahindra Ltd, Hero MotoCorp Ltd, Bajaj Motors Ltd, TATA Motors
Ltd., Ashok Leyland Ltd. etc. These players have introduced state-of-the-art operating
practices which have been fed into the local production environment.

NCR

This cluster is located in the northern part of India in three states namely; Delhi, Haryana and
Uttar-Pradesh. The automobile industry is probably the biggest industry in the state of Haryana,
which ranks first in India in the production of passenger cars, motorcycles . Therefore, this cluster
largely follows the traditional pattern of auto clusters led by assemblers that served as lead firms.

ADVANTAGES:

 Access to large domestic market, government’s support and availability of land were
major factors which have resulted in the growth of the automobile sector in the NCR
region.
  Delhi and Haryana have an excellent road network which facilitates faster transportation
of goods from the point of production to the point of consumption.
 The industries in Uttar Pradesh have also benefited out of the 165 km long newly
constructed Yamuna Expressway Industrial Development Authority (YEIDA) which
ensures planned development of areas along the route.
 Maruti Suzuki India Ltd, Hyundai Motor India Ltd ( HMIL ), Hero MotoCorp Ltd Are the
major Player in the cluster.

GUJRAT

The automobile revolution in Gujrat, a town near Ahmedabad, Gujarat, began with Tata Motors’
ambitious plant to manufacture Nano car models in 2010.Since then, the 5,000 acre Gujrat Industrial
Estate has attracted world renowned automobile majors such as Maruti Suzuki, Honda and Hero
Motocorp. The Sanand - Hansalpur - Vithalpur belt has an installed capacity of 1.5 million vehicles
and three million two wheelers.

ADVANTAGES:

 excellent support infrastructure and iextremely well connected to the rest of country. It is
situated 35 km from the Ahmedabad International Airport and linked to the state highway - 17
which connects a part of it to the Golden Quadrilateral.
 it is connected to major ports – Jawaharlal Nehru Port Trust (JNPT) Mumbai, Kandla,
Mundra and Pipavav. Sanand also has a Broad Gauge network and the Ahmedabad railway
station is located at a distance of 35 km.
  Critical infrastructure including power, water/gas supply and solid waste disposal facilities
are easily available with simplified application procedures. 

PUNE

The Pune-Talegaon- Chakan automobile cluster has an installed capacity of 1.1 million vehicles. The
well-known auto industry names in the Chakan Industrial belt include Mahindra & Mahindra and
Bajaj Auto.

ADVANTAGES:

  proximity to the coast, availability of power supply, skilled labour pool and exceptional
infrastructure. 
 proximity to Mumbai’s Jawaharlal Nehru Port Trust (JNPT) and National Highways
connecting important cities in Maharashtra made it attractive to automobile companies.
 new international airport at Pune will further improve its connectivity to major global cities.
 Also well connected to Maharashtra State Corporation Transport buses from all important
cities of Western Maharastra for the migration of skilled ManPower.

CHENNAI

Chennai is nicknamed the "Detroit of Asia" (or the "Detroit of India") due to the presence of major
automobile manufacturing units and allied industries around the city. The 4-wheeler vehicles in
Chennai is the base of 30% of India's automobile industry and 35% of its automobile component
 industry. Ashok Leyland, Mahindra & Mahindra, Hindustan Motors, Hyundai are the key player in
the region.

ADVANTAGE:

 The region has always welcomed major auto-players with its superior infrastructure facilities. 
 Three modern ports in Chennai and one in Tuticorin provide an easy gateway for exports and
imports.
 Chennai’s strong labour force is noted to be a significant contributor to its success as an auto
cluster.
 Innovative business models, ease of doing business and strong policy support have all
contributed to the rise of Chennai as the automobile hub in the region.

Q.3.Select three major automobile plants in India of your choice and compare their
locations based on the important influencing factors.

Ans.

Facility location is the process of determining a geographic site for a firm’s operations. Managers of
both service and manufacturing organizations must weigh many factors when assessing the
desirability of a particular site, including proximity to customers and suppliers, labour costs, and
transportation costs.It is appropriate to divide the factors, which influence the plant location or facility
location on the basis of the nature of the organization as

CONTROLLABLE FACTORS

1. Proximity to markets.
2. Supply of materials
3. Transportation facilities
4. Infrastructure availability
5. Labour and wages
6. Government policy
7. Climate conditions

FACTORS CHENNAI UTTRARAKHAND NCR

Proximity to Entire south India North India and Capital of India
markets. and Export through entire NCR. Delhi, Gujrat
Port. ,UttarPradesh.
Supply of Imported as nearest Due to richness in Available as Being
materials to the Port. economy easily near to the Capital
available. and Good
transportation
Transportation Chennai Port and National Newly built Yamuna
facilities National and state Highways(NH125) Express way ,NH
highways connecting connecting Major city 8,Delhi Noida
major locations like including Delhi , Flyways.
Tuticorin, Attur. NCR .
Infrastructure Critical infrastructure There a few private As Yamuna River is
availability including power, industrial estates, very close ,it help
water/gas supply and which provide 24*7 with water supply
solid waste disposal electricity, Effluent also this region has
facilities are easily treatment plants, the cheap electricity
available with cost.
 simplified application waste management
procedures.  facility, etc.
Labour and wages Chennai’s strong Abundant skilled Adequate number of
labour force is noted to manpower is labor and with skills
be a significant available in the State. specific is a factor is
contributor to its The Uttarakhand Skill considered both at
success as an auto Development territorial as well as
cluster. Mission provides at community level
specific courses on due to High
the Automobile Population. 
Sector.
Climate conditions The geology of the Being in the North Climates greatly
area is suitable Part of The India The influence human
together with climate for the efficiency and
climatic conditions production and for
behaviour.
(humidity, manpower is
temperature). Suitable.

Q.4.Discuss the type of layout used by an automobile plant. Discuss the factory layout of
any one of the plant of your choice.

Ans: The layout used by AutoMobile plant is Product layout.It is Suitable for AutoMobile
plant. Product layouts are found in flow shops (repetitive assembly and process or continuous
flow industries). Flow shops produce high-volume, highly standardized products that require
highly standardized, repetitive processes. In a product layout, resources are arranged
sequentially, based on the routing of the products. In theory, this sequential layout allows the
entire process to be laid out in a straight line, which at times may be totally dedicated to the
production of only one product or product version. The flow of the line can then be
subdivided so that labour and equipment are utilized smoothly throughout the operation.
Two types of lines are used in product layouts: paced and unpaced. Paced lines can use some
sort of conveyor that moves output along at a continuous rate so that workers can perform
operations on the product as it goes by. For longer operating times, the worker may have to
walk alongside the work as it moves until he or she is finished and can walk back to the
workstation to begin working on another part (this essentially is how automobile
manufacturing works).
On an unpaced line, workers build up queues between workstations to allow a variable work
pace. However, this type of line does not work well with large, bulky products because too
much storage space may be required. Also, it is difficult to balance an extreme variety of
output rates without significant idle time. A technique known as assembly-line balancing can
be used to group the individual tasks performed into workstations so that there will be a
reasonable balance of work among the workstations.
Product layout efficiency is often enhanced through the use of line balancing. Line balancing
is the assignment of tasks to workstations in such a way that workstations have approximately
equal time requirements. This minimizes the amount of time that some workstations are idle,
due to waiting on parts from an upstream process or to avoid building up an inventory queue
in front of a downstream process.
Advantages of product layouts include:

 Output. Product layouts can generate a large volume of products in a short time.
 Cost. Unit cost is low as a result of the high volume. Labour specialization results in reduced
training time and cost. A wider span of supervision also reduces labour costs. Accounting,
purchasing, and inventory control are routine. Because routing is fixed, less attention is
required.
 Utilization. There is a high degree of labour and equipment utilization.

LAYOUT ANALYSIS OF MARUTI COMPANY

A plant layout refers to the proper arrangement of machinery, equipment and other industrial facilities
such as receiving and shipping departments, tool rooms, maintenance room and employee ameneties
for the purpose of achieving the quickest and smoothest production at low cost. • While the
manufacturing of the car various raw materials along with the tools and equipments are used by the
company for the final delivery .While the manufacturing of car it can use various layout but the main
layout that is followed by the company is the PRODUCT LAYOUT in this company. The process
layout is the step by step completion of the work. The processes that takes place in the manufacture of
the car are as:

 1. CUTTING & PRESSING • In this process the raw materials available with the company i.e. the
steels are cut in to the shape and size as per required by the types of car that is being manufactured
.The steels are cut with the help of the cutter machine.

2. WELDING • This is the 2nd phase of car manufacturing in which the steels pieces that are cut in
different shapes and sizes are welded together to give the form of car. It is phase in which the body of
the car is given some particular shape and size as per the requirement and engineering models.

3. PAINTING • It is another phase of car manufacturing in which the car that is given some shape
and size in welding phase is painted with different shades of colour using the automatic painting
machine or the technically equipped robots.

4. MACHINING • It is another step in which various components along with the engines are
machined in the body of the car with the help of highly technically skilled workers also sometimes
with the robotics help.

 5. ASSEMBLY • In this the various components like glass, lights, wheels, seats, suspension engine,
instrument panel etc are assembled and installed in the painted body to make it a complete car.

 6. INSPECTION • It is the last stage of car manufacturing in which the manufactured car is studied
and inspected carefully by the inspectors .The inspection is done by the robot and the screening
device. If any faults are found in the car it is again sent back to the assembly line so that the correction
can be made as per the faults. And finally it is launched in the market for the customers.

Q.5.Compare and contrast between the layouts of automobile plant with that of an
automobile service station.

Ans: Automobile Plant and Automobile service stations are two different entity in respect of
the Layout of Plants.
For Automobile Service Station The layout is process layout, also called the functional
layout, is designed to keep everything organized in a manner so that everything has its
place.New tires are stored in one section, whereas wrenches and other tools are stored in
another section. The cans of oil are stored together, as are other groupings of supplies or
power tools.

For automobile manufacturing plant the product layout is being . Rather than have a
specific section for each group of tools and supplies, the product layout is an assembly
line. The required tools and supplies are located at each section of the assembly line,
based on where the product is in production. 

COMPARISON B/W PRODUCT LAYOUT AND PROCESS LAYOUT

BASIS FOR PRODUCT LAYOUT PROCESS LAYOUT

COMPARISON (Automobile Plant) (Automobile service stations)

Meaning Product Layout is a type of Process Layout refers to the

layout design in which the type of layout design
resources needed to produce wherein the resources
the product are arranged in having homogeneous
one line, as per the sequence processes or functions are
of operations. combined together.

Product Standardized Customized

Workflow Identical flow and sequence Variable flow, relying on

of operations for each unit. the nature of the job.

Inspection Minimum inspection is Inspection is conducted

there, during the sequence multiple times during the
of operations. sequence of operations.

Results in Transfer lines Group Technology

Production Time Less Comparatively high

Production Cost High fixed cost and low Comparatively low fixed
variable cost. cost and high variable cost.
 BASIS FOR PRODUCT LAYOUT PROCESS LAYOUT
COMPARISON (Automobile Plant) (Automobile service stations)

Effect of Due to the interrelated Machinery breaks down

breakdown system, machinery does not have a significant
breakdown can seriously affect on the final output.
affect production.

Suitable for Mass production with less Moderate production with

job variety.(AUTOMOBILE more job variety.
PRODUCTION) (AUTOMOBILE PLANT)

Q.10.What is the function of demand forecasting in production planning? Discuss the

various techniques of demand forecasting.

Ans:

Demand forecasting reduces risk related to business activities and helps it to take efficient
decisions. For firms having production at the mass level, the importance of forecasting had
increased more. A good forecasting helps a firm in better planning related to business goals.
There is a huge role of forecasting in functional areas of production management. Good
forecast also helps in appropriate production planning, process selection, capacity planning,
facility layout planning, and inventory management, etc.Demand forecasting provides
reasonable data for the organization’s capital investment and expansion decision. It also
provides a way for the formulation of suitable pricing and advertisement strategies.

There are handful of ways forecasting is a critical value proposition for planning and
production in today’s modern manufacturing landscape.

1.More effective production scheduling

Forecasting gives companies the ability to see into the future to avoid this
hypothetical accident via more effective production scheduling to meet customer demands
and market forces, and to align with the availability of raw materials and component parts.
Because forecasting gives manufacturing companies a leg-up on these elements of planning
and production cycles, companies can operate with more agility, transparency, and flexibility
to adapt to changing production environments or schemes.
2.Inventory management and reduction

If a manufacturer can better understand and predict demand or orders for certain
products, then they can more effectively work with suppliers to achieve optimal inventory
levels to reduce the likelihood of part overages or shortages. Forecasting capabilities provide
manufacturing companies the clarity of supply situations to more accurately evaluate the
level of customer demand versus the volume of component parts necessary to successfully fill
orders and ensure scheduled delivery windows.

3.Cost reduction

Forecasting also helps companies reduce costs by providing companies the

foresight to not order more stock than necessary to fulfill customer orders. In addition,
forecasting helps reduce costs associated with a number of other critical production tasks
such as job allocation and management, sourcing raw materials, and even some front-office
or customer-facing duties.

4.Increased customer satisfaction

Customer satisfaction in today’s global manufacturing industry is really about

making sure the customer has the right product in their hands at the right time and how this
product arrives to meet the customer’s needs. If we take forecasting to be a holistic method of
refining, streamlining, and enhancing a manufacturing company’s operational, logistics, and
production cycle platforms, then it makes sense how forecasting works to increase customer
satisfaction and promote growth and expansion in the short, mid, and long-term.

Methods of Demand Forecasting

1. Survey of Buyer’s Choice

When the demand needs to be forecasted in the short run, say a year, then the most feasible
method is to ask the customers directly that what are they intending to buy in the forthcoming
time period. Thus, under this method, potential customers are directly interviewed.
This survey can be done in any of the following ways:

a. Complete Enumeration Method: Under this method, nearly all the potential buyers are asked
about their future purchase plans.

b. Sample Survey Method: Under this method, a sample of potential buyers are chosen
scientifically and only those chosen are interviewed.

c. End-use Method: It is especially used for forecasting the demand of the inputs. Under this
method, the final users i.e. the consuming industries and other sectors are identified. The
desirable norms of consumption of the product are fixed, the targeted output levels are estimated
and these norms are applied to forecast the future demand of the inputs.
Hence, it can be said that under this method the burden of demand forecasting is on the
buyer. However, the judgments of the buyers are not completely reliable and so the seller
should take decisions in the light of his judgment also.

2.Collective Opinion Method

Under this method, the salesperson of a firm predicts the estimated future sales in their
region. The individual estimates are aggregated to calculate the total estimated future sales.
These estimates are reviewed in the light of factors like future changes in the selling price,
product designs, changes in competition, advertisement campaigns, the purchasing power of
the consumers, employment opportunities, population, etc.

The principle underlying this method is that as the salesmen are closest to the consumers they
are more likely to understand the changes in their needs and demands. They can also easily
find out the reasons behind the change in their tastes.

Therefore, a firm having good sales personnel can utilize their experience to predict the
demands. Hence, this method is also known as Salesforce opinion or Grassroots approach
method. However, this method depends on the personal opinions of the sales personnel and is
not purely scientific.

3.Barometric Method

This method is based on the past demands of the product and tries to project the past into the
future. The economic indicators are used to predict the future trends of the business. Based on
future trends, the demand for the product is forecasted. An index of economic indicators is
formed. There are three types of economic indicators, viz. leading indicators, lagging
indicators, and coincidental indicators.

The leading indicators are those that move up or down ahead of some other series. The
lagging indicators are those that follow a change after some time lag. The coincidental
indicators are those that move up and down simultaneously with the level of economic
activities.

4. Market Experiment Method

Another one of the methods of demand forecasting is the market experiment method. Under
this method, the demand is forecasted by conducting market studies and experiments on
consumer behavior under actual but controlled, market conditions.

Certain determinants of demand that can be varied are changed and the experiments are done
keeping other factors constant. However, this method is very expensive and time-consuming.
5. Expert Opinion Method

Usually, market experts have explicit knowledge about the factors affecting demand. Their
opinion can help in demand forecasting. The Delphi technique, developed by Olaf Helmer is
one such method.

Under this method, experts are given a series of carefully designed questionnaires and are
asked to forecast the demand. They are also required to give the suitable reasons. The
opinions are shared with the experts to arrive at a conclusion. This is a fast and cheap
technique.

6. Statistical Methods

The statistical method is one of the important methods of demand forecasting. Statistical
methods are scientific, reliable and free from biases. The major statistical methods used for
demand forecasting are:

a. Trend Projection Method: This method is useful where the organization has a sufficient
amount of accumulated past data of the sales. This date is arranged chronologically to obtain a
time series. Thus, the time series depicts the past trend and on the basis of it, the future market
trend can be predicted. It is assumed that the past trend will continue in the future. Thus, on the
basis of the predicted future trend, the demand for a product or service is forecasted.

b. Regression Analysis: This method establishes a relationship between the dependent variable

and the independent variables. In our case, the quantity demanded is the dependent variable and
income, the price of goods, the price of related goods, the price of substitute goods, etc. are
independent variables. The regression equation is derived assuming the relationship to be linear.
Regression Equation: Y = a + bX. Where Y is the forecasted demand for a product or service.

Q.6.In modern time industries are moving towards cellular layout. With appropriate
example discuss the benefit of cellular layout over two basic layouts.

Ans:

Cellular layout is a manufacturing process that produces families of parts within a single line or cell of
machines operated by machinists who work only within the line or cell. A cell is a small scale,
clearly-defined production unit within a larger factory. This unit has complete responsibility for
producing a family of like parts or a product. All necessary machines and manpower are contained
within this cell, thus giving it a degree of operational autonomy. Each worker is expected to have
mastered a full range of operating skills required by his or her cell. Therefore, systematic job rotation
and training are necessary conditions for effective cell development. Complete worker training is
needed to ensure that flexible worker assignments can be fulfilled.
Advantages of cellular manufacturing compared to traditional manufacturing by efficient layout
design are depicted in figure 1 and explained as follows.

1. Reduction in setup time

Setup time is defined as period required preparing a device, machine, process or system to be ready to
function or accept a job. Manufacturing cells are designed to process parts having similar shapes and
relatively similar sizes. So it is not required to change or adjust machines and tools within cells to
process similar parts. Thus setup time is greatly reduced in cellular manufacturing in compare with
the Product and Process Layout of Manufacturing.

2. Reduction in work in progress

Work in progress refers to all materials and partly finished products that are at various stages of the
production process. Work in progress excludes inventory of raw materials at the start of the
production cycle and inventory of finished products at the end of the production cycle. With reduced
setup times, the amount of work in progress can be reduced. Work in progress can be reduced by 50%
when the setup time is cut in half than the other 2 manufacturing process.

3. Reduction in material handling cost and time

Material handling is the art and science of moving, storing, protecting and controlling material at the
lowest possible cost through the use of proper method and equipment. Hundreds and thousands tons
of materials are handled daily requiring the use of large amount of manpower, while the movement of
materials takes place from one processing area to another or from one department to another
department of the plant.

If proper method is not employed in material handling then total manufacturing cost & time is
significantly increased. In cellular manufacturing, each part is processed completely within a single
cell (where possible) which reduces part travelling distance & time. Almost no effort is needed in
cellular manufacturing to store, protect and control materials. In cellular manufacturing, machines are
close together under one or more workers in each cell. Thus it becomes easy to move materials from
one machine to another. Reduction in work in progress also reduces material handling cost in cellular
manufacturing ,Where as the time in Process layout is much higher due to customized product and
high manufacturing time.

4. Reduction in material flow distance

Material flow distance is defined as total distance travelled by all parts/materials to manufacture a
single product or a variety of different products. By reducing it we can significantly reduce total
manufacturing cost & time. Material flow distance is low in cellular manufacturing because every
parts travel only in a small area (cell). In each cell, machines are close together. By efficient layout
design of machines in each cell, 30 to 70% reduction in material flow distance can be achieved in
compare to the Procduct and Process Manufacturing Layput.

5. Improvement in machine utilization

In cellular manufacturing, single machine can be used to manufacture one or more products in each
cell. Unnecessary machines are identified and removed from the manufacturing process as In Process
and Procut layout different machineries are being assigned to do different work. Reduction in setup
time also reduces idle time for machines thus machine utilization is improved in cellular
manufacturing.

6. Reduction in production lead time

Production lead time is defined as period between receipt of an order and until when it is available for
packing or shipment. Production lead time is reduced in cellular manufacturing because of reduction
in setup time, reduction in work in progress, reduction in material handling time, reduction in material
flow distance and improvement in machine utilization than the other basic layouts.

Q.12.Discuss the quality measures taken by automobile companies across the world.

Ans:

Quality control in the automotive industry is essential because cars are inherently dangerous if they're
not correctly constructed with good quality control.

Having the Right Tools

Automotive quality control is all about having the right tools for the job. These tools will vary a little
bit depending on the exact product that's being produced, but there are several core tools that any
automotive facility can utilize to improve their quality control plan. These tools include a failure
mode analysis, a statistical process control and a measurement system analysis.

A failure mode analysis allows the facility to analyze the production process and predict possible
failure points. Once these failure points have been found, countermeasures can be put in place to
prevent them from happening during production.

Statistical control processes are used in quality control in nearly every industry. They utilize statistics
to control and improve production processes. They'll need to be tweaked slightly to cater to the
specific needs of the automotive industry.

There are several supporting “core tools”, including:

 Failure Mode Effects Analysis

This is a formal method for analyzing the production process (or, less frequently, a product
design) for possible failures and developing countermeasures.

 Statistical Process Control

Standard QA SPC techniques, applied to automotive situations.

 Measurement System Analysis(MSA)

A formal statistical method for comparing the measurement instrument capability to the

products and tolerances of a specific product, in order to assure that the inspection is reliable. 

The most frequent type of MSA is also known as a Gage Repeatability and Reproducibility
study; this involves having several inspectors using the inspection gages to repeatedly check a small
sample of products. Once this is done, the results are studied to see how the measurements vary.
MSAs must be done for every checking gage or instrument used on the Control Plan.

 Production Part Approval Process (PPAP)

This procedure demands that the supplier use all of the above “core tools” in launching a
product; run an initial mass production run (300 piece min); inspect a small number of random
samples thoroughly; document the results; and keep the production process stable, getting prior
approval before changing suppliers, adding tooling, etc.

Improving Automotive Quality Control

What can facility managers and foremen do to improve quality control in their own facilities? Start by
creating a quality of culture. Everyone, from the lowest-experience factory worker to the highest
manager, should be focused on creating a quality product. This dedication includes having an open
door policy where workers are not afraid to bring production problems or quality concerns to the
attention of those above them.

If you use suppliers, work closely with them to ensure that their quality control measures align with
your own. That way, products that come from other facilities will meet your quality standard without
requiring repair or modification, saving both time and money in the long run.

Adopt new technologies as they become available. One emerging trend is the use of augmented
reality — digital constructs projected onto real-world locations — to improve quality control. In some
cases, even manual quality control inspections can be improved through the addition of augmented
reality. While this practice hasn't been widely adopted yet, it presents an interesting new option for
companies looking to improve their quality control measures.

In addition, create comprehensive quality control checklists that can be easily followed. Keep each list
with the right product throughout the production process to reduce the chance that a step will be
missed or forgotten.

Quality control is an essential part of the automotive industry — one that you can't afford to overlook.
No matter what steps you take to improve your quality control process, make sure that they're
universally adopted throughout your facility — having a team or two clinging to old QC processes
could cause countless problems in the long run. Take the time to improve these processes, and it will
be easier for you to create products that are consistently high in quality and perfect for the ever-
changing automotive industry.