Q1. Define production and productivity. Explain different types of production systems.

Ans: Production/operations is one of the functions of an organisation, using which the transformation
of a range of inputs into the required outputs (goods or services) at a satisfactory quality level. It is a
function that is used to create or enhance the utility of a product or service to the user. For example,
such as manufacturing a car or bus or any vehicle, constructing a building and more.
Productivity refers to the measure of efficiency in which a person, organization, or system can use
resources to produce a desired outcome or result. It is the rate at which goods or services are produced
per unit of input, such as labour, capital, or time. Productivity can be measured in various ways,
including output per hour worked, revenue per employee, or units produced per dollar of capital
invested. Essentially, productivity is about achieving more with less, and improving productivity can
lead to increased profits, economic growth, and improved standards of living.
The main two types of production systems which can be further classified into more sub categories are:
a. Intermittent System.

Production is performed on a start-and-stop basis, such as for the manufacture of made-to-

order products. Done to produce small volume and high diversity products.

Job - With Job production, the complete task is handled by a single worker or group of workers.
Jobs can be small- scale/low technology as well as complex/high technology.
Low technology jobs: hairdressers; tailoring.
High technology jobs: film production; large construction projects (e.g., the Millennium
Dome).

In Batch production batches are produced in different time by same machineries. Example-
tablet production in pharmaceutical industries.

b. Continuous/Flow Production Processes.

A production process, such as those used by chemical plants or refineries, that runs for very long
periods without the start-and-stop behaviour associated with intermittent production.
Enormous capital investments are required for highly automated facilities that use special-purpose
equipment designed for high volumes of production and little or no variation in the type of outputs.

Mass Production
A special type of flow production process using standardized methods and single-use machines to
produce long runs of standardized items. Usually used to produce large volume and low diversity
products.

Assembly Production
It is a type of Production system in which the assembly of different equipment takes place to
produce the final product. Exp- Manufacturing of car.
Q2. Explain the importance of Capacity Planning. Analyse various strategies.

Ans: The goal of capacity planning is to ensure that your supply chain is always ready and able to
meet demand. Incorporating this type of strategic planning into your process will help you meet due
dates, effectively scale your business, and increase your bottom line.

1. Reduces stock-outs

Customers don’t like to wait, and if they don’t have to, they won’t. The internet has made it easy for
consumers to find products somewhere else if you’re out of stock, so you need to reduce stock-outs
if you want to minimize customer churn.

Capacity planning can help you avoid stock-outs and improve profitability. And the more you do it,
the better you will understand your unique demand. The capacity planning process will help you see
how demand fluctuates during different seasons (such as holidays) or how it is affected by events
(like kids going back to school). You use this insight as a guide for overall decision making and supply
chain management.

2. Increases delivery capacity

Capacity planning ensures you have the workers available to deliver products whenever needed,
keeping your business competitive.

3. Identifies process inefficiencies

When you start capacity planning, you have to ask, “what is the maximum capacity of this resource?”
It’s easy to lose sight of these limitations in real-time when you’re struggling to patch together a
supply chain. By taking a moment to assess available capacity and capacity requirements, you’ll gain
insight into what factors limit capacity, and you’ll be able to easily spot bottlenecks that can be fixed
or improved.

4. Facilitates risk management

At its core, effective capacity planning is a roadmap for your business. Both short- and long-term
capacity planning help businesses understand their strengths, weaknesses, and limitations. You’ll be
able to make informed decisions about how fast you should scale your business, when is the best
time frame to launch a new product, and when you need to hire new employees.

Capacity planning will better prepare you to overcome obstacles, too. No matter how much planning
you do, you’ll still need to be able to respond quickly when unexpected challenges arise.

3 Strategies for Using Capacity Planning

There are three methodologies behind capacity planning. In order to choose the right strategy, you’ll
need to consider the type of business you run, the level of risk you can safely assume, and the
lifecycle of your products.

1. Lag strategy
Lag strategy is planning to have enough resources to meet true demand (not projected). Lag strategy
is a conservative method of capacity planning that ensures your costs are as low as possible. The
potential downside to this strategy is that it can create a lag in the delivery of products or services to
customers, which is where the name comes from. If you get a sudden surge in orders or land a large
new client who wants fast turnaround times, lag strategy may prevent you from meeting due dates.

2. Lead strategy

Lead strategy is planning to have enough resources to meet your demand forecasts. Lead
strategy assumes more risk than lag strategy. For example, if you hire new workers and don’t wind up
with the orders you were predicting, you could lose money paying employees to sit around. The
major benefit of this strategy is that if you do have a sudden uptick in orders, you will most likely be
able to keep all of your customers happy and meet due dates.

3. Match strategy

Match strategy is the middle ground between lag and lead strategy. Using match strategy, you do
strategic capacity planning more frequently. You closely monitor true demand, projected demand,
and market shifts/trends. Based on this information, you adjust your capacity management to meet
demand in increments. This strategy offers the most flexibility with less risk than lead strategy, but it
has more ability to scale than lag strategy.
Q3. Explain layout levels and types with proper example / diagram.

Ans:

Functional Layout ( Process Layout)

Also called as process layout.

Its best suited for intermittent type of operation.

Machines on layout are called as general-purpose machines.

It involves a grouping together of like machines in one section / dept.

Examples:

Machines performing grinding operation are installed in grinding dept.

Machines performing drilling operation are installed in drilling dept.

Heat Treatment / Painting etc.

Process Layout / Functional Layout (JOB Shop)

All machines performing a particular process are grouped together in a processing department

Low production volumes

Rapid changes in the product mix

High interdepartmental flow

Line Layout ( Product Layout)

 It involves the arrangement of machines in one line , depending on

 operation sequence.
 Raw material will be fed in first machine & final product will come
 out of last machine.
 Output of one machine becomes input to next machine.

Example :

Sugar refineries / Paper mills / Cement plants / Rolling mills.

Production line according to the processing sequence of the product.

High volume production and short distances.

tatic Product Layout ( Fixed Position)

Group Layout ( Cellular Layout)

Combination layout ( Hybrid Layout)

Q4. Explain the importance of plant location. How do you choose the best plant location?

Ans: Plant location assumes importance under the following conditions;

 When there is new business

 Existing business needs to change place
 Markets and Volumes of production increase
 Lease expiry and other land related issues
 Socio-economic reasons such as supply of labour, shifting of markets and more.

Steps in choosing the best location.

Step 1: MAKING A COUNTRY DECISION

 Political stability and import quota

 Currency and Exchange rates
 Cultural and Economic peculiarities
 Natural environment

Step 2 : SELECTION OF REGION

 Availability of raw materials

 Nearness to the markets
 Availability of power
 Transport facilities
 Suitability of climate
 Government policies

Step 3 : COMMUNITY SELECTION

 Availability of Labour
 Provision of civic amenities for workers
 Existence of complementary and competitive industries
 Presence of Finance and research facilities
 Availability of firefighting facilities
 Local taxes and restrictions
 Momentum of an early start
 Personal factors

Step 4 : SITE SELECTION

 Presence of right type of soil size.

 Appealing topography
 Provisions for waste disposal
Q5. Define location strategy. What are the factors Influencing Facility Location.

Ans: Location strategy is a business plan or approach that determines the optimal location or locations
for a company's operations, facilities, or resources to achieve the organization's goals and objectives.
This strategy considers factors such as market demand, cost of operations, availability of labour and
raw materials, proximity to suppliers and customers, and regulatory requirements. A well-planned
location strategy can help a company reduce costs, improve efficiency, increase productivity, and gain
a competitive advantage in the marketplace. It is a crucial component of a company's overall business
strategy, especially for businesses that rely on physical infrastructure or have high transportation costs.
Q6. Discuss the objectives of efficient store keeping. Explain functions of store management.

Ans:

Store is a place where all the products are received, safely guarded and issued whenever

required. The process of storing (stocking safely) for the purpose of production is known as

'Store management'. It is one of the major functions of materials management.

Objectives of Store Management

As already mentioned, major purpose of store management is for the production. Few other

objectives are as follows:

• To maintain the material safely against risks such as breakdown or spoilage

• To ensure the availability of materials for prompt delivery

• To inspect the quality and quantity of the incoming and outgoing materials

• To keep a record of the material flow throughout the supply chain

Functions of Store Management

Store management plays a role of a custodian in materials management by looking after the

items and controlling their flow. A good management information system (MIS) plays an

important role as the custodian function requires a good information and record system to

maintain the incoming, outgoing and remaining items of materials.

Other major functions of a store are listed as follows:

• Issue of materials to the departments as and when they require.

• Appropriate codification, storage and material handling to avoid wastage, shortage or

surplus of materials.

• Situation scanning for problems such as accumulation or discrepancies in the stock and

abnormal consumption of materials by any departments.

• Accurate information sharing with the purchase department to assist in purchasing

decisions.

• Maintenance of good store keeping facilities for effective handling, preservation and

stocking of materials.
Q7. What are the objectives of materials management?

Ans: Most general objective of materials management is to reduce the overall cost and increase the

overall profitability.

Few more important objectives are as follows:

• To procure high quality materials at low prices, so that to decrease the overall cost.

• To supply materials consistently for the smooth running of production processes

• To maintain adequate inventories in such a way that reduce the holding and carrying cost

of inventory.

• To procure consistent quality materials so that the quality of final products is maintained.

• To increase the efficiency of the production process by ensuring high quality materials.

• To maintain a healthy relationship with the suppliers by the effective management of

supply of materials that leads to good reputation for the firm in the market.

• To decide either to make or buy the product or a part of the product. Since, at times, it is

economical to buy rather than produce.

Q8. Define Material handling. Explain the Principles of Materials Handling.

Ans: "Material handling embraces the basic operations in connection with the movement of bulk,

packaged and individual products in a semi-solid or solid state by means of gravity manually

or power-actuated equipment and within the limits of individual producing, fabricating,

processing or service establishment" - Haynes.

"Material handling is the function that deals with the preparation, placing and positioning of

materials to facilitate their movement or storage"- Anil Kumar and Suresh.

Principles of materials Handling

Some of the principles that play an important role in material handling function are as

follows:

• All material handling activities should be planned

• There should be a systematic integration of all material handling activities.

• Effectively utilise the available cubic space.

• Gradually increase the quantity, size, and weight of the load to be handled.

• An operation sequence and equipment arrangement to be planned for optimal

material flow.

• Eliminate unnecessary equipment as well as movement.

• Material handling equipment and methods should be safe

• Automated or mechanical material handling equipment should be used whenever

and wherever necessary.

• Material handling equipment type, size and method should be standardised.

• A variety of material handling applications or activities can be performed with the

available methods and equipment

• Appropriate material handling equipment, method or movement to be selected

• Transporting equipment should be kept in motion

• Minimise the idle time of material handling equipment

• Plan for a scheduled repair of all material handling equipment

• Replace the old or obsolete material handling techniques and equipment with the

modern and new techniques and equipment.

• Utilise material handling to improve production control, inventory control.

Q9. What is the major aim of maintenance management? Explain the three types of maintenance
operations.

Ans: Major aim of maintenance management is to maintain the equipment in good operating

conditions with economical cost.

Three types of maintenance operations are there. They are:

Breakdown (Reactive) Maintenance

Under the type of breakdown maintenance, no actions will be taken to maintain the equipment.

Moreover, corrective action only will be taken, once the machine or equipment breaks down.

In this type of maintenance, whenever dealing with new equipment, we can expect minimal

incidents of failure. This program is purely reactive as manpower or money is not spent until

something breaks. Therefore, there is no maintenance cost during the period before breakdown.

But, the life time of the equipment is shortened resulting in more frequent replacement.

However, the labour cost associated with repair will probably be higher since the failure will

most likely require more extensive repairs. Moreover, if a critical piece of equipment is failed,

then maintenance overtime cost has to be paid to bring back it on-line quickly. Subsequently,

a large material inventory of repair parts to be stored.

Advantages

• Initial investment cost for maintenance is low.

• Number of maintenance staff required is minimum as they are needed once the

equipment fails.

Disadvantages

• Unplanned downtime of equipment may result in delay in production and decrease in

productivity.

• If machine or equipment failure occurs during off-time, increased labour cost due to

the overtime needed.

• Cost involved with repair or replacement of equipment may be high.

• Before correction, there will be a chance of damage of secondary equipment or process

damage from the equipment failure.

• Maintenance labour resources are used inefficiently.

Preventive Maintenance

Preventive maintenance can be defined as, “Actions performed on a time or a machine-runbased

schedule that detect, preclude, or mitigate degradation of a component or system with

the aim of sustaining or extending its useful life through controlling degradation to an

acceptable level.”

Preventive maintenance is a means to increase the reliability of their equipment. By simply

consuming the necessary resources to conduct maintenance activities proposed by the

equipment designer, equipment life is extended and its reliability is increased. In addition to

an increase in reliability, cost savings is improved over that of a program just using reactive

maintenance.

Advantages

 It is cost effective in many production processes that are capital intensive

 Flexibility allows for the adjustment of maintenance periodicity.
 Component life cycle is increased
 High energy savings.
 Number of equipment failures or process failures is reduced.
 Cost savings is higher than reactive maintenance program.

Disadvantages

• There is a chance for Catastrophic failures

• It requires large number of maintenance staff

• Maintenance activities are also to be done regularly that may not be needed at times.

• There is a chance for incidental damage to components in conducting unneeded

maintenance.

While preventive maintenance is not the optimum maintenance program, it does have several

advantages over that of a purely reactive program. By performing the preventive maintenance

as the equipment designer envisioned, we will extend the life of the equipment closer to design.

Preventive maintenance (lubrication, filter change, etc.) will generally run the equipment more

efficiently resulting in cost savings. Though it is not possible to prevent equipment catastrophic

failures at times, the number of failures can be reduced gradually. Minimising failures translate

into maintenance and capital cost savings.

Predictive Maintenance

Predictive maintenance can be defined as “Measurements that detect the onset of a degradation

mechanism, thereby allowing causal stressors to be eliminated or controlled prior to any

significant deterioration in the component physical state. Results indicate current and future

functional capability”.

Basically, predictive maintenance differs from preventive maintenance by basing maintenance

need on the actual condition of the machine rather than on some preset schedule. Preventive

maintenance is time-based. Activities such as changing lubricant are based on time, like

calendar time or equipment run time. For example, most people change the oil in their vehicles

every 3,000 to 5,000 miles travelled. This is effectively basing the oil change needs on equipment

run time.

No concern is given to the actual condition and performance capability of the oil. It is changed

because it is time. This methodology would be analogous to a preventive maintenance task. If,

on the other hand, the operator of the car discounted the vehicle run time and had analysed the oil
at some periodicity to determine its actual condition and lubrication properties, he may be

able to extend the oil change until the vehicle had travelled 10,000 miles. This is the

fundamental difference between predictive maintenance and preventive maintenance, whereby

predictive maintenance is used to define needed maintenance task based on quantified

material/equipment condition.

Advantages

• A well-orchestrated predictive maintenance program will eliminate catastrophic

equipment failures.

• It schedules the maintenance activities to minimise or delete overtime cost.

• Using this type of maintenance, it is possible to minimise inventory and order parts, as

required, well ahead of time to support the downstream maintenance needs.

• It optimises the operation of the equipment.

• It saves energy costs.

• It increases plant reliability.

Disadvantages

• Increased investment in diagnostic equipment

• Increased investment in staff training

• Savings potential not readily seen by management

Q10. What is Batch processing? How do you calculate EBQ ?

Ans: Batch processing in product and material management refers to the process of producing or
processing a specific quantity of products or materials in a single production run or operation. In
batch processing, a set of similar products or materials are produced or processed at the same time
in a batch, rather than producing them individually or in continuous flow.

Batch processing allows businesses to optimize production efficiency by grouping together similar
products or materials for processing. It enables manufacturers to minimize setup times, reduce
waste, and optimize the use of equipment and labour.

In product and material management, batch processing is typically used for products or materials
that have a limited shelf life, require specific environmental conditions, or have high setup costs. By
producing products or materials in batches, businesses can reduce inventory levels, improve
production planning, and control costs.

Batch processing also allows for more effective quality control measures, as products or materials
can be inspected and tested as a group, rather than individually. This can help ensure that all
products or materials in the batch meet the required specifications and quality standards.

EBQ (Economic Batch Quantity) is a formula used to calculate the optimal order quantity of inventory
to minimize the total cost of ordering and holding inventory. The formula takes into account the cost
of placing an order, the cost of holding inventory, and the demand for the product. The formula for
EBQ is:

EBQ = sqrt((2 x D x S) / H)

where:

D = annual demand for the product

S = cost of placing an order

H = holding cost per unit of inventory

The formula assumes that demand for the product is constant and that lead time is negligible. The
result of the calculation represents the optimal order quantity to minimize the total cost of ordering
and holding inventory. By using the EBQ formula, businesses can make informed decisions about
inventory management and reduce their overall costs.
Q11. Explain ABC analysis with proper example.

Ans: ABC analysis –

In this technique the materials are divided into 3 groups. A,B,C according to the cost of the
materials and money value.

A items - A few costly items come under this category these items require proper storage and
handling, overstock is avoided.

B items - These are neither costly nor cheap.

C items - Cheaper in cost.

It is also known as Selective Inventory Control Method (SIM).

Q12. What are the objectives of inventory? Explain VED, SDE and FSN Classification.

Ans: Objectives of Inventory Control –

 To reduce investment in inventories and made effective use of capital investments.

 To supply items in time.
 Efforts are made to procure goods at minimum price without bargaining the quality.
 To avoid stock out and shortages.
 Wastages are avoided.
 Inventory management is essential to maintain a large size inventory for efficient and
smooth production and also for sales operation.

VED ANALYSIS

VITAL,ESSENTIAL, DESIRABLE

It is based on the importance of the item and its effects.

VITAL Items – Such items are categorised as vital whose absence (no stock) cannot be tolerated
even for a single day. That means in their absence the work of factory will to come standstill.

ESSENTIAL items – These are the items without which a hospital can function but may affect the
quality of service to some extent but not to a very serious extent.

DESIRABLE items - These are the items whose absence will not affect the functioning of hospital or
ward or department or patient care.

The motive of this system is to reduce investment in inventories. The items which are fast moving ,
i.e., which are in great demand should be stocked more than items occasionally demanded and
lastly the items which are rarely demanded should be stocked in minimum quantity.

SDE CLASSIFICATION

 The SDE is based upon the availability of items.

 Here ‘S’ refers to ‘Scarce’ items
 ‘D’ refers to ‘Difficult’ items
 ‘E’ refers to ‘Easy to acquire’
 This is based on problems faced in procurement, where some strategies are made on
purchasing.

FSN ANALYSIS

 The abbreviation for FSN in “Fast moving, Slow moving and Non-moving”.
 Here in this analysis, the date of receipt or the last date of issue, whichever is later, to
determine the no. of months which have lapsed from last transaction.
 FSN is helpful in identifying active items which need to be reviewed regularly and surplus
items and non- moving items are examined.