Assignment II for OM

1. What do you mean by TQM (Total Quality Management)? Discuss the importance of
TQM.

2. Define inventory management. What are its objectives?

3. Write short notes on:

a) ABC analysis
b) EOQ approach to inventory.

4. What do you mean by MRP (Material Requirement Planning)? Discuss its objectives and
scope.

5. Write short notes on:

a) Kanban
b) JIT
c) Kaizen
d) Poka-yoke
e) Operating characteristics curve
f) PDCA Cycle
g) Fishbone Diagram

6. An insurance company wants to design a control chart to monitor whether insurance

claim forms are being completed correctly. The company intends to use the chart to see
if improvements in the design of the form are effective. To start the process, the
company collected data on the number of incorrectly completed claim forms over the
past 10 days. The insurance company processes thousands of these forms each day. And
due to the high cost of inspection each form, only a small representative sample was
collected each day. The table below reflects it.

Sample Number of inspected Number of incorrect

1 300 10
2 300 8
3 300 9
4 300 13
5 300 7
6 300 7
7 300 6
8 300 11
9 300 12
10 300 8
7. Eight carpets were observed and the table below gives the number of defects. Construct the
control chart for number of defects.

Carpet no. No. of defects

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

8. An auto component manufacturer requires a certain steel forging in large quantities. The annual
requirement is 40,000 pieces, each costing Rs. 450. The ordering cost if Rs.600 per order and
carrying cost is Rs.100 per unit per year.
a) What is the optimal order quantity?
b) How frequently should the manufacturer place the order with the supplier?
c) Compute the total ordering cost and total carrying cost. Do you notice anything?

9. A manufacture of electric ovens has made an estimate (as shown in table below) for annual
consumption and unit cost of the components that are used for manufacture. Perform an ABC
analysis and advise how the manufacturer should plan and control for inventory.

Item no. Annual consumption Unit value

1 200 7000.00
2 400 5000.00
3 40000 30.00
4 60000 1.00
5 40000 1.25
6 20000 10.00
7 400 200.00
8 20000 3.00
9 10000 7.00
10 10000 8.00
11 80000 0.50
12 60000 1.25

10. Consider an item that is ordered once per month. The daily requirement is 200 and the lead
time for supply is two days. There are 25 working days in a month. The cost of ordering is Rs.
300 per order and the cost of carrying is Rs. 150 per unit per year.
a) Draw a sketch showing the cyclic and pipeline inventory in the system.
b) What is the reorder point for the item?
c) What will the cost of this plan be?