Section A

1. What is obsolete items?

Answer: Obsolete items belong to such inventory that has completed its
product life cycle and no longer relevant in company’s business.

What is surplus items?

Answer: Surplus items is the inventory which a company holds in excess of
the inventory required within a specific time period.

2. What is scarp?
Answer: Scrap is recyclable wastage generated during different processes or
due to bad manufacturing. These are left over materials after a product has
been manufactured, or a returned product from customers due to
unsatisfactory quality.

Section B
1. Explain the reason for generation and accumulation of obsolete, surplus
and scrap items.

Usually obsolete items remain idle in the shelves for such a long period that
it became outdated due to various factors in the market, factors could be
price, overall demand, fashion, taste, technology etc. Such inventories are
either recycled, downgraded, being sold out on cut prices or disposed-off
depending upon the nature and shelf life of items.

Surplus items is such an inventory that is accumulated over the period due to
poor forecasting, planning and purchasing. Typically caused by over
production, over purchases, low product absorption in the market or
availability of substitute goods. There are risks involved in holding such
inventory for long that it can become obsolete over time, priced out or
reaches its expiry and can also cost huge in storage for a period.

Many factors can cause increase scarps generation in any manufacturing

process, such as wrong or misread tolerances, incorrect or expired materials,
and imprecise measurements or deviation from standard processes. Scraps
 carries plenty of cost in any value chain. Both in terms of cost and reputation
because it can be returned goods from customers, cost of bad impression and
embarrassment or It can be a nonconforming product which requires rework
and hence extra cost, time and manhours will be required.

Section C
1. Discuss the identification & control of waste.

Answer:
There are typically three broader categories of activities/processes in any
value stream:

 Value added – Creates values in the eyes of customer

 Non-value added – Required (No value addition but required to run
business, such like legal compliance)
 Non-value added – Not Required (Pure Wastes)

There are eight types of wastes: DOWNTIME

Defects - Producing defective goods that needs rework, processes should be aligned in
such a way that it produces right first time.

Over Production - Producing more than it is required causing surplus inventory.

Proper forecast and planning can reduce this type of waste.

Waiting - Waiting for anything: people, material, machinery, or information. Waiting

time can be reduced by making all the necessary items available in processing area.

Neglected human talent - Not striving to improve process by utilizing right talent
rather tolerating status quo. This waste can be reduced by if people are assigned with
jobs according to their talent.

Transportation – Transporting something further than necessary due to improper

process design or temporarily locating something. Design plant in such a way that the
right material flow is ensured.
 Inventory - Excess inventory that takes up space, has inherited safety risk or may
become obsolete over period. Proper forecasting and planning can reduce this waste.

Motion - Any motion that is not necessary to the successful completion of an

operation. Plant machinery and people can be aligned in a way that ensures minimum
motion during process.

Excess processing – Non value adding processes that the customer does not
want or that do not add value for the customer. All such processes which doesn’t
add any value should be avoided in order to reduce this waste.

2. Discuss the disposal of scrap.

Disposal is the process in which such scraps are disposed-off where Reduce,
Reuse, Recycle is not possible and material is of no use for organization.
Disposal requisition is being raised by the procurement department and
Auction/ Tender methods are often used for disposal of scraps, interested
parties inspects the scrap in the scrap yard and submit their offer in sealed
envelope to the procurement department. Then subsequently those with
better offer requires to deposit earnest money and uplift the scraps. It is very
essential that the scrap is segregated according to material, type, etc. because
when the scrap is mixed, the return is even lower than the lowest element in
the mixture.