Answer 1

Plant layout is a master blueprint for conciliate all the operations that are performed inside a
manufacturing or a service organization. It is very necessary to overall arrange the production process,
stock room, store room, material handling equipment, tool room, racks, aisles and all the other
accessories which are required to facilitate smooth operations in the factory. Likewise, in service
organizations such as hotels, restaurants and hospitals, there are various resources that shall be
physically located at the best possible location. With a better arrangement of the resources, operations
can be improved a lot and customers can be provided with better service. It confines productions and
service facilities and serves for the utmost utilization of men, machine and material that constitute the
processes.
In manufacturing organizations, a good plant layout will make sure that majority of the jobs will have
to travel the least before going for the next process and that it shall complete all their processing
requirement in the best and the fastest possible way. Similarly, in service organization, a good plant
layout ensures that the customers will have to walk the least possible distances and spend the least
possible time to complete their service requirements.
There are various types of layout planning. Some of the important layout planning are as follows:

• Product Layout
• Process Layout
• Fixed Position Layout
• Combined Layout, and
• Group Technology or Cellular Layout

Product Layout

In product layout, the machines are arranged in a sequential manner as required by the particular
product. As required to balance the particular product, all the machines are arranged in a sequence
line, however they are not necessarily in the straight line. Product layout is also known as “the product
line layout.”

In this type of layout, a particular product has to go through the machines that are lined up as ordered
by the manufacturer. In this type of layout, the product is given more importance than the process and
whenever the product needs it service, the process machines must remain present at the point.

This kind of layout is particularly used in mass production. For example, product layout is useful in
the industries that manufactures automobiles, cigarettes, cement, steel, sugar, and many more.

Process Layout
At one location, all the machines performing much of the same type of operations are grouped
together in this type of layout. For example, in an engineering shop, all the lathes, machines, milling,
cutting machines, etc are clustered in a group. Thus, in one area, all the forging will be done and, in
another area, all the lathes will be placed.
More than one product may share a machine to make its comprehensive use. The sequential
arrangement of the machine group is often, but not always made on the basis of the operations of
labour. In process layout, the process is given the primary importance than the product and the
products are moved for the purpose of operations to the section where it gets processed with like
machines located at a particular location.
This kind of layout is used in the firms that produces small numbers of different variety of products.
For example, it is used in drill department or in a paint department. These are primarily found in job
shops, or shops that produces customized and low volume products.

Fixed Layout

In situations when the product manufactured is huge and bulky and is difficult to move and is usually
made in quantities of one, fixed layout is used. In this type of layout, the operations require that
movements of men, materials and machines. Unlike product and process layout where the machines
were installed fixed at a location, here in fixed layout, the product stays at a single location and
machines and labour are brought to the product. It enables managers to have a better control over the
flow of material.

This type of layout is usually employed in organizations with large projects. For example, building of
ships, aircraft, nuclear plants, etc.

Combined Layout

Usually, pure product layout or pure process layout is practiced. A combination of product layout and
process layout is found in combined layout. In combined layout, the benefits of both, product layout
and process layout are incorporated. It is followed where several products are produced in repeated
number with no intention of continuous production.

Combined layout is found in most of the industrial establishments. Plants and machineries involving
fabrication of parts uses the process layout, while the assembly areas tend to employ product layout.
For example, in soap manufacturing, heating of glycerine is done in process layout while the
machinery manufacturing the soap is done in product layout.

Cellular Layout

In this type of layout, the machines are grouped according to the requirement of the process for a set
of similar products which goes through same processing. These groups are knowns as cells. Hence, a
cellular layout is configured in a way to support cellular manufacturing. The technique in which the
processes are grouped into the cells is known as group technology. Group technology includes
recognizing parts with similar process characteristics and similar design characteristics. In such kind
of layout, the workers are cross-trained in a way that they can operate all the tools and machinery
within the cell and takes the responsibility for the output.

This type of layout is a hybrid system used by most manufacturers, including automobile and
appliance industries. For example, piano manufacturer uses this kind of layout.

Other Layouts
There are various other types of layout which are usually used in service organizations, which include
warehouse layout, retail layouts and office layouts.
Warehouse layouts depends on the order frequency. The items which are ordered frequently should be
located near the entrance. It is easier to establish layout for retail stores as they are not as huge as a
manufacturing outlet. They must take into consideration the customer’s presence and the focus on
opportunities to influence and increase sales. Office layout shall be set and organized in a way that all
the physical transfer of information is optimized.

Retail stores uses different types of layout but free flow layout is the most commonly used. Fixtures
and products are placed in a free-flowing pattern on the sales floor which works best in small and
medium stores which is under 5000-7000 square feet. This layout can be seen in Nike, Adidas, etc
stores.
In conclusion, layout planning is an important consideration. It can significantly affect the service
quality and productivity. Costs can be increased, confusion and frustration in customers can be
increased and flow of poor communication and information can also be increased if there is no
effective layout planning. It even helps in decreasing delays of jobs. Layout planning is important in
every manufacturing industries as well as service industries.
Answer 2

Managing inventory is an intimidating task. If it is not done right, it can cost thousands of rupees to a
firm or may be even lakhs. Inventory is the raw material and the finished goods which the
organization uses for production or to sell. In accountancy, it is considered as an asset. Inventory is
any idle resources that either has current or future use. It includes all the components parts, raw
materials, goods work in progress, finished goods, packaging and packing materials, and general
supplies.
The systematic approach of storing, sourcing and selling of inventories, which include both raw
materials and finished goods is known as inventory management. It plays a vital role in identifying
which stock to order, how much to order, and at what time. An effective inventory management
means to have the right stock, at the right levels, in the right time, in the right place and at the right
cost. It helps an organization in various ways. Inventory management helps in saving cost by
identifying what stock is not required, improves cash flow by identifying which stock is required, and
keep a good customers relation by providing whatever they want without waiting.

Some of the important inventory management techniques are discussed below:

ABC Analysis: ABC Analysis is the acronym of Always Better Control Analysis. This is a technique
in which the inventories are classified in 3 categories, where category A includes stocks that represent
80% of the organization’s revenue. Category B includes inventory that represent 15% of the revenue
and category C includes rest 5% of the revenue.
Category A includes organization’s most profitable products, whereas category C includes all the
slow moving and dead stocks.

Just in Time (JIT) Method: This technique is used to save costs in a huge amount by just keeping as
much inventories as it needs during the time of production or having products arrive as and when the
customers orders them. It involves a plethora of research as it is based on customer’s behaviour,
which is very unpredictable. It helps in reducing storage and insurance costs as well as the discarding
or liquidating the excess inventories.

Material Requirements Planning (MRP) Method: This is a technique in which management orders
the inventory depending on the sales forecast. Managers integrate data from various areas where
inventories exist and based on which, he/she orders the new inventory from the raw material
suppliers.

Economic Order Quantity (EOQ) Model: This is a technique in which managers needs to take
decisions on how much quantity of inventory is required at a particular point of time and when shall
the order be placed for the restocking of the same. Managers reorders the inventory as the inventory
reaches the minimum level. This model helps the organization to order right quantity and saves
ordering and carrying costs.

Minimum Safety Stock: To avoid the out-of-stock situation, organizations maintain a minimum
safety stock level. The organizations reorder as soon as inventories reaches the minimum safe stock
level. For example, if the total inventory of an organization is 10,000 units and minimum safety level
is set at 3,000 units, the organization reorders when the 7,000 units of inventory is used or sold.

Vital Essential and Desirable (VED) Analysis: This technique is mostly used in controlling the
spare parts of inventory. For the vital parts that are expensive and are important for production,
organizations need to maintain a higher level of inventories. A medium level of inventory is required
for essential spare parts without which the production process may slow down. Likewise, a low level
of inventory is required for the desirable parts which are not often required for productions.
Fast, Slow and Non-moving (FSN) Method: All the items of inventory are not required in the same
quantity. In this method, inventory is classified into 3 categories, fast-moving inventory, slow-moving
inventory and non-moving inventory. Fast-moving inventory are more frequently ordered as they are
required more. Similarly, slow-moving inventory is ordered less frequently as they are not required a
lot. Likewise, non-moving stocks are ordered very rarely as they are kept as dead stock and are least
required.

Some of these techniques are also very much important to general stores in managing their inventory
effectively. Following techniques can be used by them in order to effectively manage their inventories
like groceries, packets of biscuits, bag of chips, toiletries, beverages, etc.

1. Bulk Shipments: It is always cheaper to order the required inventory in bulk. Goods with
higher demand are ordered in bulk by the general stores to avoid paying extra cost and to earn
more profit.
2. Minimum Safety Stock Method: Once a product or an inventory reaches a minimum level
fixed by the store owner/manager, he/she reorders the quantity required. This way the
particular product with high demand will not go out of stock which results in less customer
dissatisfaction and more sales.
3. ABC Analysis: This technique is also very useful as general store includes variety of
products and managing inventories is a complex task. Store managers uses this technique to
assort the product, keep the category A product nearby, followed by category B products and
then category C.
4. First In, First Out: This is a technique commonly used by all the general store owners. Since
general store usually deals with products that are perishable in nature, such as groceries, bag
of chips, packets of biscuits, eggs, etc., oldest products are sold first. This way, the store
manager does not have to bear any losses of expiration of perishable goods.

Inventory management is a very important part of an organization. An organization can reduce its
various costs such as warehouse cost, inventory carrying costs, ordering cost, cost of obsolescence,
etc wit the help of effective inventory management. It also helps in improving supply chain of the
organization.
An effective inventory management also helps in forecasting the spike in sales, maintaining good
relationship with the suppliers, retaining the loyalty of the customers, thus allowing frequent cash
flow.
In contrary, poor inventory management can have bad results in the business. It can increase the risk
losing sales when the organization runs out of stock or even incur losses for having excess
inventories. It can increase holding costs, loses customer loyalty for not having the required stock
when needed and making the cashflow uncertain. An organization must convert inventories into cash
as fast as possible.
Answer 3 (a)

Serving the best quality of food at the cheapest rates is not enough for a restaurant to become successful.
A lot of other factors needs to be considered too, such as the taste of the food, the presentation, hygiene,
how fast is the service, etc., but the most important factor is the location of the restaurant.

Opening a restaurant which is in the outskirts of the city, where the footfall is very less, where the
demand of the food is less can be a failure for the owner of the restaurant. It is favourable for a restaurant
owner to open a restaurant in a location where the demand of the cuisine served is more and customers
shall have a proper accessibility to the restaurant. Kolkata being a metro city, the owner should consider
opening his restaurant in the area of Bhawanipur as there are various shopping malls, pubs and parking
lots nearby, and the residents have a higher standard of living.

Although, to have a proper site location for the restaurant, the latter should keep in mind that the location
shall have the following:

• Visibility: The owner should keep this in his mind that the restaurant should be visible to the
customers. If it is located inside a lane, which is barely visible to the customers, the footfall
will never increase. The owner needs to do determine how much the restaurant is visible to
the target customers.

• Parking Availability: If the owner is targeting rich customers, he should keep in mind that the
parking spaces are available nearby the restaurants. A hungry customer will not park the car
half a km away from the restaurant and walk there. He shall buy or rent a place that is big
enough for the customers to park their car or has a nearby roadside parking available.

• Accessibility: The owner needs to ensure that customers have a proper accessibility to the
restaurants. Opening a restaurant where people will there is no local transport available, it will
be a failure unless the restaurant uses some extraordinary USP.
• Unique Selling Point: The owner must ensure that from his interiors to the menu and quality
of the food, he should stand out of his competitors. He should provide some uniqueness in
order to attract more customers and become successful.
• Surrounding Businesses and competitors: A comprehensive research on nearby businesses
and competitor is mandatory as it will help in determining how can he attract and aim for the
employees of nearby businesses and what different is the restaurant serving for that of
surrounding competitors. If there is a shopping mall nearby, it will become his added
advantage as after shopping, the restaurant can attract those shoppers.
• Space Size: He needs to ensure that the area he is renting or purchasing fits his budget but
also is not very compact. According to OSHA, the restaurant must have five square feet of
kitchen space for every seat in the restaurant which would help in minimizing workplace
accidents.

The owner needs to take the decision of choosing the location of the restaurant with his eyes wide
open, researching about the space, the pros and cons of it and how the location can affect his costs and
profits.
Answer 3 (b)

Aggregate operation planning is a planning exercise which helps to forecast short-term and mid-term
demand and output capacity of the company. Usually, it helps in determining the decisions involving
the amount of resources to be committed to ensure a constant flow of goods and service to the
customers. Since here, we are to discuss on adaption of these strategies for restaurant for a time span
of a year, we may not take inventories into consideration as a restaurant cannot store the inventories
for a year and employees do not produce products. However, making an aggregate operations
planning for optimally utilizing the employee’s work hours, controlling labour costs and maintaining
quality services for the customers. This is also commonly known as annualized hours and productivity
planning for service businesses.

There are three strategies for aggregate operations planning:

• Level Strategy
• Chase Strategy
• Mixed Strategy

Level Strategy

This is a strategy which emphasizes on not making any changes in the existing operations at all. In
other words, the system would employ a fixed workforce and/or maintain a constant work hour. In
this type of strategy, inventory plays an important role of connecting two periods. That is why firms
usually employ inventory related substitutes to identify the demand supply mismatch. When the
demand is less, anticipation inventories are built and used when the demand increases and to meet
such high demands, other alternatives such as back ordering/shortages are used.

In restaurant industries, this strategy can be used by maintaining constant working hours of the
employees. Maintaining constant working hours can be done by guaranteeing them a set number of
hours for the year.

Chase Strategy
This strategy carries a little or no inventory from one period to another. Rather, the supply demand
mismatch in each period is met by altering the capacity of the firm. For example, during high demand,
the firm may higher new employees and/or working hours of the employees are increased. Similarly,
when the demand is low, employees are laid off, some are asked to work undertime and working
hours is reduced.
In restaurant industries, the owner can use this strategy by asking the employees to work overtime
during high demand to avoid hiring additional work capacity during high demand and laying them off
during lean demand.

Mixed Strategy
In real life, almost every industry uses this form of strategy by utilizing the combination of the
alternatives available to devise a strategy for aggregate operations planning.
This strategy is the best in restaurant industry as initially, the owner cannot predict the number of
footfalls. At first, the owner can hire the employees in a contractual basis and if the business thrives
and the number of workers is sufficed then convert them into a permanent employee.
Similarly, the inventories can be ordered in small lots and if the demand seems to be higher,
inventories can be stocked up beforehand. This way, the owner could bear minimum loses of storing
materials for a longer period of time till they become unusable.

It is very important for such a start-up to have a plan beforehand, which will help him in saving costs.
This way, he can successfully operate his restaurant with a less chance of failing and higher chance of
earning profit as early as possible. The owner can increase the cash flow, decrease the cost in effective
manner and earn higher profits if he uses the mixed strategy.