Vishwakarma Institute of Technology, Pune

Industrial & Production Engineering Department, Pune 411037

Course Code: PR 3043

Course Name: Project Management
Class: T.Y. B.Tech. Production
A.Y. 2019-20 Sem II

Home Assignment

Submitted By:

Roll No. GRN Name of Student

44 1710736 Roshni Mutha
 Sunrise Ltd. is setting up a new project for manufacturing two products. Product
Q2
A: 2500 tons
Product B: 3500 tons
The cost of project, after capitalizing interest and pre-operative expenses are: (Rs. Lakhs)
Cost of Project Means of Finance
Land and Site Development : 26 Equity Share Capital: 125
Buildings: 34 Term Loans: 240
Plant & Machinery: 290 Misc.
Fixed Assets: 12 Preliminary
Expenses: 3
Total: 365 Total: 365

Assumptions:
m) Capacity utilization of both products: Year I: 50%, Year II: 60%, Year III: 70%
n) Raw material requirements:
Product A: Rs. 30 per kg
Product B: Rs. 80 per kg
o) Total cost of power: Rs. 30 lakhs (Year I) with an increase of 10% thereafter every year
p) Repairs & Maintenance: Rs. 50 lakhs per year
q) Administration overheads: Rs. 40 lakhs (Year I) with increase of 10% every year
r) Salaries and wages: Rs. 100 lakhs (Year I) with increase of 20% thereafter
s) Selling expenses: 10% of sales
t) Selling price: Product A: Rs. 40 per kg, Product B: Rs. 120 per kg
u) Depreciation (straight line method): Buildings: 5%, Plant & machinery: 10%, Misc Assets: 15%
v) Interest on term loans: Rs. 50 lacs per annum
w) Bank borrowing interest: 18%
Bank borrowings: Year I: Rs. 375 lakhs, Year II: Rs. 465 lakhs, Year III: Rs. 535 lakhs
x) All expenses estimated to remain constant for appraisal purpose except interest on term loan from III
onwards
v) From above information prepare cost and profitability statement for next four years

Projected Profit & Loss Account

Year 1 2 3 4
Capacity Utilization (%) 50% 60% 70% 80%
Sales (Tons)        
Product A 1250 1500 1750 2000
Product B 1750 2100 2450 2800
Sales (Rs)        
Product A 5,00,00,000 6,00,00,000 7,00,00,000 8,00,00,000
Product B 21,00,00,000 25,20,00,000 29,40,00,000 33,60,00,000

Total Sales (Rs) 26,00,00,000 31,20,00,000 36,40,00,000 41,60,00,000

Material Cost        
Product A 3,75,00,000 4,50,00,000 5,25,00,000 6,00,00,000
Product B 14,00,00,000 16,80,00,000 19,60,00,000 22,40,00,000
Total Material Cost (Rs) 17,75,00,000 21,30,00,000 24,85,00,000 28,40,00,000
Salaries & Wages (Rs) 1,20,00,000 1,44,00,000 1,44,00,000 1,44,00,000
Cost of Power (Rs) 30,00,000 33,00,000 36,30,000 39,93,000
Repairs & Maintenance
(Rs) 60,00,000 60,00,000 60,00,000 60,00,000
Administration OHs (Rs) 25,00,000 27,50,000 30,25,000 33,27,500
Selling Expenses (Rs) 2,60,00,000 3,12,00,000 3,64,00,000 4,16,00,000
Total Operating
Expenses (Rs) 22,70,00,000 27,06,50,000 31,19,55,000 35,33,20,500
PBDIT 3,30,00,000 4,13,50,000 5,20,45,000 6,26,79,500
Depreciation 61,50,000 49,54,500 39,95,475 32,25,896

PBIT 2,68,50,000 3,63,95,500 4,80,49,525 5,94,53,604

Interest 1,17,50,000 1,33,70,000 1,46,30,000 1,46,30,000
PBT 1,51,00,000 2,30,25,500 3,34,19,525 4,48,23,604
Tax (25%) 37,75,000 57,56,375 83,54,881 1,12,05,901

PAT 1,13,25,000 1,72,69,125 2,50,64,644 3,36,17,703

Schedule of
Depreciation
Buildings (Op. Value) 34,00,000 32,30,000 30,68,500 29,15,075
Depreciation 1,70,000 1,61,500 1,53,425 1,45,754
Buildings (Cl. Value) 32,30,000 30,68,500 29,15,075 27,69,321
P & M (Op. Value) 2,90,00,000 2,32,00,000 1,85,60,000 1,48,48,000
Depreciation 58,00,000 46,40,000 37,12,000 29,69,600
P & M (Cl. Value) 2,32,00,000 1,85,60,000 1,48,48,000 1,18,78,400
Misc Asssets (Op. Value) 12,00,000 10,20,000 8,67,000 7,36,950
Depreciation 1,80,000 1,53,000 1,30,050 1,10,543
Misc Asssets (Cl. Value) 10,20,000 8,67,000 7,36,950 6,26,408
Interest on Term Loans 50,00,000 50,00,000 50,00,000 50,00,000
Bank Borowings 3,75,00,000 4,65,00,000 5,35,00,000 5,35,00,000
Interest on Bank
Borrowings
Q33
67,50,000 83,70,000 96,30,000 96,30,000

Q3

TELOXY ENGINEERING (A)

Teloxy Engineering has received a one-time contract to design and build 10,000 units of a new product.
During the proposal process, management felt that the new product could be designed and manufactured at a
low cost. One of the ingredients necessary to build the product was a small component that could be
purchased for $60 in the marketplace, including quantity discounts.

Accordingly, management budgeted $650,000 for the purchasing and handling of 10,000 components plus
scrap.

During the design stage, your engineering team informs you that the final design will require a somewhat
higher-grade component that sells for $72 with quantity discounts. The new price is substantially higher than
you had budgeted for. This will create a cost overrun.

You meet with your manufacturing team to see if they can manufacture the component at a cheaper price
than buying it from the outside. Your manufacturing team informs you that they can produce a maximum of
10,000 units, just enough to fulfill your contract. The setup cost will be $100,000 and the raw material cost
is $40 per component. Since Teloxy has never manufactured this product before, manufacturing expects the
following defects:

Percent defective 0 10 20 30 40
Probability of 10 20 30 25 15
occurrence
 All defective parts must be removed and repaired at a cost of $120 per part.
Using expected value, is it economically better to make or buy the component?
1. Strategically thinking, why might management opt for other than the most economical choice?

Percent defective 0 10 20 30 40
Probability 10 20 30 25 15
100
No. of Defectives 0 0 2000 3000 4000
Probability (decimals) 0.1 0.2 0.3 0.25 0.15
Expected No. of Defectives 2150
Q3

Numerical 3 Making Component (Inhouse) Buying Component (From Outside)

Per Unit 10000 units Per Unit 10000 units
Material Cost 40 4,00,000
Repairs Cost 2,58,000
Setup Cost 1,00,000
Purchase Cost 72 7,20,000
Handling Cost 5 50,000
7,58,000 7,70,000

Q.4 .Your manufacturing team informs you that they have found a way to increase the size of the manufacturing run
from 10,000 to 18,000 units in increments of 2000 units. However, the setup cost will be $150,000 rather than $100,000
for all production runs greater than 10,000 units and defects will cost the same $120 for removal and repair.
1. Calculate the economic feasibility of make or buy.
2. Should the probability of defects change if we produce 18,000 units as opposed to 10,000 units?
3. Would your answer to question 1 change if Teloxy management believes that follow on contracts will
be forthcoming? What would happen if the probability of defects changes to 15 percent, 25 percent, 40
percent, 15 percent, and 5 percent due to learning-curve efficiencies?

1. Percent defective 0 10 20 30 40
Probability 10 20 30 25 15
No. of Defectives 0 1800 3600 5400 7200
Probability (decimals) 0.1 0.2 0.3 0.25 0.15
Expected No. of Defectives 3870

Numerical 4 (1) Making Component (Inhouse) Buying Component (From Outside)

Per Unit 18000 units Per Unit 18000 units
Material Cost 40 7,20,000
Repairs Cost 4,64,400
Setup Cost 1,50,000
Purchase Cost 72 12,96,000
Handlling Cost 5 90,000
13,34,400 13,86,000
2.
Percent defective 0 10 20 30 40
Probability 15 25 40 15 5
No. of Defectives 0 1800 3600 5400 7200
Probability (decimals) 0.15 0.25 0.4 0.15 0.05
Expected No. of Defectives 3060

Numerical 4 (2) Making Component (Inhouse) Buying Component (From Outside)

Per Unit 18000 units Per Unit 18000 units
Material Cost 40 7,20,000
Repairs Cost 3,67,200
Setup Cost 1,50,000
Purchase Cost 72 12,96,000
Handlling Cost 5 90,000
12,37,200 13,86,000

Q6) Movies of the Future

Movie Design, a manufacturer of movies on videos wants to get into the DVD business. They feel they can
move into DVD market to remain competitive. They are planning to take their top 50 selling videocape main
titles and convert them to DVD. This is new manufacturing process for them. The company would like to
manufacture 10000-20000 DVD movies per year beginning within nine months. The company has already
selected a project manager and the project team. The project manager is ready to begin. He is most concerned
about project schedule, resources and personnel.

Questions
If you were the project manager, what planning tools would you start with to resolve your concerns. Do these
tools relate to each other? Explain.
ANS-If I were a Project manager ,I would start with planning tools such as WBS, SOW, network
analysis, Gantt chart, resource planning.

Project Planning tools:

1) Statement of Work (SOW): it is written description of goals, work & time frame of project.it
covers many aspects such as a)Scope of work b)Itemized tasks to be performed c)Deliverables
d)Data Items e)Reports. The complexity of the SOW is determined by the desires of mgmt,
customer/users. Explicitly describes what the project team will do to achieve the triple constraint
of the project Contains specific, measurable and attainable goals Lists all deliverables, schedule
and budget.

2) WBS: Work Breakdown Structure: Divides the project in to definable work packages, tasks or
activities. Helps to assure all activities are identified and occur logically. It will identify all work
packages required for a project the accuracy of a Team produced WBS will exceed that of the
project manager performing it alone.

3) Networks & Networks Analysis: this method produce the earliest and latest starting & finishing
times for each task or activity, Calculate the amount of slack associated with each activity,
Determine the critical tasks (Critical path). Link project activities and events with one another to
demonstrate interdependencies. An activity or event may have interdependency with predecessor,
successor, and parallel; activities or events. Uses of network diagrams will include providing
Status Reports, shows Slacks and Delays, for planning remainder of project.
 Network Control will include following methods:

a)Critical Path Method (CPM)

b)Program Evaluation and Review Technique (PERT)

4) Gantt Chart: used for monitoring the progress of a project (updated regularly to track actual
progress of project with plan).
5) Resource Planning: mainly used by three methods that are a)Resource Smoothing b)Resource
Leveling c)Resource Allocation. Based on project network times are not a schedule until
resources have been assigned. Used for resource smoothening and utilization of resources in
optimum manner.These tools are very interrelated to each other as chronologically these all are
dependent on each other.

Q7) The LOGON Project [Large Projects – Example]

The Standard Industrial Gadgets Company (STING) is a medium-sized engineering and

manufacturing firm specializing in warehousing and materials handling systems. STING purchases
most of the subsystems and components for its product systems, then modifies it and assembles them
to satisfy customer requirements. Most of STING’s customers are in manufacturing or distribution.

Every STING system is made to customer specification and most of the firm’s work is in system
design, assembly, installation and checkout. The firm’s 250 employees are roughly divided equally
among five divisions: engineering, design, fabrication, customer service and marketing. Recently,
competition has forced the firm to expand into computerized warehousing system despite the fact that
its experience and computer expertise is currently rather limited.

The company has been awarded a large contract for a robotic system for placement, storage, retrieval
and routing of shipping containers for truck and rail by the Midwest Parcel Distribution Company.
This system, called the Logistical Online System, or LOGON, is to be developed and installed at the
company’s main distribution centre in Chicago. The contract is for a fixed price of 1,462 million
dollars which includes design, fabrication, and installation at the center. The contract was awarded
because it was the lowest bid and because of STING’s outstanding record for quality and customer
service. A clause in the contract imposes a penalty of 1000 dollars daily for failure to meet the
contract delivery date.

At various times throughout the estimated 47-week project, personnel will be involved from the
functional divisions of design, fabrication, procurement, and customer service. Most personnel will be
involved on a full-time basis for at least four or as many as 18 weeks. In the past, the company has set
up ad hoc project management teams comprised of a project coordinator and members selected from
functional areas. These teams are then responsible for planning, scheduling, and budgeting, but the
actual work is done by the functional departments. Members of the teams serve primarily as liaisons
to the functional areas and work part-time on the teams for the duration of the project.

The LOGON contract differs from other STING systems, both in its heavy usage of computer, real-
time operation via remote terminals, and in its size. The company has no experience with real-time
warehousing systems and has only recently hired people with the background needed for the project.
(However, a contract has been signed with CRC, a major computer manufacturer, to provide
hardware, programming support, and to assist with system installations and checkout.

The LOGON contract is roughly 40 percent greater than anything STING has done before. At present,
STING is in the middle of two other projects that absorb roughly three-fourths of its labour capacity,
is winding down on a third that involves only the customer service division, and has two outstanding
proposals for small projects under review.

1. Discuss how would you organize the LOGON project, if you were the president of STING.

2. Discuss the alternatives available for the STING project and the relative advantages and
disadvantages of each. What assumptions have you made?

ANSWER-

1. At various times throughout the estimated 47-week project, personnel will be involved from
the functional divisions of design, fabrication, procurement, and customer service. Most
personnel will be involved on a full-time basis for at least four or as many as 18 weeks.
The LOGON contract is roughly 40 percent greater than anything STING has done before. At
present, STING is in the middle of two other projects that absorb roughly three-fourths of its
labour capacity, is winding down on a third that involves only the customer service division.
The company should accept the contract if and only if the time management is taken
care of properly. While considering the project duration all the steps should be
followed. The company should sign the contract only if its realistic one, otherwise they
can let it go look for future opportunities instead of regretting.

2. Alternatives available for the STING project is instead of accepting LOGON project they can
accept two proposals for small project. and
Advantages:
Upper hand over competitors
experience and computer expertise

Q12) TELESTAR INTERNATIONAL*

[Project Organization Structure]

On November 15, 1998, the Department of Energy Resources awarded Telestar a $475,000 contract for the
developing and testing of two waste treatment plants. Telestar had spent the better part of the last two years
developing waste treatment technology under its own R&D activities. This new contract would give Telestar
the opportunity to “break into a new field”—that of waste treatment.

The contract was negotiated at a firm-fixed price. Any cost overruns would have to be incurred by Telestar.
The original bid was priced out at $847,000. Telestar’s management, however, wanted to win this one. The
decision was made that Telestar would “buy in” at $475,000 so that they could at least get their foot into the
new marketplace.

The original estimate of $847,000 was very “rough” because Telestar did not have any good man-hour
standards, in the area of waste treatment, on which to base their man-hour projections. Corporate management
was willing to spend up to $400,000 of their own funds in order to compensate the bid of
$475,000.
By February 15, 1999, costs were increasing to such a point where overrun would be occurring well ahead of
schedule. Anticipated costs to completion were now $943,000. The project manager decided to stop all
activities in certain functional departments, one of which was structural analysis. The manager of the
structural analysis department strongly opposed the closing out of the work order prior to the testing of the
first plant’s high-pressure pneumatic and electrical systems.

Structures Manager: “You’re running a risk if you close out this work order. How will you know if the
hardware can withstand the stresses that will be imposed during the test? After all, the test is scheduled for
next month and I can probably finish the analysis by then.”

Project Manager: “I understand your concern, but I cannot risk a cost overrun. My boss expects me to do the
work within cost. The plant design is similar to one that we have tested before, without any structural
problems being detected. On this basis I consider your analysis unnecessary.”

Structures Manager: “Just because two plants are similar does not mean that they will be identical in
performance. There can be major structural deficiencies.”

Project Manager: “I guess the risk is mine.”

Structures Manager: “Yes, but I get concerned when a failure can reflect on the integrity of my
department. You know, we’re performing on schedule and within the time and money budgeted.
You’re setting a bad example by cutting off our budget without any real justification.”

Project Manager: “I understand your concern, but we must pull out all the stops when overrun costs
are inevitable.”

Structures Manager: “There’s no question in my mind that this analysis should be completed. However, I’m
not going to complete it on my overhead budget. I’ll reassign my people tomorrow. Incidentally, you had
better be careful; my people are not very happy to work for a project that can be canceled immediately. I may
have trouble getting volunteers next time.”

Project Manager: “Well, I’m sure you’ll be able to adequately handle any future work. I’ll report to my boss
that I have issued a work stoppage order to your department.”

During the next month’s test, the plant exploded. Post analysis indicated that the failure was due to a
structural deficiency.

a. Who is at fault?
b. Should the structures manager have been dedicated enough to continue the work on his own?
c. Can a functional manager, who considers his organization as strictly support, still be dedicated to
total project success?

ANSWER

1. The person first responsible should be the project manager. the project manager should
consider carefully on possible risks rather than take the risk roughly even if it’s the important

safety risk. Senior management is also to blame for this failure. The main conflict in this

case comes from the shortage of capital, which is due to the lack of cost analysis before the
company decided to place a bid.

2. Yes the structures manager should have been dedicated enough to continue the work on his
own because the issue was a risk to all the other workers working in the plant
3. No , any manager should not be dedicated total project success as the success was achieved
by complete teamwork and everyone should be given their due credits in the success.
Q19) A project schedule is given below. The status of project on 7th day is given in last 2 columns.

Activity Predecessor Duration Budget Actual %

(Days) (₹) Cost(₹) Complete
a - 3 600 480 100
b a 2 300 360 100
c a 5 800 400 60
d b 4 400 300 50
e c 2 400 0
The budgeted costs for activity are spread equally over the activity duration. Calculate planned value, budget at
completion, earned value, actual cost, cost variance, schedule variance, cost performance index, schedule.
performance index, estimate at completion, estimate to complete.

ANSWER-
:
Plan Progress on Day 7
Act Pre-dec Duration Expected Budget Actual % Complete
% Cost
Complete
a - 3 100 600 480 100
b a 2 100 300 360 100
c a 5 80 800 400 60
d b 4 50 400 300 50
e c 2 0 400 - 0
2500 1540

BAC 2500 600+300+800+400+400

10
1
2

7
8

AC a 1540 480+360+400+300 P
PV(BCWS) 1740 100% of 600 + 100% of 300 + 80%Aof 800 + 50% of 400 + 0% of 400
b P
EV(BCWP) 1580 100% of 600 + 100% of 300 + 60%Aof 800 + 50% of 400 + 0% of 400
CV(EV-AC)
c 40 1580-1540 P
A
SV(EV-PV) -160 1580-1740
d P
CPI(EV/AC) 1.02 1580/1540 (On Budget) A
e
SPI(EV/PV) 0.9 1580/1740 (Behind schedule) P
A
CSI 0.91 1.02*0.9
EAC 2450 2500/1.02
ETC 910 2450-1540
VAC 50 2500-2450
Q32) Draw the network and identify the critical path. Also, for each activity, calculate
a. earliest–latest starting and finishing times for each activity
b. total float, free float and independent float
c. rank the activities on priority on the basis of critical-non critical path activities and floats
d. determine the effect on project completion if activity
1. Only activity A gets delayed by 2 weeks
2. Only activity B gets delayed by 2 weeks
3. Only activity C gets delayed by 2 weeks
4. Only activity D gets delayed by 2 weeks
 5. Only activity E gets delayed by 2 weeks
6. Only activity F gets delayed by 4 weeks
7. Only activity G gets delayed by 3 weeks
8. Only activity H gets delayed by 1 weeks
Only activity I gets delayed by 4 weeks

Activity Preceding Time

Activity (weeks)
A - 3
B - 7
C - 4
D A 8
E B 6
F B 8
G C 4
H D, E 7
I F, G, H 3
vActivity Duration E.S. E.F. L.S. L.F.
A 3 0 3 2 5
B 7 0 7 0 7
C 4 0 4 12 16
D 8 3 11 5 13
E 6 7 13 7 13
F 8 7 15 12 20
G 4 4 8 16 20
H 7 13 20 13 20
I 3 20 23 20 23

ANSWER-

Total Slack Free Slack Independent Slack

Activity
[LETj-EETi-t] [EETj-EETi-t]] [EETj-LETi-t]
A 2 0 0
B - - -
C 12 0 0
D 2 2 0
 E -
F 5
G 12
H -
I -
- -
5 5
12 0
- -
- -

Priority: 1. B-E-H-I
2. G, C
3.D ,A
4.F
(D)
1. 1.No change in duration.
2. 2 weeks delay in duration.
3. No change in duration.
4. No change in duration.
5. 2 weeks delay in duration.
6. No change in duration.
7. No change in duration.
8. 1 week Delay in duration.
9. 4 weeks delay in duration

Q38) For the network shown in figure below with all times indicating weeks, answer the following questions:
a. What is the impact on the end date of the project if activity B slips by four weeks?
b. What is the impact on the end date of the project if activity E slips by three weeks?
c. What is the impact on the end date of the project if activity D slips by two weeks?
d. If the customer offered you a bonus for completing the project in sixteen weeks or less, which
activities would you focus on first as part of compression (“crashing”) analyses?

e.

ANSWER-
 14 23

23
27

10 27

Critical Path- ACE

a. If B slips by 4 weeks, the end date of the project will not be affected.
b. If E slips by 3 weeks, the end date of the project will get delayed by 3 weeks as E lies on the
critical path.
c. If D slips by 2 weeks, the end date of the project will not be affected.
d. If customer offers bonus for completing the project in 16 weeks, the activity A will be the
first on the focus and then the activity C will be on focus as they lie on the critical path and
have no floats.

Q41) A project manager discovers that his team has neglected to complete the network diagram for the project.
The network diagram is shown in figure below.
However, the project manager has some information available, specifically that each activity, labeled A–G, has a
different duration between one and seven weeks. Also, the slack time for each of the activities is known as shown
in figure below in ascending order.
Duration (weeks): 1, 2, 3, 4, 5, 6, 7
Slack time (weeks): 0, 0, 0, 2, 4, 4, 7

Using the clues provided below, determine the duration of each activity as well as the early start, early finish, latest
start and latest finish times for each activity.
Clues
1. Activity E is on the critical path.
2. The early start (ES) time for activity F is five weeks.
3. The duration of activity B is seven weeks.
4. Activity D has four weeks of slack, but activity F has a greatest amount of slack.
5. The early finish (EF) time for activity G is seventeen weeks.
6. The latest finish (LF) time for activity E is thirteen weeks.

ANSWER-
 ACTIVITY DURATIO EARLY EARLY LATEST LATEST
N START FINISH START FINISH
A 3 0 7 0 7
B 7 0 7 0 7
C 5 0 5 0 5
D 2 7 13 7 13
E 6 7 13 7 13
F 1 5 13 5 13
G 4 13 17 13 17

Q45 )TECH SOUND BANKRUPTCY

Tech sound, Inc., was a manufacturer of sound equipment for over 50 years. Its product lines included
electronic amplifiers and various acoustic speakers. The brand name “TECH 2000” once was the leading
brand name, and considered to be the Cadillac of
the speaker industry.

Tech Sound had two manufacturing facilities, one located in California and the other in Oklahoma. The
Oklahoma factory production volume was responsible for over 70% of the sales even though the corporate
headquarters was in California. The product lines covered industrial and professional speaker units, home
stereos, car stereos, and outdoor speakers. All but the industrial and professional speakers were made in
Oklahoma. The general techniques and concepts of designing a speaker had not changed for over 30 years.

The components needed to assemble a speaker can be divided into two categories:
1. Hardware such as the frame, the top plate, the bottom plate, a pole piece, screws or rivets, and
housing (for outdoor speakers only)
2. Software such as voice coils, spider/diaphragm, corns, corn caps, and gaskets

These two types of components were manufactured by Tech Sound itself because of the close and precise
tolerance requirements. Therefore, Sound Tech had large departments devoted to machine shop work and coil
 winding in both factories.

The sound equipment market is a very competitive one. Products from the US, Japan, and other countries are
all trying to gain bigger market shares. Sound Tech had been experiencing losses in revenue for the last
several years, and it had an outstanding debenture that would mature in another 2 years. Top management felt
a regrouping of the financial structure and a major cost reduction were necessary to keep the company from
going under. After several meetings, the decision was made to close the factory in California and move the
headquarters to Oklahoma. The property in California was sold to pay for the debenture. To have enough
floor space for the incoming industrial and professional speaker line and to reduce cost, the final assembly
process (assembly of software and hardware to a complete speaker) of the outdoor speakers were moved from
Oklahoma to Mexico. The steps required to implement the above decisions are here presented, with the
responsible departments listed in parenthesis:

1. Planning
a. Generation of equipment and machinery list (engineering and production)
b. Production scheduling (production control)
c. Generation of material inventory list (production control)
d. Drawing up of time schedules (project manager)
e. Transportation (project manager)
f. Layout of new factory fl oor (engineering)
g. Documentation transfer (all)
2. Physical movement
a. Shipping to new location (project, engineering, contractor)
b. In-house movement of equipment and machinery (Project engineering, engineering, and contractors)
3. Training and start-up in new location
a. Training of assembly personnel
b. Training on quality control
c. Training on engineering
d. Review and evaluation

Tech Sound completed its manufacturing facilities relocation project in 20 months. The production continued at
its new location with some problems, mainly caused by inexperienced workers (no employees were willing to be
relocated to the new plant). After the learning period was over, the level of production quality and performance
went back up to the previous levels. However, 1 year after the project completion, Sound Tech fi led for
bankruptcy, and eventually sold out to another company.

CASE STUDY QUESTIONS

1. What were the underlying causes of the problems of Sound Tech Company?
2. Were the problems due to poor organizational setups? Should things have been done differently? What
would you recommend for a company in an identical situation?

ANS- The problems were mainly caused by inexperienced workers (no employees were willing to be
relocated to the new plant).

• The product was not updated for last several years. (as the market was competitive)

• All but the industrial and professional speakers were made in Oklahoma. Diversification was not
done properly.

• They did not outsource their products which may have resulted in heavy operation costs.

2.) Yes , the problems were due to poor organizational setup because -

1. The work distribution between the California and Oklahoma facilities was not proper

2. They heavily relied on their own manufacturing for minor components which hindered production
after shutting down of unit
3. The transfer after sale of facility was mismanaged and could have been managed differently.

4. The best way to go about this situation is to Fix the Process, Not the Problem.

5. Management’s first approach to the problems should be top-down. The senior managers should
met, analyzed the problems—as seen through their own eyes—and decided on key actions the
institution would have to take to survive.

6. To avoid problems an organization must be able to engage in a second kind of problem-solving

loop: developing processes to keep problems from occurring.

7. To avoid mismanagement of staff

8. Subcontract the key components until facility is at its regular capacity