PAPER IV Tech MGMT

Technical Management
Paper IV Notes - Technical Management
[Paper IV Notes with solved question papers from 2002 – 2006.

Based on notes from various people in Valsura but primarily from
the notes of Lt Cdr Arun Nair & Lt Cdr NK Bhat.]
Cdr PP Singh
5/5/2007
Technical Management 2007
Table of Contents
GENERAL MANAGEMENT (60 MARKS) ............................................................................. 8
MANAGEMENT RESPONSIBILITY & FUNCTIONS, ORGANISATIONS REQUIREMENTS &
TYPES (SOK –B) ................................................................................................................ 8
MANAGEMENT RESPONSIBILITY & FUNCTIONS, ORGANISATIONS ........................8
Management (Functions) ..........................................................................8
Responsibilities of Management ...............................................................8
Peter Drucker’s view on Functions of Management ..................................9
Jobs of a good Manager ............................................................................9
Qualities of a good manager .....................................................................9
Organization .........................................................................................................9
Types of organizations ............................................................................10
Forms of Organization .............................................................................10
Communication ..................................................................................................11
Barriers to effective communications ......................................................11
Types of Communications .......................................................................12
Communication – Effectiveness & Necessity ...........................................12
Awareness of Indian Social, Political & Economic Environment in the Industrial Scene
(SOK-C).......................................................................................................................... 13
Indian Boilers Regulations 1950 (SOK-C) ........................................................................ 15
Restrictions for Use ............................................................................................15
Renewal of Certificate ........................................................................................15
Penalties for Non Compliance .............................................................................15
Montreal Protocol (SOK-C) ............................................................................................ 16
Salient Points ......................................................................................................16
ISO 9000(SOK-C) ............................................................................................................ 16
Salient Points ......................................................................................................16
Implementation ..................................................................................................17
MATERIAL MANAGEMENT (30 Marks) ........................................................................... 21
MATERIAL MANAGEMENT BASICS ......................................................................21
Definition of Material Management ........................................................21
Importance of Material Management .....................................................21
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Functions of Material Management ....................................................... 21

Advantages of Material Management .................................................... 22
INVENTORY ........................................................................................................ 22
Definition of Inventory ........................................................................... 22
Classification of Inventory ...................................................................... 23
Types of Inventory ................................................................................. 23
Inventory Costs ...................................................................................... 23
Inventory Control ................................................................................... 23
Reduction of Inventory Costs ................................................................. 23
Example Problem ................................................................................... 25
Assumptions made while ascertaining EOQ: ........................................... 25
ABC Analysis ...................................................................................................... 26
Advantages of ABC Analysis.................................................................... 26
Disadvantages of ABC Analysis ............................................................... 26
Basic Principles of ABC Analysis .............................................................. 26
Mechanics of ABC Analysis ..................................................................... 27
Summary of ABC Analysis ....................................................................... 27
VED Analysis ...................................................................................................... 28
Combination of VED & ABC Analysis ....................................................... 28
Mechanics of VED Analysis ..................................................................... 28
Material Handling .............................................................................................. 29
Factors for Deciding Equipment ............................................................. 30
Importance of MH in production ............................................................ 30
Factors influencing MH .......................................................................... 30
Evaluation of MH ................................................................................... 30
Efficiency of MH depends upon .............................................................. 31
Principles of MH ..................................................................................... 31
Quality Control .................................................................................................. 31
Decision on Quality ................................................................................ 32
Functions of QC Department .................................................................. 32
Sampling Techniques .............................................................................. 33
Inspection Techniques ............................................................................ 34
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Types of QC .............................................................................................34
MANAGEMENT TECHNIQUES (40 Marks)....................................................................... 38
Work Study (SOK B) ....................................................................................................... 38
Definition ...........................................................................................................38
Methods Improvement.......................................................................................38
Motion Study ..........................................................................................38
Approaches to Methods Improvement ...................................................38
Tools for Method Improvement ..............................................................39
Time Study ..............................................................................................39
Equipment / methods for Time Study .....................................................39
Effect of working conditions & environment ...........................................39
OPERATION RESEARCH (SOK B) ..................................................................................... 40
Definition ...........................................................................................................40
Essentials of OR ..................................................................................................40
Steps in OR .........................................................................................................41
Limitations in OR ................................................................................................41
Types of OR techniques ......................................................................................41
Linear Programming ...........................................................................................42
Solution of LP ..........................................................................................42
Value Analysis.....................................................................................................44
Definition ................................................................................................44
Selection of product for VA .....................................................................44
VA Framework ........................................................................................44
Implementation & Methodology .............................................................45
DARSIRI Method of VA ............................................................................45
Uses of VA...............................................................................................45
Network Analysis (SOK B) ...................................................................................46
Definitions ..............................................................................................46
Network Analysis of a Project..................................................................46
Rules of a Network ..................................................................................46
Analyzing a Network ...............................................................................47
Planning & Control Tools ....................................................................................48
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PERT ....................................................................................................... 48
CPM ....................................................................................................... 48
Uses of Network Analysis ....................................................................... 49
Data Analysis (SOK B) ......................................................................................... 49
Statistical Methods................................................................................. 49
Sampling ................................................................................................ 50
Statistical Investigations ......................................................................... 50
Data presentation & Analysis ................................................................. 50
Distributions ...................................................................................................... 52
Normal distribution ................................................................................ 52
Application of Normal Curve .................................................................. 52
PERSONAL MANAGEMENT (40 Marks) .......................................................................... 56
Functions of PM, Training, Motivation, Leadership (SOK C) ........................................... 56
Functions of PM ................................................................................................. 56
Objectives of PM................................................................................................ 56
Training ............................................................................................................. 56
Motivation ......................................................................................................... 57
Elements of Motivation .......................................................................... 58
Objectives of Motivation ........................................................................ 58
Types of Motivation ............................................................................... 59
Leadership ......................................................................................................... 59
Theories of Leadership ........................................................................... 59
Safety management........................................................................................... 60
Steps for Safety ...................................................................................... 60
Prevention ............................................................................................. 60
Remedial Action ..................................................................................... 60
Factories Act 1948 ......................................................................................................... 61
Factory Act 1948 ................................................................................................ 61
Object .................................................................................................... 61
Definitions .............................................................................................. 61
Main Provisions ...................................................................................... 61
Apprenticeship Act 1961 ............................................................................................... 63
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Apprenticeship Act 1961 ....................................................................................63

Objectives ...............................................................................................63
Implementation ......................................................................................63
Induction / Training.................................................................................64
Implementation in Navy ..........................................................................64
JCM, AINTSSA, Shop Committee, Trade Union ............................................................... 64
Joint Consultative Machinery (JCM) ....................................................................64
Scope ......................................................................................................64
Levels ......................................................................................................64
Shop Committee.................................................................................................65
Functions ................................................................................................66
Trade Union........................................................................................................66
Role ........................................................................................................66
Responsibilities .......................................................................................66
Definition ................................................................................................67
Disciplinary Action – Civilian Employees .............................................................67
Disciplinary Action ..................................................................................68
Bonus System .....................................................................................................70
Leave Regulations – Dockyard Employee ............................................................71
General Principles ...................................................................................71
Types of Leave ........................................................................................71
Project Management .................................................................................................... 77
Project ................................................................................................................77
Characteristics of a Project .................................................................................77
Stages of a Project ..............................................................................................77
Planning a Project ...............................................................................................78
Project Phases ....................................................................................................79
Project Costing ...................................................................................................79
Project Report ....................................................................................................80
Techniques Used in Project management ...........................................................81
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Table of Figures
Figure 1 - Graphical Representation of EOQ ........................................................................... 24

Figure 2 - Resources versus Slack for Network Crashing ....................................................... 48
Figure 3 - Relation between Ability, Motivation & Performance ............................................ 58
Figure 4 - Elements of Motivation ........................................................................................... 58
Figure 5 - CCS Hierarchy.......................................................................................................... 67
Figure 6 - Stages of a Project ................................................................................................... 77
Figure 7 - Phases of a Project .................................................................................................. 79
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GENERAL MANAGEMENT (60 MARKS)
MANAGEMENT RESPONSIBILITY & FUNCTIONS, ORGANISATIONS

REQUIREMENTS & TYPES (SOK –B)
MANAGEMENT RESPONSIBILITY & FUNCTIONS, ORGANISATIONS
Management (Functions)
4.1 Management is that element that brings co-ordination, cohesion, infuses plan
& objective to our activities.
Responsibilities of Management
4.2 The responsibilities of management include the following:-

(a) Planning :-
(i) Establishing organizational goals
(ii) Strategy for their accomplishment
(iii) Concerned over the short term / long term future
(iv) Middle & operational management planning stems from the top
level planning
(b) Organizing
(i) This is an operational function.
(ii) Makes things happen as planned
(iii) Depends heavily on coordinated efforts of entire organization
(c) Directing
(i) This is a motivational function
(ii) Obtains higher levels of productivity
(iii) Involves guiding / motivating / influencing / supervising
(d) Controlling
(i) Monitors achievement of goals
(ii) Compares actual results with respect to planned & previous
instances
(e) Staffing
(i) Find the right man for the right job
(ii) Match individual qualifications to job specs
(iii) Ongoing process
(iv) Fill position, evaluate performance, encourage growth
(f) Innovating
(i) This is the creative function
(ii) Find new & better ways to do a thing
(iii) Get additional resources
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Peter Drucker’s view on Functions of Management
4.3 Peter Drucker’s views were :-

(a) Put economic performance first in every decision / action
(b) Make productive enterprise out of human & material resources
(c) Manage workers, work & time
(d) Take decisions & actions in time
Jobs of a good Manager
4.4 A good manager must plan future actions, contingencies etc. He must
organize men, material, time, and jobs to produce an environment which is
conducive. He must direct activities of others, communicate objectives etc and
finally he must control / enforce events to conform to pre arranged plans &
feedback.
4.5 A good manager creates the environment conducive to the performance of

acts by individuals to achieve collective goals while simultaneously achieve 1 or
more individual goals.
Qualities of a good manager
(a) Think
(b) Think broadly
(c) Technical competence
(d) Emotionally strong
(e) Moral integrity
(f) Express himself well
(g) Dynamic & desirous of moving ahead
(h) Organize activities
(i) Interpersonal skills & understand people & their expectations.
Organization
4.6 Organization is the means by which the management :-

(a) coordinates the efforts of employees to attain company objectives
(b) to achieve those tasks that would not have been possible by individual
efforts
(c) to combine work with facilities / resources and duties to provide a
systematic & coordinated application of available effort
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4.7 A good organization results in the following :-

(a) Establishes responsibilities
(b) Easier communication
(c) Eliminates Jurisdictional Disputes
(d) Develop Executive Ability
(e) Measurement of Person’s Performance
(f) Equitable distribution of Work Function
(g) Permits easy expansion / contraction
(h) Makes for closer cooperation & higher morale
(i) Prevents duplication of work
(j) Growth possible with adequate control
(k) Defines avenues for promotion
Types of organizations
4.8 Also called theories of organizations

Classical Neo Classical Modern
 Stress on formal  Puts human  Combines both
organization element at par with classical & neo classical
 Higher structural productivity  Views organization
bureaucracy  Reorganizes as a Total System having
 Authority based on business organizations as distinctive parts
position social systems  Holds that a
 Implements  Accepts importance change in one part
scientific management of of psychological & affects operation of
administrative emotional factors in others
management theories efficiency
 More work more  Reflects influence
pay of behavioral sciences &
 Ignores human industrial revolution
element
Forms of Organization
4.9 The organizations can be grouped into four forms:-

(a) Line Organization. The flow of authority is in a direct line from
highest level executive to lowest ranked employee. This form has no staff or
advisory positions.
Advantages Disadvantages
 One person reports to one boss  Supervisor needs variety of
 Decisions easily reached skills
 Responsibilities are clearly  Different lines of authorities
defined may be difficult to integrate
 Too much responsibility on
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top level executives may hamper

ability to develop policies &
practices
(b) Line & Staff Organization. The formal line organization is augmented
by staff specialists who act in the advisory role. Line departments
contribute directly to the organizational goals, staff departments provide
specialist assistance that enables efficient functioning of line staff.
 Frees line management from  Friction over line versus staff
specialized duties outside his area of contribution to the organization
competency  Conflict over the staff
 Provides line management manager seeking too much
with specialized advice relating to authority over line manager
their area of responsibility  Staff specialist may be blamed
 Maintains clear flow of for implementation failure by the
authority line staff
(c) Functional Organization. Each manager is a specialist and each

worker many bosses. The manager specialist has authority over all who
perform functions for which they are responsible.
 Highly specialized managers  Confusion amongst workers
 Overlapping areas of
responsibility
 No direct line of authority
(d) Committee Organization. Replaces individual authority at all

supervisory levels with a group representing the firm at various operating
levels.
 Brings together individuals  Inconvenience of arranging
with various specializations & meetings
viewpoints  Lack of authority to implement
 Provides a forum for recommendations
exchange amongst members  Necessity for compromise
 Gives several people a say in  No clear responsibility
important decision making
Communication
Barriers to effective communications
4.10 The main barrier to effective communications is the human element:-

(a) Distortion due to human element
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(b) Perception problem

(c) Lack of listening
(d) Semantic i.e. interpretation of words is wrong or wrong usage of
words
(e) Physical constraints (noise, interference etc)
(f) Organizational barriers
(i) Chain of command
(ii) Information hoarding
(iii) Staff screen
(iv) Lack of feedback
(g) Emotions & feelings
(h) Situational context
Types of Communications
4.11 The types of communications are:

(a) Upward Communications like course critiques, suggestion boxes, GBM,
Durbar etc
(b) Downward communications like Daily Orders, CTM / XTM,
Administrative Orders, Address by superior etc
(c) Informal communications like High Tea, Cocktails etc
Communication – Effectiveness & Necessity
4.12 Communications is the interchange of thought or information to bring about

mutual understanding & confidence and good human relationships. An effective 2
way communication unites an organization into an effective organization.
4.13 Good communications is essential for:-

(a) Communication of goals, objectives, policies
(b) Obtain feedback from workers
(c) Motivation / morale boost of workers
4.14 Good communications leads to:-

(a) Effective Decision Making
(b) Effective Delegation
(c) Decentralization
(d) Development of Managerial Skills
(e) Good Planning
(f) High Motivation & Morale
(g) Better Coordination
(h) Effective Leadership
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(i) Better Understanding

(j) Higher Efficiency
(k) Unity
(l) Develops Faith & Confidence
(m) Breaks artificial barriers
(n) Better interpersonal relations
4.15 The purpose of communications in an enterprise is to EFFECT CHANGE – to

influence action in the direction of corporate welfare.
Awareness of Indian Social, Political & Economic Environment in the

Industrial Scene (SOK-C)
4.16
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Indian Boilers Regulations 1950 (SOK-C)
4.17 Definitions used in the regulations:-

(a) Boiler A Boiler is defined as a closed vessel with capacity > 22.75
liters and used to generate steam under pressure.
(b) Economizer A part of the feed tube exposed to flue gases for recovery
of waste heat.
(c) Accident. An explosion of boiler or steam pipe or any damage to
boiler or steam pipe which renders it liable to explode.
(d) Steam pipe. Passes steam from boiler to user at > 3.5 Kg / sq cm
pressure and Internal Diameter > 2.54 mm
4.18 The regulations make registration & inspection of all boilers COMPULSORY
except those fitted on ships or under the military or railways.
4.19 The registration process can be shown as follows
Restrictions for Use
4.20 No boiler can be used if:-

(a) It has not been registered
(b) If it has been transferred from another state and the transfer has not
been reported
(c) At pressures > max pressures for which it has been registered
(d) Unless it is operated by proficient operators.
Renewal of Certificate
4.21 The certificate is required to be renewed :-

(a) On expiry of period for which it was granted
(b) When accident occurs
(c) On transfer of boiler from one state to another
(d) On carrying out any structural change
Penalties for Non Compliance
4.22 The penalties for non compliance are applied if any of the following
conditions exist:-
(a) Fraudulent registration mark on boiler
(b) A’s & A’s without approval
(c) Tampering with safety valve
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(d) Marking of registration number not done

(e) Owners not handed over certificate by old owners
(f) Not Registered
(g) Interstate transfer not reported
(h) Certificate not surrendered when asked to
(i) Accident not reported
Montreal Protocol (SOK-C)
Salient Points
4.23 Salient points about the protocol are:-

(a) Significant depletion of stratospheric ozone levels due to ignorance
(b) Bromides, CFC’s are called Ozone Depletion Substances
(c) After Montreal Protocol CFC levels are likely to reduce to pre-1980
levels only by 2050
(d) Ozone Depletion Substances:-
(i) Aerosols
(ii) Foams (PUF) – replaced by liquid CO2
(iii) Halons
(iv) Solvents
(v) Methyl Bromides
(vi) Refrigerants
(vii) Process Agents
(e) ODS levels increases the UV-B levels and causes climatic changes
(f) Cardinal Dates
(i) 2000 – freeze on CFC levels at 1995-97 levels
(ii) 2005 - Reduce CFC consumption by 50% from 2000 levels and
CTC levels by 85% and Methyl Bromide levels by 20%
(iii) 2007 – reduce CFC by 85%
(iv) 2010 – no production / consumption of CFC, CTC etc
ISO 9000(SOK-C)
Salient Points
4.24 The salient points about ISO are :-

(a) ISO 9000 refers to a set of Quality Management Standards, currently it
includes 03 quality standards:-
(i) ISO 9000 : 2000 Guidelines
(ii) ISO 9001 : 2000 Requirements for QMS
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(iii) ISO 9004 : 2000 Best practices / guidelines

(b) On choosing to get ISO certification the organization has to develop a
quality management system(QMS) that meets the requirements of ISO 9001 :
2000
(c) In doing so it is not mandatory to follow the guidelines at 9000 & 9004
(d) ISO 9002 & 9003 have been dropped from the updated version in the
year 2000
Implementation
4.25 The process of implementation of ISO is as follows:-

(a) Gap Analysis is carried out to help identify the gaps that exist
between the ISO 9001 standard and the organization’s QMS or processes
(b) Develop a Quality System & implement it
(c) Carry out an internal audit to ensure that every ISO 9001 : 2000
requirements have been met
(d) When ready seek registration by auditors who audit the effectiveness
of QMS
(e) Certificate is issued by the registrar
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MATERIAL MANAGEMENT (30 Marks)
MATERIAL MANAGEMENT BASICS
Definition of Material Management
4.26 Material management is that coordinated function which is responsible to

plan for, acquire, store, move and control materials (including finished products) to
optimize the usage of facilities, personnel, capital funds and to provide services to
the user in line with the organizational aim.
4.27 Material Management is the management of flow of material from raw

materials to finished goods for sale. It involves coordination of planning, sourcing,
purchasing, moving, storing and controlling material in an optimum manner to
provide pre determined service to customer at minimum cost. It can also be defined
as acquisition, storage and movement of raw materials; semi finished goods and
finished goods.
Importance of Material Management
4.28 The importance of material management is as follows:-

(a) Materials form single largest expenditure for many organizations
(b) Reduction in material costs will contribute towards profitability
(c) Materials form the maximum part of an organizations current assets
Functions of Material Management
4.29 The important functions of material management are as follows:-

(a) Material Planning & Control
(i) Estimate requirement of material
(ii) Prepare material budget
(iii) Forecast levels of inventory
(iv) Schedule orders
(v) Monitor performance
(b) Purchasing
(i) Identify sources of supply
(ii) Finalize terms of purchase
(iii) Place purchase orders
(iv) Follow up
(v) Payment to suppliers
(vi) Evaluate & rate suppliers
(c) Stores & Inventory Control
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(i) Physical control of material

(ii) Preservation of stores
(iii) Minimize obsolescence & damage by timely disposal
(iv) Maintain stores records
(v) Proper location & stocking
(vi) Physical verification with book figures
(vii) Inventory control
Advantages of Material Management
4.30 The advantages of material management are as follows:-

(a) Better accountability
(b) Better coordination
(c) Better performance
(d) Adaptability to EDP
INVENTORY
Definition of Inventory
4.31 It is defined as an idle resource of any kind provided that resource has
economic value. Inventory has to be maintained for smooth running of operations &
to decouple various stages of manufacturing. The inventory can be better defined
in:-
(a) Financial Definition: Inventory is the sum of values, at any given
time, of:-
(i) Raw material
(ii) Spare parts
(iii) Maintenance consumables
(iv) Semi finished materials
(v) Finished goods & stock
(b) Operational Definition: Inventory is the amount of required for
smooth operation of process, of:-
(i) Raw material
(ii) Spare parts
(iii) Maintenance consumables
(iv) Semi finished materials
(v) Fuel & lubricants
4.32 Inventories provide:-
(a) Good customer service
(b) Smooth flow of goods through production process
(c) Protection against supply & demand characteristics
(d) Efficient utilization f manpower & equipment
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Classification of Inventory
4.33 Inventories can be classified as follows:-

(a) Production inventory – consisting of raw materials, parts, components
etc which are required for the finished goods
(b) Maintenance, Repair & Operational Inventory(MRO)
(c) In Process Inventory
(d) Finished Goods Inventory
Types of Inventory
4.34 The types of inventories can be grouped as follows:-

(a) Transit – goods in movement from place A to B in a production cycle
(b) Cycle – due to management effort to procure in lot sizes
(c) Buffer – to avoid risk of not having an item
(d) Anticipatory – caters for changes in supply & demand
(e) Decoupling – separates dependent production processes
Inventory Costs
4.35 Inventory cost are of following types:-

(a) Cost of placing a replenishment order
(b) Cost of Holding Inventory – tied up capital, interest on capital, cost of
storage, stocking, accounting, deterioration etc.
(c) Cost of not holding inventory – if an item is not available then the cost
of an idle plant / machinery, emergency purchase costs
(d) Cost of over stocking
Inventory Control
4.36 This is important because:-

(a) Smaller profit margins
(b) Wide variety & complexity of requirements of modern industry
(c) High idle time costs of man & machine due to non availability of items
(d) Increased competition in the market due to cutting costs
Reduction of Inventory Costs
4.37 This can be understood as follows:-
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(a) Min Levels Level below which the supplies should never be allowed
to drop depends upon the rate of usage, importance, lead time etc. Never set
to zero to have safety factor against shortages.
(b) Re order Point The quantity level at which reordering so that the
item is available before the min level points.
(c) EOQ Amount of material which will be ordered each time the stock
level dips to re order point. This is the quantity which has to be optimized
based on financial / operational considerations.
(d) Max Level = Min Level + EOQ
6
Max Level
4
Inventory
2
0 Re Order
T1 T2 T3 T4 T5 T6 T7 Point
Figure 1 - Graphical Representation of EOQ
(e) Now EOQ can be represented as shown

2 × 𝐴𝑛𝑛𝑢𝑎𝑙 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑈𝑠𝑎𝑔𝑒(𝑢) × 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡(𝑆)
𝐸𝑂𝑄 =
𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡(𝐶) × 𝐼𝑛𝑣𝑒𝑟𝑡𝑜𝑟𝑦 𝐶𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝐶𝑜𝑠𝑡(𝐼)
𝑶𝑹
2 × 𝐴𝑛𝑛𝑢𝑎𝑙 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 (𝐴) × 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡(𝑆)

𝐸𝑂𝑄 =
𝐼𝑛𝑣𝑒𝑟𝑡𝑜𝑟𝑦 𝐶𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝐶𝑜𝑠𝑡(𝐼)
(f) If EOQ value is X then the total cost curve is fairly flat at X. this implies
that there exists certain flexibility in making adjustments without sacrificing
too much on economy.
(g) EOQ can be calculated both in terms of Quantity (numbers) or in terms
of Costs
(h) After calculating EOQ we can follow one of the following methods :-
(i) Fixed Interval System.
(1) Calculate economic interval
(2) Place order based on time and not actual stock values
(3) Order quantity is calculated every time
(ii) Fixed Order or Two Bin System
(1) Calculate EOQ
(2) Calculate reorder point based on lead time + safety
stock
(3) Review after every transaction
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(4) Place order after stock falls below reorder point
Example Problem
Unit cost o f box; Rs 30/-;

Sale per month; 100 Nos;
Lot size f or supply; 25 Nos;
Lead time; 1 month;
Ordering cost; Rs 10/- per order;
Carrying cost; 20% per year on capital investment.
Find the annual carrying cost when (i) OQ is 100 and (ii) OQ =25.
Find operating costs for both cases.
Determine EOQ
Case I OQ = 100
Aug stock = OQ/2 = 50
Therefore stock value in the inventory = Aug stock x cost price = 50 x 30 =Rs1500/-
Therefore annual carrying cost = 20% of stock value =0.2 x 1500 =Rs 300/-
Case II OQ = 25
Aug stock = OQ/2 = 12.5
Therefore stock value in the inventory = Aug stock x cost price= 12.5 x 30 =Rs375/-
Therefore annual carrying cost = 20% of stock value =0.2 x 375 =Rs 75/-
Operating costs = Carrying cost + ordering cost

𝐶𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡 𝑕 𝑥 12
Case I number of orders placed annually = = 100x12/100 =
𝑂𝑟𝑑𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦
12
Therefore total ordering cost = 12 x 10 = Rs 120
Therefore operating cost = Order cost + carrying cost =120 + 300 =Rs 420/-
Similarly for case II:
Number of orders annually = 100x12/25 = 48
Therefore ordering costs = 48 x 10 =480/-
Therefore operating costs = 480+75 =555/-
Analysis
Reducing the OQ has resulted in more frequent orders, reduced carrying costs but
increased ordering costs. By statistical analysis we can find the EOQ. The EOQ is
defined as the OQ at which the total operating cost is the least ideally EOQ is the
quantity at which carrying cost = ordering cost
Assumptions made while ascertaining EOQ:
4.38 The assumptions are:-

(a) Item cost remains same throughout the year.
(b) Quantity of discount availed is not accounted.
(c) Pattern of consumption, ordering and carrying remains the same.
(d) EOQ will be delivered just when stock becomes NIL.
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ABC Analysis
4.39 Always Best Control (ABC) Analysis:-

(a) Basic analytical management tool
(b) Enable to place efforts where results will be greatest.
(c) Based on Pareto’s 80:20 Principle
(d) Also termed as Alphabetical Approach
(e) Analysis distribution of characteristics by money value of importance
in order to determine its priority
(f) In Material Management applied to areas requiring selective control
example inventory, purchase orders etc
(g) A Items few top high value items are classified as A Items these form <
10% of the total numbers but account for > 70% of costs
(h) C Items large number of low cost items which form > 70% of the total
numbers but < 10 % of the cost
Advantages of ABC Analysis
4.40 The advantages are:-

(a) Help material managers to exercise selective control.
(b) Focus attention on few selected items
(c) Concentrate on A class items & show results in short time periods
(d) Reduce clerical costs
(e) Better planning & improved inventory turnover
(f) Obsolete stocks are recognized
(g) Overall MM costs are reduced
Disadvantages of ABC Analysis
4.41 The disadvantages are:-

(a) Standardization & Codification required for effective analysis.
(b) Not based on importance of performance only based on usage /
annual cost
(c) Results have to be reviewed periodically
(d) Requires formal inventory system with periodic attention
Basic Principles of ABC Analysis
4.42
(a) Depends on Annual Consumption Value and not the unit cost of the
item
(b) Does not depend upon the importance of the item
(c) Limits are not uniform but depends on
(i) Size of industry
(ii) Size of inventory
(iii) No of items controlled
(d) Develop policy guidelines for selective control of items as follows:-
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(i) C – simple inventory system

(ii) B – Formalized inventory system with periodic review
(iii) A – Tight control over inventory with constant attention
Mechanics of ABC Analysis
4.43
(a) Calculate rupee annual amount for each item = annual usage x unit
cost
(b) Sort items by annual rupee consumption in descending order
(c) Prepare a detailed list of the ranked items containing item no, unit
cost, annual issue, rupee value of issue.
(d) Compute running total of issue & rupee consumption from the top
(e) Calculate cumulative % for issue & rupee consumption for each item
(f) Following pattern emerges:-
(i) A – 5 to 10 % of TOP items account for 70 % of the total
consumption value
(ii) B – 15 – 20 % of items account for 20% of the total
consumption
(iii) C – balance items account for the remaining % of the total
consumption
Summary of ABC Analysis
A Items B Items C Items

Very strict control Moderate control Loose control
Nil or very low safety Low safety stock High safety stock
stock
Frequent ordering or Order once in a quarter Bulk order once every 6
weekly delivery months
Weekly control statements Monthly control Quarterly control reports
statements
Max follow up & Periodic follow up Follow up only in
expediting exceptional cases
Rigorous value analysis Moderate value analysis Min value analysis
Max multiple sources for 2 or more reliable sources 2 reliable sources for each
each item item
Accurate forecast in Estimates based on past Rough estimates for
material planning data planning
Minimization of waste, Quarterly control over Annual review of surplus
surplus & obsolete surplus & obsolete / obsolete items
Individual posting Small group posting Group postings
Central purchase & Combination purchase De centralized purchasing
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storage & storage

Max effort to reduce lead Moderate effort to reduce Min clerical effort
time lead time
Must be handled by Can be handled by middle Can be fully delegated
seniors management
VED Analysis
4.44 Selective control technique applied by carrying out utility value analysis.
Items are classified as Vital, Essential and Desirable
Combination of VED & ABC Analysis
4.45 Draw a combined matrix as follows:-
A B C A B C
V VA VB VC V VA VB REPAIR
E EA EB EC E EA EB EC
D DA DB DC D REPLACE DB DC
4.46 In this manner we can combine the utility & consumption analysis and decide
if repair or replacement of an item is to be done. Other items would be replaced and
repaired later.
Mechanics of VED Analysis
4.47 Classify items as:-

(a) Vital – if want of the item can halt production
(b) Essential – if stock out cost of item are very high
(c) Desirable – does not have any immediate loss
4.48 Identify factors like:-

(a) Effect on Production (30)
(b) Lead Time (30)
(c) Nature of Item (20)
(d) Source of Supply (20)
4.49 Now assign points / weightage to each factor as per its importance. Divide
each factor into degrees & allocate points:-
(a) 1st degree – points = weightage
(b) 2nd degree – points = 2 x weightage
(c) 3rd degree – points = 3x weightage
4.50 Prepare categorization plan and evaluate all items as follows:-
FACTOR 1st deg 2nd deg 3rd deg
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Stock out Costs Below X Between X & Y Above Y

(30)
30 60 90
Lead Time (30) Below T1 Between T1 & T2 Above T2
30 60 90
Nature of Item Produced off the Standard Item Proprietary Item
(20) shelf produced to
suppliers design
20 40 60
Source of Supply Local Outstation Imported
(20)
20 40 60
4.51 Now classify the item based on the total points as follows:-
(a) 100 – 160 Desirable
(b) 161 – 230 Essential
(c) 231 – 300 Vital
Material Handling
4.52 Material Handling:-

(a) Is the function dealing with preparation, placing & positioning of
materials to facilitate their movement or storage
(b) Responsible for much of the overhead cost of an item, but not give
enough importance
(c) MH Study is essential to enable a plant or production facility to
function with full efficiency
(d) MH begins from the point of unloading of raw material, moving to
store room, production plant, moving the finished goods to storage and
finally to loading platform
(e) Cost of moving material within the plant varies with the plant &
product
(f) Centralized MH can lead to:-
(i) Greater efficiency
(ii) Prevents one department to have excess of equipment at the
cost of others
(iii) Better control if number of equipment is limited
(g) Types of MH equipment
(i) Cranes
(ii) Conveyors
(iii) Manual
(iv) Fork Lifts
(v) Tractors & Trailers
(vi) Lift Trucks etc
(h) Various types of equipment are integrated to achieve least amount of
effort at LOWEST COST PER UNIT.
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Factors for Deciding Equipment
4.53 The factors for deciding equipment are:-

(a) Ton Feet Per Route – if volume of work does not warrant separate
MH equipment. Then a system that can be adapted to multiple routes is
better
(b) Concentration of Route – Trucks preferred over cranes if there is
simultaneous movement of material over certain routes
(c) Pick up & Delivery of Load – with sufficient volume any mechanized
system can work at low costs & high speeds but not all can pick up & deliver
at same efficiency under all circumstances
(d) Cost –
(e) Plant Layout
Importance of MH in production
4.54
(a) Methods of moving products during manufacturing and finished
products to customer play an important part during design & development of
the product
(b) Better MH enables better production forecasts
(c) Plant layout and therefore routing of material in the plant has to be
optimized for better MH
(d) MH & plant layout are closely related
(e) Effectiveness of plant layout measured by cost of MH
Factors influencing MH
4.55
(a) Plant layout
(b) Manufacturing process
(c) Nature of material
(d) Nature of product
4.56 MH cannot be viewed in isolation. It requires an integrated approach to

achieve better efficiency. Industrial engineering techniques like Process Flow Chart,
String Diagrams etc help in design of efficient MH systems
Evaluation of MH
4.57 The effectiveness of MH can be measured as follows:-

(a) Time spend in production to Total Time
(b) Cost per unit weight handled
(c) Equipment utilization ratio
𝑃𝑒𝑟𝑠𝑜𝑛𝑠 𝑎𝑠𝑠𝑖𝑔𝑛𝑒𝑑 𝑓𝑜𝑟 𝑀𝐻
(d) Material handling labor ratio =
𝑇𝑜𝑡𝑎𝑙 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑊𝑜𝑟𝑘 𝑓𝑜𝑟𝑐𝑒
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(e) Direct labor handling ration, used to measure delivery of material to

𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝐻𝑎𝑛𝑑𝑙𝑖𝑛𝑔 𝑡𝑖𝑚𝑒 𝑙𝑜𝑠𝑡 𝑏𝑦 𝑑𝑖𝑟𝑒𝑐𝑡 𝑙𝑎𝑏𝑜𝑢𝑟
work place with max efficiency = 𝑇𝑜𝑡𝑎𝑙 𝑑𝑖𝑟𝑒𝑐𝑡 𝑙𝑎𝑏𝑜𝑟 𝑡𝑖𝑚𝑒
𝑀𝐻 𝑡𝑖𝑚𝑒 𝑙𝑜𝑠𝑡 𝑏𝑦 𝑑𝑖𝑟𝑒𝑐𝑡 𝑙𝑎𝑏𝑜𝑟
= 𝑡𝑜𝑡𝑎𝑙 𝑑𝑖𝑟𝑒𝑐𝑡 𝑙𝑎𝑏𝑜𝑢𝑟 𝑡𝑖𝑚𝑒
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑜𝑣𝑒𝑠
(f) Movement operation ratio = 𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑒 𝑚𝑜𝑣𝑒𝑠
Efficiency of MH depends upon
4.58
(a) Efficiency of handling method employed
(b) Efficiency of layout
(c) Utilization of handling facilities
(d) Speed of handling
Principles of MH
4.59 The principles of MH are:-

(a) Planning principles
(i) Plant layout
(ii) Delegation of responsibility
(iii) Minimize re handling as it adds to cost
(iv) Space saving
(b) Operating principles
1
(i) Unit load handling ( handling cost α 𝑢𝑛𝑖𝑡 )
𝑠𝑖𝑧𝑒 𝑜𝑓 𝑙𝑜𝑎𝑑
(ii) Gravity principle – use gravity where ever possible
(iii) Flow of materials principle – greatest efficiency when steady
flow of material as straight as possible with minimum interruptions &
back tracking
(c) Equipment principles
(i) Mechanization principle ( mechanization increases efficiency)
(ii) Terminal Time Principle – lower terminal time of handling
equipment implies greater efficiency & economy of equipment
(iii) Dead Weight Principle – keep dead weight minimum
(iv) Standardization of MH increases efficiency
(v) Preventive maintenance increases availability of MH
equipment
(vi) Speed
(vii) Versatility of equipment improves cost effectiveness
(d) Costing Principles
(i) Equipment selection
(ii) Replacement principle – replace obsolete equipment before
high repair costs set in
Quality Control
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4.60 Quality control is part of functional need. It provides a scale to certify if a

particular product or process will perform its function. Quality is a combination of
characteristic, where the specific combination may vary from time to time.
Decision on Quality
4.61 Quality has two major components:-

(a) Technical Quality – physical / chemical properties
(b) Economic Quality – cost / procurability
4.62 Final decision on quality will depend upon:-

(a) Description of Quality. Responsibility of defining quality rests with
the user.
(b) Quality can be defined by the following:-
(i) Brand
(ii) Specifications
(iii) Engineering drawings
(iv) Miscellaneous methods
(v) Combination of 2 or more parameters above
(c) Control of Quality. This is done through inspection to assure buyer
that the items delivered by the supplier correspond to the specifications
given
(d) Factors for Inspection. This involves
(1) Inspection of purchased material, WIP & finished goods
(2) Has technical problem of where, when, how much &
how to inspect
(3) Importance given by organization to quality
(4) Inherent administrative problems relating to:-
(a) Personnel
(b) Cost
(c) Relation with stores
(d) Relation with production units
(5) Sometimes done in vendor premises
(6) Armed forces also use a quality capability survey which
involves evaluating suppliers prior to ordering & subsequent
continuous monitoring
Functions of QC Department
4.63 Quality Control has following components:-

(a) Test material for compliance with description
(b) Assist in setting up specifications
(c) Initiate material studies
(d) Investigate claims & errors with respect to finished product &
incomplete items
(e) Check reusability of material returned to store
(f) Examine salvage material & make disposal recommendations
(g) Assist in assessing QA programs in supplier plants
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Sampling Techniques
4.64 Sampling is done as follows:-
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Inspection Techniques
4.65 Inspection techniques involve:-

(a) First piece inspection
(b) Pilot piece inspection
(c) Trial run inspection
(d) Key point inspection
(e) Endurance inspection
(f) Ultrasound inspection
Types of QC
4.66 Quality Control can be following types:-

(a) Centralized
(b) Incoming
(c) Floor
(d) Final
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MANAGEMENT TECHNIQUES (40 Marks)
Work Study (SOK B)
Definition
4.67 Work Study is the investigation of work done in an organization with the aim
of finding the best & most efficient way of using available resources
Methods Improvement
4.68 This is the general term given to procedures employed by management to

study work performed in a firm with the objective to increase works effectiveness &
firm’s efficiency. It is concerned with:-
(a) Motion Study. How an employee is performing a job
(b) Time Study. How much time is he taking (data recording) & at what
speed is performing the task.
Motion Study
4.69 This deals with the motions a worker makes while doing his job. The aim of
the study is to select wasteful / non productive motions and substitute such motions
with effective motions
Approaches to Methods Improvement
Sequencing of work is done so that

Analyze each operation & try to
it is effectively & efficiently
simplify it, keeping in mind that the
Sequencing of
system should be practical Work
Eliminate unwanted jobs /
activities
Simplification Elinimation of
Operation Work
Makes job simpler by combining 2 or more

operations into a batch process
Combination
Operation
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Tools for Method Improvement
4.70 Tools used for MI are:-

(a) Flow Diagram
(b) Activity Chart
(c) Man & Machine Chart
(d)
(e)
(f)
Time Study
4.71 Time study is used to determine the time required by a qualified & well
trained person working at a normal pace to do a specific task. The time is also called
as the standard time for the task / operation. This study is used to:-
(a) Provide wage incentives using the time standard
(b) Estimate cost of production
(c) Determine schedules & planning work
(d) Machine / equipment effectiveness
(e) Labor cost control
(f) Aids in preparing budget & standard costs
Equipment / methods for Time Study
4.72
(a) Stop watch, motion camera, computer
(b) Synthesized standards
(c) Statistical methods
Effect of working conditions & environment
4.73 The working conditions effects can be summarized as follows:-

(a) Lighting
(i) It should be distributed
(ii) Should not have glare
(iii) Ineffective lighting can cause
(1) Accidents
(2) Wastage
(3) Ineffective use of machine
(b) Ventilation & AC
(i) Temp 23:C to 280 C
(ii) 12m3 air space per person
(iii) Very high or low temperatures reduce efficiency
(iv) Poor ventilation leads to loss of working hours
(c) Noise Levels
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(i) Should be < 90dB

(ii) Increased noise implies faster fatigue
(iii) Can be improved through mufflers
(d) Miscellaneous
(i) Firefighting equipment & knowledge
(ii) Proper equipment & tools
(iii) Layout of building
(iv) Proper safety gear
(v) Sanitation
OPERATION RESEARCH (SOK B)
Definition
4.74 OR is the branch that applies scientific methods to provide the decision
maker with quantitative basis for decisions regarding complex operations under his
control. The characteristics of OR are:-
(a) Broad in scope. Concerned with organization as a whole rather than a
sub group
(b) Develops analytical techniques for solving INDIVIDUAL problems and
not a general model for all problems
(c) Uses team effort
(d) Concerned with practical management of an organization
Essentials of OR
4.75 The basic components of OR are:-

(a) Models – logical representation of a problem
(b) Goals – emphasis on goals and determine whether the given solution
can attain the goal or not
(c) Mathematical Modeling
(i) Identify variables
(ii) Incorporate variables
(iii) Quantify variables
(iv) Supplement variables with quantifiable data
Study Actual
Situation
Take Translate
Decision into Model
(d) Establishes control over the solution

(e) Implements the solution
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Steps in OR
4.76 There are six steps in OR:-

(a) Formulate the Problem –
(i) Analyze goals & system in which solution will operate
(ii) All goals must be defined & taken into account
(b) Construct mathematical model
(i) As per following formulae
𝑀𝑒𝑎𝑠𝑢𝑟𝑒 𝑜𝑓 𝑆𝑦𝑠𝑡𝑒𝑚 𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒𝑛𝑒𝑠𝑠
= 𝐹 (𝑐𝑜𝑛𝑡𝑟𝑜𝑙𝑎𝑏𝑙𝑒 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒, 𝑛𝑜𝑛 𝑐𝑜𝑛𝑡𝑟𝑜𝑙𝑙𝑒𝑑 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒)
(ii) Optimization Model:-
(1) Insert values for non controlled variable
(2) Manipulate controlled variable to optimize Effectiveness
(iii) Simulation Model:-
(1) User defined for controlled variables
(2) Manipulate non controlled variables to produce
satisfactory effectiveness
(3) No way of knowing optimal solution
(c) Obtain solution for the model through:-
(i) Analytical method – mathematical deduction
(ii) Numerical method – iterative method
(d) Test model
(i) Use model to solve a problem using past data or actual
implementation
(ii) Compare with actual results
(e) Provide control for actual model & solution
(i) Model might cease to represent reality
(ii) Variables may go out of control
(iii) Therefore a feedback or control is required
(f) Implement the solution
Limitations in OR
4.77
(a)
(b)
(c)
(d)
Types of OR techniques
4.78 The various OR techniques are:-

(a) Linear Programming
(i) Graphical Method
(ii) Simplex Method
(b) Transportation Model
(i) Vogel’s Approximation Method
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(ii) North West Corner Method

(c) Queuing Theory
(d) Dynamic Programming
(e) Game Theory
(f) Integer Programming
(g) Quadratic Programming
(h) Geometric Programming
(i) Stochastic Programming
Linear Programming
4.79 LP has wide military applications such as troop deployment, finance etc. It
studies the interrelated complex variables of a system so that the limited resources
can be effectively used in optimum manner to attain desired objectives. George
Dantzig is called the father of LP.
4.80 The various requirements of LP are:-

(a) There must be an objective to achieve
(b) There must be alternate courses of action to achieve the objective
(c) Resources must be limited
(d) Objectives & constraints must be expressed in mathematical linear
equations or inequations.
Solution of LP
4.81 The solution of LP equations can be obtained through:-

(a) Graphical Method
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Value Analysis
Definition
4.82 VA is defined as an organized creative approach which has, as its objective,

the efficient identification of unnecessary cost. VA focuses the attention of
engineering, production & purchasing departments to one objective that is
equivalent performance at lower cost. VA has developed by Lawrence D Miller.
4.83 Unnecessary costs are costs that do not provide:-

(a) Quality
(b) Use
(c) Life
(d) Appearance
(e) Customer features to a product
4.84 VA deals with costs added due to inefficient or unnecessary specifications &
features.
4.85 Value is defined as the minimum money that has to be expended to purchase
/ manufacture a product. It has the following components:-
(a) Functional Value. Qualities that encompass a use
(b) Esteem value. Features that make us want the product
(c) Cost value. Sum of all costs to produce the product
(d) Exchange value. Properties that enable the exchange of the product for
something else
Selection of product for VA
4.86 Select the product for VA as follows:-

(a) Through ABC analysis select products that have max sales /
consumption values
(b) Through contribution analysis, rank products according to
contribution & choose product with least contribution per unit
VA Framework
4.87 VA Framework is formed by the following questions:-

(a) What is the item
(b) What does it do
(c) What does it cost
(d) What else would do the job
(e) What would the alternative costs be
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Implementation & Methodology
4.88 The process for implementing VA is as follows:-

(a) Identify the function
(i) Primary function e.g. bulb gives light
(ii) Secondary functions
(b) Evaluate the function by comparison
(c) Develop alternatives by following 13 principles:-
(i) Avoid generalities
(ii) Get all available costs
(iii) Use information from best sources only
(iv) Brain storming sessions
(v) Blast ( generate alternate ideas / processes), create ( generate
alternatives that do the complete job), refine (refine alternatives
generated in create stage)
(vi) Identify & overcome the road blocks
(vii) Use industry specialists to extend specialized knowledge
(viii) Key tolerances should not be too light
(ix) Utilize and pay for vendor skills & techniques
(x) Utilize vendors available functional products
(xi) Utilize specialty processes
(xii) Utilize applicable standards
(xiii) Utilize the criteria ‘would I spend the money this way’
DARSIRI Method of VA
Data
Collection
Implement Analyse data
Recommend Record Ideas
Investigate Speculation
Uses of VA
4.89
(a) Reduces cost of product
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(b) Determines appropriate cost for reliable performance of the essential

functions
(c) Generate new concepts & ideas
(d) Create cost consciousness
Network Analysis (SOK B)
Definitions
4.90 The definitions used in network analysis are:-

(a) Network. It is the graphical representation of a project plan which
depicts the correct sequence & inter relationships of all activities which must
be completed to achieve the objectives of the project
(b) Activity. Physically identifiable job or task or part of project which
consumes time and possibly other resources for its execution
(c) Event. An occurrence marking the commencement or completion of
one or more activities.
(d) Dummy. Jobs that have no duration or costs. They are interjected into
the network to keep the logical sequence / flow correct & to keep the
designation of each activity unique.
(e) Path. Uninterrupted sequence of activities, taken in their logical
order, forming a part of the network.
Network Analysis of a Project
4.91
(a) Develop a network covering all aspects of the project
(b) Evaluate the plan to be SURE that the end objectives will be achieved
(c) Monitor / control the project as it proceeds
(d) Use techniques like PERT, CPM to review
Rules of a Network
4.92 The rules n drawing a network and its analysis are:-

(a) Every activity must be preceded & followed by an event
(b) Every event except START & END must be preceded and followed by
an activity
(c) No activity must start until its preceding event has completed.
(d) Closed loops cannot be incorporated into the network
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Analyzing a Network
4.93 The following methods are used to analyze a network:-

(a) Three Time Estimates.
(i) Optimistic time t0. The shortest possible time for an activity
to complete under ideal conditions.
(ii) Pessimistic Time tp. The max possible time for an activity to
complete
(iii) Most Likely / Realistic Time tr. Estimate between t0 & tp, gives
allowances for usual delays
t0+ 4tr +tp
(iv) Now Expected Time t𝑒 = 6
(b) Earliest Start Time (EST). It is the earliest possible time an activity
can start on completion of previous event. It is indicated by and is done
during the forward pass that is from Left to Right. The EST of an activity
leaving a node is the largest EFT of all activities entering the same node.
(c) Earliest Finish Time (EFT). It is the earliest an activity can finish and
can be calculated as follows 𝐸𝐹𝑇 = 𝐸𝑆𝑇 + 𝑇𝑒
(d) Latest Finish Time(LFT). The latest time an activity can be completed
without extending the completion time of the network. The calculation is
done during backward pass and is indicated by . Latest Finish Time for
an activity entering a node is the smallest LST of all activities leaving that
node.
(e) Latest Start Time(LST). Latest start time that an activity can start on
without affecting the project schedule. 𝐿𝑆𝑇 = 𝐿𝐹𝑇 − 𝑇𝑒
(f) Slack / Float. It is the length of time an activitity can be delayed
witout delaying the project completion. 𝑆𝐿𝐴𝐶𝐾 = 𝐿𝑆𝑇 − 𝐸𝑆𝑇 𝑜𝑟 𝑆𝐿𝐴𝐶𝐾 =
𝐿𝐹𝑇 − 𝐸𝐹𝑇
(g) Critical Path. It is the longest path in the network or the path with no
slack or float.
(h) Crashing. Compressing the network in time through:-
(i) Compressing the critical path
(ii) One or more activities on the critical path need to completed in
< Te
(iii) Achieved by using more resources
(iv) Cost of the activity may go up
(v) Resources can be appropriated from other activities where
there is slack
(vi) Amount of resources that can be re appropriated depends upon
the slack available.
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Resources vs Slack
6
4
2 Resources vs Slack
0
Crash Normal
Figure 2 - Resources versus Slack for Network Crashing
Planning & Control Tools
PERT
4.94 PERT is a dynamic process and involves:-

(a) Changes
(b) Readjustments
(c) Formularization of new network
(d) Changes in schedules
(e) Constant revision of plan etc
4.95 The 3 methods of readjustment / re planning PERT are as follows:-

(a) Interchange resources from non critical to critical path thus saving
time
(b) Relaxing technical specifications to reduce time but within scientific
reasoning and not arbitrary
(c) Changing the sequence or arrangement of activities if possible
CPM
4.96 Critical Path Method:-

(a) Brings cost into prominence in the planning and control process
(b) When time & cost can be better estimated then CPM is better than
PERT
(c) CPM uses 2 time & cost estimates
(i) Normal Estimate
(ii) Crash Estimate
(1) Crash Time – time required to finish an activity if cost is
not a concern at all for reducing project time
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(2) Crash Cost – cost incurred to complete project in crash

time
PERT CPM
Event oriented Activity oriented
Probability model with uncertainty in Deterministic model with well known
activity duration activity & time base
Does not demarcate between critical & Demarcates between critical & non
non critical activities critical activities
Dummy activities are required to Dummy activities are not required
maintain proper sequencing
Finds use in projects where TIME control Brings COST into prominence
is more important than cost
Used when there is a high degree of Used when time & cost can be estimated
uncertainty well in advance
Assumes resources for a project are Minimum forecast for making resources
always available available is required
Uses of Network Analysis
4.97 Helps answer the following questions:-

(a) When will the project finish
(b) When will each independent part of the project finish / start
(c) Out of the various parts of a project which ones must be finished to
avoid delaying the project
(d) Is it possible to shift resources from non critical parts of the project to
critical parts without affecting the overall schedules
(e) Amongst various parts where should the management concentrate
Data Analysis (SOK B)
Statistical Methods
4.98 The statistical methods include:-

(a) Descriptive Statistics. Information / data are taken from each &
every element of the population / universe. Information is collected through
census
(b) Inductive Statistics. Conclusions are drawn based on data from a
portion (sample) of the elements from the universe. Statistical Inference is
carried out to estimate characteristics of a large group based on the limited
observation of a small portion of it. Data is collected through sampling. It
relies on concepts of probability theory to overcome uncertainties / in
accuracies due to sampling
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Sampling
4.99 Sampling is done as it:-

(a) Saves time & cost
(b) Used where destructive testing is required on products
(c) Has an element of uncertainty as only a portion is being tested
Statistical Investigations
4.100 Following steps are followed:-

(a) Formulate or define the problem
(b) Decide on data required
(c) Collect & validate data
(d) Classification, tabulation & description of results for easy
comprehension
(e) Analyze & interpretation
Data presentation & Analysis
4.101 Data is presented as follows:-

(a) Measure of Central Tendency
(i) Mean
(1) Arithmetic average
(2) Denoted by X
1 𝑁
(3) 𝑋=𝑁 𝑛 =1 𝑋𝑛
Very familiar concept Mean can be completely distorted if
extreme high / low values occur in the
data
Easily understood One has to be careful in using &
interpreting mean as a representative
value for making decisions / conclusions
Reliable for estimating average value of a
given population
(ii) Mode
(1) Value of item in the middle
(2) If number is odd then median is value of middle item
else it is mean of the two center values
Is a positional concept
Not effected by extreme values
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Easy to determine
Can be arrived at graphically
Can be determined for open ended
distributions also
(iii) Median
(1) Value that occurs most
(2) Other values tend to clutter around mode
Least precise
Cannot be handled mathematically
Difficult to calculate
Least understood
Limited statistical use
(b) Measure of Dispersion

(i) Range
(1) Difference between highest & lowest values
(2) Used in process control, computing share value etc
Very familiar concept Emphasis is on extreme values only
Easily understood Cannot tell about character of
distribution
Cannot be calculated for open ended
distributions
(ii) Standard Deviation

(1) Most important measure of dispersion
(2) Mathematically precise
(3) Also called root mean square deviation
(4) Square root of the mean of standard deviations from the
mean
Comprehensive measure of variability Abstract measure
takes every item into account Little difficult to understand
Has mathematical properties that are Cannot be calculated for open ended
used in advanced statistical theories distributions
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(iii) Coefficient of Variation. Ratio of standard deviation to mean

expressed as a percentage
Distributions
Normal distribution
4.102
(a) It is the most regularly used distribution
(b) Applicable to many situations.
(c) It has a symmetrical bell shaped curve extending from –∞ to +∞
(d) Requires 2 parameters mean(µ) and standard deviation(σ)
(e) Because of symmetry µ lies at the center of the curve
(f) σ governs the dispersion and therefore the shape / spread of the curve
(g) Total area under the curve is 1 and therefore areas under the curve
may be equated to probability
Application of Normal Curve
4.103 Used to analyze:-

(a) Performance of man & machine
(b) Equipment life cycle, wastage, replacements
(c) Equipment MTBF
(d) Wastage pattern of general stores
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PERSONAL MANAGEMENT (40 Marks)
Functions of PM, Training, Motivation, Leadership (SOK C)
Functions of PM
4.104 It is the management of HR in an organization and is concerned with creation

of harmonious working relationships.
4.105 PM deals with creating, developing & utilizing a work group & involves all
types of inter personnel relationships between superior & subordinate
4.106 PM is a line responsibility & a staff function
Objectives of PM
4.107 The objectives of PM are:-

(a) General
(i) Effective utilization of HR
(ii) Establish desirable working relationships
(iii) Development of each individual employee
(b) Specific
(i) Induction
(1) Select right type & number of persons
(2) Proper orientation & introduction
(ii) Conditions
(1) Fair salary & wages
(2) Provision of incentives
(3) Well organized & suitable training facilities
(4) Provision of employee benefits
(iii) Termination
(1) Full & fair consideration
(iv) Misc
(1) Good relationships with trade unions
(2) Continuous personnel research
Training
4.108 It is the attempt to improve the performance on the current job or prepare
for an intended job.
(a) The purpose of training is:-
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(i) Increased productivity

(ii) Increased quality
(iii) Health & safety improvement
(iv) Prevention of obsolescence
(v) Personal growth
(vi) Improve organizational climate
(vii) Meet future personal needs
(viii) Meet future organizational needs
(b) The need for training is:-
(i) Increased use of technology in every field
(ii) Labor turnover (death, accident, promotion etc)
(iii) Additional hands for increased production
(iv) Employ new labor
(v) Refresher training for old employees
(vi) Reduce grievances
(vii) Minimize accidents
(viii) Improve efficiency
(ix) Maintain validity of an organization
(x) Raise morale of employees
(c) The importance of training is:-
(i) Makes employee more effective & productive
(ii) Increased earning power & job security
(iii) Better cooperation & loyalty for organization
(iv) Increased morale & decreased absenteeism
(v) Better & economical use of material & equipment
(vi) Facilitates delegation of authority
(d) Steps in training are:-
(i) Identify the need
(ii) Getting ready for the ob
(iii) Preparation of the learner
(iv) Presentation of operations & knowledge
(v) Performance evaluation
(vi) Follow up & evaluation of the training program
Motivation
4.109 Performance is the result of interaction between physical resources (PR), HR,
Financial Resources (FR). FR & PR are inanimate factors which can be clearly
defined, while HR is abstract and hence become crucial. Performance is the sum of
abilities, which state what one can do and motivation which state what one will do.
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4.110 The following figure demonstrates the basics:-
Abilities
Motivation Performance
Financial Physical Human
Resources Resorces Resources
Figure 3 - Relation between Ability, Motivation & Performance
4.111 Motivation is defined as the willingness to expend energy to achieve a goal or

reward. It is also called the force that activates dormant energies of people & sets in
motion the actions of people.
Elements of Motivation
4.112 The basic elements of motivation are shown in figure:-
Goals - aleviates the needs

Motives - set to alleviate the needs
Needs - deficiencies
Figure 4 - Elements of Motivation
Objectives of Motivation
4.113 The objectives of motivation are to create conditions so that the worker
works with the following properties to achieve the goal:-
(a) Zeal
(b) Initiative
(c) Interest
(d) Enthusiasm
(e) High personal & group satisfaction
(f) Sense of loyalty
(g) Sense of discipline
(h) With pride & confidence
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Types of Motivation
4.114 The types of motivation:-

(a) Positive. In this an attempt to make others do what one wishes
them to do through possibility of gain or reward like:-
(i) Praise or credit for work done
(ii) Pride
(iii) Completion
(iv) Delegation of responsibility
(v) Appreciation
(vi) pay
(b) Negative. Make a person work through possibility of:-
(i) fear
(ii) punishment
(iii) employee does just enough to avoid punishment
(iv) short time goal
(v) atmosphere of hostility, mistrust
(c) Extrinsic. By financial rewards, pay, promotion etc
(d) Intrinsic. Feeling of having done something worthwhile. Factors
include:-
(i) Praise
(ii) Responsibility
(iii) Recognition
(iv) Power
(v) Status
(e) Self motivation
(i) Making the job interesting
(ii) Thinking constructively
(iii) Making use of one’s strong points
(iv) Adapting to situation
(v) Being tough minded particularly to oneself
(vi) Overcoming ignorance or fear due to ignorance
Leadership
Theories of Leadership
4.115 Leadership is defined as the ability to make others do what you want done,
because he wants to do it. The various theories of leadership are:-
(a) Trait theory. This states that the leader has certain traits like
intelligence, self confidence, initiative etc in comparison to his followers.
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(b) Situational theory. This theory states that all are leaders and
depending upon the situation specific types of leaders are created.
Safety management
4.116 Safety is a management responsibility and is delegated through line & staff.
The staff function develops policies & plans while the line function implements
them.
Steps for Safety
(a) Safety & Medical Director draws up plans & procedures

(b) Plans / procedures endorsed by CEO so that all management
representatives respect & apply it.
(c) Safety & Health directors & industrial hygiene directors must have
specific qualifications commensurate with their responsibilities.
(d) Policy decisions must have emphasis on prevention rather than post
accident relief / procedures.
Prevention
4.117 The following care must be taken:-

(a) Implement industrial hygiene
(b) Annual medical check up
(c) Testing of new machines
(d) Develop new safety gear
(e) Cooperate with supervisors, operators, union representatives to
develop safe working habits in employees & safety oriented mindset.
Remedial Action
4.118 The following care must be taken:-

(a) Decide in advance about organizations obligations for disability /
prolonged illness.
(b) Analyze accidents and find ways of preventing them
(c) Educate employees
(d) Participative management (Joint Safety Committees)
(e) Identify, evaluate & manage RISKS
(f) ND(Mb) has a 3 tiered safety committee
(i) Dockyard Apex safety Committee.
(ii) Dockyard Local Safety Committee
(iii) Departmental safety committee
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Factories Act 1948
Factory Act 1948
Object
4.119 The object of the act is to regulate the following aspects of the workers
employed in the factory:-
(a) Health
(b) Safety
(c) Welfare
(d) Working Hours
(e) Leave with wages
(f) Employment of women / young person
(g) Special provisions for:-
(i) Dangerous operations
(ii) Accidents & diseases
(iii) Penalty & Procedures
Definitions
4.120 A Factory is defined as a place with more than 10 people employed in

manufacturing with power or more than 20 people employed in manufacturing
without power, on any day in the preceding 12 months.
4.121 A Manufacturing Process is defined as:-

(a) Does not include mining & railways
(b) Making, altering, refining, finishing, practicing or any adaptation of an
article with a view to its use, sale etc.
(c) Pumping oil, water, sewage
(d) Generating, transforming & transmitting power
(e) Printing
(f) Ship construction
4.122 Workers are defined as people employed with / without wages in

manufacturing process, cleaning of machines or premises used for manufacturing or
work incidental to manufacturing process.
Main Provisions
4.123 The main provisions of the act are:-

(a) Health
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(i) Measures for cleanliness

(ii) Waste & effluent disposal
(iii) Ventilation
(iv) Temperature
(v) Overcrowding
(1) 350 cubic feet per worker for factories before 1948
(2) 500 cubic feet for factories after 1948
(vi) Drinking water
(vii) Sanitary arrangements
(1) Bathrooms
(2) Urinals
(3) Spittoons
(b) Safety
(i) Fencing of parts of dangerous machines
(ii) Methods of fencing
(iii) Only qualified / prescribed persons to work on / near
machines in motion
(iv) Construction/ maintenance of hoists, lifts, cranes
(v) Protection of eyes
(vi) Protection against dangerous fumes
(vii) Precautions against
(1) Fire
(2) Explosion
(3) Inflammable gas etc
(c) Welfare
(i) Washing facilities
(ii) First aid
(iii) Ambulance
(iv) Canteen if workers more than 250
(v) Appoint welfare officer if more than 500
(d) Hours of work
(i) Not more than 48 hrs in a week for an adult worker
(ii) Sunday is weekly rest day
(iii) Can substitute Sunday with any of the 3 preceding or
succeeding days provided not worked continuously for more than 10
days
(iv) Compensatory holidays in same month or within 2 months
(e) Daily hours
(i) Not more than 9 hrs in a day
(ii) Not more than 5 hrs at a stretch
(iii) Half hour break after 5 hrs
(f) Spread over
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(i) Working hours should not spread over more than 10.15 hours
including rest
(g) Overtime
(i) Work time more than 9 hrs a day or more than 48 hrs a week
(ii) Double ordinary wages
(iii) Women work only between 6 am to 7 pm
(h) Annual leave with wages
(i) Also called earned leave
(ii) 1 day for every 20 days worked for adult or every 15 days for
young person
(iii) Up to 30 days for adult / 40 days for child
(iv) Apply 15 days prior
(v) Minimum attendance is 240 days
(i) Accidents
(i) Management responsibility to inform prescribed authorities
about accident if the accident resulted in death or bodily injury that
prevents worker to more than 48 hrs
(j) Miscellaneous
(i) Penalties for offences
(ii) Appeals
(iii) Obligations of workers in respect of
(1) Willful interference
(2) Willful neglect
(3) Misuse of facilities given for health & safety of workers
Apprenticeship Act 1961
Apprenticeship Act 1961
Objectives
4.124 The objectives of the act are:-

(a) Regulate program of training to conform to the prescribed syllabi &
period of training in accordance with central apprenticeship council
(b) Utilize training facilities in the industry to meet the requirement of
skilled worker
Implementation
4.125 The implementation of the act started from 01 Jan 1963 (1968 in J & K). It
covers trade apprentice (ITI), graduate & diploma holders in technology as
graduate & technician apprentice and vocation 10 + 2 students as tech
apprentices.
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Induction / Training
4.126
(a) Engagement twice a year through entrance exams (Feb / Mar & Aug /
Sep)
(b) Training period 6 months to 4 years depending upon trade
requirements
(c) Syllabus prepared by experts in the trade from industry
(d) Age greater than 14 years
Implementation in Navy
4.127
(a) Dockyard apprentice school at Mumbai, Visakhapatnam & Kochi
(b) Entries
(i) Designate that is seeks jobs outside
(ii) Non designate that is employed by navy
(c) Working hrs 42 to 48 hrs a week
(d) Leave
(i) 12 C/L
(ii) 15 Medical
(iii) 10 extra ordinary
(e) Minimum attendance
(i) 240 days in a year
(ii) 40 for instructions
(iii) 200 for practical
JCM, AINTSSA, Shop Committee, Trade Union
Joint Consultative Machinery (JCM)
Scope
4.128
(a) Promote harmonious relationship
(b) Secure maximum cooperation from employee
(c) Achieve greater efficiency by arbitration of unresolved problems
Levels
4.129 Level I.
(a) National Council
(b) Functioning at cabinet secretariat level
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(c) Up to 25 official members (government representatives) & 60 staff

members (union / associations)
(d) Chaired by cabinet secretary
(e) MoD has 6 seats in JCM 1 Staff side
4.130 Level II.

(a) Departmental Council
(b) At concerned ministry level
(c) 27 seats for staff
4.131 Level III.

(a) Regional Council
(b) At lowest level of administrative setup
(c) Normally JCM has only 3 levels but MoD has 4 levels
(d) Meeting once a quarter
(e) Done at NHQ for navy
(f) Takes up following:-
(i) If no settlement at JCM IV
(ii) Hours of employment
(iii) Transfers
(iv) Output of work
(v) Promotion
(vi) Confirmation
(vii) Reverse
(viii) Wage structure
(ix) Medical facilities
4.132 Level IV.

(a) Command HQ level
(b) Concerned with all local matters related to work, welfare and
improvement in efficiency
(c) Meeting once a month / quarter
(d) Steering committee chaired by CSO(P&A)
(e) Seats are
(i) 6 seats for staff – 1 member from works committee ASD, NAD &
MO, 2 from INCEA & 1 from INCESA
(ii) From official side – C-in-C, CSO(P&A), ASD, NAD, MS
Shop Committee
4.133 It was constituted by the ministry of labor in 1975 and is aimed as a scheme
for workers to participate in industry particularly at shop floor level. It has two
components shop committee and joint shop committee.
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4.134 Center manager / departmental heads are required by law to set up these
two committees:-
(a) Shop Committee. It has workers elected for shop committee during
elections + equal number of management representatives. Meet every month
and has representatives from PM & MIRW
(b) Joint Shop Committee. All elected shop committee members + at least
1 each from each shop / center in the department. Meet once a quarter.
Functions
4.135
(a) Assist management in achieving production targets
(b) Improve production, efficiency
(c) Reduce wastage
(d) Optimum utilization of man & machine
(e) Identify low productivity areas and improve them
(f) Safety measures
(g) Assist in maintaining discipline
(h) Physical working conditions / reduction of fatigue
(i) Proper flow of 2 way communications between management &
workers
(j) NOT authorized to discuss disciplinary cases initiated under CCS
(CCA) rules
(k) Chaired by center manager, meet 1 a month
Trade Union
Role
4.136
(a) To encourage collective bargaining by making provisions for
recognition of one union as a bargaining agent & at the same time prescribe
certain Do’s & Don’ts on the part of the employees.
(b) Achieve higher wages, working conditions
(c) Minimize helplessness of individual by collective strength
(d) Raising the status of the worker
(e) Develop sense of sincerity & discipline in workers
(f) Take up welfare measures
(g) Boost the morale of the workers
Responsibilities
4.137
(a) No form of physical duress on management
(b) Do not permit rowdies in demonstrations
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(c) Not to engage in union activities during working hours unless

provided for by law, agreement or practice
(d) To discourage unfair practices such as:-
(i) Negligence of duties
(ii) Careless operation
(iii) Damage to property
(iv) Interference with normal work
(v) Insubordination
(e) Take prompt action to implement decisions
(f) Display provision of code of conduct prominently & in local language
(g) Take action against members / office bearers who break the code of
conduct
(h) Negotiations during minor / major punishments
(i) Maintain cordial relations between worker & employer
Definition
4.138 Trade Union Act 1926 defines a trade union as a combination, whether
temporary / permanent formed primarily for the purpose of regulating relations
between workers & employers, employers & employers, workers & workers for
imposing restrictive conditions on the conduct of any trade or business. Any 7 or
more workers in a factory can form a union and apply for registration to the
Registrar of Trade Unions.
Disciplinary Action – Civilian Employees
Civilian Employees
CCS Class A (Class I CCS Class B (Class II

CCS Class C & D
Gazetted Officer) Gazetted Officer)
Industrial Non Industrial
Ministerial Non Ministrial
Figure 5 - CCS Hierarchy
4.139 Class A & B officers are appointed by the ministries on behalf of the President
of India in consultation with UPSC. Class C & D are appointed by NHQ (DCP), AA or
ASD. Industrial staff includes MT fitters, Painters, Welders etc. Ministerial Staff
includes office superintendent, UDC, LDC etc. Non Ministerial Staff includes drivers,
sweepers, peons, Mali etc.
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4.140 Disciplinary rules are laid down in Central Civil Services (Classification
Control & Appeals) Rules 1965 also called CCS (CCA) Rules 1965. In all there are 35
rules, major ones are:-
(a) Rule 10. Suspension / deemed suspension
(b) Rule 11. Major / minor penalties
(c) Rule 13. Authorities competent to institute disciplinary
proceedings
(d) Rule 14. Procedure for conduct of major inquiry
(e) Rule 16. Procedure for conduct of minor inquiry
(f) Rules 22 – 27. Appeals & appellate authority
(g) Rule 29. Revision & powers of revisionary authorities.
Disciplinary Action
4.141
(a) Warning / admonition / reprimand.
(i) This given for negligence, carelessness, lack of thoroughness
and is given in writing and is placed on record. If there is no
improvement then it is mentioned in ACR.
(ii) Should be given only if there is good and sufficient reason
(iii) Warning is not a punishment and cannot be equated to a formal
censure
(iv) Warning should not be issued as part of regular disciplinary
proceedings. If some blame exists then at least a CENSURE should be
issued.
(b) Disciplinary proceeding (minor penalties)
(i) In accordance with rule 11 of CCS (CCA)
(ii) Flow as follows:-
Supervisory
Officer
•Statement of Imputation of misconduct / misbehaviour

•Offender is given time to reply
Chargesheet
•Refutes Charges
•Formal Inquiry is constituted
•Accepts Charges
Reply •Appropriate punisment
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(iii) In case the charges are refuted then a formal inquiry is held as
follows:-
(1) Disciplinary Authority (DA) appoints Inquiry Officer
(IO) and Presenting Officer (PO) from government side. PO
cannot be a service officer.
(2) IO is to submit a report to DA after formal inquiry into
the events alleged, recorded statements of witnesses, record of
entire proceedings etc
(3) IO is to furnish a copy to defendant & PO. They are to
make a representation / submission to DA within 15 days
(4) DA may agree or disagree with findings
(5) If agreed then the award of suitable penalty by
appropriate level
(6) Inquiry is mandatory if minor penalty is WITHHOLD
INCREMENT under following cases:-
(a) Likely to affect pension
(b) With cumulative effect
(c) For > 3 years
(c) Disciplinary proceeding (major penalties)
(i) Procedure is identical to minor penalty except that when the
reply to charge sheet is received a formal inquiry is always
constituted.
(ii) Exceptions to Minor / Major penalties procedure. The
procedure need not be followed when:-
(1) Penalty flows from offence that led to conviction on
criminal charges
(2) DA feels that it is not practical to hold an inquiry;
reasons for same are to be recorded in writing.
(3) President is satisfied that the inquiry need not be held in
the interest of state or security
Minor Penalty Major Penalty
Censure Reduction to lower stage in time scale of
pay
Withholding promotions Reduction to lower time scale of pay,
grade & post of service
Recovery from pay(for loss to state due Compulsory retirement
negligence or breech of order)
Withholding increments of pay Removal from service (can take future
employment from government)
Dismissal from service(cannot take
future employment from government)
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(d) Suspension.
(i) It is an executive order to keep a government servant out of
duty temporarily pending final action against him for criminal
offences or acts of indiscipline, delinquency, misdemeanor etc.
(ii) Suspension debars the officer from exercising the powers &
discharging the duties of his office.
(iii) The conditions when an officer may be placed on suspension
are:-
(1) Disciplinary proceeding is pending / contemplated
(2) Engages in activities prejudicial to security of state
(3) Criminal case is under investigation, inquiry or trial
(4) Likelihood of individual tampering with witness or
evidence if he continues in service
(5) Misdemeanors
(a) Moral turpitude
(b) Corruption
(c) Loss to state due negligence
(d) Refusal to carry out written orders of superior
(6) Continuation in office will
(a) Seriously subvert discipline
(b) Be against wider public interest
(iv) The conditions when an officer has to be suspended:-
(1) Arrested for Dowry death
(2) Police report to magistrate that prima facie case exists
(v) Deemed Suspension. An individual is deemed to have been
suspended if:-
(1) Detained in custody for > 48 hrs. suspension will
continue even if bailed out after 48 hrs
(2) Sentenced to imprisonment > 48 hrs but is not
dismissed, removed or compulsorily retired.
(3) Penalty for dismissal, removal or compulsory
retirement has been set aside and the DA decides to proceed
ahead with inquiry.
(vi) It is not to be resorted to for petty offences unrelated to official
duties or when the person is absconding
(vii) Formal written order of competent superior authority is a must
for suspension.
Bonus System
4.142 The Payment of Bonus Act 1965 was promulgated with an aim to maintain
peace & harmony by allowing employees to share the prosperity of the
establishment reflected by the profits earned. It is applicable to every factory &
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establishment employing more than 20 people during the current financial year. It is
also applicable to person drawing more than 1600 pm as salary / wages.
4.143 Every employer is bound to pay bonus under the following conditions:-
(a) Employee completes 30 days working during the current accounting
year
(b) Minimum 8.33 % of salary / wages earned.
(c) Or Rs 100 for workers > 15 hrs / Rs 60 for workers < 15 hrs
(d) Has to be paid even if no profit for the establishment
(e) Bonus has to be paid within 8 months of closing the accounting year
(f) Maximum limit of bonus is 20% of salary or Rs 2500 (2003 limit)
Leave Regulations – Dockyard Employee
General Principles
4.144
(a) Not a right
(b) Sanctioning Authority(SA) may refuse / revoke the leave
(c) Type of leave cannot be altered by SA
(d) Different types of leave can be combined except C/L
(e) Leave taken can be converted to any other type of leave at a later date
but only while in service
(f) AWL can be converted to extra ordinary leave by SA
(g) Maximum continuous leave period = 5 years, periods more than that
presidents permission is required.
(h) No other employment can be taken up except with the approval of SA
(i) Leave on medical grounds for gazette officers by Authorized Medical
Authority (AMA) and for non gazette officers, AMA or any Registered Medical
Practitioner
(j) Second medical opinion may be sought by SA
(k) After medical leave can report back on duty only with a FITNESS
Certificate
(l) Overstay of leave is debited from Half Pay Leave(HPL)
(m) Willful absence after expiry of leave – disciplinary action
Types of Leave
4.145
(a) Commuted Leave – can commute any amount of leave, medical
certificate is compulsory
(b) Casual Leave – 8 days in a calendar year
(i) Not recognized form of leave
(ii) Not subject to rules by GOI
(iii) Person on C/L not treated as absent from duty
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(iv) No affect on pay

(v) Can be combined with special C/L & vacation leave only
(vi) Cannot be combined with joining time
(vii) Sundays / holidays during C/L not part of C/L
(viii) Can be prefixed / suffixed
(ix) Not more than 8 days at a time
(x) Un availed C/L lapses
(xi) Can claim LTC during C/L
(xii) Entitlement – 12 d for those with 16 holidays & 15 days for
those not with 16 holidays
(xiii) Can avail proportional or full C/L even if person joins in middle
of the year, at the discretion of the competent authority
(c) Hurt Leave – 120 days with full pay & then HPL as recommended by
AMA. Total leave not more than 28 months
(d) Leave not Due – granted to permanent employees only on basis of
medical certificate. Maximum 180 days for entire service, not more than 90
days at a time.
(e) Extra Ordinary Leave – when no other leave is admissible & served for
more than 5 years
(f) A/L – 30 days
(g) HPL – 20 days
(h) Earned Leave
(i) 15 days credited n 1st Jan & 1st Jul
(ii) Credit reduced by 1/10 of extra ordinary leave availed in
previous year
(iii) Accumulated up to 240 days
(iv) For appointment / retirement in that ½ year earned leave
credited at rate of 2.5 days per month till HYE or retirement
respectively
(v) Fractions of days rounded off
(vi) Un availed joining time credited into earned leave subject to
max 15 days
(vii) Can avail up to 120 days at a time
(viii) EL > 120 days for group A & B for leave spent outside India
(ix) 240 days EL allowed for leave Preparatory to Retirement (LPR)
(i) Hospital Leave
(i) Admissible to Class C – for handling dangerous drugs,
machines, poison etc
(ii) Admissible to Class D – while under medical treatment or due
to injury / illness directly related to official duties.
(iii) Medical certificate required from AMA
(iv) Not debited from Leave account
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(v) Can be combined with any other type of leave admissible but <
28 months
(vi) Salary during leave – full pay during 1st 120 days and then half
pay for balance
(vii) Competent authorities for sanctioning leave as per 1 st schedule
of CCS Leave Rules
(viii) If drawing benefit under workmen’s compensation act or
employees state insurance act the salary during leave is reduced
accordingly
(j) Special C/L can be granted to:-
(i) Males if:-
(1) Max 6 days for vasectomy
(2) Max 21 days for recanalisation
(3) Max 7 days for wife’s tubectomy / laparoscopy
(ii) Females if:-
(1) Max 14 days for tubectomy / laparoscopy
(2) 14 days after MTP
(3) On the day of IUCD insertion / reinsertion
(4) 21 days for recanalisation
(5) 1 day for husbands vasectomy (on the day of operation)
(iii) For union / association activities
(1) Max 20 days in calendar year
(2) 20 days for office bearers for participation in activities
(3) 10 days for outstation delegates of executive committee
for meetings
(4) 5 days for local delegates for meetings
(5) 10 days for staff side of JCM- vice chairman, Secretary
(iv) Natural calamities, bandh etc
(v) Cooperative society meetings – max 10 day + TT
(vi) During elections for exercising franchise
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Project Management
Project
4.146 A project is defined as a task that has definite beginning, a definite end and
requires the expenditure of 1 or more resources in each of the separate but inter
related & inter dependent activities which must be completed in order to achieve
the objectives for which the task was initiated.
Characteristics of a Project
4.147
(a) An entity by itself
(b) Identifiable end product
(c) Non repetitive
(d) Target date for completion
(e) High risk & uncertainty
(f) Generally large & complex
(g) Separate organization to manage
Stages of a Project
perception of need
defining the need
explore alternate solutions
conduct feasibility study
estimate resources required
approval & allocation of funds & resources
contract work to agencies
planning & time schedule
execution
evaluation
Figure 6 - Stages of a Project
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Planning a Project
4.148 The planning of a project involve the following:-

(a) Market survey
(b) Project Capacity
(i) Demand
(ii) Raw material availability
(iii) Nature of product
(iv) Investment capacity
(c) Selection of Site
(i) Project Capacity
(ii) Transport facility
(iii) Labor Availability
(iv) Climatic Condition
(v) Existence of related industry
(vi) Commercial facility
(vii) Proximity to market
(viii) Availability to power / water
(d) Plant layout
(i) Future expansion
(ii) Efficient material handling
(iii) Flexibility for change
(iv) Easy supervision
(e) Design & drawing of product
(f) Material requirement or BOM
(g) Operational planning – method study or Time Study
(h) Machine Loading
(i) Sub contract considerations
(j) Equipment requirements
(k) Organization requirements & staff requirements
(l) Material handling
(m) Budgeting
(i) Master
(ii) Sales
(iii) Production
(iv) Financial
(v) Micro level
(n) Cost of product
(i) Material expenses
(ii) Labor
(iii) Factory
(iv) Admin
(v) Sales
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(vi) Distribution
(vii) Added to above is the profit to get sales price
(o) Profit depends upon demand, price of completion product &
customers capacity to pay.
Project Phases
Concept Phase • imaginary action or conceptualization
Definition or Proposal
• characterize the project by assumptions
Phase
Planning / Organization
• detailed planning & task identification
Phase
Prelim Studies Phase • to rectify & validate earlier assumptions
Work Accomplishment
• directing, coordinating, controlling & execution
Phase
Post Accomplishment
• customer feedback etc
Phase
Figure 7 - Phases of a Project
Project Costing
4.149 Project cost can be characterized as:-

(a) Direct or indirect costs
(i) Direct cost are directly related to the project
(ii) Indirect costs are incidental to the project and can be
(1) Fixed
(2) variable
(b) Capital or Revenue costs

(i) Capital expenses include:-
(1) Location cost
(2) Cost of building
(3) Cost of machine
(4) Cost of equipment
(ii) Revenue costs include:-
(1) Quality control
(2) Consultation fee
(3) Labor
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(4) Power & water

(5) Fuel
(6) Running cost
(7) Maintenance cost
(c) Accurate estimation leads to better control
(d) Costing done by logically breaking down all jobs and extrapolating
production estimates, labor / time estimates & material estimates.
(e) Cost escalation occurs in a project due:-
(i) Deliberate initial under estimation
(ii) Increase cost of material & labor
(iii) Natural causes
(iv) Changes in scope of work
(v) Poor planning due to inadequate knowledge & inadequate
effort
(vi) Design errors
(vii) Material / component failure
(viii) inflation
Project Report
4.150 It is the written account of various activities by a firm and their technical,
financial, commercial & social liabilities for successful completion of the project. It
has the following sections:-
(a) Objectives
(i) Compare different investment opportunities
(ii) Assess technical feasibility, economic necessitity, financial
viability
(iii) Assess management competence of entrepreneur
(b) Constituents
(i) System plan
(1) Market survey
(2) Commercial viability
(3) Selection of site
(4) Size of plant
(ii) Max power plan – required to accomplish planned production
(iii) Technical plan
(1) Project engineering
(a) Selection of equipment
(b) Production process
(c) Preliminary resources
(2) Civil work
(3) Site layout
(4) Additional installations required
(5) Facilities required
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(6) Flexibilities of production capacity

(7) Material handling
(8) Work schedule
(iv) Financial plan
(1) Investment
(a) Fixed assets
(b) Working capital
(2) Financing
(3) Profitability
(4) Repayment of loan
(5) costs
(v) Organization structure
(vi) Implementation schedule & time estimates
Techniques Used in Project management
4.151
(a) Bar Charts
(b) Time & Progress Charts
(c) Gantt Chart
(d) PERT
(e) CPM
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Technical Management

Paper IV Notes - Technical Management

[Paper IV Notes with solved question papers from 2002 – 2006.

Functions of Material Management ....................................................... 21

Apprenticeship Act 1961 ....................................................................................63

Figure 1 - Graphical Representation of EOQ ........................................................................... 24

GENERAL MANAGEMENT (60 MARKS)

MANAGEMENT RESPONSIBILITY & FUNCTIONS, ORGANISATIONS

MANAGEMENT RESPONSIBILITY & FUNCTIONS, ORGANISATIONS

4.2 The responsibilities of management include the following:-

Peter Drucker’s view on Functions of Management

4.3 Peter Drucker’s views were :-

Jobs of a good Manager

4.5 A good manager creates the environment conducive to the performance of

Qualities of a good manager

4.6 Organization is the means by which the management :-

4.7 A good organization results in the following :-

4.8 Also called theories of organizations

4.9 The organizations can be grouped into four forms:-

top level executives may hamper

(c) Functional Organization. Each manager is a specialist and each

(d) Committee Organization. Replaces individual authority at all

Barriers to effective communications

4.10 The main barrier to effective communications is the human element:-

(b) Perception problem

4.11 The types of communications are:

Communication – Effectiveness & Necessity

4.12 Communications is the interchange of thought or information to bring about

4.13 Good communications is essential for:-

4.14 Good communications leads to:-

(i) Better Understanding

4.15 The purpose of communications in an enterprise is to EFFECT CHANGE – to

Awareness of Indian Social, Political & Economic Environment in the

Indian Boilers Regulations 1950 (SOK-C)

4.17 Definitions used in the regulations:-

4.19 The registration process can be shown as follows

Restrictions for Use

4.20 No boiler can be used if:-

4.21 The certificate is required to be renewed :-

Penalties for Non Compliance

(d) Marking of registration number not done

Montreal Protocol (SOK-C)

4.23 Salient points about the protocol are:-

4.24 The salient points about ISO are :-

(iii) ISO 9004 : 2000 Best practices / guidelines

4.25 The process of implementation of ISO is as follows:-

MATERIAL MANAGEMENT (30 Marks)

MATERIAL MANAGEMENT BASICS

Definition of Material Management

4.26 Material management is that coordinated function which is responsible to

4.27 Material Management is the management of flow of material from raw

Importance of Material Management

4.28 The importance of material management is as follows:-

Functions of Material Management

4.29 The important functions of material management are as follows:-

(i) Physical control of material

Advantages of Material Management

4.30 The advantages of material management are as follows:-

4.33 Inventories can be classified as follows:-

4.34 The types of inventories can be grouped as follows:-

4.35 Inventory cost are of following types:-

4.36 This is important because:-