5860 OSCM April 2022

Q1) Solve any five out of eight following sub question. [10]
a) Enlist any four key principles of TQM.
b) List any four functions of Supply Chain Management.
c) Examine the concept of 5S.
d) Memorize and reproduce the examples of various inventory costs.
e) Describe the concept of Kaizen.
f) Enumerate any four characteristics of product quality.
g) List any four functions of PPC.
h) State the concept of quality with respect to manufacturer’s perspective.

a) Four key principles of Total Quality Management (TQM) are:

1. Customer focus: TQM emphasizes meeting and exceeding customer expectations by

understanding their needs and requirements. It involves gathering customer feedback,
incorporating it into product/service design, and continuously improving customer satisfaction.

2. Continuous improvement: TQM promotes a culture of continuous improvement in all

aspects of an organization's operations. It involves identifying areas for improvement, setting
goals, implementing changes, and evaluating the results. This principle encourages employees
to constantly seek better ways of doing things.

3. Employee involvement: TQM recognizes that employees are a valuable resource and
encourages their active participation in quality improvement initiatives. It involves
empowering employees, providing training and support, and fostering a collaborative work
environment where everyone contributes to achieving quality objectives.

4. Process approach: TQM emphasizes the importance of understanding and managing

processes to achieve desired outcomes. It involves mapping out and analyzing key processes,
identifying bottlenecks and areas of waste, and implementing measures to streamline
operations and improve efficiency.

b) Four functions of Supply Chain Management (SCM) are:

1. Planning: SCM involves forecasting customer demand, creating production plans, and
coordinating with suppliers to ensure the availability of raw materials and components. It
includes activities such as demand forecasting, production scheduling, and inventory planning.
2. Sourcing: SCM encompasses selecting suppliers, negotiating contracts, and managing
relationships with them. It involves identifying reliable suppliers, ensuring quality and timely
delivery of goods/services, and optimizing costs associated with procurement.

3. Inventory management: SCM involves managing inventory levels to ensure efficient and
cost-effective operations. It includes activities such as determining optimal inventory levels,
implementing inventory control techniques, and minimizing stockouts while avoiding
excessive inventory holding costs.

4. Logistics: SCM encompasses the transportation, storage, and distribution of goods. It

involves coordinating transportation networks, selecting appropriate modes of transportation,
managing warehouses and distribution centers, and optimizing the flow of goods to customers.

c) The concept of 5S is a systematic approach to workplace organization and cleanliness. It

originated in Japan and consists of five key elements, each starting with the letter "S":

1. Sort (Seiri): This step involves separating necessary items from unnecessary items in the
workplace. Unnecessary items are removed to create a clean and organized work environment.

2. Set in order (Seiton): In this step, necessary items are organized and arranged in a logical
and efficient manner. Everything has a designated place, making it easier to find and access
items when needed.

3. Shine (Seiso): This step focuses on cleaning and maintaining the workplace. Regular
cleaning routines are established to keep the workspace tidy, promote safety, and prevent
equipment deterioration.

4. Standardize (Seiketsu): Standardization involves establishing procedures and guidelines for

maintaining the first three steps consistently. It includes visual controls, checklists, and
standard operating procedures to ensure that the 5S practices are sustained over time.

5. Sustain (Shitsuke): The final step aims to develop a culture of continuous improvement. It
involves creating a mindset where all employees take responsibility for maintaining the 5S
practices, making it a part of daily work habits and encouraging ongoing improvement.

d) Examples of various inventory costs include:

1. Holding or carrying costs: These costs are incurred to maintain and store inventory,
including expenses such as warehousing, insurance, utilities, and depreciation. They also
include the opportunity cost of tying up capital in inventory instead of investing it elsewhere.

2. Ordering costs: These costs are associated with the process of ordering and receiving
inventory. They include expenses such as order processing, supplier communication, and
transportation costs.

3. Stockout costs: These costs occur when inventory is insufficient to meet customer demand.
They include lost sales, potential penalties for not fulfilling orders, and damage to customer
relationships.

4. Obsolescence costs: These costs arise when inventory becomes outdated or obsolete. It can
occur due to changes in technology, market trends, or product lifespan. Obsolescence costs
include write-offs, discounts for clearance, and disposal expenses.

e) Kaizen is a Japanese term that translates to "continuous improvement" or "change for the
better." It is a concept and philosophy that promotes small, incremental improvements in all
aspects of an organization. Key features of Kaizen include:

- It involves the participation of all employees, from top management to frontline workers, in
identifying problems and suggesting improvements.
- It emphasizes a bottom-up approach, where small, continuous changes are implemented by
employees who have direct knowledge of the processes.
- Kaizen encourages a culture of continuous learning, experimentation, and innovation.
- It aims to eliminate waste, improve efficiency, enhance quality, and streamline processes.
- Kaizen encourages the use of problem-solving techniques, such as the Plan-Do-Check-Act
(PDCA) cycle, to identify root causes and implement sustainable improvements.

f) Four characteristics of product quality are:

1. Performance: Performance refers to the ability of a product to meet or exceed customer
expectations and fulfill its intended purpose. It includes factors such as reliability, durability,
functionality, and overall effectiveness in delivering the desired benefits.

2. Reliability: Reliability refers to the consistency and predictability of a product's

performance over time. A reliable product operates as expected without failures, breakdowns,
or defects, ensuring customer satisfaction and trust.

3. Conformance: Conformance relates to the degree to which a product meets specified

standards, specifications, or requirements. It implies that the product is manufactured or
delivered according to established criteria, ensuring consistency and compliance with quality
standards.

4. Aesthetics: Aesthetics refers to the visual appearance, design, and sensory appeal of a
product. It encompasses factors such as attractiveness, style, color, texture, and overall visual
impression. Aesthetics contribute to customer perception and satisfaction with the product.

g) Four functions of Production Planning and Control (PPC) are:

1. Demand forecasting: PPC involves analyzing historical data and market trends to predict
future demand for products or services. Accurate demand forecasting enables effective
production planning and resource allocation.

2. Production scheduling: PPC includes creating detailed production schedules that determine
when and how much of each product should be produced. It involves coordinating resources,
such as labor, equipment, and materials, to meet customer demand efficiently.

3. Capacity planning: PPC encompasses assessing the production capacity of a facility and
ensuring it aligns with demand. It involves determining the optimal utilization of resources,
identifying capacity constraints, and making adjustments to meet production targets.

4. Inventory management: PPC involves managing inventory levels to ensure uninterrupted

production and meet customer demand. It includes activities such as determining optimal
inventory levels, implementing inventory control techniques, and minimizing stockouts while
avoiding excessive inventory holding costs.
h) Quality, from a manufacturer's perspective, can be defined as the degree to which a product
or service meets or exceeds customer expectations and specifications. It involves meeting
quality standards, ensuring reliability, and delivering value to customers. Key aspects of
quality from a manufacturer's perspective include:

- Conformance to specifications: Manufacturers aim to produce products that meet the defined
specifications and standards. They strive for consistency in dimensions, performance,
materials, and other attributes as specified by the design and engineering teams.

- Meeting customer requirements: Manufacturers focus on understanding customer needs and

expectations to deliver products that fulfill those requirements. They consider factors such as
functionality, reliability, durability, aesthetics, and cost to ensure customer satisfaction.

- Continuous improvement: Manufacturers adopt a mindset of continuous improvement,

seeking ways to enhance product quality and optimize production processes. They encourage
employee involvement, implement quality management systems, and strive for ongoing
improvement

in all aspects of their operations.

- Cost-effectiveness: Manufacturers aim to achieve a balance between quality and cost. They
strive to deliver quality products while optimizing production costs, minimizing waste, and
improving efficiency.

Overall, manufacturers view quality as a critical factor in gaining a competitive edge, building
customer loyalty, and maintaining a positive brand reputation.

Q2) Solve any two of the following sub questions : [10]

a) Paraphrase the various types of Operations Processes.
b) Describe the concepts of Fixed Position Layout and Cellular Layouts.
c) Distinguish and contrast MRP-I and MRP-II.

a) Paraphrased types of Operations Processes:

1. Job Processes: These processes involve the customization of products or services to meet
individual customer requirements. They typically involve a high degree of flexibility and
require skilled labor.
2. Batch Processes: In batch processes, products or services are produced in groups or batches
based on similar characteristics or requirements. This allows for greater efficiency and
resource utilization compared to job processes.

3. Line Processes: Line processes involve the sequential production of products or services in
a standardized and repetitive manner. They are often used in mass production scenarios, where
products follow a predetermined sequence of operations.

4. Continuous Processes: Continuous processes are characterized by uninterrupted and

continuous production of products or services. They involve highly automated systems that
operate 24/7 and are commonly found in industries such as chemicals, petroleum, and utilities.

b) Description of Fixed Position Layout and Cellular Layouts:

- Fixed Position Layout: In a fixed position layout, the product or project remains stationary,
and the necessary resources and equipment are brought to it. This layout is commonly used in
construction projects, shipbuilding, and large-scale manufacturing where the size, complexity,
or immobility of the product makes it impractical to move it through a production line.

- Cellular Layouts: Cellular layouts are designed to enhance flow and efficiency by grouping
together machines or workstations that are involved in producing similar products or
components. Each cell operates as a self-contained unit, reducing material handling and transit
time. Cellular layouts promote teamwork and allow for easier supervision and coordination
within each cell.

c) Distinction and contrast between MRP-I and MRP-II:

- Material Requirements Planning (MRP-I): MRP-I is a system for managing and planning
material requirements for production. It focuses primarily on determining the quantities and
timing of raw materials, components, and sub-assemblies needed to meet the production
schedule. MRP-I is primarily concerned with inventory control and ensuring that materials are
available when needed.

- Manufacturing Resource Planning (MRP-II): MRP-II is an expanded version of MRP-I that

integrates other aspects of production planning and control. In addition to material
requirements, MRP-II also considers other resources such as labor, machinery, and capacity
planning. It incorporates functions like capacity requirements planning (CRP), shop floor
control, scheduling, and financial planning to provide a comprehensive view of the
manufacturing process.

While MRP-I focuses on material requirements, MRP-II extends its scope to include broader
resource planning and coordination within the manufacturing environment. MRP-II provides a
more holistic approach to production planning and control, considering the availability and
utilization of various resources to ensure effective and efficient production.

Q3) a) 'Stop making assumptions regarding the production and start planning your
capacity'. Interpret this statement with respect to auto ancillary unit. [10]
OR
b) Illustrate the steps involved in Material Requirement Planning with special
reference to home appliances manufacturing company. [10]

A) Interpreting the statement with respect to an auto ancillary unit, it emphasizes the
importance of moving away from making assumptions about production capacity and instead
focusing on effective capacity planning.

In the context of an auto ancillary unit, this statement suggests that the organization should not
rely solely on assumptions or estimations when it comes to production capacity. Instead, they
should undertake a systematic and proactive approach to capacity planning.

Capacity planning involves assessing the organization's resources, capabilities, and production
capabilities to determine the optimal level of output that can be achieved within a given time
frame. It takes into account factors such as available machinery, skilled labor, infrastructure,
and potential bottlenecks.

By shifting from assumptions to capacity planning, the auto ancillary unit can achieve several
benefits:

1. Accurate production forecasting: Capacity planning allows the organization to forecast

production needs more accurately. It helps in determining the maximum capacity that can be
achieved and the resources required to meet the demand.

2. Optimal resource utilization: With capacity planning, the organization can identify and
utilize its resources optimally. It helps in avoiding underutilization or overutilization of
machinery and labor, leading to improved efficiency and cost-effectiveness.
3. Timely delivery commitments: By having a clear understanding of the available capacity,
the auto ancillary unit can make reliable delivery commitments to its customers. It reduces the
risk of overpromising and underdelivering, which can harm customer relationships and
reputation.

4. Improved responsiveness: Capacity planning enables the organization to respond effectively

to changes in demand or market conditions. It allows for better preparedness and the ability to
adjust production levels or allocate resources accordingly.

In summary, the statement urges the auto ancillary unit to move away from assumptions and
embrace capacity planning as a strategic approach to ensure efficient resource allocation,
accurate production forecasting, and improved responsiveness to meet customer demands
effectively.
B) Material Requirements Planning (MRP) is a process used by manufacturing companies to
determine the materials needed for production and create a detailed schedule for their
acquisition and usage. Here are the steps involved in Material Requirement Planning, with a
special reference to a home appliances manufacturing company:

1. Establish the Master Production Schedule (MPS):

The first step is to establish the Master Production Schedule, which outlines the production
quantities and schedule for each finished product. The MPS is based on demand forecasts,
sales orders, and customer requirements.

2. Determine the Bill of Materials (BOM):

The next step is to create a Bill of Materials for each finished product. The BOM lists all the
components, raw materials, and sub-assemblies required to manufacture the finished product.
It includes information on the quantity and lead time for each item.

3. Calculate Net Requirements:

Using the MPS and BOM, the system calculates the net requirements for each component or
raw material. Net requirements are determined by subtracting the available inventory and
scheduled receipts from the gross requirements (quantity required according to the MPS).

4. Check Inventory Levels:

The system checks the inventory levels for each component and raw material. It compares the
net requirements with the available inventory. If there is insufficient inventory, a planned
order is generated to replenish the stock.

5. Generate Purchase Orders:

For components or raw materials that are not available in sufficient quantities, the system
generates purchase orders to procure the required items from suppliers. The purchase orders
specify the quantity, delivery date, and other relevant details.

6. Track and Monitor Orders:

The system tracks the status of purchase orders, including order placement, delivery dates, and
supplier performance. It provides visibility into the progress of procurement activities and
helps ensure timely delivery of materials.

7. Monitor Production:
As production progresses, the system monitors the usage of materials and updates the
inventory levels accordingly. It also adjusts the net requirements based on actual consumption,
taking into account any scrap or waste.

8. Handle Changes and Exceptions:

Throughout the planning process, the system handles changes and exceptions. This includes
updating the plans in response to changes in customer demand, material availability, or
production schedules. It also addresses any issues such as late deliveries, quality problems, or
changes in specifications.

9. Continuous Review and Improvement:

MRP is an ongoing process that requires continuous review and improvement. The system
regularly reviews inventory levels, demand forecasts, and supplier performance to refine the
planning process and optimize material availability.

By following these steps, a home appliances manufacturing company can effectively plan and
manage its material requirements, ensuring that the necessary components and raw materials
are available at the right time to support production and meet customer demand.
Q4) a) Categorize various inventory control techniques and appraise the inventory
control policies with respect to ABC Analysis. [10]
OR
b) M/s Unique Carb Tooling Company buys its requirement of component
at the rate of Rs. 10 each from a local vendor every quarter. The average
monthly requirement of component is 600 nos. 10% extra components
are procured to take care of in-process rejection. The procurement cost
and inventory carrying cost have been calculated at Rs. 50 per order and
20% of average inventory investment. [10]
Calculate :
i) Economic Order Quantity to optimize the cost.
ii) What is the total inventory cost of existing inventory policy?
iii) How much company can save by switching over EOQ buying
inventory policy?

A) a) Categorizing various inventory control techniques:

1. Economic Order Quantity (EOQ): EOQ is a technique used to determine the optimal order
quantity that minimizes total inventory costs. It takes into account factors such as carrying
costs, ordering costs, and the usage rate of inventory.

2. Just-in-Time (JIT): JIT is an inventory control technique that aims to reduce or eliminate
inventory by receiving materials and producing goods only when they are needed. It focuses
on tight coordination between suppliers and manufacturers to ensure timely delivery and
production.

3. Material Requirements Planning (MRP): MRP is a computer-based inventory control

technique that uses a bill of materials, master production schedule, and inventory data to
determine the quantity and timing of materials needed for production.

4. Safety Stock: Safety stock is a buffer inventory held to protect against uncertainties such as
unexpected demand fluctuations, supply disruptions, or lead time variations. It helps prevent
stockouts and ensures continuity of operations.

5. Just-in-Case (JIC): JIC is an inventory control technique that emphasizes holding excess
inventory as a precautionary measure. It aims to provide a buffer against uncertainties and
reduce the risk of stockouts. However, it comes with higher carrying costs.

6. ABC Analysis: ABC Analysis is a technique for classifying inventory items based on their
value or importance. It categorizes items into three groups: A, B, and C, based on criteria such
as annual usage value or frequency of sales. This classification helps prioritize inventory
management efforts.
b) Appraising inventory control policies with respect to ABC Analysis:

ABC Analysis helps in determining the appropriate inventory control policies for different
categories of items:

1. Category A: Items categorized as A are high-value or high-impact items that represent a

significant portion of the inventory investment. These items typically have a high annual usage
value but a relatively low quantity. For Category A items, inventory control policies should
focus on accuracy, tight control, and frequent review. This may involve implementing
techniques like EOQ, JIT, and frequent monitoring to ensure efficient management of these
critical items.

2. Category B: Items categorized as B have moderate value and usage, falling between
Categories A and C. These items require a balanced approach to inventory control. Policies
may include periodic review, forecasting, and maintaining an appropriate level of safety stock.
The frequency of review and reorder may be lower compared to Category A items.

3. Category C: Items categorized as C are low-value or low-impact items that represent a

smaller portion of the inventory investment. These items typically have a high quantity but a
low annual usage value. Inventory control policies for Category C items may involve less
frequent review, higher reorder points, and automated replenishment systems. The focus is on
minimizing administrative costs and ensuring the availability of these less critical items.

By utilizing ABC Analysis, companies can allocate their inventory control efforts and
resources more effectively. It helps identify the items that require stricter control and attention
while allowing for more relaxed policies for items of lesser significance. This approach
optimizes inventory management and ensures that resources are allocated appropriately based
on the value and impact of each inventory item.

B) To calculate the values, we need to follow these steps:

i) Calculate the Economic Order Quantity (EOQ):

EOQ formula: EOQ = √[(2DS) / H]
Where:
D = Annual demand or usage = Monthly requirement * 12 = 600 * 12 = 7200
S = Ordering cost per order = Rs. 50
H = Holding cost as a percentage of the inventory value = 0.2 = 20%

Substituting the values into the formula:

EOQ = √[(2 * 7200 * 50) / 0.2]
EOQ = √(720000 / 0.2)
EOQ = √3600000
EOQ ≈ 189.74 (approx.)

Therefore, the Economic Order Quantity (EOQ) to optimize the cost is approximately 190
units.

ii) Calculate the total inventory cost of the existing inventory policy:
Total inventory cost = Ordering cost + Carrying cost

Ordering cost = (Annual demand / EOQ) * Ordering cost per order

Ordering cost = (7200 / 190) * 50
Ordering cost ≈ Rs. 1894.74 (approx.)

Carrying cost = Average inventory investment * Holding cost

Average inventory investment = (EOQ / 2)
Average inventory investment = (190 / 2)
Average inventory investment = 95

Carrying cost = 95 * 0.2 * 10

Carrying cost = Rs. 190

Total inventory cost = Ordering cost + Carrying cost

Total inventory cost = Rs. 1894.74 + Rs. 190
Total inventory cost = Rs. 2084.74
Therefore, the total inventory cost of the existing inventory policy is approximately Rs.
2084.74.

iii) Calculate the savings by switching over to EOQ buying inventory policy:
Savings = Total inventory cost (existing policy) - Total inventory cost (EOQ policy)
Savings = Rs. 2084.74 - Total inventory cost (EOQ policy)

To calculate the Total inventory cost for the EOQ policy, we use the EOQ quantity calculated
in step i):

Ordering cost = (Annual demand / EOQ) * Ordering cost per order

Ordering cost = (7200 / 189.74) * 50
Ordering cost ≈ Rs. 1895.09 (approx.)

Carrying cost = Average inventory investment * Holding cost

Average inventory investment = (EOQ / 2)
Average inventory investment = (189.74 / 2)
Average inventory investment = 94.87 (approx.)

Carrying cost = 94.87 * 0.2 * 10

Carrying cost = Rs. 189.74 (approx.)

Total inventory cost (EOQ policy) = Ordering cost + Carrying cost

Total inventory cost (EOQ policy) = Rs. 1895.09 + Rs. 189.74
Total inventory cost (EOQ policy) = Rs. 2084.83 (approx.)

Savings = Rs. 2084.74 - Rs. 2084.83

Savings ≈ - Rs. 0.09

Therefore, by switching over to the EOQ buying inventory policy, the company would save
approximately Rs. 0.09.
Q5) a) Compose Generic Supply Chain Structure for new start-up of vegetable
and fruit selling company. The company receives the orders on their
Android and IOS APP. Workable assumptions can be considered. [10]
OR
b) 'The fulfilling the objectives of a good layout as per yearly product
requirement and product types of high-volume manufacturing unit' Evaluate
the above statement with respect to the specific type of layout. [10]

A) a) Generic Supply Chain Structure for a new start-up vegetable and fruit selling company:

1. Supplier Network:
The start-up would establish relationships with local farmers, wholesalers, or agricultural
cooperatives to source fresh vegetables and fruits. These suppliers would provide the company
with a steady and reliable supply of produce.

2. Procurement and Receiving:

The company would have a designated team responsible for procurement. They would utilize
the Android and IOS app to receive orders from customers and coordinate with suppliers for
the timely delivery of the requested produce. The procurement team would ensure the quality
and quantity of the received goods.

3. Warehousing and Inventory Management:

The start-up would maintain a warehouse facility to store the received vegetables and fruits.
The warehouse would be equipped with proper storage and temperature control systems to
ensure the freshness and quality of the inventory. Inventory management software could be
utilized to track stock levels, monitor expiration dates, and facilitate efficient order fulfillment.

4. Order Fulfillment:
Upon receiving customer orders through the app, the start-up would have a dedicated team
responsible for order fulfillment. They would pick the requested items from the warehouse,
pack them appropriately, and prepare them for delivery.

5. Delivery and Distribution:

The company would have a fleet of delivery vehicles or engage with third-party logistics
providers for timely and efficient delivery of orders. The delivery personnel would use the app
to navigate and deliver the orders to customers' locations.
6. Customer Service:
A customer service team would handle inquiries, resolve issues, and provide assistance to
customers regarding their orders. They would be accessible through various channels such as
phone, email, or live chat, ensuring a positive customer experience.

7. Returns and Reverse Logistics:

The start-up would establish a process for handling returns or exchanges in case of damaged or
unsatisfactory products. Reverse logistics procedures would be in place to manage the return
of products, assess their condition, and take appropriate actions such as refunds or
replacements.

8. Technology and Data Management:

The company would leverage technology solutions, including the Android and IOS app, to
manage customer orders, track inventory, analyze data, and make informed decisions. This
would help streamline operations, improve efficiency, and enhance customer satisfaction.

9. Quality Control:
A quality control team would be responsible for inspecting the received produce, ensuring that
it meets the company's quality standards. They would conduct regular checks to maintain the
freshness, appearance, and overall quality of the products.

10. Strategic Partnerships and Marketing:

The start-up may collaborate with local restaurants, grocery stores, or online platforms to
expand its market reach. Strategic partnerships and marketing efforts would help promote the
company's brand, attract new customers, and drive sales.

Overall, the generic supply chain structure for the vegetable and fruit selling start-up would
encompass procurement, inventory management, order fulfillment, delivery, customer service,
technology integration, quality control, and strategic partnerships to ensure a seamless and
efficient operation from supplier to customer.

B) To evaluate the statement regarding the fulfillment of objectives of a good layout based on
the yearly product requirement and product types of a high-volume manufacturing unit, we
need to consider a specific type of layout. One common layout used in high-volume
manufacturing is the Product Layout, also known as the Line or Flow Layout.
The objectives of a good layout for a high-volume manufacturing unit are typically focused on
efficiency, productivity, and cost-effectiveness. Let's evaluate the statement in the context of a
Product Layout:

1. Yearly Product Requirement:

The Product Layout is well-suited for high-volume production, where large quantities of the
same or similar products are manufactured. It allows for a continuous flow of production,
minimizing interruptions and maximizing output. Therefore, in terms of yearly product
requirement, a Product Layout can efficiently handle the production volume and meet the
objectives of the manufacturing unit.

2. Product Types:
A Product Layout is most effective when the products being manufactured are standardized or
have a limited number of variations. It is ideal for products that follow a sequential production
process with little customization or product-specific requirements. If the high-volume
manufacturing unit primarily deals with such product types, a Product Layout would align
well with the objectives.

3. Efficiency and Productivity:

One of the primary objectives of a good layout is to improve efficiency and productivity. A
Product Layout achieves this by organizing workstations and machines in a sequential manner,
allowing for a smooth flow of materials and minimizing movement and handling time. It
enables operators to specialize in specific tasks, leading to increased efficiency and
throughput. Therefore, a Product Layout can contribute to meeting the objectives of efficiency
and productivity in a high-volume manufacturing unit.

4. Cost-effectiveness:
Another objective of a good layout is to optimize the use of resources and reduce costs. A
Product Layout can help achieve cost-effectiveness by minimizing material handling, reducing
work-in-progress inventory, and maximizing machine utilization. The sequential flow in a
Product Layout reduces the need for excessive transportation and setup time. This layout can
contribute to cost savings in terms of labor, material, and equipment usage.
In summary, if the high-volume manufacturing unit's yearly product requirement is significant,
and the product types are standardized or have limited variations, a Product Layout can be an
appropriate choice. It aligns with the objectives of efficiency, productivity, and cost-
effectiveness by facilitating a smooth flow of production, specialized tasks, and optimal
resource utilization. However, it is essential to consider other factors such as product
customization requirements, flexibility, and potential bottlenecks to make a comprehensive
evaluation of the layout choice.
 5946 OSCM OCT 2022
Q1) Solve any Five out of Eight following sub questions: [10]
a) Define Operations Management.
b) Enumerate any four fragmented elements of Supply Chain.
c) Enumerate any four characteristics of service quality.
d) Describe the concept of Kaizen
e) Examine the concept of Decoupling Inventory.
f) Describe PDCA Cycle.
g) List any two examples of each of Mass production process and Batch
Production process.
h) Enumerate the challenges in Supply Chain Collaborations.

a) Operations Management refers to the administration and coordination of the processes and
activities involved in transforming inputs (such as raw materials, labor, and capital) into goods
and services. It involves designing, planning, organizing, and controlling the production and
delivery of products or services to meet customer demands efficiently and effectively.

b) Four fragmented elements of the Supply Chain are:

1. Lack of coordination: When different stages or entities within the supply chain operate
independently without proper communication or coordination, it can lead to fragmented
operations and inefficiencies.

2. Information gaps: Insufficient sharing or communication of information between different

parties in the supply chain can create gaps and delays in decision-making, resulting in
fragmented processes.

3. Inventory discrepancies: When inventory levels are not accurately tracked or managed
across the supply chain, it can lead to discrepancies and mismatches between supply and
demand, causing disruptions and inefficiencies.

4. Inconsistent processes: Inconsistent or varied processes, standards, or procedures among

different entities in the supply chain can hinder smooth operations and create bottlenecks or
delays.

c) Four characteristics of service quality are:

1. Reliability: The ability to deliver the service accurately, dependably, and consistently,
meeting or exceeding customer expectations.

2. Responsiveness: The willingness and readiness to provide prompt assistance, support, or

solutions to customers' needs or concerns.

3. Assurance: Building trust and confidence through the competence, professionalism, and
knowledge of service providers, making customers feel secure and reassured.

4. Empathy: Demonstrating understanding, compassion, and attentiveness towards customers'

individual needs, concerns, and circumstances, providing personalized service experiences.

d) Kaizen is a concept derived from Japanese management philosophy, which means

"continuous improvement." It involves the continuous and incremental improvement of
processes, products, services, and systems within an organization. Kaizen emphasizes the
involvement of all employees in identifying and implementing small, gradual improvements in
their daily work to enhance quality, efficiency, and productivity. It encourages a culture of
ongoing learning, innovation, and problem-solving to achieve long-term success.

e) Decoupling Inventory refers to maintaining inventory buffers strategically at various stages

in the supply chain to decouple or separate different processes or activities from each other.
By having inventories at specific points, disruptions or variations in one part of the supply
chain can be absorbed or buffered without affecting the entire chain. This helps in managing
uncertainties, such as fluctuations in demand, supply disruptions, or lead time variability, by
allowing different stages to operate semi-independently, thus improving overall efficiency and
responsiveness.

f) The PDCA Cycle is a four-step iterative problem-solving method widely used in quality
management and continuous improvement processes. It stands for Plan-Do-Check-Act and is
also known as the Deming Cycle or the Shewhart Cycle. The steps are as follows:

1. Plan: Identify the problem, set specific goals, analyze the situation, and develop a plan or
strategy to address the issue.

2. Do: Implement the planned solution on a small scale or as a pilot project, gathering data and
observations.
3. Check: Evaluate the results and compare them to the expected outcomes and goals. Analyze
the data collected to assess the effectiveness of the implemented solution.

4. Act: Take appropriate actions based on the evaluation and analysis. If the solution was
successful, standardize and implement it on a larger scale. If not, identify the reasons for
failure, adjust the plan, and repeat the cycle.

The PDCA Cycle promotes a continuous improvement mindset by emphasizing data-driven

decision-making and learning from experiences to enhance processes and achieve better
results over time.

g) Examples of Mass Production process:

1. Automobile manufacturing: Large-scale production of cars using assembly line techniques,

where standardized components are assembled in a sequential manner.

2. Consumer electronics: Production

of electronic devices such as smartphones, televisions, or laptops in high volumes with

standardized processes and components.

Examples of Batch Production process:

1. Bakery: Producing batches of baked goods like bread, pastries, or cookies, where specific
quantities are prepared at a time to meet customer demand.

2. Pharmaceutical manufacturing: Producing medicines in batches according to specific

formulations, allowing for better quality control and customization.

h) Challenges in Supply Chain Collaborations include:

1. Trust and communication: Establishing trust and effective communication among multiple
partners in a supply chain collaboration can be challenging, especially when there are different
organizational cultures, priorities, or competitive interests involved.
2. Information sharing and visibility: Sharing accurate and timely information across different
entities in a supply chain collaboration can be difficult due to data security concerns,
incompatible systems, or resistance to transparency.

3. Coordination and alignment: Aligning goals, strategies, and operations among collaborating
partners requires coordination and agreement on processes, standards, and performance
metrics, which can be complex and time-consuming.

4. Risk management: Collaborative supply chains involve shared risks, such as disruptions in
supply, demand fluctuations, or regulatory changes. Managing and mitigating these risks
collectively requires effective collaboration and contingency planning.

These challenges require active collaboration, clear communication, trust-building, and the use
of technologies and frameworks that facilitate coordination, information sharing, and risk
management among the partners involved in the supply chain.

Q2) Solve any Two of the following sub questions: [10]

a) Differentiate Continuous and Intermittent Operations Process.
b) Explain VED Analysis.
c) Paraphrase the process of Capacity planning.

a) Continuous Operations Process:

Continuous operations processes are characterized by the continuous production of goods or
services without interruption. The production occurs in a non-stop manner, typically involving
high-volume and standardized outputs. These processes often use highly automated and
mechanized systems, allowing for consistent and uninterrupted production. Examples include
oil refineries, power plants, and automated assembly lines.

Intermittent Operations Process:

Intermittent operations processes involve the production of goods or services in batches or
intermittent intervals. The production occurs periodically or based on specific orders or
demand. These processes are characterized by flexibility and the ability to adapt to different
products or variations in customer requirements. Examples include custom furniture
manufacturing, restaurant service, and construction projects.

b) VED Analysis (Vital, Essential, Desirable Analysis):

VED Analysis is a technique used in inventory management to categorize items based on their
criticality and importance for the operations of an organization. It helps prioritize the items for
effective inventory control and management. The analysis categorizes items into three groups:

1. Vital: Items categorized as "Vital" are critical for the organization's operations. Their
unavailability can cause severe disruptions or halt the production process. These items have a
high impact on the organization's functioning, and managing their inventory is of utmost
importance.

2. Essential: Items categorized as "Essential" are necessary for the organization's operations,
but their unavailability does not have an immediate severe impact. However, their absence can
lead to delays, inefficiencies, or increased costs. These items require careful management and
attention.

3. Desirable: Items categorized as "Desirable" have the least criticality for the organization's
operations. Their unavailability may not significantly impact the production process or overall
functioning. These items can be managed with more flexibility and lower inventory levels.

By categorizing items using VED Analysis, organizations can prioritize their focus and
resources on managing the most critical items effectively, ensuring smooth operations and
reducing the risk of disruptions.

c) Paraphrase of the process of Capacity Planning:

Capacity planning is the systematic process of determining and managing an organization's
ability to meet current and future demands for its products or services. It involves analyzing
and evaluating the organization's current and projected demand patterns, understanding the
available resources, and making informed decisions to optimize the utilization of resources
and meet customer needs effectively.

Paraphrased: Capacity planning is a structured procedure that involves assessing and

controlling an organization's capability to fulfill existing and future demands for its goods or
services. It encompasses analyzing and assessing the current and anticipated patterns of
demand, understanding the resources at hand, and making well-informed choices to optimize
resource utilization and adequately satisfy customer requirements.

Q3) a) Relate the various criteria considered while selecting appropriate

operation process for food processing unit. [10]
OR
b) Illustrate the concept of forecasting as a planning tool
A) When selecting an appropriate operation process for a food processing unit, several criteria
are typically considered. These criteria help ensure that the chosen process aligns with the
specific requirements and characteristics of the food processing industry. Here are some key
criteria:

1. Product Characteristics: The nature of the food product, such as its perishability, sensitivity
to temperature or handling, and required quality standards, plays a crucial role in selecting the
operation process. For example, delicate or highly perishable products may require processes
that minimize handling and ensure rapid processing and packaging to maintain freshness.

2. Production Volume and Demand Variability: The anticipated production volume and
demand variability impact the choice of operation process. High-volume production may favor
continuous processes to achieve economies of scale, while intermittent processes may be
suitable for varying demand patterns or specialized product lines.

3. Food Safety and Hygiene Requirements: Food processing units must adhere to stringent
safety and hygiene regulations. The operation process should comply with food safety
standards, such as Hazard Analysis and Critical Control Points (HACCP) guidelines, to ensure
proper handling, sanitation, and prevention of contamination risks.

4. Process Flexibility and Customization: Some food processing units may require the ability
to customize products or handle different recipes or variations. In such cases, processes that
offer flexibility, modularity, or easy changeovers may be preferred to accommodate diverse
product offerings.

5. Equipment and Technology Availability: The availability and suitability of equipment and
technology for the chosen process are important factors. Food processing units consider the
availability of specialized machinery, automation capabilities, energy efficiency, and
compatibility with food handling requirements.

6. Cost Efficiency and ROI: The overall cost implications, including capital investment,
operational costs, labor requirements, and return on investment (ROI), are critical
considerations. The chosen operation process should balance cost-efficiency with the desired
level of productivity, quality, and competitiveness in the market.

7. Environmental Impact: Sustainable and environmentally friendly practices are increasingly

important in the food industry. The operation process should consider factors such as waste
management, energy consumption, water usage, and the potential for pollution or emissions
reduction.

8. Regulatory Compliance: Compliance with local, national, and international regulations

governing food processing, labeling, and packaging is crucial. The chosen operation process
should align with relevant regulations and support traceability, labeling accuracy, and product
safety requirements.

By evaluating these criteria, food processing units can make informed decisions when
selecting an operation process that best suits their specific needs, ensuring efficient
production, product quality, and compliance with industry standards and regulations.

B) Forecasting is a planning tool used to predict future events or trends based on historical
data, statistical models, and expert judgment. It helps organizations anticipate and prepare for
future demand, market conditions, resource needs, and other key factors that impact decision-
making and strategic planning. Here's an illustration of the concept of forecasting as a
planning tool:

Let's consider a retail company that sells clothing. The company wants to plan its inventory
levels for the upcoming holiday season, which is known to be a peak period for sales. To make
informed decisions, the company utilizes forecasting as a planning tool.

1. Data Collection: The company gathers historical sales data from previous holiday seasons,
including sales volume, revenue, and customer behavior. This data becomes the foundation for
forecasting.

2. Trend Analysis: The company analyzes the historical sales data to identify patterns and
trends. For example, they may observe a consistent increase in sales during the holiday season,
indicating a positive sales trend.

3. Statistical Modeling: The company employs various statistical techniques, such as time
series analysis or regression analysis, to develop forecasting models. These models use
historical data to project future sales based on identified patterns and relationships.

4. External Factors: The company considers external factors that can impact sales during the
holiday season, such as economic conditions, consumer trends, and competitor activities.
These factors are integrated into the forecasting models to enhance accuracy.
5. Forecast Generation: Using the forecasting models, the company generates predictions of
future sales for the upcoming holiday season. The forecasts provide estimates of expected
sales volume, revenue, and customer demand.

6. Decision Making: With the forecasts in hand, the company can make informed decisions
related to inventory planning, production scheduling, staffing, marketing strategies, and
financial budgeting. For example, based on the projected sales volume, the company can
determine the optimal inventory levels and reorder points to meet customer demand while
avoiding excessive stock or stockouts.

7. Monitoring and Adjustments: As the holiday season progresses, the company monitors
actual sales performance against the forecasted values. If deviations occur, the company can
analyze the reasons behind the variances and make necessary adjustments in real-time, such as
revising inventory levels or modifying marketing campaigns.

By utilizing forecasting as a planning tool, the retail company can make more accurate and
informed decisions, optimize resource allocation, mitigate risks, and capitalize on market
opportunities. It helps them align their operations with anticipated demand, improve
efficiency, and enhance overall business performance.

Q4) a) Categorize various inventory control techniques and appraise the inventory
control policies with respect to ABC Analysis. [10]
OR
b) M/s Unique Carb Tooling Company buys its requirement of component
at the rate of Rs. 10 each from a local vendor every quarter. The average
monthly requirement of component is 600 nos. 10% extra components
are procured to take care of in-process rejection. The procurement cost
and inventory carrying cost have been calculated at Rs. 50 per order and
20% of average inventory investment. [10]
Calculate :
i) Economic Order Quantity to optimize the cost.
ii) What is the total inventory cost of existing inventory policy?
iii) How much company can save by switching over EOQ buying
inventory policy?

A) a) Categorizing various inventory control techniques:

1. Economic Order Quantity (EOQ): EOQ is a technique used to determine the optimal order
quantity that minimizes total inventory costs. It takes into account factors such as carrying
costs, ordering costs, and the usage rate of inventory.

2. Just-in-Time (JIT): JIT is an inventory control technique that aims to reduce or eliminate
inventory by receiving materials and producing goods only when they are needed. It focuses
on tight coordination between suppliers and manufacturers to ensure timely delivery and
production.

3. Material Requirements Planning (MRP): MRP is a computer-based inventory control

technique that uses a bill of materials, master production schedule, and inventory data to
determine the quantity and timing of materials needed for production.

4. Safety Stock: Safety stock is a buffer inventory held to protect against uncertainties such as
unexpected demand fluctuations, supply disruptions, or lead time variations. It helps prevent
stockouts and ensures continuity of operations.

5. Just-in-Case (JIC): JIC is an inventory control technique that emphasizes holding excess
inventory as a precautionary measure. It aims to provide a buffer against uncertainties and
reduce the risk of stockouts. However, it comes with higher carrying costs.

6. ABC Analysis: ABC Analysis is a technique for classifying inventory items based on their
value or importance. It categorizes items into three groups: A, B, and C, based on criteria such
as annual usage value or frequency of sales. This classification helps prioritize inventory
management efforts.

b) Appraising inventory control policies with respect to ABC Analysis:

ABC Analysis helps in determining the appropriate inventory control policies for different
categories of items:

1. Category A: Items categorized as A are high-value or high-impact items that represent a

significant portion of the inventory investment. These items typically have a high annual usage
value but a relatively low quantity. For Category A items, inventory control policies should
focus on accuracy, tight control, and frequent review. This may involve implementing
techniques like EOQ, JIT, and frequent monitoring to ensure efficient management of these
critical items.
2. Category B: Items categorized as B have moderate value and usage, falling between
Categories A and C. These items require a balanced approach to inventory control. Policies
may include periodic review, forecasting, and maintaining an appropriate level of safety stock.
The frequency of review and reorder may be lower compared to Category A items.

3. Category C: Items categorized as C are low-value or low-impact items that represent a

smaller portion of the inventory investment. These items typically have a high quantity but a
low annual usage value. Inventory control policies for Category C items may involve less
frequent review, higher reorder points, and automated replenishment systems. The focus is on
minimizing administrative costs and ensuring the availability of these less critical items.

By utilizing ABC Analysis, companies can allocate their inventory control efforts and
resources more effectively. It helps identify the items that require stricter control and attention
while allowing for more relaxed policies for items of lesser significance. This approach
optimizes inventory management and ensures that resources are allocated appropriately based
on the value and impact of each inventory item.

B) To calculate the values, we need to follow these steps:

i) Calculate the Economic Order Quantity (EOQ):

EOQ formula: EOQ = √[(2DS) / H]
Where:
D = Annual demand or usage = Monthly requirement * 12 = 600 * 12 = 7200
S = Ordering cost per order = Rs. 50
H = Holding cost as a percentage of the inventory value = 0.2 = 20%

Substituting the values into the formula:

EOQ = √[(2 * 7200 * 50) / 0.2]
EOQ = √(720000 / 0.2)
EOQ = √3600000
EOQ ≈ 189.74 (approx.)

Therefore, the Economic Order Quantity (EOQ) to optimize the cost is approximately 190
units.
ii) Calculate the total inventory cost of the existing inventory policy:
Total inventory cost = Ordering cost + Carrying cost

Ordering cost = (Annual demand / EOQ) * Ordering cost per order

Ordering cost = (7200 / 190) * 50
Ordering cost ≈ Rs. 1894.74 (approx.)

Carrying cost = Average inventory investment * Holding cost

Average inventory investment = (EOQ / 2)
Average inventory investment = (190 / 2)
Average inventory investment = 95

Carrying cost = 95 * 0.2 * 10

Carrying cost = Rs. 190

Total inventory cost = Ordering cost + Carrying cost

Total inventory cost = Rs. 1894.74 + Rs. 190
Total inventory cost = Rs. 2084.74

Therefore, the total inventory cost of the existing inventory policy is approximately Rs.
2084.74.

iii) Calculate the savings by switching over to EOQ buying inventory policy:
Savings = Total inventory cost (existing policy) - Total inventory cost (EOQ policy)
Savings = Rs. 2084.74 - Total inventory cost (EOQ policy)

To calculate the Total inventory cost for the EOQ policy, we use the EOQ quantity calculated
in step i):

Ordering cost = (Annual demand / EOQ) * Ordering cost per order

Ordering cost = (7200 / 189.74) * 50
Ordering cost ≈ Rs. 1895.09 (approx.)

Carrying cost = Average inventory investment * Holding cost

Average inventory investment = (EOQ / 2)
Average inventory investment = (189.74 / 2)
Average inventory investment = 94.87 (approx.)

Carrying cost = 94.87 * 0.2 * 10

Carrying cost = Rs. 189.74 (approx.)

Total inventory cost (EOQ policy) = Ordering cost + Carrying cost

Total inventory cost (EOQ policy) = Rs. 1895.09 + Rs. 189.74
Total inventory cost (EOQ policy) = Rs. 2084.83 (approx.)

Savings = Rs. 2084.74 - Rs. 2084.83

Savings ≈ - Rs. 0.09

Therefore, by switching over to the EOQ buying inventory policy, the company would save
approximately Rs. 0.09.

Q5) a) Compose Generic Supply Chain Structure for new start-up of vegetable
and fruit selling company. The company receives the orders on their
Android and iOS APP. Workable assumptions can be considered. [10]
OR
b) Draw the product process matrix and map various types of industry
operation processes on the same.

A) A generic supply chain structure for a new start-up vegetable and fruit selling company,
considering the company receives orders on their Android and iOS app, could be as follows:

1. Suppliers:
- Farmers: The company establishes relationships with local farmers or agricultural
cooperatives who can provide a consistent supply of fresh vegetables and fruits.
 - Packaging Suppliers: Suppliers that provide packaging materials, such as crates, boxes, or
bags, for storing and transporting the produce.

2. Procurement:
- Order Management System: The company utilizes an order management system integrated
with their Android and iOS app to receive and process customer orders in real-time.
- Inventory Management: The procurement team monitors inventory levels, forecasts
demand, and places orders with suppliers to ensure an adequate supply of vegetables and
fruits.

3. Warehousing and Storage:

- Storage Facilities: The company maintains temperature-controlled warehouses or storage
facilities to preserve the quality and freshness of the produce.
- Inventory Tracking: The company utilizes inventory management software to track the
stock levels, rotation of products, and manage expiration dates.

4. Packaging and Quality Control:

- Sorting and Grading: The company employs a team to sort and grade the fruits and
vegetables based on quality, size, and ripeness.
- Packaging: The produce is packaged in appropriate containers or packaging materials,
considering factors like product protection, freshness preservation, and branding.

5. Distribution and Logistics:

- Delivery Fleet: The company operates a fleet of delivery vehicles, such as vans or trucks,
to transport the packaged produce to customer locations.
- Route Optimization: Routing software is utilized to optimize delivery routes, considering
factors like distance, traffic, and time windows.
- Last-Mile Delivery: Delivery personnel use the Android and iOS app to receive order
details, navigate to customer locations, and ensure timely and accurate delivery.

6. Customer Interface:
- Android and iOS App: The company's Android and iOS app allows customers to browse
and select products, place orders, make payments, and track their deliveries.
- Customer Support: The company provides customer support through various channels like
in-app chat, phone, or email, to address queries, resolve issues, and provide assistance.
7. Customer Feedback and Analytics:
- Feedback Mechanism: The company encourages customers to provide feedback and
reviews on the app, website, or through surveys to understand their preferences and improve
service.
- Data Analysis: The company analyzes customer data, order patterns, and feedback to gain
insights, identify trends, and make informed decisions regarding product assortment, pricing,
and promotions.

It's important to note that this is a generic structure, and the specific implementation may vary
based on the scale, location, and operational requirements of the start-up vegetable and fruit
selling company.

B) Apologies, but as a text-based AI model, I am unable to draw visual illustrations. However,

I can describe the product-process matrix and provide an overview of how various types of
industry operation processes can be mapped on it.

The product-process matrix is a framework that helps classify different types of products
based on their characteristics and match them with appropriate process types. It consists of
four quadrants that represent different combinations of product variety and volume. The
quadrants are as follows:

1. Project Process: This quadrant represents low-volume, high-variety products. Examples

include custom-designed buildings, large-scale construction projects, or unique machinery.
These products require highly specialized and flexible processes that are tailored to specific
customer requirements.

2. Job Shop Process: In this quadrant, products have moderate volume and variety. Job shop
processes are characterized by the production of small batches or individual products to meet
specific customer demands. Examples include custom furniture manufacturing, print shops, or
specialty restaurants.

3. Batch Process: The batch process quadrant represents moderate-volume, low-variety

products. It involves producing goods in batches, with each batch comprising a specific
quantity. Batch processes are often used in industries such as pharmaceuticals, food
processing, or apparel manufacturing, where standardization is important but some
customization is possible.
4. Continuous Process: This quadrant represents high-volume, low-variety products.
Continuous processes involve the production of goods or services in a continuous, non-stop
manner. Examples include oil refineries, chemical plants, or mass production of standardized
consumer goods like beverages or packaging materials.

To map various types of industry operation processes on the product-process matrix, you
would consider the characteristics of the products being produced and their corresponding
process types. For example:

- Project-based industries, such as construction or shipbuilding, would be mapped to the

Project Process quadrant.
- Job shop processes would be suitable for industries like custom manufacturing, print and
copy shops, or specialized service providers.
- Batch processes would be applicable to industries like food processing, pharmaceuticals, or
smaller-scale manufacturing.
- Continuous processes would be appropriate for industries like oil refining, chemical
production, or large-scale consumer goods manufacturing.

It's important to note that specific industries or companies may span multiple quadrants based
on the range of products they offer and the level of customization required. The product-
process matrix serves as a helpful tool to understand the relationship between product
characteristics and the appropriate operation processes for efficient production.