The Most Important Questions

Antim Prahar

MBA/BBA

By
Dr. Anand Vyas
1 Types of plant layout and Factors affecting
for Plant Layout/ (Plant Location)
Definition and Purpose:
Plant layout refers to the arrangement of physical facilities, such as
machinery, equipment, workstations, and storage areas, within a
manufacturing plant or industrial facility. The primary purpose of
plant layout is to design an efficient and productive workspace that
maximizes operational efficiency, minimizes costs, and ensures a
safe working environment.
Importance of Plant Layout
1. Improved productivity through optimized workflow and reduced material
movement.
2. Enhanced safety by considering safety guidelines and ergonomics in the layout
design.
3. Cost savings through minimized material handling, reduced inventory levels,
and efficient space utilization.
4. Increased flexibility and adaptability to changes in production requirements.
5. Improved product quality by reducing errors, bottlenecks, and rework.
6. Streamlined operations and reduced lead times.
7. Effective utilization of available resources, such as machinery and equipment.
8. Enhanced communication and coordination between workers.
9. Facilitates easy expansion and modification of the facility.
Types of Plant Layouts
• : There are various types of plant layouts that organizations can choose from
based on their specific needs:
• a. Process Layout: Grouping similar machines or equipment together based on
functions or processes.
• b. Product Layout: Arranging machinery and workstations in a sequential order to
facilitate a smooth flow of production, commonly used in assembly line
manufacturing.
• c. Fixed Position Layout: Bringing equipment and workers to a fixed location to
assemble or construct large, heavy, or complex products.
• d. Cell Layout: Creating self-contained cells to produce specific product families or
components, promoting teamwork and efficient communication.
• e. Combination Layout: Integrating elements of different layouts to meet specific
production requirements, often used in complex manufacturing environments.
Factors affecting plant layout
1. Product or Service Requirements: The nature of the product or
service being produced determines the spatial requirements
and arrangement of equipment and workstations.
2. Production Volume and Variety: The volume of production and
the range of product variations influence the layout design.
3. Workflow and Material Flow: The movement of materials and
work in progress throughout the production process impacts
the layout design.
4. Equipment and Machinery: The type, size, and number of
machines and equipment required for production influence the
layout design.
5. Safety and Ergonomics: Workplace safety and ergonomic
considerations impact the layout design to ensure a safe and
comfortable working environment.
6. Environmental Factors: Environmental conditions such as
temperature, humidity, ventilation, and noise need to be
considered in the layout design.
7. Expansion and Future Growth: The potential for future expansion
and growth should be considered in the layout design.
8. Regulatory and Legal Requirements: Compliance with building
codes, safety regulations, and industry standards impacts the layout
design.
9. Cost and Budget: Budgetary constraints and cost considerations
influence the layout design to achieve cost-effectiveness.
Plant location
1. Proximity to Market: The location should be close to the target market to reduce transportation costs and
ensure timely delivery of products.
2. Availability of Raw Materials: Access to a reliable and cost-effective supply of raw materials is essential to
minimize procurement costs and maintain production efficiency.
3. Transportation and Infrastructure: Adequate transportation networks, such as highways, railways, and
ports, are important for easy movement of goods and materials. Availability of utilities like water,
electricity, and telecommunications infrastructure is also crucial.
4. Labor Availability and Skills: The availability of a skilled and cost-effective workforce in the vicinity is an
important factor. Labor market conditions, including wages, education, and training facilities, should be
considered.
5. Cost of Land and Real Estate: The cost and availability of suitable land and real estate for setting up the
plant affect the overall investment and operational costs.
6. Government Policies and Incentives: Government policies, regulations, and incentives offered by local
authorities can significantly influence plant location decisions. Tax incentives, subsidies, and supportive
industrial policies can attract businesses to a particular location.
7. Political Stability and Legal Environment: Stability in the political and legal environment is important for
business operations. Consideration should be given to factors such as political stability, ease of doing
business, and legal frameworks.
2 Production Technology: Types of Manufacturing
Processes / Productivity
In the simplest sense, production technology is the machinery that
makes creating a tangible physical product possible for a business. To
the small business, this means a workshop at the very least, with more
elaborate operations making use of machines and assembly lines.
Types of Manufacturing Processes
• 1. Casting and molding
• This type of manufacturing process involves pouring molten material into a
mold, where it cools and hardens to create the desired shape.
• Casting is often used to create large, complex parts that would be difficult
or impossible to manufacture using other methods.
• Common casting materials include metal, plastic, and concrete.
• 2. Machining
• This type of manufacturing process uses tools to remove material from a
workpiece to create the desired shape.
• Machining is a versatile process that can be used to create a wide variety of
parts, from simple to complex.
• Common machining tools include lathes, milling machines, and drills.
• 3. Joining
• This type of manufacturing process joins two or more parts together
to create a single, larger part.
• Common joining methods include welding, soldering, and adhesive
bonding.
• Joining is often used to create strong, durable assemblies.
• 4. Shearing and forming
• This type of manufacturing process changes the shape of a workpiece
without removing any material.
• Shearing is used to cut workpieces to size, while forming is used to
bend or shape workpieces.
• Shearing and forming are often used to create simple parts that
would be difficult or impossible to manufacture using other methods.
Productivity Meaning

• Productivity refers to the measure of the efficiency and output of

production or work processes. It represents the ratio of output (goods
or services produced) to input (resources such as labor, capital,
materials, and time) in a given period. A high level of productivity
indicates that an organization or individual is efficiently utilizing
resources to generate a greater output.
Factors Affecting Productivity:
1. Technology and Automation: Advanced technology and automation
systems can streamline operations and increase output.
2. Workforce Skills and Training: Well-trained and skilled employees
contribute to higher productivity levels.
3. Resource Allocation: Effective allocation and utilization of resources
minimize wastage and downtime.
4. Management and Leadership: Clear goals, efficient planning, and
effective communication from management contribute to a
productive work environment.
5. Work Environment: A safe and comfortable work environment
promotes employee well-being and motivation.
6. Process Optimization: Streamlining and optimizing work processes
improve efficiency and output.
7. Quality Management: Investing in quality control measures reduces
defects and contributes to higher productivity.
8. Motivation and Incentives: Employee motivation, recognition, and
appropriate incentives positively impact productivity.
9. External Factors: Market demand, economic conditions, and
government policies can influence productivity.
3 SERVQUAL Model of Measuring Service
Quality
The SERVQUAL model is a popular framework for measuring and
assessing service quality. It was developed by researchers
Parasuraman, Zeithaml, and Berry in the 1980s. The model focuses
on identifying and evaluating customer perceptions and
expectations across five key dimensions of service quality. Here are
the dimensions and components of the SERVQUAL model:
• Tangibles: This dimension assesses the physical aspects and appearance of the service,
including facilities, equipment, and the physical environment.
• Components: Physical facilities, equipment, appearance of personnel.
• Reliability: Reliability refers to the ability to perform the promised service dependably
and accurately.
• Components: Consistency, dependability, accuracy.
• Responsiveness: Responsiveness measures the willingness and promptness of service
providers to provide a quick and helpful response to customer needs or inquiries.
• Components: Promptness, willingness to help, attentiveness.
• Assurance: Assurance involves building trust and confidence in customers through the
competence, knowledge, and courtesy of service providers.
• Components: Competence, knowledge, credibility, courtesy.
• Empathy: Empathy relates to understanding and caring for customers' individual needs,
providing personalized attention, and showing empathy towards their concerns.
• Components: Individualized attention, understanding, caring.
• To measure service quality using the SERVQUAL model, customer perceptions and
expectations are gathered through surveys or questionnaires. The difference between
customers' perceptions and expectations is calculated for each dimension to determine
the service quality gap. A smaller gap indicates higher service quality.
4 Characteristics of Service, Classification of
Service
Characteristics of Service refer to the unique features and qualities that distinguish services from
tangible goods. These characteristics help to understand the nature of services and shape the
way they are marketed, delivered, and consumed. The following are commonly recognized
characteristics of services:

1. Intangibility: Services are intangible, meaning they cannot be seen, touched, or felt before they
are consumed. Unlike physical goods, services lack a physical form. For example, when you visit
a hair salon, you cannot experience the service until it is delivered.

2. Inseparability: Services are often produced and consumed simultaneously. The production and
consumption of services typically occur in the presence of the customer. For instance, when
you visit a restaurant, the cooking, serving, and consumption of food happen together.

3. Variability: Services are highly variable due to the involvement of human factors. Since services
are delivered by people, factors such as individual skills, attitudes, and behaviors can lead to
variations in service quality. For example, the quality of customer service in a hotel may differ
depending on the front desk staff.
4. Perishability: Services are perishable, meaning they cannot be stored or
inventoried for future use. If a service is not consumed or utilized at the time it is
available, it cannot be stored for use later. For instance, an empty hotel room for
the night cannot be saved and sold the next day.

5. Heterogeneity: Services are often heterogeneous, meaning they can vary in

quality from one provider to another or even from one interaction to another.
Since services are often customized to meet individual customer needs,
consistency in service delivery can be challenging to achieve.

6. Customer Involvement: Customers play a significant role in the delivery and co-
creation of services. Unlike goods, where customers are passive recipients,
services require customer participation and interaction. The customer's
involvement can influence the outcome and quality of the service.

7. Time-based: Services are often time-bound and have a temporal element. The
duration and timing of service delivery are crucial. For example, a haircut may
take a certain amount of time, and a flight must depart and arrive at specific
times.
Classification of Service
• Tangible vs. intangible services: Tangible services are those that can be
seen, touched, or felt. Intangible services are those that cannot be seen,
touched, or felt. For example, a haircut is a tangible service, while a tax
preparation service is an intangible service.
• People-based vs. equipment-based services: People-based services are
those that are delivered by people. Equipment-based services are those
that are delivered by machines or equipment. For example, a haircut is a
people-based service, while a car wash is an equipment-based service.
• Professional vs. non-professional services: Professional services are those
that are delivered by people with specialized skills or knowledge. Non-
professional services are those that are not delivered by people with
specialized skills or knowledge. For example, a doctor's visit is a
professional service, while a taxi ride is a non-professional service.
• Business services vs. consumer services: Business services are those
that are delivered to businesses. Consumer services are those that
are delivered to consumers. For example, accounting services are
business services, while hairdressing services are consumer services.
• These are just a few of the many ways to classify services. The specific
classification that is used will depend on the purpose of the
classification. For example, a business might classify services based on
the type of customer they are targeting, while a government might
classify services based on the level of government that provides
them.
5 Factors affecting Service Operations and Service designing
process
1. Customer Demand: The level of customer demand for a service can significantly impact
service operations. High demand may require increased staffing, efficient scheduling,
and streamlined processes to handle customer volume effectively. Conversely, low
demand may result in adjustments to staffing levels and resource allocation.
2. Service Quality: The quality of service provided is a critical factor affecting service
operations. Maintaining consistent and high-quality service requires well-trained staff,
effective processes, and monitoring mechanisms to ensure customer satisfaction and
loyalty.
3. Technology: The use of technology can greatly influence service operations.
Automation, digital platforms, and online self-service options can enhance efficiency,
reduce costs, and improve the overall customer experience. Adopting and leveraging
appropriate technologies can optimize service delivery and streamline operations.
4. Workforce Skills and Training: The skills and training of the service workforce directly
impact service operations. Adequately trained and skilled employees can deliver high-
quality service efficiently. Continuous training programs and skill development
initiatives are essential for maintaining a capable and competent workforce.
5. Operational Processes: Well-defined and efficient operational processes
are crucial for delivering services effectively. Process design,
standardization, and optimization contribute to streamlined operations,
reduced errors, and improved service efficiency.
6. Supply Chain and Logistics: Service operations that rely on physical
resources or external suppliers need to consider supply chain and
logistics factors. Timely availability of resources, efficient inventory
management, and effective coordination with suppliers can impact
service delivery and operational efficiency.
7. Regulatory and Legal Requirements: Compliance with regulatory and
legal requirements is a significant consideration for service operations.
Services in industries such as healthcare, finance, and transportation
often have specific regulations that must be adhered to, influencing
operational processes and resource allocation.
8. Competitive Landscape: The competitive environment can influence
service operations. Organizations must stay aware of their
competitors' offerings, pricing, and service levels to remain
competitive. Market research and strategic planning help
organizations adapt their operations to gain a competitive edge.
9. Feedback and Continuous Improvement: Regular feedback from
customers and employees is vital for identifying areas of
improvement in service operations. Emphasizing continuous
improvement and implementing feedback loops enables
organizations to refine their operations and enhance service quality.
10. External Factors: External factors such as economic conditions,
political stability, and technological advancements can impact
service operations. Organizations need to adapt to these external
influences to ensure the sustainability and success of their service
operations.
 Service designing process
Understand the needs of the customer and the business, and define the
1 Align
scope of the project.
Gather information about the customer, the competition, and the service
2 Research
industry.
3 Ideate Generate ideas for new or improved services.
4 Prototype Build and test prototypes of the new or improved services.
5 Implement Roll out the new or improved services to the customer.

Measure the success of the new or improved services, and make adjustments as
6 Evaluate
needed.
6 Conceptual model of SCM and Supply Chain Drivers
• A conceptual model of Supply Chain Management (SCM) provides a high-level
representation of the key components and relationships involved in managing the
flow of goods, services, and information within a supply chain. Although I cannot
provide an image directly, I can describe the main elements typically included in a
conceptual model of SCM:
• Suppliers: Suppliers are the entities or organizations that provide the raw
materials, components, or services needed to produce the final product. They
play a critical role in the supply chain by ensuring a steady and reliable supply of
inputs.
• Procurement: Procurement refers to the process of sourcing and acquiring the
necessary inputs from suppliers. It involves activities such as supplier selection,
negotiation of contracts, and order placement.
• Production: The production component encompasses the activities involved in
transforming the inputs into finished products or services. This can include
manufacturing, assembly, packaging, and quality control.
• Inventory Management: Inventory management involves the control and
optimization of inventory levels throughout the supply chain. This includes
determining appropriate inventory levels, implementing inventory tracking
systems, and managing stock replenishment.
• Warehousing and Distribution: Warehousing and distribution activities focus on the
storage, handling, and movement of goods within the supply chain. This component
includes managing warehouses or distribution centers, coordinating transportation, and
optimizing logistics operations.
• Transportation: Transportation plays a crucial role in the supply chain by moving goods
between different locations, such as from suppliers to manufacturers, manufacturers to
distributors, and distributors to retailers or customers. It involves selecting appropriate
transportation modes, managing routes, and ensuring timely delivery.
• Demand Planning and Forecasting: Demand planning and forecasting involve estimating
customer demand for products or services to enable efficient production and inventory
management. It includes analyzing historical data, market trends, and customer insights
to predict future demand.
• Customer Relationship Management (CRM): CRM focuses on building and maintaining
strong relationships with customers. It includes activities such as customer engagement,
order management, after-sales support, and gathering customer feedback.
• Information Systems and Technology: Information systems and technology play a critical
role in SCM by facilitating the flow of information across the supply chain. This can
include using enterprise resource planning (ERP) systems, electronic data interchange
(EDI), and supply chain visibility tools to improve communication, collaboration, and
decision-making.
• Performance Measurement and Analytics: Monitoring and measuring key performance
indicators (KPIs) are crucial for evaluating the effectiveness and efficiency of the supply
chain. Analytics and data-driven insights help identify areas for improvement, optimize
processes, and drive informed decision-making.
Supply Chain Drivers
Supply Chain Capabilities are guided by
the decisions you make regarding the
five supply chain drivers. Each of these
drivers can be developed and managed
to emphasize responsiveness or
efficiency depending on changing
business requirements. As you
investigate how a supply chain works,
you learn about the demands it faces
and the capabilities it needs to be
successful. Adjust the supply chain
drivers as needed to get those
capabilities.
7 Types of inventories, inventory control techniques -
EOQ, ABC, VED, FSN, HML and SDE KANBAN
• Raw Materials: Raw materials are the basic inputs used in the production
process. They are the materials that are transformed into finished goods.
Raw material inventories include items such as wood, metal, fabric,
chemicals, or any other materials used in manufacturing.
• Work-in-Progress (WIP): Work-in-progress inventory consists of partially
completed products that are still undergoing the production process. These
are goods that have been started but are not yet finished. WIP inventory
represents the value of the materials, labor, and overhead costs invested in
the manufacturing process.
• Finished Goods: Finished goods inventory refers to the completed and
ready-for-sale products. These are the end products that are held in stock
until they are sold and delivered to customers. Examples include
electronics, clothing, furniture, packaged food items, and automobiles.
• Maintenance, Repair, and Operations (MRO) Inventory: MRO inventory consists of
supplies and spare parts necessary for the maintenance, repair, and operation of
equipment and facilities. These items include tools, lubricants, replacement parts,
safety equipment, and other consumables required to keep operations running
smoothly.
• Safety Stock: Safety stock is a buffer inventory maintained to protect against
uncertainties in demand, supply disruptions, or lead time variability. It serves as a
cushion to prevent stockouts and meet unexpected spikes in demand. Safety
stock helps ensure continuity of operations and customer satisfaction.
• Transit Inventory: Transit inventory refers to goods that are in transit from one
location to another within the supply chain. This includes inventory in transit
between suppliers, manufacturing facilities, distribution centers, or retail stores.
Transit inventory is necessary to bridge the time gap between production and
consumption points.
• Seasonal Inventory: Seasonal inventory is specific to businesses that experience
significant fluctuations in demand due to seasonal variations. Retailers, for
example, stock up on inventory before peak seasons like holidays or back-to-
school periods to meet customer demand during these peak periods.
• Pipeline Inventory: Pipeline inventory represents goods that are in the process of
being transported or delivered. It includes inventory that is en route, such as
goods in transportation by sea, air, rail, or truck, as well as inventory awaiting
customs clearance or in the various stages of distribution.
Inventory control techniques

• Inventory control techniques are strategies and practices used by

businesses to manage and optimize their inventory levels. These
techniques help businesses strike a balance between meeting
customer demand, minimizing stock outs, and minimizing the costs
associated with holding inventory. Here are some common inventory
control techniques:
Economic Order Quantity (EOQ): EOQ is a mathematical formula used
to calculate the optimal order quantity that minimizes the total costs
of ordering and holding inventory. It considers factors such as
demand, ordering costs, and carrying costs. EOQ helps businesses
find the right balance between ordering costs and holding costs to
minimize overall inventory costs.
ABC Analysis: ABC analysis categorizes inventory items into different
groups based on their value and importance.
• A-items are high-value items that require close monitoring and tighter
control.
• B-items are moderate-value items that require less monitoring,
• C-items are low-value items that can be managed with minimal
attention. This technique helps prioritize inventory management
efforts and focus resources on high-value items.
VED Analysis: VED analysis classifies inventory items based on their criticality in
terms of the impact of their stockouts.
• V-items are vital items whose stockouts can cause significant disruption and
must be closely monitored.
• E-items are essential items that are important but have a slightly lower
impact, and
• D-items are desirable items with the lowest impact. VED analysis helps
prioritize inventory management efforts based on criticality.
FSN Analysis: FSN analysis categorizes inventory items based on their
consumption patterns.
• F-items are fast-moving items that have a high rate of consumption.
• S-items are slow-moving items with a moderate rate of consumption, and N-
items are non-moving items that have very low or no consumption.
• FSN analysis helps optimize inventory control by focusing on the movement of
items and determining reorder points accordingly.
HML Analysis: HML analysis categorizes inventory items based on their
unit price or value.
• H-items are high-value items with high unit prices.
• M-items are medium-value items with moderate unit prices, and
• L-items are low-value items with low unit prices. HML analysis helps in
prioritizing inventory management efforts based on the value of items.
SDE Analysis: SDE analysis categorizes inventory items based on their shelf
life, demand, and expiration dates.
• S-items are short-shelf-life items that have a high demand and can
expire quickly.
• D-items are durable items with a longer shelf life and lower demand,
and
• E-items are non-durable items with a longer shelf life and low demand.
SDE analysis helps optimize inventory control by managing the shelf life
and expiration dates of items.
KANBAN
• KANBAN is a concept that relates to obtaining materials or required items “just in
time” for their introduction into the assembly or process. The system of JIT or the
just in time process was initiated by the Japanese firm Toyota in the 1940s.
• KANBAN is a system to signal a need for action. This can be done by cards on a board
(which is the traditional way) or by other devices that are used as markers,
indicating the need to take action. Taiichi Ohno, the man who conceptualized the JIT
system, says KANBAN is the means to achieve JIT.
• A very simple method of implementing KANBAN is the use of a three bin system.
One bin is available on the floor of the production unit using the product.
• A second bin is available at the inventory department of the factory where the
production staff obtains raw materials.
• Finally, a third bin is available at the premises of the supplier who has been selected
to deliver the materials. Each bin contains cards with detailed information showing
inventory numbers available within the bins and the date which they were received.
• Such bins, represented by KANBAN cards, are created for each of the items required
in the production process. The number of KANBAN cards depends upon the actual
number of the items required during each stage of the process.
 8 Process of Production planning and Control (PPC) Routing, Scheduling,
Loading, Just-in-time (JIT)

1. Planning: This involves gathering information about the quantity

to be produced, the dates when delivery has been promised, and
the engineering and drawing specifications.
2. Routing: This involves determining the path that work will follow
and the order in which various operations will be carried out.
3. Scheduling: This involves determining the time that should be
required to perform each operation and also the time necessary to
perform the entire series.
4. Loading: This involves assigning jobs to work centers and to
various machines in the work centers.
5. Dispatching: This involves taking steps to implement the production
program, such as procuring tools and giving workers instructions.
6. Follow-up: This involves checking up on the progress of the
production and taking corrective action if necessary.
7. Inspection: This involves ensuring that goods produced are of the
right quality.
8. Just-In-Time (JIT): This is a philosophy of manufacturing that aims to
create a system that is responsive to the market needs by
eliminating waste and seeking continuous improvement.
Just in Time
• Just-in-time (JIT) is a production strategy that strives to improve efficiency
and profitability by reducing waste and improving flow. JIT is based on the
principle of "pull" rather than "push": goods are produced only when they
are needed, rather than being produced in advance and stored in inventory.
• JIT has a number of benefits, including:
• Reduced inventory costs: Because JIT systems produce goods only when
they are needed, there is less inventory on hand. This can lead to significant
cost savings, as companies no longer have to pay for the storage, handling,
and obsolescence of inventory.
• Improved quality: JIT systems require a high level of coordination and
communication between different parts of the production process. This can
lead to improved quality, as problems can be identified and corrected more
quickly.
• Increased flexibility: JIT systems are more flexible than traditional
manufacturing systems, as they can adapt to changes in demand more
quickly. This can be a valuable asset in a competitive marketplace.
• However, JIT also has some challenges, including:
• Complexity: JIT systems can be complex to implement and manage.
This is because they require a high level of coordination and
communication between different parts of the production process.
• Dependency on suppliers: JIT systems are dependent on suppliers to
deliver components and materials on time and in the correct
quantities. If a supplier fails to deliver, it can disrupt the entire
production process.
• Risk of stockouts: If demand for a product increases unexpectedly, JIT
systems may not be able to meet demand. This can lead to stockouts
and lost sales.
9 Juran’s quality triology and PDCA Cycle
• Juran's quality philosophy is based on three processes: quality planning,
quality control, and quality improvement.
• Quality planning is the activity of developing products and processes to
meet customers' needs. This includes building an awareness of the need to
improve, setting goals, and planning for ways goals can be reached.
• Quality control is the activity of ensuring that products and processes meet
the customer's requirements. This includes measuring quality, identifying
and correcting defects, and preventing defects from occurring.
• Quality improvement is the activity of making changes to products and
processes to improve quality. This includes identifying opportunities for
improvement, implementing changes, and evaluating the results of
changes.
Juran's philosophy
emphasizes the
importance of
prevention over
inspection. He
believed that it is
more cost-effective
to prevent defects
from occurring in
the first place than
to identify and
correct them after
they have occurred.
10 Measuring supply chain performance
• Supply chain performance measure can be defined as an approach to
judge the performance of supply chain system. Supply chain performance
measures can broadly be classified into two categories:
• Qualitative Measures
• For example, customer satisfaction and product quality.
• Quantitative Measures
• For example, order-to-delivery lead time, supply chain response time,
flexibility, resource utilization, delivery performance.
• Here, we will be considering the quantitative performance measures only.
The performance of a supply chain can be improvised by using a multi-
dimensional strategy, which addresses how the company needs to provide
services to diverse customer demands.
11 Demand Forecasting Techniques in Supply
Chain / Aggregate Planning
• Simple Moving Average (SMA): The Simple Moving Average method calculates
the average of historical demand data over a specified period. The steps involved
in using SMA for demand forecasting are as follows: a. Select a fixed time period
(e.g., 3 months, 6 months, etc.). b. Sum up the demand for that period. c. Divide
the sum by the number of periods to calculate the average. d. Repeat the process
for each subsequent period to update the forecast.
• The advantage of SMA is its simplicity, but it may not effectively capture changes
in demand patterns or handle outliers.
• Weighted Moving Average (WMA): The Weighted Moving Average method
assigns weights to different time periods based on their relative importance or
relevance. The steps involved in using WMA for demand forecasting are as
follows: a. Assign weights to each time period based on their significance (e.g.,
recent periods may have higher weights). b. Multiply the demand values by their
respective weights. c. Sum up the weighted demand values. d. Divide the sum by
the total weight to calculate the forecasted demand.
• WMA allows for more flexibility in capturing changing demand patterns by
assigning different weights to different periods.
• Exponential Smoothing: Exponential Smoothing is a popular
forecasting method that assigns exponentially decreasing weights to
historical demand data. The steps involved in using Exponential
Smoothing for demand forecasting are as follows: a. Assign an initial
forecast value for the first period. b. Calculate the forecast for the
next period by combining the actual demand and the previous
forecast using a smoothing factor (alpha). c. Repeat the process for
each subsequent period, updating the forecast using the latest
demand and the previous forecast.
• Exponential Smoothing places more emphasis on recent data while
gradually reducing the impact of older data. The smoothing factor
(alpha) determines the weight assigned to the most recent demand
observations.
Aggregate Planning
• Aggregate planning is a process of determining the overall level of
production, inventory, and workforce required to meet anticipated
demand over a medium-term planning horizon, typically 3 to 18
months. The goal of aggregate planning is to minimize the total cost
of production while meeting demand requirements.
• Aggregate planning is typically used by manufacturing organizations
that produce a variety of products or services that have different
demand patterns. The aggregate plan provides a framework for
making decisions about production levels, inventory levels, and
workforce levels.
12Kaizen/ 7Qc / Six Sigma

• Kaizen is a Japanese word that means "continuous improvement." It

is a philosophy of improvement that focuses on making small,
incremental changes to processes and systems. The goal of kaizen is
to gradually improve the way things are done, leading to a more
efficient and effective organization.
• Kaizen is often used in manufacturing and production, but it can be
applied to any industry or organization. The key to kaizen is to involve
everyone in the organization in the improvement process. This
includes employees, managers, and even customers. By working
together, everyone can identify areas for improvement and make
small changes that can have a big impact.
• There are many different kaizen tools and techniques that can be
used to improve processes and systems. Some of the most common
kaizen tools include:
• Flowcharts: Flowcharts are used to visualize a process and identify
areas where it can be improved.
• Value stream mapping: Value stream mapping is a more detailed type
of flowchart that shows the flow of materials and information
through a process.
• 5S: 5S is a Japanese methodology for organizing and cleaning up a
workplace.
• Kanban: Kanban is a system for managing work in progress.
• Just-in-time: Just-in-time is a system for delivering materials and
products as they are needed.
7 QC tools
• The term "7 QC" refers to the "Seven Quality Control Tools," a set of
techniques developed by Dr. Kaoru Ishikawa, a renowned Japanese
quality management expert. These tools are widely used in quality
management and problem-solving initiatives to identify, analyze, and
resolve issues. The Seven Quality Control Tools are as follows:
• Cause-and-Effect Diagram (also known as Fishbone Diagram or Ishikawa
Diagram): This tool helps identify and understand the potential causes
contributing to a problem or an effect. It uses a graphical representation to
visualize the relationships between various factors and their impact on the
problem.
• Check Sheet: A check sheet is a simple data collection tool used to gather and
record data systematically. It provides a structured format for data collection and
helps identify patterns, trends, or abnormalities.
• Control Charts: Control charts are graphical tools used to monitor and analyze
process variation over time. They provide a visual representation of process
performance and help identify when a process is within or out of control limits.
• Histogram: A histogram is a graphical representation of the distribution of data. It
shows the frequency or count of data within different intervals or bins, allowing
for a visual understanding of the data distribution and potential issues.
• Pareto Chart: A Pareto chart is a bar chart that displays data in descending order
of frequency or importance. It helps identify and prioritize the most significant
factors contributing to a problem or issue, allowing teams to focus their efforts on
the vital few rather than the trivial many.
• Scatter Diagram: A scatter diagram (also known as a scatter plot) is
used to examine the relationship between two variables. It helps
identify any correlation or pattern between the variables and is useful
in determining potential cause-and-effect relationships.
• Stratification: Stratification involves separating data into different
categories or groups based on specific characteristics or criteria. It
allows for a more detailed analysis of data subsets, enabling teams to
identify patterns or variations within each category.
Six Sigma
• Six Sigma is a business management strategy which aims at improving the quality
of processes by minimizing and eventually removing the errors and variations.
The concept of Six Sigma was introduced by Motorola in 1986, but was
popularized by Jack Welch who incorporated the strategy in his business
processes at General Electric. The concept of Six Sigma came into existence when
one of Motorola’s senior executives complained of Motorola’s bad quality. Bill
Smith eventually formulated the methodology in 1986.
• Quality plays an important role in the success and failure of an organization.
Neglecting an important aspect like quality, will not let you survive in the long
run. Six Sigma ensures superior quality of products by removing the defects in
the processes and systems. Six sigma is a process which helps in improving the
overall processes and systems by identifying and eventually removing the hurdles
which might stop the organization to reach the levels of perfection. According to
sigma, any sort of challenge which comes across in an organization’s processes is
considered to be a defect and needs to be eliminated.
• DMAIC has Five Phases
• D – Define the Problem. In the first phase, various problems which need to
be addressed to are clearly defined. Feedbacks are taken from customers
as to what they feel about a particular product or service. Feedbacks are
carefully monitored to understand problem areas and their root causes.
• M – Measure and find out the key points of the current process. Once the
problem is identified, employees collect relevant data which would give an
insight into current processes.
• A – Analyze the data. The information collected in the second stage is
thoroughly verified. The root cause of the defects are carefully studied and
investigated as to find out how they are affecting the entire process.
• I – Improve the current processes based on the research and analysis done
in the previous stage. Efforts are made to create new projects which would
ensure superior quality.
• C – Control the processes so that they do not lead to defects.
13 Bullwhip Effect in SCM , Lean
manufacturing and Agile manufacturing
The bullwhip effect on the supply chain occurs when changes in
consumer demand causes the companies in a supply chain to order
more goods to meet the new demand. The bullwhip effect is a
distribution channel phenomenon, rather problem, in which
demand forecasts yield supply chain inefficiencies. This mostly
happens when retailers become highly reactive to consumer
demand, and in turn, intensify expectations around it. This results
into inefficient asset allocations and high inventory fluctuations,
moving down in the supply chain.
Lean manufacturing and Agile manufacturing
• Lean manufacturing, often referred to as simply "Lean," is a systematic
approach to process improvement and waste reduction within
manufacturing operations. It aims to maximize value creation for
customers while minimizing waste and non-value-added activities.
Developed by Toyota in the 1950s as part of the Toyota Production System
(TPS), Lean has become a widely adopted methodology across industries.
Here are key principles and concepts of Lean manufacturing:
• Value: Lean focuses on understanding and delivering value from the
customer's perspective. Value is defined as any activity or process step that
directly contributes to meeting customer needs and is willing to pay for.
• Value Stream: A value stream represents the end-to-end sequence of
activities required to transform raw materials into finished products or
services. Lean emphasizes the analysis and optimization of value streams
to eliminate waste and enhance flow.
• Sometimes called “lean production,” lean manufacturing is a series of
methods designed to minimize the waste of material and labor while
maintaining or increasing levels of production. This results in a net
improvement in total productivity.

• Lean manufacturing has evolved beyond its original application in

manufacturing and has been applied to other areas, such as
healthcare, service industries, and software development. The
principles and tools of Lean continue to drive operational excellence,
waste reduction, and continuous improvement in organizations
worldwide.
Agile manufacturing

• Agile manufacturing is seen as the next step after lean manufacturing

in the evolution of production methodology. The key difference
between the two is like between a thin and an athletic person, agile
being the latter. One can be neither, one or both. In manufacturing
theory, being both is often referred to as leagile. According to Martin
Christopher, when companies have to decide what to be, they have to
look at the customer order cycle (COC) (the time the customers are
willing to wait) and the leadtime for getting supplies. If the supplier
has a short lead time, lean production is possible. If the COC is short,
agile production is beneficial.
14 EOQ Numerical
• A company wants to determine the optimal order quantity for a
product. The annual demand for the product is 5,000 units, the cost
per unit is Rs 20, and the annual carrying cost per unit is Rs 4. The
ordering cost per order is Rs 100. What is the EOQ for this product?
Solution:
Step 1: Calculate the EOQ using the formula:
EOQ = √((2 * D * S) / H)
Where: D = Annual demand
S = Ordering cost per order
H = Annual carrying cost per unit
Given: D = 5,000 units S = Rs 100 per order H = Rs 4 per unit
Plugging the values into the formula:
• EOQ = √((2 * 5,000 * 100) / 4)
• EOQ = √(1,000,000 / 4)
• EOQ = √250,000 EOQ ≈ 500 units (approximated)
Examples
• A company has an annual demand of 15,000 units for a product. The
cost per unit is Rs 10, the ordering cost per order is Rs 50, and the
annual carrying cost per unit is Rs 2. What is the EOQ for this
product?
• Solution: D = 15,000 units S = Rs 50 per order H = Rs 2 per unit
• EOQ = √((2 * 15,000 * 50) / 2) EOQ = √(1,500,000 / 2) EOQ ≈ 1,732
units (approximated)
• Remember, the EOQ is often rounded to a whole number as it
represents the optimal order quantity.