OPERATIONS

MANAGEMENT-II

23PGP019 - AHONA BISWAS

23PGP038 - ANKIT MEENA
23PGP050 - APOORVA SONKAR
23PGP060 - ASHOO SINGH
23PGP133 - JYOTI DEVI
23PGP331 - SIDDHARTH SINGH
CONTENTS

01 INTRODUCTION

02 METHODOLOGY

03 RESULTS & ANALYSIS

04 CONCLUSION AND DISCUSSION

05 CHALLENGES AND LIMITATIONS

INTRODUCTION

Business selected:
Saket Plywood and Hardware

Objectives:
To understand the raw material demand faced by small furniture business and
identify the major cost drivers.
To study order history and recommend appropriate forecasting methods for future
demand estimation.
To apply Linear programming and create a model to predict the benchmark cost
for materials of a modular kitchen.
To do a cost comparison between hiring and contracting.
METHODOLOGY
Data collection process Sources of Data
PRIMARY DATA
INITIAL PLANNING SOURCES

SECONDARY DATA
PARAMETERS OF THE
SOURCES
STUDY

DATA IDENTIFICATION Tools for Analysis

ABC Analysis
Demand forecasting
DATA COLLECTION
Linear programming (LP)
METHODS
Cost analysis of hiring vs. contractor
RESULTS & ANALYSIS
ABC ANALYSIS
Categorization of inventory:

CLASS A: Represents 75% of total cost volume.

CLASS B: Represents 15% of total cost volume.
CLASS C: Represents 10% of total cost volume.

Results of Analysis:

PLYWOOD: Represents 77% of total cost, classified as Class A.

DOORS, MICA, HINGES, HANDLES, FEVICOL, ENOX CHANNELS: Combined account for
14.5% of total cost, categorized as Class B.
REMAINING ITEMS: Fall under Class C, with Nerolac Probond and Tape being
significant contributors.
Order Forecasting

The Mean Absolute Percentage Error (MAPE) for Plywood forecasting using the naive
method is 48.156%, whereas for the 3-month moving average method, it is 37.6%.
Similar trends were observed across other materials such as Laminate, Door, and Fevicol.
Order Forecasting

The 3-month moving average method demonstrates superiority over the naive method, as
evidenced by the consistently lower MAPE values.
Implementing the 3-month moving average method holds promise for enhancing the
accuracy of order volume forecasting and optimizing inventory management processes.
Cost Analysis: Hiring v/s Contractor based

Hiring Carpenters:
Carpenter: Rs. 400/day
Helper: Rs. 300/day
Overtime VC for Carpenter:
Rs. 400/day
Monthly labor cost: Rs. 26,600
Contractor Based:
Contractor fee: Rs. 1,200/day
Monthly contractor cost: Rs.
31,200
Linear Programming

1. This model allows for the shop owner to give

benchmark estimate to customers on the basis of
number of standard size cabinets in kitchen.
2. It is very useful when dealing with resource
shortage.Since the business in consideration is a
small one that doesn’t really have a warehouse ,the
chances of shortage of resources are always a
concern.
 RECOMMENDATIONS
1. Implement a 3-month moving average method for
forecasting.
2. Cultivate strong partnerships with suppliers that
provide the A and B category items identified
through the ABC analysis.
3. Consider a hybrid approach after analyzing costs:
hiring workers for control, contracting for flexibility,
to optimize efficiency and cost-effectiveness.
4. Use LP for cost estimation and give faster and data
backed material requirement order to minimize
wastage and over ordering.
CHALLENGES AND LIMITATIONS

01 Scale of the project

02 Data chaos

03 Resource constraints

04 Privacy concerns

05 Subjectivity in interview