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AEREN FOUNDATION REG. NO. F/11724
Subject:- Production Management
Total marks 80
Case 1 (10 Marks)
Plant Location Analysis
A chemical manufacturing company has three options to select the location for a new factory. The costs associated with various factors for the locations are:
Rupees in lacs
Cost element
Site X
Site Y
Site Z
1
Land Development
1000
980
560
2
Building construction
6000
585
580
3
Labour Charges
2250
2000
2000
4
Power generation & maintenance
35
39
42
5
Water charges
50
65
10
6
Raw-material expenses
5005
4900
4200
7
Local taxes
Heavy
Nil
Moderate
8
Transportation expenses
20
15
18
* These charges are on annual basis for the predetermined rate of production.
* Total operating costs could be calculated from the table.
The company also has the following data for further analysis:
(1) It is observed that the cost of living at X,Y and Z is lowest, highest and moderate respectively. But the community facilities are also of the same level. The company has to take a prudent decision because most of the employees are currently resident at urban locations.
(2) The housing facilities available at X, Y and Z are rated poor’, ‘good’ and ‘better’ respectively. In fact the availability of these facilities is equally good at all places.
(3) The climatic conditions are better at Y, X is comparatively very hot during the day and Z has very high humidity. The materials need a dry and cool climate for protection.
Questions
Q.1) Suggest the best decision?
Answer:
Rupees in lacs
Cost element
Site X
Site Y
Site Z
1
Land Development
1000
980
560
CASE-2
(20 Marks)
CAD/CAM Application: Case Study of BMW AG
BMW AG had about 44,000 employees and a turnover of DM 11,480 million in 1983. CAD/CAM are used in both the automobile and motorcycle businesses. The major objectives behind the initial decision to invest in CAD/CAM were to reduce the overall design and development time cycle, to increase productivity by integrating previously independent phases of this cycle, and to optimize design. The first CAD/CAM system was in place in 1978, with 20 workstations, and by the end of 1985, about 200 CAD/CAM workstations had been installed.
The major phases in the design and development cycle of a car are pre-development, concept development, detailed design, prototype manufacture and testing, design of tools and fixtures for production, manufacture of these tools and fixtures, planning and quality control, production of the preserves and finally, series production. Traditionally (i.e. before CAD/CAM was used), each phase was carried out separately and in sequence, and little work could be carried out on a phase until the previous phase had been terminated. With CAD/CAM it is possible to increase the overlap of the design phase and, for example, to pass the data from the first phase to the second before the first phase has been completed. Similarly, new opportunities arising from the use of 3-D representations with CAD/CAM allow the designer to carry out stress-, kinematics-, collision- and assembly-analysis before a prototype has been built. This not only saves time but leads to design optimization.
It is recognized that different application areas have different CAD/CAM requirements. At the time at which CAD/CAM was introduced, no individual CAD/CAM system met all the requirements. The solution of a single CAD/CAM system for all applications was rejected as being unproductive. Such a system would, in general, only have been used in carrying out the most mundane parts of the design. Had such a system been chosen at that time, it would have been of assistance only in drafting. This solution would not have met the objectives mentioned above, nor contributed much to the overall product requirements such as high-quality, high-precision and attractive design. It was therefore decided that the best possible system for an application (i.e. the system meeting a particular application’s requirements as closely as possible) would be applied to that application. This led to the use of several CAD/CAM systems within the company. Each of these systems was required to meet the specific requirements of the application for which it was used. The order in which systems have been installed reflects the benefits expected to arise from their use in a particular application area.
CAD/CAM systems were first installed to support car-body applications as this was the area believed to offer the highest potential productivity gains. Within this area, the individual activities include styling, model manufacturing, digitization of models, production of computer-based model drawings, smoothing of surfaces, model generation by NC milling, tool designing, tool manufacturing (copy-milling) and checking. With CAD/CAM it was found possible to create more body design alternatives within a reduced time, and to increase the quality of the body.
The systems used for body applications are GILDAS, MEFISTO and STRIM. GILDAS is an in-house development for managing the multitude of digitized points produced from models. MEFISTO is another in-house development. It is a surface-milling system with 5-axes capabilities. STRIM (from Cisigraph), a surface modeller based on a multiparametric polynomial representation, is used by the designer to ‘smooth’ the digitized points to form individual patches of surface. These patches are then blended together, and modified if necessary, to from an aesthetically pleasing car body surface. The entire outer body surface is designed using STRIM.
The same system handles many of the inner body parts. Although many of these are not made up of such complex shapes as the external body, they are often designed using information available in the external body description (e.g. offset surfaces). The system is also used to design interior fittings and mountings for parts such as seats and sun visors. It is also used in windscreen design and manufacture; for example to design a developable windscreen surface to fit the requested windscreen outline, or to calculate the best shape of the flat glass that will be moulded to produce a non-developable windscreen surface.
Once the use of CAD/CAM had been successfully demonstrated in car-body applications, CAD/CAM systems were implemented for other applications. In 1979, CABLOS (from AGS) was implemented for schematic diagrams and layouts. In 1980, CD- 2000 (from Control Data Corporation) was implemented for the design and drafting of mechanical parts. CADAM (from Lockheed/IBM) and CATIA were then installed for manufacturing engineering applications such as design of press tools, casts, fixtures and production machine mechanisms, and for preparation of NC machine-tool programs. Finally, 1983 saw the development of GRIVAD, a system for circuit design, electrical wiring layout and electrical-parts-list generation.
BMW purchased CAD/CAM systems wherever possible (i.e. whenever there has been a system available on the market to meet the requirements of a particular application). In-house developments were made when a suitable system was not found on the market. Typical in-house developments have been in linking systems together, and in special car-industry-related applications (e.g. kinematics-analysis of wheel movements, calculations of visible areas and calculation of the wiped area on the windscreen).
It was found that the initial acceptance of the CAD/CAM system is decisive for its long-term success. Another requirement for success is a constructive dialogue between system managers and users, with the user being able to influence the development of the system positively. Other important requirements were found to be high stability and availability of the system, transparency to the user EDP problems, and the possibility of adapting the system to specific requirements of the company (particularly with respect to data inferences, data protection and special applications).
BMW found that the use of CAD/CAM led to saving in time, lower costs, higher flexibility, and increased product quality. It also offered, in some cases, the possibility of carrying out tests that were just not possible before the introduction of CAD/CAM. Reduction of time cycles is particularly appreciated partly because it offers the possibility of creating alternative designs within a given time period, and partly because it offers, for example, at an early stage of styling and design, the chance to reduce the lead times. Quality improvement both produces a better product and results in a reduction of harmonizing and modification work at later stages of the manufacturing process.
The period 1979 to 1984 is seen as a highly successful one in which productivity in several application areas was increased by the introduction and use of specific CAD/CAM systems meeting specific application requirements. Since 1983, BMW has been preparing for a new phase of CAD/CAM development in which further productivity gains can be attained by increasing the integration between systems. One major requirement is to improve the transfer of CAD/CAM data both between applications and with sub-contractors. An in-house development, CADNET uses IGES and VDA formats. BMW is also co-operating with other companies (e.g., on an Esprit project), to attain a unique data interface between systems. Whereas the initial period of CAD/CAM use led to success in specific application areas, productivity gains in the next phase will come both from full integration of systems within the same development phase and from integrating different development phases.
CAD/CAM at BMW is not seen as an isolated technique, but as a major component of CIM. It is therefore developed in conjunction with production automation (NC machine tools, robots, etc.) and communication techniques for improved technical administrative logistics (including process planning and engineering data management).
Questions
1) Analyze the above case and give your comments?
Answer : Kineo CAM the leading software components provider for collision detection and automatic path planning announced in June the availability of its software component to assess and validate the feasibility of a human task.
BMW – Virtual Prototype Division has chosen Kineo CAM’s solution to automatically compute collision-free human tasks; because the most valuable asset of any company is its workforce, and employees’ health should therefore always be at the heart of workplace design. BMW Group uses computer simulations to enable early and
CASE-3
(20 Marks)
Manpower Planning at Mylin
INTRODUCTION
Mylin is a private limited company in Pune, specializing in switch gear manufacturing and has over 1500 employees. The company manufactures a large number of electrical products to rigid specifications, under collaborations with many renowned manufacturers from England, West Germany, France and Switzerland. Important products manufactured by the company include starters, contactors, circuit breakers, switches and switch gears. The company has two Units, one situated inside the city and another in an industrial suburb. It is an expanding organization.
ORGANIZATION STRUCTURE
Mylin has a matrix organization structure which is shown in Fig. 1. The structure at the middle management level is neat and well designed, thus affording a close control over the operations.
The firm has steadily grown over the years, from 1980 to 1991 and particularly from 1985 onwards, as can be seen from Fig. 2.
During the lean period from 1981 to 1985 in which the sales of the company steadily fell, Mylin hired the services of a consultant (in 1982) to make a corporate plan and a manpower plan for the company (Table 10.1). As such, Mylin adjusted its manpower and went on performing well starting from 1985. In 1992, the management decided to plan for a third unit and was reviewing its human resources. It was found that a large number of highly skilled workers would be retiring in the mid nineties and therefore, there was a need to review the manpower of the company.
The Chairman, Gopalan, called a meeting of the senior executives of the company to discuss the issues. He said that the skilled workers were their greatest asset. It was because Mylin had a large number of skilled workers that it had managed to pull through during and after the recession and now they were back on their legs and were poised for a good growth. He said that at a time when they were planning expansion of their facilities and diversifying the products, the importance of skilled workers became even greater. But, he said that according to the personnel officer Sastry, in a decade the company could lose most of the stock of skill, it had at present, as usually, after a year or two a good proportion of new incumbents left their organization and joined the public! private sector giants. It is necessary therefore, for them to find out why this happened, remedy it and plan for generating a manpower with sufficient skill to take over from the veterans who would he retiring in large numbers in 95’. He asked Parate, the industrial engineer to develop a long range plan for manpower and suggest policies for maintaining a healthy human resource in the organization. He also requested all the senior executives, to help him in his efforts in whatever way they could.
Table 1 : Employees Strength Fixed Assets and Sales of Mylin
Sales
Year
Employees strength
Fixed assets
(Rupees, in million)
1980
968
2,714,581
20.83
1981
1183
3,677,303
23.89
1982
1260
5,067,835
22.67
1983
1247
4,906,531
22.35
1984
1263
4,753,644
22.81
1985
1359
4,769,169
20.52
1986
1458
4,947,088
24.71
1987
1515
5,143,585
31.77
1988
1524
5,318,212
36.82
1989
1692
5,603,325
46.52
1990
1799
6,568,049
55.22
1991
1692
10,795,067
54.47
MANPOWER PLANNING STUDY
Parate, the industrial engineer collected the following information on manpower planning at Mylin.
The company did not have a separate manpower planning group. This function was carried out by the personnel officer with the help of the divisions. The company decided its short range manpower requirements depending upon the demand for the products and made shop side adjustments to deal with fluctuations. It decided the manpower level product wise and service wise using industrial engineering techniques, and then, integrated it on the basis of experience and judgement. To prepare the long range forecast, the company used statistical methods, five year plans and forecasts of Indian electrical manufacturing association.
In respect of supervisory, technical and managerial manpower, the company seemed to prefer to follow the policy of replacement of retiring, or dead or leaving personnel and was guided in this respect by the sanctioned positions which were communicated from time to time by the top management of the company.
Recruitment was done by open advertisement. The company had a well equipped Training Department to train apprentices, engineers and technical trainees. Promotions were from within the organization, based on merit rating and performance appraisal. The company used all modern methods to acquaint the employees with current industrial practices. These included:
Demonstrations/lectures by competent authorities arranged in the factory.
2. Deputation of’ employees to various lectures/seminars/training courses arranged by many professional bodies like National Productivity Council (NPC).
ManpowerData
Parate further collected the following data (given as tables in the appendices):
Employees strength for the previous 14 years (Table).
Labour turnover figures (workmen) for the previous four years (Table A 10.2).
3. Codes of labour skill categories (Table A 10.3).
4. Workmen statistics as per wage scale in the city unit (Table A 10.4).
5. Age distribution of employees (Table AlO.5).
Manpower Projections
Parate assumed that trends in the past would continue in the future. Workmen and total strength were predicted for the next four years by the least squares analysis. For this, a straight line relationship, as given below, was assumed.
y = mx+c (1)
where
y = workmen strength or total employees strength
x = time (number of years)
m = slope of straight line
c = intercept of straight line on the y-axis.
From the data collected, the results obtained are given in the table below:
Parameters
Workmen
Total employees
Slope=m
49
79
Intercept = c
558
707
Correlation coefficient
0.9648
0.9699
F value
162
191
Equations predicted for manpower were:
for workmen y = 49.27x + 558 (2)
for employees y = 79.12x + 707 (3)
From the high correlation coefficients, Parate concluded that a high degree of relationship existed between y and x.
NOTE: As the past data for the previous 14 years was taken into consideration to fit a best straight line, this line would have n — 2(14 — 2 = 12) degrees of freedom. From the statistical tables, F value for 12 degrees of freedom should not be less than 10.2 for 95.5 per cent confidence level. F values for these regression lines are more than 10.2, therefore, it was concluded that the regression was significant.
These regression lines were extrapolated to get the values of y for the subsequent four years. The predicted manpower requirements are shown in Table 10.2 (for workmen).
Analysis of Labour Turnover
The industrial engineer, next turned his attention to the analysis of labour turnover in the factory.
Time
Workmen strength
Total employees strength
1992
1297
1864
1993
1346
1973
1994
1395
2072
1995
1445
2132
Table 2 Predicted Manpower* Requirements at the End of Each Year (as on 31st March).
*All figures are in numbers.
The regression analysis did not take into consideration the movement of employees from one grade to another, wastage, dismissals, etc. To take the employee mobility into account, labour turnover figures (workmen) were analyzed by him.
There were 36 trades in the company. For the purpose of analysis, all 36 trades were classified into eight different classes depending upon their common characteristics (classes C1 to C8). Parate assumed that workmen in a particular category would be promoted or transferred to different trades within that category.
The ratios of the number of persons appointed to the total number of persons at the end of a year in each trade (AlT), and the ratios of the number of persons quitting to the total number of persons at the end of a year in each trade (Q/T) were computed. Thus for each trade, four values of AlT and QIT were calculated. The values (AlT, QIT) for each class were grouped in different class widths to get the frequency distribution.
From the frequency distribution, the mean values of AlT and QIT were calculated for each class by the formula:
Mean = E(f x x) IE (f)
where
f = frequency of occurrence
x = mid-value of the class
From the total number of workmen in each class at the end of a year, the proportion of workmen in each class was computed by the formula:
R= Total workmen in a class (1988 to 1991)
Total workmen strength (1988 to 1991)
This ratio was assumed to be constant over the number of years. The results of all the above computations are shown in Table 10.3.
From the total workmen strength (1988 to 1991) at the end of a financial year (31st March) and the total workmen strength (1988 to 1991) at the end of a calendar year (31st December), the average increase in strength from March to December was computed as follows:
The average of the ratio =
total workmen on 31st December — total workmen on 31st March
total workmen on 31st March
This value was computed for the years 1988 to 1991 as 0.03 or three per cent, i.e.
(4767/4628) – 1 = 0.03 (3%)
Table 3 Proportion of Workmen in Each Class
Trade Classes
Ratio R
Mean values
(A/T) (Q/T)
1
0.46
0.123 0.122
2
0.025
0.000 0.0786
3
0.0545
0.175 0.265
4
0.0138
0.125 0.0875
5
0.105
0.241 0.204
6
0.0702
0.260 0.127
7
0.185
0.132 0.0955
M
0.0965
0.133 0.10
Therefore, the predicted workmen strength obtained for the period, March 1992 to March 1995 was increased by three per cent to get the predicted workmen strength at the end of December of each year (Table 4).
Table 4 Predicted Workmen Strength at the End of Each Year from 1992 to 1995
Year
Workmen strength as on
31st March 31st dec.
1992
1297 1330
1993
1346 1385
1994
1395 1435
1995
1445 1485
The predicted total strength was sub-divided to get the strength in each trade/class by multiplying the total strength with proportions R in Table 3 (see Table 5).
Table 5 Classwise Workmen Strength
Workmen strength
Year ending
Trade classes 1992 1993 1994 1995
1 610 638 660 682
2 33 35 36 37
3 72 75 78 81
4 18 19 20 21
5 140 145 151 156
6 93 97 101 104
7 246 255 124 130
From this, Table 6 was prepared to get the predicted values of A and Q from 1992 to 1995.
Questions
Analyze the above case and give your comments?
Case 4
(20 Marks)
Order Promising with ATP
Mitel Corporation, headquartered in Kanata, Ontario, Canada, is an international supplier of telecommunications equipment and services. Its product lines include business telephone systems, semiconductors, public switching systems, network enhancement and gateway products, systems development, and software products. Mitel is active in major growth markets such as computer telephony integration and emerging technology systems. By combining its products, services, and knowledge, the company provides solutions to a variety of telecommunication problems for customers.
One of the company’s products is a telephone, the Superset 430. The dark gray version of the phone is part number 9116-502-000-NA. The order promising record for this product is shown as Figure 6.11. At the top of the header information is the part number, and product description. Next, data on stock status and availability are given. The “Whs” is the warehouse where the stock is located. The “OH” is the on-hand balance, which might overstate availability because some product is already allocated (“Ale”) for a customer, has been picked (“Opk”) and is ready to ship to a customer, or is being inspected for damage (“Dmg”). The net result is the amount of product available (“Avl”) for delivery to customers in the future. The record has a 13-month horizon, of which only 9 weeks are shown on the screen. The starting availability refers to the beginning of the first week of the record.
The detailed record itself is used to develop the available-to-promise quantities that are used to make order promises to customers. The record displays nine weeks of information
Figure 1 Order-Promising Record for Mitel
Product Description
9116-502-000-NA Superset 430 Dark Grey
Schedule/Stock-by-Week
—WHS—OH—ALC—OPK—DMG—AVL—-BKO—ONO—COM—INT-
DIS 1039 1039
APT Horizon: 13 Starting Avl: 1039
Week Ending
3/8
3/15
3/22
3/29
4/5
4/12
4/19
4/26
5/3
Unal Ship
2
8
3
188
93
Sch Rcpt Mfg Rcpt
84
150
Prj OH
1037
1029
1026
838
745
745
829
829
979
Cum B’log Atp
294 745
292 745
284 745
281 745
93 745
745
829
829
979
Figure 2 Update of ATP after Booking Order
-Product————Description————Extended Description———–
9116-502-000-NA SUPERSET 430 DARK GREY
Schedule/Stock-by-Week
—Whs—OH—Alc—Opk—Dmg—-Avl—-Bko—Ono—Com—-Int-
DIS 1039 1039
ATP Horizon: 13 Starting Avl: 1039
Week Ending
3/8
3/15
3/22
3/29
4/5
4/12
4/19
4/26
5/3
Unal Ship
2
8
3
188
93
100
SChRcpt Mfg Rcpt
84
150
Prj OH
1037
1029
1026
838
745
645
729
729
879
Cum B’log
ATP
394
645
392
645
384
645
381
645
193
645
100
645
729
729
879
using the week ending date as the indicator of the week. The row labeled “Unal Ship” (unallocated shipments) contains the booked customer orders that have not yet been allocated or picked. The second line shows scheduled receipts (“Sch Rcpt”), for items for which purchasing is an alternative, and manufacturing receipts (“Mfg Rcpt”), which come directly from the master production schedule and are managed using a different record. The projected on-hand balance (“Prj OH”) is calculated from the booked orders directly, since there is no forecast information included in the Mitel order-promising record. For instance, the starting availability of 1,039 is reduced by the demand of 2 in the week of 3/8 to leave a balance of 1,037. Similarly, the demand of 8 in 3/15 further reduces the balance to 1,029.
The final row on the record totals the cumulative backlog for each week in the future for all subsequent weeks. For week 3/8 it is the sum of the booked orders for the first five weeks, 294. For week.3/1 5 it is the sum of the first five weeks minus the first week. Since the last booked order occurs in week 4/12, that is the last week for which there is a backlog. The ATP row shows that there are 745 units available to promise up to week 4/19 where an MPS quantity increases the availability. Another MPS quantity increases the ATP in week 5/3. The ATP amount (745) is just the difference between the starting availability and the cumulative backlog for the first six weeks. The record says that up to 745 units can be promised to customers anytime over the next six weeks and that another 84 will be available in seven weeks.
Figure 6.12 shows the results of booking an order for 100 telephones for the week of 4/12. The order increases the cumulative backlog by 100 units to 394 and reduces the ATP to 645 in the first six weeks. Salespeople use this record to inform customers when orders can be delivered. The actual booking of the orders is done formally, however, so there can be no game playing with the quantities. Once an order has been placed and is booked, the record is immediately updated for all subsequent order promises. The record is also updated when there is a change in the master production schedule.
Questions
Analyze the above case and give your comments?
Case 5
(10 Marks)
Kawasaki, U.S.A.
Kawasaki produces six different types of motorcycles as well as motorized water skis at its U.S. plant. About 100 different end-product items are manufactured for shipment to the firm’s distribution centers. Although demand for products is highly seasonal, workload at the plant is stabilized by permitting fluctuations in the finished-goods inventory carried at the distribution centers. The company frequently introduces new product designs that represent styling changes in the product. The key elements in gaining sales are price, product
Market Characteristics
Manufacturing Strategy
Manufacturing
Manufacturing Planning and Control System
Task
Features
Master Production Scheduling
Detailed Material Planning
Shop-Floor Systems
Narrow Product
Standard Products
High volume per Product
Seasonal demand
Sales from finished
Goods inventory at distributors
Introduction of new products
Changing product mix
Key customer requirements: Price
Delivery speed (through finished-goods inventory in distribution divisions)
Market qualifies: Basic design and peripheral design changes
Provide a low-cost manufacturing support capability
Support the marketing activity with high delivery speed through finished-goods inventory
High-volume batch and line production process
Short setup times
Small batch size
Low-cost manufacturing
Low labor cost
High material cost
Low overheads (low MPC Costs)
Make-to-stock
Manufacture to forecast
Level Production
Three-Month frozen planning horizon
Manufacture to replenish distribution inventories
Rate-based material planning
JIT-based systems
Kanban containers
JIT flow of material, component and WIP inventory
styling, and product performance. Factors qualifying the firm to compete in the market are quality and delivery speed. Figure 11 1 summarizes characteristics of the market served by ‘Kawasaki along with key e4ments of its manufacturing strategy.
Manufacturing’s task is o produce standardized products in high volume at low cost. Since material costs are significant, major emphasis is placed on reducing plant inventories using just-in-time manufacturing methods. The production process is characterized by short setup times and small production batches using production line and high-volume. batch processes. Standardized assembly operations and repetitive employee tasks characterize the production process.
All the manufacturing planning and control functions in Figure z 1 are performed a Kawasaki; a make-to-stock master production scheduling approach is used. Customer orders for end products are filled from the finished-goods inventory held by the company’s distribution division. The MPS is based on forecast information, and mixed model assembly is used in performing final assembly operations. Substantial emphasis is placed on 1eveling the master production schedule and freezing it over a three-month planning horizon.
A rate-based material planning approach utilizes a simple planning bill of materials to schedule the rates of flow for manufactured and purchased components. A JIT shop scheduling system using kanban containers controls the flow of material between work centers. The JIT system supports low-cost manufacturing with small plant inventory levels and high-volume material flows. Very few personnel and minimal transactions are required in 1anning and controlling production activities.
Questions
1) Analyze the above case and give your comments?
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