UNIT – I
PART – A
1. Define Production Planning and Control.Production planning and control can be defined as the “direction and coordination of firms resources towards attaining the prefixed goals”. Production planning and control helps to achieve uninterrupted flow of materials through production line by making available the materials at right time and required quantity.
2. What is the need for PPC?
1. Effective utilization of firms resources.
2. To achieve the production objectives with respect to quality, quantity, cost and timeliness of delivery.
3. To obtain the uninterrupted production flow in order to meet customers varied demand with respect to quality and committed delivery schedule.
4. To help the company to supply a good quality products to the customer on the continuous basis at competitive rates.
3. What are the objectives of PPC?
1. Systematic Planning of production activities to achieve the highest efficiency in production of goods / services.
2. To organize the production facilities like machines, men, etc., to achieve stated production objectives w.r.t. quantity and quality time and cost.
3. Optimum Scheduling of resources.
4. Coordinate with other departments relating to production to achieve regular balanced and uninterrupted production flow.
5. To conform to delivery commitments. 6. Materials planning and control.
4. What is Process Planning or Routing?
Process Planning (Routing): It is concerned with selection of path or route which the raw material
should follow to get transformed into finished product. The duties include, a) Fixation of path of travel giving due consideration to layout. b) Breaking down of operations to define each operation in detail. c) Deciding the set up time and process time for each operation.
5. What is Loading and Scheduling?
Loading and Scheduling: Scheduling is concerned with preparation of machine loads and fixation
of starting and completion dates for each of the operations. Machines have to be loaded according to their capability of performing the given task and according to their capacity. Thus the duties include:
a) Loading the machines as per their capability and capacity. b) Determining the start and completion times for each operation. c) To coordinate with sales department regarding delivery schedules.
6. What is meant by dispatching?
Dispatching: This is the execution phase of planning. It is the process of setting production
activities in motion through release of orders and instructions. It authorizes the start of production activities by releasing materials, components, tools, fixtures and instruction sheets to the operator.
7. What is meant by Expediting?
Expediting: This is the control tool that keeps a close observation on the progress of the work. It is
a logical step after dispatching which is called “follow-up” or “progress”. It coordinates extensively to execute the production plan. Progressing function can be divided into three parts, i.e., follow up of materials, follow up of work-in-process and follow up of assembly.
8. What is meant by Evaluation?
Evaluation: This stage though neglected is a crucial to the improvement of productive efficiency. A
effected by a feedback. The success of this step depends on the communication, data and information gathering and analysis.
9. What is meant by Centralized Planning?
In centralized planning the functions of production planning are controlled by a staff specialist. Centralized planning is more effective in case of multi-product, multi-plant organizations and it takes away the burden of planning from line function to allow them to concentrate on manufacturing.
10. What is meant by Decentralized Planning?
The decentralized planning involves the line staff in planning the production and this is going to take away the majority of their time in performing functions.
11. What is Job Shop Production?
Job Shop Production / industries are characterized by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of job shop is low volume and high variety of products.
12. Mention any two characteristics of Batch Production.
i. Shorter production runs.
ii. Plant and machinery set up is used for the production of items in a batch and set up required to be changed for processing next batch of items.
iii. More number of set ups and hence higher set up cost.
13. Mention any two characteristics of Mass Production.
i. Standardization of product and process sequence and hence line layout (product layout) is recommended.
ii. Dedicated, special purpose machines (SPM) having higher production capabilities and output rates.
iii. Large volumes of products.
14. What are the advantages of mass production?
i. Higher rate of production with reduced cycle time. ii. Higher capacity utilization due to line balancing.
iii. Less skilled operator can man the process.
15. What is meant by Introduction stage in Product Life Cycle (PLC)?
Introduction Stage: This stage marks the introduction of the product into the market. It may be an
entirely new product in the market or old product to the new market. The demand is low as customers do not know much about the product. So the organizations have to invest heavily in advertisement to make the product familiar to the customer. The volume of sales will be low and if proper care is not taken, the chances of product failures are high.
16. What is meant by growth in Product Life Cycle?
Growth: Once the product passes through the introduction stage, the sales starts increasing
because of the acceptability of the product by the customer. The sales growth rate is high because of limited or no competition.
17. What is meant by saturation in PLC?
Maturity (Saturation): The sales growth reaches a point above which it will not grow. This is due
to the market share taken by the competitor’s products. Thus, the sales will be maintained for some period.
18. What is meant by Decline in PLC?
Decline: The competitors will enter the market with better product features, advanced technology
and reduced prices. This is a threat to the very existence of product and sales start declining. If proper care like addition of special features, design changes are not incorporated there comes a time when the products are to be taken back from the market.
19. What is PRE-PRODUCTION in product design process?
PRE-PRODUCTION: In large scale production, it is recommended to carryout a pilot run under
production conditions. This will consist of completely assembling quantity of production from parts or components made by normal production method and using the same degree of skill in the operatives which will be found in the final manufacture. The pre-production run will ensure the quality, reliability of product as per the specifications before the production will be started on commercial basis. Thus the pre-production stage will check:
1. Drawings. 2. Final tools
3. Production techniques and estimates 4. Specifications.
20. What is translation in product design process?
TRANSLATION: At this stage the production engineering department is involved in design work.
The manufacturing feasibility is tested at this stage. The final manufacturing drawings are prepared.
21. What is the purpose of advertising?
Advertising serves many purposes such as:
Providing general information about the general existence of product. Technical information like its functional utility and characteristics.
Drawing attentions of the customers to special features targeted at the customer.
22. Define Durability.
Durability refers to the length of the active life of the product under given working conditions.
23. Define Dependability.
Dependability refers to the reliability with which the product serves its intended function.
24. What is Aesthetic aspect of a product?
Aesthetic aspect refers to the “external look good” aspect of the product and it is concerned with moulding the final shape around the basic skeleton. Aesthetic aspects help the sell function of the product by attracting the customers and creating the first impression about the product.
25. Define Standardization.
Standardization is a tool for variety reduction – “Standardization is a process of defining and applying the conditions necessary to ensure that given range of requirements can normally be met with a minimum of variety and in a reproducible and economic manner on the basis of the best current techniques”.
26. Define Simplification.
Simplification – “a process of reducing types of products within a definite range”.
27. Define Specialization.
Specialization – “a process where in particular firms concentrate on the manufacture of the limited number of product types”.
28. What are the objectives of Standardization? Objective of Standardization
Interchangeability of parts, components, etc. Keeping the variety minimum.
Helps to achieve a better control due to reduced variety.
29. What are the advantages of Simplification?
The advantages of simplification (minimum variety) are:
1. Reduce inventories of materials and component parts. 2. Reduced investments in plant and machinery.
3. Reduced space requirements of storage. 4. Ease of planning and control.
30. What are the essential steps in control activity?
The essential steps in control activity are: Initiating the production
Progressing
Corrective action based upon the feedback and reporting back to the Production Planning.
31. What is Production Control?
32. Explain some functions of PPC in job production. Job Production – Functions of PPC
(a) Materials are purchased on receipt of the order.
(b) Standard tools are stocked and special tools are either made in house or purchased from outside.
(c) Process planning activity normally does not exist. Based upon the drawings and specification supervisor decides the work methods, fixes up the machines and estimates time for completion of the operation.
33. Explain some functions of PPC in Batch Production. Batch Production-Functions of PPC
Functions are more complex.
(i) Materials control and tools control are more important and systematic stock replenishment system is essential.
(ii) Detailed route sheets (Process sheets) are prepared.
(iii) Loading and scheduling are to be worked out with greater details.
(iv) Progressing function is crucial as the detailed data is to be collected on the progress of the work.
34. Explain some functions of PPC in continuous production. Continuous Production – PPC Functions
(a) Materials function is critical.
(b) No tools control because of nature of the plant. (c) No process planning activity.
(d) Scheduling is restricted to final quantity required.
(e) Progressing requires only recording of final production quantity.
35. Define Breakeven Analysis.
Break – even analysis establishes the relationship among the factors affecting profit. It indicates at what level cost and revenue are in equilibrium. It is a simple method of presenting to management the effect of changes in volume on profit. The detailed analysis of break – even data will help the management to understand the effect alternative decisions that convert costs from
36. Mentions some assumptions in break even analysis.
1. Selling prices will remain constant at all sales levels (Quantity discounts are not available) 2. There is a linear relationship between sales volume and costs.
3. The costs are divided into two categories – Fixed costs, those costs which does not vary with volume (quantity) and variable costs will be varying in direct proportion to quantity.
4. Production and sales quantities are equal. (There is no inventory) 5. No other factors will influence the cost except the quantity
37. Define Break – Even Point.
Break – even point refers to the level of sales (sales volume) at which the sales income (revenues) equal the total costs. It is a point at which the profit is zero. The quantities produced (sold) above break – even point result in profits and quantity below break-even point result in losses. The break – even point is reached when then fixed costs are completely recovered.
38. Define margin of safety in break even point (BEP).
Margin of safety is the difference between the existing level of output and the level of output at BEP.
Sales at BEP
Margin of safety = 100
Sales
39. Define angle of incidence in BEP.
This is an angle at which the sales line cuts the total cost line. The management aims at large angle of incidence because large angle of incidence indicates a high profit rate. A narrow angle will show that even fixed overheads are absorbed and relatively low rate of return.
40. Define cost volume profit analysis (CVP).
Cost – volume – profit analysis is concerned with the effect of change in costs, volume and selling price on profits. It is a useful technique for planning the profits (budgeting) pricing decisions, sales mix decisions and production capacity decisions. Based upon the concept of fixed and variable costs, it is possible to determine break-even sales volume to calculate the sales level necessary to generate desired profits and answer many questions that arise during management planning.
41. A manufacturing firm incurs a fixed cost of Rs.18000. The variable costs accounts Rs.8 per unit and selling price is Rs.13.
Find the number of pieces to be produced to break – even. Solution:
Fixed Cost (F) = 18000
Variable cost (a) = 8 Rs./unit Selling price (b) = 13 Rs./unit
Fixed Cost F 18000 BEP Contribution b a 13 8 =3600 pieces 42. Define cost in PPC.
Cost is the amount of resources sacrificed or given up to achieve a specific objective which may be the acquisition of goods or services. Costs are always expressed in money terms, e.g., a manufacturer incurs costs in buying materials and in hiring labour, etc.
43. Define cost centre.
Cost centre is defined as “a location or item of equilibrium, (or group of these) for which costs may be ascertained and used for the purpose of cost control”.
44. Classify cost.
Classifications of costs are based on the following:
1. Natural characteristics (material, labour and overhead) 2. Changes in activity of volume (fixed, variable, mixed)
3. Degree of traceability to the product (direct cost, indirect cost)
4. Costs for analytical and decision-making (sunk costs, opportunity costs, controllable and non-controllable, differential, imputed costs)
45. Define opportunity costs.
Opportunity cost is defined as the benefits lost by rejecting the best competing alternative to the one chosen. The benefit lost is usually the net earnings of profits that might have been earned from the rejected alternative.
46. Define sunk costs.
It is an expenditure for equipment or productive resources which has no economic relevance to the present decision – making process. It is a cost that has either already been incurred or is yet be incurred but will be same no matter which alternative course of action is selected. Generally, it is known as unavoidable cost.
47. Define controllable and non controllable cost.
A controllable cost is the cost over which a manager has direct and complete decision authority, ie., the manager has complete control over these costs, e.g., indirect labour, cutting tool, lubricants.
A cost which cannot be influenced by the action of the specified member of an organization is referred to an uncontrollable cost.
48. Define imputed costs.
Imputed costs are costs not actually incurred in some transaction but which are relevant to the decision as they pertain to a particular situation. These costs do not enter into traditional accounting systems, e.g., interest on internally generated funds, rental value of company owned property, etc.
PART – B
1. Explain in detail the functions of PPC.The main Functions of PPC
1. Materials function: Raw materials, finished parts and bought out components should be
made available in required quantities and at required time to ensure the correct start and end for each operation resulting in uninterrupted production. The function includes the specification of materials (quality and quantity) delivery dates, variety reduction (standardization) procurement and make or buy decisions.
2. Machines and equipment: This function is related with the detailed analysis of available
production facilities, equipment down time, maintenance policy procedure and schedules. Concerned with economy of jigs and fixtures, equipment availability. Thus, the duties include the analysis of facilities and making their availability with minimum down time because of breakdowns.
3. Methods: This function is concerned with the analysis of alternatives and selection of the
best method with due consideration to constraints imposed. Developing specifications for processes is an important aspect of PPC and determination of sequence of operations.
4. Process Planning (Routing): It is concerned with selection of path or route which the raw
material should follow to get transformed into finished product. The duties include, a. Fixation of path of travel giving due consideration to layout.
b. Breaking down of operations to define each operation in detail. c. Deciding the set up time and process time for each operation.
5. Estimating: Once the overall method and sequence of operations is fixed and process sheet
for each operation is available, then the operations times are estimated. This function is carried out using extensive analysis of operations along with methods and routing and a standard time for operation are established using work measurement techniques.
6. Loading and scheduling: Scheduling is concerned with preparation of machine loads and
fixation of starting and completion dates for each of the operations. Machines have to be loaded according to their capability of performing the given task and according to their capacity. Thus the duties include:
a. Loading the machines as per their capability and capacity. b. Determining the start and completion times for each operation. c. To coordinate with sales department regarding delivery schedules.
7. Dispatching: This is the execution phase of planning. It is the process of setting production
activities in motion through release of orders and instructions. It authorizes the start of production activities by releasing materials, components, tools, fixtures and instruction sheets to the operator. The activities involved are,
(a) To assign definite work to definite machines, work centres and men. (b) To issue required materials from stores.
(c) To issue jigs, fixtures and make them available at correct point of use.
(d) Release necessary work orders, time tickets, etc., to authorize timely start of operations.
(e) To record start and finish time of each job on each machine or by each man.
8. Expediting: This is the control tool that keeps a close observation on the progress of the
work. It is a logical step after dispatching which is called “follow-up” or “progress”. It coordinates extensively to execute the production plan. Progressing function can be divided into three parts, i.e., follow up of materials, follow up of work-in-process and follow up of assembly. The duties include:
(a) Identification of bottlenecks and delays and interruptions because of which the production schedule may be disrupted.
(b) To devise action plans (remedies) for correcting the errors. (c) To see that production rate is in line with schedule.
9. Inspection: It is a major control tool. Though the aspects of quality control are the separate
function, this is of very much important to PPC both for the execution of the current plans and its scope for future planning. This forms the basis for knowing the limitations with respects to methods, processes, etc., which is very much useful for evaluation phase.
10. Evaluation: This stage though neglected is a crucial to the improvement of productive
efficiency. A thorough analysis of all the factors influencing the production planning and control helps to identify the weak spots and the corrective action with respect to preplanning and planning will be effected by a feedback. The success of this step depends on the communication, data and information gathering and analysis.
2. Describe Production Cycle.
Production procedure (cycle) starts with the customer and ends up with satisfying the needs of the customer by delivering products. Production Procedure consists of:
1. Sales forecast: The marketing or sales department after a thorough analysis and market
research comes out with details like acceptability of the product by customers, consumers reactions to new modifications and designs. Based upon the analysis of the data, sales department prepares a sales forecast with breakdown of products and models as a function of time periods. Detailed forecast is submitted to the management.
2. Preparation of production budget: The production budget is prepared by the finance
department in consultation with production department. The management reviews the forecast and the budget to take decision regarding annual quantities to be produced.
3. Engineering department to prepare details: The engineering department is instructed to
prepare drawing, B.O.M. (Bill of Materials) specifications or to check and modify the existing ones.
4. Production Planning activity: Production planning activity begins as soon as the technical
information is received from the engineering department. The production planning activity results in a schedule or time table of production. The inventory levels are checked in order to initiate procurement activity of materials. Make or buy decision is made. The production planning section supplies the compete data on methods, process sheets, machine loading and production schedule to the dispatching section.
5. Dispatching: Detailed production orders are dispatched to the shop specifying what, how
and when and where the operations are to be performed.
6. Progressing: Control action is exercised throughout the manufacturing period and progress
is continuously compared with planned schedule so that suitable corrective steps are taken in case of difference between planned and actual production.
7. Inspection: Inspections are carried out and quality control ensures that the desired
specifications are in conformance with the actual.
8. Evaluation: Evaluation is carried out after and before production so that corrective actions
9. The finished product is transferred to stock.
10. Finally, the product is delivered to the customer – Thus, the production procedure requires
the coordinated effort of all the functional departments of the organization. The production procedure is shown in Figure.
SALES FORECAST
Based on market research, the forecast is prepared with Break down of products as function of time
PREPARATION OF PRODUCTION BUDGET Prepared by Finance Dept. and send to Mgt. for review
and decision –making
PREPARATION OF DETAILS BY ENGG. DEPTT. Drawings, part list (B.O.M.) specifications
PRODUCTION PLANNING.
Supplies complete data to dispatching section
AUTHORISATION FOR PRODUCTION Despatch of production orders
CONTROL FUNCTION
Progress is compared with the plan on the continuous basis
INSPECTION, QUALITY CONTROL
To ensure the production of items as per the specifications
EVALUATION OF PRODUCTION SYSTEM And Feedback on improvements
Finished Goods Stock
DISPATCH TO CUSTOMERS Customer F e e db ac k Management
Figure – Production Procedure 3. Compare Production Planning and Production Control.
Production Planning Production Control
1. Production Planning is a pre-production activity.
2. Planning involves the collection, maintenance and analysis of data with respect to time standards, materials and their specification, machines and their process capabilities.
3. Planning is useful to anticipate the problems and devising remedial measure in case the problem arises. 4. Planning is a centralized activity and
includes functions like materials control, tool control, process planning and control.
5. Planning sees that all the necessary resources are available to make the production at right quality and time.
Production control will be in action when production activity begins.
Control is concerned with communication of their information and producing reports like output reports, productivity, rejection rate, etc.
Control involves in taking corrective steps in case of error to match actual performance against the planned performance.
Control is a widespread activity. Includes functions such as dispatching programming and inspection, etc.
Control keeps track of the activities and sees whether everything is going as per schedule or not.
4. Explain with a graph various stages of Product Life Cycle. PRODUCT LIFE- CYCLE
The product once introduced into the market will undergo definite phases. The various phases of life-cycle of a product are represented in figure.
A – Introduction B – Growth C – Maturity D – Decline Sales Volume
Figure. Product Life – Cycle Characteristics of Phases in Product Life-cycle (PLC)
The demand for a product generally tends to follow a predictable pattern called product life-cycle (PLC). Products go through a series of stages beginning with start-up or introduction of product followed by rapid growth, maturity or saturation and finally the decline of demand. The time spans of stages of these products vary considerably across industries. These time spans vary from few weeks or months (for novelty and fashion goods) to years.
Introduction Stage: This stage marks the introduction of the product into the market. It may be an
entirely new product in the market or old product to the new market. The demand is low as customers do not know much about the product. So the organizations have to invest heavily in advertisement to make the product familiar to the customer. The volume of sales will be low and if proper care is not taken, the chances of product failures are high.
Growth: Once the product passes through the introduction stage, the sales starts increasing
because of the acceptability of the product by the customer. The sales growth rate is high because of limited or no competition.
Maturity (Saturation): The sales growth reaches a point above which it will not grow. This is due
to the market share taken by the competitor’s products. Thus, the sales will be maintained for some period.
Decline: The competitors will enter the market with better product features, advanced technology
and reduced prices. This is a threat to the very existence of product and sales start declining. If proper care likes addition of special features, design changes are not incorporated there comes a time when the products are to be taken back from the market.
Characteristics of Phases of PLC are shown in Table.
Characteristics of Phases of PLC
Particulars Introduction Growth Maturity Decline
1. Product Variety High Variety Increasing Standardization Dominant Design feature of product High standard commodity 2. Volume Low Volume Increasing Volume Consolidation High Volume Decreasing Volume 3. Industry Structure Small Beginning of Few large Survivors
4. Form of
Competition Product Characteristics Product Quality and availability Price and dependability Price.
5. Explain the steps in new product design.
PRODUCT DESIGN (DEVELOPMENT) PROCESS
The stages in the product design are shown in figure.
Stage I: CONCEPTION
The draft specifications for the product are laid down incorporating the user requirements at this stage. This stage provides the basis for all subsequent design activities. The specifications of the proposed product must be prepared by marketing department in as much details as possible. The following minimum information on design specifications should be furnished.
The performance requirements
The appearance or styling requirements. The estimated quantity which will be sold.
The maximum price within which the product should be offered. The probable date of introduction of the product into the market.
CONCEPTION
ACCEPTANCE
EXECUTION
Figure. Stages in product design
Stage II: ACCEPTANCE
This is a stage where the design activity of the product begins after the feasibility analysis and model making and calculations of the product is accepted.
Stage III: EXECUTION
On general design considerations, a model is prepared as per the acceptance of specifications in stage II. The models should conform to specifications. The model is going to reveal the detailed feasibility aspects of proposed designs and special considerations. The cost of the product is built at this stage which the production engineers always try to stick to it. Now the advanced techniques like rapid prototyping technique (RPT) and experimental stress analysis techniques are available for prototype, modelling and testing.
Stage IV: TRANSLATION
At this stage the production engineering department is involved in design work. The manufacturing feasibility is tested at this stage. The final manufacturing drawings are prepared.
Stage V: PRE-PRODUCTION
In large scale production, it is recommended to carryout a pilot run under production conditions. This will consist of completely assembling quantity of production from parts or components made by normal production method and using the same degree of skill in the operatives which will be found in the final manufacture. The pre-production run will ensure the quality, reliability of product as per the specifications before the production will be started on commercial basis. Thus the pre-production stage will check:
1. Drawings. 2. Final tools
3. Production techniques and estimates 4. Specifications.
FUNCTIONAL ASPECTS
Once the marketing feasibility exists for the proposed product, i.e., a sufficient demand exists for the product, the functional scope of the product is to be carefully analyzed and the functions are to be defined properly. The functional objectives are to be fixed with respect to the product like:
What are the functions the product is expected to perform?
Whether we should give a single function or multiple functions are to be incorporated. Cost considerations due to offering multiple functions.
The functional analysis helps in analyzing the importance and worth of each function to be built into the product and, hence, affects the design of the product.
Example: A tape recorder has a well defined objective, i.e., to play the cassettes and should give a
good quality sound as output. But it this will not state all aspects. The functional analysis is to be done with respect to:
Whether only tape recorder or should include the additional utilities like radio and/or clock.
Whether should use single cassette or twin cassettes. Whether it should be provided with auto reverse facility. What should be the built in safety measures.
Whether portable or stationary
and many of the other factors need to be analyzed. Now, the trend is towards offering a functional versatility of the product which aims at increasing the range of applications of product to the customer.
For example, a kitchen mixer allows for large number of operations to be performed by additional attachments. Even functional versatility is offered to engineering equipment like machine tools, which are going to perform number of operations and with a minimum of investment and savings in space. The provision of multifunction will create a psychological satisfaction of owning more than one product. For example, a two-in-one tape recorder serves the twin objectives of tape recorder and radio.
Once the functions expected to be serviced by the product are established then operational aspects of the products are to be determined. The product is not only expected to perform its functions satisfactorily but it should be easy to handle and operate at the customers end.
The product is used at different operational conditions and the customers vary with respect to skill and knowledge and the designer’s problem becomes complicated with addition of more functions.
The designer has to analyze the preparation time (set-up time), operation time and put away time with respect to the customer. Thus, the operational aspect becomes all the important as it is the customer who is going to operate at his place and care should be taken to see that the product should have ease of operation.
7. Explain in detail the production aspects of product design. PRODUCTION ASPECTS OF PRODUCT DESIGN
The design will be converted into reality in the production shop where it will be transformed into a physical product to be offered to the customer. So successful transformation of design into a saleable product is a challenge to the organization. This needs a close coordination of production and design department at all stages of manufacturing the product. Thus, a designer cannot design the product in isolation and an increased interaction is need by production and other department the produce design that works and that can be manufactured without any problems.
Thus the concept of “DESIGN FOR PRODUCTION” is the current trend. The following aspects of production should be evaluated:
(A) Selection of Suitable Process
1. Production quantity (volume of production).
2. Information regarding utilization of equipment, capacity of equipment, accuracy, etc. 3. Selection of tooling such as jigs and fixtures.
4. Sequence of operations and methods of assembly. 5. Possibility of applications of new techniques, processes.
(B) Utilization of Materials and Components with a View of
(ii) Selection of method to reduce waste and scrap. (iii)Usage of standard components and parts.
(iv) Interchangeability of components and assemblies within the product.
(C) Selecting the proper tolerances and work method to achieve the specified quality standard
through available processes and equipment. The specification of quality is going to influence the selection of a process.
To achieve a successful transformation of the design, a designer engineer should work in close coordination with production and methods engineer to specify the best available process of transformation keeping in mind the limitations of the production.
8. Explain the Quality, Reliability and Aesthetic aspects of product design. DURABILITY AND DEPENDABILITY
These two factors define the quality and reliability of the product. Durability refers to the length of the active life of the product under given working conditions. Dependability refers to the reliability with which the product serves its intended function. Thus, quality of the product is directly proportional to the quality f inputs (materials, men, etc.), the process of manufacture. Thus, it is a function of cost.
Depending upon the management product policy, a compromise is to be struck between quality and cost. To be in competition the organizations have to give better quality products at reasonable price. Due consideration should be given to various aspects of quality measures, safety and maintenance aspects.
AESTHETIC ASPECT
Aesthetic aspect refers to the “external look good” aspect of the product and it is concerned with moulding the final shape around the basic skeleton. Aesthetic aspects help the sell function of the product by attracting the customers and creating the first impression about the product.
For consumer goods aesthetics is the dominant factor in creating the demand for the product. Styling becomes all the important factor in product design in situations such as changes in fashion and taste, evolution of form and introduction of new ideas to quickly outdate the old ones. If the market is ready to accept creative product and eager to discard old ones in favour of new ones, the styling becomes the main aspect of saleability of product. Designers use variety of
1. Use of Special materials: For housing the components (body) or additional decorations.
For example, use of chromium strips, plastics, wood, glass, fabric materials.
2. Use of Colour: Natural colour of the material concerned or by use of paints, plating,
spraying.
3. Texture as a supplement to colour: Shape denoted by outer contours and similarity to
familiar objects.
4. Use of lines.
5. Scaling the product. 6. Packaging.
Aesthetics has been recognized as an integral part of design and the scope of aesthetics is not limited to only consumer goods but now it has been extended to engineering goods also like machinery and equipment.
9. What are the sources that help to identify a new product?
Before selecting a product, organizations have to carryout SWOT analysis in order to know their strength areas, weaknesses or limitations, opportunities before the organisation and the perceived threat. The organizations have to explore the opportunities (products) which fall under their strength areas so that they are able to cash on the opportunities. Product selection is a team effort.
IDENTIFICATION OF PROFITABLE PRODUCT
1. By chance: It is impossible to ignore the effects of chance. A meeting in a train with a
stranger, sight of a new device, an attendance at a social gathering can create the idea which may lead to a successful product.
2. Desire to utilize idle resources: Many organizations have idle resources like excess cash,
unused plant and equipment, unutilized management talent, surplus distribution channels and the management may conceive an idea of putting these resources to productive use which gives rise to new product.
3. Demand supply gap: If the gap between demand and supply is big, then the products are
selected to bridge this gap.
4. Need to support existing range.
5. Forward and/or backward integration. 6. By spreading the risk.
7. To supplement a declining income.
9. To exploit special skills. ‘To attract prestige. 10. To exploit special assets.
No project should be undertaken until it is viewed objectively from all aspects and a detailed feasibility study is carried out. The personal preference and immediate excitement should not be given any room.
10. Write short notes on Product policy of an organization.
Product policy is the top management (Strategic) decision. Every organization has its own product strategies or polities which form the basis of competing in the market. They become the unique selling proposition (USP) of the company. As per the requirements of the company, it may choose product policies. The same company can opt for different policies for the different products. The various product policies are:
1. Lowest price: The Company will be the price leader and the company is going to offer the
product at the cheapest price than its competitors. Price becomes the criteria used to compete in the market. Though the profit per unit is less, the company is gong to make the substantial profit by the large volume.
2. Highest quality: Some organizations offer highest quality products irrespective of the cost.
They are catering to the needs of special class of customers who value quality as the only criteria to purchase the product.
3. Compromise between cost and quality: Some organizations in order to capture the larger
sections of the customers, offer products with the optimum blend of quality and cost. The products are reasonably of good quality in proportion to its price. These organizations try to give good value to the customers for his money.
4. Safety: Some organizations give maximum importance to safety. Safety is the criteria on
which they compete in the market. For example all home appliances, electrical gadgets, etc. Thus, organizations have to choose the policies suitable for them. This policy is going to influence the design to the large extent.
11. Explain the marketing aspects of product design. MARKETING ASPECTS
Once the product is selected, then it is very important to know the marketability of the product. All further steps are dependent upon the demand for the proposed product and customer acceptability to the product. If there is no potential market, then it is a wasteful exercise to design and manufacture the product. The marketing analysis for the proposed product seeks to give answers to the following questions:
1. Whether the functions that are offered by the product are desirable and acceptable to the customers?
2. What will be the status of the product in the market? (i) Product is already existing?
(ii) Entirely new product about which the customer is totally unaware?
3. What will be the expected demand for the product both short-term and long-term? 4. The factors that influence the demand for the proposed product?
5. What is the level of competition and basis of competition for product? 6. What are the distinguishing features offered by competitors?
7. The price prevailing in the market. 8. Distribution system, etc.
The answers to the above question will furnish the designer with lot of information about the product.
It is easy to estimate the demand for the existing product. But if the product is entirely new, it is offered to the market first time, a detailed market survey is to be carried out to estimate the demand for the product.
The demand for the product depends on many factors. Some of which are related to local conditions and sometimes difficult to define. So, an organization has to be in close touch with the target market it wants to capture so that it is able to feel the trend of the market.
A product that is offered to the customer should be of infinite variety if it is aimed at 100 per cent customer satisfaction. This is practicably impossible. Thus, in practice, product design is an outcome of some sort of compromise between infinite variety and designer’s concept of ideal design. In selling this compromise to customers, the management resorts to advertising. The advertisement campaign is dependent upon the compromised design.
Advertising serves many purposes such as:
Providing general information about the general existence of product. Technical information like its functional utility and characteristics.
Drawing attentions of the customers to special features targeted at the customers. To create demand among passive population of customer.
Educating the customer or telling him what he should want.
12. Explain in detail the Job shop production.
Job Shop Production / industries are characterized by manufacturing of one or few quantity of products designed and produced as per the specification of customer within prefixed time and cost. The distinguishing feature of job shop is low volume and high variety of products.
Examples of products manufactured by job shop industry include space vehicles, aircraft, machine tools, special purpose machines, tooling and jigs and fixtures, custom clothing, prototypes, large turbo generators, material handling machines, construction equipments and the like.
A job shop typically comprises of general-purpose machines arranged in to different departments. Each job demands an unique technological requirements, demands processing on machines in a certain sequence. Because of high variety, scheduling becomes complicated. Planning for job order involves deciding the order or priority for jobs for the jobs waiting to be processed in order to achieve the desired objectives. Job order type production applies to situations where products are to be manufactured against specific requirements of the customer.
Characteristics of Job Order Production
1. High variety of products and low volume/ 2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge because of its uniqueness. 4. Frequently changing set ups.
5. Process (or functional) type layouts for arrangements of facilities. 6. Large inventor of materials, tools and parts.
7. Movement of material is long and interrupted.
8. Relative imbalance of work loads of different departments and labour. 9. Functional departmentation exists.
10. Required numerous job instructions.
11. Detailed planning will evolve around sequencing requirements for each product, capacities for each work centre and order priorities, because of this, scheduling is relatively complicated in comparison to repetitive line manufacture.
12. Many products are run throughout the plant and material handling has to be modified and adjusted to suit different types of products.
Advantages of Job Order Production
Because of general-purpose facilities, variety of products can be processed.
Operators will become more skilled and competent that each job gives them learning opportunity.
Utilization of full potential of operators.
Opportunity to use innovate ideas and creative methods.
Limitations
1. Higher set up and tooling up cost due to frequent set up changes.
2. High inventory level of raw material and in process and hence higher inventory costs. 3. Production planning is complicated.
4. Highly competent and skilled manpower is demanded. 5. Product cost comes to be high.
6. High cost of material handling and larger space requirement.
13. Explain in detail about the Batch Production.
Batch production is characterized by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales. Material tends to be more complex. The facilities can be used for producing another batch of product between two successive productions runs. Batch production is represented as shown in figure.
Figure – Batch Production
Tp = Production period Tc = Consumption period Tp Tc Tp Tc Q u a n t y
Batch production is justified when the production rate exceeds the demand rate. The quantities in batch production are decided based on the balancing of two costs i.e. set up cost and inventory carrying cost.
Batch production aims at satisfying the continuous customer demand for an item. However, the plant is capable of production rate that exceeds demand rate. The shop produces the products to build an inventory and it changes over to other products. When the stock of the first item becomes depleted, the production is repeated to build up the inventory again. The intermittent production caters to make to stock, assemble to order and also make to order manufacturing environments.
Manufacturing equipment machines used in batch production is general-purpose machines, which are designed for higher production rate. For examples, Turret lathes capable of holding several cutting tools are used rather than engine lathes. The machine tools used in batch production are usually combined with specially designed jigs and fixtures. Which increase the production rate. Batch production plants include machine shops, foundries, plastic moulding units and press shops. This also includes some kinds of chemical and pharmaceutical units. Batch quantities may very from few units to many thousands of units.
Characteristics of Batch Production
i. Shorter production runs.
ii. Plant and machinery set up is used for the production of items in a batch and set up required to be changed for processing next batch of items.
iii. More number of set ups and hence higher set up cost.
iv. Amount of supervision required is less compared to job order. v. Plant and machinery are flexible.
vi. Manufacturing lead time and also cost are lower as compared to job order production. vii. Higher level of work in process inventory.
Advantages of Batch Production
Better utilization of plant and machinery. Promotes functional specialization.
Cost per unit is lower as compared to job order production. Lower investment in plant and machinery.
Flexibility to accommodate and process number of products. Job satisfaction exists for operators.
Production planning and control is complex.
Work in process inventory is higher compared to continuous production. Longer production times.
Higher set up costs due to frequent changes in set up.
Lower utilization of production facilities compared to mass production. 14. Explain in detail about the mass production.
Mass Production
Manufacture of discrete parts or assemblies using a continuous process are call Mass production or Repetitive production. When the volumes are very large, a fixed assignment of resources, which otherwise would be risky, is justified. The machineries are arranged in a line or produced layout. Specialized departments will disappear and their place is taken by assembly lines. Material handling systems can automated, thus bringing down the cost of material handling per unit. Automobile assembly line is a typically example of mass production. Product and process standardization exists and typically, all outputs follow the same path. Standardization provides for known and fixed through put time, giving managers easier control of the system and more reliable delivery dates.
Characteristics of Mass Production
1. Standardization of product and process sequence and hence line layout (product layout) is recommended.
2. Dedicated, special purpose machines (SPM) having higher production capabilities and output rates.
3. Large volumes of products. 4. Shorter cycle time of production. 5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and without any back tracking. 8. Production planning and control is easy.
9. Extent of supervision required is less. 10. Material handling can be fully automated. 11. Because of high volume, cost per unit is low.
Advantages of Mass Production
3. Less skilled operator can man the process. 4. Low in process inventory.
5. Production cost per unit will come down due to economics of scale.
Limitations of Mass Production
1. Breakdown of one machine will stop an entire production line.
2. Line layout needs major adjustments/changes with the changes in the product design. 3. High investment in production facilities.
4. Supervision is general rather than specific.
5. Work for operators is monotonous without much challenge. 6. The cycle time is determined by the slowest operation.
15. Compare between various types of Production. Comparison between Various Types of Production
Characteristics Job order Production Batch Production Mass Production
1. Volume of production (quantity)
One or few jobs Limited number of small lots Large quantity
2. Product variety Larger variety Medium or few variety One or few standard products 3. Layout Process or functional layout Process or functional layout Product or line layout
4. Set up time High High and frequency Low
5. Manufacturing
cycle time Large Medium Low
6. Material flow
Discontinuous, non-uniform, travel long
distances. Discontinuous
Uniform and uninterrupted flow 7. Equipment &
machinery General purpose
General purpose with high production rate
Special purpose and dedicated
8. Flexibility High High Very low
9. Production Planning & Control
Complex Complex Simple & routine
11. Cost per Unit High Medium Low
12. Skill of labour Highly skilled Skilled Semi skilled or unskilled
13. Investment Low Medium Highly capital intensive
14. Material handling Manual Manual or semi automatic Automated 15. Plant utilization &
productivity Low Medium High
16. Explain about make to stock production. Make to Stock Production
In this system, manufacture stocks the finished goods (products) in inventory for immediate shipment. This system ensures immediate delivery of good quality, reasonably priced, off the shelf standard products. For example, automobile bearings, ready to wear garments, nuts and bolts, motors, televisions etc. Normally, the customer does not accept delay in delivery and the management is required to maintain adequate stock of finished products. Thus system implies the manufacture of products based on a well-known and predictable demand pattern. Operations management focuses entirely on replenishment of inventory, actual customer orders cannot be identified in the production process. The production volume of each sales units tends to be high and customers delivery time is usually determined by the availability of finished goods inventory. The finished goods inventory acts as a buffer against uncertain demand and stock out situations. The main advantage of this system being the short delivery time and the limitations being high costs of inventory and inability to express customer for the design of the product
Situations for Make to Stock production are:
1. Fairly constant and predictable demand. 2. Products are few and they are standardized. 3. Shorter delivery time expected by the customers. 4. Products having higher shelf life.
Information needed to make a production plan is as follows:
1. Forecasted demand for the planning period. 2. Starting inventory level.
3. Desired ending inventory level.
Make to stock items are generally mass consumed and pass through multiple channels before reaching the end user. Most of the data about customers is not known and hence, feed back from distribution channel will act as an important source of information. Demand is also calculated from these channel members and aggregated for production purpose.
This system is characterized by less complex production, process and product standardization and fairly constant production rate. Distribution system is critical and integration of production and distribution is essential to keep a stable flow of products at the point of consumption and should be responsive to any change. As there is no one contact between producer and the customer, distribution system acts as eyes and ears of organization to support demand forecasting and demand analysis.
17. Explain the following:
i. Make to order production System. ii. Assemble to order Production System. Make to Order
Some companies make or manufacture products after the receipt of the firm order from the customer. Here the production activities will be initiated only after the confirmation of the orders and the products are not supplied from the stock and hence the lead time (the time between ordering the product and delivery) is long.
Make to order production system describes a manufacturing facility in which the final product is usually made from parts/components already designed but may include some custom designed components also. If has many of the base components available along with the engineering designs but the product is not completely specified. The order processing cycle begins when the customer specifies his requirements of the product. The manufacturer also some times assists the customer to prepare product specifications.
Made to order is a demand responsive strategy, and only the product and component designs and some standard raw material and components are held in stock. Examples are, custom tailored clothing, special purpose machinery and product made to customer specifications. Very expensive products are usually made to order.
1. Products are manufactured to customer specifications.
2. Customer can wait till the order is being processed (longer delivery schedule). 3. Product is non standard and expensive to store.
In make to order production system, there is a direct interaction with customers during all the stages of but it is extensive during engineering phase. Manufacturer quotes delivery schedule and price and there is a discussion among the customer and producer regarding alternatives to reduce cost, reduce time to deliver.
In make to order situations, production schedule changes with changes in customer orders from one period to another. In this system, producers build large capacities in anticipation and capacity utilization is lower as compared to make to stock situation. Capacity requirements planning and shop floor control are critical and distribution is less complicated.
Assemble-To-Order Production System
When number of alternative combinations or options is available to customers as in automobiles, consumer electronics and computers and customer is not ready to wait until product is made, manufacturers produce and stock standard component parts. When the customer places the order, the customer does the assembly from the parts/components selected. Since the components are manufactured and stocked, the only the time to assemble is needed before delivering product to the customer. The modular parts approach strategy is normally used here. The assemble to order system aims to combine product customization/variety of make to order system with low cost and shorter lead-time.
18. Compare between Make to Stock, Make to Order and Make to Assemble Systems. Comparison between Make to Stock, Make to Order and Make to Assemble Systems
Particulars Make to Stock Make to Order Assemble to Order
1. Product range Low High Medium / high
2. Production volume High Low Medium
3. Lead time Low High Medium
4. Customer producer
interface Limited / Distant High at sales & design level High at sales level 5. Handling of
fluctuations in demand
Safety stock of product units
Planning of excess capacity & raw material stock
Planning of standard modules & Parts 6. Basis of planning End item forecasts Back logs & marketing intelligence reports Backlogs and trend analysis 7. Inventory level
High F.G. Inventory & associated inventory carrying costs
Low inventory level & associated carrying cost
Major modules / parts held in inventory 8. Product category and Standardized products Special products (high Modular parts/sub
price/ units 19. List applications of BEP.
1. Safety margin: Break – even chart helps the management to know at a glance the profits at different levels of activity and the safety margin refers to the extent to which an organization can afford to loose its sales before it starts incurring losses.
2. It helps to plan the profit: It is useful to calculate the volume needed to attain the target profit. Sometimes the firm aims to generate a particular amount of profit in a specified period. For this purpose, with the help of contribution margin it is convenient to calculate volume of sales necessary to achieve targeted profit.
3. It helps to compute up to what level the sales price can be reduced in competition or to compute additional sales volume required to maintain a particular level of profit.
4. It helps to make the decisions with respect to selection of equipment amongst the alternatives, selection of a process, etc.
5. It helps to take decision regarding make or buy.
6. It helps to decide the product mix and promotion mix.
20. Classify cost based on Natural characteristics. Natural Classification of Costs
This classification refers to the basic physical characteristics of the cost. In a manufacturing company, the total cost of a product includes the following four elements:
(A) Direct material: Direct material refers to the cost of materials which become a major
part of the finished product. They are the raw materials that become an integral part of the finished product and are traceable to specific units of output.
Examples of direct materials are: Raw cotton in textiles, crude oil to make diesel, steel to
make automobile parts. The following groups of materials come under direct material. (i) All materials purchased for a particular job, process or product
(ii) All materials acquired from stores for production. (iii) Components or parts purchased or produced
(iv) Materials passing from one process to another process.
(B) Direct Labour: Direct labour is defined as the labour associated with workers who are
Example: Labour of machine operators, assembly operators.
(C) Direct Expenses: The expenditure incurred (other than direct material and direct
labour) on a specific job or products are included in direct expenses. These are also called chargeable expenses.
Examples: Cost of special layout, design or drawings, hiring special machines for specific
product manufacture, etc.,
(D) Factory overheads: These are also called manufacturing costs. These include the costs
of indirect materials, indirect labour and indirect expenses.
(i) Indirect material refers to materials that are needed for the completion of the product but it is not possible to trace or identify it with end product, e.g., cutting oil, lubricants cannot be charged to specific product.
(ii) Indirect labour refers to the labour hours expended which will not directly affect the composition or construction of the finished product.
Examples: Foreman, shop clerks, material handlers, maintenance employees. Their labour
is considered indirect because it is not economically possible to trace their with specific product. (iii) Indirect expenses are the expenditure incurred by the manufacturing company from the beginning (start) of production to its completion and transfer to finished goods store.
Direct costs and factory overheads together are called conversion costs.
(E) Distribution and administrative overheads: Distribution overheads are also called
marketing or selling overheads. These costs include advertising, salesman salaries, and commission, packaging, storage, transportation and sales administrative costs. Administrative overhead includes costs of planning and controlling of general business operations. All costs which are not charged to production and sales are included in administrative overheads, e.g., Chairman’s salary, fees of board of directors, rent of administrative office.
These costs are represented in the Table:
Table: Costs of Manufacturing Company
1. Direct Material + Direct Labour + Direct Expenses = Prime Cost 2. Indirect Material + Indirect Labour + Indirect Expenses = Factory
Overhead
21. Classify cost based on Activity or volume. Classification Based on Activity or Volume
(A) Fixed Cost: The costs which do not change for a given period in spite of change in
volume of production. This cost is independent of volume of production.
Examples of fixed costs are rent, taxes, salaries of supervisors, depreciation, insurance, etc. Fixed costs are normally expressed in terms of time period.
i.e., per day, per annum, etc.
Fixed costs are represented as shown in figure
Fixed cost does not mean that they never change. They are constant up to specific volume or range of volume.
(B) Variable Costs: These vary directly and proportionately with output. There is a
constant ratio between the change in the cost and change in the level of output. Direct material cost and direct labour costs are generally variable costs. Variable costs results from the utilisation of raw materials and direct labour in production departments.
Variable cost is represented in figure:
10 20 30 40 50 60 Volume
Figure: Fixed Costs 1000
Cost
(C) Mixed Costs: Mixed costs are made up of fixed and variable costs. They are
combination of semi-variable and semi-fixed costs. Because of variable component, they fluctuate with volume, because of fixed component; they will not change in direct proportion to output. Semi fixed costs are those costs which remain constant up to a certain level of output after which they become variable as represented in figure. Semi – variable cost is the cost which is basically variable but whose slope may change abruptly when a certain output level is reached.
1000 2000 3000 4000 5000
Production units
Figure: Variable Cost 1500 1000 500 Variable Cost M at e ria l C o st 1000 2000 3000 4000 Units Produced 4000 3000 2000 1000 T ot al C o st
22. ABC company plans to ceel an article at a local market. The articules are purchased at Rs. 5 on the condition that all unsold articles shall be returned. The rent for the space is Rs. 2000. The articles will be sold at Rs. 9. Determine the number of articles which must be sold (a)To break – even,(b) To earn Rs. 400 as profit. (c) If the company sells 750 articles. Calculate margin of safety and profit.
Solution: Fixed cost F 2000 (a) BEP= contribution b c 9 5 =500 units (b) To earn to profit of Rs. 400.
Fixed cost+Profit F Pr ofit No. of articles to be sold =
contribution b a 2000 400 9 5 =600 units
The company should sell 600 units to earn the profit of Rs. 400. Sales - Sales at BEP
(c)Margin of safety = 100 Sales 750-500 100 = 750 =33.3 percent Profit at 750 units
Profit = Total revenue – Total cost = Total contribution – Fixed cost
23. PQR Limited company has been offered a change to buy between Machine A and Machine B. You are required to compute.
(i) BEP of each machine.
(ii) The level of sales at which both machines earn equal profits? The following data is given
Machine A Machine B
Annual output (in units) 10,000 10,000
Fixed costs 30,000 16,000
Profit at above level 30,000 24,000
The market price of the products is expected to be Rs. 10/unit. Solution:
Particulars Machine
A B
Sales Rs. (10,000 10) 1,00,000 1,00,000
Contribution (fixed cost + Profit 60,000 40,000
Variable cost 40,000 60,000
P/V Ratio (contribution / Sales )
60% 40%
BEP (Fixed cost /P/V Ratio) 50,000 40,000
Contribution per unit 6 4
Variable cost / unit 4 6
(b) Since selling prices of A and B are equal, the machines will earn equal profit when total cost of operations on both machines is equal.
Let X be the output when the total costs on both are equal.
Machine A Total Cost =4x+30,000
Machine B Total cost =6x+16,000 4x+30000=6x+16000
Solving the equation for x
x=7000 units.
24. An analysis of the company reveals the following information
Cost element Variable cost Fixed cost
Direct material 32.8
-Direct labour 28.4
-Factory over heads 12.6 1,89,900
Distribution overheads 4.1 58,400
General administrative overheads 1.1 66,700
Budgeted sales are 18,50,000
Determine
1. Break-even sales volume.
2. The profit at the budgeted sales volume.
3. The profit if the actual sales (a) drop by 10 per cent, (b) increase by 5 per cent from budgeted sales.
Solution:
Total variable costs as percentage of sales=32.8+28.4+12.6+4.1+1.1 =79 percent contribution 100 79 P/V Ratio= 21 percent Sales 100
Total fixed costs = 3,15,000 1. Break – even Sales volume
Fixed cost 315000 BEP=
P / V Ratio 0.2 =1,500,000
2. Profit at budgeted Sales volume Profit = Sales P/V Ratio – Fixed cost
=18,50,000 0.21-31,5000=3,88,500-3,15,000 =73,500
3. Profit when actual sales drop by 10 percent Actual sales = 18,50,000 – 1,85,000=16,65,000
