GUIDE BOOK

SUBJECT CODE & NAME BBA506 -PRODUCTION AND OPERATIONS

Q.No

Write short notes on:

 Operations Strategy as a Competitive Weapon

 Objectives of Operations Management
 Reverse Engineering
 Computer-Aided Manufacturing (CAM)

(Operations Strategy as a Competitive Weapon, Objectives of Operations

Management, Reverse Engineering, Computer-Aided Manufacturing (CAM)) 10
(2.5 marks each)

Answer:

Operations Strategy as a Competitive Weapon:

The development of a customer-oriented corporate strategy needs proper coordination at the

functional level to achieve the overall objectives of the company. The company response is based
on the market environment to keep the information bank updated at all times. Market analysis
makes assessment of the strength of the competitors for adopting or making changes in the
strategy as per the needs of the buyer and offers cost-effective solutions. The information is used
to develop competitive priorities. These priorities help the management to develop the required
services or products suiting the market environment. The competitive priorities enable delivery
of the required products or services at competitive costs. This process would also help enhance
the firm’s capabilities for sustained performance and reliability. Suitable checks and
amendments can be made as required for any shortages and gaps. It is, therefore, very
important to make policy plan flexible and decentralize decision making as per the status of the
authority.

Objectives of Operations Management:

The objectives of operations management overlap with those of production management. As
mentioned in the previous unit, every organization starts with a goal and mission and then
chalks out the activities to achieve these goals. All the activities, primarily those for converting
inputs into required outputs, are planned accordingly. The common objectives of any kind of
organization are:
• Customer satisfaction: Customer satisfaction is vital to the survival of an organization. The
organization researches the expectations of the customer or service to be rendered and decides
on the product. An organization can survive only if its products satisfy the customers on the
basis of the following criteria:
(i) Quality of the product as per acceptable standards
(ii) Easy maintenance and reliability of the product
(iii) Functionality of the product as offered by the seller
• Profitability: The pricing of the product should be competitive to achieve sales. For this, the
market price of products should be competitive and commensurate with the features offered in
the product. A good organization produces the right quality that meets all product
specifications, at optimal cost. The organization should focus on minimizing costs and
maximizing revenue for increasing profitability.
• Timeliness: The product produced or service rendered may be qualitative and cost-
competitive but if it does not reach the consumers when they require it, the organization loses.
The consumer does not wait for a good or service; he acquires it from a competitor. Therefore,
production and operations management plays a vital role in providing the product or service on
time by effectively maintaining production schedules.

Reverse Engineering:
Reverse engineering means discovering the technological principles of a device, object, or
system through the device structure, function, and operation analysis. This process was
originally applied only to hardware, but now it is applied to software, databases and even human
DNA. Reverse-engineering is used for many purposes. it is used as a learning tool; as a way to
produce new, compatible products that are cheaper than its present market rates; for making
software operations more effective, etc.

Computer-Aided Design/Computer-Aided Manufacturing:

Computer-Aided Design (CAD) involves creating computer models defined by geometrical

parameters. These models typically appear on a computer monitor as a three-dimensional
representation of a part or a system of parts, which can be readily altered by changing relevant
parameters.

Computer-Aided Manufacturing (CAM) uses geometrical design data to control automated

machinery. CAM systems are associated with Computer Numerical Control (CNC) or Direct
Numerical Control (DNC) systems. These systems differ from older forms of Numerical Control
(NC) in which geometrical data are encoded mechanically. Since both CAD and CAM use
computer-based methods for encoding geometrical data, it is possible for the processes of design
and manufacture to be highly integrated. Computer-aided design and manufacturing systems
are commonly referred to as CAD/CAM.

QNO

Describe any TEN factors that affect decisions regarding choice of location?

(Description of any TEN factors that affect decisions regarding choice of location,
Proximity to customers (markets), Proximity to raw materials, Good
transportation facilities, Availability of power, Basic amenities, Government
policies, Environmental and community considerations, Proximity to
subcontractors, Availability of cheap land, Availability of cheap, skilled and
efficient labour) Climate, Water availability) 10 ( 1 mark each,

Answer:

(i) Proximity to customers (markets)

When the plant is located near the customers/markets, the cost of transportation is low. This
reduces the product cost. Most small ancillary units are located near big automotive factories.
The Original Equipment Manufacturers (OEMs) are the institutional customers of small parts,
components, or sub-assemblies from these ancillary units. The Maruti Joint Venture Complex at
Gurgaon near the Maruti Suzuki car factory is a good example of how proximity to the customer
reduces the transportation cost of auto ancillary units, which supply parts, components, sub-
assemblies, etc., for manufacturing the Maruti car.
(ii) Proximity to raw materials
Proximity to the source of raw materials is an important consideration for facility location,
especially if the raw materials are bulky, and huge shipping costs will be incurred in
transporting them. Where it becomes absolutely necessary to transport them, it is found that
cost of the material is equal to the shipping cost thus making the raw materials very costly at the
point where they are used.
(iii) Good transportation facilities
Good transportation facilities are necessary for movement of goods and people.
Regions near metro cities have these facilities, as they have a good network of rail, air, water,
and road transportation.

(iv) Availability of power

Uninterrupted power supply is a basic requirement of most industries. Companies have to set up
their own DG sets or have captive power plants if they are located in areas with power problems.
This increases the cost of the product, besides additional problems of running the DG sets,
captive power plants, etc.

(v) Basic amenities

The location site should have certain basic facilities like sewage system, piped water supply,
security, etc., that are managed by the local municipality. Roads up to the factory premises are
always desirable. If these basic amenities are provided, it will be easier for the employees and
they will be willing to work in that factory. Availability of housing facilities, schools, colleges,
banks, post office, hospitals, etc., are added advantages for locating a facility in an area.

(vi) Government policies

Relaxed taxation policies, excise duty exemption and various other promotional efforts attract
industrial activities in a region. Pondicherry and Daman and Diu are declared ‘no sales tax
regions’ and we find that many companies have their offices/warehouses located there. Many
state governments promote industrial activities in their regions by creating Industry
Development Zones, Special Economic Zones, etc. Agriculture gets maximum subsidies from the
central as well as many state governments.
(vii) Climate
Climatic conditions also play an important role in deciding the location of companies and
manufacturing. For example, adequate humidity is an important criterion for textile mills, which
is why most textile mills are located towards Mumbai and Coimbatore.

(viii) Proximity to subcontractors

Small ancillary units manufacturing small components/sub-assemblies are important for any
new factory. Ancillary units and joint ventures set up their facilities near the OEM. The
advantage to the ancillaries is that it will reduce their component cost. The OEMs too benefit if
they set up their facilities near these ancillaries.

(ix) Availability of cheap, skilled and efficient labour

Many companies locate their facilities at places where there is cheap, skilled and efficient labour.
Many companies are locating their branches in South India because the people here are more
disciplined, efficient and skilled.

(x) Water availability

Availability of water is essential for industries in textile dyeing, paper or chemicals, etc. for plant
location. It is needed for processing or for waste disposal into rivers.

Q What are the various types and functions of stores?

(Listing of functions of stores, Explanation of various stores(Receiving ,Main,

Warehouse, Special) 5+5= 10

Answer:

Listing of functions of stores:

• Requesting the purchasing department for adequate quantity of materials so that the deliveries
can be made in the appropriate time
• Controlling on quantity of materials received from excess use
• Protecting the materials from conditions such as bad weather, damage and stealing
• Issuing materials only to authorized people or requisitions
• Maintaining proper records of receipts, issues and balances

• Maintaining the exact records of expenditures and dispatches

• Maintaining proper records of stores so that they can be provided at right time
• Keeping a record of inventory investment

Receiving store
They perform activities that control the quality and quantity of purchased materials before it is
accepted for production. This type of stores is also called goods inward store. It is further
divided into the following types:

Inward: It is used to store the incoming materials until they are accepted and taken into stock.

Quarantine: It is used to store the stock materials temporarily that are under dispute or need
certification from the supplier.

Rejection: This is used to store materials that are defective and rejected by a company until the
materials are sent back to the respective suppliers.

Main store
Main stores perform activities that are concerned with storage and issuance of accepted
materials and deal with the maintenance of records of materials. It can be maintained either in
the company as a godown or a warehouse located near the company from where goods can be
easily transferred. It is further divided into the following types: However all these type of stores
depend on the nature and size of the organization and industry.

Crib: It is used to store stocks such as cutting and hand tools, gauges, etc., that are to be issued
to the workmen at the beginning of their shift and to be received at the end of their shift.

Finished Part: This store is used to store stock components and parts that are produced in
economic sizes in the plant itself.

Sub: This is used to store bar stocks, casting and forgings that require a lot of space and need to
be stored in open spaces and is also called the raw material stores.

Plant Store: It is used to store spare parts of tools and machineries that are used in a plant for
production.

Warehouse
Warehouse performs activities that are concerned with receipt, packing and dispatch of finished
goods to various destinations. It involves handling of papers and documents related to goods.
This type of store is also called finished product store.

Special store
They perform activities that are related to receipt, storage and issuance of special materials such
as bank papers, petroleum products, etc. They are further divided into the following types:

Bonded: These stores are used to store materials that are related to banks and stocks that are
excisable.

Statutory: It is used to store petroleum products such as kerosene and diesel that require safety
precautions.
Temperature-controlled: This store is used to store materials such as meat, fish mand vegetables
or goods such as rubber or active ingredients such as vitamins and calcium that require
temperature-controlled storerooms.

Q3.Write short notes on:

 Warehousing
 Scope of Project Management
 Importance of sales forecasting
 Total Productive Maintenance (TPM)

(Warehousing, Scope of Project Management, Importance of sales forecasting,

Total Productive Maintenance (TPM)) 10 (2.5 marks each)

Answer:

Warehousing:

A warehouse is a godown or a storage space where a firm stores or holds raw materials and
semi-finished or finished goods for different periods of time. It helps to create time utility for
raw materials, industrial goods and finished products. The basic nature of raw materials, parts
and finished goods flowing through and between a vast network of facilities makes warehousing
a labour intensive process.

Warehousing has developed into a strategic tool with state-of-the-art systems capable of
providing necessary manufacturing and retail support. Efficient warehousing permits reduction
in material and parts storage and handling costs while optimizing production for manufacturers
producing products at multiple locations. A central warehouse is used to maintain a basic stock
of parts, thereby reducing the need to maintain inventory at each assembly plant. Market-
oriented warehousing allows a firm to provide the customer with shorter lead times. This
warehousing function continues to be progressively more important, as companies and
industries utilize customer services as dynamic, value-adding and competitive tools.

Technology has had a great impact on the quality of service, costs and operations of
warehousing and improved the flexibility of warehousing. With advanced information
technology, warehouse operators can quickly react to changes in market conditions. In the area
of productivity, which is one area of concern in warehousing, technology has been used to
improve the configuration of warehouse systems, handling equipment performance and
improved storage techniques.

Scope of Project Management:

There are three factors that predominantly influence a project:

  Time
 Resources such as people and equipment
 Cost

Time: In most of the projects, some activities are critical and must be completed exactly on
schedule or the entire project will be delayed. It is important for the project manager to
determine these critical activities.

Resources: Project managers must also determine the resources, such as people and
equipment, available for the project and how they should be allocated among the various
activities.

Cost: The cost of the project must be controlled. Managers seek ways in which cost can be
minimized in order to meet a deadline. Cost is closely related to the allocation of resources
throughout the project. Two of the more useful tools that have been developed to assist project
managers in their scheduling efforts are Project Evaluation and Review Technique
(PERT) and Critical Path Method (CPM).

Importance of sales forecasting:

In producing units, the importance of sales forecasting is greater because of their varied
problems of producing and distributing the products on a large scale. Sales forecasting is a
guiding factor for a firm because it enables the firm to produce the actual quantity of the
required quality product, at the right time and at a reasonable price. The firm can arrange the
various resources, such as raw materials, equipment, machines, accessories, labour buildings,
etc., required for production well in advance. Only a few firms produce products on the basis of
the orders received from customers; most of the firms produce in ‘anticipation of demand’.
Forecasting helps a firm to assess the probable demand for its products and plan it accordingly.
With the help of sales forecasting, the producer can prepare production schedule and can reduce
inventory, production and other related costs.

Sales forecasting is the basis for planning various activities, such as production activities, pricing
policies, marketing planning, programmes policies and strategies. Thus, overall planning can be
done only on the basis of sales forecasting.

Sales forecasting helps management to take correct decisions and on time and thus, helps avoid
unnecessary hardships to the firm. In this way, it also helps in reducing the wastage of men,
materials, machines, etc. Thus, it measures the correctness of management decisions.

Sales forecasting is valuable because it prepares the management for change. Sudden and
temporary changes can be avoided to diffuse the situation. It is possible only with the help of
sales forecasting data. Sales forecasting also sets the goal for the sales department. If the sales
department accomplishes the goal set for it, it can be regarded as an efficient and well organized
department. In this way, sales forecasting helps in measuring the efficiency of the sales
department.

Total Productive Maintenance (TPM): TPM is a management process developed for

improving productivity by making processes more reliable and less wasteful. It has its objective
in maintaining the plant or equipment in good condition without intervening into the daily
process. Preventive and predictive maintenance is required in order to fulfil this objective. Using
TPM the unexpected failure of the equipment can be minimized. Implementation of TPM
requires the production unit and maintenance unit to work in collaboration with each other.

Q5 Define Method Study and state its objectives and procedure.

(Definition of method study, List the any three main objectives of method study

1. To identify the proper sequence of production operations

2. To optimize the utilization of machineries

3. To reduce the manufacturing cycle time by reducing idle time of machinery

4. To choose the right kind and amount of materials and reduce the raw material
consumption per unit of production

5. To reduce wastages and production of defective products

6. To enhance the tool life and therefore reduce the tool cost per unit of production

7. To allocate work force optimally and reduce idle time of the operator by optimal
utilization of human resources

8. To improve the processes and procedures involved in production

9. To improve the working environment in the workplace

Explain the basic procedures in method study

 Selection of jobs
 Recording of facts
 Critical examination
 Development and selection
 Installation
 Maintenance

1+3+6( 1 mark for each step)=10

Answer:
Definition:

Method study is a method for examining, recording and analysing the existing way of doing
work and proposing a method for improving the efficiency of a system.

Objectives of Method Study

The main objectives of method study are as follows:
1. To identify the proper sequence of production operations
2. To optimize the utilization of machineries
3. To reduce the manufacturing cycle time by reducing idle time of machinery
4. To choose the right kind and amount of materials and reduce the raw material consumption
per unit of production
5. To reduce wastages and production of defective products
6. To enhance the tool life and therefore reduce the tool cost per unit of production
7. To allocate work force optimally and reduce idle time of the operator by optimal utilization of
human resources
8. To improve the processes and procedures involved in production
9. To improve the working environment in the workplace

Method Study Procedure

(a) Selection of jobs

Selection of a job for which method study is to be done is a managerial responsibility. The
considerations for selecting a job could be economic, technical or human.
(i) Economic considerations
These include operations which could be holding up other production operations, such as: •
Needless movement of workmen and materials over long distances
• Operations that involve great deal of manpower
• Operations that involve poor utilization of men and machines
• Sections or departments from which too many suggestions for improvement are received
(ii) Technical considerations
• Operations that produce a great deal of waste or defectives
• Operations that involve repetitive work
• Complaints that performance standards cannot be achieved
• Operations requiring frequent supervision
• Jobs with incompatible quality
• Operations involving discrepancies in materials and tool performance
• Jobs involving greater number of man hours for checking and rechecking work
(iii) Human considerations
• Workers complain about being overworked
• Poor worker morale
• Frequent accidents and health hazards
• Inconsistency in the earnings of the employees due to overtime

(b) Recording of facts

Accurate and precise recording of facts related to a method determines the success of the
method study. A method study generally uses the graphical method to record facts such as
completion time and labour required in a method.
The graphical method uses five symbols to record the facts related to a method.
They are:
• Operation
• Transportation:
• Inspection:
• Delay:
• Storage:

(c) Critical examination

Critical examination means analysing the facts related to a method. In critical examination, the
facts related to a method should be examined as they are and not as they should be. Each step
should be analysed in a logical sequence and hasty decisions should be avoided.

(d) Development and selection

Development involves an analyses of all the ideas generated during critical examination and
implementing these ideas practically. All the ideas generated during critical examination may
not be practical. So the organization first needs to isolate the practical ideas from the conceptual
ones. The selected ideas are then refined and developed during the development and selection
process. The development process comprises three functions: evaluation, investigation and
selection.

(e) Installation
Implementation of the proposed method is known as installation. The proposal for change in
method is presented to the management indicating the sequential steps that must be taken to
implement the changed proposal. On receipt of formal approval, the implementation plan is
prepared. A demonstration of the proposed method can be held to clear misconceptions and
apprehensions. Training of the employees who will use the new methods can also be done.
(f) Maintenance
After implementing a method, it is important to monitor the performance of the method. A
feedback mechanism is needed to inform the concerned authorities about the results of the
monitoring process. The savings accrued by using the new method should be audited to
determine whether or not the implementation work is complete. The audit will also reveal
additional factors that can enhance profits and then the whole cycle will start again.

Q6 What are the major costs of quality. List the characteristics of quality.
(Explanation of major costs of quality, (Prevention, appraisal, internal failure and
external failure costs), Listing of Characteristics of Quality from consumer’s point
of view, Listing of Characteristics of Quality producer’s point of view) 4+3+3= 10

Answer:

The following are the major costs of quality.

(a) Prevention costs
Costs that are incurred in preventing the manufacture of non-conforming products and stopping
any such product from reaching the customers are called preventive costs.
(b) Appraisal costs
They are incurred while maintaining quality levels through measurement and analysis of data in
order to detect and correct problems. Testing and inspection costs are incurred while testing and
inspecting incoming materials, work in process and finished goods and include salaries for
employees, cost of equipment, cost of maintaining instruments, etc.
(c) Internal failure costs
It results from unsatisfactory quality that is found prior to the delivery of a product to the
customer. It includes scrap and rework costs, costs of corrective action arising from time spent
determining the causes of failure and correcting production problems.
(d) External failure costs
It occurs after poor quality products reach the customer. Costs of investigating complaints,
product recall costs, warranty claim costs, which include the cost of repair or replacement of
products during warranty periods, and product liability

Characteristics of Quality:

A product is called a quality product only when it satisfies various criteria for its functioning.
Keeping the consumer’s view in mind, following characteristics of a product or service are
judged while assessing quality:
Performance and Appearance: How well does the product perform with respect to its
intended use? How pleasant does it look, smell, taste, feel or sound.

Safety: How much care has the company taken to make the product safe for users before,
during or after use?

Features: What special features does the product have?

Customer Service: How is the behaviour and treatment of the seller with the customer before,
during and after the sale of the product?

Reliability and Durability: What is the probability of breakdowns, need for adjustments,
replacement of parts, etc., in the product?

Service ability: How easily, cheaply and speedily can the product be repaired and serviced?
How fast is the response of the company to a complaint?

From a producer’s point of view, the characteristics of quality are as follows:

Innate: Quality is innate or inherent in the product. It is not based on any comparison
regarding the features and characteristics with other similar products.

Measurable: Quality is measurable, i.e., conformance to quality can be quantified by

measuring the variation.

Usability based: Quality of a product is based on the usability or ability to satisfy the given
need.

Design based: A product is designed such that it has a particular quality.

SET-1 Q.No Criteria Marks Total Marks

QNO. Why Production is considered as a heart of an organization? Also explain the importance of
technology in production.

Production as a heart of an organization 5

Importance of technology in production. 5 10

ANSWER –

Production is the primary business of an organization. All other wings or activities of an organization
exist subject to the existence of production. Without production or anything to sell, there is no
organization at all. An organization usually has several departments and each department has a
specialized function.

• Marketing establishes the demand for goods and sells what is produced.

• Finance provides the capital for equipment and resources.

• Human Resource Management provides and manages manpower.

Purchasing is concerned with procurement of materials needed to run the organization.

• Materials Management takes care of inventories.

• Law Department safeguards the organization on legal issues.

• Public Relations department builds the image of the organization.

• R&D is responsible for Research and Development. But it is the production department which
produces goods and services. It plays a vital role in achieving a firm’s strategic goal.
Production involves the greatest bulk of a company’s employees and is responsible for a large portion of
its assets. It also has a major impact on the quality and cost of goods and therefore is the visible face of
the company. Hence we say that production is the heart of an organization.

Importance of Technology in Production –

Technology makes way for fast and efficient operations in manufacturing companies, as well as
facilitates cost-saving measures. Technology brought significant changes to traditional production
systems that have been so beneficial to all industrial players, including suppliers and customers. A
pharmaceutical company, for example, employs advanced machineries in concocting, capsulizing, and
wrapping medicine. Traditionally, the making of medicine was manually done. However, to prevent
contamination and mitigate errors from human intervention, pharmaceutical companies have employed
robots and computerized machines, resulting in the mass production of medicine at faster speeds and
lower costs.

It is now quite difficult to imagine a world without modern inventions. Countries in Europe,
North America, and some parts of Asia are particularly experienced at applying modern technology in
producing products and services. The Finnish pharmaceutical sector for instance is characterized by a
high-level know-how, attracting foreign capital to the country.

QNO2. Define Planning, Organizing and Controlling Functions of Operations Management.

Planning function of operations management 4

Organizing function of operations management 3

Controlling function of operations management 3

ANSWER –

Planning function of operations management -

There are certain functions that the production or operations management should perform. Operations
management begins with the discussions for conceiving the design and specifications for the product.

Operations management is involved throughout in the development and production cycles to

a stage where products are ready to be dispatched to the marketing and sales department to provide
them to final consumers.
• Product design and development: This deals with the issues of converting market feedback on the
requirements pertaining to the type of product to be produced into specifications and drawings that
help in production.

• Production process selection: This helps in evaluating different process options possible to produce the
type of product in terms of volume and variety and other factors to select the best-suited process.

• Planning facility location: This deals with evaluation of different possible locations for production and
selecting the most suitable one that meets the organizational objectives of production in the required
quantities at the minimal costs.

• Planning facility layout: This refers to studying various options in terms of plant and machinery layout
that enables the smooth flow of materials for smooth production.

• Capacity planning: This deals with the issues pertaining to planning the capacity for the plant that
enables cost-competitive production event with certain degree of fluctuations in the required volumes.
• Production planning: This helps effectively plan the production to meet the required quantities of
products within the scheduled time.

Organizing

• Work study: Also known as time and motion study, it aims at improving the cycle time required for
producing a product.

• Materials management: This aims at establishing sources for the required materials in terms of input
materials or consumables at the right time so that no delays in production occur.

• Purchasing management: This is responsible for making the input material available in time, at the
right price and in the right quantity and quality.

Controlling

• Stores management: This refers to managing the stores for input materials, consumables and finished
stocks while avoiding overstocking of materials. Stores are also accountable for recording the stock and
consumption of these materials.

• Value analysis: The process of obtaining the best possible combination between cost and required
functional specifications of a product by assigning a value to every operation of the production process
and identifying the function of the product. This helps in enhancing the value of the product.

• Quality control: This is responsible for monitoring the quality requirements of the product so that no
defective parts are passed on to the consumers. For this, systems associated with the processes are
assessed by the management of an organization in order to improve them so that no defective parts are
produced.

• Maintenance management: This is responsible for ensuring the continuous production in terms of
machinery and other required infrastructure so that no breakdowns occur to hamper the production
flow. It also includes proactive preventive maintenance to maintain the health and performance of the
machines in peak condition.

• Inventory management: This is responsible for maintaining minimum inventory of all critical materials
and ensuring that there is no overstocking or stock-out.

QNo3.Discuss various steps of Product selection and development. Various steps of Product selection
and development. 10

Answer:-

Steps of Product selection and development:-

i. The first stage is idea generation, which means the search for new products. This can also be done by
studying the product of competitors. Companies also seek the advice of the top-level management for
generating new ideas.
 ii. The second stage includes idea screening. Ideas are listed by companies into three categories:
promising ideas, marginal ideas and rejects.

iii. The third stage covers the development process. This stage is characterized by conversion of a product
idea into several product concepts. Out of several product concepts, the most appealing one is
selected.

iv. The fourth stage involves developing of marketing strategy for new products. This includes evaluation
of market size, demand of product, growth potential, and estimate of profit in first few years.

v. The fifth stage includes business model development around the new product. Business models start
with sales estimate, purchase frequency, and nature of business.
vi. The sixth stage involves the actual production of new product. Decisions are then taken from the
viewpoint of operation as to whether it is technically and commercially feasible to continue
production.

vii. The seventh stage involves test marketing of a new product. It is made accessible to the select
consumers and feedback sought.

viii. The eighth stage involves launching of a product across the target market, backed by a proper
marketing and strategy plan. This stage is called the commercialization phase.

QNO

Define materials management and state its importance and functions.

Definition of material Management 2

Importance of Material management 4

Functions of Material management 4

ANSWER –

Materials management can be defined as controlling, organizing and managing materials/stock so that it
guarantees the maximum return for a business. It involves determining the purchase, location, storage,
account-keeping and transportation of stock.

Materials management differs between organizations, and may include production planning, materials
planning and control, inventory control and stores management, purchasing, movement of materials
and waste management.

Functions of Materials Management

Materials management generally includes the following activities:

• Purchasing

• Procurement

• Distribution

• Warehousing

The purchase department provides all the production goods and materials that are required by the
company. The stores or any functional department can request for goods and materials. Their requests
may be received for direct, indirect materials, production items, seasonal items, low-price items, etc. In
the following section, we discuss various methods of purchasing.

Materials management function is always of prime concern to the management of any industrial
organization as high inventory and an inefficient procurement process impact on the profitability of the
organization to a considerable extent. Problems multiply due to a very dynamic business environment in
India. Hence, existing materials planning and procurement processes and inventory management
systems require a re-look with respect to a changing business environment.

Importance of Materials Management

Materials management involves a purchasing mix. It deals with material acquisition and the ability to
forecast the goods available in the store and to be supplied on request. The functions are chiefly
executed by the store manager and his duty is to make sure that goods supplied meet the expectations
of the customers. The most important role of materials management is to ensure that the stores and
supply manager synchronize the business’s demand, sales and issues to enable the manager to be alert
when the organization is running short of stock and avoid making use of its buffer stock. The importance
of Materials management function lies in the fact that the material cost is 60-70% - a significant portion
of the final product cost and hence the significance. This further emphasizes the important role -
materials management personnel play especially in manufacturing organizations and very often a
member of the senior management.

QNO
.How Automation is beneficial for manufacturing? Explain Computer-Aided Design (CAD) and
Computer-Aided Manufacturing (CAM).

Benefits of automation in manufacturing 2

Computer-Aided Design (CAD) 4

Computer-Aided Manufacturing (CAM). 4

ANSWER –

Automation and advanced technology began in the 1950s with the development of Numerically
Controlled (N/C) machine tools. N/C machining enabled the machinist’s skills to be duplicated by a
computer program that was stored on a computer medium such as punched paper tape. The computer
program controlled the movements of a tool when making complex shapes. Over time, N/C computer
hardware has become smaller and cheaper, computer controlled software has become more
sophisticated, and machine tools have become more complex. This has led to the development of
industrial robots and Flexible Manufacturing Systems (FMS). Advances in computer software and
communications systems have led to improvements in manufacturing equipment and vice versa.
Similarly, the knowledge base on which production planning and control decisions are made has
significantly improved. By combining knowledge bases with physical process control, computer assisted
manufacturing (CAM) was born.

Computer-Aided Design (CAD)

Early CAD systems were basically computer-controlled plotting systems; today’s systems revolve around
graphics terminals. CAD allows engineers and designers to work in two and three dimensions and utilize
colour to simplify complex designs. Designers can carry out geometric transformations at high speeds
and can obtain the top, side and front views of design, rotations about any axis and cross sections. In
addition, CAD systems allow the storage and retrieval of designs for easy updating and automatic
creation of Bills of Materials and process information for production planning and scheduling systems.

Computer-Aided Manufacturing (CAM)

CAM involves computer control of the manufacturing process, such as determining tool movements and
cutting speeds. N/C machines is an old form of CAM, robotics is a modern example. CAM offers
advantages over conventional manufacturing methods. It can be used when several different parts with
variable or cyclic demands are produced, when frequent design changes are made, when the
manufacturing process is complex, when there are multiple machining operations on one part, or when
expert operator skills and close control are required. Each machine in a CAM system has the ability to
select and manipulate a number of tools according to programmed instructions. Thus, CAM provides a
high degree of flexibility in performing and controlling manufacturing processes. When a CAD system
and a CAM system share a common data base, the term CAD/CAM is used. The integration of CAD and
CAM allows for important coordination between design and manufacturing; through such integration
the lead time for process planning can be reduced, quality assurance is improved and cost savings in tool
design and other capital investments can be realized.

QNO

The life cycle of a project can be classified into four stages

(a) Conception and definition phase 3

(b) Planning and organizing phase 3

(c) Implementation phase 2

(d) Project close 2

ANSWER –

As every project has defined starting and ending points, it also has a life cycle. The life cycle of a project
can be classified into four stages:

(i) Conception and definition phase

This phase begins with the idea of the project. The idea is explored by listing out the following:

• Raw materials required

• Location selection and plant layout

• Technology/process selection

• Machinery/equipment needed

• Utilities – fuel/ power, water, sanitation, etc.

• Manpower and organization pattern

• Resources needed
(ii) Planning and organizing phase

This is a very important phase. In this phase – (a) Necessary approvals are taken to go ahead with the
project.

(b) Finances are arranged.

(c) Project infrastructure is planned – land is obtained, machinery is put in place.

(d) Manpower recruitment and organization structure are finalized. Project leaders are appointed.

(e) Schedules and budgets are finalized.

(f) Licenses and government clearances are obtained.

(g) Contracts are prepared and executed.

(h) Site preparation is done.

(i) Construction resources and materials are put in place.

(j) Work packaging is done. This means the entire project is split into activities and work packages and
roles are assigned.

(iii) Implementation phase

This is the actual implementation phase where the work is carried out. Without proper implementation
no project can be concluded in a good and result oriented manner. Without proper implementation
everything will be become useless although we can plan it very well.

(iv) Project close

It is also called project clean-up. Once the project has been implemented, all the drawings, documents,
operation manuals, maintenance procedures/ manuals, etc. are handed over to the customer. Usually a
small portion of the payment is held up till this phase. The final instalment of payment is released after
the customer is satisfied with the guarantee test runs.

Q. Explain the Functions and Scope of Operations Management. Define major factors affecting
Operations Management.

Functions and Scope of Operations Management. 6

Factors affecting Operations Management. 4

Answer:-

Functions and Scope of Operations Management:-

(A) Planning

There are certain functions that the production or operations management should perform. Operations
management begins with the discussions for conceiving the design and specifications for the product.

i. Product design and development

ii. Production process selection
iii. Planning facility location
iv. Planning facility layout
v. Capacity planning
vi. Production planning

(B) Organizing

i. Work study: Also known as time and motion study.

ii. Materials management: This aims at establishing sources for the required materials in terms of input
materials or consumables at the right time so that no delays in production occur.
iii. Purchasing management: This is responsible for making the input material available in time, at the
right price and in the right quantity and quality.

(C) Controlling

i. Stores management
ii. Value analysis
iii. Quality control
iv. Maintenance management
v. Inventory management

(D) Manufacturing and Non-Manufacturing Operations and their Classifications

Above all, it is pertinent to know whether the transformation process is functioning properly or not. This
is done by objectively measuring the extent to which inputs are converted to outputs, efficiently and
effectively, by calculating a factor called productivity. Productivity is a measure of the quantity of output
per unit of input. Productivity can be expressed as a factor or a percentage.

Alternatively it can be expressed as a percentage,

(E) Productivity Figure

The productivity figure of an organization immediately projects how an organization is being run. It
indicates how efficiently the organization is converting the input to output.
(F) Operations Planning and Control

The 5 Ms of a business that form the input are man, machine, materials, money and method. Planning
their inputs over a specified period of time so as to get the planned output is the job of operation
planning. Depending on the timeframe of planning, it can be:

i. Long-term or strategic planning: Focuses on a horizon greater than one year.

ii. Medium-term or intermediate range: Usually covers a period of six to eighteen months. If done
annually, it is called aggregate planning.
iii. Short-term: Routine planning may be done daily, weekly or monthly.

Factors affecting Operations Management:

Product performance Technology New product Delivery service

leadership introduction
• Process variability • Process technology • Flexible • Lead times: internal
and design replacement policy production/operations and external
facility system
• Quality • Manufacturing • Capacities of • Discipline regarding
management system management’s machine, men, schedules
openness for materials
experimentation
• Work culture and • Capability of men, • Flexibility of
attitudes machines, materials production/operations
(and its suppliers) facility/system
• Product variability • Skilled manpower • Proper forecasting
of demand and hence
the load of the
operations system

Q.

What are the Basic Elements of Forecasting? Define short run and long run objectives of sales
forecasting.

Basic Elements of Forecasting 6

Short run and long run objectives of sales forecasting. 4

Answer:-

Basic Elements of Forecasting:-

i. Forecasting means prediction of future events using the most appropriate means or tools.

ii. Any sales forecasting analysis is characterized by four primary elements of economic data that ought
to be used. These are:
 a.Trends
b.Cycles
c. Seasonal variations
d.Irregular variations
iii. Trends refer to the long-term, long-range movements of economic data series. They are not closely
related to the month-to-month occurrence of changes, and they manifest their direction gradually.
For instance, share prices in the stock market.

iv. Cycles are shorter in duration and are generally unique in being featured by alternate phases of
expansion and contraction. For instance, price of Gold.

v. Seasonal variations take place within a certain phase of the year and recur at about the same time
and to approximately the same extent over the years. For instance, sale of air conditioners during
summer.

vi. Irregular variations take place due to unanticipated or non-recurring occurrences that cause an
economic influence or impact. For instance, a strike in a major industry might lead to irregular
variation.

Short run and long run objectives of sales forecasting:-

Short-run objectives

The sales forecasting for a year or lesser period is known as short-run forecasting. The short-run
objectives of sales forecasting are as follows:

a. Formulation of suitable production policy

b.Regular supply of raw materials
c. Best utilization of machines
d.Determination of appropriate price policy
e. Regular availability of labour
f. Forecasting of short-term financial requirements
g. Setting the sales target and establishing controls and incentives

Long-run objectives

Forecasting of sales of more than a year is called long-run forecasting. The objectives of long-run
forecasting are:

a. Estimating long-term financial requirements

b. Planning of plant capacity
c. Manpower planning
d. Budgetary control over expenditures
e. Long-run production planning
f. Dividend and reserve policies
Q. Discuss various steps of Product selection and development.

Various steps of Product selection and development. 10

Answer:-

Steps of Product selection and development:-

Idea gereration

Idea screening

Development process

Developing of marketing strategy

for new products

Business model development

Actual production of new product

Test marketing of a new product

Launching of a product

i. The first stage is idea generation, which means the search for new products. This can also be done by
studying the product of competitors. Companies also seek the advice of the top-level management for
generating new ideas.

ii. The second stage includes idea screening. Ideas are listed by companies into three categories:
promising ideas, marginal ideas and rejects.

iii. The third stage covers the development process. This stage is characterized by conversion of a product
idea into several product concepts. Out of several product concepts, the most appealing one is
selected.

iv. The fourth stage involves developing of marketing strategy for new products. This includes evaluation
of market size, demand of product, growth potential, and estimate of profit in first few years.

v. The fifth stage includes business model development around the new product. Business models start
with sales estimate, purchase frequency, and nature of business.
 vi. The sixth stage involves the actual production of new product. Decisions are then taken from the
viewpoint of operation as to whether it is technically and commercially feasible to continue
production.

vii. The seventh stage involves test marketing of a new product. It is made accessible to the select
consumers and feedback sought.

viii. The eighth stage involves launching of a product across the target market, backed by a proper
marketing and strategy plan. This stage is called the commercialization phase.

Q. Define materials management and state its importance and functions.

Definition of material Management 2

Importance of Material management 4

Functions of Material management 4

Answer:-

Materials management can be defined as controlling, organizing and managing materials/stock so that it
guarantees the maximum return for a business. It involves determining the purchase, location, storage,
account-keeping and transportation of stock (planning of moving stock through various processes of
manufacturing, warehouses and channels of distribution).

Materials management differs between organizations, and may include production planning, materials
planning and control, inventory control and stores management, purchasing, movement of materials
and waste management.

Importance of Material management:-

Materials management involves a purchasing mix. It deals with material acquisition and the ability to
forecast the goods available in the store and to be supplied on request. The functions are chiefly
executed by the store manager and his duty is to make sure that goods supplied meet the expectations
of the customers.

The most important role of materials management is to ensure that the stores and supply manager
synchronize the business’s demand, sales and issues to enable the manager to be alert when the
organization is running short of stock and avoid making use of its buffer stock.

The importance of Materials management function lies in the fact that the material cost is 60-70% - a
significant portion of the final product cost and hence the significance.

This further emphasizes the important role - materials management personnel play especially in
manufacturing organizations and very often a member of the senior management.
Functions of Materials Management

Materials management generally includes the following activities:

i. Purchasing
ii. Procurement
iii. Distribution
iv. Warehousing

Q. Define Nature of Production Planning and Control (PPC).

Explain following Strategies of Production Planning

a. Chase strategy 4
b. Level production 1
c. Make-to-stock 1
d. Make-to-order 1
e. Assemble-to-order 1
f. Manpower planning 1

Answer:-

Nature of Production Planning and Control (PPC):

Production planning and control (PPC) is an amalgamated operation of the company, which draws the
maximum advantages from planning. The following factors affect the planning of production operations:

i. Acquisition of raw material

ii. Quality control and inspection of raw materials
iii. Inventory levels of goods in the process of production and those already produced
iv. Manufacturing costs
v. Labour
vi. Available machinery and equipment
vii. Warehousing capacity

Strategies of Production Planning:

a. Chase strategy: - Companies that use the chase strategy, or demand matching strategy, produce
only enough goods to exactly meet the demand for goods. The chase strategy has several
advantages; it keeps inventories low, which frees up cash that can otherwise be used to buy raw
materials or components, and reduces inventory carrying costs that are associated with inventory in
stock.

b. Level production: - In a manufacturing company that uses a level production strategy, the company
continuously produces goods equal to the average demand of goods. Scheduling consistently
arranges the same quantity of goods for production as the total demand of goods.
 c. Make-to-stock: - In the make-to-stock environment, goods are produced before customers place
orders. The retail environment is an example of make-to-stock as goods are produced and put into
inventory at the retailer location.

d. Make-to-order: - Companies that use a make-to-order strategy produce goods after receiving an
order from the customer. Most often a company that uses the make-to-order strategy produces one
type of goods. Dell uses a make-to-order strategy wherein customers can choose the various
components of a computer through the internet website and order a personal computer configured
to their choice.

e. Assemble-to-order: - Certain fast-food restaurants use an assemble-to-order strategy. A customer

walks in, places an order for a burger his way and the burger gets prepared from a selection of
ingredients. This strategy forces the restaurant to carry enough ingredients to make every burger
combination a customer might request.

f. Manpower planning: - Manpower planning, also known as Human Resource Planning (HRP), is
placing people with the right talent at the right place at the right time for achieving organizational
goals.

Q. Define Work Measurement and state its objectives and techniques.

Definition of Work Measurement. 2

Objectives of Work Measurement 2

Techniques of Work Measurement. 6

Answer:-

Work Measurement:-

Work Measurement is a technique to find out the time required to do any activity at a predetermined
level of performance by a qualified worker. In other words, it is a technique to develop time standards
for the performing jobs.

Objectives of Work Measurement:-

i. To establish the standard time for completing a job.

ii. To fix the salary of employees and to determine and calculate incentives based on their
performance.
iii. To estimate the machine and labour requirements for planning and scheduling of production, the
time required for jobs and when deliveries are possible, etc.
iv. To distribute workload among the workers.
v. To calculate the number of employees needed for various tasks of the organization.
vi. To determine the number and nature of machines that a worker can run.
vii. To help managements accurately determine the costs incurred in production.
viii. To compare the efficiency of various alternative methods and determining the best alternative
among them.
ix. To establish standards for the performance of employees and utilization of machinery. This way,
substandard workers can be identified.
x. To control costs by uncovering wastages of both machine and labour and thus help to increase the
operating efficiency.
xi. To track the performance of workers, their training needs, etc.

Techniques of Work Measurement:-

(i) Time study:-

This method of work measurement is generally used when the work is repetitive. It is a sampling process
in which a few observations of a sample are taken. The inferences drawn from the study of the sample
are used to determine the time required for the performance of the subsequent cycles by the worker.

(ii) Work sampling:-

In work sampling, the size of the sample is a major issue. The level of statistical confidence desired in the
results is considered before deciding the sample size.

The three primary applications for work sampling are:

a. To determine the average time that the machine and labour are idle or running. This is also called
‘activity time’ for personnel and machinery.
b. To develop a performance index for workers. These performance measures help in performance
evaluation of the workers, fixing of pay, bonus, penalties, etc.
c. To fix time standards, that is, the standard time required for a task.

(iii) Standard data:-

For jobs in which there are a large number of repetitive operations with similar characteristics,
companies often develop standard data through time studies or predetermined data. The advantage of
having standard data is that each job need not undergo a time study.

(iv) Predetermined Motion Time Studies (PMTS):-

An alternative to time study is the use of standard times for work elements that have been
predetermined from long periods of observation and analysis. The major advantage of this method is
that only motion patterns must be known.
Q.1. Write short notes on:

 Production Management
 Objectives of Operations Management
 Reverse Engineering
 Production Planning and Control

Answer:-

a. Production Management:-

The domain of Production and Operations Management (POM) is not only limited to the production of
goods and services, but it also comprises all the activities that are related to the process of production.
The term ‘production’ is applicable to entities like manufacturing units, machinery, equipment, assembly
lines, etc.

Production theories and practices were being used in a broad range of operations and conditions, which
have very little or no link with industries or manufacturing. The outcome of these activities is not just
production of goods, but also supply of services like banking, hotel management, health services,
education, transportation, recreation and government operations.

b. Objectives of Operations Management:-

1. Customer satisfaction: Customer satisfaction is vital to the survival of an organization. The

organization researches the expectations of the customer or service to be rendered and decides on the
product. An organization can survive only if its products satisfy the customers on the basis of the
following criteria:

i. Quality of the product as per acceptable standards

ii. Easy maintenance and reliability of the product
iii. Functionality of the product as offered by the seller

2. Profitability: The pricing of the product should be competitive to achieve sales. The organization
should focus on minimizing costs and maximizing revenue for increasing profitability.

3. Timeliness: The product produced or service rendered may be qualitative and cost-competitive but if
it does not reach the consumers when they require it, the organization loses. The consumer does not
wait for a good or service;

c. Reverse Engineering:-

Reverse engineering means discovering the technological principles of a device, object, or system
through the device structure, function, and operation analysis. This process was originally applied only
to hardware, but now it is applied to software, databases and even human DNA. Reverse-engineering is
used for many purposes. it is used as a learning tool; as a way to produce new, compatible products that
are cheaper than its present market rates; for making software operations more effective, etc.

d. Production Planning and Control:-

Production planning and control (PPC) is an amalgamated operation of the company, which draws the
maximum advantages from planning. The following factors affect the planning of production operations:

i. Acquisition of raw material

ii. Quality control and inspection of raw materials
iii. Inventory levels of goods in the process of production and those already produced
iv. Manufacturing costs
v. Labour
vi. Available machinery and equipment
vii. Warehousing capacity

Q.2. what is the purpose of sales forecasting? Explain following methods of time series analysis for
forecasting:

Purpose of sales forecasting 2

a. Simple average method 2

b. Moving average method 2

c. Exponential smoothing 2

d. Trend projections 2

Answer:-

Purpose of Sales Forecasting:-

i. It determines the scale of production and its rate.

ii. It lays a base for a variety of budgets like production, labour, material, etc.
iii. It provides inputs on the need for a hike in scope/growth of plant.
iv. It emphasizes on the need for product research development.
v. It also provides recommendations on the need for alteration in the methods of production.
vi. It helps in determining pricing policies.
vii. It is helpful in setting the limit of advertising, product distribution, etc.

a. Simple average method:-

It smoothens random fluctuations. When the demand for a product is neither growing nor declining
rapidly, and does not show seasonal characteristics, this method of forecasting can be useful. However,
this method also does not take into account seasonal fluctuations. The formula for calculation is:

Ft = A (t–1) + A (t–2) + A (t–3) + ... + A (t–n)/n

Where Ft = forecast for the coming period

A (t–1), A (t–2), ... + A (t–n) = Actual occurrence in the past period

n = No. of periods to be averaged

b. Weighted moving average method:-

It is useful to guard against random fluctuations due to seasonal demand characteristics. Weights are
assigned to each component of the moving average database, provided that the sum of all weights is
exactly equal to 1.

c. Exponential smoothing method:-

The drawback of the methods discussed so far is that as each new piece of data is added to these
methods, the oldest observation is dropped and the new forecast is calculated. Also, in most cases, the
more recent occurrences are a better indicator of the future than the past ones.

d. Trend projections:-

This Method fits a trend line to the data points to get trend projections and projects it into the future.

Q.3. What do you mean by Operation Strategy? Discuss various operations strategies in services.

Meaning of Operation Strategy 4

Operation strategies in services 6

Answer:-

Operation Strategy:-

Strategy means a planned methodology to complete a given job. Since we are talking about business
strategy, we mean to adopt and execute all skills, techniques and procedures for achieving the aims and
objectives of the corporate body. Broadly speaking, the first step is to identify the objective and
formulate the policy plan. The next step is to collect the resources and do all that is necessary to convert
the plan into reality.

Operations strategy is a set of decisions taken across the organization to help support the
implementation of the competitive business strategies. The operations strategy links both its long and
short term operational decisions to Corporate strategy. Operations Strategy is a process by which key
operations decisions are made and should always be consistent with the overall Strategic Objectives of
the organization.

Operation strategies in services:-

It is essential that organizations understand their operational domain. In the classic definition, the
‘external environment’ and the ‘future’ were the two concerns of strategy.
A top-down hierarchical approach to strategy consists of three main levels of strategy:

1. Corporate
2. Business
3. Functional

As per this model, the corporate goals are passed down to the business followed by functional areas.

1. Corporate:-Strategy at the corporate level sets out the direction of the whole organization,
acknowledging the key stakeholders the organization has its objective in satisfying. These stakeholders
are internal as well as external. Such a strategy reflects how the organization wants to place itself in
terms of its economic, political, social environment. It specifies the types of business the corporation
wants to be involved in and the parts of the world it would want to be functional in.

2. Business: - Business level strategy, is at the Strategic Business Unit (SBU) level. This strategy plans
how the business unit is to deal with its customers, markets and competitors and also how this would
contribute to the overall corporate strategy. Growth and profitability targets and return on investment
form part of this level.

3. Functional:-The third level of strategy is where the business functions, operations or finance or
marketing, formulate their long-term plans which support the objectives of business strategy. Various
business objectives would probably require different operations strategies in that they would demand a
different set of priorities.

Q.5. what is PERT? Explain the applications and advantages of PERT.

Definition of PERT 2

Application of PERT 6

Advantages of PERT 2

Answer:-

Programme Evaluation Research Task (PERT):-

PERT or project evaluation and review technique was developed for the US Navy’s Polaris missile project
in the late 1950s. This was a massive project involving over 3,000 contractors. Because most of the
activities had never been done before, PERT was developed to handle uncertain time estimates of the
various jobs or activities.

Programme Evaluation and Review Technique (PERT) and Critical Path Method (CPM) are two
techniques involved in the planning process. PERT is a group analysis and flow-chart procedure that
begins with identification of the activity sequence of dependent activities for the purpose of achieving a
specific goal.

Application of PERT:-
The application of PERT, however, is limited due to difficulties in estimating the duration of various
activities. The probabilistic PERT is not of much use since assigning probabilities to the project activity
time is not easy.

PERT is intended for very large-scale, one-time, non-routine, complex projects with a high degree of
intertask dependency, projects which require a series of activities, some of which must be performed
sequentially and others that can be performed in parallel with other activities.

The technique called PERT-Cost attempts to incorporate a cost dimension into the network analysis. This
is basically an extension of the planning of the time dimension. This helps in developing a critical path
that is optimum considering both time and cost aspects jointly. For the purpose of planning, it is
supposed to provide a basis for analysing the actual time and cost jointly. It also helps in determining
the cash flow requirement during the course of the project.

Today, the distinction between PERT and CPM as two separate techniques has largely disappeared.
Computerized versions of the PERT/CPM approaches often contain options for considering uncertainty
in activity times as well as activity time – cost trade-offs. Today, project planning, scheduling and
controlling procedures have combined the features of PERT and CPM and the distinction between the
two techniques is no longer necessary.

Advantages of PERT:-

a) The priority need is to keep the project simple,

b) The front-end activities are detailed and far-end activities summarized, and
c) It is divided according to agency or department for better understanding and visibility.

PERT is a project evaluation technique. Events and activities must be sequenced in the network under a
highly logical set of ground rules, which allow the determination of important critical and non-critical
paths for analysis. PERT can be applied where the activities are complex and largely sequential in nature.

BBA 501 Exam Guide Book MCQ Question

1. Adam Smith introduced the concept of specialization of labour in the manufacturing process.
(True/False)

Ans- True

2. By the end of the eighteenth century, the internal combustion engine had been invented.
(True/False)

Ans- False
3. Digital manufacturing has disabled companies to rapidly build to order, maintain nonstop
production and integrate their supply chains. (True/False)

Ans- False

4. The term ___________ is applicable to entities like manufacturing units, machinery,

equipment, assembly lines, etc.

Ans- Production

5. Production theories and practices were being used in a broad range of_________ and
conditions, which have very little or no link with industries or manufacturing.

Ans- Operations

6. A ________ comprises a process wherein an input is transformed or converted into the

desired output with a feedback procedure.

Ans- System

7. The six Ms associated with the production process are __________ , __________,
__________, __________, ________, and _____________

Ans- Man, machine, materials, money, method, management

8. The transformation process includes ________, ________, __________, and

_____________

Ans- Alteration, transportation, storage, output

9. Goods are tangible but ___________ are intangible.

Ans- Services

10. Marketing establishes the demand for goods and sells what is produced. (True/False)

Ans- True

11. Finance provides the capital for equipment and resources. (True/False)

Ans- True

12. Human Resource Management provides and manages manpower. (True/

False)

Ans- True

13. An organization can survive only if its products satisfy the _________.

Ans- Customers
14. The __________ of the product should be competitive to achieve sales.

Ans- Pricing

15. Production and _________ management plays a vital role in providing the product or service
on time by effectively maintaining production schedules.

Ans- Operations

16. _________ makes way for fast and efficient operations in manufacturing companies, as well
as facilitates cost- saving measures.

Ans- Technology

17. Characteristics of a human being are not thought of as fixed quantities. (True/False).

Ans- True

18. The ___________ process starts by determining that which is required and then working on
the pattern for achieving that target.

Ans- Planning

19. A company’s operation strategy is decided by framing its _________.

Ans- Key Success Factors (KSFs)

20. __________ related competencies render firm competent to provide products at a lesser
price than that offered by rivals.

Ans- Cost/Price

21. _________ priorities are necessary to design new products and services at operational
levels.

Ans- Competitive

22. The functional-level managers and supervisors are not required to take timely initiatives and
make quick decisions. (True/False)

Ans- False

23. The common objectives of any kind of organization are _________, ______ and
__________.

Ans- Customer satisfaction, profitability, timeliness

24. An effective POM needs to produce goods or render services of the right quality in right
quantities at the right time and at _______.
Ans- Minimal costs

25. The three most important functions in an organization are_________, _________,

__________, and __________.

Ans- Finance, operations, marketing and sales

26. Production process selection helps in evaluating different process options possible to
produce the type of product in terms of volume and variety and other factors to select the best-
suited process. (True/False)

Ans- True

27. Purchasing management is responsible for making the input material available in time, at
the right price and in the right quantity and quality. (True/False)

Ans- True

28. Quality control is responsible for maintaining minimum inventory of all critical materials and
ensuring no overstocking takes place. (True/False)

Ans- False

29. ____________ is a measure of the quantity of output per unit of input.

Ans- Productivity

30. While __________ means doing something at lowest possible cost, _________ means
doing the right thing to create maximum value for the company.

Ans- Efficiency, effectiveness

31. Strategy means a planned methodology to complete a given job. (True/False)

Ans- True

32. Operations strategy is a set of decisions taken across the organization to help support the
implementation of the competitive business strategies. (True/False)

Ans- True

33. The __________ crisis dominated the headlines in 2012 as policy makers attempted to
rescue it from break-up.

Ans- Euro Zone

34. Domestic austerity measures, rising unemployment rates and decelerating external demand
for goods and services had a positive impact on growth in 2012. (True/False)

Ans- False
35. Market analysis makes assessment of the strength of the competitors for adopting or
making changes in the strategy as per the needs of the buyer and offers cost-effective solutions.
(True/False)

Ans- True

36. Companies bring out goods as per the new technological advancement in automotive,
electronics and all other fields that provide improved facilities and comforts to the buyers.
(True/False)

Ans- True

37. Resources can be hired but not purchased by the management. (True/False)

Ans- False

38. The planning of operational strategy and execution is the inherent job to Be done by the
management. (True/False)

Ans- True

39. According to _________ (1994), ‘an organization needs a sense of where it is going and
what forces in its environment are going to help or hinder it in achieving its goal’.

Ans- Mintzberg

40. A top-down hierarchical approach to strategy consists of three main levels of strategy:
_________, __________, and ___________.

Ans- Corporate, business, functional

41. Forecasting means to predict about ___________ events by the best possible means or
tools.

Ans- Future

42. Sales forecasting is the basis for planning various activities, such as production activities,
price policies, marketing planning, programmes policies and ___________.

Ans- Strategies

43. Forecast symbolizes a commitment on the part of the sales department and each of its
divisions for expected sales. (True/False)

Ans- True

44. The sales forecasting for a year or lesser period is known as long-run forecasting.
(True/False)

Ans- True
45. The grass roots method suffers from the disadvantage of being highly subjective.
(True/False)

Ans- True

46. Delphi method was developed by the Rand Corporation in the 1950s. (True/False)

Ans- True

47. Time series method uses ___________ data to predict the future.

Ans- Historical

48. The simple average method smoothens random _________________.

Ans- Fluctuation

49. Product selection and development take place in a single step. (True/False)

Ans- False

50. In product selection, idea generation means searching for new products.(True/False)

Ans- True

51. Ideas are listed by companies into three categories: _________ ideas, ________ ideas and
__________.

Ans- Promising, marginal, rejects

52. ___________ refers to the process of creating new products or modifying the existing ones
in a pre-defined time frame.

Ans- Product development

53. Introducing a new product adds to the __________ for an organization by an increase in
sales.

Ans- Profitability

54. __________ implies an economical process used for converting raw material into finished
goods.

Ans- Process selection

55. __________ is associated with the sequences of operations necessary to meet product
specifications.

Ans- Product design

56. ___________ is placing people with the right talent at the right place at the right time for
achieving organizational goals.

Ans- Manpower planning

57. In the ____________ environment, goods are produced before customers place orders.

Ans- Make-to-Stock

58. Routing means determination of the sequence of operations for manufacturing a product or
service. (True/False)

Ans- True

59. Dispatching means preparation and distribution of work orders and manufacturing
instructions to the concerned departments in accordance with the details worked out under
routing and scheduling functions. (True/False)

Ans- True

60. __________ means comparing the actual with the written or expected specifications and
assessing whether they have been met.

Ans- Inspection

61. A __________ is a planned schedule of completing the end items.

Ans- Master Production Schedule

62. When the input exceeds the output, backlogs build up at the work centre, congestion occurs,
processing becomes inefficient, and the flow of work to downstream work centres becomes
sporadic. (True/False)

Ans- True

63. The objective of assembly line balancing is to sub-divide the network into several sub-
networks (stations) without violating the precedence relationships. (True/False)

Ans- True

64. The process of determining the order of jobs to be processed on the machine or in a work
centre is known as ______.

Ans- Job sequencing

65. Gantt charts require updating at regular intervals. (True/False)

Ans- True

66. The process of determining the order of jobs to be processed on the machine or in a work
centre is known as ______ or priority sequencing.
Ans- Job sequencing

67. Operations technology includes computer software, hardware, etc. (True/False)

Ans- True

68. The full form of CAD is ____________.

Ans- Computer-Aided Design

69. The full form of FMS is ____________.

Ans- Flexible Manufacturing System

70. Continuous Production System (CPS) involves continuous physical flow of material.
(True/False)

Ans- True

71. Process Production is used for ___________ items for which the demand is continuous or
high.

Ans- Manufacturing

72. An ___________ consists of two or more computer-controlled machines linked by handling

devices such as robots and transport systems.

Ans- FMS

73. A _________ is a programmable machine designed to handle materials or tools in the

performance of a variety of tasks.

Ans- Robot

74. ____________ combines several management functions into a logical integrated system
and allows flow of information across these functions.

Ans- ERP

75. ERP is designed to model and automate basic processes across the organization over a
____________ database and discards the need of disparate systems maintained by various
units of the organization.

Ans- Centralized

76. ERP system grew to replace the islands of information by integrating these traditional
business functions. (True/False)

Ans- True
77. ERP system provides a tremendous boost to the efficiency of daily transactions such as
order fulfillment, timely shipment, vendor performance, quality management, invoice
reconciliation, sales realization, and cash management. (True/False)

Ans- True

78. Materials management is controlling, organizing and managing materials/ stock so that it
guarantees the maximum return for a business. (True/False)

Ans- True

79. Materials management is the same between organizations. (True/False)

Ans- False

80. ____,____,____ and _______ are functions of material management.

Ans- Purchasing, procurement, distribution and warehousing

81. Hand to Mouth, Scheduled, Market, Speculative, and Contract purchasing are a few
methods of ______.

Ans- Purchasing

82. _________,__________ and _________ are types of purchasing contracts.

Ans- Rate, running, service

83. Store keeping is the process of storing raw materials or goods under the supervision of a
storekeeper or store controller. (True/False)

Ans- True

84. Warehouse performs activities that are concerned with receipt, packing and dispatch of
finished goods to various destinations. (True/False)

Ans- True

85. _______,_________,________ and _________ are types of stores.

Ans- Receiving, main, warehouse, special

86. Special Stores are further divided into _____,______ and ______ stores.

Ans- Bonded, statutory, temperature-controlled

87. __________ may be defined as a detailed record of portable goods and general supplies
that are required for manufacturing a product.

Ans- Inventory
88. Inventory may be explained as an idle ___________ of any kind with an economic value.

Ans- Resource

89. __________ refers to a way of identifying particular items and categorization of related
inventory items.

Ans- Coding

90. Superior cost, quality, delivery and technological performance guarantee success for supply
chain. (True/False)

Ans- False

91. In a Single entity as there are varieties of planning and control functions across the supply
chain, the responsibility is given to the single or particular group or person. (True/False)

Ans- True

92. Decisions have strategic implications than just operational ones in the supply chain.
(True/False)

Ans- True

93. Value chain activities are general and vary by industry. (True/False)

Ans- True

94. Competitive advantage cannot be obtained by optimizing and coordinating linked activities.
(True/False)

Ans- False

95. Alliances are a very resource-intense approach to supply management. (True/False)

Ans- True

96. ______ is the method of controlling the supply of products, energy, information and other
resources like services and people from the source of production to the market.

Ans- Logistics

97. A B2B e-commerce is when large numbers of buyers and sellers meet at a common virtual
market place. (True/False)

Ans- True

98. Radio-Frequency Identification refers to small electronic devices that consist of a small chip
and an antenna. (True/False)

Ans- True
99. _________is the combination of computers and telecommunication which offers the fastest
means of communication.

Ans- Internet

100. Data Warehousing is a database used for ________and ________.

Ans- Reporting, analysis

101. The actual _________ phase of a project is when the work is carried out.

Ans- IMplementation

102. ___________ and ___________ project structures together form a matrix.

Ans- Functional, pure

103. The ___________ is a complete blue print for the execution of the project and is an
implementation guide for the project team.

Ans- Detailed project report

104. Slack concept is dependent on both availability of _______and________.

Ans- Orders, resources

105. _______ are often thought of as milestones by which to measure the progress of a project.

Ans- Events

106. The direct cost associated with each crash time is called the _______.

Ans- Crash cost

107. _______ of a project means intentionally reducing the duration of a project by allocating
more resources to it.

Ans- Crashing

108. The _________ are the institutional customers of small parts, components or sub-
assemblies from anciliary units.

Ans- Original Equipment Manufacturers (OEMs)

109. The process of deciding on the facility _________ begins by listing the various location
options.

Ans- Location
110. __________ refers to the placement of machinery and materials in the order in which they
are to be used for producing the product.

Ans- Product layout

111. The layout in which the production operation is performed in a fixed position is called the
________layout or _________layout.

Ans- Project, fixed position

112. ___________indicate the relative degree of desirability of having one department situated
near another.

Ans- Closeness ratings

113. __________ management is required to ensure reduction in the downtime of the

machineries and plant.

Ans- Maintenance

114. Systems of maintenance can be broadly classified into two types: ________ and
________.

Ans- Planned, unplanned.

115. _________ is the most important activity of any maintenance management system.

Ans- Inspection

116. ____________is a detailed and thorough checkup undertaken periodically to give a new
lease of life to a machine.

Ans- Overhauling

117. When the design of a machine or its parts are modified for the purpose of reducing the time
and human effort needed for performing the maintenance task, it is called________

Ans- Design-in maintenance

118. Work study is a practical concept as it deals with human beings who have their own
character and outlook. (True/False)

Ans- True

119. The floor plan representing the gathering of all equipment marked to scale is known as the
Layout diagram. (True/False)

Ans- True
120. __________ is an arrangement of points at which materials are introduced into the process
the series of processes and inspections performed.

Outline process chart

121. __________ is a scientific and systematic method by which an organization can determine
the most appropriate method to manufacture a product.

Ans- Method study

122. __________ are basic movements based on various parts of the human body.

Ans- Threbligs

123. Work measurement is a technique to develop time standards for the performing jobs.
(True/False)

Ans- True

124. Time study is a method of work measurement which is generally used when the work is
repetitive. (True/False)

Ans- True

125. In work sampling, the ________ is a major issue.

Ans- Size of the sample

126. _________ are not required in work sampling.

Ans- Timing devices

127. The full form of PMTS is ___________.

Ans- Predetermined Motion Time Studies (PMTS)

128. In JIT incoming material is delivered directly at the point of use at the shop floor.
(True/False)

Ans- True

129. ________ and __________ are two main objectives of JIT.

Ans- Waste reduction, enhance productivity

130. Check sheets are used to track the frequency of occurrence of specific events that occur
during a sampling period. (True/False)

Ans- True

131. The bar chart is commonly used for presentation of ____________ data.

Ans- Qualitative
132. The four hazards in the fault tree analysis are ___________, ________, ________ and
_______ hazards.

Ans- Negligible, marginal, critical, catastrophic

133. TQM is concerned with continuous improvement in all work. (True/False)

Ans- True

134. TQM allows and encourages participation among shop floor workers and managers.
(True/False)

Ans- True

135. Deming’s 14 points includes stabilizing reasons of improvement. (True/False)

Ans- True

136. Six Sigma is defined as a broad and comprehensive system for building and sustaining
business performance, success and leadership. (True/False)

Ans- True

137. The key focus of Six Sigma is on ____________.

Ans- Processes
138. JIT system helps, to fence from the problems that may rise using the _________
instead of moderate inventories.

Ans - underutilized capability

139. Quality, basically relates to the ‘features’ or ‘characters’ or some ‘attributes’ of

_________or service or similar offerings.

Ans - a product

140. Prevention costs, Appraisal costs, internal failure costs, external failure costs are the major
costs of_____.

Ans - quality

141. ___ensures utmost efficiency and secures commercial leadership in a business by placing
processes and systems which raise excellence.

Ans - TQM

142. Six Sigma is defined as a broad and comprehensive system for building and sustaining
business performance, success and _____.
Ans - Leadership

143.Define just in time .

Ans - This is a management study that makes great efforts to remove sources of production
waste by manufacturing the right part in the right place at the right time.

Its objectives are:

 Waste reduction
 Respect for humans

144. There are several techniques for measuring work. The most common are:

• Time study

• Work sampling

• Standard data

• __________.

Ans - Predetermined Motion Time Studies (PMTS)

145. Methods Time Measurement (MTM) was developed in _________ from studies of motion
picture films of assembly operations.

Ans - 1948

146. String diagram helps in finding out the points of congestion and back tracking by depicting
the movements as________.

Ans - Continuous threads

147. Systems of maintenance can be broadly classified into two types: _______ and unplanned.

ANS - planned

148. There are three factors that predominantly influence a project: Time, _______, and Cost.

ANS - Resources

149. A Supply Alliance is a business relationship between a buyer and a________.

ANS - Supplier

150. When many buyers and sellers meet at a common virtual market place then it is
called_______.
ANS - B2B e-commerce

151. Supply Chain Management (SCM) is a philosophical approach of tools and techniques,
which mostly requires immense amount of interaction and trust between __________to work.

ANS - Organizations

152. An ______streamlines the functioning of procurement and purchase of raw materials,

awarding orders to suppliers and billing.

ANS - ERP Purchase module

153. Automation and advanced technology began in the 1950s with the development of
________(N/C) machine tools.

ANS - Numerically Controlled

154. The most commonly used qualitative techniques are:

(i) Grass roots method

(ii) Consensus method

(iii) Delphi method

(iv) Historical analogy method

(v) ____________

Ans - Market Research method

155. Quantitative Techniques are of the following three types:

Ans -

(i) Time series analysis method

(ii) Causal relationships using cause–effect models

(iii) Simulation

QN156. Forecasting simply means an approximate estimation of type, _________ and quality
of future work, like sales, etc.

ANS - quantity
QN157. 1. Who introduced the concept of specialization of labour in the manufacturing process?

a. Adam Smith

b. John Smith

c. Robert Smith

d. Adam Roberts.

ANS - a. Adam Smith

158. The term ___________ is applicable to entities like manufacturing units, machinery,

equipment, assembly lines, etc.

a. Operation

b. Production

c. Management

d. Finance

ANS - Production

159. Production theories and practices were being used in a broad range of Operations and

conditions, which have very little or no link with industries or manufacturing.

a. True

b. False

ANS - a. True

160. The __________ process starts by determining that which is required and then working on

the pattern for achieving that target.

a. Manufacturing

b. Production

c. Planning

d. Financing
ANS - c. Planning

161. A company’s operation strategy is decided by framing its Key Success Factors (KSFs).

a. True b. False

ANS - a. True

162. A company’s operation strategy is decided by framing its Key Success Factors (KSFs).

a. True b. False

Ans - a. True

163.Competitive priorities are necessary to design new products and services at ___________

levels.

a. Operational b. Planning c. Management d. Administrative

Ans - . Operational

164. The common objectives of any kind of organization are customer satisfaction,

_____________ and timeliness.

a. Production

b. High sales

c. Low cost

d. Profitability

Ans - d. Profitability

165. An effective POM needs to produce goods or render services of the right quality in right

quantities at the right time and at _____________.

a. High costs

b. Right sales pitch

c. Minimal costs

d. None of the above

Ans - c. Minimal costs

166.Strategy does not refer to a planned methodology to complete a given job.

a. True b. False

ans - b. False

167. Administration strategy is a set of decisions taken across the organization to help support

the implementation of the competitive business strategies.

a. True

b. False

Ans - b. False

168.The Euro Zone crisis dominated the headlines in ______ as policy makers attempted to

rescue it from break-up.

a. 1990

b. 2012

c. 2001

d. 2010

Ans - b. 2012

169. _____________ makes assessment of the strength of the competitors for adopting or

making changes in the strategy as per the needs of the buyer and offers cost-effective

solutions.

a. Market analysis

b. Finance analysis

c. Resource analysis
d. Operations analysis

Ans - a. Market analysis

170.Companies bring out goods as per the new ___________ advancement in automotive,

electronics and all other fields that provide improved facilities and comforts to the buyers.

a. Quality

b. Operations

c. Technological

d. None of the above

ANS – Technological

171. Forecasting means to predict about future events by the best possible means or tools.

a. True b. False

ANS - a. True

172. ____________ is the basis for planning various activities, such as production activities,
price

policies, marketing planning, programmes policies and strategies.

a. Market forecasting

b. Financings

c. Sales forecasting

d. Manufacturing

ANS - c. Sales forecasting

173. Forecast symbolizes a commitment on the part of the HR department and each of its

divisions for expected sales.

a. True

b. False

ANS - b. False
174. The grass roots method suffers from the disadvantage of being ____________.

a. Highly subjective

b. Short-sighted

c. Highly expensive

d. None of the above

ANS - a. Highly subjective

175. In product selection, ____________ means searching for new products.

a. Planning

b. Idea generation

c. Resource planning

d. Market research

ANS - b. Idea generation

176. Ideas are listed by companies into three categories: promising ideas, marginal ideas and

______________.

a. Acceptable b. Mind-range c. Rejects d. Recommended

ANS - c. Rejects

177. ___________ refers to the process of creating new products or modifying the existing ones

in a pre-defined time frame.

a. Product planning

b. Product development

c. Manufacturing

d. None of the above

ANS - b. Product development

178. __________ means determination of the sequence of operations for manufacturing a

product or service.

a. Routing

b. Planning

c. Manufacturing

d. Operations

ANS - Routing

179. Process Production is used for manufacturing items for which the _______ is continuous or

high.

a. Price

b. Demand

c. Quality

d. None of the above

ANS - Demand

180. Process Production is used for manufacturing items for which the _______ is continuous or

high.

a. Price

b. Demand

c. Quality

d. None of the above

ANS - b. Demand

181. Which of these refers to controlling, organizing and managing stock so that it guarantees
the

maximum return for a business?

a. Materials management

b. Human resource management

c. Finance management

d. None of the above

ANS - Materials management

182. Hand to Mouth, Scheduled, Market, Speculative, and Contract purchasing are a few
methods

of ___________________.

a. Marketing

b. Sales

c. Purchasing

d. Planning

ANS - c. Purchasing

183. Rate, running and service are types of _______________.

a. Purchasing contracts

b. Marketing techniques

c. Material sourcing techniques

d. Sales contracts

ANS - a. Purchasing contracts

184. Which of these performs activities that are concerned with receipt, packing and dispatch of

finished goods to various destinations?

a. Purchase department

b. Sales department

c. Warehouse

d. Marketing department
ANS - c. Warehouse

185. ________ are a very resource-intense approach to supply management.

a. Alliances

b. Markets

c. Sources

d. Planning concepts

ANS - a. Alliances

186. ______ concept is dependent on both availability of orders and resources.

a. Stiff

b. Loose

c. Slack

d. Pile

ANS - Slack

187. Events are often thought of as milestones by which to measure the _______ of a project.

a. Cost

b. Feasibility

c. Compatibility

d. Progress

ANS - d. Progress

188. Which of these refers to the placement of machinery and materials in the order in which

they are to be used for producing the product?

a. Location

b. Product layout
c. Placement

d. Warehouse

ANS - Product layout

189. Maintenance management is required to ensure reduction in the ________ of the

machineries and plant.

a. Cost

b. Sales

c. Downtime

d. Manufacture

ANS - Downtime

190. Work study is a practical concept as it deals with _________ who have their own character

and outlook.

a. Machines b. Human beings c. Robots d. Plans

ANS - b. Human beings

191. The floor plan representing the gathering of all equipment marked to scale is known as the

________________.

a. Floor arrangement

b. Factory settings

c. Layout diagram

d. Blueprint

ANS - c. Layout diagram