Aim - Case study based assignment on method study

Definition of Method Study:

Method-study concerned with “the way in which work is done (i.e., method)”. It is used to simplify
the way to accomplish a work and to improve the method of production. Method- study results in
a more effective use of material, plant, equipment and manpower. Method study is the process of
subjecting work to systematic, critical scrutiny to make it more effective and/or more efficient.

Scope of Method Study:

1. Layout of shop floor and working areas or work stations
2. Working conditions i.e. ergonomics etc.
3. Handling distances (material movement)
4. Tooling and equipment used.
5. Quality standards to be achieved
6. Operators and operations in achieving the production targets
7. Materials to be used
8. Power required and available
9. Work cycle time.
10. Working processes.

Objectives of method study are:

1. The improvement of processes and procedures
2. Factory and work place layout improvement.
3. Improvement in the design of plant and equipment
4. Reduction in unnecessary fatigue and movements
5. Use of improved materials, machines and manpower
6. Better Working conditions

Steps involved in method study:

The basic approach to method study consists of the following eight steps. The detailed
procedure for conducting the method study is shown in Fig.

1. SELECT the work to be studied and define its boundaries.

2. RECORD the relevant facts about the job by direct observation and collect such
additional data as may be needed from appropriate sources.

3. EXAMINE the way the job is being performed and challenge its purpose, place
sequence and method of performance.

4. DEVELOP the most practical, economic and effective method, drawing on the
contributions of those concerned.
 5. EVALUATE different alternatives to developing a new improved method
comparing the cost-effectiveness of the selected new method with the current method with the
current method of performance.

6. DEFINE the new method, as a result, in a clear manner and present it to those
concerned, i.e., management, supervisors and workers.

7. INSTALL the new method as a standard practice and train the persons involved in
applying it.

8. MAINTAIN the new method and introduce control procedures to prevent a drifting
back to the previous method of work.

Fig.1 Method Study Procedure

Symbols Used in Method Study:

Graphical method of recording was originated by Gilberth, in order to make the

presentation of the facts clearly without any ambiguity and to enable to grasp them quickly and
clearly. It is useful to use symbols instead of written description.

Sr.
Events Symbols Descriptions
NO
1 Operation Operation represent an action, it is a step in the procedure. An
operation involves a change in the location or condition of a
product. Example: Cutting a bar on power hacksaw.
2 Storage Storage represent a stage when a finish good or a raw material
awaits an action or an item has been retain for quite some time.
Example: milling cutter lying in tool store.
3 Delay or Delay occurs when something stop the process and product waits
Temporary for the next events. Example: power failure.
storage
4 Transport Transport indicates a movement of an item from one location to
another. The item may be material, manpower, equipment,
machinery, etc.
5 Inspection Inspection is an act of checking for correction of the quantity or
the quality of the item.

CHARTS

This is the most popular method of recording the facts. The activities comprising the jobs are
recorded method study using symbols. A great care is to be taken in preparing charts so that
the information it shows is easily understood and recognized. The following information should
be given in the charts:

a) Adequate description of the activities.

b) Whether the charting is for present or proposed method.
c) Specific reference to when the activities will begin and end.
d) Time and distance scales used wherever necessary.
e) The date of charting and the name of the person who does charting
 Flow Process Chart

FLOW PROCESS CHART MAN/MATERIAL/EQUIPMENT TYPE

Chart No.: Sheet No.: SUMMARY

Subject Charted: Activity Present Proposed Savings

Date: Operation
Activity: Transportation

Inspection
Method: Present/Proposed
Delay

Storage

Location: Time:
Operator(s): Clock No.: Distance:

Charted By: Cost:

Approved BY:
Description Distance Time Symbol Remarks
(m) (Min.)

Total
Aim- Hands on assignment on application of Work Measurement
Techniques

Definition of Work Measurement:

Work measurement is also called by the name ‘time study’. It is essential for both
planning and control of operations.

According to British Standard Institute time study has been defined as techniques designed to
establish the time for a qualified worker to carry out a specified job at a defined level of
performance.”

Objectives of Work Measurement:

The use of work measurement as a basis for incentives is only a small part of its total
application. The objectives of work measurement are to provide a sound basis for:

1. Comparing alternative methods.

2. Assessing the correct initial manning (manpower requirement planning).

3. Planning and control.

4. Realistic costing.

5. Financial incentive schemes.

6. Delivery date of goods.

7. Cost reduction and cost control.

8. Identifying substandard workers.

9. Training new employees.

Techniques of Work Measurement:

For the purpose of work measurement, work can be regarded as:

1. Repetitive work: The type of work in which the main operation or group of operations repeat
continuously during the time spent at the job. These apply to work cycles of extremely short
duration.

2. Non-repetitive work: It includes some type of maintenance and construction work, where
the work cycle itself is hardly ever repeated identically.

Various techniques of work measurement are:

1. Time study (stop watch technique),

2. Synthesis,

3. Work sampling,

4. Predetermined motion and time study,

5. Analytical estimating.

Steps in Making Time Study:

Stop watch time is the basic technique for determining accurate time standards. They
are economical for repetitive type of work. Steps in taking the time study are:

1. Select the work to be studied.

2. Obtain and record all the information available about the job, the operator and the working
conditions likely to affect the time study work.

3. Breakdown the operation into elements. An element is a instinct part of a specified activity
composed of one or more fundamental motions selected for convenience of observation and
timing.

4. Measure the time by means of a stop watch taken by the operator to perform each element
of the operation. Either continuous method or snap back method of timing could be used.

5. At the same time, assess the operator’s effective speed of work relative to the observer
concept of ‘normal’ speed. This is called performance rating.

6. Adjust the observed time by rating factor to obtain normal time for each element

7. Add the suitable allowances to compensate for fatigue, personal needs, contingencies.etc. to
give standard time for each element.

8. Compute allowed time for the entire job by adding elemental standard times considering
frequency of occurrence of each element.

9. Make a detailed job description describing the method for which the standard time is
established.

10. Test and review standards wherever necessary. The basic steps in time study are
represented by a block diagram in Fig.No.1
 Figure 1: Steps in time study

Time study Equipment:

Stop watch: Stop watch is measuring instrument (Fig.No.2) to observe the elemental
timings and usually a decimal watch is used.

A- Slide for stopping and starting the movement

B- Winding knob. Pressure on this knob returns both the hands to zero.

Figure 2: Decimal-minute stop watch

 Time study sheet
DEPARTMENT: SECTION:

SHEET NO.
OPERATION:
CLOCK NO.

PLANT/MACHINE: DATE:

MACHINE NO.: STUDIED BY:

TOOLS AND GAUGES: CHECKED:

EL ELEMENT DESCRIPTION Observed Time Total Average Rating B.T.
O.T. O.T.
1 2 3 4 5

O.T.=Observed Time
R=Rating,
B.T.=Basic Time
STD.TIME= Basic Time + Allowances
(Basic Time= Observed Time x Rating Factor)
Aim-Assignment on industrial safety audit of selected work environment

INDUSTRIAL SAFETY AUDIT

The examples outlined below do not list all the possible items for manufacturing facilities.
The best checklist for your workplace is one that has been developed for your specific
needs. Whatever the format of the checklist, provide space for the inspectors' signatures
and the date.

Inspectors: Date:
(O)Satisfactory
(X) Requires Action
Remark
1 Training

a Is training provided for each person newly

assigned to a job?
Does initial training include a thorough
b review of hazards and incidents associated
with the job?
c Is adequate instruction in the use of personal
protective equipment provided?

d Is training for the use of emergency

equipment provided?

e Are workers knowledgeable in the "Right to

Refuse" procedures?
2 Environment
Are resources available to deal with very hot
a or very cold conditions (drinking water,
lined gloves, insulated boots)?
Is the rain/cold weather gear that is provided
b comfortable, and light enough so as not to
constitute a hazard?
c Are work surfaces and grip surfaces safe
when wet?
Do workers know the symptoms of heat
d cramps/heatstroke, or frost
bite/hypothermia?
3 Work Process

a Are repetitive motion tasks properly paced

and kept to a minimum?
b Are the safety data sheets accessible to all
employees?
c
Are hazards signalled by signs and tags?

d Have all trucks, forklifts and other

equipment been inspected and maintained?
e Are lockout or tagout procedures in place
and followed?
f Is ventilation equipment working
effectively?

g Is the fume and dust collection hood

working effectively?
Are the safety showers and eye wash stations
h in the proper locations and in good working
condition?
4 Fire Emergency Procedures

a Is there a clear fire response plan posted for

each work area?

b
Do all workers know the plan?

c
Are drills held regularly?

d Are fire extinguishers chosen for the type of

fire most likely in that area?

e Are there enough extinguishers present to do

the job?
f Are extinguisher locations conspicuously
marked?
g Are extinguishers properly mounted and
easily accessible?

h Are all extinguishers fully charged and

operable?

i Are special purpose extinguishers clearly

marked?
5 Means of Exit

a Are there enough exits to allow prompt

escape?
b
Do employees have easy access to exits?

c Will exit doors open in an emergency to

allow egress?
d Are exits clearly marked?

e Are exits and exit routes equipped with

emergency lighting?

f Are exits and exit routes accessible (e.g., no

items stored in the pathway or doorway)?
6 Warehouse and Shipping

a Are dock platforms, bumpers, stairs and

steps in good condition?

b
Are light fixtures in good condition?

c
Are all work areas clean and free of debris?

d Are stored materials properly stacked and

spaced?
e
Are tools kept in their proper place?

f Are there metal containers for oily rags and

similar rubbish?

g
Are floors free of oil spillage or leakage?

h Is absorbent available for immediate clean-

up of spills and leaks?

i Are all hazardous products stored

appropriately?
7 Loading/Unloading Racks

a Are steps, railings and retractable ramps on

raised platforms in good repair?

b Is piping and in-line equipment in good

condition and free of leaks?
c Are loading arms operating satisfactorily?

d Do submerged filling two-stage valves

operate properly?

e Are bonding and grounding cables free of

breaks or damage?
f Are connections tight and sound?
Is the general condition of wiring and
g junction boxes, etc. in good condition (visual
inspection)?
8 Lighting

a Is the level of light adequate for safe and

comfortable performance of work?

b Does lighting produce glare on work

surfaces, monitors, screens and keyboards?

c Is emergency lighting adequate and regularly

tested?
9 Machine Guards

a
Are all machine parts adequately guarded?

b
Do machine guards meet standards?

c Are all guards in place and operating as

designed?
Are lockout procedures followed when
d performing maintenance with guards
removed?
10 Electrical

a Is the Canadian Electrical Code followed for

operation, use, repair and maintenance?

b
Are all machines properly grounded?

c Are portable hand tools grounded or double

insulated?
d
Are junction boxes closed?

e Are extension cords out of the aisles where

they can be abused by heavy traffic?

f Is permanent wiring used instead of

extension cords?
11 Tools and Machinery

a Are manufacturers' manuals kept and

followed for all tools and machinery?
b
Do power tools conform to standards?
Are tools chosen to be models that can be
c used properly by employees (e.g., size,
weight, ergonomic features)?
 Are defective tools tagged and removed
d from service as part of a regular maintenance
program?

e Are tools and machinery used so as to avoid

electrical hazards?

f Is proper training given in the safe use of

tools and machinery?
12 Confined Spaces
Are the confined space procedures and
a training available and followed by all
involved?
b
Are entry and exit procedures adequate?

c Are emergency and rescue procedures in

place (e.g. trained safety watchers)?
13 Housekeeping
a
Is the work area clean and orderly?

b Are floors free from protruding nails,

splinters, holes and loose boards?
c Are aisles and passageways kept clear of
obstructions?
d Are permanent aisles and passageways
clearly marked?
e Are covers or guardrails in place around
open pits, tanks and ditches?
14 Floor and Wall Openings

a Are ladder-ways and door openings guarded

by a railing?
b Do temporary floor openings have standard
railings or someone constantly on guard?
15 Stairs, Ladders and Platforms
a Are stairs and handrails in good condition?
b Are ladders free of defects?
c Are ladders set up properly before use?

d Are the elevated platforms properly secured

and do they have handrails?
16 Elevating Devices

a Are elevating devices used only within their

capacity?
b Are capacities posted on equipment?

c Are they regularly inspected, tested and

maintained?
d Are controls of the "dead man" type?
e Are operators trained?
17 Sound Level/Noise

a
Are regular noise surveys conducted?

b Is hearing protection available and used

properly?
18 Temporary Work Structures
Are temporary work structures used only
a when it is not reasonably practicable to use
permanent ones?
b Are excavations properly shored, free of
large objects (rocks, etc.) at the edges?

19 Employee Facilities

a
Are facilities kept clean and sanitary?

b
Are facilities in good repair?

c Are cafeteria facilities provided away from

hazardous products?
Are hand washing facilities available,
d especially in washrooms and near eating
areas?
20 Medical and First Aid

a Do all employees know how to get first aid

assistance when needed?
Do the first-aiders know when and to which
b hospital or clinic an injured person should be
taken?
c Are there employees trained as first-aid
practitioners on each shift worked?
d Are first-aid kits provided as per your
jurisdiction's first-aid regulations?

e Are first-aid supplies replenished as they are

used?
21 Personal Protective Equipment (PPE)

a Is required PPE provided, maintained and

used?
b Has the PPE been chosen to protect against
the hazards that are present?

c
Is the PPE reliable?
Is PPE used only when it is not reasonably
practicable to eliminate or control the
d
hazardous substance or process by other
means?
e Are the areas requiring PPE usage properly
identified by warning signs?
22 Materials Handling and Storage

a Is there safe clearance for all equipment

through aisles and doors?
b
Is stored material stable and secure?

c
Are storage areas free from tipping hazards?

d Are only trained operators allowed to

operate forklifts?

e Is charging of electric batteries performed

only in designated areas?
Are dock boards (bridge plates) used when
f loading or unloading from dock to truck or
dock to rail car?

g Are necessary warning devices and signs in

use for railway sidings?
Are specifications posted for maximum
h loads which are approved for shelving,
floors and roofs?
i Are racks and platforms loaded only within
the limits of their capacity?
j Are chain hoists, ropes and slings adequate
for the loads and marked accordingly?
k
Are slings inspected daily before use?

l Are all new, repaired, or reconditioned alloy

steel chain slings proof-tested before use?
m Are pallets and skids the correct type and
inspected?
n Do personnel use proper lifting techniques?

o Is the size and condition of containers

hazardous to workers?
Are elevators, hoists, conveyors, balers, etc.,
p properly used with appropriate signals and
directional warning signs?
23 Hazardous Product / Chemical Storage
Has the safety data sheet (SDS) been
a reviewed before handling, moving, or
storing the product?
b Is appropriate PPE used for that product?

c Is the storage area and products organized to

keep incompatible products separated?
d Are hazardous products stored away from
heat sources?
e
Are containers checked for leaks or damage?

f Are containers stored in drip trays where

necessary?

g Are all products labelled, and are missing or

damaged labels replaced immediately?
h Is spill cleanup material immediately
available?
Are bonding and grounding connections
i immediately available for flammable
products?
j Is the ventilation for the storage area
adequate for the products stored within?

Title & Address of Organization

Safety Supervisor
Sign:
Aim: Assignment on simulation determination of EOQ and plot the graphs

Economic Order Quantity is the level of inventory that minimizes the total inventory holding
costs and ordering costs. It is one of the oldest classical production scheduling models.
Economic order quantity refers to that number (quantity) ordered in a single purchase
so that the accumulated costs of ordering and carrying costs are at the minimum level.
In other words, the quantity that is ordered at one time should be so, which will
minimize the total of. Cost of placing orders and receiving the goods, and Cost of
storing the goods as well as interest on the capital invested.

Definitions
1. Economic Order Quantity (EOQ) is the order quantity that minimizes total inventory
costs.

2. Order Quantity is the number of units added to inventory each time an order is placed.

3. Total Inventory Costs is the sum of inventory acquisition cost, ordering cost, and holding
cost.

4. Ordering Cost is the cost incurred in ordering inventory from suppliers excluding the cost
of purchase such as delivery costs and order processing costs.

5. Holding Cost, also known as carrying cost, is the total cost of holding inventory such as
warehousing cost and obsolescence cost.

Total inventory cost is comprised of the following main costs:

1. Cost of purchase
2. Order Costs
3. Holding Costs
If we change the order quantity, it can affect the different types of inventory costs in different
ways.
Larger order size results in lower order costs because fewer orders need to be placed to cover
the annual demand. This however results in higher holding costs because of the increase in
inventory levels.
Conversely, smaller order size results in lower holding costs because of the decline in average
inventory level. However, as lower quantity of inventory is ordered each time, the number of
orders needed to increase in order to fulfil the annual demand which leads to higher ordering
costs. Reducing the order size may also affect the cost of purchase due to the loss of trade
discounts that are based on the order quantity.
So the question arises how we can find the optimal order quantity that minimizes the total
inventory costs.
EOQ model offers a method of finding the optimal order quantity that minimizes inventory
costs by finding a balance between the opposing inventory costs.
Formula
2 𝑥 𝐶𝑜 𝑥 𝐷  Co is the cost of placing one order

Economic Order Quantity = √− − − − − −

 D is the annual demand
𝐶ℎ
 Ch is the annual cost of holding one unit of
Assumptions inventory

 EOQ model assumes a constant demand.

 EOQ calculation assumes that ordering costs and holding costs will remain constant.

Limitations

 Since no fluctuation in demand is considered in the EOQ calculation, business losses

due to potential shortage of inventory are ignored.
 EOQ model does not take into account the seasonal fluctuations in the cost of
inventory. In seasonal industries, it would make sense to buy inventory in bulk when
it is readily available at a lower price. Inventory may be harder to procure in off
season and would usually cost more as well.
 EOQ model does not take into account purchase discounts that could be obtained by
buying inventory in bulk. We can however work around this problem as is illustrated
in this next lesson.

Q A company makes bicycles. It produces 450 bicycles a month. It buys the tires for bicycles
from a supplier at a cost of $20 per tire. The company’s inventory carrying cost is estimated to
be 15% of cost and the ordering is $50 per order.

1 .Calculate the EOQ In this problem?

2 .What is the number of orders per year?
3. Compute the average annual ordering cost?
4 Compute the average inventory?
5. What is the average annual carrying cost
6. Compute the total cost. ?
Solution

1 Calculate the EOQ In this problem

D = annual demand = (2 tires per bicycle) x (450 bicycles per month) x (12 months in a year) =
10,800 tires

S = ordering cost = $50 per order H = carrying cost = (15%) x ($20 per unit) = $ 3.00 per unit
per year EOQ = Square root of { (2 x 10,800 x $50) / $3 = Square root of 400,000 = 600 tires

The company should order about 600 tires each time it places an order.

2 What is the number of orders per year? Number of orders per year = D / Q = 10,800 / 600 =
18 orders per year
3. Compute the average annual ordering cost.

Average annual ordering cost = (18 orders per year) x ($50 per order) = $900 per year

4. Compute the average inventory.

Average inventory = Q / 2 = 600 / 2 = 300 tires

5. What is the average annual carrying cost

Average annual carrying cost = (average inventory) x (H) = (300 tires) x ( $3) = $900 per year

6.Compute the total cost.

Total cost = (Average annual ordering cost) + (average annual carrying) = ($900) + ($900) =
$1,800

Pizza hut purchases its boxes from printing supplier it delivers on an average 200 pizzas each
month boxes cost Rs 20 each and each order cost Rs 100 to process because of limited storage
space manager wants to charge inventory holding at 30% of cost. Lead time to get the boxes
once they are delivered is 7 days. Pizza hut is open 360 days per year. To make the math easier
assume 30 days in each month.

1. What is the economic order quantity?

2. What is the total cost? Be sure to include the cost of total boxes

Annual Demand (D) =2400

Cost per order (Co) =10.00

Carrying charge rate (I) =30%

Cost per case(C)=0.20

Cost for holding inventory (Ch)=0.06

Economic order quantity (Q*)=√2𝐷Co⁄ √2 ∗ 2400 ∗ 10⁄ =894.42
Ch 0.06

Annual holding inventory cost=1/2 Q Ch

𝐷
Annual ordering cost= * Co
𝑄
 Total cost Inventory Ordering cost Total cost
holding cost
100 3.00 240 243.00
200 6.00 120 126.00
300 9.00 80 89.00
400 12.00 60 72.00
500 15.00 48 63.00
600 18.00 40 58.00
700 21.00 34 55.29
800 24.00 30 54.00
900 27.00 27 53.67
1000 30.00 24 54.00
1100 33.00 22 54.82
1200 36.00 20 56.00
1300 39.00 18 57.46
1400 42.00 17 59.14
1500 45.00 16 61.00
1600 48.00 15 63.00
1700 51.00 14 65.12
1800 54.00 13 67.33
1900 57.00 13 69.63
2000 60.00 12 72.00

Economic order quantity

300.00

250.00

200.00

150.00

100.00

50.00

0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Inv Holding cost Ordering cost Total cost

Aim:-Assignment on analysis of manufacturing/Service operation for capacity
planning

Capacity is the maximum output rate or production or of a production service facility, capacity
planning is the process of establishing the output rate that may be needed of a facility. And how
you will identify or how you will find out what is the output rate which is needed at the facility
this is based on the demand for which we are doing the production capacity is usually
purchased. In order to add additional design additional types of machines which can help us to
improve or increase the demand of our product in the market tactical issues are also involved
such as work force and inventory levels and day to day use of equipment. So, tactical issues
may be as written there that workforce level and inventory levels and day to day use of
equipment also are important when we are doing the capacity planning.

Measuring capacity Examples

Type of Business Input measures of capacity Output measures of capacity

Car manufacturer Labor hours Cars per shift
Hospital Available beds Patients per month
Pizza parlor Labor hours Pizzas per day
Retail store Floor space in square feet Revenue per foot

Making Capacity planning decision

The three-step procedure for making capacity planning decision is as follow
1 Identify capacity requirement
2 Develop capacity alternatives
3 Evaluate capacity alternatives

Determine project capacity Formulate alternative to meet

requirement given for demand future capacity requirement

Evaluate alternatives based on economic factors, cost, revenue, risks,

competition, Flexibility, quality, organizational and managerial adjustments

Select optimum alternative and implement capacity development plan

Procedure for developing a plan to change capacity

Q) A manufacturer produces mustard in small and family-sized plastic bottles with the
following demand forecasts
Year 1 Year 2 Year 3 Year 4
Small 150,000 170,000 200,000 240,000
Family 115,000 140,000 170,000 200,000

Three 100,000 units-per-year machines are available for small bottle production.2 operators
are required per machine
Two 120,000 units-per-year machines are available for family-sized bottle production.3
operators are required per machine.
How much capacity is used and what are the machine and labour requirement?

Solution:

Year 1 Year 2 Year 3 Year 4

Small 150,000 170,000 200,000 240,000
Family 115,000 140,000 170,000 200,000
Small
% capacity used 50.00% 56.67% 66.67% 80.00%
Machine required 1.50 1.70 2.00 2.40
Labour required 3.00 3.40 4.00 4.80
Family size
% capacity used 47.92% 58.33% 70.83% 83.33%
Machine required 0.96 1.17 1.42 4.25
Labour required 2.88 3.50 4.25 5.00

We are having 3 machines available with us with the capacity of 100,000 each. So 3, 00,00 is
the overall capacity for making small sized bottles and demand is less than 150,000

Calculation for small size mustard

% capacity required is150, 000/300,000=50%

Machine required is 150, 000/100,000 per machine=1.5

Labour required is 1.5 machine*2 operator/1 machine=3.00

Calculation for family size mustard

% capacity required is115, 000/240,000=47.92%

Machine required is 115, 000/120,000 per machine=0.96

Labour required is 0.96 machine*3 operator/1 machine=2.88

Conclusion
So, if we see that most of the time our capacity percentage capacity used is less or
approximately equal to the maximum utilization 80 and 83 percentage here because the
demand is maximum 240 and 200 here in the 4th year. So, prior to that for the first 3 years we
are not able to utilize the capacity available with us and therefore, we can just use some creative
thinking your innovative thinking to find out other uses other usage of this capacity that is
available with us.

Poona bakery makes 148,000 rolls every week and operated 7 day/week .Determine the
design capacity, utilization, efficiency and expected output

Solution:
Actual production last week = 148,000 rolls
Effective capacity = 175,000 rolls
Design capacity = 1,200 rolls per hour
Bakery operates 7 days/week, 3 - 8 hour shifts

Design capacity = (7 x 3 x 8) x (1,200) = 201,600 rolls

Utilization = 148,000/201,600 = 73.4%

Efficiency = 148,000/175,000 = 84.6%

Efficiency = 84.6%

Efficiency of new line = 75%

Expected Output = (Effective Capacity) (Efficiency)

= (175,000) (.75) = 131,250 rolls

Aim: Assignment on simulation of routing and

scheduling model

Software:-Promodel

Problem statement: ProModel is a simulation and animation tool designed to model

manufacturing systems of all types quickly and accurately. Do the simulation for Routing &
scheduling of given plant layout in promodel. Use the following resources, task executers and
parameters. Build a model that uses lists for routing items in a simple job shop model. The
following image shows the basic layout. In this model we will have one products gear. Model is
run for 48 hours. (24*60 =1440minutes)

Location
Locations are fixed places in the system such as machines, queues, storage areas, workstations
or tanks to which parts or entities are routed for processing, storage or simply to make some
decision about further routing. Locations may be either single unit locations (a single machine)
or multiunit locations (a group of similar machines performing the same operation in parallel).

Entities
Entities or parts refer to the items being processed in the system. These may include raw
materials, piece parts, assemblies, loads, WIP, finished products, orders, or any other type of
product that may need to be tracked as it moves through the system.
Path Networks
Path networks are optional and define the possible paths that entities and resources may travel
when moving through the system. Path networks consist of nodes connected by path segments
and are defined graphically with simple mouse clicks. Multiple path networks may be defined,
and one or more resources and/or entities may share the same network. Movement along a path
network may be defined in terms of distance and speed or by time

Resources
A resource may be a person, tool, vehicle or other object that may be used to:
• Transport material between routing locations,
• Perform an operation on material at a location,
• Perform maintenance on a location or other resource that is down.
Resources may be either static or assigned to a path network for dynamic movement. A
special type of dynamic resource is a crane. Built-in decision rules can be

Processing (or Routing)

This element defines the processing sequence and flow logic of entities between routing
locations. The operation or service times at locations, resource requirements, processing logic,
input/output relationship, routing conditions, and move times or requirements can be described
using the Processing element. Routing of gear through the conveyer and then it goes to the
packing table again it follow to the conveyer and goes to the inspection bench and finally
material goes with the forklift to the shipping. For the inspection the waiting time is given as
WAIT N (4, 2) so that it takes time for inspection to carry out the process. Routing is done for
workstation to follow the path given as per the sequence.
Arrivals (or Production Schedule)
Deterministic, conditional, or stochastic arrivals can be modelled using this element.
Independent scheduled arrivals simulate scheduling of repeated appointments and production
schedules can be modeled using independent arrivals. Frequency of entity can be entered as
per the requirement.

Conclusion

It is difficult to schedule the sequence of flow of material manually. Simulation software plays
important role in this to schedule the flow without creating any bottleneck. If number of types
of product get increased then complexity will increase in such situation simulation software
will play a important role.
Aim: Case study based assignment on cost-revenue
model analysis
Introduction
Break-Even Analysis –
Break-even point refers to the level of sales (sales volume) at which the sales income (revenues)
equal the total costs. It is the point at which the profit is zero .The quantities produced (sold)
above break-even point result in profit and quantity below break-even point result in losses.
The break-even point is reached when the fixed cost are completely recovered

Break-even point is represented Total cost =Fixed cost + variable cost = F+ aQ

F represents the fixed cost. At BEP, Total cost equal total income

Q is the quantity produced and sold. Therefore, Total cost = Total income

b is the sales price per unit. F+ aQ = bQ

a is the variable cost per unit. Q = F/b-a

bQ total income (revenue). Contribution = sales – variable cost = b-a

aQ total variable cost.

𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡
BEP (units) = = 𝑃
𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑖𝑜
𝑣

Contribution = Sales-variable cost

𝑃 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛
ratio =
𝑣 𝑆𝑎𝑙𝑒𝑠

𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡+𝑝𝑟𝑜𝑓𝑖𝑡
Sales (units) =
𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛
Problem1: An analysis of the company reveals the following information

Cost Element Variable Cost Fixed Cost

Direct Material 32.8
Direct Labour 28.4
Factory Overheads 12.6 189900
Distribution Overhead 4.1 58400
General administrative Overhead 1.1 66700
Budgeted Sales are 1850000
Determine

1. Break-even sales volume

2. The profit at the budgeted sales volume
3. The profit if the actual sales (a)drop by 10% (b)increase by 5% from budgeted sales

Solution : Total variable cost as percentage of sales=32.8+28.4+12.6+4.1+1.1=79%

𝑃 𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛
𝑟𝑎𝑡𝑖𝑜 = =100-79/100=21%
𝑣 𝑆𝑎𝑙𝑒𝑠

Total fixed cost=315000

1 Break-even sales volume

𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 315000

BEP = 𝑃 = =1,500,000
𝑟𝑎𝑡𝑖𝑜 0.21
𝑣

2 The profit at the budgeted sales volume

Profit = Sales × 𝑃 𝑟𝑎𝑡𝑖𝑜-Fixed cost

𝑣
= 1850000 × 0.21-31500
= 73,500

3 The profit if the actual sales (a)drop by 10%

Actual sales =18,50,000-1,85,000 =16,65,000

Profit = Sales × 𝑃 𝑟𝑎𝑡𝑖𝑜-Fixed cost
𝑣
= 16,65,000 × 0.21 -3,15,000
= 34,650

(b) Increase by 5% from budgeted sales

Actual sales = 18,50,000 + 92,500 =19,42,500

Profit = 19, 42,500 × 0.21 – 3,15,000
= 4,07,925-3,15,000
=92,925
Problem 2: ABC company plans to sell an article at at local market. The articles are purchased
at Rs.5 on the contribution that all unsold articles shall be returned. The rent for the space is
Rs.2000. The articles will be sold at Rs.9.Determine the number of articles which must be sold
(a) To break-even
(b) To earn Rs 400 as profit
(c) If the company sells Rs 750 articles. Calculate margin of safety and profit

Solution:
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 𝐹 2000
(a) BEP (units) = = =
𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑏−𝑎 9−5

= 500 units

To earn Rs 400 as profit

𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡+𝑝𝑟𝑜𝑓𝑖𝑡 𝐹+𝑝𝑟𝑜𝑓𝑖𝑡
(b) No of articles to be sold = =
𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑏−𝑎

2000+400
= 9−5
= 600 units

The company should sell 600 units to earn the profit of Rs.400.
𝑆𝑎𝑙𝑒𝑠−𝑆𝑎𝑙𝑒𝑠 𝑎𝑡 𝐵𝐸𝑃
(c) Margin of safety = × 100
𝑆𝑎𝑙𝑒𝑠

750−500
= × 100
750

= 33.3 percent

Profit at 750 units

Profit =Total revenue-Total cost

=Total contribution-Fixed cost

=3000-2000=1000 Rs.
Aim: Case study of Supply chain management of DELL computers

Supply Chain Management is a business practice that has been employed in order to give an
effective service to customers and to make the business sustainable by considering all the
aspects from the suppliers to the consumers. Supply Chain integrates all these features such as
manufacturer, supplier, transport, wholesalers, retailers, customers and all other elements
which link the above. Its main objective is to fulfill customer demands by adding value to the
products and services..
DELL is a computer technology corporation that develops sells, repairs and supports,
computers and computer related products. DELL has realized that supply chain is becoming
more and more important for the success of today’s business world and they work accordingly
to keep a competitive advantage in the market.
Scope of the study:
Here in this study, the supply chain processes that are utilized by DELL will be taken into
consideration which is known to be one of the best in the world. DELL s supply chain will be
heavily analyzed in the areas of supply chain integration strategies and demand management
aspects.
Supply Chain of DELL:
DELL has a different business model than its competitors, which can be identified as “direct
model”. In this model DELL sells its PC s directly to customers without using a retail channel.

Therefore it creates a direct relationship with each individual customer which they have
segmented into groups to make it easier to approach.

Mainly there are three customer segments which can be illustrated as large organizations,
small and medium businesses, and personal consumers.
The other aspect that makes DELLs supply chain unique is the Build-to-order strategy.
According to this once the order is placed by the customer, all the configuration details are
sent to the manufacturing floor and then the assembly of the PC begins. Once the computer is
built and all the software’s are downloaded it will be shipped to the customer by using 3PL.
Because of these aspects DELL has the competitive advantage over others because of several
reasons. The level of inventory costs is really low since the case of faster responses to
demand changes. It is also visible that customer pays for an order before DELL pays its
suppliers for the products components.
Thus the most interesting part of DELL and its supply chain is relationship they maintain
between the customers which of course lays foundation for the existence of the business.

Supply Chain Activities Involved in Managerial Levels

For the supply chain to be strategically effective it has to be implemented in all the levels in
the organization. Therefore in all the three levels of DELL; strategic, tactical and operational,
supply chain practices are being made use of.
In the strategic level decisions will be made regarding the whole organization considering the
supply chain. These decisions are critical since it reflects the overall corporate strategy of the
company. In the case of DELL the unconventional idea of using direct sales method has to be
come from the strategic level.
Senior management of DELL is giving the strategic direction when considering the product
that the company should manufacture and offer to their customers. Especially the customer
segments are identified targeting company marketing and advertising. It is the same when it
comes to manufacturing of products strategically decisions are taken to verify the capacity of
existing facilities and other logistics related things. DELL is using 3PL providers and it applies
the theory of manufacturing overseas. It is needed to analyse and predict the capacity in supply
chain therefore measures can be taken to expand the facilities accordingly. The middle level
management team has the responsibility of this. There is more significance when it comes to
the operational level. All the supply chain activities in DELL are done thoroughly by this
cluster.

The Role of Supply Chain in Maximizing Profit in DELL

DELL is able to sustain a competitive advantage over competitors in the computer industry
because of an extremely efficient supply chain/distribution system. Also DELL has been able
to acquire superior profits in the industry since they are a knowledgeable in areas of
information, communication, e-commerce, e-business, and internet and web technologies.
DELL implements a Just-In-Time (JIT) inventory system which operates on only six days of
inventory. Because of this inventory system Dell has been able to obtain higher profit margins.
Inventory and labor are the highest liabilities that are there in a business firm. Since DELLs
inventory is only a 6 day cycle, they have been able to cut down costs on warehousing, hiring
people to track and maintain inventory, and thus avoid using out dated technology.
One other thing which makes this supply chain really competitive is the fact that DELL’s
customers can only order computers through DELL itself which results in a profoundly bond
with the customers . This makes them retain their market share in the business.
DELL is also having strategic alliances with other companies to have their products sold on
DELL’s direct selling distribution channel.
All these elements in their supply chain make them the best in the business.
The value chain of DELL

According to this value chain plays a vital role in their demand analysis which can’t be
considered as true as always since there are visible occasions when their share prices go down
drastically.
Conclusion
Even though it is said to be that their relationship is “DEEP” with customers in the Sri Lankan
context it’s quite visible that the service is not the greatest among all. In fact DELL is losing
its market share with the rising of other PC producers which is quite evident in recent share
prices of DELL.
Having a direct relationship with the customer is a good strategy but considering big customers
who are going to be retailers in that context can be a threat to this supply chain. Since somehow
it’s representing DELL and the customer service that is done by them can have an adverse
impact on them. Therefore rather than going for short term profits consideration of these aspects
would make them thrive in the industry.