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Please help me with the answers for the following questions.
please, please, please.

Q1. Write briefly what is Kaizen? How it helps an Organisation to make TQM successful?    (10)

Q2. State the process of facilitation of quality audit.    (10)

Q3. Justify the role of Six sigma in service sector quality management.    (10)

Q4. Explain the steps in CPM technique.      (10)

Q5. A bearing manufacturing factory manufactures four types of bearings, each bearing is processed in machines A,B,C,D in order of ABCD. The processing time of each (in hours) an four machines are as below:

Bearing Type   Processing time   Processing time   Processing time   Processing time
1   A   B   C   D
2   12   10   14   8
3   14   15   10   12
4   16   18   12   14
  8   6   10   12

Determine the sequencing for the four types of bearings which will minimize the total operation time. Also find the idle time of each machine, A,B, C,D   (15)

Q6.Elaborate what do you mean by Direct material usage budget and direct material purchase budget.       (10)

Q7.  Define EOQ Explain different models of EOQ in brief.    (15)

Q8. Differentiate the principles of factor rating method and point rating method.   (10)

Q9.What is break even Analysis in location evaluation.    (10)

thanking you.

ANSWER: Q1. Write briefly what is Kaizen? How it helps an Organisation to make TQM successful? (10)

The word Kaizen means "continuous improvement".

Kaizen is a system that involves every employee - from upper management to the cleaning crew. Everyone is encouraged to come up with small improvement suggestions on a regular basis. This is not a once a month or once a year activity. It is continuous. Japanese companies, such as Toyota and Canon, a total of 60 to 70 suggestions per employee per year are written down, shared and implemented.
In most cases these are not ideas for major changes. Kaizen is based on making little changes on a regular basis: always improving productivity, safety and effectiveness while reducing waste.
Suggestions are not limited to a specific area such as production or marketing. Kaizen is based on making changes anywhere that improvements can be made. Western philosophy may be summarized as, "if it ain't broke, don't fix it." The Kaizen philosophy is to "do it better, make it better, improve it even if it isn't broken, because if we don't, we can't compete with those who do."
Kaizen in Japan is a system of improvement that includes both home and business life. Kaizen even includes social activities. It is a concept that is applied in every aspect of a person's life.
In business Kaizen encompasses many of the components of Japanese businesses that have been seen as a part of their success. Quality circles, automation, suggestion systems, just-in-time delivery, Kanban and 5S are all included within the Kaizen system of running a business.
Kaizen involves setting standards and then continually improving those standards. To support the higher standards Kaizen also involves providing the training, materials and supervision that is needed for employees to achieve the higher standards and maintain their ability to meet those standards on an on-going basis.

The Benefits Resulting From Kaizen
Kaizen involves every employee in making change--in most cases small, incremental changes. It focuses on identifying problems at their source, solving them at their source, and changing standards to ensure the problem stays solved. It's not unusual for Kaizen to result in 25 to 30 suggestions per employee, per year, and to have over 90% of those implemented.
For example, Toyota is well-known as one of the leaders in using Kaizen. In 1999 at one U.S. plant, 7,000 Toyota employees submitted over 75,000 suggestions, of which 99% were implemented.
These continual small improvements add up to major benefits. They result in improved productivity, improved quality, better safety, faster delivery, lower costs, and greater customer satisfaction. On top of these benefits to the company, employees working in Kaizen-based companies generally find work to be easier and more enjoyable--resulting in higher employee moral and job satisfaction, and lower turn-over.
With every employee looking for ways to make improvements, you can expect results such as:
Kaizen Reduces Waste in areas such as inventory, waiting times, transportation, worker motion, employee skills, over production, excess quality and in processes.
Kaizen Improves space utilization, product quality, use of capital, communications, production capacity and employee retention.
Kaizen Provides immediate results. Instead of focusing on large, capital intensive improvements, Kaizen focuses on creative investments that continually solve large numbers of small problems. Large, capital projects and major changes will still be needed, and Kaizen will also improve the capital projects process, but the real power of Kaizen is in the on-going process of continually making small improvements that improve processes and reduce waste

Explain how the relevance of the concept in the present context.

Getting Started With Kaizen

For most  companies Kaizen involves a significant change in the corporate culture. This is key. The attitudes of employees - from top management down to new hires will need to change. Kaizen needs to become something all employees do because they want to, and because they know it is good for them and the company. It can not be something employees do because management dictates that it be done.
That means that if management isn't ready to lead by example, Kaizen will not get off the ground.
Employee training and communication is important. Combined with that, direct involvement by the management is critical. For example, a manager spending a week on the shop floor working with employees to help and encourage them to develop suggestions will help. That manager should also ensure employees see their suggestions acted on immediately. Suggestions should not be implemented next month or next week, but today. In some cases, a suggestion submitted in the morning can be implemented that afternoon, or sooner
Keep employees informed about what happens with their suggestions. Don't have suggestions disappear into a management "black hole."
To get Kaizen started it can be helpful to bring in outside experts. They can work in your facility identifying problems that those close to the work may not see. This serves as a "seed" allowing employees to see how Kaizen works and to experience the benefits of Kaizen.
A significant obstacle to Kaizen in many corporations is that problems are seen as negatives. We don't like problems. Someone who is associated with a problem is likely to be negatively impacted (a lower raise, missed promotion, or even fired). In Kaizen, problems are opportunities to improve. With Kaizen we want to find, report, and fix problems. Kaizen encourages and rewards the identification of problems by all employees.
To encourage the submission of suggestions, a part of each supervisor's evaluation should be based on the number of suggestions submitted by those they supervise. Don't evaluate employees on the number of suggestions they submit, evaluate your supervisors and managers and how well they are doing at getting those who work for them to actively participate in Kaizen.
Managers should develop methods to help create suggestions and increase the number of suggestions. For example, set up teams of five to 12 people to evaluate work areas, processes, quality, productivity, and equipment availability/reliability. The team then makes suggestions for improvements, and they may even implement those improvements.

Cultivates effective relationships to create a culture that supports the department's and organization's goals and strategy.
Builds coalitions through give and take; gains cooperation from others to obtain information and accomplish goals; collaborates across boundaries; recognizes which battles are worth fighting for and when it is time to compromise; seeks to build internal and external partnerships to better accomplish goals; invites other points of view; anticipates the reactions and objections of others
Identifies and takes steps to prevent potential situations that could result in confrontations; manages and resolves conflicts and disagreements in a positive and constructive manner to minimize negative impacts
Recruits, develops and retains a diverse high quality workforce; leads and manages an inclusive workplace that maximizes the talents of each person to achieve sound results; respects, understands, values and seeks out individual differences to achieve the vision and mission of the organization
Inspires and guides others toward goal accomplishments; consistently develops and sustains cooperative working relationships; fosters commitment, team spirit, pride and trust; shares leadership and helps the team become interdependent by facilitating participation and group interaction
Considers and responds appropriately to the needs, feelings and capabilities of different people in different situations; is tactful, compassionate and sensitive; challenges others' ideas without getting personal; follows through on commitments to others
Makes clear and convincing presentations to individuals and groups; listens effectively and clarifies information as needed; shares relevant information and expectations openly, honestly and in a timely fashion; targets presentations to the needs and level of the audience; translates complex information into understandable, meaningful, relevant language


- Access wider geographic markets by complying with a  recognised standard.
- New customers who require ISO 9000 compliance.

- Reduce customer rejection of products/services because of poor quality.
- Improve customer loyalty.

- Reduce or eliminate repetition of work.
- Reduce warranty and customer support costs.
- Reduce management time spent on “putting out fires”.
- Improve productivity by “doing it right the first time”.
WHAT  DOES  TQM paradigm  OFFER :

-Developing a corporate quality policy.
-Designing and implementing a quality system.
-Developing measures for capturing quality costs and benefits from improved quality.
-Encouragement of teamwork and participation of the management and the workforce.
-Continuous education and training to foster employee attitudes, management beliefs and value system.
-Usage of problem solving tools and techniques.
-Benchmarking of business results and processes.
-Improvement of managerial and technical processes.
-Integrating the customers’ and suppliers’ expectations.
-Carrying out quality audits and reviews on a continuous basis.

TQM leads to a synergy of benefits to  the  firm.
1.A philosophy that improves business from top to bottom
[everybody  in  the organization  is involved  towards the same objective]

2.A focused, systematic and structured approach to enhancing customer's satisfaction
[helps  to increase  sales  /  profit  of  the  organization ]

3.Process improvement methods that reduce or eliminate problems i.e. non conformance costs
[improves  the   efficiency  of  the  process  and  better  results]

4.Tools and techniques for improvement - quality operating system
[improved  working  methods  for   improves  results ]

5.Delivering what the customer want's in terms of service, product and the whole experience
[helps  to  tailor  the  product/service  to match  customer  requirements and the
customer  satisfaction]

6.Intrinsic motivation and improved attitudes throughout the workforce
[improved  work conditions  means  employees  are  motivated  to  perform better]

7.Workforce is proactive - prevention orientated
[it  helps  to  prevent  accidents / quality   rejects  etc ]

8.Enhanced communication
[it  encourages  discussion  among  employees/  between managers and employees]

9.Reduction in waste and rework
[continual discussion /continual  improvements / proactive  attitude
helps  to  prevent  waste / rework/ reduces  rejects.]

10.Increase in process ownership- employee involvement and empowerment
[setting  of  quality circles/ problem solving teams  improves
the  employee  involvement    and   empowers  employee to make  decisions]

11.Everyone from top to bottom educated.
[TQM involves  continual  training  at  all  levels  which
helps  the  development  of  the  individuals ]

12.Improved customer/supplier relationships (internally & externall)
[TQM  takes   the  system  across  all  working  units
including  all  departments internally  and  external   stakeholders integration]

13.Market competitiveness
[TQM  helps  to  improve  the  customer  servicing  and  helps
the  competitive  positioning  of  the  company in   the  market]

14. TQM  Through education, management and staff are given the tools to achieve all the above. Education provides for guided innovation from all levels. Training, which is a cost, shows a commitment by management .

15. TQM  HELPS  Individual staff self improvement, which is a motivator.
Staff will collectively provide continual improvement of company  systems. By working together, communication/departmental barriers will be broken down. The standard of service can be set, maintained and then improved. Suppliers will be working with rather than working for the company . The standard of staff and management will improve through education. The adoption of a new attitude to work, by everyone embracing the ideas of TQM.

Direct benefits of TQM are as follows:
- Increased pride of workmanship among individual workers
- Increased readiness
- Improved sustainability caused by extended time between equipment failures
- Greater mission survivability
- Better justification for budgets because of more efficient operations
- Streamlined maintenance and production processes.
The bottom line of TQM is “more bang for the buck.” The Concept of Quality Management The concept behind quality management revolves around a change from management by results to management by process (quality) improvement. Managers are tasked with con- tinuously improving each and every process in their organization. That means combining quantitative methods and human resource management techniques to improve customer-supplier .

-Standardizes, organizes and controls operations.
-Provides for consistent dissemination of information.
-Improves various aspects of the business based on the use of statistical data and analysis.
-Encourages improvement.
-Runs the business in a controlled and disciplined manner.
-If non-conformances occur, the cause can be determined and eliminated in order to prevent recurrences.

Increase Revenue
- Access wider geographic markets by complying with a globally recognised standard.

Preserve Existing Revenue
- Reduce customer rejection of products/services because of poor quality.
- Improve customer loyalty.

Reduce Costs
- Reduce or eliminate repetition of work.
- Reduce warranty and customer support costs.
- Reduce management time spent on “putting out fires”.
- Improve productivity by “doing it right the first time”.


Companies where health and safety was clearly seen and accepted as important
for overall business success. Applying process management and performance
measurement skills to health and safety management would lead
to greater integration of health and safety management within TQM.

Q2. State the process of facilitation of quality audit. (10)
A corporate-wide QM model (performance excellence management infrastructure) consists of activities on four levels of business responsibility:
1. Corporate (cultural and normative issues),
2. Business areas (strategic issues)
3. Processes (operational issues)
4. Individuals and teams ( personal and human issues)
Management commitment and actions (plan, do / control, improve and assure) take place on all these levels.
Corporate-widely used methodology and tools that are essential from the QM point of view are developed and supported on the corporate level. Auditing procedure and process management model are very representative examples.

Because process approach is the most practical and effective basis for a comprehensive QM, therefore it is also very essential aspect from the auditing point of view. That means that the business processes are objects of auditing, and audits themselves are carried out and managed according to company's process practices. Management of business processes consists of:
- Process plan (definition of the process owner, activity flow, and measures and indicators),
- Process control,
- Continual improvement
- Quality assurance
Internal auditing is a support process of business management defined by appropriate procedure documents. Items being audited consists of company's business processes according to corporate's process management framework that includes customer processes, market processes, support processes and management processes.
Internal performance assessment, an essential part of QM
Performance management includes that business performance is assessed internally by company's own resources for performance improvement and also for quality assurance. Both strategic and operational assessments are needed. Aiming at performance excellence requires that also relevant references of competitors and best practices and benchmarks in other organizations are taken into account in the assessments.
Strategic assessments cover business units and their businesses as a whole. They are made as self-assessments by the management teams of the units. Malcolm Baldrige methodology and its criteria originated in the American national quality award form the rational methodology used for that purpose. Audits are empirical internal assessments of the performance of individual business processes. Thus audits are more operational than Malcolm Baldrige assessments. Audits are made by people who are independent from the processes being audited. Self-assessments are made by the responsible business leaders. The both methods support well each other.
Auditing is based on the international standard definition and principles
Internal auditing is a comprehensive task that should be both reactive and proactive by nature. Its purpose is not only to search for nonconformities (nonfulfilment of specified requirements) or defects (nonfulfilment of intended usage requirements or reasonable expectations under the existing circumstances) but there is a broader business related scope in auditing. Also performance strengths of the business processes should be noted in internal audits. It is useful to comply with the recognized international definition and principles of auditing. The formal definition for audits has been recently reconsidered in the new standards ISO 9000 and ISO 19011.
According to the above mentioned standards internal audit is understood as a systematic, independent and documented process for obtaining records, statements of fact or other meaningful data relevant to the criteria of business performance enhancement. These criteria are both qualitative and quantitative and relate to policies, and procedures/processes including their outputs and performance results. Requirements for business management and thus naturally also for internal audits consider need or expectation that is stated, generally implied or obligatory taking into account company's all interested parties (i.e. persons or groups having a interest in the performance or success of the company). Thus in auditing the business aspects of effectiveness and efficiency are being considered. Particularly performance excellence issues are necessary in internal audits within a company operating in severe competitive business environments.
In general and very often external auditing, e.g. third party auditing for certification or registration, does not comply with the broad range and business views of the above-mentioned standard definition of auditing.
Internal audits are carried out within the different business areas of the company as process audits examining business processes and related results whether they comply with planned arrangements, and whether these arrangements are implemented effectively and efficiently and are suitable to achieve objectives from the business point of view. Auditing is for improvement of the business process performance as well as for quality assurance. Auditing is a major means for quality management.
Business processes are more practical object-entities of auditing than quality (management) systems. In many organizations quality (management) systems are too artificial and vague. In a modern quality thinking quality management must be integrated with business. Thus in fact the real "quality system" is equal with the quality of a management system consisting of a network of interlinked business processes. Therefore separate concept of quality (management) system is no more needed. Also according to ISO 9000 standards quality management system is more a concept or a "mental system" for a systematic approach towards a business integrated quality management than a distinct system.

The auditing process

The internal auditing procedure defined by an auditing process
The internal audits are carried out according to the auditing process (see figure 1). Thus auditing practice is defined and documented through the process documentation of the auditing process and managed according to company's general process management model. This approach is along with the ISO 19011 standard.
Detailed principles and practices of internal auditing have been created and developed during the recent past decades in practical company cases. The auditing process is established through the methodology development and process owner nomination. Typically a group of internal auditors have been trained within different business units by internal training courses for auditors on regular basis.
The general aim is that all the major business processes are being audited at least once a year. Individual audits are carried out by about 3 to 5 persons including the lead auditor. Additionally 3 to 5 persons have been actively involved from the process being audited. Process description and performance documents and records as well as practical operations and facilities on site are examined by the auditors. A process audit itself normally takes about one day. Additionally time is needed for auditor's briefing and preparing the report and communication with the owner of the process being audited. Facts for the audit report is drafted immediately after the audit by the team of auditors, and a representative from the audited process may attend the drafting meeting as an observer. This makes the report and its basis better understandable for the process improvement.
Auditing covers all the relevant business aspects of a business process
A process examination of auditing covers six relevant business related areas  to address:
1. Customer issues (i.e. external and internal customers of the process), customer needs, products ie. the outputs of the process, customer relationships, and customer satisfaction results
2. Process entity as a whole, internal process activities/tasks, flow of information and material, process-internal performance and related measures and indicators, measurements, target values and related performance results
3. People issues including responsibilities, knowledge, competences and skills, education and training, learning, participation/involvement, innovation communication, and people satisfaction
4. Tools, methods, information systems including documentation, and work facilities and environments
5. Suppliers, supplier relationship/partnership, and supplier performance measures and indicators and related results
6. Process management, process plan and target setting, control, quality assurance, and improvement
Specialized items as environmental management issues and corporate/information security issues within the process are also examined within the six examination areas as necessary. In addition to general process audits, specifically directed audits for these specialized areas have been performed, too, using the same general audit methodology.

##############################################Q3. Justify the role of Six sigma in service sector quality management. (10)

Six Sigma Can Benefit The Service Industry

Six Sigma goes in to the details of improving customer service, generating business expansion and gaining knowledge about the service sectors business processes. Most service industries revolve around areas of finance, human resources and sales and marketing. Hence, Six Sigma delves deeply into the subject of soft skills. Six Sigma can be applied to a company that provides housekeeping services. Firstly, the companies working processes would need to be understood. Using the DMIAC method or the define-measure-improve-analyze-control method, Six Sigma can definitely implement quality in any industry. As the main aim of this methodology is to reduce defects, the first step would be detecting the particular defect. Secondly, data will be collected to observe how, why and how often these defects occur. Next, the Six Sigma team implements an outstanding employees method of working as the normal method for all employees. Finally, new employees are taught the correct techniques.

Six Sigma is useful in the field of sales and marketing as well. According to Six Sigma data, during sales, too much face time with a customer can prove to be counter-productive. Changing this process can result in an increase in the percentage of sales per product. Other industries that Six Sigma has assisted in the past are the financial service sector, insurance companies, management companies, educational institutions, high-tech companies, state agencies and many more.

The key elements of Six Sigma implementation which service
organizations must take in consideration are:
Customer Customer Satisfaction;
The customer is the center of the universe He defines the
Process Think from outside to inside;
Quality requires watching your business from customer's
perspective rather than yours. With this knowledge can add
value significantly or can improve the process of Customer
PerspectiveCTQ's (critical to quality are customer needs
translated into critical process requirements that are specific and
measurable. A fully developed CTQ has five elements: Output
Characteristic, Project Output Metric, Target,
Specification/Tolerance Limits and Defect Definition);
Employee Management commitment;
People create results. Fundamentally in quality approach is the
involvement of all members/employees. The company is
committed to providing opportunities and incentives for
employees who focus their talent and energy in achieving
customer satisfaction For all employees.
This is why it can be beneficial to embed Black Belts in business units,
where they can monitor processes regularly, collect feedback and make
sound, data-based decisions. Six Sigma identifies several key roles for
its successful implementation such as: Six Sigma Champions, Six
Sigma Master Black Belt, Black Belts, Six Sigma Green Belt, Six Sigma
Yellow Belt.
Services are by nature very often bound by time in terms of the
processes that are run and lead to the delivery of an outcome that
benefits a customer.
It is difficult to argue that any change management philosophy or
methodology is new. TQM development has followed two major
strands, namely mechanistic perspective TQM and organic perspective
TQM. Parallels can be drawn with the current measures and process
focus of Six Sigma, along with its tentative people development. It is
contended that Six Sigma is a specific development of TQM, and that
Six Sigma currently belongs to the mechanistic development of TQM,
although it may be developed in a more holistic manner. Many of the
organizations currently claiming success from Six Sigma have also long
established TQM programmes, e.g. Motorola, GE, Nortel, Boeing
(Henderson and Evans, 2000 cited in McAdam, R. & Lafferty, B.
2004, p. 533).
It is quite a common view among many people engaged in service
organizations that Six Sigma requires complicated statistical tools and
techniques. The truth is that Six Sigma is not about a collection of
statistical tools and techniques. In fact, service organizations do not
simply need many of the tools and techniques of the Six Sigma
toolbox. The majority of the process and quality related problems in
service organizations can be readily tackled using the simple problemsolving
tools of Six Sigma such as process mapping, cause and effect
analysis, Pareto analysis, control charts and so on (Kumar, M. et al.,
2008, p. 884).
The main weakness of traditional TQM concepts is the exclusive
focus on customer requirements. Six Sigma in contrast focuses on
quality from both the customer’s and the investor’s perspectives with
the aim to meet customer requirements fully and profitably.
Nevertheless, like TQM, Six Sigma requires a strong incorporation of
the corporate control system to enable companies to objectively
measure and monitor their long-term development within, and
monetary outcome of TQM using statistical techniques (Wessel, G. &
Burcher, P. 2004, p. 265).
There is a cause-and-effect relationship between the total quality
management practices and corporate performance, measured by
employee relations, productivity, customer satisfaction, or profitability
(Kumar, V. et al., 2009, p. 26). The results are:
Better employee relations. Employees experienced more job
satisfaction, there was a higher rate of attendance, and there was
less turnover, absenteeism and accidents.
Improved operating procedures. Companies increased the
reliability and on-time delivery of their products or services and
reduced errors product lead-time, and cost of quality.
Greater customer satisfaction. There were fewer customer
complaints and a greater number of customers stayed with the
Increased financial performance. Each company also improved
its market share and increased profitability.
Many processes in the finance sector can be performed in a
standardized way, especially in the field of processing customerrelated
outputs like payments/credit cards transactions, processes
using self service devices like ATMs, securities settlement and
loan approval processing. A similar potential can be found in the
insurance sector, e.g. application handling, contract issuing, and
processing of claims (Puaar, 2006; Ruggier, 2006, cited in Heckl, D
et al., 2010, p. 5). Table 1 shows how an organization can pursue its
business strategy across the similarities and differences between TQM
and Six Sigma.

Q4. Explain the steps in CPM technique. (10)

C.P.M. or Critical Path Method was developed as a way of
organizing and tracking the numerous activities associated with the Polaris missile
defense program.
Using a C.P.M. will help to identify and coordinate various tasks associated
with the completion of a project. It allows for various information about a specific
project to be found:
1. The total time to complete the project
2. The scheduled start and finish dates foe each task pertaining to the
projects completion.
3. The tasks that are ”critical“ to the project and must be completed
exactly as scheduled.
4. The ”slack“ time available in non-critical tasks, as well as how long they can be
delayed before they affect the project finish date.

Steps to creating a C.P.M.
1. Develop a list of tasks that are required to complete the project.
ie. The actual work to be carried out.
To name a task so that its purpose is clear. It is usually best to use two words; a verb
followed by a noun. For example; build walls, install windows.
Define your tasks so that they are the right size. If the task you assign is too large
in scope it may hide smaller tasks that need to be completed. For example the task
”construct building“ would be too large, as there are many steps that go into the
construction of a building, such as Excavate the site, Pour foundation...
On the other hand, turning on the cement mixer is too finely detailed to be valuable
to programming your C.P.M. This level of detail would quickly lead to a cluttered and
confusing diagram.
In short the tasks should be well defined, precise and detailed but they should
also be significant to furthering the project along.
2. Order your tasks and determine the immediate predecessors for each. Simply put ” What
tasks need to be completed before the next task can be carried out. ie. The architectural
drawings must be completed before the building can be built. Hence the task ”Build
house“ is dependant on ”Prepare drawings“.
3. Determine completion time for each task. How long will the individual task take to complete?
Sources for determining these times are;
-Your own judgement and experience.
-Draw on the experience of others.
-Obtain estimates from professionals.
The more information you have the more accurate your prediction for the project completion will be.
I.D. Task Name Duration Predecessor
1. prepare drawings 5w -
2. identify tenants 6w -
3. develop prospectus 4w 1
4. select G.C. 3w 1
5. prepare permits 1w 1
6. obtain permits 4w 5
7. build mall 14w 4,6
8. finalize contracts 12w 2,3
9. tenants move in 2w 7,8
C.P.M. Summary
1. Develop a list of tasks
2. Order and determine immediate predecessors for each task
3. Estimate completion time for tasks
4. Layout a project network using tasks and their predecessors
5. Determine earliest start and finishing times using a forward pass through the network.
Equations: forward pass 1.ESi =largest of (EFi-1)
2.EFi= ESi +t
backward pass 3.LFi= smallest of (LSi+1)
4.LSi=LFi -t
6. Using the earliest finish time for the project make a backward pass through the network to determine the latest start
and finish times for each task.
7. Determine slack for each task using difference between latest and earliest start times.
8. Find tasks with zero slack. These are critical tasks lying on the critical path.
1.4 Crashing the C.P.M.
Once you have created a network and determined its critical path, you should reevaluate the network to see if the time for project
completion can be shortened without considerable loss to the project. this shortening of the project network is called ”crashing“
the C.P.M..
There are several techniques to use when crashing a c.p.m.;
1.Shorten (if possible) the duration of tasks on the critical path by
adding resources such as overtime hours or extra workers.
2.Overlap tasks on the critical path so that they may be worked on simultaneously. ie. Drywallers finish upstairs move to
downstairs. Painting can begin on upstairs walls.
3. Break up larger tasks on the critical path into smaller more manageable ones
4. Does the plan include only tasks which are necessary to achieving project goals?
Crashing is the technique of minimizing the total duration of a network of activities, mainly by reducing the duration of the critical path activities to the least possible magnitude.
Since the critical path is also the longest, the duration of this path has to be reduced. However any reduction in activity duration comes at the cost of increased cost due to extra resources required(like labor, electricity etc). Also note that simply reducing the duration of a critical path activity is meaningless unless the duration of parallel activities are also reduced by equal magnitude. Then and only then will the total duration get reduced.
Sometimes the non-critical path activities have floats(ie expendeble time). In such a case while crashing such an activity, first the floats are removed. Only then can its total duration be reduced.

time-cost tradeoff
One of the analysis that you should perform after evaluating the resource allocation and leveling for your overall project is to evaluate the impact of increasing or decreasing the levels of resources, or their daily productivity. You might be interested in the results of this analysis to decrease key constraining activities such as power outages or to improve productivity of leading production activities such as building structural systems. During a project you may need to make-up for delays experienced elsewhere on the project.
Take a moment and consider the types of actions you, as the project manager, might be able to take to increase the total daily productivity of planned work. Given a standard baseline of productivity what would be the effect of increasing the productivity on the overall cost of the project.
In the Time-Cost Tradeoff analysis you might consider overtime, second shifts, or changing equipment to make some work proceed faster. These additional resources, however, will often increase the cost of the work, above a “standard” work day with the “typical” crew. If all things are equal, there would be no consideration of increasing productivity since any increase in cost of a fixed value project would result in decreased profits. Since indirect costs are not fixed, but are accrued each day on the project, it may be possible to increase the cost of specific activities in order to decrease the time of those activities. Decreasing the duration of those activities may result in an overall decrease in project duration, and hence a decrease on the overhead for job office, home office expenses.
Another reason to consider “buying time” through the Time-Cost? Tradeoff analysis is to avoid liquidated damages penalties that might be imposed for late projects. The expected increase in profit due to early completion bonuses, widely used on urban transportation projects, may also be evaluated through this method.
The objective of the Time-Cost Tradeoff analysis is to determine which activities to “crash” in order to produce the maximum overall job profit. There are two parts to the analysis. First, as the project duration decreases the cost of the project increases. Second, the longer the project continues the higher the overhead costs associated with the project. As demonstrated by the figure below, the Time-Cost Tradeoff helps you to find the sweet-spot between increasing costs of specific activities and decreasing overall project costs.

Crashing refers to a particular variety of project schedule compression which is performed for the purposes of decreasing total period of time (also known as the total project schedule duration). The diminishing of the project duration typically take place after a careful and thorough analysis of all possible project duration minimization alternatives in which any and all methods to attain the maximum schedule duration for the least additional cost. There are a number of standard and typical approaches to attempting to crash a project schedule. One of the most commonly utilized methods of crashing a project schedule involves minimizing the schedule activity durations while, at the same time, increasing the assignment of resources on schedule activities. Crashing is something which can be utilized to attempt to get the most value out of a project assignment. Essentially, it boils down to an attempt to get the most productivity out of the least time and expense. Crashing is also similar to schedule compression as well as schedule fast tracking.

Q5. A bearing manufacturing factory manufactures four types of bearings, each bearing is processed in machines A,B,C,D in order of ABCD. The processing time of each (in hours) an four machines are as below:

Bearing Type Processing time Processing time Processing time Processing time
1 A B C D
2 12 10 14 8
3 14 15 10 12
4 16 18 12 14
8 6 10 12

Determine the sequencing for the four types of bearings which will minimize the total operation time. Also find the idle time of each machine, A,B, C,D (15)

Q6.Elaborate what do you mean by Direct material usage budget and direct material purchase budget. (10)

Direct material usage budget and
Direct Material Usage Budget in Quantity and Dollars
Wool Dye Total
Physical Units Budget
Direct materials required for
Blue Rugs (100,000 rugs × 30 skeins and 0.5 gal.) 3,000,0000 skeins 50,000 gal.
Cost Budget
Available from beginning direct materials inventory
(under a FIFO costflow
Wool: 349,000 skeins $ 715,450
Dye: 5,000 gallons $ 24,850
To be purchased this period
Wool: (3,000,000 349,000)
skeins × $2 per skein 5,302,000
Dye: (50,000 – 5,000) gal. × $5 per gal. _________ 225,000
Direct materials to be used this period: (a) + (b) $6,017,450 $ 249,850 $6,267,300
Weaving budgeted
overhead rate = $18,852, 000
5,600,000 DMLH
= $3.3664 per DMLH
Dyeing budgeted
overhead rate = $12,809, 000
450,000 MH
= $28.4644 per MH
Budgeted Unit Cost of Blue Rug
Cost per
Unit of Input
Input per
Unit of
Output Total
Wool $2 30 skeins $ 60.00
Dye 5 0.5 gal. 2.50
Direct manufacturing labor 15 56 hrs. 840.00
Dyeing overhead 28.4644 4.5 1 machhrs.
Weaving overhead 3.3664 56 DMLH 188.52
Total $1219.11
1 0.15 machine hour per skein´30 skeins per rug = 4.5 machinehrs.
per rug.
Cost of Goods Sold Budget
From Schedule Total
Beginning finished goods inventory $ 0
Direct materials used $ 6,267,300
Direct manufacturing labor ($840 × 100,000) 84,000,000
Dyeing overhead ($128.09 × 100,000) 12,809,000
Weaving overhead ($188.52 × 100,000) 18,852,000 121,928,300
Cost of goods available for sale 121,928,300
Deduct ending finished goods inventory 0
Cost of goods sold $121,928,300

direct material purchase budget.
The following budgeted units of pottery are to be produced each quarter: 1,060, 1,260, 1,600, and 1,800. Plain pottery is $3 per unit and the color for the pottery is $0.20 per ounce. On a per-unit basis, the factory needs one pound of clay and five ounces of the color to produce the final piece. ArtCraft Pottery's policy is to have 10% of the following quarter's production needsin ending inventory. The factory has 58 pounds of clay and 390 ounces of color on hand on January 1. At the end of the year, the desired ending inventory is 106 pounds of clay and 530 ounces of color.
What do we solve for? We calculate the ending inventory of clay and color for quarters 2 and 3. Second, we prepare a direct materials purchases budget for both clay and color.
Calculation of Ending Inventory for clay and color for Quarters 2 and 3
Ending Inventory clay, quarter 2 = 0.10 (1,600 units X 1 unit clay) = 160
Ending inventory clay, quarter 3 = 0.10 (1,800 units X 1 unit clay) = 190
Ending inventory color, quarter 2 = 0.10 (1,600 units X 5 ounces) = 800
Ending Inventory color, quarter 3 = 0.10 (1,800 units X 5 ounces) = 900
You now have the units of each component to manufacture the pottery that you need. You can see, however, that if a product was more complicated and needed a lot of different raw materials, this calculation would be massive. In this simple example, we have the information to calculate the direct materials purchases budgets.
The table was developed from a simple accounting equation you are probably familiar with:
Raw Materials Required for production + Ending Inventory = Total Raw Materials Required
Beginning Raw Materials Inventory - Raw Materials to be Purchased
*Table Developed Compliments of Cornerstones of Managerial Accounting, 3rd ed.
ArtCraft Pottery - *Direct Material Purchases Budget
Clay for Pottery          
  Clay   1   2   3   4   Year
  Units to be Produced   1,060   1,260   1,600   1,800   5,720
  Direct Materials Per Unit   x1   x1   x1   x1   x1
  Production Needs   1,060   1,260   1,600   1,800   5,720
  Desired Ending Inventory   126   160   180   106   106
  Total Needs   1,186   1,420   1,780   1,906   5,826
  Less: Beginning Inventory   (58)   (126)   (160)   (180)   (58)
  Direct Materials to be Purchased   1,128   1,294   1,620   1,726   5,768
  Cost of clay   x$3   x$3   x$3   x$3   x$3
  Total Purchase Cost of Clay   $3,384   $3,882   $4,860   $5.178   $17,304

Q7. Define EOQ Explain different models of EOQ in brief. (15)
The economic order quantity (EOQ) is a model that is used to calculate the optimal quantity that can be purchased or produced to minimize the cost of both the carrying inventory and the processing of purchase orders or production set-ups.
Following is the formula for the economic order quantity (EOQ) model:

Where Q = optimal order quantity
D = units of annual demand
S = cost incurred to place a single order or setup
H = carrying cost per unit
This formula is derived from the following cost function:
Total cost = purchase cost + ordering cost + holding cost
Limitations of the economic order quantity model:
It is necessary for the application of EOQ order that the demands remain constant throughout the year. It is also necessary that the inventory be delivered in full when the inventory levels reach zero.
Underlying assumption of the EOQ model
Following are the underlying assumptions for the EOQ model. Without these assumptions, the EOQ model cannot work to its optimal potential.
•   The cost of the ordering remains constant.
•   The demand rate for the year is known and evenly spread throughout the year.
•   The lead time is not fluctuating (lead time is the latency time it takes a process to initiate and complete).
•   No cash or settlement discounts are available, and the purchase price is constant for every item.
•   The optimal plan is calculated for only one product.
•   There is no delay in the replenishment of the stock, and the order is delivered in the quantity that was demanded, i.e. in whole batch.
These underlying assumptions are the key to the economic order quantity model, and these assumptions help the companies to understand the shortcomings they are incurring in the application of this model.
•     Various EOQ Models
•    Economic Production Quantity (EPQ)
•    Quantity Discount Model
•    Planned Shortage With Backorders
1.Economic ProductionQuantity
 EPQ determines the quantity a company or retailer should order to minimize the total inventory costs by balancing the inventory holding cost and average fixed ordering cost.
 Assumptions : ◦ Demand for items from inventory is continuous and at a constant rate. ◦ The production of items is continuous and at a constant rate. ◦ Ordering cost is fixed (independent of quantity produced). ◦ The purchase price of the item is constant i.e. no discount is available. ◦ The replenishment is made incrementally.
6. Derivation of EPQ Formula
 Holding Cost Per Year = Q/2*(F(1-x)) Q/2 is average inventory & F(1-x) is the average holding cost. F(1-x) is the average holding cost.
 Ordering Cost per Year =D/Q*(K) ◦ K = ordering/setup cost ◦ D = demand rate ◦ F = holding cost ◦ Q = order quantity ◦ P=Production Rate ◦ x=D/P

7. How TO Get EPQ Formula ? Holding Cost = Ordering Cost So, We get:

2. Quantity Discount Model
 Quantity discounts are price reductions designed to induce large orders.
 The buyers goal in this case is to select the order quantity that will minimize total costs, where total cost is the sum of carrying cost, ordering cost, and purchase cost.
 Two approach are there: ◦ With the Incremental Approach, we would pay $65 for the first 100 units and $60 for rest of the 150 units. ◦ But, with the All Units Approach, we would pay $60 a piece for all the 250 units.
9. Understanding QuantityDiscontQUANTITY PRICE Co = Rs.2,500 1 - 49 Rs.1,400 Ch = Rs.190 per unit 50 - 89 1,100 D = 200 90+ 900 2CoD 2(2500)(200) Qopt = = = 72.5 PCs Ch 190For Q = 72.5 Co D ChQopt TC = + 2 + PD = Rs.233,784 Qopt For Q = 90 CoD ChQ TC = + 2 + PD = Rs.194,105 Q
3.Planned ShortageWithBackorder
•   11. Continued.. Shortage: when customer demand cannot be met. Shortage may result into: ◦ Lost of goodwill. ◦ Reduction in future orders. ◦ Unfavorable Changes in the market share. ◦ Loss of customers. In some situation customer may not withdraw order and wait till next shipment arrives.
•   12. Planned Backorder Formula

Q8. Differentiate the principles of factor rating method and point rating method. (10)
principles of factor rating method  
The factor-rating method is a useful tool to help us make decision. It involves six steps:
1.   Develop a list of relevant factors which affect our choice.
2.   Assign a weight to each factor to reflect its relative importance.
3.   Develop a scale for each factor, e.g. 1 to 10 or 1 to 100 points.
4.   Determine the score of each factor using the scale in step 3.
5.   Multiply the score by the weights for each factor and total the score for each alternative.
6.   Make a decision based on the maximum point score.

I wanted to buy a new car. Based on my budget, I narrowed down my choices to Honda City and Toyota Vios. I then applied the factor-rating method to evaluate each of these cars. The scores are given in the following table:

principles of  point rating method

Q9.What is break even Analysis in location evaluation. (10)

Break-even analysis is a graphical and algebraic representation of the relationships among volume of output, costs and revenues. Costs can be classified into two types: fixed costs and variable costs. Fixed costs are the costs such as administration expenses, rents of the buildings, lighting, etc. And they do not vary with the volume of the output. Variable costs are the costs such as raw material cost, labor cost, etc. And they vary with the volume of the output. The sum of the fixed and variable costs at a specific volume of output becomes the total cost at that volume of output.
Break-even analysis is one of the tools used for selection of a location. Since each and every location will have a different cost structure and sales volume, break-even analysis helps the manager identify the location where the profits are high. Figure shows the relationship of cost and volume in two different locations A and B.
Here, we assume that the revenues and costs are the linear functions of output volume. We also assume that the revenues for the two locations are the same, as there will not be much difference in the demand if the price of the product remains the same irrespective of the location it was produced at. From Figure, it is clear that if the volume of the output is less than Vo, location B is preferable as TCB (total cost at location B) is less than TCA (total cost at location A). If the volume is more than Vo, location A is preferable as TCA is less than TCB.
Figure: Cost Volume Relationships of Two Locations

However, the lowest cost location may not always be the maximum profit location. This always depends on the price and volume of sales in a particular location. For instance, Figure 6.2 describes a situation where the company experiences a sales volume of V2 in location B and a sales volume of V1 in location A. Here the higher cost location will result in a greater profit, and hence is preferred over the lower cost location.
Figure: Higher Cost Locations Providing Higher Profits

Godavari Electricals Ltd. wanted to set up a new plant for manufacturing industrial heaters. The management of Godavari Electricals identified Kakinada, Vijayawada, and Hyderabad as the potential areas to set up the plant. The fixed costs per year and the variable costs per heater at each of the three locations are given below.
Location    Fixed cost /Yr    Variable cost / Unit
Kakinada   Rs. 2,00,000   325
Vijayawada   Rs. 2,50,000   285
Hyderabad   Rs. 3,00,000   265
The product is expected to be sold at Rs.1050 and the company hopes to sell 600 industrial heaters per year. Calculate the likely profit at each location and determine the most profitable location for the company.
We first calculate the total costs (sum of the fixed and variable costs) at each of the three locations when 600 units of goods are sold.
Total cost at Kakinada = Rs. 2,00,000 + (325 × 600)
= Rs. 3,95,000
Total cost at Vijayawada = Rs. 2,50,000 + (285 × 600)
= Rs. 4,21,000
Total cost at Hyderabad = Rs. 3,00,000 + (265 × 600)
= Rs. 4,59,000
Total revenue of the firm = 1050 × 600 = Rs. 6,30,000.
Therefore, the profits of the company if they were set up in the given locations would be as follows:
Profit at Kakinada = Rs. 6,30,000 - Rs. 3,95,000
= Rs. 2,35,000
Profit at Vijayawada = Rs. 6,30,000 - Rs. 4,21,000
= Rs. 2,09,000
Profit at Hyderabad = Rs. 6,30,000 - 4,59,000
= Rs. 1,71,000
From the above calculations, it is clear that Kakinada is the most profitable location to set up the new plant for producing 600 units per year

---------- FOLLOW-UP ----------


The problem no. 5 is not solved. Plz help me.

The question No. 8 is not answered completely. 'principles of  point rating method ' is incomplete.

Pls help.





principles of  point rating method

Is  an  analytical , quantitative  method  of  determining the relative  values  of  jobs.
-plans  define  characteristics or factors common  to  jobs  being  evaluated,definitions  of  each  factor  and  allocate  point values to  each degree. The  total value determined for each item  of  the  point  values  assigned  by  the  raters.
-all methods  of  job  evaluation require  the  exercise  of  judgement  and orderly  collection  and  information  in order  that  consistent  judegemet  can  be  made.The  point  rating  method  facilitiate  rational  discussion  and  resolution  of  differences in determining the  relative  values  of  jobs.

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