1

OPERATION
MANAGEMENT
PRACTICAL PROBLEMS
Tips and tools for solving.T.VENKATARAMANAN.FCA(COST)
 Old syllabus
2

 Contains only important problems

 Problems from economic batch
3 economic batch production
Terms :1)EBQ 2)ELS 3)EMQ
4)ERL = 2AS/CI(1- D/P) A=ANNUAL DEMAND S=SETUP/ORDERING COST
D= DEMAND RATE P= PRODUCTION RATE C= COST/UNIT I=INVENTORY
CARRYIG COST
 CALCULATE :EOQ & ROP/ROL

 DATA  Ans:
 ANNUAL demand 10,000 units
 1)400
 CARRYING COST P.A of  2)2* 40 + 5* 40=280
component x = Rs 40/=
 Ordering cost Rs 320/order.
 250 WORKING DAYS IN THE
YEAR
 LEAD TIME =5 days
 Safety stock = 2 days
 HMT bearings is committed to supply 24,000. bearings p.a
to M.ltd.on a daily basis .It costs as Re1/= as inventory
5
holding per month.set up cost per run=3240/=
compute 1)ERL SIZE.2)INTERVAL BETWEEN 2 RUNS
3)MINIMUM INVENTORY HOLDING COST

1)ERL = 2 * 24,000 * 3240/1* 12 = 3600

2) interval between 2 orders= 3600/2000* 30= 54 days
3)minimum inventory holding cost = 3600/2 *12=
21,600
From the following data calculate 1) EOQ 2)If suppliers is willing to supply
1500units on a quarterly basis a discount of 5% 3)ROL,maxi level, & minimum
level

1) Cost of unit Rs 500. 2)average monthly demand =2,000

2) Ordering cost Rs 100 4)inv.carrying cost 20% pa.
3) Normal usage 100 units /week 6)maxi usage 200/week
4) Mini usage 50/week8) lead time 6 -8 weeks

Ans: 1) EOQ = 102 2)DIFFERENTIAL COST /BENEFIT=130,000

= 68,550 –ACCEPTABLE
3)ROL=1600,MAX.LEVEL =1402,MINI LEVEL= 900

Problem No. 6
 CALCULATE 1)EOQ 2)EXTRA COST IF ORDERING QUANTITY IS 4,000.
3)MINIMUM CARRYING COST
7

 DATA  Ans: 1)2400

 monthly demand 4000 units  2)5440-4800=640
 Price of component x = Rs
20/=  3)2400(oc= cc )
 Ordering cost Rs 120/order.
 Holding cost 10%
 Compute EOQ & RELATED TOTAL
COST
8

 MONTHLY  Ans:
CONSUMPTION=250 UNITS
 EOQ = 300 UNITS
 CARRYING COST 10% OF
PRICE WHICH IS RS 10.  ORDERING COST = 150
 ORDERING COST RS 15/=  CARRYING COST = 150
 COST OF MATERIAL
=30,000
 TOTAL COST = 30,300
 PROBLEM 3/161
9

The demand for a component is random .It has been estimated that the monthly de
Has a normal distribution with a mean of 680 & a std. deviation of 130 units.The pric
is Rs 10/= & ordering cost Rs 20/= carrying cost is 25% p.a.
The procurement lead time is constant & is one week.find the EOQ,expected total c
of controlling the inventory at 97.5 % service level

Solution : annual demand = 680 * 12 = 8160. EOQ = (/ 2 *8160 * 20)/2.5 =

361
 Failures-calculate the number of failures expected in a
year & the mean time between failures:
10

Testing time 100hrs Total testing time 50*100 =5000unit hrs

Samples tested 50 units Lost during testingassuming 50%= 2 * 100/ 2
Failures 2 units = 100
Average usage - 2 hrs /day Net unit hrs =5000-100= 4900
Total sales in a year=500 units Expected failures = 2/4900*500 *365 *2=
149 units
Mean time between failures = (4900/2) * 2* 36
= 3.36 unit year/failure.
11 H.R.Planning
From the following data available calculate:
1)%absenteeism 2)efficiency of utilization of labor 3)productive
Efficiency of labor.4) over all productivity of labour in terms
units/man/month
No. Hrs No, Std Std Ab Uni Idle
ope /da of .pr lab sen t tim
r y day odn hrs teei pro e
s /mo /uni sm duc ma
/pm n t /los ed n
s hrs
 Solution
12

1) No of days /month 25 (2)hrs /day -8 Overall productivity

2) No. of operators 15
3) Man Hrs /month 15*25* 8 = 3,000 Units produced -240
4) Hrs lost on a/c of absenteeism 30 * 8 = 240 No.operators 15
5) Absenteeism % 240/3000 * 100=Units/operator/month
8% -16
6) Idle time 276
7) Total 516
8) Actual hours utilized = 3000 – 516 =2484
9) Actual production = 240 units
10)Labor efficiency =240 * 8 /2484 =77.3%
11)Labor utilization =1920/3000 *100=64%
 Selection of incentive scheme-advise
13
Production / day 200 units
Selling price/unit Rs8
DM Rs 2
DL 1
OH( INCLUDING Rs 800/day
SELLING)
decrease in SP Rs1 Sales increases
by50%
The workers are More if wages are Increased
willing to produce proportionately
Suitable incentive Costing Rs To administer
scheme 100/day
14 Solution
RS proposed
Sales 200*8 1600 300*7 2100
DM 200*2 400 300*2 600
DL 200*1 200 NOT present 200
VARIABLE
OH200*4 800 OH+EXTRA 900
100
ADDL-50% L 100
TOTAL 1400 1800
 Labor remuneration
15

Term
What is a scanlon plan?
Definition
type of gain sharing program in which employees receive a bonus if the rati
labor costs to the sales value of production is below a set standard.
 Compute the amount available to be paid as
bonus under Scanlon plan for 2007
16

Information relating to the 3 previous years

Year Sales Total
revenue Rs salaries Ratio
&wages Rs s&w/sales
2004 120,000 36,000 36/120= 0.30
2005 125,000 35,000 35/125=0.28
2006 135,000 35,100 35.1/135=0.26
2007 150,000 36,000 Total =0.84
Average=.84/3=
0.28
 solution
17

Expected labor cost = 0.28*150,000 = 42,000

Salaries & wages saved =42,000 – 36,000= 6,000
Assuming 30% is set aside for equalization 6000-1800
= 4200 is available for scanlon bonus for 2007
 From the following data for a m/c in a
factory
18

details
Hrs worked /day 8 If plant is operated
Working days in a month 25 @75% efficiency
What is the output
No . of operator 1 Per month (2)if m/c
Std minutes /unit.m/c time 22 Productivity is
Operator time /efficiency 8 min/efficiency 100% increased by 20%
What is the output ?
Total time /unit 30 min 3)If operator efficiency
decreased by 20%
What is the output?
 solution
19

1) 8*25*75/100=150*60/30=300

2)Std m/c time =22

m/c productivity increased by 20%
Revised std. time =22*100/120=110/6=18.33 min.
Actual time /unit= 18.33= 8 = 26.33
Production = 150 * 60/26.33= 342
3)Operator efficiency reduced by 20% i.e 10 min
Production = 150 * 60/32= 281 units
 LATHE ,MILLING & DRILLING MACHINE.THE OPERATORS
EFFICIENCIES ,STD. TIMES ,M/C TOOLS AVAILABLE ARE AS
FOLLOWS
20

Type of m/c Operator Std. man hours m/c availability

efficiency
Lathe 75% 0.15 95%
Milling m/c 80% 0.20 75%
Drilling 80% 0.10 75%

The factory operates 8 hours for 6 days in a week.If u want to produce 2000 bushes/wee
What will be the % of spare capacity available in each type of m/c tool
 solution
m/c lathe Milling Drilling Remarks

Hrs in a 48 48 48
week8*6
Available 95% 75% 75%
Hrs
stdHrs/bus 0.15 0.20 0.10

Operator eff 75% 80% 80%

Opt time/b 0.20 hrs 0.25 0.125

Prodn./week 228 144 288 1*2/5

No of m/cs 8.77 13.88 6.94 2000/228 etc

% spare 2.5% of 9 0.79% of 14 0.79% of 7

21
22
 A LTD. Manufactures a component which passes through 3 m/c s P Q &
R.
THE STANDARD TIME OPERATOR EFFICIENCY etc ARE AS
23
FOLLOWS:

DETAILS
MACHINES Std. hrs Operator
/component efficiency
P 0.16 80%
Q 0.23 100%
R 0.09 90%

The factory operates 2 shifts of 8 hrs ,6 days in a week to produce 4000units, per w
Compute the no. of machines & available time if any for other jobs.
 A soap factory is following a piece rate system for its packing section, the
24
rate being Re0.10/=there is a guaranteed wage of Rs200/per day.

Following table gives details regarding the number of cakes

packed per day.if std. time per packing is 4 min& shift
Worker No. ofduration is 480
soap cakes min../ day
packed Min. ,compute:
Worker productivity
A 800 CALCULATE Group
B 600 (1)wages payable /worker & comment on the same
C 100 (2)average cost of packing per soap
/day
D 700
 Solution
25

Worker A B C D Total/gr
oup
WAGE 200 200 200 200 1)Productivity of C
S Is poor.
Incentiv 80 60 10 70 2) Average or group
e Is ok
Total 280 260 210 270 1020
Averag 1020/2200
0.46
e cost
Labour 80/12 60/12 10/12 70/12 55/12
producti 667% 500% 83.33% 583.33 458.3%
 Productivity of material
26

 A factory manufactures 2 products A & B using 2 materials P & Q .

Selling price of A& B are Rs 70 & 30/unit resply.
Material Material
.P Q Compute productivity of
INPUT/ou 200 400 RM, L, & E.ENERGY
tput/A COMMENT ON RELATI
ADVANTAGE of P & Q
Input/outp 300 200
p/195
ut/B
RM 1000 kg 1000kg
usage Productivity=
v of output/v of input
Labor 300Mhrs 250Mhrs @ Rs 5/= Per Hr
 solution
27

Details Product A Product B

output 200 300
Value 14,000 9,000 23,000
Material 20,000 Productivity 23/20= 1.15
Labour 1500 23/1.5=
15.33
Elec 1500 15.33
 Problem No.2
A work shop has 25 numbers of identical m/c. The failure pattern of the m/cs
are given below
Lapsed time in Probability of
months after failure
maintenance
1 .10 It costs Rs 160 to
attend a failed
m/c
2 .15 Compute yearly
cost of servicing
3 .15 m/c s failed
4 .15
5 .20
28
6 .25
 Solution 2
29

Expected time before failure :

.1 *1+.15*2 +.15*3 +.15*4 + .2*5 + .25*6 = 3.95 months
No. of repair /m/c / annum12/3.95 = 3.038
Yearly cost of servicing = 3.038 *25 *160 = 12,152
 Problem 3
30

 Alternative set ups A & B are available for producing a

component on a m/c whose operating expenses /Hr is
Rs 25/= Set up A Set up B
No,of 20,000 30,000 Calculate
components Mfg rate
/ set up /piece
Set up cost Rs 500 Rs 600 Assuming
p.a 3000hrs in a
year
Production 20 pieces 40 pieces Which one
rate /hr will be
economical
 Solution 3
Setup A B IN CASE OF
PRODN/HR 20 40 3000 HRS
COMP 20,000 30,000 A B
/SETUP
HRS/SET 1,000 750
UP
OPTG Rs25000 Rs18750 75,000 75,000
COST
SET UP 500 600 1500 2400
COST
TOTAL Rs25,500 Rs 19350 76,500 77,400
31 B IS BENEFICIAL
COST / 1.275 0.645 1.275 0.645
 PROBLEM NO 4. An article is processed on 3 machines as shown below:

Machin Time in Proces total Prepn. Cleanin

es minute sing Time g time
s min/da min/da
y y
A 2 2.5 4.5 15 10
B 3 10 13 30 10
C 2 5 7 25 10
IF JIGS FOR M/C B& C ARE REDESIGNED LOADING & UNLOADING TIME COUL
REDUCED TO 2 & 1 MIN 1)rsply.calculate no of pieces /day of 8 hrs. 2) unless prod
is increased by 20% new jigs would not be worth while.3)incase of large vol suggest
changes to present arrangement & estimate new production rate.

32
 SOLUTION NO4.
33

(a)THAT WHICH TAKES THE LONGEST TIME IS THE CRITICAL JOB.

i.e. job no B,which takes 13 minutes.
Production time = 8* 60 =480 min.
(-) prep & cleaning for job b =30 +10= 40
Output from M/C B =440/13 = 33.84

(b)If jigs are redesigned time for b will become 12 from 13.
Output of B = 440/12 = 36.66.increase % = 3/33* 100= 9%
So not worthwhile
( c) if production to be increased one more m/c B TO BE ADDED.
 PROB NO 5.
34

A COMPANY MANUFACTURES ITEMS A & B THE DETAILS ARE AS FO

DETAILS X Y Remarks
PRO
Profit 35 25
Material 3kg 2kg Max 350 kg
Labor 4 hrs 3 hrs Max 600 hrs
m/c hr 2 2 550 m/c hr
Formulate under simplex method 1) the objective function & linear constraints
2)The equations after introducing slack variables
(b)State the various methods of solving linear programming problem
 Prob no.6 Sales forecasting
35

The annual sales of TV SETS in Chennai are as under:

year Sales in (000)
2004 3
2005 14
2006 36
2007 4
2008 33
Find the linear trend Estimate the sales for the
equation to sales figure & year 2009
 Solution prob No.6
36

year Deviati sales D*D D* S

on(d)
2004 -2 3 4 -6 Y=a +Bx
a = 90/5= 18
2005 -1 14 1 -14 B= 50/10=5
2006 0 36 0 0 Y=18+ 5x
= 18+ 5*3= 33
2007 1 4 1 4
= 33,000 sets
2008 2 33 4 66
N=5 Sum=0 Sum of Sum Sumof
y=90 ofD2= DS = 50
10
 Sum No.7
37

As on 1st aug the following jobs are to be processed .the processing time & due
dates are As follows :
Jobs A B C D
SEQUENCE
PROCESS 2 6 7 12
TIME IN
C
DAYS QD D
DUE DATE AUG 12 AUG 7 AUG 4 AUG8 B
A
Sequence ratio
jobs on
minimum
TIME 11 6 3 7
REMAINING
Time needed to complete the jobsA-2 ,B-6, C-7, D-12
CRITICAL RATIO A-11/2=5.5,B1.,C-3/7=0.43, D=0.58
 Problem-8 –location of plant.
38

Two locations A & B are considered for location of a medical testing equipment
Fixed costs Rs25 30 laks.
Variable 300 250 .average selling price of equipmentRs 550/ unit
Compute Range of annual production & sales volume for which location is most suitab

Ans: locations A B Deatails/un 8000 12000

TOTAL COST 25L +300X 30L+ 250X its
CONTRIBUTION 250 300
ATotal 49 61
BE POINT 10,000 10,000
costRs Ls
LOSS WILL BE LESS FOR A <10,000
FOR ABOVE 10,000 UNITS B total cost
B IS BETTER. 50 60
 PROBLEM -9-OPERATION TIME
39

A SHAFT OF 3000 MM LENGTH requires machining on lathe .If the spindle execu
1500 rpm & the feed is .20 mm per revolution ,how long does the cutter take to pas
down the entire length of the shaft.

Ans: number of revolutions to pass 3000 mm length = 3000/.20 = 15,000

Time required = 15,000/1500= 10 .min
40 Compute EOQ from the following
1) Consumption per month-250 units.
2) Carrying cost 10% of purchase price of Rs 10/=ordering
cost Rs 15 per order. Compute EOQ & related total cost
.

Ans : EOQ 300 UNITS TOTAL COST Rs 30, 300/=

 The data collected from a transport corporation about the
number of breakdowns for months over the past 2 years are
41 as follows:
No of 0 1 2 3 4
break
downs
No of 3 7 11 2 1
months
occurre
d
Each break down costs Rs 3000/= On an average.Preventive maintenance of Rs
1375/= break downs can be reduced to an average of one per month.Which policy is
suitable/
 solution
42

No Freq in Freq in Expect Break dn Prevent

break month % ed cost /mon ive
dns s value(1 mainten
* 3) ance

0 3 0.125 0 1.625*3000 3000 +

1 7 0.292 0.292 =4875 1375
2 11 0.458 0.916 4375/=
3 2 0.083 0.249
4 1 0.042 0.168
Preventive maintenance is suitable
total 1.625
 Problem 10
43

A manufacturing line consists of 5 work stations in series.The individual work statio

capacities are given. The actual output of the unit / shift is 540.
Work 1 2 3 4 5
stn.
No:
Capacit 700 650 700 650 600
y/shift
Calculate 1) system capacity 2)EFFICIENCY OF THE PRODN.LINE
 Problem 11
44

Machine A & B are capable of manufacturing a particular product .

the details are as follows:
1) Find out which m/c is
Machin A B REMA 2) suitable for regular
e RKS 3) production
INVEST 100,000 150,000 4) Which m/c will give
MENTR 5) lower cost of prodn.for
sINTEREST ON LOAN 9% FOR BOTH 6) 5000 pieces.
Operating cost/hrA-Rs12 B- Rs 10 7) At what level
Production/hr 5 pieces 9 pieces 8) cost of production will
Hrs worked /year 4000 4000 9) Be the same for both
 Problem no 12
45

A factory has capacity to provide 3999 hrs /week.

It has capacity to produce A B
ANNUAL COSTS Rs 15,000
Maximum sales 5,000 4,000
Variable cost Rs 9 12
Selling price 15 18
Hrs reqd./ unit 5 6
Calculate 1) product mix for max profit 2)
46

Q. 3. (a) Explain how you would choose a material handling equipment from amongst alternative offers.
(b) Prasad Timber Works uses forklift trucks to transport lumber from factory to a storage area 0.3
km away. The lift trucks can move three loaded pallets per trip and travel at an average speed of
8 km. per hour (allowing for loading, unloading, delays and travel). If 640 pallet loads must be
moved during 8 hours shift, how many lift trucks are required? Assume single shift working and
300 working days in a year.

(c) State the machine tool to be used for following operations :

(i) Melting steel for making castings.
(ii) Picking up bits of iron and steel in a scrap yard.
(iii) Squeezing a piece of hot metal in a die.
(iv) Making a small hole in a block of metal.
(v) Making keyways on inside surface of the bore of a pulley.
 Answer 3. (a)
The choice of material handling equipment is essentially based on technical suitability an
Economic considerations. In the first stage we check up whether the equipment offers m
the technical criteria/parameters mentioned in the specification i.e the load to be lifted/ca
the speed of movement,maneuverability, turning radius etc. Once we are satisfied that t
equipment meets the technical parameters , we check up the cost aspects and select th
equipment having the lowest life time cost. We thus take into account the cost of initial a
receiving costs incurred during the life cycle of the equipment as annual operating cost
repair/maintenance costs, and the salvage value of the equipment at the end of its life.
The cash out flows and inflows occurring during the various periods are suitably discoun
as to have a common basis for comparison. While the above approach is suitable for
equipments offering identical performance/output, we decide the issue on cost per unit
handled, in case of equipment having differing output parameters, subject to of course
their meeting the technical criteria specified.

47
 Answer 3. (b)
Total distance travelled by fork lift truck per trip = (0.3+0.3) km = 0.6 km(up and down
No. of trips that can be made by the truck per shift = 8km/0.6km × 8hrs = 106.66 trips
\ No. of pallet loads carried per shift by each truck = 106.66 × 3 = 319.98 = 320
\ Total no. of fork lift trucks required for 640 pallet loads = 640/320 = 2 fork lift trucks.
Answer 3. (c)
(i) Electric Arc Furnace.
(ii) Electromagnet
(iii) Forging machine
(iv) Drilling machine
(v) Slotting machine

48
 Q. 4. (a) What factors will have to be considered in choosing the location for the following industries?
(i) Aluminium industry.
(ii) Thermal power plant.
(iii) Large furniture(domestic and office)manufacturing unit.
(b) Empire Glass Company can produce a certain insulator on any three machines which have the
following charges shown below . The firm has an opportunity to accept an order for either (1) 50
units at Rs. 20/unit or (2) 150 units at Rs. 12/unit.
Machine Fixed Cost (Rs) Variable Cost(Rs)
A 50 4/unit
B 200 2/unit
C 400 1/unit
(i) Which machine should be used if 50 units order is accepted and how much profit will result?
(ii) Which machine should be used if the 150 units order is accepted and what will be the resultant
profit?
(iii) What is the break-even volume for machine B when the price is Rs. 12/unit?
(iv) Suppose the fixed cost for machine A is a stepped function with Rs. 50 up to 40 units and
Rs. 100 thereafter. Will the answers to (i) and (ii) above vary? If so, what will be the revised
answer?

49
 Answer 4. (a)
The general factors to be considered for any Industry location are the following :
1. Proximity to raw material sources
2. Availability of critical input required for the process
3. Proximity to the Market
4. Availability of skilled labour
5. Special tax and other financial benefits available in a location
6. Central/state/municipal regulations.
While all the above factors are important for all Industries, some factors will be
dominant for some industries as explained below :

50
 1. Aluminium Industry is a power intensive industry. Hence the region/location
2. where availability of power is a very critical consideration for the choice of location
Likewise, proximity to raw material source namely bauxite is also a vital consideration.
2. For thermal plant proximity to coal mines is very important since transportatio
of huge quantity of coal every day is very costly and difficult. Equally important is the
availability of abundant quality of water for the boiler.
3. For furniture industry proximity to the Market is a crucial factor apart from othe
While transporting finished furniture, damages may take place and also it will be bulky
and occupy more space and hence costly. Therefore furniture units are located nearer
towns and cities nearer to offices and houses.

51
 Answer 4. (b)
(i) For 50 unit order at Rs. 20/unit.Costs for various machines :
Machine Rs. Profit Rs.
Machine A 50 + 50 × 4 = 250, 1000 – 250= 750
Machine B 200 + 50 × 2 = 300, 1000 – 300= 700
Machine C 400 + 50 × 1 = 450, 1000 – 450= 550
Since Machine A gives the highest profit of Rs. 750 it is to be preferred.
(ii) For 150 unit order at Rs. 12/unit.Costs for various machines
Machine Rs. Profit Rs.
Machine A 50 + 150 × 4 = 650, 1800 – 650 =1,150
Machine B 200 + 150 × 2 = 500, 1800 – 500= 1,330
Machine C 400 + 150 × 1 = 550 ,1800 – 550= 1,250
Hince Machine B to be preferred.
(iii) Breakeven Volume for Machine B at Rs. 12/unit.
Let X be the No. of units to be produced.Total costs at ‘X’ units = 200 + 2x
Total revenue at x units = 12x.
At Breakeven point.
200 + 2x = 12x i.e 10x = 200
x = 20 Hence 20 units is the Breakeven Volume.

52
 (iv) The fixed cost for machine A being a step function, the total cost of manufacturing o
50 units with machine.
A = 100 + 50 × 4 = Rs. 300, which is also the cost of production with machine B.
Thus either of the two machines A or B could be chosen to produce 50 units.
A will be Rs. 700, which is higher than the production cost on machine B.
Hence the answer in this case will not vary.

53
 (b) A Company adopts a counterseasonal product strategy to smooth production requirements. It
manufactures its spring product line during the first four months of the year and would like to
employ a strategy that minimises production costs while meeting the demand during these four
month. The Company presently has on its rolls, 30 employees with an average wage of Rs. 1,000
per months. The Company presently has on its rolls, 30 employees with an average wage of
Rs. 1,000 per month. Each unit of the product requires 8 man-hours. The Company works on
single shift basis (8 hrs. shift/day). Hiring an employee costs Rs. 400 per employee per occasion
and discharging an employee costs Rs. 500 per person per occasion. Inventory carrying costs are
Rs. 5/unit/month and shortage costs are Rs. 100/unit/month and shortage costs are Rs. 100/
unit/month. The Company forecasts the demand for the next four months as below :
Month (Demand units) No. of working daysin the month
jan 500 22
February 600 19
March 800 21
April 400 21
The Company is thinking of adopting one of the following pure strategies :
Plan I : Vary work force levels to meet the demand.
Plan II : Maintain 30 employees and use inventory and stockouts to absorb demand fluctuations.
Which strategy would you recommend? You may assume nil inventory at the start.

54
 The overall costs of both the strategies are computed in the following tables.
Plan I, varying the work force levels to suit the production needs :
January February March April Total
1. Workers required 22 500
= 23 19 600
= 32 21 800
= 38 21 400
= 19
2. Labour cost 23,000 , 32,000; 38,000 ;19,000 ;=1,12,000
3. Hiring costs 9 × 400 6 × 400
= 3,600 = 2,400 6,000
4. Lay off costs 7 × 500 19 × 500
= 3,500 = 9,500 13,000
Total 1,31,000
Plan II : Maintain a steady work force and use of inventory plus stock on
January February March April Total
1. Workers used 30 30 30 30
2. Labour cost 30,000 30,000 30,000 30,000 1,20,000
3. Units produced 660 570 630 630
4. Inventory costs 5 × 160 5 × 130 5 × 190 = 800 = 650 = 950 2400
5. Shortage costs 100 × 40 = 4,000 ; 4,000
Total 1,26,400 On the basis of costs, plan II would be the choice. Moreover this strategy would result in higher worker
morale, smoother production, and generally, a higher quality product.
55
 Problem no.13
56

5 jobs are required to be processed through 2 m/cs. Sequentially

The following table gives processing times in hours

Job A B C D E
M/C 1 2 7 5 6 5
M/C 2 4 8 8 7 3

1)Calculate minimum completion time of all jobs

2) For what period m/c 2 will remain idle
3)When does job –B GETS COMPLETED.
 Q. 6. (a) The following tasks are to be performed on an assembly line in the se
and times specified :
Task Time (Seconds) Tasks that must precede
A 50 –;B 40 –;C 20 A ;D 45 C;E 20 C;F 25 D;G 10 E;H 35 B, F, G
(i) Draw the schematic diagram.
(ii) What is the theoritical minimum number of stations required to meet a fore
demand of
400 units per an 8-hour day?
(iii) Use the longest task time rule and balance the line in the minimum numbe
produce 400 units per day.
(iv) Evaluate the Line Efficiency and the Smoothness Index

57
(i) Schematic Diagram : D F
A C H
E G
B
A-20 B-40

D-45 E= 20
F-25 G-10
H-35
(Activity on Node)
20 10
(ii) Theoretical minimum number of stations to meet D = 400 is :
N = T/C = 245/{(60 seconds 480minutes) 400units}
= 245 ÷ 72
= 3.4 day 4.

58
 (b) Write short notes on :
(i) Line Balancing
(ii) Work Simplification
(iii) Progressing
(iv) Six Sigma quality programme

59
 (iii) Line Balancing :
Station Task Task Time Unassigned Time Feasible Station Cycle time
(Seconds) (Seconds) Remaining Time (Seconds)
Task (Seconds)
1 A 50 22
C 70 70C 20 2 None
2 D 45 27
E, F 70 70F 25 2 None
3 B 40 32 E E 20 12 G 70 70
G 10 2 None
4 H 35 37 None 35 70
Total 245 280
(iv) Line Efficiency = (245/280) × 100 = 87.5%
Smoothness Index = (70 − 70)2 + (70 −70)2 +(70 −70)2 +(70 −35)2
= (35)2 = 35%.
60 Answer 6.
61
 Answer 6. (b)
(i) This technique is employed to ensure balanced flow of production specially in Assembly lines.
When products require a number of operations to be performed , the time taken for each operation
may vary. Therefore if the line is not balanced , a few operators will be over loaded whose operation
times are long and others will be idling away their time.
This technique decides the cycle time for the products based on the output required per shift. This
also considers the sequence in which the operations will have to be carried out. Then Line Balancing
technique groups operations in such a manner that each group will have generally equal total task
times. Each group is called a work station and assigned to an operator. Thus all the operators in
each work station will have balanced load.
(ii) Work Simplification involves subdivision of an operation into its constituent elements in order to
simplify operations and eliminate wasteful motions. It reduces fatigue and improves productivity.
It covers all aspects of work, i.e equipment , layout , procedures , methods etc.
(iii) Progressing is the gentle but firm direction of ‘activities planned’ to proper channels, shielding
them from adverse factors inseparable from actual operations. The work of the progress department
starts where the planner’s ends. The Progress Controller/Progress Chaser , as he is called, is not
concerned with methods of carrying out operations(which are under the purview of the process
planning department) but the ‘doing’ of them at proper time in the correct order and at the lowest
anticipated cost. The duties of the Progress Chaser would vary widely from unit to unit. In a well

62
 organized manufacturing activity, his duties consists of :
(A) recording of actual production or output against planned production;
(B) assessment of causes leading to activities falling behind schedule;
(C) reporting to appropriate authority;
(D) where possible , to foresee all that may lead to failure on schedules and to sound a note of
warning to all concerned.
(iv) Six Sigma Quality program is company- wide approach for continuous improvement in quality of
products and services. It measures the degree to which the process deviates from the standards
and takes efforts to improve the process to achieve customer satisfaction.
The objective of Six Sigma Quality programme are two –fold :
(i) to improve the customer satisfaction and reducing and eliminating gaps/defects and
(ii) to continuously improve processes throughout the organization with a view to reduce sources
of variation and improve quality as well as productivity.
It is a statistical measurement which tells us how good our products, services and process are and
enables us to benchmark our operations with the best in the field. It thus helps us to establish our
course in the race for total customer satisfaction.
A process at 6- Sigma level normally produces 3-4 non conformances in a million operations. This
is supposed to be the best-in-class quality. Thus 6-Sigma is essentially a philosophy of working
smarter. This means making fewer mistakes in everything we do. As we discover and eliminate the
sources of variation , the non conformances are eliminated and the process capability improves.
63
 (c) The following cost have been recorded :
Particulars Rs.
Incoming materials inspection 10000
Training of personnel 30000
Warranty 45000
Process planning 15000
Scrap 9000
Quality laboratory 30000
Rework 25000
Allowances 10000
Complaints 14000
What are the costs of prevention, appraisal, external failure and internal failur

64
 Problem on transportation
65

Factory –ware house –cost ,demand & supply schedule

F w W-1 W-2 W-3 W-4 SUPPL

Y
F-1 6 8 8 5 30
F-2 5 11 9 7 40
F-3 8 9 7 13 50
DEMAN 35 28 32 25 120
D
 VOGL’S METHOD
66

Factory –ware house –cost ,demand & supply schedule

F w W-1 W-2 W-3 W-4 SUPP COL
SELECT HIGHIEST PENAL
LY /PENA
ALLOT for cell F2W4--25
LTY
F-1 6 8 8 5 30 ½
F-2 5/35 11 9 7 40/5 2/4
F-3 8 9 7 13 50 1/1
DEMA 35 28 32 25 120
ND
ROW PLTY 1 1 1 2/0
 VOGL’S METHOD
67

Factory –ware house –cost ,demand & supply schedule

F w W-1 W-2 W-3 W-4 SUPP COL
SELECT HIGHIEST PENAL
LY /PENA
ALLOT for cell F2W1--35
LTY
F-1 6 8 8 5 30 ½
F-2 5/35 11 9 7 40/5 2/2
F-3 8 9 7 13 50 1/1
DEMA 35-35 28 32 25 120
ND
ROW PLTY 1 1 1 2/0
 VOGL’S METHOD
68

Factory –ware house –cost ,demand & supply schedule

F w W-2 W-3 W-4 SUPP COL
SELECT HIGHIEST PENAL
LY /PENA
ALLOT for cell F2W1--35
LTY
2)3 being the highiest
F-1 8 8 5/25 30/5 1/3
Allot 25 units to F1-W4
F-2 11 9 7 40/5 2/2
F-3 9 7 13 50 1/2
DEMA 28 32 25-25 120
ND
ROW PLTY 1 1 1 2/0
 VOGL’S METHOD
69

Factory –ware house –cost ,demand & supply schedule

F w W-2 W-3 SUPP COL
SELECT HIGHIEST PENAL
LY /PENA
ALLOT for cell F2W1--35
LTY
2)3 being the highiest
F-1 8/5 8 30/5 1/3/0
Allot 25 units to F1-W4
F-2 11/5 9 40/5 2/2/2
F-3 9/18 7/32 50 1/2/2
DEMA 28 32-32 120
ND
ROW PLTY 1 1 1 2/0
 IBFS F/W W1 W2 W3 W4 Supply
F1 6/ 8/5 8 5/25 30
F2 5/35 11/5 9 7 40
F3 8 9/18 7/32 13 50
Deman 35 28 32 25 120
d
Cost/units /unit Total cost
5 35 175
8 5 40
11 5 55
9 18 162
7 32 224
70
5 25 125 =781
71 Optimality test
The initial basic solution obtained by any one of the three
methods may still have some better solution . To find out
whether there exists a better solution we may carry out the
following tests :
1)stepping stone method. 2)MODI method .
 Stepping stone method:
72

1)Verify whether the IBFS has (4+3-1 )= 6 occupied cell.

2)Then evaluate unoccupied /unallocated or Non-Basic cells. This done by
finding out the net increase or decrease in cost by moving one unit from
occupied cell to unallocated cell.
3)This is done by forming a loop or closed path
4)The loop starts from unallocated cells moves horizontaly or vertically & finally
forms a loop ending with the unallocated cell
5)See the next slide
 Evaluation process & final
solution
73

2)For F1W3=8-8+11-9+ 2
3)F2W3=9-11+9-7=0
4)F2W4=7-5+8-11=-4
5)F3W1=8-5+11-9=5
6)F3W4=13-5+8-11+9-7=7
F2W4 GIVES – VE VALUE
 IBFS W-1 is the least
Costed un allocated
cell
By moving one unit
From W-2 to W-1
F/W W1 W2 W3 W4 Supply The cost /unit will
come down by Re 1
F1 6/ 8/10 8 5/20 30 But this will out
Shoot supply
F2 5/35 11/0 9 7 5 40 Therefore we move
F3 8 9/18 7/32 13 50 I unit from F2W1
TO F2W2.
Deman 35 28 32 25 120 The change in cost
d -8+6-5+11= 4

Cost= 5* 35=175 9*18= 162 7*32= 224

8*10= 80 5*20= 100
7*5= 35
255 + 297 +224 = 776
74
 W-1 is the least
Costed un
IBFS allocated
cell
By moving one
unit
From W-2 to W-1
F/W W1 W2 W3 W4 Supply The cost /unit will
come down by Re
F1 6/ 8/10 8 5/20 30 1
But this will out
F2 5/35 11/0 9 7/5 40 Shoot supply
Therefore we
F3 8 9/18 7/32 13 50 move
Deman 35 28 32 25 120 I unit from F2W1
TO F2W2.
d The change in
Thus by moving 5 units from F2W2 to F2w4 the cost =down by5*
cost can be brought 1=
-8+6-5+11= 4
This method can be repeated till all the values are +.It means no further reductionis

75
76
 MODI METHOD.
77

F\W W1 W2 W3 W4 suppl U Occupied cells

y F1W2=8=U1+V2
F1W4=5=U1+V4
F1 6 8/5 8 5/25 30 U1 F2W1=5=U2+V1
F2 5/35 11/5 9 7 40 U2 F2W2=11=U2+V2
F3W2=9=U 2+V2
F3 8 9/18 7/32 13 50 U3 F3W3=7=U2+V3

DEMA 35 28 32 25 150
ND
V V1 V2 V3 V4
 Answer 7. (c)
Particulars Rs.
Training of personnel 30000
Process planning 15000
Total cost of prevention 45000
Incoming materials inspection
10000
Quality laboratory
30000
Total cost of appraisal 40000
Scrap 9000
Rework 25000
Total cost of internal failure
34000
Warranty
45000
78 Allowances 10000
Complaints 14000
 (c) An industrial engineer, deputed to conduct a time study for a job,
has, after observation, divided

(i) Are there any outliers in the data, i.e., probable errors in reading or recording data which
should not be included in the analysis?
(ii) Compute the basic time for the job and the standard time if a relaxation allowance of 12
79 contingency allowance of 3% and an incentive allowance of 20% are applicable for the job.
 Basic time = 7.722 mins
Allowance = (12+3) = 15% (Incentive allowance not considered)
Standard time = 7.722 × 1.15 = 8.88 min (approx)
80
 (c) A work sampling study is to be made of a data entry operator pool. It is felt t
operators are idle 30% of the time. How many observations should be made in
to have 95.5% confidence that the accuracy is within +/- 4%.

Answer 9. (c)
n = {4p(1-p)}/s2
p = 0.3
1– p = 0.7
s = 0.04
n = 4 × 0.3 × 0.7/(.04)2
= 0.84/.0016
= 525.

81
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83
84
85
 Widescreen Test Pattern (16:9)

Aspect Ratio
Test
(Should appear
circular)

4x3

86 16x9