OPERATIONS MODULE

OPERATIONS CLUB (EUREKA) will like to welcome you all to LBSIM, Delhi & hope that our association together will be fruitful and enjoyable at the same time. It is our endeavor to make your stay at LBSIM as knowledgeable as possible and will try our best to impart our learnings to you during our stay at LBSIM. We hope that by the end of it all you will be able to gain some valuable management lessons through our honest efforts. The purpose of this module is not to test your knowledge only but it intends to give you a brief insight on Operations as a branch and Operations overall followed in the industry. We sincerely hope that through the questions you will be able to learn about some of the key areas in the Operations field. We look forward to having a mutually productive association with you all. Instructions for the solving the module: 1) There are 4 sections in this module & it is compulsory to attempt all the sections. 2) Please do not exceed the word limit as it might invite penalty and you may end up losing marks for that particular question. 3) Please try to answer the questions from your understanding as our aim is not for you to give us bookish (lifted off the internet in this case) answers but to help you learn from them. 4) All the sections carry equal marks.

Operations Module

Page 1

SECTION 1: Understanding importance of Operations Management Operations Management is a comprehensive production-related responsibility that includes Inventory Management, Vendor Development, and Purchase Management. It also includes areas that demand multi-disciplinary skills like SCM (Supply Chain Management) and ERP (Enterprise Resource Planning). An MBA in Operations Management teaches students to manage the processes that lead to successful production and distribution of product(s) in any business organization. Students will learn to oversee manufacturing - product creation, development, production - and its distribution to sales outlets. An MBA Program in Operations & Supply Chain Management is designed to expand your knowledge of operational efficiencies and effectiveness, while satisfying customer requirements as skillfully as possible from the point-of-origin to the point-of-consumption. A candidate with an MBA in Operations Management would be able to look after a factory or other operations of the factory in a better manner as compared to others due to their competency and knowledge regarding handling the operations of an organization. Manufacturing is one of the most important areas for any product-based business. Management of large as well as small manufacturing companies involves various production and operational techniques and theories. These skills are especially useful for engineering graduates. The career options in the field of Operations Management are:

Quality Control Material Management Productivity Improvement Inventory Control Production Planning Supply Chain Management Logistics

The focus of Operations Specialists is not engineering problems, but managerial implications of engineering problems. The specific skills required are behavioral, technical, and statistical. These techniques are largely applied to manufacturing organizations. There are a few consultancies that work with such organizations in this functional area, thereby offering attractive career opportunities to MBAs. Q Write in brief on your understanding of operations by taking any case of a company where operational strategy has led to optimization thus leading to better efficiency and productivity.(Please do not exceed 400 words)

Operations Module

Page 2

SECTION 2: Identifying and understanding some important terms in Operation. Note: Please do not write more than 50 words for any of the Qs in this section. a. Connect the following 3 pictures to name the term and give a brief description about the term.

b. Name the term associated with the below pic and write briefly about it.

Operations Module

Page 3

c. Name the term associated with the process depicted below and write in brief about it.

d. Identify the person? Write a brief decription on his contribution to the society. Hint: An award is there on his name.

e. Identify the term associated with the below card and write in brief about it.

Operations Module

Page 4

SECTION 3: Case Study on Toyota Operations. Toyota Production System as a Sustainable Competitive Advantage Toyotas Global Competitive Advantage Toyotas global competitive advantage is based on a corporate philosophy known as the Toyota Production System. The system depends in part on a human resources management policy that stimulates employee creativity and loyalty but also on a highly efficient network of suppliers and components manufacturers. Employee Empowerment: Average Annual Results More than 700,000 improvement suggestions were submitted by Toyota's employees.
That is an average of over 10 improvement suggestions per employee per year. Over 99% of suggestions were implemented.

The Toyota Way: 14 Principles The Toyota Way is not the Toyota Production System (TPS). The 14 Principles of the Toyota Way is a management philosophy used by the Toyota Corporation that includes TPS, also known as lean manufacturing. TPS is the most systematic and highly developed example of what the principles of the Toyota Way can accomplish. The Toyota Way consists of the foundational principles of the Toyota culture, which allows the TPS to function so effectively. Corporate Culture The fundamental reason for Toyota's success in the global marketplace lies in its corporate philosophy the set of rules and attitudes that govern the use of its resources. Toyota have successfully penetrated global markets and established a world-wide presence by virtue of its productivity. The company's approach to both product development and distribution is very consumer-friendly and market-driven. Toyota's philosophy of empowering its workers is the centerpiece of a human resources management system that fosters creativity, continuous improvement, and innovation by encouraging employee participation and that likewise engenders high levels of employee loyalty. Knowing that a workplace with high morale and job satisfaction is more likely to produce reliable, highquality products at affordable prices, Toyota have institutionalized many successful workforce practices. Toyota has done so not only in its own plants but also in supplier plants that was experiencing problems. Although many car manufacturers have earned a reputation for building high-quality cars, they have been unable to overcome Toyota's advantages in human resource management, supplier networks and distribution systems in the highly competitive car market. Much of Toyota's success in the world markets is attributed directly to the synergistic performance of its policies in human resources management and supply-chain networks. Five Ss The Five Ss refer to the five dimensions of of workplace optimization: Seiri (Sort), Seiton (Set in order), Seiso (Shine), Seiketsu (Standardize), and Shitsuke (Sustain). The Focus of Toyota Production System Real TPS is not just about flow or pull production or cellular manufacturing or "load leveling". TPS in Toyota is primarily concerned with making a profit, and satisfying the customer with the highest possible quality at the lowest cost in the shortest lead-time, Operations Module Page 5

while developing the talents and skills of its workforce through rigorous improvement routines and problem solving disciplines. This stated aim is mixed in with the twin production principles of Just in Time (make and deliver the right part, in the right amount, at the right time), and Jidoka (build in quality at the process), as well as the notion of continuous improvement by standardization and elimination of waste in all operations to improve quality, cost, productivity, lead-time, safety, morale and other metrics as needed. Q. Based on your understanding of the case make a ppt of 5-6 slides highlighting key points in the case.

Operations Module

Page 6

SECTION 4: Understanding Inventory Management. Inventories are materials and supplies that a business or institution carry either for sale or to provide inputs or supplies to the production process. All businesses and institutions require inventories. Often they are a substantial part of total assets. Financially, inventories are very important to manufacturing companies. How much to order is an important question in inventory management. The case study introduces us a cost model, to provide an economic approach to determine order side. Economic Order Quantity (EOQ) is a simple and widely used inventory control model. ECONOMIC ORDER QUANTITY 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. Formula 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. Operations Module Page 7

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. 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. Q. Draw a graph between Total Cost, Carrying cost and Holding Cost & Quantity pinpointing EOQ point. Q. An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1,200 batteries. The supplier pays Rs28 for each battery and estimates that the annual holding cost is 30 percent of the batterys value. It costs approximately Rs20 to place an order (managerial and clerical costs). The supplier currently orders 100 batteries per month. Calculate EOQ using the knowledge gained from above case.

Operations Module

Page 8