Management science.pptx

Management
UNIT 1
Management is the art of getting things done by
others. Management means decision making. More
effective definition is management is the process of
planning, organizing, directing and controlling
activities of and using resources of an organization
for accomplishing the organizational goals
efficiently and effectively in an ever changing
environment.
Manager- Someone who coordinates and organizes
the work of other people that organization goal can
be accompanies.

Need/importance of management
1. For the effective utilization of resources.
2. Development of resources.
3. To incorporate innovations.
4. For both coordinating among various
departments.
5. Provide a sense of security and oneness to
employees.
6. To complete the task within the stipulated time
frame.

Management is a science
Common features
Cause- Motivate
Effect-Good work employee.
In science
Cause- Law of gravitation.
Effect- Come down ball.
Principle based on experiment motivate employee
they will work more so like science this also do
experiment but management is not pure science.

Management is an art
Creativity
Continuous practice
Personalized application(solve problem in his
unique manner).

Importance of management
• Achieving group goals
• Maximum efficiency
• Create dynamic organization.
• Achieving personal objective.
• Development of society.

Evolution of management thought
It started in the early days of man. It began since the
period man saw the need to live in groups. Mighty men
were able to organize the masses, share them into
various groups. The sharing was done accord to the
masses strength, mental capacities and intelligence. If
you want a good example where advance management
principles where applied, consider the organization of
olden days Roman Catholic church, military forces as well
as ancient Greece. These are all excellent examples. The
origin of management as a discipline was developed in
the late 19th century.
1700-1800 ----- Industrial revolution Due to more industry
and labor at this time so management role increases.

Types of management skills
1. Technical skills- Technical skill involve skills
that give the manager the ability and knowledge
to use a variety of techniques to achieve their
objectives. These skills not only involve
operating machines and software's, production
tools, and pieces of equipment but also the skills
needed to boost sales, design different types of
products and services, and market the services
and products.

2. Conceptual skills- These involve the skills
managers present in terms of the knowledge
and ability for abstract thinking and formulating
ideas. The manager is able to see an entire
concept, analyze and diagnose a problem, and
find creative solutions. This help the manager to
effectively predict hurdles their department or
the business as a whole may face.

3. Human or interpersonal skills- The human or
the interpersonal skills are the skills that present
the managers ability to interact, work or
effectively relate with people. These skills
enable the managers to make use of human
potential in the company and motivate the
employees for better results.

Examples of management skills
There is a wide range of skills that management
should possess to run an organization effectively
and efficiently. The following are six essential
management skills that any manager ought to
possess for them to perform their duties.
1. Planning 2. Communication 3. Decision
making 4. Delegation- The act of passing on
work related tasks and or authorities to other
employees 5. Problem solving 6. Motivating

Function of management
• Planning
• Organizing (who, where, when to work)
• Staffing
• Directing
• Controlling.

Contribution of F.W Taylor and Henry
Fayol to the management.
14 principle of Henry Fyol
DAD U C USSR
D- Division of work
A- Authority and responsibility.
D-Discipline.
U-Unity of command
C-Centralization and decentralization
U-Unity of direction.
S- Scalar chain.
S- Stability of tenure.
R- Remuneration.

Contribution of F.W Taylor and Henry
Fayol to the management
O I SEE
O- Order
I- Initiative
S- Subordination of individual interest to general
interest.
E-Equity
E-Espirit de corps.(Team spirit)

Authority
• Right to give command and receive obedience
from subordinates is the meaning of authority.
DISCIPLINE- Every employee has to follow the
organizational rules and comply with the terms
of employment agreement.
Unity of Command- Each employee should have
one boss from whom he/ she gets instruction.

Authority
Centralization -
Manager

Meaning of scientific management
Scientific management means what is to be
done and how it is to be done.

Frederick W. Taylor Contribution to
Scientific Management
He placed stress in the philosophy on the following
things for enhancing the productivity of the workers
1. Science not rule of thumb.
2. Harmony, not discord.
3. Cooperation, not individualism.
4. Maximum output, in place of restricted output.
5. The development of each man to his greatest
efficiency.

System approach
Taken from a Greek word which means to bring
together or to combine. A system is a set of
different independent parts working together in
an interrelated manner to accomplish a set of
objectives.

Features of a system
1. A system is a combination of parts, subsystems.
2. Each part may have various subparts.
3. For example within a galaxy there is a solar system, and within solar
system there are many planets.
4. A system can be identified by its boundary.
5. The boundary of a system classifies it into two parts closed system and
open system. No interaction with environment is closed system and
open system interaction takes place.
6. A system transforms input into outputs. Inputs can be information,
money, materials , man, etc
7. Transformation process involves production, marketing, finance , HR
departments (which perform planning, organizing, directing, controlling
functions).
8. Outputs may be goods and services.
Input Transformation
Process
Output

Corporate planning
Q. What is a corporate planning
Answer. Corporate planning is a process that is
used by business to map out a course of action
to grow, increase profits, gain exposure, or
strengthen brand identity. Corporate planning is
a tool that successful business use to leverage
their resources more wisely than their
competitors

Why plan
Plan help to increase
1. Clarity of direction
2. Ensure efficiency use of resources.
3. Providing a way of measuring progress.
4. Support effective decision making.
5. Coordinate activities.
6. Allocate responsibilities.
7. Motivate and guide staff.

Process of corporate planning
Environmental analysis and diagnosis----
Determination of objective-- Strategy
formulation---- Development of tactical plan--
 Implementation of tactical plan----- Follow
of action.

Six key elements of a successful
corporate plan
To create a successful corporate plan, you will need
to
1. Gather information.
2. Set objectives of the plan.
3. Devise strategies to meet goals.
4. Implement your plan.
5. Monitor plan performance.
6. Evaluate the effectiveness/ success of your plan.

Gather information
Take the good, the bad, the ugly and the pretty
that regard to your specific goals. No matter if
you are a small business or large, it is important
to look at the strengths and weakness of the
leading companies on your industry. This can
shape your plan to avoid the costly mistake of
others.

Environmental scanning
Environmental scanning is a process of
gathering, analyzing and dispensing information
for tactical or strategic purposes. The
environmental scanning process entails
obtaining both factual and subjective
information on the business environments in
which a company is operating and considering
entering.

Approach to environment scanning
Systematic approach- Information is collected
systematically and continuously.
AD HOC APPROACH- Special surveys and studies
to deal with specific environment issues.
Processed form approach- Information available
from various sources is processed.

Environmental Scanning
Scanning Environmental Scanning
External
Analysis
Internal
Analysis
Macro
environment
PEST
analysis
Micro
environment
Five force
analysis

External analysis
A scan of the external macro environment in
which the firm operates can be expressed in
terms of the following factors
Political
Economical
Social
Technological

Political factors
Political factors include government regulations and
legal issues and defines both formal and informal
rules under which the firm must operate. Some
examples include
1. Tax policy
2. Employment laws
3. Environment regulations.
4. Trade restriction and tariffs.
5. Political stability.

Economic factors
Economic factors affect the purchasing power of
potential customers and the firms cost of
capital. The following are examples of factors in
the macro economy.
1. Economic growth
2. Interest rates.
3. Exchange rates.
4. Inflation rates.

Social factor
Social factors include the demographic and
cultural aspects of the external macro
environment. These factor affect customer
needs and the size of potential market. Some
social factors include
Health consciousness
Population growth rate
Age distribution
Emphasis on safety.

Technological factors
Technological factors can lower barriers to entry,
reduce minimum efficient production levels, and
influence outsourcing decision. Some
technological factors include
R and D activity.
Automation.
Technology incentive.
Rate of technology change.

Five force analysis
Threat of new entrant.
Threat of substitutes.
Bargaining power of buyers
Bargaining power of suppliers.
Rivalry among existing firms.

SWOT analysis
It is a strategic planning techniques used to help
a person or organization identify strengths,
weakness, opportunities and threats related to
business competition or project planning. It is
intended to specify the objective of the business
venture or project and identify the internal and
external factors that are favorable and
unfavorable to achieving these objectives.

Strength
Strength are things that your organization does
particularly well or in a way that distinguishes
you from your competitors. These might be the
motivation of your staff, access to certain
materials, or a strong set of manufacturing
process.

Social responsibility of management
Social responsibility is the idea that business
should balance profit making activities with
activities that benefit society it involves
developing businesses with a positive
relationship to the society in which they
operate.

Need for social responsibilities
1. For their self interest example salary.
2. Better environment for business like pollution.
3. Good image in public.
4. To avoid disturbance in government example
tax.
5. Social strength.
6. Resource used for moral justification or
betterment of society.
7. Contribution on social problem.

Organization
Louis Allen, “ Organization is the process of
identifying and grouping work to be performed,
defining and delegating responsibility and
authority and establishing relationships for the
purpose of enabling people to work most
effectively in accomplishing objectives.”

Types of organization
Line organization
The traditional line structure is organized in such
a way that a president or CEO( Chief Executive
Officer) is at the top. Then there are the
directors or vice presidents of specific areas,
followed by managers.
CEO
Director
Manager

Line and staff organization
Supportive functions intended to help line
executive. Staff means supportive functions
intended to help line executives. Staff are
appointed to give advice to line organization.
General manager
Production manager
Foreman
Worker
Process
specialist
Production
Specialist

Functional Organization
A design that group people together on the
basis of their common expertise or experience
or because they use the same resources.
Restaurant Cook
Cleaning
financing
Serve
customer
Kitchen
Supportive
Dining room

Matrix organization structure
The search for better and faster ways to develop
products and respond to customer needs has
led some companies to choose a matrix
structure.
MATRIX STRUCTURE
An organization design that group people and
resources in two ways simultaneously by
function and by product.

Matrix structure
A matrix is a rectangular grid that shows a
vertical flow of functional responsibility and
horizontal flow of product responsibility.

Matrix Organization
Matrix
CEO
Vice
President
Engineering
Vice
President
Purchasing
Vice
President
Marketing
Vice
President
Finance
Vice
President
R and D
Product
A
manager
Product B
manager

Network organizations
An organization that uses its own employees to
do some work activities and network of outside
suppliers to provide other needed product
components or work processes.

UNIT 2
Facility location planning(Plant location)
Location planning is nothing but planning for
site selection which is strategic decision.
Facility location planning is the process of
determining the geographical site for firms
operation to achieve maximum operating
economy and efficiency .
A selection of a place for locating a plant is
called plant location.

Factors affecting plant location
(i) Availability of Raw Materials
(ii) Proximity to Market
(iii) Infrastructural Facilities
• (iv) Government Policy
• (v) Availability of Manpower
• (vi) Local Laws, Regulations and Taxation
• (vii) Ecological and Environmental Factors
(viii) Competition
(ix) Incentives, Land costs. Subsidies for Backward Areas
(x) Climatic Conditions
(xi) Political conditions.

Plant layout
Plant layout is a plan for effective utilisation of
facilities for the manufacture of products;
involving a most efficient and economical
arrangement of machines, materials, personnel,
storage space and all supporting services, within
available floor space.

Objectives of plant layout
• Streamline flow of materials through the plant
• Minimize material handling.
• Facilitate manufacturing progress by
maintaining balance in the processes
• Maintain flexibility of arrangements and of
operation
• Maintaining high turnover of in-process
inventory

Objectives of plant layout
• (vi) Effective utilization of men, equipment
and space
• (vii) Increase employee morale
• (viii) Minimize interference (i.e. interruption)
from machines
• (ix) Reduce hazards affecting employees

Classification of plant layout

4 method of production
Four types of production
1) Unit or Job type of production.
2) Batch type of Production.
3) Mass Production or Flow production.
4) Continuous production or Process production.

Method of production
Product
Flexibility
Product variety
Continuous
Mass
Batch
Job

Quality
The real definition of quality is customer
satisfaction.

Acceptance sampling
Dodge reasoned that a sample should be picked
at random from the lot, and on the basis of
information that was yielded by the sample, a
decision should be made regarding the
disposition of the lot. In general, the decision is
either to accept or reject the lot. This process is
called Lot Acceptance Sampling or
just Acceptance Sampling.

Why acceptance sampling done
• Acceptance sampling is employed when one
or several of the following hold: Testing is
destructive
• The cost of 100% inspection is very high
• 100% inspection takes too long

Single sampling plan
A single sampling plan, is specified by the pair of
numbers (n,c). The sample size is n, and the lot
is rejected if there are more than c defectives in
the sample; otherwise the lot is accepted.

Double sampling plan
• If d1≤a1, the lot is accepted.
If d1≥r1, the lot is rejected.
If a1<d1<r1, a second sample is taken.
• If a second sample of size n2 is taken, the number of
defectives, d2, is counted. The total number of
defectives is D2=d1+d2. Now this is compared to the
acceptance number a2 and the rejection number r2 of
sample 2. In double sampling, r2=a2+1 to ensure a
decision on the sample. If D2≤a2, the lot is accepted.
If D2≥r2, the lot is rejected.

Control chance for variable and
attributes
If we make production very effective minimize
error or defect in production or variation in
production in production then we can get
quality products.
Variation of production takes place due to two
reason
1. Chance cause
2. Assignable cause.

1. Chance cause
Chance cause are those cause which takes place
by chance example a barber do slight variation
in cutting hair as cut fast electricity was not
there.

Assignable cause
Assignable cause is due to major cause which we
have to find the reason and rectify it.

Control charts of variables
X
- chart, R chart are control charts for variables.
Control charts are variable charts which can be
measured quantity wise like length, width, area,
volume, weight.

Control charts for variables
Smple no
_
X R
1 7 2
2 7.5 3
3 8 2
4 10 2
5 9.5 3
Total 𝜀 X
-=42.0 𝜀R=12

Problem
Sample size A2 D3 D4
2 1.88 0 3.27
3 1.02 0 2.57
4 0.73 0 2.26
5 0.58 0 2.11
6 0.48 0 2.00
8 0.37 0.14 1.86
10 0.31 0.22 1.78
12 0.27 0.28 1.72

Solution
X
-- = 𝜀X- /(No of samples)=42/5=8.5
R- = 𝜀R/(No of samples) =12/5=2.4
For X
- chart
UCL= X-- +A2 R-
LCL= X-- -A2 R-
For R chart
UCL=D
4 R-
LCL=D
3R-

For X bar chart
UCL=8.5+(0.58X2.4)
= 9.892
LCL=8.5-(0.58X2.4)=7.108
For R chart
UCL=2.11X2.4=5.064
LCL=0x2.4=0

X bar chart
8.5
9.892
7.108
Sample average
Sample number

Range
Range R
Sample number
8.5
7.108
9.892

Range chart
5.064
2.4
Range
®
Sample number
LCL=0

Control charts for attributes
Control charts for attributes we cannot measure
quantity wise like number of errors in a page we
count. If error is acceptable we accept otherwise
we reject it.

Problem
The number of customer complaints received
daily by an organization is given below.
Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Complaints 2 3 0 1 9 2 0 0 4 2 0 7 0 2

Problem
Does it mean that the number of complaints is
under statistical control. Establish a control
scheme for the future.
C bar=
𝜀𝐶
15
=
36
15
= 2.4
C bar=2.4
UCL= C bar+ 3 𝐶 = 2.4 + 3 2.4 = 7.05
LCL=C bar- 3 𝐶= 2.4 − 3 2.4 = 0

Ordering cost
Cost of placing order
Cost of transportation
Cost of inspection
Cost of receiving

Carrying cost
Cost of storage space
Cost of insurance
Cost of security

Problem
Annual consumption =48,000 units
Purchase price 1 piece= Rs 180
Ordering cost per order= Rs 180
Annual carrying cost = 12% of purchase price
Calculate EOQ and number of orders per year.

Solution
A.C= Rs 48,000
O.C=Rs 180
Annual carrying cost= 12% of purchase
price=(12/100) ×25
EOQ= (2𝑋𝐴𝑋𝑂)/𝐶=
2𝑋48000𝑋180
25𝑋12
100
=2400 units
Number of order per year=48000/2400=20 order.

ABC analysis
80
20 40
15
100
10
Percentage
Of total
usage value
Percentage of total items

ABC analysis
A products or items- Most costly and less
number of products
B products or items- Number of products is
more than A products but less costly than A
products.
C products or items- Number of products is
more than A products and B products but less
costly than A products and B products.

What is inventory management?
• Inventory management is a systematic approach
to sourcing, storing, and selling inventory—both
raw materials (components) and finished goods
(products).
• In business terms, inventory management means
the right stock, at the right levels, in the right
place, at the right time, and at the right cost as
well as price.
•

Objectives of Inventory Management:
• To ensure continuous supply of materials spares and finished
goods so that production should not suffer at any time and
the customer’s demand should also be met.
• To avoid both overstocking and under-stocking of inventory.
• To maintain investment in inventories at the optimum level as
required by the operational and sales activities.
• To keep materials cost under control so that they contribute in
reducing cost of production and overall cost.
• To eliminate duplication in ordering or replenishing stocks.
This is possible with the help of centralizing purchases.
• To minimize losses through deterioration, pilferage, wastages
and damages.

Definition of Marketing
Marketing is the activity, set of institutions, and
processes for creating, communicating,
delivering, and exchanging offerings that have
value for customers, clients, partners, and
society at large.

Store inventory
A store inventory is a record of all the items
available for use in your daily business
operations. The store inventory increases with
purchases and decreases with sales or
consumption.

PERT
Three time estimate
TO-OPTIMISTIC TIME
TM-Most likely Time
TP-Passimistic Time
1
2
Tail event
Head
event

PERT
Te =( To +4 Tm+ Tp)/6
Te=Expected time.
If To =1
If Tp =3
If Tm =2
Then Te =(1+(4x2)+3)/6
Te=2
1
2
3

Network Diagram
2 3
Tail event Head
event
1
Predescor
activities
Successor
activities

PERT
Standard deviation
-𝜎 𝜇(𝑚𝑒𝑎𝑛 𝑎𝑣𝑒𝑟𝑎𝑔𝑒) +𝜎(standard deviation)

PERT
• Te =( To +4 Tm+ Tp)/6
• 𝜎 =(Tp- To)/6
• Variance= 𝜎2 =V

Dummy activities
Hypothetical activities are known as dummy
activities.
Does not consume any resources and time.
Dummy activities are shown with a dotted line.
Dummy activity are drawn so that duplicate
activity does not exist. It also helps to complete
precedence relationship.

Problem related to dummy activity
There are 5 activities in a project A,B,C,D,E. A
preceeds all others. E follows all other activities
A B E
D
A
1 2 4
3
1
2
3
4
5
6
C
D
B
E
D
D

Problem related to dummy activity
Start of activity C depend on completion of
activity A and B. Start of activity E depend on
completion of activity B. Draw network diagram.
3
1
2
5
6
A
B
C
E
1 4 5
2 3 6
A C
B E
D

Problem on PERT solving technique
1
3
2
4 5
𝜎1
𝜎2
𝜎3
𝜎4
𝜎5

Problem on PERT solving technique
• Vcritical =V1+V3+V5
=𝜎1
2 + 𝜎3
2 + 𝜎5
2
Variance= 𝜎2 =𝑉c =𝜎1
2 + 𝜎3
2 + 𝜎5
2
𝜎c =√ 𝑉c
𝑇c =Critical Time
T=Time required to complete the project.
Z= number of standard deviation=(T- 𝑇c)/ (𝜎)
Z Probability distribution %
You will find out Will be given to you

Numerical on PERT
For the given activities determine
a. Critical path using PERT
b. Calculate variance and standard deviation.
c. Calculate the probability of completing the project in 26 days.
Activities to tm tp
1-2 6 9 12
1-3 3 4 11
2-4 2 5 14
3-4 4 6 8
3-5 1 1.5 5
2-6 5 6 7
4-6 7 8 15
5-6 1 2 3

Solution
Activities Te=(To+4T
m+Tp)/6
EST EFT
(EST)+Time
LST
(LFT)-
Time
LFT Total
Float
Variance
𝝈
((Tp-
To)/6)2
1-2 (6+(4x9)+
12)/6=9
0 9 0 9 0 1
1-3 3+11+4x4
/6=5
0 5 4 9 4 1.7
2-4 6 9 15 9 15 0 4
3-4 6 5 11 9 15 4 0
3-5 2 5 7 20 22 15 0
2-6 6 9 15 18 24 9 0
4-6 9 15 24 15 24 0 1.778
5-6 2 7 9 20 22 15 0

Network diagram
a. Critical path=1-2-4-6
1
2 4
6
3 5
0 0
9 9
24 24
15 15
5 9 7 22

Solution
b. Standard deviation 𝜎 = 1 + 4 + 1.778
𝜎 =2.6034
c. t=26 days given
tcp =24 days
Z= (t- tcp )/ 𝜎=(26-24)/2.6034
Z= 0.7682
In table percentage probability for Z value will be given to u

Objective Question
Statement 1- Direct cost is the cost that is related to
production.
Statement 2- It is also called fixed cost.
Which of the following statements are correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
Answer a

Direct and Indirect Costs
Direct costs
Cost that can be easily and conveniently
traced to a unit of product or other cost
object
Indirect costs
Cost that cannot be easily and
conveniently traced to a unit of product
or other cost object.
Examples: direct material and direct labor Example manufacturing overhead
E.g Wood to make furniture, hours
worked on project, flour to make cake.
E. g rent of a factory that make cars/
furniture, manager’s salary.

Differences
Direct expenses
These are charged directly to a job or a
cost center
Indirect expenses
These expenses which cannot be charged
to a specific job or a cost Centre.
The benefit of such expenses is received
by a specific job only and they are not to
be apportioned.
The benefit of such expenses go to more
than one job or cost center and they have
to be apportioned.
These are included in prime cost These are included in factory overhead if
they are related to factory, in
administrative overhead if they related to
administration, or in selling and
distribution overhead if they related to SD.

Objective Question
Which of the following not direct cost?
a. Material Cost
b. Labour Cost.
c. Wages.
d. Rent.
Answer. d

Depreciation
Depreciation is indirect cost as it can’t be
directly related to the cost of production.
Depreciation is like rent only which can be
general expenditure and can’t be linked to cost
of a product.
Income Saving
Income Expenditure
Tax Cash
Non
cash
Rent Depreciation

Crashing/Compressing of network
Question. Why crashing/compressing of
network done?
Answer. Probability of selling more we reduce
the time of project by reducing some activities
in critical path.
Question. Does crashing/compressing of project
increase the cost of project?
Answer. Cost may increase, may not increase or
remain same.

Cost
Direct Cost Indirect Cost
Direct cost increases if Indirect cost increases
time of project decrease if time of project
increases.
Example- Man , material, Example-Rent
Machine. interest, overhead
cost, electricity.

Indirect cost
Indirect cost = Fixed cost+ Variable cost
Fixed cost example rent.
Variable cost example interest, overhead cost
,electricity.
In some book they write indirect cost instead of
overhead cost.

Indirect Cost
Indirect cost
Variable
Cost
Fixed
Cost
Indirect
cost
Time

Total Cost
Total
cost
Time of project
Direct
Cost
Indirect
Cost
Total
Cost
Optimum
Time

Activity we crash
Question. Which activity we normally crash?
Answer. The activity which has minimum cost
slope we crash in critical path.
Cost slope=(Cc- Cn )/(Tn –Tc ) Rs/day.
Cc = Crashing cost
Cn = Normal cost
Tn = Normal time
Tc = Crashing time

Crashing of project network
1. Consider the data of a project as shown in the
following table
Activity Normal
Time
(weeks)
Normal
Cost(Rs)
Crash Time
(weeks)
Crash
cost(Rs)
1-2 7 700 4 850
1-3 5 500 3 700
1-4 8 600 5 1200
2-5 9 800 7 1250
3-5 5 700 3 1000
3-6 6 1100 5 1300
4-6 7 1200 5 1450
5-7 2 400 1 500
6-7 3 500 2 850

Problem
If the indirect cost per week is Rupees 200, find
the optimal crashed project completion time.

Activity Normal
Time
(Weeks)
Normal
Cost(Rs)
Crash
time(Weeks)
Crash
Cost(Rs)
Slope=(CC –
Cn)/(Tn –Tc)
1-2 7 700 4 850 (850-700)/(7-
4)=50
1-3 5 500 3 700 100
1-4 8 600 5 1200 200
2-5 9 800 7 1250 225
3-5 5 700 3 1000 150
3-6 6 1100 5 1300 200
4-6 7 1200 5 1450 125
5-7 2 400 1 500 100
6-7 3 500 2 850 350
Total 6500

1 3 7
2 5
4
6
7
9
2
3
6
7
8
5
5

Critical path
1-2-5-7=7+9+2=18 ……………………... Critical path
1-3-5-7= 5+5+2=12
1-3-6-7=5+6+3=14
1-4-6-7=8+7+3=18 ………………………Critical path
Normal Project Completion time,18 weeks
Critical path,
1-2-5-7
and
1-4-6-7
Total Direct normal cost= 6,500 Rs
Indirect Cost = 200x 18= 3600 Rs
Total Cost = Direct cost+ Indirect Cost
Total cost= 6500+ 3600=10100 Rs

Critical path
Critical path Critical activity Crash limit (Tn-Tc) Cost slope
1-2-5-7 1-2 (7-4)=3 50 (Least value)
2-5 2 225
5-7 1 100
1-4-6-7 1-4 3 200
4-6 2 125 (Least value)
6-7 1 350

Cost slope
Activity 1-2 has the least cost slope=50 Rs/week
Activity 4-6 has the least cost slope=125Rs/week
Activity 1-2 after reducing 1 week number of
weeks= 7-1=6
Activity 4-6 after reducing 1 week number of
weeks=7-1=6

Critical path
II Iteration
1
2
3
4
5
7
6
6
9
2
5
6
5
8
6
3

Critical path
II iteration
1-2-5-7=6+9+2=17 weeks
Project completion time= 17 weeks.
1-2-5-7 and 1-4-6-7
10100+(50+125)-200
=10075Rs= Total cost.

Crash Limit and Slope
II iteration
Critical path Critical activity Crash Limit Cost Slope
1-2-5-7 1-2 2 50
2-5 2 225
5-7 1 100
1-4-6-7 1-4 3 200
4-6 1 125
6-7 1 350

III Iteration
1
2
4
3
5
7
6
5
9
5
5
2
6 3
8
5

III Iteration
Project completion time=16 weeks.
1-2-5-7=5+9+2=16 weeks……….critical path
1-3-5-7=5+5+2=12 weeks.
1-3-6-7=5+6+3= 14 weeks
1-4-6-7=8+5+3=16 weeks………..critical path
10075+(50+125)-200=10,050 Rs

Crash Limit and Slope
III Iteration
Critical path Critical activity Crash limit Cost Slope
1-2-5-7 1-2 1 50
2-5 2 225
5-7 1 100
1-4-6-7 1-4 3 200(we crash as
this is less least
value)
4-6 0 (As crash limit
zero we cannot
crash)
125
6-7 1 350

IV Iteration
1
2
3
5
7
6
4
4
9
5
7
2
6
5
5
3

Critical path
IV Iteration
1-2-5-7=4+9+2=15
1-3-5-7=5+5+2=12
1-3-6-7=5+6+3=14
1-4-6-7=7+5+3=15 weeks
Project completion time= 15 weeks
The critical path are 1-2-5-7 and 1-4-6-7

Total cost
IV Iteration
Project completion time= 15 weeks.
1-2-5-7 and 1-4-6-7
10050+(50+200)-200=10,100
As crashing of project now 10,100 more than
previous iteration value 10050 so stop consider
now. Consider previous iteration value.

Final result
Since the total cost of the iteration (IV) is more
than that of the previous iteration, stop the
procedure and treat the solution of the previous
iteration (III) as the best solution for the
implementation. The final crashed project
completion time is 16 weeks. Corresponding
critical path are 1-2-5-7 and 1-4-6-7

Crash 2 days
Activity Normal Time Normal Cost Crash Time Crash cost
1-2 8 100 6 200
1-3 4 150 2 350
2-4 2 50 1 90
2-5 10 100 5 400
3-4 5 100 1 200
4-5 3 80 1 100

Cost slope
Cos slope= (Crash cost-Normal cost)/(Normal
time- crash time)
1
2
5
3
4
8
10
2
3
5
4

Cost slope
Paths 1-2-5= 8+10=18days (critical path)
1-2-4-5=8+2+3=13 days
1-3-4-5=4+5+3=12 days.
Crashing of project done only on critical path.
Cost slope for critical path
1-2=(200-100)/(8-6)=50/day
2-5=(400-100)/(10-5)=60/day
Crashing of project by 2 days= 2x50= 100 Rs.

Crashing of network
Problem
Activities Normal Time Normal Cost Crash Time Crash Cost
1-2 3 300 2 400
2-3 6 480 4 520
2-4 7 2100 5 2500
2-5 8 400 6 600
3-4 4 320 3 360
4-5 5 500 4 520

Problem
Find
a. Critical path and project duration
b. Optimum project cost with considering
indirect cost is Rs 100 per day

Critical activity
Select the critical activity which has minimum
cost slope for crashing
1
2
3
4
5
3
6
7
8
4
5

Solution
Probability of completion of project
1-2-5=11 days
1-2-4-5= 15 days
1-2-3-4-5=18 days
Critical path 1-2-3-4-5 and time duration =18
days.

Cost slope in critical path
Cost slope 1-2= (400-300)/(3-2)=100Rs
2-3=(520-480)/(6-4)=40/2=20
3-4= (360-320)/(4-3)=40/1=40
4-5= (520-500)/(5-4)=20/1=20
Crashing done on 2-3 and 4-5 as minimum cost
slope.

Before crashing
1 2
3
4
5
3
6
7
8
4
5

Critical path first crashing
Critical Path 1-2-3-4-5
Time 15 days
1 2
3
4
5
3
4
7
8
4
4

Project cost
Project Cost= Total normal cost+ Indirect cost+
crash cost.
Project cost=4100+(1600)+((2x20)+(1x20))
=4100+1500+60=5660Rs/day
2nd crashing we crash 3-4
1 2
3
4
5
3
4
7
8
3
4

Critical path in 2nd crashing
1-2-3-4-5= 14 days
1-2-4-5=14 days
Project cost=4100+(14x100)+(40+20)+(1x40)
= 5600 Rs
3 rd crashing we crash 1-2
1 2 4
3
5
2
4
7
8
3
4

Crashing of network
Project completion time= 13 days
Project cost
=4100+(13x100)+(40+20+40)+(1x100)
=4100+1300+200
=5600Rs
Optimum cost= 5600 Rs
Duration=13 days

Enterpreneurship
1700 First concept came.
In 20 th century Joseph Scumpler define
enterpreneurship as innovation.
4 Key element of enterpreneurship
1. Innovation.
2. Risk taking.
3. Vision.
4. Organization skills.

Types of enterpreneur
1. Idealistic enterpreneur ( who like innovation)
2. Optimiser.
3. Hardworker.
4. Improver.
5. Advisor.

Need and importance of
entrepreneurship
Entrepreneurship is important for national
growth and social development.
Need for entrepreneurship
1. Life line of a nation.
2. Provide innovation.
3. Growth of economy.
4. Increased profit.
5. Employment opportunities
6. Social benefits.

5 Traits of Entrepreneur
1. Self discipline- Self discipline is the ability you
have to control and motivate yourself, stay on track
and do what is right.
2. Integrity- The quality of being honest and having
strong moral principles that you refuse to change.
3. Persistance- the continued or a prolonged
existence of something.
4. Clear sense of direction
5. Decision and action oriented

Entrepreneur
An entrepreneur is a person who searches for
change and responds to it by starting an
enterprise.
An entrepreneur introduces new ideas, carries
on new activities, coordinate the factors of
production and describes how the business
should run.

Manager
A manager is one who deals with day to day
affairs of a giving concern and operates in an
existing enterprise.
Managers use entrepreneurial skills in order
to manage change and innovation to effectively
deal with uncertain external environment of
business.

Difference of entrepreneur and
manager
Entrepreneur Manager
1. An entrepreneur sets up a new venture
and runs it.
1. A manager only runs an existing unit.
2. Entrepreneurship is another name of
innovation. Entrepreneur works to find
new methods, products etc.
2. A manager is an employee of the
business organization. He cannot operate
independently.
3. An entrepreneur takes calculated risks.
He is responsible for failure and financial
loss.
3. A manager takes less risks as compared
to an entrepreneur. He is less tolerant to
uncertainty.
4. An entrepreneur starts and runs his
venture independently. He is self
employed and is his own boss
4. A manager need not to be an innovator.
He deals with the day to day affairs of a
going concern.
5. An entrepreneur is motivated by
profits. He may even suffer a loss.
5. A manager is motivated by rewards or
incentives. His salary cannot be negative.
6. An entrepreneur is responsible to
external environment and is always
prepared to change.
6. A manager may not very receptive to
change, unless he is enterprising.

Difference between entrepreneur and intrapreneur
Entrepreneur Intrapreneur
1. Entrepreneur is the owner
of the business.
1. Intrapreneur works as an
employee of the business.
2. Entrepreneur raises the
requisite capital himself
2. Intrapreneur does not raise
any capital.
3. Entrepreneur works
independently
3. Intrapreneur is semi
independent.

JIT/LEAN MANUFACTURING/KANBAN
SYSTEM(KAIZAN,TQM)
Related to Japanese model of workmanship.
Just in time(JIT) inventory system also known as just
in time production or lean manufacturing or the
Toyota Production system (TPS) is a management
strategy that aligns raw material orders for
suppliers directly with production schedules. It aims
primarily with reducing flow times within
production system as well as response times from
suppliers and to customers. Its origin and
development was in Japan, largely in the 1960’s and
1970’s and particularly at Toyota.

JIT
Companies employ this inventory strategy to increase efficiency and decrease
waste by receiving goods only as they are needed in the production process,
thereby reducing inventory cost. This method requires that producers are
able to accurately forecast demand. The just in time inventory supply system
is a shift away from other “ just in case” strategies in which producers hold
large inventories to have enough product to have maximum market demand.

Case Study
Toyota uses JIT inventory control as part of its
business model. Toyota sends off orders for parts
only when it receives new orders from customers.
The company started this method in the 1970’s and
it took more than 15 years to perfect. Several
elements of Just in Time manufacturing need to
occur for Toyota to succeed. The company must
have steady production, high quality workmanship,
no machine breakdown of the plant, reliable
suppliers and quick way to assemble machines that
put together vehicles.

Case Study
Toyota just in time concept almost came to a crashing halt in
February 1997. A fire owned by Asian decimated its capacity
to produce a P-valve for Toyota vehicles. The company was the
sole supplier of the part, and the fact that the plant was shut
down for weeks could have devastated Toyota’s supply line.
The auto manufacturer ran out of p-valve parts after just one
day. Production lines shut down for just two days until a
supplier of Asian was able to start manufacturing the
necessary valve. Other suppliers for Toyota also had to shut
down because the auto manufacturer did not need other
parts to complete any car on the assembly line. The fire cost
Toyota nearly 15 billion dollar in revenue and 70000 cars due
to its two day shutdown but it could have been more worse.

Just in Time inventory system
advantages
Just in Time inventory controls have several advantages over
traditional models.
. Production runs remain short, which means manufacturers can
move from one type of product to another very easily.
. This method reduces cost by eliminating warehouse storage
needs.
. Companies also spend less money on raw material because
they buy just enough resources to make just the ordered
products and no more.

System Disadvantages
The disadvantages of just in time inventories
involve
. Disruption in the supply chain- If a supplier of a
raw material has a breakdown and cannot
deliver the goods in time, one supplier can shut
down the entire production.
. A sudden order for goods that surpasses
expectation may delay delivery of finished
products to clients.

Kanban System
Kanban(signboard or billboard in Japanese) is a
scheduling system for lean manufacturing and just in time
manufacturing. Taiichi Ohno, an industrial engineer at
Toyota, developed Kanban to improve manufacturing
efficiency. Kanban is one method to achieve JIT. The
system takes its name from the cards that track
production within a factory. One of the benefit of Kanban
is to establish an upper limit to work in process inventory
to avoid overcapacity. Kanban is a concept related to lean
and just in time production, where it is used as a
scheduling system that tells you what to produce, when
to produce it, and how much to produce.

Kanban System
A Kanban system ideally controls the entire
value chain from the supplier to the end
consumer. In this way, it helps avoid supply
disruption and overstocking of goods at various
stages of the manufacturing process. Kanban
requires continuous monitoring of the process.
Particular attention needs to be given to avoid
bottlenecks that could slow down the
production process.

Kanban System
The aim is to achieve the higher throughput
with lower delivery lead time. Over time,
Kanban has become an efficient way in a variety
of production system. Kanban aligns inventory
level with actual consumption. A signal tells a
supplier to produce and deliver a new shipment
when a material is consumed. The signal is
tracked through the replenishment cycle,
bringing visibility to the supplier, consumer,
buyer.

Kanban System
Kanban uses the rate of demand to control the rate of production, passing
demand from the end customer up through the chain of customer store
process. In 1953, Toyota applied this logic in their main plant machine shop.
Kanban is pull system of demand from market. It is opposite to the
conventional push system of market demand. Kanban is part of an approach
where the pull comes from demand and the products are made to order. Re-
supply of production is determined according to customer orders.
In contents where supply time is lengthy and demand is difficult to forecast
often, the best one can do is to respond quickly to observed demand. This
situation is exactly what a Kanban system accomplishes, in that it is used as a
demand signal that immediately travels through the supply chain.This ensures
that intermediate stock held in the supply chain are better managed and are
usually smaller. Where the supply response is not quick enough to meet
actual demand fluctuations, thereby causing potential lost sales, a stock
building may be deemed more appropriate and is achieved by placing more
Kanban in the system

Kanban cards
Kanban cards are a key component of Kanban and
they signal the need to move materials within a
production facility or to move materials from an
outside supplier into the production facility. The
Kanban card, in effect, a message that signals a
depletion of product, parts or inventory. When
received, the Kanban triggers replenishment of that
product, part or inventory. Consumption, therefore
drives demand for more production and the Kanban
card signals demand for more product- so Kanban
cards help create demand driven system.

Kanban cards
The first step in the introduction of Kanban is to
visualize the workflow. This is done in the form
of Kanban board consisting of a simple
whiteboard and sticky notes or cards. Each card
on the board represent a task.

Kanban cards
In a classic Kanban board model, there are three columns, as shown in the picture
above
“ To Do” This column lists the task that are not yet started.
“ Doing” Consists of the tasks that are in progress.
“ Done” Consists of the task that are completed.
Simple Kanban Board
To Do Ongoing Done
D B A
E C
F

Questions
Statement 1- The concept of just in time is operationalized when the exact
number of units required are brought at each successive stage of production
at the appropriate time.
Statement 2- Just in time concept has been expanded to mean a
manufacturing philosophy of eliminating waste.
a. Both statement 1 and 2 are individually true and statement 2 is correct
explanation of statement 1.
b. Both statement 1 and 2 are individually true and statement 2 is not the
correct explanation of statement 1.
c. Statement 1 is true but statement 2 is false.
d. Statement 1 is false but statement 2 is correct.
Answer a JIT is very much closer to lean manufacturing in which wastage is
eliminated at each stage of production. Lean manufacturing is broader
concept.

Question
Just in time inventory system is known as
a. Toyota Production System.
b. Sony Production System.
c. Kanban.
d. ABC analysis.
Answer a. The just in time(JIT) inventory system also known as
just in time production or the Toyota production system is a
management strategy that aligns raw material orders from
suppliers directly with production schedules. It aims primarily
at reducing flow times within production systems as well as
response times from suppliers and to customers. Its origin and
development was in Japan, largely in the 1960’s and 70’s and
particularly at Toyota.

Questions
Q. Just in time inventory system is also known as
a. Thin manufacturing.
b. Lean manufacturing.
c. Kanban
d. ABC analysis.
Answer b. Company employ JIT inventory strategy to increase efficiency
and decrease waste by receiving goods only as they are needed in the
production process, thereby reducing inventory costs. This method
requires that producers are able to accurately able to forecast demand.
The just in time inventory supply system is a shift way from other “ just in
case strategies(JIC) in which producers hold large inventories to have
enough product to absorb maximum market demand, it tends to minimize
the inventory and wastage. Also known as lean manufacturing.

Question
Which of the following may not be one of the
advantages of JIT manufacturing system.
a. Minimize inventory level.
b. Minimize the flow time.
c. Reduce set up and lead time.
d. Efficient manpower.
Answer. d
Just in time inventory controls have several
advantages over traditional models

JIT
• Just in time inventory controls have several
advantages over traditional models.
• Production runs remain short, which means
manufacturers can move from one type of
product to another very easily.
• This method reduces cost by eliminating
warehouse storage needs.
• Companies also spend less money on raw
materials because they buy just enough
resources to make the ordered products and no
more

Question
Which of the following is disadvantages of JIT
system.
a. Disruption of supply chain
b. Lesser flow time.
c. Increased cost.
d. Higher wastage.
Answer a.

Question
Question. Kanban system is related to
a. ABC analysis
b. 6 sigma
c. PERT CPM
d. JIT
Ans. d Kanban (signboard or billboard in Japanese) is a
scheduling system for lean manufacturing and just in time
manufacturing. Taichi Ohno an industrial engineer at
Toyota, develop Kanban to improve manufacturing
efficiency. Kanban is one method to achieve JIT
manufacturing of lean manufacturing.

Question.
The meaning of Kanban is
a. Lean.
b. Efficient.
c. Signboard.
d. Quick.
Answer. c. Kanban ( signboard or billboard in Japanese) is
a scheduling system for lean manufacturing and just in
time manufacturing(JIT). Taiichi Ohno, an industrial
engineer at Toyota developed Kanban to improve
manufacturing efficiency. Kanban is one method to
achieve JIT manufacturing of lean manufacturing.

Question
Q. Who developed “Kanban” system of
manufacturing.
a. Taguchi.
b. Juran.
c. Deming.
d. Taichi Ohno.
Answer. d

Question
To attain the JIT system which of the following
may not be the requirement of the system
a. Employee empowerment
b. Involvement of management
c. Long term supplier manufacturer customer
relations.
d. Trained employees.
Answer d

Question
Muda is a Japanese word used for
a. Waste management.
b. Overburden.
c. Work load.
d. Inefficiency.
Answer. a

Question.
Which of the following is not true, JIT
manufacturing system eventually leads to
a. Minimum Inventory.
b. Minimum lead time.
c. Minimum delay.
d. Minimum worker interaction.
Answer. d

Question.
The manufacturing methodology opposite to JIT
is called
a. Not JIT.
b. Un JIT.
c. Just in Case.
d. Just delayed
Anser c

Answer.
The Just in Time(JIT) inventory system also
known as just in time production or the Toyota
Production System (TPS) is a management
strategy that aligns raw material orders from
suppliers directly with production schedules. It
aims primarily at reducing flow time within
production system as well as response times
from suppliers and to customers. Its origin and
development was in Japan, largely in the 1960s
and 1970s and particularly at Toyota.

JIT
Companies employ this inventory strategy to
increase efficiency and decrease waste by
receiving goods only as they are needed in the
production process, thereby reducing inventory
costs. This method requires that producers are
able to accurately forecast demand. The just in
time inventory supply system is a shift away
from other just in case strategies in which
producers hold large inventories to have enough
product to absorb maximum market demand.

Question
Statement 1- JIT manufacturing system drastically reduces the in
process inventory.
Statement 2- To implement JIT, organization must have efficient
management system in order with management commitment
Which of the following statements are correct.
a. 1 only
b. 2 only.
c. Both 1 and 2.
d. Neither 1 nor 2.
Answer. c. To implement JIT is the organization system should be
efficient. Top management involvement is required. Good
supplier, manufacturer and customer relations should be there.

Question
JIT system is not related to
a. Kaizen.
b. Kanban.
c. TQM
d. ABC analysis.
Answer. d

Question
Visualization of the work flow through production
line is the technique used in
a. JIT
b. Lean manufacturing.
c. Kaizan.
d. Kanban system.
Answer d Cardboard and cards are used to show
the workflow in the supply chain for proper control
on the in process inventory.

TQC
1. What is TQC
Answer. Application of quality management
principles to all areas of business from design to
delivery instead of confined them only to
production activities. It was popularized by
quality guru Armand Val Feigenbaum.

TQC
Absolute
targets are
flexible
Total staff
participation
Focuses on
processes and
continuous
improvement

TQM
Total= Made up of the whole.
Quality= Degree of excellence a product/service
provides.
Management= Act, art or manner of handling,
controlling, directing etc.
TQM is the art of managing the whole to achieve
excellence.

TQM Concept
TQM is a set of systematic activities carried out
by the entire organization to effectively and
efficiently achieve company’s objectives so as to
provide products and services with level of
quality that satisfies customers at the
appropriate time and price. TQM is the concept
related to customer delight

Key elements of TQM
1. Top management commitment and support.
2. Customer involvement and focus.
3. Employment involvement and focus.
4. Leadership and strategic planning.
5. Company wide quality culture.
6. Continuous improvement.
7. Customer satisfaction and delight.

Steps in implementing TQM
Plan
Do
Check
Act

Steps in implementing TQM
Plan- Define and analyze a problem and identify
the root cause.
Do- Devise a solution. Developed detail action.
Plan and implement it systematically.
Check- Confirm outcomes against plan. Identify
deviations and issues.
Act- Standardize solution. Review and define
next issue.

TQM
Committment
Control
Culture
6 Cs of
TQM
Cooperation
Customer focus Continuous
improvement

The Three Aspects of TQM
Counting Tools, techniques and training in
their use for analyzing,
understanding and solving quality
problems
Customers Quality for the customer as a driving
force and central concern.
Culture Shared values and beliefs expressed
by leaders, that define and support
quality.

Basic Principles of TQM
1. The customer makes the ultimate
determination of quality.
2. Top management must provide leadership
and support for all quality initiatives.
3. Preventing variability is the key to producing
high quality.
4. Quality goals are a moving target, thereby
requiring a commitment towards continuous
improvement.

Basic Principles of TQM
5. Improving quality requires the establishment
of effective metrics. We must speak with data
and facts not just opinions or gut feelings.

Features of TQM
1. Integrated system.
2. Strategic and systematic approach.
3. Continuous improvement.
4. Fact based decision making.
5. Communication.

TQM and Continuous Improvement
• TQM is the management process used to
make continuous improvement to all
functions.
• TQM represents an ongoing continuous
commitment to improvement.
• The foundation of total quality is a
management philosophy that supports
meeting customer requirements through
continuous improvement

6 Sigma
Question. What is 6𝜎 why this name?
Answer. Statistical Quality control term, which
controls quality through statistical analysis of
data.
.Sigma( 𝜎 ) represents deviation/ variation/
spreading of data around mean value.
. Eliminate defects by reducing variability in the
process( zero defect technique)

6 𝜎
. Data driven approach.
Use of statistical/empirical methods
. Continuous effort done to make processes
more predictable and stable reduce process
variations.
. Commitment from top management level.
. Focus is on achieving measurable and
quantifiable results.
. Special infrastructure and professionals who
are quality experts( black belt etc)

6 𝜎
3𝜎
−3𝜎 0
Yield %
99.997

Continuous improvement
. Use of statistical /empirical methods .
. Continuous effort done to make process more
predictable and stable, reduce process
variations.
. Commitment from top management level.
. Focus is on achieving measurable and
quantifiable results.
. Special infrastructure and professional who are
quality experts ( black belt etc)

6 𝜎
Six sigma is zero defect technique. Here we
control all the method statistically that there is
no chance of error.
History of 6𝝈
Management technique developed by Bill Smith
Motorola Engineer in 1986 (Father of6 𝜎).
Later Jack Welch (General Electrical) spread it to
other organization in 1995.

ISO and 6𝜎
International organization of standard published
in 2011 the first standard ISO 13053:2011

Example of six sigma
Transfer money from one account to another
account is example of six sigma.

Professionalization of 6𝜎
• Quality management professionals of different
expertise.
. Ranking is given to professionals of quality
management as explained.
Executive Leadership
Master black belt
Green belt
Champion
Black belt

Executive leadership
. CEO a top management
. Set up vision for six sigma implementation.
. Overcome resistance to change.
Champions
. Upper management.
. Mentors to black belt

Mater Black belts
. In house coaches for 6 sigma.
. Devote 100 percent time for six sigma.
. Assist champions, identify projects for six
sigma.
Black belt
. Apply six sigma methodology to specific
projects.
. Six sigma project execution.

Green Belt
Six sigma green Belts are employees who spend
some of their time on process improvement
teams. They analyze and solve quality problems
and involvement with six sigma, lean or other
quality improvement projects.

Deming cycle
• P=Plan
• D=Do
• S= Study
• E= Execute the result.

Six sigma methodologies for existing
project.
• Define system/ goal.
• Measure process data.
• Analyze data to identify.
• Improve for optimize current process.
• Control the process through continuous
monitoring.

Six sigma methodology for new project
1. Define.
2. Measure.
3. Analyze.
4. Improve for optimize current process.
5. Control the process through continuous
monitoring.

6 Sigma and Kaizan
Kaizan means continuous improvement.
Kaizan is inherent in 6 sigma
DMAIC (Improvement and control.

6 𝜎 for TQM
• TQM(Total Quality Management).
• Total means everyone from top to bottom is involved.
• Ultimate objective of TQM is “customer delight”.
• Total culture of organization must be “service to customer”.
• 6 sigma is more data driven and tends to improve quality by
reducing defects.
• Top management involvement is needed in both.

6 𝜎 and lean manufacturing
• Lean manufacturing means less wastage,
efficient process flow.
• 6 𝜎 focus on lesser defects, focus on lesser
variation and better design.
• Lean manufacturing eliminate wastage and
improve efficiency.
• 6 𝜎, eliminate defects and reduce variability.
• Both are connected as lean six sigma.

Six sigma and Kaizan
• Kaizan means continuous improvement.
• Kaizan is inherent in six sigma.

Multiple choice
.Statement 1 – 6 𝜎 is statistical quality control technique
with 3.4 DPMO.
Statement 2- 6 𝜎 in an organization intends to make each
person defect free to the extent of 3.4 DPMO.
a. Both are correct and statement 2 is reason for
statement 1.
b. Both are correct and statement 2 is not reason for
statement 1.
c. Statement 2 is wrong.
d. Statement 1 is wrong.
Answer. c

Multiple choice
6 𝜎 as a quality improvement programme is
mostly closely related to.
a. Concurrent engineering.
b. Kaizan.
c. TQM.
d. Lean manufacturing.
Answer. d

Multiple choice
• Core philosophy of 6 𝜎 is
a. Customer satisfaction.
b. Minimum wastage.
c. Zero defects.
d. Continuous improvement.
Answer. c

Multiple choice
Statement 1 -Implementation of 6 𝜎 helps to attain
TQM in the organization.
Statement 2- 6 𝜎 is important tool of TQM.
a. Both are correct and statement 2 is reason for
statement 1.
b. Both are correct but statement 2 is not reason
for statement 1.
c. Statement 2 is wrong.
d. Statement 1 is wrong.
Answer c.

Multiple choice question
6 𝜎 was introduced in
a. GE
b. Honeywell.
c. Motorola.
d. Sony
Answer. c

Supply Chain Management
• SCM is defined as the management of the
flow of goods and services, involving the
movement and storage of raw material of
work in progress inventory, and of finished
goods from the point of origin to the point of
consumption.

Types of SCM
Types of SCM
1. External supply chain.
2. Internal supply chain.

Value chain analysis
Value- Amount customer is ready to pay.
Chain- Series of activities that a firm performs in
order to deliver the product.
Value chain analysis – Identifying those activities
in which consumer is ready to pay for the
product.

Value Chain Analysis
• Concept given by Michael Porter.
• Objective- To stay ahead of your competitors.
• Ways to achieve objective
– Cost leadership.
– Product differentiation.

Business process outsourcing
BPO refers to getting business task done through
an outside agency/country.
BPO companies in India
1. Wipro BPO.
2. Infosys BPO/
3. Zenta.

Scope
1. Customer support services
- Call centre.
2. Contract sales
- Technical services, tools support, etc.
3. Data Services
- Maintenance of accounting books,etc.

Advantages
1. Concentration on core competence.
Routine task Concentrate important
work.
Companies Routine works Outsource
 Reduction in cost
1. Cost reduces.
2. Benefit of economic scale.
Outsource
Important work

Advantages
3. Helps in avoid labor problem
Country Labor Shortage Outsource
4. Benefits of latest development.
LIMITATION
I. Confidentiality (Secrecy)
Outsource Company Important data leak
2. Sweat Shopping
Neither skill, neither intelligence level increases.
3. Protest in home country
4. Ethical concerns.

Role of Information in Decision making
• Decision support system is a computer based
information system that supports in business
and organization in decision making activities.
DSS
Fully
computerized
Human
Combination
of both

Decision Support system
It serves
1. The management operations and planning
level organization.
2. Help to make decision.
Which is rapidly changing.
And not easily specified in advance.

Information
Collection of raw facts and figures is known as
data. Data is been processed to obtain
information.
Data Processing Information

Decision support System
• A decision support system is an information
system that supports business or
organizational decision making activities.
• A decision support system is a computerized
program used to support determination,
judgment and courses of action in an
organization or a business.

Enterprise Resource planning
ERP is a process of integrating and managing
important part of a company’s business. An ERP
management information system, which
integrate human resources, sales, planning,
marketing , purchasing and finance is
implemented through software most of the
time.
Thus ERP is an integrated software solution
used to manage company’s resources.

Features/ Characteristics of a good ERP
system
Flexible, Modular and open, Comprehensive,
Online connection with other ERP system, Best
business practices, Multi facilities, Strategic
planning, Optimize the data, Project
management, Automatic functions

Benefits of ERP
Competition, Efficiency, Cost savings, Integrated
information, Collaboration, Productivity,
Forecasting, Scalability, Streamlined Process,
Flexibility, Security, Reporting, Customer service,
mobility, regulatory compliance.

Modules of ERP
Inventory Purchase Production
Planning
Sales and
marketing
Finance Human
resource and
management
Receive material
Send for quality
control
Rejected material
Monitor rejected
stock
Return rejected
material to
supplier
Send accepted
stocks to store

GLOBALIZATION
• Most of the countries are opening their
borders to foreign products as well as foreign
producers.
• The companies of developed countries are
entering foreign countries by opening
manufacturing facilities there.
• Management can license or franchise to
another firm the right to use its brand name,
technology or product specifications.

GLOBALIZATION
• Management of global companies are
adjusting their organizational structures as per
the requirement of situations.
• The managers are being taught to be global in
approach.
• Generally the executives from concerned
countries are given the responsibility for
running the subsidiaries.

Types of maintenance
1. Preventive maintenance.
2. Breakdown maintenance( Run to Failure)
3. Predictive maintenance.
4. Reliability Central maintenance(RCM)

Preventive maintenance
• To prevent the failure.
• To minimize the risk of failure.
• It may be costly in long run.
• Without any production loss
Principle- Prevention is better than cure.
Summary- Maintenance on a pre determined
schedule.

Classification of maintenance
programme
• Hourly- Lubricant level, sharpness of tool.
• Monthly- Corrosion.
• Weekly- major displacement, lubricant.
• Daily- Cleaning of machine, tightening of nuts.
Principle- Prevention is better than cure.
Summary- Maintenance on a pre determined
schedule.

2. Run to failure ( Breakdown
maintenance)
• Has a low cost .
• Fixed in the event of breakdown.( by repair or
replacement)
• Example- Light bulb( cost of fixing it is low)
( by repair and restoration of parts)
Fail Fix
Summary- Fix when it breaks.

3. Predictive Maintenance
• Do maintenance when it is required.
• Using technology to monitor and determine
equipment conditions
• Vibrations, Visual Inspection
Advantages of predictive maintenance
1. Cost savings.
2. Reduced manpower.

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