June 2005

Paper 13 Operations and Project Management & Control June 2005

Time Allowed : 3 Hours

I—13(OPM) Revised Syllabus Full Marks : 100

Answer Question No. 1 & Question No. 7 which are compulsory and any two other questions from Section-1 & any two other questions from Section-II Please answer all bits of a question at one place. Please Value Tables will be supplied on request. SECTION I

Marks 1. (a) Expand the following acronyms: 1x5 (i) AMT (ii) MTBF (iii) PMTS (iv) GT (v) GRN (b) Match each item in the Left Hand Column with an appropriate item in the 1x5 Right Hand Column. (A) Forming (1) Anodizing (B) Heat Treatment (2) Shot Blasting (C) Joining (3) Annealing (D) Surface Treatment (4) Extrusion (D) Fetting (5) Brazing (c) Mention whether the following statements are True or False. 1x5 (i) Industrial Engineering is a staff function. (ii) Group Layout is ideal for mass production. (iii) Merit Rating is concerned with rating the 'operative' while Job Evaluation is concerned with rating the 'Job'. (iv) Human Engineering is also known as 'Ergonomics'. (v) Production Planning & Control techniques include’ Machine Loading'. . (d) Distinguish between: 2+2+1 (i) Motion Study and Time Study (ii) Breakdown Maintenance and Preventive Maintenance. (iii) Conveyor and Elevator. 2. The existing layout of a Finished Goods Stores in a manufacturing organization 15 is given below: 2 3 4 5 6 1 7 8 9 10 11 1 12 13 15 16 4

↓

↓ (aisles omitted for simplicity) Receiving/Dispatch Area Packing Area The other areas (2 to 8 and 10 to 16) are storage areas for different products. Material flows between Area 9 and the other 15 sections/areas. Loads are moved to Area 1 only from Area 9. All other loads flow from remaining areas/sections into Area 9. For simplicity, we consider only loads moved to Packing Area 9 from all areas, except the Receiving, Dispatch Area 1. The location of Receiving/Dispatch Area 1 is fixed and cannot be relocated. All other areas can be considered for relocation. Average annual loads from each area/section to Area 9 are as follows: Area Load Area Load Area Load Area Load Area Load 2 500 5 150 8 350 12 150 15 250 3 100 6 150 10 250 13 250 16 500 15 4 350 7 11 100 14 100 0 From Area 9 to Area 1, average annual loads are 2800. Amve at an improved layout using the "Load-Distance Matrix". 3. (a) Explain the Point Rating System of Job Evaluation with the help of an attribute-degree table. (b) A factory has three departments x, y and z to manufacture tow products A and B. Department 'x' can produce parts for 7000 Units of A or parts for 12000 units of B per week, but cannot do both at the same time, through parts for some A and some B can produced. Similarly, department 'y' can produce 9000 parts for A or 5000 parts for B or combinations in between. Final assembly is undertaken in department 'z' with separate assembly lines for A and B with maximum capacities of 6000 and 4000 units respectively. Both lines can be operated at the same time. What is the optimal product mix?

9 6

Please turn over (2) F-13(OPM) Revised syllabus 4. (a) Draw the typical job description of a 'Loader' in the dispatch section of a manufacturing organization. (b) A manufacturing organization operates an incentive scheme on slab rates based on cost of production as shown below: Saving in production cost Incentive Amount

Marks 9 6

(Labour + Material + Overheads) (as % of savings) 1 - 10% 5% 11 - 20% 15% 21 - 40% 30% 41 - 70% 40% Above 709% 50% Three workers X, Y and Z take 25 hours, 30 hours and 15 hours respectively to produce 10 units of the product and their respective wage rates are Rs. 6.50/- and Rs.7/- per hour. The material costs Rs. 50/- per unit and the overhead recovery rate is @ 500% of cost of wages. the standard cost of production per unit is determined as Rs. 175/- per unit. What is the amount of incentive earned by each of these workers and what is the actual cost of production per unit in each case? 5. (a) Describe the advantages and disadvantages of a Materials Requirements Planning (MRP) system. (b) The following tasks are to be performed on an assembly line in the sequence 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 theoretical minimum number of stations required to meet a forecasted demand of 400 units per an 8-hour day? (iii) Use the longest task time rule and balance the line in the minimum number of stations to produce 400 units per day. (iv) Evaluate the Line Efficiency and the Smoothness Index. 6. Write short notes on the following: (i) Technology Life Cycle (ii) Progressing (iii) Supply Chain Management (iv) Labour Turn over (v) Activity Sampling. SECTION II 7. (a) Match the following: (1) Success Planned (A) Fulkerson's Rule (2) PERT Network (B) Project Viability Checking (3) EFCI (C) Project Management Software (4) EBA (D) Trend Projection Method (5) Demand Forecasting (E) Project Funding. (b) Expand the following acronyms:

7

2 1 3 2 3x5

1x5

1x5

(i) FDI (ii) WBS (iii) ROCE (iv) BEP (v) LRC. (i) Capital Ratio is the reverse of 'Turn Over Ratio'. (ii) Detailed Estimates are prepared before completion of Engineering, Ordering of Machinery & Equipment and award of major contracts. (iii) Social Analysis deals with the impact of Investment in Project on people and their lives. (iv) Task Force Organization Structure is created by sharing authority between the Project Manager and the Functional Manager. In item Rate Contracts, the contractor is paid in lump sum at the end of (v) the contract. (d) Explain in one line Bilateral Cost Institutional Benefit SWOT (i) (ii) (iii) (iv) (v) Aid Slope Analysis Cost Ratio Analysis. 8. Calculate the Total Float (TF), Free Float (FF) and independent Float (IF) of each of the activities in the network given below:

1x5

15

Please turn over (3) F-13(OPM) Revised syllabus Marks 9. (a) Bring out the benefits of a network based planning and monitoring system 6 for project. (b) The data concerning a site development project at the end of the 10th week 9 of Implementation is given below: Actual Cost of Progress (%) Budgeted Cost at Activity work at the end of 10th Completion performed week (BAC) (ACWP) Planned Actual (Rs. Lakhs) (Rs. Lakhs) A 100 90 5 7 B 50 40 35 15 C 100 80 5 5 D 100 100 10 10 E 50 20 20 5 F 100 80 10 10

G 70 60 15 9 H — — 5 — I — 10 10 1 J 100 90 15 13 K 200 90 10 9 L 20 — 20 — Total 160 84 The Project is scheduled to be completed at the end of the 20th week. Calculate the costs forecast at completion, assuming that the remaining work shall progress at: i. Planned rates; ii. Prevailing trend; and iii. Assessed crashing costs amounting to Rs. 8 Lakhs. Also determine the % Cost Overrun of the project. 10 (a) The Cost Accountant plays a multi-dimensional role in Project Management. He reports to the project Manager and mainly plays the role of a Cost Controller. Before one can sit down to control the costs, one has to have a good estimate of the costs of the project, which is a crucial function. This calls for an understanding and the type & nature of costs incurred in the project. The Project scope and complexity often call for tapping the fight source of information for gathering the cost data. The Cost Accountant is mainly responsible for the following activities. (b) Lucky Computer Stores is making a business plan for the next five years. Sales growth over the past 2 years has been good. Sales would grow substantially if a major electronics firm is established in the vicinity as proposed by an investor. Lucky Computers see 3 options:(i) to enlarge the current store. (ii) to relocate it at a new site and (iii) to simply wait and do nothing. The decision to expand or move would take little time and therefore, the stores would not lose revenue. If nothing were done in the first year and strong growth occurred, then the decision to expand would be reconsidered. Waiting longer than one year would allow competition to move in, making expansion no longer feasible. The assumptions and conditions are: Strong growth, emanating from the new electronics firm has a probability • of 55%. Strong growth with new site would give annual returns of Rs. 1,95,000 • p.a. Weak growth with site would mean annual returns of Rs. 1,15,000 p.a. Strong growth with expansion would yield annual returns of Rs. 1,90,000 • p.a. Weak growth with expansion would mean annual returns of Rs. 1,00,000

6

9

p.a. • There would be returns of Rs. 1,70,000 p.a. at the existing store with no changes in case of strong growth and returns of Rs. 1,05,000 if growth is weak. • Expansion at current site would cost Rs. 87,000. • A shift to the new site would cost Rs. 2,10,000. • In case of strong growth, if existing site is enlarged during the 2nd Year, the cost would still be Rs. 87,000. Which option should Lucky Computer Store take, if operating costs for all options are equal?

Please turn over (4) F-13(OPM) Revised syllabus 11. (a) Explain Venture Capital Funding of Projects. (b) The Balance Sheet of Sagar Ltd. As on 31st March 2004 is as follows: (In Rs. Lakh) Liabilities Assets Share Capital Reserves & Surplus Secured Loans Unsecured Loans

Current Liabilities Provisions

50 40 40 30 60 10

Fixed Assets Investments Current Assets: Cash Receivables Inventories

1 0 4 0 6 5

11 0 5

11 5

23 230 0 The Projected Income Statement and distribution of earnings for the year 2004-05 are given below: (In Rs. Lakh) 19 Cost of Goods Sold Sales 250 0 Depreciation 15 Interest 12 Tax 18 Dividend 10 Retained earnings 5 Total

Marks 6 9

25 25 0 0 During the year 2004-05, the firm plans to raise secured loans of Rs. 10 Lakhs, repay a previous secured term loan to the extent of Rs. 5 Lakhs, acquire fixed assets worth Rs. 15 and to raise its inventories by Rs. 5 Lakhs. During the year, Current Liabilities and Receivables are expected to increase by 5% each. Prepare the Projected Cash flow Statement for 2004-05 and the Projected Balance Sheet as on 31st March 2005. 12. Write short notes on any four of the following: (a) Zero Based Budgeting (ZBB) (b) Brown Field Project (c) Sensitivity Analysis (d) 'Invisible Walls' in Project Cost estimation (e) Consortium Lending. Total

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3x5