SEM 2 MBA WINTER 2014

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MB 0044 - PRODUCTION AND OPERATION MANAGEMENT

1. What is value engineering? List the main benefits of value engineering?

A Definition and explanation of Value Engineering(VE)

·         Definition

·         Example/s

·         Where is it used?

·         Why is it used?

·         How is it helps the organisation?

Listing of the main benefits(any four):

·         Cost reduction

·         Overall cost consciousness

·         Culture of effecting savings across organisations

·         Streamlining of administration

·         Development of reliable suppliers

2. Case study: SABMiller revamps supply chain management

SABMilller, the $24bn global brewing giant, is revamping its supply chain management system toreduce stock-outs caused by an increasingly complex and hard to predict market. The firm is developing and testing the new system in South Africa with an eye on rolling it out togroup companies worldwide, says SABMiller programme manager Rudi van Schoor.The trigger for the revamp came when the company's customers ran out of stocks of popularSABMiller brands during peak periods in two consecutive years, 2007 and 2008. The shortfall onsome brands was as high as 22%. "That had a direct impact on the bottom line," Van Schoorsays.

Given SABMiller's ambition to be the world's most efficient producer, such a gap was never going to be tolerated. But instead of addressing the symptom, it called in management consultancyMcKinsey to look at the entire supply chain system to see where it could be improved and future stock-outs avoided.

The study revealed a complex situation, one that wasn't susceptible to a "quick fix", Van Schoor

says.

Demand factors

The ethnically and demographically diverse South African market is one of the world's mostcomplex and fast-changing. Van Schoor cites economic growth, more disposable income in new hands, changing and upgrading tastes, new product development and new routes to market among the factors that influence demand for SABMiller's products.

Add to that big events such as the British Lions tour and the 2010 World Cup, and climate change, and the picture becomes more complex.

"Our brands are the same as any other brand, especially those at the luxury end," says VanSchoor. "If the customer comes into the shop and can't find our product, he or she has thedisposable income and self-confidence to substitute our brand for our competitors'. That'sdangerous."

Van Scoor says the group has a average stock availability target of 98%. "But for some premiumbrands the target is 100%," he says. That means it will live with excess stocks of some products, just to ensure that a thirsty customer can get his or her favourite drink, every time.

Maximise profitability

But SABMiller also wants to maxmise its profitability. To do all this it must integrate information from a lot of sources. These include sales forecasts for about 2,600 SKU locations or depots for the brewing division and 3,100 for the soft drinks division, as well as planned promotions data from the marketing and promotions division, as well as cost and production data, among others.

These data must then be converted into raw material purchases, manufacturing scheduling, distribution and stockholding plans for 12 factories (seven breweries and five soft drink plants) and three tiers of distributors, broken down into between 70 and 80 stock-keeping units (skus) for the brewing division and around 270 for soft drinks.

And all this must be optimised for profit.

"There is inherent volatilty of demand in the soft drinks business because of seasonal change,but less in the beer market," Van Schoor says.

Even so, improving the accuracy of demand forecasts and schedules and integrating them toboost profitability was too complex for SABMillers's demand forecast and supply system. The inhousesystem, developed over years, had most of the usual problems associated with legacy systems: it was inflexible, complex, hard to communicate with, and hard to integrate with newersystems, Van Schoor says.

Integration with SAP system

After a global search, SABMiller settled on Infor's advanced supply chain management system, inparticular Infor's demand forecasting system. This takes information from modules of SABMiller's SAP enterprise resource management system, integrates them with sales forecasts from thefield, and feeds back to the manufacturing resource planning system and financial systems togenerate production schedules, raw materials orders and volume and financial forecasts.

This will let SABMiller make any of its products in the most cost-effective location, given the localdemand, manufacturing, transport and inventory costs.

It will also increase its flexibility in responding to changes in demand. Products will no longer be made only in a single plant to optimise production runs, but, based on more holistic data, in the plants that optimise overall profitability.

This flexibility also gives the company greater cover to handle factory downtime and to meet rapid changes in demand.

But some parts of the legacy system will still be around. "We are keeping it to manage the return and reuse of empty bottles," Van Schoor says.

But even that data will go into the Infor system so that it can create production schedules down to tank, line and minute accuracy.

This attention to detail is part of the SABMiller ethos. Measurement and numbers are integral to the company culture. Van Schoor says the Infor system will be tested in three ways: on its "theoretical" answers, against actual results, and against causal factors that may have influenced demand and supply.

Van Schoor says the $1.2m the firm spent on Infor licences was about 60% of the total project cost. But this could be a drop in the ocean if the company adopts it worldwide. And interest from group firms is high.

"We have used expertise from all around the group," Van Schoor says. "One of the best people on the project came from our European division, and we have lots of others keen to know how wedo."

(Source: http://www.computerweekly.com/feature/Case-study-SABMiller-revamps-supply-chainmanagement)

Why did SABMilller revamp its supply chain? Describe the domain application used for SCMintegration?

·         Analysis of the major and minor issues for revamping the supply chain with evidence

·         Description of the SAP system, why it was used and the benefits from using the system

3 Write short notes on:

·         Ingredients of a business process

·         Acceptance sampling

·         Work Breakdown Structure

·         Productivity

[Ingredients of a business process

·         Acceptance sampling

·         Work Breakdown Structure

·         Productivity]

4 Collaborative Forecasting Running Smoothly at Brooks Sports

Brooks Sports designs and develops high-performance running footwear, apparel andaccessories which are sold in 80 countries worldwide. In 2001, when the company shifted from a broad product line to focus on high-performance products targeted at serious runners, it was clear that the forecasting process needed to change to support the strategic direction of the company. The existing forecasting process, based entirely on the judgment of the sales team, was limiting the company’s ability to grow.

The strategy shift created a number of forecasting challenges for Brooks including:

♦ Inconsistent style growth: the new line of products experience growth rates anywhere from 0 to50 percent annually.

♦ Long production planning horizon coupled with short product life: production and capacitydecisions are typically made 18 months before a style is launched, average lead time for a style is 6 months and the product life of Brooks’ styles range from 6 to 24 months. This means thatplanners must sometimes set the entire demand plan for a style prior to ever receiving a customer order, underscoring the importance of accurate forecasts.

♦ Increasing “at-once” orders: “at once” orders, which are placed for immediate shipment,historically accounted for less than 20 percent of total sales. Since 2001, however, “at once” orders have increased to nearly 50 percent of total sales.

♦ Evolving size curves: with its new focus on serious runners, the standard footwear size curve would not adequately reflect distribution of sales by sizes.

♦ No exposure to retail sell-through: the high-performance products are sold primarily through independent specialty stores who don’t have the capability to share sales data with vendors.

With a corporate mandate from senior management emphasizing the importance of creating accurate and timely forecasts, Brooks completely revamped its forecasting process. An independent forecasting group, reporting directly to the COO and CFO, was established to coordinate input from various groups—sales, marketing, product development and production— and to remove bias from the forecasting process.

The forecasting group established a collaborative forecasting process with three primary steps:

Step 1: Produce monthly statistical forecasts at the SKU level to capture level, trend, seasonality and the impact of events based on historical data. Brooks chose Forecast Pro to create these forecasts due to a number of features available in the software:

♦ Ability to create accurate forecasts

♦ Flexibility to choose forecast models or let software automatically select models

♦ Capability to model events (particularly important for predicting spikes in demand with new product launches)

♦ Support for multiple-level models to produce consistent forecasts at all levels of aggregation

♦ Powerful override facility to enable collaborative forecasting

“Forecast Pro has been a great solution for Brooks,” says Tom Ross, Financial Analyst.

“Implementing Forecast Pro’s event modeling is very simple, which is an essential feature for us because of our moving product launches. We also use event models to address the challenge of forecasting events that don’t occur on a regular basis—such as races—which can have a dramatic impact on the sales of specific products. Another powerful feature of Forecast Pro is theability to forecast a product hierarchy. This helps us to serve our multiple constituents withinBrooks—we review higher-level forecasts with management and easily generate detailedforecasts at the SKU level for demand planning.”

Step 2: On a quarterly basis, get sales management and sales reps to forecast sales for a 12-month horizon, focusing on major accounts. This input is gathered via the Web and thenaggregated by the forecasting group.

Step 3: Compare the statistical and judgmental forecasts, and make adjustments to create thefinal monthly forecast. Ninety percent of the final forecasts are the same as the statisticalforecasts—changes are most commonly made to the forecasts for new styles where the salesorganization has important knowledge to add. These final forecasts are then automatically fedinto Brooks’ ERP system. “Forecast Pro allows us to easily apply judgmental overrides, which iscritical for us,” notes Ross. “We now can systematically track changes, giving us a betterunderstanding of our forecasting performance.”

The commitment to forecasting has paid off at Brooks. Forecast accuracy has improved onaverage by 40 percent, unfulfilled demand has been lowered from approximately 20 percent to less than 5 percent, and closeouts have been reduced by more than 60 percent. The improved forecasting has also helped to smooth out production, resulting in lowered costs and better margins.

Source:http://www.forecastpro.com/pdfs/Success%20Story-Brooks%20Sports.pdf

What is the main issue of the case study? Analyse the forecasting solution

[Description of the main issue(forecastingprocess needed to change), forecastingChallenges

·         Evaluation of the collaborative forecasting process

·         Evaluation

·         Conclusion on whether the solution could be improved or not]

5. Explain the risk management and its various components

A Definition of risk management and what it entails

Description of the four components of risk management

·         Risk assessment

·         Risk control

·         Risk prioritising

·         Risk mitigation

6 Why redesign of layouts may be necessary? List the differences between product and process layout.

[Listing of reasons why resdesigning ofexisting layout is required

Listing of any five differences]

MB0045- FINANCIAL MANAGEMENT

1 Capitalisation of a firm refers to the composition of its long –term funds debt and equity.

Discuss the theories of capitalization.

Explain each theory of capitalisation

2 A) The share of Megha Ltd is sold at Rs 500 a share. The dividend likely to be declared by the company after one year is Rs 25 per share. Hence, the price after one year isexpected to be Rs 550. What is the return at the end of the year on the basis of likelydividend and price per share?

B) A bond of face value of Rs 1000 and a maturity of 3 years pays 15% interest annually.What is the market price of the bond if YTM is also 15 %.

A Problem

B problem

3 Discuss the sources of capital of a company. Analyse the factors that affect the capital structure.

a) Sources

b) Factors that affect the capital structure

4 A project costs Rs 50,000. It is expected to generate cash inflows as shown in table. If the riskfree rate is 10%, compute NPV.

Year	Cash inflows	Certainty equivalent
1	32000	0.9
2	27000	0.6
3	20000	0.5
4	10000	0.3

Compute NPV

5 a) Annual demand of a company is 30,000 units. The ordering cost per order is Rs 20(fixed) along with a carrying cost og Rs 10 per unitper anum. The purchase cost perunit i.e., price per unit is Rs 32 per unit. Determine EOQ, total number of orders in ayear and the time gap between two orders.

a) EOQ

b) total number of orders in a year and

c) the time gap between two orders.

6 Discuss the dividend policy of Dabur India Ltd for the last three years. Analyse the dividend policy of Dabur India Ltd. Forthree years

Comment on dividend policy

MB0046-Marketing Management

1 “Planning is a process of designing the Blueprint for the future”. In this context,explain Marketing Planning in detail.

Explanation of Marketing plan

Explanation of marketing planning process

2 Explain Henry Assael Model of buying decision behaviour along with the diagram”.

Explanation of Model.

Diagram

3 “Packaging includes all the actions that involve the development of a container and a graphic design for a product “.In the light of the statement, explainpackaging and labelling.

Explanation of packaging considerations

Explanation of Labelling Considerations

4 Explain Brand Extension and its kind.

Explanation of brand extension

Types

5 “Logistics has always been a central and essential feature of all economic activities”. In this context, explain logistics management and its major functions.

Explanation

Functions

6 Write short notes on:

a) Integrated Marketing Communication

b) Direct Marketing

a) Meaning and components

b) Meaning and Advantages

MB0047- MANAGEMENT INFORMATION SYSTEM

1 Professor A. Van Cauwenbergh of Antwerp University, in a paper presented at the Tenth Anniversary Conference of the European Institute for Advanced Studies in Management, presented four revisions to traditional Management Theory. In summary, the revisions are:

(1) The initiative for the renewal and adjustment of the activities of a firm should come from the different levels in the management hierarchy. “Strategy is not a privilege of topmanagement”.

(2) Firms, especially big firms, are incoherent systems (goals of the different componentsystems are not simply subdivisions of an overall goal; there are individual, conflicting goalsas well).

Some of these differences are manifestations of organizational initiative and vitality. Usinginformation systems and central planning and rule-making to suppress all differences is destructive to organizations.

(3) The most vital “fluid” of an enterprise is the aggregate of its entrepreneurial values. The most fundamental and motivation and control come through these shared values relative towork, quality, efficiency, etc. Management often neglects these values and assumes that thecollection and dissemination of information will provide sufficient motivation and control.

(4) Enterprises are open systems; their structure and operating processes are determined bytheir environment. This means organizations must be designed to continually adjust to the environment.

a. If these revisions are correct, how is planning to be organized?

b. How should the information system support the planning organization?

Aa. Explaining the organizational planningprocess with diagram

b. Guidelines for planning MIS 2

Comparing MIS plan and Business Plan

(atleast two)

Explaining significant problem of the

Lewis model

2 Information Technology and Computers have brought information age. The spread of Internet

& relative ease of access made Information Breach easier. Our future is not secure, if ourinformation is not secure. Information Resources need to be guarded, protected and controlled.

List the precautionary measures to be considered to prevent cybercrime?

A Listing any 5 measures to prevent cyber crime 10 10

3 a. While implementing MIS in any organization change can occur in number of ways.

List and explain the steps in the process as suggested by Lewin’s model.

b. Compare between prototype approach and Life Cycle approach

Aa. Explaining the 3 steps of implementing the process suggested by Lewin’s model

b. Comparison between the two approachesatleast two points

4 There is an information explosion in today’s society. There are lot of advantages of DBMS like proper maintenance of the data and maintaining security. Explain the process of datatransition using diagram and an example of your own.

A Writing diagram, 2

Own example other than given in the SLM 3 10

Explaining the process 5

5 Write short note on

a. World wide web

b. Voice over IP

c. Intranet

d. Extranet

Aa. World Wide Web 2

b. Voice over IP 2

c. Intranet 3

d. Extranet 3

6 Artificial intelligent system functions like a human being and helps a manager in taking quick decisions. Explain the different applications AI using diagram.

Aa. Diagram 2

b. Applications of cognitive science 2

c. Applications of robotics 2

d. Applications of natural interface 2

e. Explaining each type with an example 2

MB0048-OPERATIONS RESEARCH

1 Discuss the various stages involved in the methodology of Operations Research. Brieflyexplain the techniques and tools of Operations Research.

Operations Research Methodology

Techniques and tools of Operations Research

2 a. Explain the steps involved in linear programming problem formulation. Discuss in brief the advantages of linear programming.

b. Alpha Limited produces & sells two different products under the brand names black& white. The profit per unit on these products in Rs. 50 & Rs. 40 respectively. Both theproducts employ the same manufacturing process which has a fixed total capacity of50,000 man-hours. As per the estimates of the marketing research department ofAlpha Limited, there is a market demand for maximum 8,000 units of Black & 10,000units of white. Subject to the overall demand, the products can be sold in any possiblecombination. If it takes 3 hours to produce one unit of black & 2 hours to produce oneunit of white, formulate the model of linear programming.

Steps involved in LPP

Advantages of LPP

Formulation of LPP

3 a. What is degeneracy in transportation problem? How it can be resolved?

b. Solve the following transportation problem using Vogel’s approximation method.

Factories	Distribution Centres				Supply
	C1	C2	C3	C4
F1	3	2	7	6	50
F2	7	5	2	3	60
F3	2	5	4	5	25
Requirements	60	40	20	15

Degeneracy in transportation problem and resolving it

Computation/Solution to the problem

4 a. Explain the steps in Hungarian method. Differentiate between Transportation and Assignment problem.

b. Find the optimal assignment of four jobs and four machines when the cost of assignment is given by the following table:

	J1	J2	J3	J4
M1	10	9	8	7
M2	3	4	5	6
M3	2	1	1	2
M4	4	3	5	6

Steps in Hungarian method

Differences between Transportation and Assignment problem

Computation/Solution to the problem

5 Define Simulation. Explain the Simulation procedure. Discuss the use of Simulation with an example.

Meaning of Simulation

Simulation procedure

Use of simulation with an example

6 Explain the following:

a. Integer programming model

b. PERT and CPM

c. Operating Characteristics of a Queuing System

Explanation of Integer programming model

Explanation of PERT and CPM

Explanation of Operating Characteristics of a Queuing System

MB0049 - PROJECT MANAGEMENT

1. Write short notes on

·         Project break-even point

·         Need for project planning

·         Project type organization

·         Rules for network construction

[Project break-even point

Need for project planning

Project type organization

Rules for network construction

2 Describe and compare the project appraisal methods NPV and IRR with example? Which one is better method in estimating returns on investment in a particular project?

Description and comparison of NPV and IRR

Analysis and inference of which is a better method

3. Microsoft Project AMS

The company

AMS is a global business and IT consulting firm to the government, financial services, and communications industries. AMS applies both proprietary and partner technologies and provides solutions through business consulting, system integration, and outsourcing. Founded in 1970, AMS is headquartered in Fairfax, Virginia, and has offices worldwide. The company has approximately 6300 employees.

The challenge

Several years ago, AMS developed an internal project management system called Project in a Box. Based on Lotus Notes, the homegrown system was becoming inefficient and costly to operate, particularly because it was designed as a standalone, non-collaborative product. When a new consulting project was set up, a new instance of the database was created, leading to a chaotic system with literally hundreds of separate databases.

Without any kind of centralised information sharing, it was difficult to use information from one project on another project. The system also prevented AMS’s managers from viewing companywide metrics, such as project completion rates and whether projects were being completed on time and on budget. AMS’s executives needed a system to allow them to have a portfolio view of the health of the company’s projects in progress. A collaborative project management system would allow AMS managers to:

·         Measure project performance and Earned Value Metrics (EVM) allowing for improvements in on-time and on-budget delivery to customers

·         Standardise processes

·         Understand the impact of task dependencies within complex projects

·         Share information across different product lines

The strategy

Many AMS project managers were already using Microsoft Project as a desktop application, developing project plans and Work Breakdown Structures (WBS) on their individual PCs. However, these individual installations were not networked together and did not feed critical project performance information to executives.

Therefore, in October 2002, when AMS began the vendor selection process for a company-wide project management solution, Microsoft Project was the natural choice, both because many internal users were already experienced with the application’s scheduling and planning functionality and because Microsoft offered the best price point.

In March 2003, AMS chose Microsoft as its project management software vendor and began a pilot programme. In June 2003, AMS selected the public sector product engineering group as the first department to begin the pilot programme. AMS divided this initial pilot programme into four distinct phases:

·         Phase 1: In early July, AMS installed Microsoft Project for and trained 15-20 project managers working on a common product line.

·         Phase 2: In late August, AMS expanded the installation to 170 people in another product line within the same group.

·         Phase 3: In late September, AMS rolled out Project’s decision support capabilities to ten executives, allowing them to mine data for reporting purposes.

·         Phase 4: If the pilot is successful, AMS will expand the Project programme to 4,000 Users Companywide in a staged rollout.

Key benefit areas

With the pilot programme well under way, AMS is already seeing benefits from Microsoft Project. The system has helped AMS to meet its goal of creating a more collaborative project management system that allows managers to view metrics and create schedules with a view of resources across projects and across the entire organisation. The collaborative nature of Microsoft Project Server allows team members, team leaders, and project managers to complete EVM reporting more quickly, leading to more available time for billable hours. The quantifiable benefits from the Microsoft Project deployment include:

·         Productivity gains from automated weekly reporting process. Consultants and developers now spend less time each week creating weekly status and performance reports, leading directly to more time available for billable hours.

·         Productivity gains from automated EVM analysis. Team leaders and project managers now spend less time processing and analysing status and performance reports from team members, allowing them to also have more time available for billable hours.

·         The Microsoft Project deployment also allows AMS project managers to get a better sense of project status metrics in real time. This leads to fewer project budget and cost overruns, because project managers can quickly make adjustments to keep projects profitable.

Key cost areas

The largest cost area for AMS’s deployment of Microsoft Project was the software license cost, making up 63% of the total cost of the project. Other cost areas over the 3-year period included consulting, training, ongoing maintenance, and personnel costs associated with the everyday use of the system.

Lessons learnt

Overall, AMS’s Microsoft Project implementation went smoothly. AMS’s managers attribute the project’s success to their careful planning and staged pilot programme approach. AMS’s managers recommend that companies considering similar implementations should not underestimate the change management necessary to make

Microsoft Project work effectively. Project managers, especially those without PMI certifications, will often need to undergo training on how to build effective WBS’s, how to plan and schedule complex projects, and how to adjust WBS’s to changing project conditions.

A successful Microsoft Project implementation also requires a high level of communication between team members and project managers. This is especially important with regard to communicating the inputs, steps, expected output, and dependencies of complex business processes.

AMS’s managers also recommended that companies carefully look at their internal processes for building WBS’s, especially the ones for complex projects that require more than 500 tasks. Some of AMS’s projects contained upwards of 2500 tasks, which was well above Microsoft Project’s practical limit of 500 tasks for a single project.

Calculating the ROI

Nucleus Research analysed the costs of software, personnel, consulting, and training over a 3-year period to quantify AMS’s investment in Microsoft Project. Direct and indirect benefits were also quantified over a 3-year period. Direct benefits quantified included productivity gains for both team members and team leaders when creating EVM reports.

Because AMS was an early adopter and because it agreed to participate in trade shows and in marketing ventures, the company received consulting services from Microsoft at no cost, though AMS did use internal consultants for a portion of the implementation.

Companies currently considering Microsoft Project for similar enterprise implementations must take consulting costs into account when evaluating potential ROI. Benefits not quantified because of the early stage of AMS’s Project deployment included reduced project budget and schedule overruns. However, Nucleus recommends that companies considering Microsoft Project evaluate this potential benefit.

Source: http://nucleusresearch.com/library/microsoft-roi/d134.pdf

What difficulties were encountered by AMS while dealing with information transfer problem in the company? What strategy is used by AMS for dealing with this problem?

Listing of difficulties encountered

Evidence of the strategy used

Analysis of the strategy

Conclusion

4 Form the above case how did the solution help the managers, project teams and the company.

Benefits of the solution to managers, project team and company

Conclusion

5 What are the key steps involved in purchase cycle?

Definition of purchase cycle

Listing of the steps involved in the purchase cycle

Summarisation of each step

6 Discuss the concept of quality and project quality management.

·         Definition of quality

·         Overview of project quality management

·         Summarization of project quality management process