Dr D Y Patil

, Pune

Department of Mechanical Engineering

Lab Manual

Subject: Industrial Engineering

Sub code: 402049 B

1
Term Work shall consist of following assignments:
Minimum of 8 Experiments are compulsory from the following list of
Experiments.

1. Case study based Assignment on Method Study.

2. Hands on Assignment on application of Work Measurement

technique(s).

3. Assignment on simulation of Routing & Scheduling Model

4. Assignment on simulation of Manufacturing System / Service System

Operations for demand forecasting of the given product using any
two methods.

5. Assignment on simulation determination of EOQ and plot the graphs.

6. Assignment on analysis of Manufacturing / Service Operation for

Capacity Planning.

7. Case study based assignment on supply chain model.

8. Assignment on analysis of (selected) plant layout modeling and

simulation for bottleneck /line balancing.

9. Assignment on analysis of material handling system - modeling

simulation for the selected plant layout.

10. Case study based assignment on identification of Key Result

Areas for performance appraisal for selected company (3600
feedback).

11. Case study based assignment on cost-revenue model analysis.

12. Assignment on industrial safety audit of selected work environment.

2
 Assignment No.01
Method study
Definition of Method Study:
According to British Standards Institution (BS 3138)

“Method study is the systematic recording and critical examination or existing and
proposed ways or doing work as a means or developing and applying easier and more effective
methods and reducing cost.”

Objectives of Method Study:

Method study is essentially concerned with finding better ways of doing things. It adds
value and increases the efficiency by eliminating unnecessary operations, avoidable delays and
other forms of waste.

The improvement in efficiency is achieved through:

1. Improved layout and design of workplace.
2. Improved and efficient work procedures.
3. Effective utilisation of men, machines and materials.
4. Improved design or specification of the final product.
The objectives of method study techniques are:
1. Present and analyse true facts concerning the situation.
2. To examine those facts critically.
3. To develop the best answer possible under given circumstances based on critical
examination of facts.

Steps involved in method study:

The basic approach to method study consists of the following eight steps. The detailed
procedure for conducting the method study is shown in Fig.

1. SELECT the work to be studied and define its boundaries.

2. RECORD the relevant facts about the job by direct observation and collect such
additional data as may be needed from appropriate sources.
3. EXAMINE the way the job is being performed and challenge its purpose, place
sequence and method of performance.
4. DEVELOP the most practical, economic and effective method, drawing on the
contributions of those concerned.
5. EVALUATE different alternatives to developing a new improved method comparing
the cost-effectiveness of the selected new method with the current method with the
current method of performance.
6. DEFINE the new method, as a result, in a clear manner and present it to those
concerned, i.e., management, supervisors and workers.
7. INSTALL the new method as a standard practice and train the persons involved in
applying it.
8. MAINTAIN the new method and introduce control procedures to prevent a drifting
back to the previous method of work.
 Fig.1 Method Study Procedure

Symbols Used in Method Study:

Graphical method of recording was originated by Gilberth, in order to make the
presentation of the facts clearly without any ambiguity and to enable to grasp them quickly and
clearly. It is useful to use symbols instead of written description.

Ο OPERATION
INSPECTION
→ TRANSPORTATION
D DELAY
∇ STORAGE
Operation O
An operation occurs when an object is intentionally changed in one or more of its
characteristics (physical or chemical). This indicates the main steps in a process, method or
procedure. An operation always takes the object one stage ahead towards completion.
Examples of operation are: Turning, drilling, milling, etc. A chemical reaction, welding,
brazing and riveting, Lifting, loading, unloading, getting instructions from supervisor, Taking
dictation.

Inspection
An inspection occurs when an object is examined and compared with standard for quality and
quantity. The inspection examples are:

Visual observations for finish. Count of quantity of incoming material. Checking the
dimensions.
Transportation →
A transport indicates the movement of workers, materials or equipment from one place to
another. Example: Movement of materials from one work station to another. Workers travelling
to bring tools.

Delay D: Delay (Temporary Storage)

A delay occurs when the immediate performance of the next planned thing does not take place.
Example: Work waiting between consecutive operations. Workers waiting at tool cribs.
Operators waiting for instructions from supervisor.

Storage ∇
Storage occurs when the object is kept in an authorised custody and is protected against
unauthorised removal. For example, materials kept in stores to be distributed to various work.

Flow Process Chart

 FLOW PROCESS CHART MAN/MATERIAL/EQUIPMENT TYPE

Chart No.: Sheet No.: SUMMARY
Subject Charted: Activity Present Proposed Savings
Date: Operation O
Activity: Transportation

Inspection
Method: Present/Proposed
Delay
D
Storage

Location: Time:
Operator(s): Clock No.: Distance:

Charted By: Cost:

Approved BY:
Description Distance Time Symbol Remarks
(m) (Min.)
O D

Total
 Assignment No.02
Work Measurement Techniques
Definition of Work Measurement:
Work measurement is also called by the name ‘time study’. It is essential for both
planning and control of operations.

According to British Standard Institute time study has been defined as techniques designed to
establish the time for a qualified worker to carry out a specified job at a defined level of
performance.”

Objectives of Work Measurement:

The use of work measurement as a basis for incentives is only a small part of its total
application. The objectives of work measurement are to provide a sound basis for:

1. Comparing alternative methods.

2. Assessing the correct initial manning (manpower requirement planning).
3. Planning and control.
4. Realistic costing.
5. Financial incentive schemes.
6. Delivery date of goods.
7. Cost reduction and cost control.
8. Identifying substandard workers.
9. Training new employees.

Techniques of Work Measurement:

For the purpose of work measurement, work can be regarded as:

1. Repetitive work: The type of work in which the main operation or group of operations
repeat continuously during the time spent at the job. These apply to work cycles of extremely
short duration.

2. Non-repetitive work: It includes some type of maintenance and construction work, where
the work cycle itself is hardly ever repeated identically.

Various techniques of work measurement are:

1. Time study (stop watch technique),

2. Synthesis,
3. Work sampling,
4. Predetermined motion and time study,
5. Analytical estimating.

Steps in Making Time Study:

Stop watch time is the basic technique for determining accurate time standards. They
are economical for repetitive type of work. Steps in taking the time study are:

1. Select the work to be studied.

2. Obtain and record all the information available about the job, the operator and the working
conditions likely to affect the time study work.
3. Breakdown the operation into elements. An element is a instinct part of a specified activity
composed of one or more fundamental motions selected for convenience of observation and
timing.
4. Measure the time by means of a stop watch taken by the operator to perform each element
of the operation. Either continuous method or snap back method of timing could be used.
5. At the same time, assess the operator’s effective speed of work relative to the observer
concept of ‘normal’ speed. This is called performance rating.
6. Adjust the observed time by rating factor to obtain normal time for each element

7. Add the suitable allowances to compensate for fatigue, personal needs, contingencies.etc. to
give standard time for each element.
8. Compute allowed time for the entire job by adding elemental standard times considering
frequency of occurrence of each element.
9. Make a detailed job description describing the method for which the standard time is
established.
10. Test and review standards wherever necessary. The basic steps in time study are represented
by a block diagram in Fig. 1

Figure 1: Steps in time study

Time study Equipment:

1. Stop watch: Stop watch is measuring instrument (Fig.No.2) to observe the elemental
timings and usually a decimal watch is used.

A- Slide for stopping and starting the movement

B- Winding knob. Pressure on this knob returns both the hands to zero.

Figure 2: Decimal-minute stop watch

 Time study sheet
DEPARTMENT: SECTION:

OPERATION: SHEET NO.

CLOCK NO.
PLANT/MACHINE:
DATE:
MACHINE NO.:
STUDIED BY:
TOOLS AND GAUGES:

CHECKED:

EL ELEMENT DESCRIPTION Observed Time Total Average R B.T.

NO. O.T. O.T.
1 2 3 4 5

O.T.=Observed Time
R=Rating,
B.T.=Basic Time
STD.TIME= Basic Time + Allowances
(Basic Time= Observed Time x Rating Factor)
 Assignment 3

Routing & Scheduling Model

Aim: Assignment on simulation of Routing & Scheduling Model
Software: Flexsim 2018
Problem statement: An electronic manufacturing unit has two product type
40% of the type 1 product process by Group A Machines
60% of the type 2 product process by Group B Machines
The product arrives at the interval of 2.5 minutes (exponentials). The processing time for each
machine of both types is 10 minutes.
Do the simulation for Routing & Scheduling of given plant layout in FlexSim 2018. Build a model
that uses lists for routing items in a simple job shop model.
Run model for 48 hours. (24*60 =1440minutes)

Find:
1) Total Parts Arrived
2) Total Parts Dispatched.
3) Work in Progress
4) Average Work in Progress

Solution:
1. Open the Flexsim Software 2018.

2. Click on New Model

3. Select Model Units as Given in Problem

After just selecting Time Unit as Minutes, rest of the parameters kept as default as shown in Figure
below and then press OK.
4. Use Fix Resources from the Menu to Create Layout
Click on the icon “Source” and drag it to the screen and place it. Similar to “Source” click, drag and
place “Queue”, “Processor” and “Sink” to create a shop floor layout.

5. Connect them using Connect Object Tool

There is shortcut way to connect object is by Pressing “A” button and connecting the objects.
6. Double Click on Source Icon and Assign Parameters

Change the name of Source as Entry and Assign Inter Arrival Time as 2.5 Minutes as shown
below.

Then click on Triggers Sub Menu, Click on the “+” icon and in “Data” Set Type by Percentage
After Assigning the values 60% and 40%, now click on “+” Icon to set Visual by Color by Case,
after these click Apply and OK.
(Set Item Type by Percentage, Set Color By Case)

7. Click on Processor and Change Name and Assign Type of Material and Time to Process
Rename the name of the Processor, Assign Time for Setup and Process.

Now click on the Flow Tab and Assign Pull Strategy as mention in the problem that First Three
machines will pull only Type 1 Specific Item. Press Apply and OK.
Use the same method for Second and Third Processor, Rename them as Machine 2 Group A and
Machine 3 Group A and Assign the Pull strategy as above.

After Group A Machines, simmilarly rename the Processor with Machine 4 Group B and Machine 5
Group B and Assign the Pull strategy as above but here select Type 2 Item.

8. Assign Run Time

Assign Run time as given in Problem as 1440 Minutes and Click Reset

9. Click on the Run Icon

Now after clicking the run, the product flow is visible. You can change the run speed as per your
convenience.
10. Analyze the result
To analyze the result, click on each object, clicking on the Source will give you the number of
product received by layout and clicking on the Sink will give you final throughput by the layout.
Clicking over processor will give percentage amount of Idle Time and Processing Time.

11. Result
Total Product at Entry Point = 557
Total Product at Sink Point = 549
Work in Progress (WIP) = 8
Average Work in Progress

Click on the Dashboard, Add Dashboard and then select Average Work In Progress, Add the
objects as shown in figure, Click on Apply and OK. After that Reset and Run, you will get the
Average Work in Progress at Dashboard.

Conclusion
Plant manufactures 2 kinds of product, having 5 processors. It is difficult to schedule the sequence
of flow of material manually. Simulation software plays important role in this to schedule the flow
without creating any bottleneck. Here, types of product are only two, if number of types of product
get increased then complexity will increase. in such situation simulation software will play an
important role.
 Assignment No 05

Determination of EOQ
Economic Order Quantity is the level of inventory that minimizes the total inventory holding
costs and ordering costs. It is one of the oldest classical production scheduling models. Economic
order quantity refers to that number (quantity) ordered in a single purchase so that the accumulated
costs of ordering and carrying costs are at the minimum level. In other words, the quantity that is
ordered at one time should be so, which will minimize the total of. Cost of placing orders and
receiving the goods, and Cost of storing the goods as well as interest on the capital invested.

Definitions

1. Economic Order Quantity (EOQ) is the order quantity that minimizes total inventory costs.

2. Order Quantity is the number of units added to inventory each time an order is placed.

3. Total Inventory Costs is the sum of inventory acquisition cost, ordering cost, and holding cost.

4. Ordering Cost is the cost incurred in ordering inventory from suppliers excluding the cost of
purchase such as delivery costs and order processing costs.

5. Holding Cost, also known as carrying cost, is the total cost of holding inventory such as
warehousing cost and obsolescence cost.

Total inventory cost is comprised of the following main costs:

1. Cost of purchase
2. Order Costs
3. Holding Costs
If we change the order quantity, it can affect the different types of inventory costs in different
ways.
Larger order size results in lower order costs because fewer orders need to be placed to cover the
annual demand. This however results in higher holding costs because of the increase in inventory
levels.
Conversely, smaller order size results in lower holding costs because of the decline in average
inventory level. However, as lower quantity of inventory is ordered each time, the number of orders
needed to increase in order to fulfill the annual demand which leads to higher ordering costs.
Reducing the order size may also affect the cost of purchase due to the loss of trade discounts that
are based on the order quantity.
So the question arises how we can find the optimal order quantity that minimizes the total inventory
costs.
EOQ model offers a method of finding the optimal order quantity that minimizes inventory costs
by finding a balance between the opposing inventory costs.

Formula

2 𝑥 𝐶𝑜 𝑥 𝐷
Economic Order Quantity = √− − − − − −
𝐶ℎ
 Co is the cost of placing one order
 D is the annual demand
 Ch is the annual cost of holding one unit of
Relevant Costs inventory

When calculating EOQ, it is important to include only those ordering and holding costs that are
relevant. Any costs that are not incremental should be ignored while calculating EOQ. Following
examples illustrate the application of relevant costing in the calculation of EOQ.

Order Costs Relevance to EOQ calculation

If increase in number of orders would not result

Salary paid to clerk who processes orders. in overtime or hiring an additional clerk, the
cost will not be relevant to EOQ.
The total delivery expense will be the same
Supplier charges Rs5 delivery cost for each unit
irrespective of the number of order deliveries so
of inventory supplied.
it should be ignored in EOQ calculation.
Delivery expense will increase with an increase
Supplier charges Rs 500 fixed delivery charge
in number of orders so it should be included in
for each delivery.
EOQ calculation.
Auto dealer transports cars from the car factory
to its showroom using its own trucks. Insurance The annual insurance cost is fixed irrespective
premium is paid to cover for any accidents of how many cars are transported in one go and
during the transportation. Rs.100 premium is should therefore be ignored.
paid for each vehicle that is transported.

Assumptions
 EOQ model assumes a constant demand.
 EOQ calculation assumes that ordering costs and holding costs will remain constant.
Limitations
 Since no fluctuation in demand is considered in the EOQ calculation, business losses due
to potential shortage of inventory are ignored.
 EOQ model does not take into account the seasonal fluctuations in the cost of inventory.
In seasonal industries, it would make sense to buy inventory in bulk when it is readily
available at a lower price. Inventory may be harder to procure in off season and would
usually cost more as well.
 EOQ model does not take into account purchase discounts that could be obtained by
buying inventory in bulk. We can however work around this problem as is illustrated in
this next lesson.

Example
Jason owns a fish shop where he sells an exotic variety of tuna fish which he imports from Japan.
Jason refrigerates the fish in a cold storage facility near his shop that charges him a fixed annual
fee of ₹1000 and variable charge of ₹5 per day for each fish container that is stored. Every morning,
Jason brings fish from the cold storage to his shop for sale. Jason estimates that he incurs ₹10,000
electricity cost each year on refrigerating the fish inside his own shop. Jason incurs the following
ordering costs:
Delivery charges of ₹10,000 per delivery
Import duties of ₹300 per carton
Custom fees of ₹200 per order
Import license fee of ₹150 per annum
Jason currently imports fish by placing one order of 20 cartons every month. Each carton costs
₹2,000. Jason is wondering if he can save inventory costs by adopting EOQ model.
a) Calculate the current annual total inventory costs
b) Calculate the economic order quantity
c) Calculate the annual total inventory costs if EOQ is used
Solution:
a) Current Inventory Cost
Costs Working ₹ Rupee
Annual demand = 20 x 12 = 240 cartons
Purchase Cost 480,000
Purchase cost = 240 x ₹2000 = ₹480,000
Order Cost
Number of deliveries = 12
Delivery Cost 120,000
Delivery Cost = 12 x ₹10,000 = 120,000
Import Cost Import fee = ₹300 x 240 cartons = ₹72,000 72,000
Custom Cost Custom fee = ₹200 x 12 orders = ₹2400 2,400
Holding Cost
Maximum number of cartons stored = 20
Average number of cartons = 20 ÷ 2 = 10
Cold storage Variable charge = 10 x ₹5 x 365 = ₹18,250 19,250
Fixed charge = ₹1,000
Total = ₹19,250
Electricity 10,000
Total Inventory Cost (Current) 703,650
b) Economic Order Quantity

2 x 10,200 (W1) x 240 (W2)

EOQ = √
1,825 (W3)
≈ 52 cartons

Order Cost (W1)

Delivery Cost ₹10,000
Import fees -
Custom fees ₹200
Cost of 1 order ₹10,200

Note:
Import fees can be ignored in EOQ calculation as they remain the same irrespective of the
number of orders.

Annual Demand (W2) = 240 cartons

Holding Cost (W3)

Cold Storage - Variable (365 x ₹5) ₹1,825
Cold Storage - Fixed -
Electricity -
Cost of holding 1 carton for 1 year ₹1,825

Inventory Cost using EOQ

Costs Working ₹
Purchase Cost As before 480,000
Order Cost

Annual Demand = 240 cartons

Delivery Cost Number of deliveries = 240/52 ≈ 5 50,000
Delivery Cost = 5 x ₹10,000 = ₹50,000

Import Cost As before 72,000

Custom Cost Custom fee = ₹200 x 5 orders = ₹1000 1,000
Holding Cost
Maximum number of cartons stored = 52
Average number of cartons = 52 ÷ 2 = 26
Variable charge = 26 x ₹5 x 365 = ₹47,450
Cold storage 19,250
Fixed charge (as before) = ₹1,000

Total = ₹48,450
Electricity (as before) 10,000
Total Inventory Cost (using EOQ) 661,450
Using EOQ Model, Jason will save ₹42,200 (703,650 - 661,450) annually.

Economic Order Quantity

Actual Demand (D) 240

Volume per Order Q
Ordering Cost (S) 1,20,000 EOQ 52
Unit Cost (C) 2,000
Holding Cost (H) 18,250
Carrying Cost (I) 10%

Annual
Volume Per Batches per Annual Holding Annual Total
Order Cost
Order (Q) Year (D/Q) Cost (Q/2*H) Cost (TC)
(D/Q*S)
50 5 5,76,000 4,56,250 10,32,250
100 2 2,88,000 9,12,500 12,00,500
150 2 1,92,000 13,68,750 15,60,750
200 1 1,44,000 18,25,000 19,69,000
250 1 1,15,200 22,81,250 23,96,450
300 1 96,000 27,37,500 28,33,500
350 1 82,286 31,93,750 32,76,036
400 1 72,000 36,50,000 37,22,000
450 1 64,000 41,06,250 41,70,250
500 0 57,600 45,62,500 46,20,100
550 0 52,364 50,18,750 50,71,114
600 0 48,000 54,75,000 55,23,000
650 0 44,308 59,31,250 59,75,558
700 0 41,143 63,87,500 64,28,643

EOQ
70,00,000
60,00,000
50,00,000
40,00,000
30,00,000
20,00,000
10,00,000
0
50 100 150 200 250 300 350 400 450 500 550 600 650 700

Annual Order Cost (D/Q*S) Annual Holding Cost (Q/2*H)

Annual Total Cost (TC)
 Assignment 6
Capacity Planning

Aim: Assignment on analysis Service Operation for Capacity Planning.

Software: Flexsim 2018
Problem statement: Do the analysis of given plant layout for capacity planning in FlexSim 2018.
Use the following resources, task executors and parameters.

Sr. Task Executers / Resources Parameters

No.
1 Part Arrival time time uniform (5,7) minutes .
2 Processor 1 QTY:1 at time and process time :10
minute
3 Processor 2, 3 Qty :1 for each capacity 1000, process
time uniform (7,12) minutes each

Run model for 24 hours. (24*60 =1440minutes)

Find:
1) Total Part arrived and dispatched.
2) Average time required for part to dispatch.
3) Average work in progress.
4) Machine utilization.
5) Find out the capacity of to produce good in 1440 minutes.

Solution:
1. Open the Flexsim Software 2018.
2. Click on New Model
3. Select Model Units as Given in Problem

After just selecting Time Unit as Minutes, rest of the parameters kept as default as shown in Figure
below and then press OK.
4. Use Fix Resources from the Menu to Create Layout
Click on the icon “Source” and drag it to the screen and place it. Similar to “Source” click, drag and
place “Queue”, “Processor” and “Sink” to create a shop floor layout.

5. Connect them using Connect Object Tool

There is shortcut way to connect object is by Pressing “A” button and connecting the objects.

6. Assign the Parameters at Source

Click on Inter Arrival Drop Down Arrow, Select Statistical Distribution as Uniform ( Given in
Problem)
After that Assign value as 5,7 as per the given data

Press Apply and OK

7. Assign the Parameters at Processor 1

Double click on the processor and assign processing time as 10 minutes as given in problem and
click Apply and then OK.

8. Assign the Parameters at Processor 2 & 3

Double click on the processor 2, Click on Process Time Drop Down Arrow, Select Statistical
Distribution as Uniform (Given in Problem), assign processing time and click Apply and then OK.

Repeat the same process for Processor 3.

9. Assign Run Time
Assign Run time as given in Problem as 1440 Minutes and Click Reset
10. Click on the Run Icon
Now after clicking the run, the product flow is visible. You can change the run speed as per your
convenience.

11. Analyze the result

To Analyze the result click on each object. Clicking on the Source will give you the number of
product received by layout and clicking on the Sink will give you final throughput by the layout.
Clicking over processor will give percentage amount of Idle Time and Processing Time.
12. Result
Total Product at Entry Point = 144
Total Product at Sink Point = 142
Work in Progress (WIP) = 2
Average Work in Progress
Click on the Dashboard, Add Dashboard and then select Average Work In Progress, Add the
objects as shown in figure, Click on Apply and OK. After that Reset and Run, you will get the
Average Work in Progress at Dashboard.
Machine Utilization
Once Again Click on the Dashboard, Add Dashboard and then select from State Templates,
State Bar, Add the objects (All Processors) as shown in figure, click on Apply and OK. After that
Reset and Run, you will get Percentage Processing and Lead Time at Dashboard.

Conclusion

With help of simulation software, it is very easy to analyze plant layout. Percentage utilization of
each processor effects on the capacity of plant. Percentage utilization of given plant is
(99.61+66.28+27.11)/3 = 64%. It means that if plant is fully utilized up to its capacity then
production can be increased nearly twice as of now.
 Assignment 7
Case study of Supply chain management of DELL computers

Aim: Case study of Supply chain management of DELL computers

Introduction:
Supply Chain Management is a business practice that has been employed in order to give an
effective service to customers and to make the business sustainable by considering all the aspects
from the suppliers to the consumers. Supply Chain integrates all these features such as
manufacturer, supplier, transport, wholesalers, retailers, customers and all other elements which
link the above. Its main objective is to fulfill customer demands by adding value to the products
and services.
DELL is a computer technology corporation that develops sells, repairs and supports, computers
and computer related products. DELL has realized that supply chain is becoming more and more
important for the success of today’s business world and they work accordingly to keep a
competitive advantage in the market.
Scope of the study:
Here in this study, the supply chain processes that are utilized by DELL will be taken into
consideration which is known to be one of the best in the world. DELL s supply chain will be
heavily analyzed in the areas of supply chain integration strategies and demand management
aspects.
Supply Chain of DELL:
DELL has a different business model than its competitors, which can be identified as “direct
model”. In this model DELL sells its PC s directly to customers without using a retail channel.

Therefore, it creates a direct relationship with each individual customer which they have
segmented into groups to make it easier to approach.
Mainly there are three customer segments which can be illustrated as large organizations, small
and medium businesses, and personal consumers.
The other aspect that makes DELLs supply chain unique is the Build-to- order strategy. According
to this once the order is placed by the customer, all the configuration details are sent to the
manufacturing floor and then the assembly of the PC begins. Once the computer is built and all the
software’s are downloaded it will be shipped to the customer by using 3PL.
Because of these aspects DELL has the competitive advantage over others because of several
reasons. The level of inventory costs is really low since the case of faster responses to demand
changes. It is also visible that customer pays for an order before DELL pays its suppliers for the
products components.
Thus the most interesting part of DELL and its supply chain is relationship they maintain between
the customers which of course lays foundation for the existence of the business.
Supply Chain Activities Involved in Managerial Levels
For the supply chain to be strategically effective it has to be implemented in all the levels in the
organization. Therefore, in all the three levels of DELL; strategic, tactical and operational, supply
chain practices are being made use of.
In the strategic level decisions will be made regarding the whole organization considering the
supply chain. These decisions are critical since it reflects the overall corporate strategy of the
company. In the case of DELL, the unconventional idea of using direct sales method has to be
come from the strategic level.
Senior management of DELL is giving the strategic direction when considering the product that the
company should manufacture and offer to their customers. Especially the customer segments are
identified targeting company marketing and advertising. It is the same when it comes to
manufacturing of products strategically decisions are taken to verify the capacity of existing
facilities and other logistics related things. DELL is using 3PL providers and it applies the theory of
manufacturing overseas.
It is needed to analyze and predict the capacity in supply chain therefore measures can be taken
to expand the facilities accordingly. The middle level management team has the responsibility of
this. There is more significance when it comes to the operational level. All the supply chain
activities in DELL are done thoroughly by this cluster.
The Role of Supply Chain in Maximizing Profit in DELL
DELL is able to sustain a competitive advantage over competitors in the computer industry
because of an extremely efficient supply chain/distribution system. Also DELL has been able to
acquire superior profits in the industry since they are a knowledgeable in areas of information,
communication, e-commerce, e-business, and internet and web technologies.
DELL implements a Just-In-Time (JIT) inventory system which operates on only six days of
inventory. Because of this inventory system Dell has been able to obtain higher profit margins.
Inventory and labor are the highest liabilities that are there in a business firm. Since DELLs
inventory is only a 6-day cycle, they have been able to cut down costs on warehousing, hiring
people to track and maintain inventory, and thus avoid using out dated technology.
One other thing which makes this supply chain really competitive is the fact that DELL’s customers
can only order computers through DELL itself which results in a profoundly bond with the
customers. This makes them retain their market share in the business.
DELL is also having strategic alliances with other companies to have their products sold on DELL’s
direct selling distribution channel.
All these elements in their supply chain make them the best in the business.
The value chain of DELL
According to this value chain plays a vital role in their demand analysis which can’t be considered
as true as always since there are visible occasions when their share prices go down drastically.

Conclusion:
Even though it is said to be that their relationship is “DEEP” with customers in the Sri Lankan
context it’s quite visible that the service is not the greatest among all. In fact DELL is losing its
market share with the rising of other PC producers which is quite evident in recent share prices of
DELL.
Having a direct relationship with the customer is a good strategy but considering big customers
who are going to be retailers in that context can be a threat to this supply chain. Since somehow
it’s representing DELL and the customer service that is done by them can have an adverse impact
on them. Therefore, rather than going for short term profits consideration of these aspects would
make them thrive in the industry.
 Assignment 9
Analysis of Material Handling System
Aim: Assignment on analysis of material handling system - modelling simulation for the selected
plant layout.
Software : Flexsim 2018.
Problem statement: Do the analysis of given plant layout for material handling. Plant
manufactures a type of product, Plant uses an automatic guided vehicles (AGV) for handling the
product. Use following resources, task executors and parameters. Do the simulation of given plant
layout in FlexSim 2018.

Sr. Task
Parameters
No Executors/Resources

Input is unlimited.
1 Product
Inter-arrival time: 3 minutes

Dispatcher control All Automatic guided vehicle. AGV

2 Queue
are guide through the Dispatcher

QTY:1
Load Time 0 minute.
3 Automatic Guided Vehicle Unload Time 0 minutes.
Max Speed 60 meter/minute.
Capacity 03 at a time.

4 Sink Output

Run model for three days. Company works in double shift. Shift duration is of 8 hours.
Find:
1) Total Part arrived and dispatched.
2) Average time required for part to dispatch.
3) Average work in progress.

Solution
1. Install and Open the Flexsim Software 2018.
2. Click on New Model
3. Select Model Units as Given in Problem

After just selecting Time Unit as Minutes, rest of the parameters kept as default as shown in Figure
below and then press OK.
 4 .
Draw and Connect AGV Paths
From the library, Use AGV Tools and Draw first Straight Paths, but keep in mind the direction of
travel of Automated Guided Vehicle. The Straight Path consists of Arrow.

Select Straight Path, draw the Straight Lines as shown below

Now Use Join Paths and connect these line, Maintain the direction of motion of AGV
5. Use Fix Resources from the Library Menu to Create Layout
Click on the icon “Source” and drag it to the screen and place it. Similar to “Source” click, drag and
place “Queue”, “Processor” and “Sink” to create a shop floor layout.

6. Connect them using Connect Object Tool

There is shortcut way to connect object is by Pressing “A” button and connecting the objects.

7. Place Control Point at the Path: Use AGV Library and Drag the Control Point Exactly at the
Path (Check the Path Should Turn Yellow when Placing it)

8. Connect these control points to Queue and Sink

Connect Object Press Keyboard Alphabet “A” and connecting Control Point 1 to Queue and
Control Point 2 to Sink.
9. Place Task Executor (Automated Guided Vehicle) to the Layout
Use task executor tab and click and drag task executor in the layout. Connect this task executor to
the control point using Connect Object tool or pressing A Key board key.

After this Press Reset Button

Now Connect Center Ports of Queue and Task Executor

This can be done either by using tool from menu or pressing “S” key of Keyboard. Connect Queue
to the Task Executor.

10. Assign Transport to Queue

Double click on Queue, Click over the Queue Tab, Click Perform Batching and set Target batch
Size to 3 and Check Flush contents between batches.
Click over the flow tab and click on Check Box to Use Transport. Press Apply and OK.

11. Assign Arrival Time to Source

Double click on Source and Assign Arrival Time as 3 Minutes as given in problem.

Press Apply and OK.

12. Assign Task Executor Capacity and Maximum Speed

Double click on Task Executor and Assign Capacity as 3 and Maximum Speed to 60 meters per
minute.
Click Apply and OK.

13. Attach loads as Trailer to Network Path

Double Click on the network Path, click on Network Properties

Click on checkbox of the Attach Loads as Trailer to Network Path

Click Apply and then OK.

14. Set Run Time
As given in the problem to run the model for three days. Company works in double shift. Each shift
duration is 8 hours.
So it will be
= 8 hours X 2 Shifts X 3 Days = 48 Hours = 2880 Minutes
Click on the Drop Down Arrow on Run Time Tab and Set the values as above
15. Reset and Run
Now Click Reset and Run the Model. You can increase or decrease speed as per your
convenience

16. Analyze the result

To Analyze the result, click on each object. Clicking on the Source will give you the number of
product received at layout and clicking on the Sink will give you final throughput by the layout.
17. Result
Total Product at Entry Point = 959
Total Product at Sink Point = 957
Work in Progress (WIP) = 2
Average time required for part to dispatch =2880/ 957 = 3 Minutes

Average Work in Progress

Click on the Dashboard, Add Dashboard and then select Average Work In Progress, Add the
objects as shown in figure, Click on Apply and OK. After that Reset and Run, you will get the
Average Work in Progress at Dashboard.

Conclusion
With help of simulation software, we analyzed the given plant layout for material handling system.
After doing analysis we found that 1 automated guided vehicle can easily handle the total
production without creating any piling up of Product manufactured.
 Assignment 11
Case study based assignment on cost-revenue model analysis

Aim: Case study based assignment on cost-revenue model analysis

Introduction:
Cost-benefit analysis (CBA) is a method of evaluating the net economic impact of a public
project. Projects typically involve public investments, but in principle the same methodology is
applicable to a variety of interventions, for example, subsidies for private projects, reforms in
regulation, new tax rates.
The aim of CBA is to determine whether a project is desirable from the point of view of social
welfare, by means of the algebraic sum of the time-discounted economic costs and benefits of the
project.
The technique is based on:
a) Forecasting the economic effects of a project,
b) Quantifying them by means of appropriate measuring procedures,
c) Monetizing them, wherever possible, using conventional techniques for monetising the
economic effects
d) Calculating the economic return, using a concise indicator that allows an opinion to be
formulated regarding the performance of the project.
The main steps involved
Basically cost-benefit analysis is made up of three parts:
● A technical-engineering part in which the context and technical characteristics of the project
are identified;
● A financial analysis that represents the starting point for the CBA and that leads the
analysis from the point of view of the private investor;
● An economic analysis, the true core of CBA, which, starting with the financial analysis that
serves to identify all the income and expenditure items and the relative market prices,
applies a series of corrections that allow us to pass from the point of view of the private
investor to that of the public operator.

Step 1: Identification of the project, technical and demand analyses.

The first step serves to place the project in its implemental context.
Obviously it is necessary to identify the object of the evaluation, the unit of analysis to which the
cost-benefit analysis is applied. This is particularly important for groups of projects or for parts or
phases of a larger project that have their own planning autonomy.
Identifying a project also means clearly defining the socio-economic objectives that the project
intends to achieve.

The technical analysis is carried out to ensure the feasibility of the projected work from a technical
point of view. This involves aspects of an engineering, management, localization, marketing and
organisational nature. The proposed project must show that it is the best of the possible
alternatives. For each project at least three alternatives may be considered:

▪ the do nothing alternative

▪ the do minimum alternative
▪ the do something alternative.

Step 2: Financial analysis

The financial analysis is the starting point for the subsequent economic analysis. It provides all the
necessary data regarding input, output, their relative prices and how they are distributed over time.
It serves to:

▪ formulate the tables for the analysis of the cash-flows (selection of the important cost and
revenue items)
▪ evaluate the financial feasibility (verification of sustainability)
▪ evaluate the financial benefit by calculating the return from the private investor’s (financial
return of the project and the capital) point of view.

The financial analysis is made up of three tables that summarize the basic data and three tables
for the calculation of important indicators. The initial three tables are:

▪ investment costs and residual value; this includes the value of the fixed assets, (land,
buildings, extraordinary maintenance), pre-production expenses (licences, patents, etc.),
variations in working capital (cash, clients, stocks, current liabilities) and residual value,
which appears as a single positive item in the last year of the time horizon.
▪ operating costs and revenue; this includes all the operating costs (raw materials, labour,
electricity, maintenance) and any possible revenue items (tariff and non-tariff income);
▪ Sources of financing; this includes private equity, all public contributions (local, national,
community level), loans and other sources of financing.
▪ The three summary tables of the financial analysis used for the calculation of the indicators
are:
 ▪ The financial sustainability table; this includes all the items of the initial three tables. By
calculating the balance between revenue and expenditure we obtain a calculation of the
accumulated generated cash (the algebraic sum between the balance of the year
considered and the cash accumulated up to the previous year, see box 2). Financial
sustainability is ensured if the accumulated generated cash is positive or, at most, equal to
zero for all the years considered. On the contrary, if the accumulated generated cash is
negative even for just one year, the project is not feasible from the financial point of view
and it will be necessary to modify the structure of the project in order to evaluate it.

Calculation of the accumulated generated cash

The description below highlights in simplistic terms, how the costs of an intervention are set
against the revenue over a period of years. It should be noted that this focuses purely on
the monetary aspect of an intervention.

In order to calculate the accumulated generated cash we start with the stream of the balance
between revenues and expenditure:

Years 1 2 3 4 5 6 7 8 9 10
Revenue 10 12 12 12 12 15 12 12 12 20
Expenditure 9 11 12 10 10 18 11 11 11 15
Balance 1 1 0 2 2 -3 1 1 1 5

The accumulated generated cash is obtained by algebraically adding the balance of the
current year to the cash of the previous year. The accumulated generated cash for year n is
calculated as Sn+Cn-1 (where Sn is the balance of year n and Cn-1 the cash generated at
year n-1).
Accumulated generated cash:

Years 1 2 3 4 5 6 7 8 9 10
Acc. Generated cash 1 2 2 4 6 3 4 5 6 11

THE PROJECT IS FINANCIALLY SUSTAINABLE

The table for calculating the return of the project is the composition of the first and second of the
initial tables. Expenditure includes all investment and operating costs and revenues include any
possible income plus the residual value. By calculating the balances, discounted at an appropriate
rate, it is possible to define a financial net present value and a financial internal rate of return (see
boxes 3 and 4).

The table for calculating the return on capital is the composition of the first and third of the initial
tables.

Net Present Value

This box shows the application of the cost benefit analysis based on what are deemed to be
appropriate discounted balances between revenues and expenditure. Again, this
assessment looks purely at monetary benefits and costs.
The net present value (NPV) is the discounted balance between monetary revenues and
expenditure.
 n S0 S1 Sn
NPV (S)=  a t St    ... 
0 1 n
t0 1  i  1  i  1  i 
In order to calculate it, it is necessary to have the stream of balances and an appropriate
financial discount rate (which measures the inter-temporal preference of individuals and
allows for the balances of different periods to be added together). The discount co-efficient
must be calculated from the financial discount rate (1+i)n.

Years 1 2 3 4 5 6 7 8 9 10
Revenue 0 5 12 12 12 15 12 12 12 20
Expenditure 9 11 12 10 10 18 11 11 11 15
Balance -9 -6 0 2 2 -3 1 1 1 5
Discount rate 5%
Discount co-eff. 0.95 0.90 0.86 0.82 0.78 0.74 0.71 0.67 0.64 0.61

NPV=Discounted Coefficient X Balance

NPV=0.952*-9+0.907*-6+0.863*0+0.822*2+0.783*2+0.746*-3+0.710*1+0.676*1+0.644*1+
0.613*5 = -8.568-5.442+0+1.644+1.566-2.238+0.710+0.676+0.644+3.065 =-7.943

THE NET PRESENT VALUE OF THE PROJECT IS –7,943. This means that the discounted
value of the income from the project is lower than the discounted value of the expenditure
(highlighting that the project will operate at a loss).

Calculation of the Internal Rate of Return

The internal rate of return (IRR) is the value of i for which the net present value is equal to
zero.
In other words the value of the IRR is obtained by solving the following equation:
n S0 S1 Sn
 a t St  0  1  ... 
t0 1 IRR 1  IRR 1 IRR n = 0

Graphically:
NPV

IRR

In this case the rate of return is –7%.

THE PROJECT IS NOT FINANCIALLY PROFITABLE

Strengths:
Cost-benefit analysis:
● enables us to express an opinion on the economic-social convenience of a project;
● enables us to create rankings among projects;
● encourages the practice of identifying the economic benefits and costs, even if they are not
immediately monetisable.

Limitations
Cost-benefit analysis:

▪ does not take redistributive effects into consideration (for these one can use a multicriteria
analysis);
▪ does not consider the effect on the economic return of non-monetisable benefits or costs;
▪ sometimes uses discretional criteria for the monetisation of the costs and benefits for which
no market exists.

Conclusion

For all of these reasons cost-benefit analysis is a useful tool for evaluating and selecting projects,
but it requires strictness and methodological coherence in its application.
 Assignment No 12

INDUSTRIAL SAFETY AUDIT

The examples outlined below do not list all the possible items for manufacturing facilities.
The best checklist for your workplace is one that has been developed for your specific
needs. Whatever the format of the checklist, provide space for the inspectors' signatures
and the date.

Inspectors: Date:
(O)Satisfactory
(X) Requires Action
Remark
1 Training
Is training provided for each person newly
a
assigned to a job?
Does initial training include a thorough
b review of hazards and incidents associated
with the job?
Is adequate instruction in the use of personal
c
protective equipment provided?
Is training for the use of emergency
d
equipment provided?
Are workers knowledgeable in the "Right to
e
Refuse" procedures?
2 Environment
Are resources available to deal with very hot
a or very cold conditions (drinking water,
lined gloves, insulated boots)?
Is the rain/cold weather gear that is provided
b comfortable, and light enough so as not to
constitute a hazard?
Are work surfaces and grip surfaces safe
c
when wet?
Do workers know the symptoms of heat
d cramps/heatstroke, or frost
bite/hypothermia?
3 Work Process
Are repetitive motion tasks properly paced
a
and kept to a minimum?
Are the safety data sheets accessible to all
b
employees?

c Are hazards signalled by signs and tags?

 Have all trucks, forklifts and other
d
equipment been inspected and maintained?
Are lockout or tagout procedures in place
e
and followed?
Is ventilation equipment working
f
effectively?
Is the fume and dust collection hood
g
working effectively?
Are the safety showers and eye wash stations
h in the proper locations and in good working
condition?
4 Fire Emergency Procedures
Is there a clear fire response plan posted for
a
each work area?

b Do all workers know the plan?

c Are drills held regularly?

Are fire extinguishers chosen for the type of

d
fire most likely in that area?
Are there enough extinguishers present to do
e
the job?
Are extinguisher locations conspicuously
f
marked?
Are extinguishers properly mounted and
g
easily accessible?
Are all extinguishers fully charged and
h
operable?
Are special purpose extinguishers clearly
i
marked?
5 Means of Exit
Are there enough exits to allow prompt
a
escape?

b Do employees have easy access to exits?

Will exit doors open in an emergency to

c
allow egress?

d Are exits clearly marked?

Are exits and exit routes equipped with

e
emergency lighting?
Are exits and exit routes accessible (e.g., no
f
items stored in the pathway or doorway)?
6 Warehouse and Shipping
Are dock platforms, bumpers, stairs and
a
steps in good condition?

b Are light fixtures in good condition?

c Are all work areas clean and free of debris?

Are stored materials properly stacked and

d
spaced?

e Are tools kept in their proper place?

Are there metal containers for oily rags and

f
similar rubbish?

g Are floors free of oil spillage or leakage?

Is absorbent available for immediate clean-

h
up of spills and leaks?
Are all hazardous products stored
i
appropriately?
7 Loading/Unloading Racks
Are steps, railings and retractable ramps on
a
raised platforms in good repair?
Is piping and in-line equipment in good
b
condition and free of leaks?

c Are loading arms operating satisfactorily?

Do submerged filling two-stage valves

d
operate properly?
Are bonding and grounding cables free of
e
breaks or damage?

f Are connections tight and sound?

Is the general condition of wiring and
g junction boxes, etc. in good condition (visual
inspection)?
8 Lighting
Is the level of light adequate for safe and
a
comfortable performance of work?
Does lighting produce glare on work
b
surfaces, monitors, screens and keyboards?
Is emergency lighting adequate and regularly
c
tested?
9 Machine Guards

a Are all machine parts adequately guarded?

b Do machine guards meet standards?

Are all guards in place and operating as

c
designed?
Are lockout procedures followed when
d performing maintenance with guards
removed?
10 Electrical
Is the Canadian Electrical Code followed for
a
operation, use, repair and maintenance?

b Are all machines properly grounded?

Are portable hand tools grounded or double

c
insulated?

d Are junction boxes closed?

Are extension cords out of the aisles where

e
they can be abused by heavy traffic?
Is permanent wiring used instead of
f
extension cords?
11 Tools and Machinery
Are manufacturers' manuals kept and
a
followed for all tools and machinery?

b Do power tools conform to standards?

Are tools chosen to be models that can be
c used properly by employees (e.g., size,
weight, ergonomic features)?
Are defective tools tagged and removed
d from service as part of a regular maintenance
program?
Are tools and machinery used so as to avoid
e
electrical hazards?
Is proper training given in the safe use of
f
tools and machinery?
12 Confined Spaces
Are the confined space procedures and
a training available and followed by all
involved?
b Are entry and exit procedures adequate?
 Are emergency and rescue procedures in
c
place (e.g. trained safety watchers)?
13 Housekeeping

a Is the work area clean and orderly?

Are floors free from protruding nails,

b
splinters, holes and loose boards?
Are aisles and passageways kept clear of
c
obstructions?
Are permanent aisles and passageways
d
clearly marked?
Are covers or guardrails in place around
e
open pits, tanks and ditches?
14 Floor and Wall Openings
Are ladder-ways and door openings guarded
a
by a railing?
Do temporary floor openings have standard
b
railings or someone constantly on guard?
15 Stairs, Ladders and Platforms

a Are stairs and handrails in good condition?

b Are ladders free of defects?

c Are ladders set up properly before use?

Are the elevated platforms properly secured

d
and do they have handrails?
16 Elevating Devices
Are elevating devices used only within their
a
capacity?

b Are capacities posted on equipment?

Are they regularly inspected, tested and

c
maintained?

d Are controls of the "dead man" type?

e Are operators trained?

17 Sound Level/Noise

a Are regular noise surveys conducted?

 Is hearing protection available and used
b
properly?
18 Temporary Work Structures
Are temporary work structures used only
a when it is not reasonably practicable to use
permanent ones?
Are excavations properly shored, free of
b
large objects (rocks, etc.) at the edges?
19 Employee Facilities

a Are facilities kept clean and sanitary?

b Are facilities in good repair?

Are cafeteria facilities provided away from

c
hazardous products?
Are hand washing facilities available,
d especially in washrooms and near eating
areas?
20 Medical and First Aid
Do all employees know how to get first aid
a
assistance when needed?
Do the first-aiders know when and to which
b hospital or clinic an injured person should be
taken?
Are there employees trained as first-aid
c
practitioners on each shift worked?
Are first-aid kits provided as per your
d
jurisdiction's first-aid regulations?
Are first-aid supplies replenished as they are
e
used?
21 Personal Protective Equipment (PPE)
Is required PPE provided, maintained and
a
used?
Has the PPE been chosen to protect against
b
the hazards that are present?

c Is the PPE reliable?

Is PPE used only when it is not reasonably
practicable to eliminate or control the
d
hazardous substance or process by other
means?
Are the areas requiring PPE usage properly
e
identified by warning signs?
22 Materials Handling and Storage
Is there safe clearance for all equipment
a
through aisles and doors?

b Is stored material stable and secure?

c Are storage areas free from tipping hazards?

Are only trained operators allowed to

d
operate forklifts?
Is charging of electric batteries performed
e
only in designated areas?
Are dock boards (bridge plates) used when
f loading or unloading from dock to truck or
dock to rail car?
Are necessary warning devices and signs in
g
use for railway sidings?
Are specifications posted for maximum
h loads which are approved for shelving,
floors and roofs?
Are racks and platforms loaded only within
i
the limits of their capacity?
Are chain hoists, ropes and slings adequate
j
for the loads and marked accordingly?

k Are slings inspected daily before use?

Are all new, repaired, or reconditioned alloy

l
steel chain slings proof-tested before use?
Are pallets and skids the correct type and
m
inspected?

n Do personnel use proper lifting techniques?

Is the size and condition of containers

o
hazardous to workers?
Are elevators, hoists, conveyors, balers, etc.,
p properly used with appropriate signals and
directional warning signs?
23 Hazardous Product / Chemical Storage
Has the safety data sheet (SDS) been
a reviewed before handling, moving, or
storing the product?
b Is appropriate PPE used for that product?

Is the storage area and products organized to

c
keep incompatible products separated?
 Are hazardous products stored away from
d
heat sources?

e Are containers checked for leaks or damage?

Are containers stored in drip trays where

f
necessary?
Are all products labelled, and are missing or
g
damaged labels replaced immediately?
Is spill cleanup material immediately
h
available?
Are bonding and grounding connections
i immediately available for flammable
products?
Is the ventilation for the storage area
j
adequate for the products stored within?

Title & Address of

Organization

Safety Supervisor/s

Sign:

Name of Student

Year – Div – Batch

Roll No.

Sign