CENTRAL INSTITUTE OF PLASTICS ENGINEERING & TECHNOLOGY
Question Bank
2 MARK ---QUESTION
COURSE : DPT
SEMESTER : IV
SUBJECT : INDUSTRIAL MANAGEMENT & ENTERPRENEURSHIP
Q1. Differentiate between
Job production, Batch production and Continuous production.
Ans. (a) Job production This
is the oldest method of production on a very small scale. With this method
individual requirements of the consumers can be met. Each job order stands
alone and is not to be repeated. This type of production has a lot of
flexibility of operation and hence general-purpose machines are required.
Factories adopting this type
of production, are generally small in size (ship building is an exception). The
layout of such factories is made flexible so that different types of work can
be easily and efficiently carried out with slight adjustments.
Even in this age of
industrialization, many things are produced on job production. This type of
production is used for things which cannot be produced on large scale, e.g.
things of high artistic nature requiring maximum attention, die work and
foundry work etc. Man working in unit production gets an opportunity to produce
a large variety of products and he can become expert in very short time.
Advantages of Job Production
are: -
1. It is the only method
which can meet the individual requirements.
2. There is no managerial
problem because of very a smaller number of workers.
3. This type of production
requires less money and is easy to start.
4. There is less risk of
loss to the factory adopting this type of production.
5. Because of flexibility,
there is no chance of failure of the factory due to the reduction of demand.
Disadvantages of Job
Production are: -
1. There is no scope for
commercial economy.
2. As the purchase of raw
material is in less quantity, hence cost of raw material is slightly more.
3. For handling different
types of jobs, only skilled and intelligent workers are needed, thus labor
cost increases.
(b) Batch Production
This type of production is
generally adopted in medium size enterprises. Batch production is a stage in between
Job Production and Mass Production.
Batch production is bigger
in scale than the Job production while it is smaller than that of Mass production.
Batch production require more machines than that of Job Production and less
machines than that of Mass production. In Batch production, some of the
machines are one purpose machines and remaining are general-purpose machines.
As in this type of
production, two or more types of products are manufactured in lots (i.e.,
batches) at
regular intervals, therefore
this is known as Batch production. Most of the engineering concerns are
adopting batch production.
In this type of production, different products are manufactured and sold on
receipt of orders.
Advantages of Batch
production are: -
1. While comparing with mass
production it requires less capital.
2. If demand for product decreases then production for another product may be increased, thus th risk of loss is very less
3. Comparing with job
production, it is more advantageous commercially.
Disadvantages of Batch
production are: -
1. Comparing with mass
production, cost of sales and advertisement per unit is more.
2. Raw material to be purchased are in less quantity than that in mass production. Therefore, it is slightly costlier than that of mass production.
(c) Mass Production
This type of production is a
large-scale production and is a continuous production. In job production,
factory works only when
orders are received and when orders are not received for some time then for
that period work may come to stand still. But mass production is a continuous
production and it does not have any non-producing time.
This type of production
requires specially planned layout, one purpose machinery and costly jigs and fixtures
etc. in this method with the use of automatic machines, articles automatically
move forward from one stage to the next stage of manufacturing operation.
In mass production,
simplification and standardization of products are made. With the help of
specialized (one purpose) machines, articles of standardized nature can easily
and economically be produced on a large scale.
Layout of the plant is such
that it can be used for only one type of product. Sequence of flow of the product
during manufacturing remains same. In this type of production, different
machines are assigned a definite nature of work. Throughout the run of the
plant, only one type of product can be manufactured.
To avoid the problem of
material handling, use of mechanical means such as conveyors of different types,
cranes etc. can be used.
Advantages of mass
production are: -
1. Mass production gives
better quality and increased production.
2. Wastage is minimum.
3. As raw materials are
purchased on a large scale, higher margin of profits is available while purchasing
them.
4. Sales promotion and advertising do not prove costly as their expenses are spread over through thousands of articles produced, hence cost per unit is low.
5. Only few skilled and rest
semi-skilled workers are required hence labor cost is reduced.
Disadvantages of mass
production are: -
1. During the period of less
demand heavy losses on the invested capital may take place.
2. Because of all the machines used are one purpose machines therefore, this type of production is not changeable to other types of production.
3. Most of the workers handle only one particular operation. They may get skill in their job but after some time they feel bored with repetition of same type of work.
4. As this type production is on large scale, therefore it cannot be fulfil individual taste. It produces things of standardized form which are demanded on large scale.
Q 2. Discuss the various
methods of payment.
Ans.
I.Time or Day Rate System.
This is the most common
system found in practice. Under this, the worker is paid an hourly, daily,
weekly or monthly rate of wages. Thus, his remuneration depends upon the number
of hours for which he is employed and not upon the amount of his production.
II.Straight Piece Work Rate
System.
This is an improvement on
the Time Rate System. Under this, a fixed rate of wage is paid for each piece or
unit produced.
III.Combination of Day Rate
and Piece-work Rate System.Under this system, minimum weekly wages are fixed
for every worker, which shall be paid to him irrespective of his output during
the week, provided he has worked for the full working hours required in a week.
If a worker is absent for some length of time during a week, his wages will be
deducted proportionately, i.e. a week consist of 48 working hours and if a
worker works for only 40 hours, then he will be paid 5/6 of his regular weekly
wages. Thus, the payment is based on time rate system. The piecework system is
combined with the above as follows: A job card of each worker is maintained,
which early shows number of pieces of job completely by the worker during a
week. Piece work rate of each job is fixed in advance. If the piece-work wages
earned by a worker are in excess then the time wages, the balance is paid to
worker. On the other hand, if they are short of time rate, the worker shall
have to make good during the next week, i.e., suppose the worker is paid Rs. 24
a week according to time rate and the piece rate of a job which he is doing is
Rs. 3 each.\ Again, he has completed 10 jobs, during a week, he will be paid
Rs.30 for that week. However, if he completes only seven jobs, he shall still
be paid Rs. 24. During the next week, he shall only be paid in excess than the
time wages, if he completes more than nine jobs and so on i.e. after
compensating for last week’s short fall.
IV.Incentives.
It is something that
encourages a worker to put in more productive efforts voluntarily. Mostly,
workers are not willing to exert themselves to produce anywhere near their full
capacities unless their interest in work is created by some kind of reward.
This is called “incentive”.
V.Profit Sharing System.
This system has been introduced by the employers in order to encourage their employees and by means of which the workers receive a share of the profit over and above their normal wages.
VI.High Wage Plan.
In this system, to attract
workers, wages are fixed at higher rate than those paid in the surrounding
areas so as to attract more skilled workers and these higher wages are paid
with the understanding that the workers shall put in their best efforts to
attain the highest standard of efficiency and output.
Q.3 Describe the role of
financial management in a business.
Ans:-
Role of financial
management: -
An effective financial management plays a dynamic role in a modern company’s development. In earlier days, financial managers were primarily engaged in (a) raising funds, and (b) managing the firms case flow. but now a days with the developments and increasing complexities in the business, responsibility of the financial managers has increase and they are now concerned with the decision-making process involving finance i.e. capital investment. Today external factors, like competition, technological change, economic uncertainty, inflation problem etc., create financial manager problem more complicated. He must have flexibility to adopt to the changing external environment for the survival of his firm. Thus, in addition to job of acquisition, financing and managing the assets, the financial manager is supposed contribute to the fortunes of the firm and to the optimal growth of the economy as a whole. He each required to take decisions (I) investing fund’s in assets and (ii) obtaining best mix of financing and dividends. In order to understand the environment in which a finance manager is required to take decision, a sketch indicating business system is given hereunder:
Q4. Explain the concept of
SWOT analysis.
Ans SWOT analysis
Swot analysis is a useful technique for understanding your strenghts and weaknesses and for identifying both the opportunities open to you and the threats you face use in a business context , a swot analysis helps you carve a sustainable niche in your market used in a personal context , it helps you develop your courier in a way that takes best advantage of your talents , abilities and opportunities What makes swot particularly powerful is that ,with a little thought , itr can help you uncover opportunities that you are well placed to exploit . and by understanding the weaknesses of your business you can manage or eliminate threats that would otherwise catch you unawares .More than this by looking at your compititors using the swot frame work you can start to craft a strategy That helps you distinguish your self from your competitors so that you can compete sucessfully in your market .Strenghts and weaknesses are often internal to your organization , while opportunities and threats generally relate to external factors. For this reason the swot analysis is sometimes called internal external analysis and the swot matrix is sometimes called an IE matrix.
Strengths :
Consider your strenghts from both an internal perspective , and from the point of view of your customers and people in your market . you should also be realistic - it’s far too easy to fall pray to „“not invented here syndrome . also if you are having any difficulty with this try writting down a list of your organisation’s Charactersitics .some of these will hope fully be strenght’s ! when looking at your strenghts , think about them then in relation to your competitors . fro example : if all of your competitors provide high quyality products then a high quality production process is not a strenght in your organisations market , it’s a necessity .
Weakness :
Again , consider this from an internal and external basis : do other people seem to perceive weakness that you dont see ? are you competitors doing any better than you ? its best to be realistic now , and face any unpleasant truths as soon as possible
Opportunities :
Tip: a useful approach when looking at opportunities is to look at your strenghts and ask your self whether these open up any opportunities . alternatively , look at your weaknesses and ask your self whether you could open up opportunities by eliminating them
Threats :
Tip: when looking at opportunities and threats , PEST analysis can help to ensure that you don’t over look external factors , such as new government regulation , or technological changes in your industry.
Q5. Discuss the various
methods of calculating it?
Ans:- Various methods of
calculating depreciation are: -
1.) Straight Line Method
This method assumes that the less of value pf machines is directly proportional to its age. It means one should deduct the scrap value and divide the remaining value by the number of useful life. Let C be the initial cost of a machine.
S be the scrap value.
N be the number of years of life of machines.
And D be the depreciation
amount per year
Then D = Rs.𝐶−𝑆\𝑁
This method of calculating
depreciation fund is also known as “Fixed Instalment” method, because every year
same (fixed) amount is deducted and no consideration is made about the
maintenance and repair charges, which gradually increases as the machine is getting
old.
2.) Diminishing Balance
Method
This method is also called
“Reducing Balance” Method. The diminishing value of machine is much greater in
the early years. It depreciates rapidly in the early years and later on slowly.
Therefore, it is better to depreciate much during early years, when the repair
and renewals are not costly. So, under this method, the book value of machine
goes on decreasing as its existence continues. A certain percentage of the
current book value is taken as depreciation. Therefore, this is also called “Percentage
on book Value” method. In this, let x be the fixed percentage taken to
calculate the yearly depreciation on the book value
Then x = 1- {𝑆/𝐶}1/𝑁
Where, C = initial cost, S =
scrap value, N = no. of years of life.
3.) Sinking Fund Method
In this method a
depreciation fund equal to the actual loss in the value of the asset or machine
is estimated, taking into account, the interest on the accumulated fund. The
rate of depreciation will be constant throughout the life of machine.
Let D = rate of depreciation
per year
R = rate of interest on accumulated fund in
fraction number
C = total cost of machine
S = scrap value
N = no. of years of life of machines
D = 𝑅(𝐶−𝑆)/(1+𝑅)𝑁−1
4.) The Annuity Charging
Method
In this, interest is charged
on the cost of machines or asset every year on the book value, but the rate of
constant every year.
Let C = cost of machines
S = Scrap value
N = no. of years of machines life
R = rate of interest in fractions
D = rate of depreciation
If the value of machine
after 1 year becomes 𝐶1 , then
D = CR + C - 𝐶1 = C(1+R) - 𝐶1
In the same way, the value
of machine after 2 years will be say, 𝐶2
Then D = 𝐶1R+𝐶1 − 𝐶2 = 𝐶1
(1+R) - 𝐶2
Hence, the standard formula
will be
D = [𝑐(1+𝑅)𝑁−𝑆 ][1−(1+𝑅)]/[1−(1+𝑅)𝑁
Hence by substituting the
different values the different values in the above formula the rate of
depreciation can be
calculated.
5.) The Insurance Policy
Method
This method covers the risk,
if the machine becomes unserviceable before its estimated life. In this method
the machine is insured with the insurance company and premiums are paid on
insurance policy. When the policy matures, the company provides sufficient sum
to replace the machine.
6.) Revolution or Regular
Valuation Method
This is not a standard
method. In this, every year the value of machine is revaluated and the
difference between the book value and revalued value is charged as a
depreciation fund.
7.) Machine-Hour Basis
Method
Un this method, rate of
depreciation is calculated, considering the total number of hours machine runs
in a year and therefore a work hour chart of ever machine is maintained to know
the total number of hours the machine runs in a year.
8.) The Sum of the Year’s
Digits Methods
As the new equipment is installed, the reduction in value will be greater initially and it will go on decreasing gradually. This fact is taken into account and therefore greater amount of depreciation is made during the early years of life and it goes on reducing as the life of equipment decreases. Therefore, for calculating depreciation, the net amount (Total cost – scrap value) is spread over whole life in a decreasing proportion.
Q6. Define overhead. Describe
the various types of overhead.
ANS. Fixed and Variable
overheads
All the overheads described
above can be classified into following to forms:
I. Fixed overheads
II. Variable overheads
1. Fixed overheads. These
are those indirect expense, which remind constant whatever may be the
volume of production.
examples of these overheads are: -
(a)Salaries of staff. These charges are for the salaries and allowances pad to the Supervisor, Officer Engineers etc. These are known supervisory charges and are generally calculated in terms of expenses per machine hour.
(b) Depreciation of machines and equipment. these is the diminution in value of machine due to as and wear and tear. various methods calculating diminution have been described in detail in latter part of these chapter.
(c) Interested on capital invested. The interested-on capital invested is calculated assuming if these capitals is deposited in some bank
(d) Rent of building and
insurance
2. Variable overheads. These
are those indirect expenses, which vary with the volume of production.
Examples of these overheads
are these
(a) Power or fuel consume.
the expenses on power (i) if generated in the factory includes expenditure on all
or other fuel, salary of powerhouse staff, expenditure on running and maintenance,
depreciation of powerhouse building, plant etc. (ii) if bought from other
agency, includes charges paid to them.
(b) Consumable store
supplies the expenditure made on salary of stores staff, stationary etc.,
required in
stores, lighting charges for
stores and other similar express are included in this category.
(c) Repairs and maintenance.
These includes the expenditure incurred on the repair and maintenances
of the machinery in the
factory. These expenditures are converted into expenditure per machine over and
then charged to various departments of the factor.
(d) Expenses on tools.
Generally, the tools have very short life and are required to be purchased
frequently. Hence, they are
charged in two ways. Firstly, the expenditure incurred on the purchase of
such tools are directly
charged. Secondly, these are depreciated.
Now, from above we can see
that variable overheads increase to proportionately with the rate of
production, but fixed
overheads remain almost constant. So, by increasing the amount of production
the
total cost of the product
can be reduced. it is also essentially that there should be at least some
minimum amount of production which can cover the fixed overheads.
Thus, profits can be
increased by increasing production and lowering fixed overhead.
Q7. Describe the various
costing methods.
Ans:- Each method is
explained in short as below:
1. Multiple costs. Concerns
manufacturing a variety of standardized products, having no relation to
one another in cost, and the
types or process etc. such as typewriter, gramophones and cycles,
use this costing method
2. Job costs. This method is
also known as “order costs” or “terminal costs”. In this method all the
items are charged to a
specific order. This method is also adopted by builders, contractors etc., as
it helps in showing the cost
of each contract or job or order of work.
Daily records of direct
material, direct labor and estimated overhead cost for each order is recorded
in
production order or cost
sheet and thus the total cost of the job is obtained from the cost sheet.
This method is useful when
products produced in distinguishable lots and it is also desirable to keep a
separate record of each lot.
It is also largely used for costing of batches of similar items such as screws,
utensils, shoes, nuts and
bolts but when there is an element of industry station in the product, standard
costing should be employed.
“Job order” costing is a basic costing procedure, and this may be used in
conjunction with costing
systems. For example, a factory manufacturing machine tools according to
customer requirements and in
doing so use standard parts and for the final assembly details.
The aim of “Job order”
costing is to determine the profit or loss earned on each job. This serves as a
check on the accuracy of the
estimates on which prices have been coated.
3. Departmental costing.
This method is adopted in estimating the cost of output of each
department separately for
the manufacture of standardized products. For example, in a steel mill
there are three separate
department such as blast furnace, open hearth and rolling mill
department. The cost of all
the three is determined separately.
4. Unit costs. This method
is adopted by the firms, which supply a uniform product rather than a
variety of products such as
mines, quarries etc.
5. Process costs. This
method is applied to industries such as oil refining, chemical, paint and other
similar industries, where
the raw material passes through a number of process or operation before
it is converted into a final
product. By-products should be considered while calculating the cost of
each process of manufacture
in this method of costing.
This method indicates the
cost of the product at different stages as it passes through various processes
or operations or departments
and, therefore, a comparison of cost of various processes is also possible.
This method is adopted for
mass scale production. For example, in garment making cutting and sewing
are two different
operations. In this system, the cost of the two operations is determined
separately.
6. Operating costs. Firms
provided utility services find this method useful. For example, in railway,
transport service, water
works, electricity boards etc., cost is determined on the basis of operating
expenses and charges are
made as ton-km or passenger per km, per 1000 liters and kilowatt-hour
respectively.
Q8. Write a short note on:
1. standard cost
2. break even analysis and
its use.
ANS. STANDARD COST – it is the pre-determined cost of a product. after compiling different expenses, an estimated cost of product is forecasted, which is known as “standard cost”. it is used as a device to check and lower overhead expenses and improving efficiency. Generally, standard cost is not flexible but when sudden variation in the material cost or any change in the production method occur, standard cost should be modified
Advantages of standard cost
1. it provides a check on
various expenses
2. it helps in deciding the
budget
3. it helps in budgetary
control
4. it helps in reduction in
wastage of material and labor
5. it helps in price
determination
6. it is a measure of
arriving at the efficiency of the whole concern.
Assumptions underlying break
even analysis
1. All the costs are either
perfectly variable or absolutely fixed over the entire range of production
2. All revenue is perfectly
variable with the physical volume of production.
3. the volume of sales and
the volume of production are equal.
4. in case of multi product
firms, the product mixed should be stable
Applications
Break even analysis not only
highlights the area of economic strength and the weakness in firm but also help
in finding out the ways which can enhance in profitability. With the help of
this analysis management of a production firm can take decision related to the
following:
1. Safety margin .it decides
the extent to which the firm can afford to decline in sales, before it starts
incurring losses.
2. Volume needed to attain
target profit.
3. Change in price, and its
effects.
4. Whether to expand
production capacity or not.
5. Whether to add a new
product or drop production of any product.
6. Whether to make or buy.
7. Selection of production
machinery so as to get maximum profit for a particular volume of the product
out of the available
machineries.
Q9. Explain the term
breakeven point theory.
Ans. The break-even- point
of any two variable situations is the point or the value at which they become
equal as a result of common
variable.
There are following two methods to obtain
break-even-point:
(a) Mathematical method.
(b) Graphical method.
(a) Mathematical method
Let cost be the common
variable in two situation 1 and 2, then cost equilibrium will be
𝑐1 = f1 (x) … a function of
(x) …………. (1)
𝐶2 = f2(x) … another function of (x) ………… (2)
𝐶1
- may be as total cost,
annual cost, cost per item or cost per day etc. for situation 1
𝐶2
- Same as 𝐶1 but application to situation 2.
X – a variable effecting 𝐶1 and C2
To solve for the value of x,
let
C1 = C2
i.e. f2(x) = f2(x) …..(3)
Equation (3) can be solved for obtaining the value of x. The value of x making the cost equal in both the situations is called “Break- Even Value”. Below this value of x, one situation will be economical while above it, another situation will be economical.
(b) Graphical method
Although the break-even-point may be calculated mathematically but it is usually represented graphically because it enables manager to see more clearly the break-even- point and the possibilities for profits and losses. By using these charts, one can predict probable profits at various levels of output.
A break-even graph given in Fig. 16.1 is used to determine break- even –point and amount of profit or loss under varying conditions of output and costs. Sales or expenditure in rupees is represented on vertical axis, while output (either in quantity or in percentage capacity) is represented on horizontal axis. Line A represents the “fixed costs”. Line B represents total cost or total expenses, while line C represents sales revenue and indicates income at various level Of output. The point where lines B and c intersect each other is “Break-Even-Point”. The space between lines B and C to the left of the “Break-Even-Point” is potential loss. The amount of loss or profit can be measured on vertical scale.
This method can be applied to various management problems. For example, suppose a manager want to replace an old lathe machine being used for manufacturing screws by automatic screw machine. Then he must first know whether it will be profitable or not, for which he must adopt break-even-point theory and construct the chart as shown in Fig. 16.2. The figure shows that for a production less than Q, it must not be changed whereas for production more than Q, automatic machine or new machine will be economical or in other words for production below Q manual lathe is economical, and beyond Q, automatic machine is profitable. This break-even-point is also known as “cut-even-point”. Margin of safety
= Sales at full capacity – Sales at B.E.P. x
100
Sales of full capacity
(i) Contribution. It is the
difference between sales and variable cost (marginal cost). It is also called
as Marginal Profit or Gross Marginal. The marginal profit provides the contribution
towards fixed cost and profit. Contribution = (Sales – Variable cost) which in
turn will be equal to fixed cost + Profit .
Break-Even-Point
Calculations
Let S = Sales price
V = Variable cost
F = Fixed cost
P = Profit
Now S = F + V + P
Or S – V = F + P
At break- even- point, P = 0
…..(i)
S – V = F …..(ii)
Multiplying both sides of
Eq. (ii) by S.
S (S – V) = F x S
Or S = F x S = F = Fixed
cost
(S – V) (S – V)/S contribution per unit
and No. of units at B.E.P
=Rs. F x S ……. (iii)
(S – V)
And No. of units at B.E.P. =
Fixed cost = Fixed cost …… (iv)
Contribution/Unit Marginal profit/unit
Position of Break-Even-Point
BEP towards the left of the chart with
large angle of incidence shows that output Can be raised considerably. If BEP
is towards the right of the chart, and the margin of safety is low, which
means:
(i) the fixed overheads are
too great for the amount of sales, and
(ii) the fixed and variable
costs are high while the profit is small.
If the production volume is
below BEP, the company will be running in loss, and when it beyond, the profit can
be had.
Q10. What are the good
traits of an enterpreneur ?
Ans
Qualitites / traits of
enterpreneur
Here are ten traits of
succesful enterpreneur
1. Disciplined :
These individuals are focus
on making there busiere gness work and eliminate any hinderance or distraction
to goal they have overarching strategies and outle tactics to accomplish them .
succesful enterpreneur are disciplined enough to take take steps everyday
toward the achievement to their objective
2. Confidence :
The enterpreneur does not
ask questions about weather they can suceed or weather they are
worthy they are confident
with the the knowledge that they will make their business succeed
they exude that confidence
in every thing they do .
3. Open minded :
Enterpreneurs realize that
every event and situation is a business opportunity . ideas are
constantly being generated
about work flows and efficiency ,peoples skills and potential new
businesses . they have the
ability to look at every thing around them and focus it toward there
goals .
4. Self starter :
Enterpreneurs know that if
something needs to be done , they should start it themselfs . they said
the parameters and make your
that projects follow that path . they are proactive , not waiting for
someone to give them
permission .
5. Competitive :
Many companies are form
because an enterpreneur knows that they can do a job better than
another . they need to win
at the sports they play and need to win at the businesses that they
create . an enterpreneur
will highlight their own company’s track record of success
6. Creativity :
One facet of creativity is
being able to make connection between seemingly unrelated events or
situations enterpreneurs
often come up with solutions which are the sinthesis of other items . they
will repurpose products to
market them to new industries
7. Determination :
Enterpreneurs are not
thwarted by their defeats . they look at the defeat as an opportunity for
success .they are determine
to make all of there endeavors suceed so will try and try again until
it does . successful
enterpreneur do not believe that some thing cannot be done
8. Strong people skill :
The enterpreneur have strong
communication skills to sell the product and motivate employees .
most successful
enterpreneurs know how to motivate their employees so the business grows
overall . they are very good
at highlighting the benifits of any situation and coaching other to their
success
9. Strong work ethic :
The succesful enterpreneur
will often be the first person to arrive at the office and the last one to
leave They will come in on
their days off to make sure that an outcome meets their expectations . their
mind is constantly on their
work , whether they are in or out of the work place
10. Passion :Passion is the
most important trait of the successful enterpreneur . they genuinely love
their work . they are
willing to put in those extra hours to make the business succed because
there is a joy their
business gives which goes beyond the money . the succesful enterpreneur will
always be reading and
researching ways to make the business better
Q11. What is economic order
quantity? Derive the formula for the EOQ .
Ans. The evaluation of the
most economic quantity to be purchased involves calculation of the following
two costs :
(a) Procurement cost or
buying cost or set up cost.
(b) Inventory carrying cost.
(a) Procurement Cost. This
cost includes the expenditure made on:
· Calling quotations.
· Processing
quotations.
· Placing purchase
orders.
· Receiving and
inspection.
· Verifying and
payment of bills.
· Other incident
charges etc.
(b) Inventory carrying cost.
This consists of expenditure made for :
· Insurance,
pilferage and administrative costs.
· Storage and
handling including cost of space.
· Obsolescence and
depreciation.
· Deterioration.
· Taxes.
· Interest etc.
This cost varies between 10
to 20 % of the product costs . The economic ordering quantity is obtained by
the quantity whose procurement cost is equal to inventory carrying cost.
Let A = Total items consumed
per year.
P = Procurement cost per order.
C = Annual Inventory carrying cost per item.
And Q = Economic ordering
quantity.
Then, Procurement cost/year
= No. of orders placed in a year x Cost per order.
=A x P/Q
And Inventory carrying
cost/year = Average value of Inventory in a year x Annual inventory carrying
cost/item .
=Q/2 x C.
Total cost = A x P/Q + Q x
C/2
This total cost will be
minimum, when
A x P/Q =Q x C/2
Or Q2 = 2AP/C
Or Q= {2AP/C}1/2
Hence, most economic
ordering quantity
=√2AP/C
Since the total cost curve is flat at the bottom, we can deviate up to 25 per cent on either side of the economic ordering quantity, without any significant extra cost, depending upon the circumstances. Therefore, for perishable item order can be reduced by 25 per cent from E.O.Q., whereas for item where quantity discount is available, we can enhance the order by 25 per cent over the E.O.Q.
Ques 12: - Explain plant
layout.
Ans: - PLANT LAYOUT Layout
of an industry is most important task for obtaining least total cost of
materials handling. Since once the building is made and plant is commissioned
it is difficult to change it. Further, the orderly flow minimizing expenditure
on materials handling and productivity, largely depends on the plant layout.
For a good plant layout, it is most essential to have minimum movement of
workers and materials during the production process, minimum bottleneck,
congestion, backtracking and maximum cubic space utilization. Materials
handling engineer and plant layout engineer both must work together in
designing the layout so as to avoid future problems. Plant layout can be
defined as the physical location or configuration of departments, workstations
and equipment in the conversion process. It is a special arrangement of physical
resources used to create the product. Plant layout is a “technique of locating
different machines and plant services within the factory so that the greatest
possible output of high quality at the lowest possible total cost can be
available.” It signifies the
arrangement of machines,
work areas, material handling equipment’s, transport, and storing of different
materials, products, tools
and fixtures etc. Proper plant layout is one of the keys of success in factory
management. The layouts for
the same product may be numerous, but which costs less in the long run is
the best. Since plant layout
is responsible for an orderly flow of materials, productivity and morale of the
workers, it is necessary to have systematic layout planning. This has become
all the more necessary with the increasing costs of the land, labor and
building materials. Layout could be such that, it can be changed without much
difficulty due to expansion, diversification, change in product design or
change in technology. In such cases we need to minimize the effects of dislocation
i.e. the transition has to be made quickly from old layout to new layout, so as
to minimize the production loss.
Most of the handling
operations are performed repeatedly daily throughout the course of production,
therefore, if shortest
manner of handling is not adopted, this will result wastage of time and shall
lose total effectiveness.
Type of building-single
story depends upon the availability of land and the type of products to be
manufactured and its
manufacturing methods. Where manufacturing process involve the gravity flow of
products such as chemicals,
paints, sugar, refineries, fertilizers etc., multi-story buildings must be designed.
A good layout minimizes the
handling time and efforts, save the floor space, shortens the travel of
materials, increases
production and reduces cost by utilizing labor more efficiently. If the layout
is hap
hazardous, the products will
not be economical, and cost may be very high resulting in losses.
Q13. Define productivity.
Ans. ‘Productivity’ is
nothing but the reduction in wastage of resources. The resources may be men,
machines, materials, power,
space, time, building etc.
It may also define as human
efforts to produce more and more with less and less inputs of resources as a result
of which the benefits of production may be distributed more equally among
maximum number of people. According to V.K.R. Menon, productivity implies
development of an attitude of mind and constant urge to find better, cheaper,
easier, quicker and safer means of doing a job, manufacturing a product and
providing service.
Output is obtained by the combined input of a
number of factors such as men, materials, money, land,
management, production
method etc. the ratio between output and input of one of these factors is known
as ‘Productivity’ of the factor concerned. The most common unit of input is
Man-Hour of working time and ‘productivity’ due to this factor is known as
‘Labor productivity’. The term
productivity means different things to different people and is stated as ratio.
It is defined as, “a comparison between the quantity of goods and services
produced (Output) and the quantity of resources used to produce these goods and
services(Inputs)”. Productivity is primarily an attitude of mind, welcoming a
change for the better, exploring the scope for improvement, making the optimum
use of available resources towards the achievement of a specified aim. It can be represented by
P=O/M
Where, P= Labor Productivity
O= Unit of output
M= Man-hour or efforts input
For example, if a
manufacturing concern is producing 150 items in 8 hours now compared with 120
items previously. Then its productivity is said to have increased by 25%. Therefore, productivity can also be defined
as, the ratio between output and input. Here output means the amount of
production, and inputs are the various resources employed e.g., labor,
machines, materials, equipment, land, building etc.
Q14. Define management
information system.
Ans: -
Management can be defined in many ways. It is a multipurpose organ of an organization that manage the work and personal at work. It is creative and innovative force striving to secure the maximum result by the use of available resources. Management provides new ideas and vision to the work group and makes effort to achieve best results.
Management compromises the activities that describe what managers do in the functioning of their organization. For example, Plan, organize, initiate and control. They plan by setting strategy and goals and select the best course of action to achieve the plan. They organize the task necessary to implement the plan, by assigning authority and responsibility. They control the performance of work by setting the standard and avoiding deviations.
Since each of these functions involve decision making for which M.I.S is necessary as it helps in making right decisions. Information It is something which management expects to know at a given time. The information is needed to plan, organize, direct and control the business. Effectiveness of any information depends on the timing and correctness of the information presented, because managers Decision is based on these information’s. Information is required at all level of management, but the same information is not useful at every level.at the top management level, a very broad survey relating to areas where results have deviated from the plant i.e. Managements by expectations, whereas middle level needs summary reports and lower level
needs detailed information
reports.
Information can be presented in the form of graphs, charts, statements etc. the timing and frequency of information depends upon denature of reports and extent of control to be exercised. Data V/S Information’s Data and information’s owe to separate things. Data are facts and not currently being used in decision process and generally take the form of records and are field, whereas, information consists of data that have been retrieved, process and used for inference purposes or as a basis for forecasting or decision making. Available data’s or facts are collected, screened, collated, and processed in order veto developed meaningful information for decision making. Raw facts about activities are called data whereas meaningful presentation of data is called information. Information is something which induces change/action. Data represent observed attributes of a physical activities; information is processed data and is presented in a meaningful manner to enable decision to be taken. We can compare the data and information with raw material and finished product respectively. Data is collected at low level of hierarchy i.e., at operating level, whereas it is converted to the information at higher level. A meaningful information means that, and information should be relevant, timely, adequate and accurate.
Relevant means it should be
of help in taking decision, timeliness means it should be available when
require, adequate means
sufficient in quantity, while accuracy means correctness for making basis of
sound decision
c. Systems. A system can be defined as an established arrangement of component which leads to the attainment of particular objectives according to plan. System refers to a group of components which interact to provide management with the information it requires. Components of a system of: Inputs, outputs and processing devices. In simples’ words, a system is a set of elements, such as people, things, and concepts that are related to achieve a mutual hole. In abroad sense, organization system, while it division departments, sections, units, wings etc. are the sub-system. System can also be defined as, an organizer collection of main, machine and method required to accomplish a set of specific functions.
Q15. What are the various
sources to obtain financial assistance for a small industry, explain in
details.
Ans. 1. State Governments:
State Government may allow loans for any of the following purposes.
A} For the construction of
factory buildings including god owns and warehouses etc.
B} For the purchase of
industrial lands.
C} For the purchase of raw
materials.
D} For the purchase and
erection of plant and machinery.
E} For working capital
requirement.
Loans are to be repaid in
seven annual instalments, first instalment falling due after two years from the
date of the receipts of the
last instalment of the loan. Generally, the rate of interest is 10% per annum,
subject to a rebate of 2%
for timely repayments.
2. State Financial
Corporation: These corporation are in most of the states and grant loan to
small scale
industries. They usually
grant loan for the acquisition of fixed assets that is land, building, plant
and
machinery, vehicles etc. for
the establishment of a new industry or for expansion, modernization and
renovation of the existing
industry. In some special cases, loans for working capital may also be granted.
Loans are not granted for an amount of less
than 10,000. The maximum loan to be granted to a single
person is Rs. 25 Lakhs
except in case of limited company or a registered co-operative society for
which
the limit is Rs. 30 Lakhs.
Loan up to Rs.2 Lakhs are granted to the technocrats without margin of
security.
The rate of interest is say
about 4 to 12.5%. The duration of repayment may be 10-12 years.
Soft Loan Scheme of State
Corporation: Under the scheme loan are granted at concessional rates of
interest. The loans are
granted from Rs. 10,000 to Rs. 1,50,000 and in case of technicians, engineers
and
diploma holders up to Rs.
2,00,000. Loans are granted for the constructions of building and purchase of
plants and machinery. In special cases, loans are granted for
working capital up to 25% of the total amount of loan sanctioned for fixed
capital.
3. Banks: Today, bank
finance the entire business cycle from the purchase of raw material to the
realization of sales
proceeds. State Bank of India and its subsidiaries grant loan to small
industries. All nationalized banks and other commercial banks now have started
to grant loan small industries. The Bank of Baroda, the central Bank of India,
the United Commercial Bank, The Punjab National Bank, Indian Overseas Bank, The
Allahabad Bank and so many others have started to finance small industries
considerably. These bank grant loan to industries for fixed as well as for
working capital requirements at the interest rates normally between 11% to 13%.
The loan is to be secured by a registered mortgage of fixed asset in case loan
for land, building, and immovable machinery. In case of loans for movable
assets, it should be secured by pledge of movable
machinery/equipment.
A margin of about 50% is
kept in respect of immoveable asset charged to the bank, which may be
relaxed, where found
necessary. In case of movable machinery and equipment, a margin of 3312⁄ % is normally
allowed, which may be relaxed to 25% where found necessary.
Loans are to be repaid
within a duration of 4-5 years in equal instalments.
4. State Industrial
Co-operative Banks: Most of the States have set up the industries co-operative
societies and other
industrial undertaking to provide loans at cheap rates of interest and on easy
instalments.
Q16. Explain quality
management principle of I.S.O 9000:2000 standards.
Ans: -ISO-9000:2000
standards are based on eight quality management principles. ISO choose these
principles because they can
be used to improve organizational performance and achieve success. These
principles can be used by senior management as a framework to guide their organization towards improved performance. The eight quality management principles as given in the ISO-9004:2000,Quality management system -Fundamentals and vocabulary; and in ISO-9004:2000,Quality management system- Guidelines for performance improvements are:
Principle 1: Focus on your
customer
Organizations depend on their customers.
Therefore
· Organizations must
understand customer needs.
· Organizations must
meet customer requirements.
· Organizations must
exceed customer expectations.
Principle 2: Provide
leadership
Organization relies on leaders. Therefore:
· Leaders must
establish a unity of purpose and set the direction the organization should
take.
· Leaders must create
an environment that encourages people to achieve the organization”
objective.
Principle 3: involvement of
people.
People at all levels are the essence of an
organization and therefore :
· Organization must
encourage evolvement of people all levels.
· Organization must
help people to developed use their abilities.
Principle 4: use a process
approach.
Organizations are more efficient and effective
when they use a process approach. Therefore:
· Organizations must
use a process approach to manage activities and related resources.
Principle 5: take a system
approach
Organization are more efficient and effective
when the use a systems approach. Therefore.
· Organization must
identify inter-related process and treat them as a system.
· Organization must
use a system approach to manage their enter-related processes.
Principle 6: encourage
continual improvement
Organization must are efficient and effective
when they continually try to improve. Therefore
· Organization must
make a permanent commitment to continually improve their overall
all performance.
Principle 7: Get the facts
before taking a decision
Organizations perform better when their decision
are based on facts. therefore:
· Organizations must
base decision on the analysis of factual information and data.
Principle 8: mutually
beneficial supplier relationship
Organizations depends on their supplier helps
them create value. Therefore.
· Organization must
maintain a maturely beneficial relationship with their supplier .
Q17. What are the major
activities of management?
Ans. Activities of
management are: -
i. Forecasting. As soon as
an idea comes in mind for manufacturing, an attempt is made to assess
possible quantities, prices
etc. Forecasting is concerned with the estimation of quantities the
sales forecast, cost finance
requirement, capital expenditure, profit or loss etc. Then one of the
most profitable courses is
selected out of several alternatives available and planning is started.
ii. Planning. Planning means
“thinking before doing”. Before actual work is started, it is decided that
what is to be produced, how
much to produce, hoe to be produced, when to be produced and
who are to produce it, etc.
The planning should aim at eliminating the wastage of material,
idleness of men, machinery
and capital.
iii. Organizing. When
complete planning is done, next step is to arrange the men, money and
material for actual
execution of manufacture.
iv. Directing. It means the
system of directing the plan to operation. The person who directs must
have dynamic leadership and
must guide the subordinates. The instruction must be simple,
clear, complete and
reasonable and as far as possible in writing.
v. Motivating. Suppose a
person is highly capable, physically strong and technically qualified, but if
he is not willing to work
hard his output will be much less. So, the function of the motivation is to
find out the motives of work
in a man and then he should be encouraged to do work by keeping
his morale high.
vi. Co-ordinating. In an
enterprise, there may be large number of workers, all engaged with the
object of producing
particular product. This is the task of co-ordination to integrate and
harmonize them to achieve a
common objective.
vii. Controlling. This
function of the management is to see that other functions are being done
perfectly alright.
Controlling means to watch actual performance with the plans and to point out
defective work , to rectify
them and to prevent recurrence. Some of the controls are – Quality
Control, Cost Control,
Material Control and Production Control etc.
viii. Communication. This
function transmits the information and instructions to all concerned parties,
i.e., to employees,
customers, suppliers, shareholders and general public. Without this there are
chances of mistrust, fear
etc. and therefore management must stress on better communication
system.
ix. Leadership. All the
managers are supposed to have the quality of leadership as they are leaders
of concern.
x. Decision Making. As
mangers are required to take decisions very frequently, and the efficiency
of the concern, loss or
profit etc. are affected by these decisions, great amount of attention is
required to be paid to this
function.
Q18. Explain in details the
pioneers of Total Quality concept. Explain their contribution.
Ans:-
l. W. Edwards Deming Dr. Deming was the first American quality expert to reach Japan in 1947 to teach Japanese managers methodically about quality. According to Deming, interpreting quality in terms of reliability, dependability, predict- ability and consistency of product and service, it is clear that quality Improvement is analogous to reduction of variation.
According to deming ,
following are the major obstacles to implementing his philosophy
I. preocuppation with short
– term profits .
II . lack of consistancy .
III. reliance on only
visible figures
VI. performance appraisal
V. managerial job mobility
2. DR. Joseph M . Juran
+
Juran develop his TQM
message around the following ten steps
(1) create awareness of the
of the need and opportunity for the quality improvement
(2) set goals for continous
improvement
(3) build an organisation to
achieve goals for establishing a qualit counsil , identifying problems ,
selecting
a project , a appointing
teams and choosing facilitators .
(4) give training to
everyone
(5)carry out projects to
solve problems
(6)report progress
(7) show recognition
(8) comunicate results
(9)keep a record of
successes
(10)incorporate annual
improvements into the company’s regular systems and processes and there by
maintain movementum Juran
expresses his essential message to managers through the three basic quality
related processes : Quality planning , quality control , and quality
improvement which has become known as the juran trilogy
3. kaoru ishikawa
He is known as father of
quality circles and is known for his role in launching japan’s quality movement
in 1960’s According to him , seven basic tools where „“indispensable for
quality control“ . these tools are : I pareto analysis II fish bone diagrams
III stratification IV tally
charts
V histograms VI scattered
diagrams
VII control charts With
these tools , ishikawa argued , managers and staff could tackle and solve the
quality problems facing them
4. philip B. Crosby
Crosby prefers to target his
training on managers rather then on quality control people . he cited his zero deffects
goal as something practical , resonable and achievable . he listed following
four essentials of quality managment . he calls them „“the absolutes “.
(1) quality is defined as
conformance to requirements , not as goodness
(2) quality is achieved by
prevention not appraisal
(3) the quality performance
standard is zero deffects
(4)quality is measured by
non –conformance not by index
5. William E.conway
Conway defines quality as a
result of quality managment which is the development , manufacture ,
administration and
distribution of consistant low – cost products and services that material ,
with time
being His priority ,
excessive inventory comes second which requires space with all the associated
cost .
Conway recommended following
six tools for continuous improvement :
(1) human relations skills :
motivate and train all employees at all levels of the company
(2) statistical serveys :
collection of data about internal and external customers , employees , technology
and equipment
(3)simple statistical
techniques : charts and diagrams should be used to identify problems .
(4) statistical process
control : these are used to reduce variation .
(5) imagining for problem
solving : technique encourages creativity when link to vision statments and
brain storming
(6) industrial engineering :
to use work study including pacing , work simplification , method analysis ,
plant layout and material
handelling to make improvement .
Q19. Explain types of
organizational structure.
Ans. ORGANISATION-STRACTURE
In practice a pure
functionalized system is rarely found. In fact, in a factory where
responsibilities are divided
on a functional basis, line relationship may also exist. This is suitable for
large manufacturing concerns which are capable of expansion in future.
1. Line and Staff
Organization
In a firm large size
operating on big scale, managers cannot give careful attention to
every part of management.
They are unable to think and plane. They are busy with ordinary task
of production and selling.
Hence ‘Some Staff is deputed to do the other work of investigation,
research, recording and
advising to manager. Thus ‘stuff brings specialization by assisting the line
officers. The line maintains discipline and stability. Staff provides expert
information and helps to improve the overall efficiency. Thus, the staff are
‘thinkers’ while line are ‘doers’. A staff man usually controls one function of
business of which is an expert. Usually the staff has no administrative
authority, but as expert in some phase of operation, he reports to the senior
executive and gives the advice on the subject of his specialty.
2. Line, Staff and
Functional Organization
Because of market
competition and complications in the business, to obtain a sound system, the
combination of line, staff
and functional type of organization is required. In this system, as regards the
discipline and output are concerned, the workers are kept under the direct
control of foreman. As regards quality, the inspector will have the proper
authority to control the quality and he can directly order the workman as in
the functional organization. In the staff relationship, there may be research
department for the analysis of raw materials semifinished and finished products
to withstand market. In this way , all the three are combined together.
3. Committee organisation
A committee is a group of
persons formed for the purpose of giving advice on a certain important
problems, which cannot usually be solved by individual. It helps by pooling the thoughts several persons on problems involving functions and offered for comments. Therefore, now-a-days many large companies add a network of committees to the line and staff organization. These committees may be either “Permanent” sometimes referred to as standing committees or they may be organised to serve a temporary function only. Various committees may be as Researched committees, Co-ordinated and Advisory committee, Purchase committee, Education committee etc.
A committee is a tool for
the development of ideas and recommendation of policy and procedure. It brings better
plans and policies for operation and result better co-operation in their
execution. The final decision to put committee recommendation into action rests
with the line. The committee simply performs advisory function. Actually, the
committee is similar to the staff and several owners think it a costly
substitute for staff, but it is found that no other method is so effective in
solving common problems or in getting new ideas as committee organisation of
collective judgement.
Q 20. Discuss 'Quality
Management System in details.
Ans : QUALITY MANAGEMENT
SYSTEM
A quality management system organises overall activities of the companyin such a way that the technical,administrative andhuman factors affecting the quality of product and services are under control The quality management system guided the corporate action of the people machines and information’s to achieve the quality objective
1. Activities
· Activities of quality
management system are
: (i) Marketing to evaluate
customer needs and use requirements.
(ii) Design and engineering
to translate the customer needs into product, process and
materialspecifications.
(iii) Purchasing to select
the competent vendors who can supply materials, components, sub assemblies
as per. spécifications.
(iv) Production to ensure
that product is produced under controlled conditions in conformance
tostandards.
(v) Quality assurance to
identify appropriate test methods and exercise quality control techniques.
(vi) Shipping to ensure
proper packaging, transportation and distribution of material,
(vii) Documentation to
maintain system and progress documents at each stage ofoperation.
(viii) Product development
for innovation and improvement based on customer's feed back.
(ix) auditing to identify
the non-conforming of the system And product, and follow up the corrective
actions.
2. Benefits
(i)Tomeet the customer
requirements by providing quality products or services to satisfy the customer
needs.
(ii) Good reputation helps
in better marketability of the company's products and services
(iii) confidence is created
(iv) Consistency in quality
(v) Productivity improvement
(vi) Better financial
performance
(vii) Brings clarity in
working
(viii) Better documentation
(ix) Better monitoring
(x) Increases export
potential
(xi) human resource
development
3 . Quality Function
(i) Marketing and market
research (ii)Design and product development
(iii) Procurement (iv)
Process planning and development
(v) Production
(vii) Packaging and storage
(vi) Inspection, testing and examination
(ix) Installation and
operation (viii) Sales and distribution
(xi) Disposal after use (x)
Technical assistanceand maintenance
4. Quality and top
management
Responsibility for and
commitment to quality always belong to the highest level of management.
Following action points are
necessary, to be adopted by top management to achieve Quality objectives of the
company:
(i) Define and state quality
policy
(ii) Appoint a management
representative
(iii) Define responsibility
and authority
(iv) Establish an internal
verification system
(v) Establish a quality
system
(vi) Review the functioning
of quality system at regular intervals
5. Installing the Quality
System
(A) Preparations
(i) Analyse the existing
status and identify what needs to be done prepare an action plan.
(ii) Develop an organisation
structure,
(iii) Develop quality system
documentation.
(iv) Prepare the .material
and machinery resources,
(B) Implementation
(i) Implement the documented
quality System
(ii) Establish internal
quality audit system.
(iii) Monitor, control and
stabilise the qualitysystem.
(iv) Harmonise the practices
with the standards
Q21. Give contributions of
following leaders to human relation approach to ,management : (a)
Elton mayo (b) Robert Owen
(c) Follet.
Ans. Elton mayo (1880-1949)
Elton mayo, the director of
Hawthorne studies is considered as the father of the human relations
management thought. Mayo
headed a team of researchers from the Harvard university, who conducted
experiments at the Hawthorne
plant of the Western electric company, between 1927 to 1936.
Elton mayo and his associates conducted the study on “Influence of social attitudes and relationship of work group on performance.” the researchers concluded that employees would work harder if believed, management was concerned about their welfare and supervisor paid special attention to them. They found that the improvement in productivity was due to such social factors as morale, satisfactory inter relationships between members of a work groups(“since of belonging “),and effective management –a kind of managing that would understand human behavior ,especially group behavior and serve it through such interpersonal skills as motivating, counselling ,leading and communicating. This phenomenon is known as Hawthorne effect.
Robert Owen (1771-1858)
Robert Owen played an
important role in this field personnel management. He being a social reformer
helped in the development of
the management thoughts. He gave an idea that workers should be treated as
human beings. He emphasized that good results can be obtained through” positive
motivation “. Positive motivation means that employees should be given fair
treatment, and this should also fill that they are being given fair treatment.
Owen is mainly responsible for getting factory act introduced for the first
time.
Mary Parker Follet
(1868-1933)
Mary parker Follet, an American philosopher, had her approach to the study of management essentially physiological. Her main contributions are:
(1) Mary Follet rejected the
remedies during conflict through (i) domination and (ii) compromise, on
the plea that domination
leaves the feeling of having been dominated and comprises gives a
feeling of loss and
surrender to both sides.
(2) She was the view that
for achieving good results, various parts of the organization should be well
coordinated and closely
knitted so that they work as a single entity. She pleaded for integrating
the interest of the workers,
investors and consumers. She also pleaded for the application of
scientific method to the
solution of personnel problems.
Q22. Write short on a
recruitment, training and development, promotion policy the labor turns
over.
Ans 1 Recruitment
It is the process by which manpower is discovered and then encouraged to apply for employment. The purpose of recruitment is to collect sufficient number of applications for each job, so that selection that can be made.
2 Training and Development
It is good to have good will
It is good to have enthusiasm
But it is essential to have “training.’
_(Jawahar Lal Nehru)
To cope up with the
fast-changing technology and needs of the society, training and development of
employees is very essential.
Training is a process of learning, in which emphasis is given for job
instruction, and job knowledge
programmers in addition to managerial skills. Training is a shortterm process
and is imparted for a definite purpose, while development is a long-term educational
process, utilizing a systematic and organized procedures for learning
conceptual and theoretical knowledge for general purpose. Even today in many
concerns no systematic training is imported to their workers, which results in
the absenteeism accident, labor turnover, bad workmanship and spoilage of tools
and plants etc. All these drawbacks ultimately increase the cost of product.
3 Promotion policy
Since promotion is a very
sensitive and important issue for both the employee and the enterprise, each
promotion be made very
carefully. Therefore, each organization must have its promotion should be made very
carefully. Therefore, each organization must have its promotion programmed and
policy. Promotion programmed is a detailed procedure for promotions. The
promotion program must be developed based on the promotion policy of the
enterprise. Promotion policy should be such that a balance of new requirement,
to infuse new blood, and promotion system of existing competent employees. The
promotion policy should be such that, when an employee is promoted, he should
be acceptable to the subordinates and others as fair and impartial and remove
all doubts arbitrariness. It should be based on correct assessment rather than
aphorism .
4 Labor turnovers
With the introduction of automatic machines and specialization, the demand of worker has become increasingly less in industries. Therefore, the problem of giving jobs to workers and securing permanency in the working force are now no longer easy. Due to this changed condition, workers have started leaving job from one industry and go to join another quite frequently. The constant shifting of workers is a source of great industrial loss. The term ‘labor turnover’ is given to this change in the laborer’s of the factory and is measured as percentage. Labor turnover may be defined as “the ratio of the workers who have been dismissed or have left their jobs on their own accord to the average number of workers employed in a factory “during a given time usually say a year. It may also be defined as “the number of separations from service during a particular period”. Separation include all quits, discharges or layoffs for any reason whatsoever . As an example, that the number of separations in a given weeks is 30 and that the average daily attendance for the week is 1000. Then the percentage of labor turnover on a yearly basis is=301000×100=3%
Q23. Explain following
theories as regards to motivation:
(i) Douglass Mc Greg ore’s
‘X’ and ‘Y’ theory.
(ii) Herzberg’s
Motivation-Hygiene theory.
Ans.
(i) Douglas McGregore- ‘X’
and ‘Y’ Theory
Douglas McGregore has
divided the thoughts of management philosophy in two parts these
are:
a. Traditional or X theory.
b. Modern theory or Y theory
A. X theory
This theory is based on
traditional view. I this theory, management or authority do not trust the labor
and use restraining policies so that labor will be unable to act against him.
Management is of the opinion that work could be extracted from labor through
fear, strict discipline and rebukes, their cooperation should not be taken in
management. Here authority or power is thought to be superior. Management acts
right or wrong, labor cannot say anything and thus mentally he is dependent on
management .
Assumption of “X theory”
This theory is based on the
following assumptions:
1. A person is disciplined
to work and hence he always shrinks from work.
2. To get work from an
employee, he is to be frightened, rebuked necessarily. Through fear he
becomes ready to do work.
3. Workers are less
ambitious. They do not try to-do or improve the work the work through interest
but
wait for instructions and
directions
4. Workers try to shrink
from responsibility hence they put off the work till the work is not urgent.
5. Workers care more
security hence they work slowly.
6. Workers act on the basis
of financial greed if they are paid more wages, they will take more interest
in work.
7. Management does not give
any importance to labor; they think them to be an instrument of
machines. Labor is not given
opportunity to show workability or to develop it.
8. This theory has authority
as superior. Labor has no right to give his suggestion, neither he can do
any work without directions
by his own will.
B. Y theory
This theory is quite
opposite to ‘X theory’. In this, labor is assumed to be partner in the
management and
all they are working is with
the cooperation of labor.
Assumptions of Y theory
1. Every work is not
disinteresting. Like a game, playing again and again givers satisfactions.
2. Workers are not
instigated to work by fear, outer restrain or strict discipline. They feel
responsible for the work for
which they are appointed.
3. For the execution of
work, it is necessary that it should be recognized. Recognition of work is
a great prize.
4. Tendency to escape from
the responsibility is not natural but the reason is lack of ambitious
and more stress on security.
5. Generally, workers are
not instigated to do by financial greed, but non-financial greed also
instigated to work.
6. This is based on
democratic principles, where everybody has equal chances.
7. Labor can also cooperate
to solve problem of enterprises.
8. This establishes
coordination between basic personal objectives and the collective objectives
of the organization.
9. Manager works as a leader
and gets good and solid results by the advices of the personnel.
Management thinks personnel
on equal footing for advices.
(ii) Herzberg’s
Motivation-Hygiene theory
Frederick Herzberg developed a theory of work
motivation by indicating the better
performance through
increased job satisfaction. He conducted his study on a group of 200 engineers
and accountants from eleven industries from the Pittsburg area in U.S.A. His
hypothesis about job satisfaction and job dissatisfaction suggests that:
a) The factors that are
present when job satisfaction is produced are separate and distinct from the
factors that lead to job
dissatisfaction.
b) The opposite of job
satisfaction is ‘no job-satisfaction’ and not job dissatisfaction.
c) The opposite of
dissatisfaction is ‘no job-dissatisfaction’ and not job satisfaction.
i. Motivators. Factors
connected with satisfaction or motivation were called as “motivators” by
Herzberg. Motivators have a
positive power to satisfy and produce high performance and are
related to job contents.
These factors are:
1. Achievement
2. Recognition
3. Challenging work
4. Increase responsibility
5. Advancement
ii. Hygiene Factors. The
factors related to dissatisfaction were called as hygiene factors because
these factors primarily
prevent dissatisfaction like hygiene prevents sickness. These factors are
related to the work
environment:
1. Company policies and
administration
2. Supervision
3. Internal relations
4. Salary
5. Working conditions
6. Status
7. Security
Q24. Explain the
contribution of Henry Fayol of scientific management.
Ans: - Henry Fayol
(1841-1925)
Henry Fayol, a French Industrial and manager,
was one of the first writer who developed his theory of management. He is
regarded as the Father of Modern Management Theory, because he was the first
who suggested the functions of management. These functions have been recognized
as the main task of manager in modern management theories. Management Thoughts
of Fayol can be classified into following three categories:
1. Functions of Management
I. Forecasting. As soon as
an idea comes in the mind for manufacturing, an attempt is, made to asses’
possible quantities, price etc. Forecasting is concerned with the estimate of quantities
the sale forecast, cost, finance requirement, capital expenditure, profit or
loss etc. Then one of the more profitable courses is selected out of several
alternatives available and planning is started.
II. Planning. Planning means
“thinking before doing”. Before actual work is started, it is decided
that, what is to be
produced, how much is to be produced, how to be produced, when to be produced
and who are to produce it, etc. The planning should aim at eliminating the
wastage of material, idleness of men, machinery and capital.
III. Organizing. When
complete planning is done, next step is to arrange the men, money and
material for actual
execution of manufacture.
IV. Directing. It means the
system of directing the plan to operation. The person who directs
must have dynamic leadership
and must guide the subordinates. The instruction must be simple, clear,
complete and reasonable and as far as possible in writing.
V. Motivating. Suppose a
person is highly capable, physically strong and technically qualified,
but if he is not willing to
work hard his output will be much less. So, the function of motivating
is to find out the movies of
work in a man and then he should be encouraged to do work by
keeping is higher.
VI. Co-Ordinating. In an
enterprise, there may be large number of workers, all engaged with the
object of producing
particular product. This is the task of co-ordination to integrate and
harmonize them to achieve a
common object.
VII. Controlling. This function
of management is to see that other function are being done
perfectly all right.
Controlling means watch actual performance with the plans and to point out
defective work, to rectify
them and to prevent recurrence. Some of the controls are-Quality
Control, cost control,
material control and production control etc.
VIII. Communication. This
function transmits the information and instructions to all concerned
parties, i.e., to employees,
customers, suppliers, shareholders and general public. Without
this there are chances to
mistrust, fears etc. and therefore management must stress on better
communication system.
IX. Leadership. All the
managers are supposed to have the quality of leadership as they are
leaders of concern.
X. Decision Making. As
manager are required to take decision very frequently, and the
efficiency of concern, loss
or profit etc. are affected by these decisions, great amount of
attention is required to be
paid to this function.
2. Principles of Management.
Fayol, the founder of the
movement for better organization, in 1916 gave the following principles
of management:
I. Division of work. It
promotes efficiency, because it permits the work to be executed in
limited space area division
of work permits all the work to be performed more effectively.
II. Authority and
Responsibility. They are always gone together. Authority means right to
act, “decide and command”.
Hence whenever a task is assigned to a manager, he must
be given sufficient powers
“Authority” to exercise control to achieve the task
Responsibility is the
obligation of the sub-ordinate for the performance of any job
allotted by the superior.
III. Discipline. It means
obedience, application, energy and respect. There are many
examples that poor
performance is due to the lack of these four mentioned factors of
discipline.
IV. Unity of command. A
subordinate should take orders from only one superior.
V. Unity of Direction. Each
management objective should have only one plan.
VI. Subordination of
Individual interest to general interest. This means that the interest
of the organization is much
before the interest of individual.
VII. Remuneration of
personnel. Payment to workers should be fair, and some proper
method should be adopted.
VIII. Centralization.
According to this principle, there should be one central point I n the
organization which have
power to control overall work.
IX. Equality. Kindness and
justice on the part of management to create loyalty and devotion
among employees.
X. Stability. Efficiency can
be achieved by having stable workforce.
XI. Initiative. To have
succeeds, plan should be made well before starting actual work.
Q25. Enumerate the steps in
the process of planning. Describe in detail.
Ans. STEPS IN PLANNING
For the purpose of planning, following steps
are taken by the planning manager:
(i) Recognition of the need
for planning. Problem or necessity must first be identified which
has caused for the planning.
(ii) Analysis of
Environment. Environment includes external as well as internal environment.
In external-environment,
government policies, national economy, business climate,
availability of resources,
competitors, values of society etc. are analyzed. In internal
environment, manpower,
technology, and availability of other resources which are to be
used for production are
analyzed. This analysis helps in identification of strengths,
weakness, opportunities and
threats.
(iii) Statement of Mission
or Purpose. This identifies the products or services to be offered,
the prospective customers,
values of products/services, social responsibilities and the
infrastructure required for
the organization.
(iv) Establishing
objectives. Next step in planning is to establish planning objectives in the
clearest possible terms
keeping in view the strengths and limitations. These objectives
specify the results
expected, indicating end points, what is to be done, where the emphasis
is to be made, and what is
to be accomplished by the network of strategies, policies,
procedures, rules, budget
and programs.
(v) Building the premises
for planning. Next step in planning is the collection and dissemination of the
facts and figures necessary for planning the future course of an enterprise.
The forecasting is an important step in planning. Forecast is based on the inferences
drawn from the known considering prospects of economic development, literacy, change
in habits, population etc. These forecasts are then used for formulating plans
for future.
(vi) Identifying alternative
course of action. The next step in the planning is to search for and
examine alternatives courses
of action. Planning manager must find out maximum number
of alternatives for
consideration.
(vii) Evaluation alternative
courses. In the next step, manager is required to compare the
strong points and
limitations of each of the identified alternative in the light of goals and
premises. Since large number
of factors are considered, evaluation is a difficult process.
The best alternative is
decided after reducing the number of alternatives to two or three by
method of elimination, and
then critically examining those left in the end.
(viii) Selecting a course of
action. Sometimes from critical examination two or three
alternatives are advisable.
In this case, a final decision is taken considering objectives,
economy and advantages in
long run. Sometimes planner may decide to proceed with more
than one plan.
(ix) Converting Plans into
Budgets. The plans are then converted into budgets to make them
meaningful.
Q26. Define following terms
:-
(i) Job Evaluation
(ii) Merit Rating
(iii) Supervision
(iv) Discipline
Ans. Job evaluation
For rewarding workers ,
there should be some systematic procedure. For this purpose , job is studied
careful regarding operations
involved and other specific tasks . This study is known as job analysis .
with the help of the job
analysis ,job description is set down which give details about the capacity and
skill required for
performing the job . After this , the value of the job is determined for the
purpose of
payment , which is known as
job evaluation . It does not give the price of the job but gives relative
values Job evaluation is the
process of comparing jobs with other jobs in terms of wages a worker should be paid
for performing the task . Thus, it is a rating of job . It can also be defined
as “the procedure to determine the relative values of the job in a plant and to
determine the basic wages for that job” Merit-rating In job evaluation , we are
interested in the worth of jobs . but when relative worth of an employee is made
, then the technique used is known as merit rating . Merit rating can be
defined as a systematic evaluation of an employee’s performance on the job in
term of requirement of the job . The merit rating enables the foreman to
differentiate among his subordinates among his subordinates through systematic
approach for the purpose of their recommendation for promotion for wage
increase or of special training etc. The employees are rated on certain factory
such as attendance , co-operation , imitative safety habits , judgment ,
creativeness , honesty , intelligence etc.
Supervision upervision is
the main function which is responsible for output. Until recent years , its
importance was neglected but now it is being felt that first that first line
supervision i.e. the supervision nearest to worker is of very much importance .
supervision is responsible for improving discipline , moral of the worker and
makes worker feel interested in his work .
Generally, people think that
discipline can be maintain , if supervisors punish them but psychological
experiments so that up
punishment is not only correct solution. It suggests that reward may be used
as another method for
promoting adherence to regulation . reward may be in the form of money ,
medals , certificates
extra-vacation etc. To encourage the be disciplined . thus , the punishment and
reward techniques which
should be employed for maintaining disciplined. The method of reward
improves the moral of the
workers
Discipline
Discipline mains employs self-control to meet organizational standards and objectives . Disciplined relate to employs conduct and may be defined as the force that promotes employee to behave in accordance with the rules , regulation another . disciplined encourage employs to behave sensibly at work to attain the objectives of the organization . disciplined helps in reducing the absenteeism , accidents , labor turnover , grievances and frustration , and wastages , while it helps in increasing production , product quality and moral . Discipline may be described as the force that promotes an individuals or group to observe rules
Discipline is of two types :
- Positive
- Negative
- As explained above ,
generally disciplined is thought of only as negative disciplined but now it is
being relished that positive
disciplined is more effective . Sound disciplined help in maintaining
successful operation with
full coordination.
Q27. Define following terms
:-
(i) Job analysis
(ii) Job Description
(iii) Job Specification
Ans. Job analysis is a detailed study of jobs and refers and refers to a scientific and systematic analysis of a job in order to obtain all pertinent facts about the job. Job analysis can be defined as follows the process of determining by observation and study the tasks , which comprise the job , the methods and equipment used , and the skills and attitudes required for successful performance of the
job
-- “ job analysis is a
process of collecting and analyzing data relating to a job. “
-- “ job analysis is the
careful study about the activities of an employee on a particular job to
determine different
operations involved and other facts which are helpful for job description and
job
specification. “-- “ Job analysis is the procedure to discover the facts about each job requirement and personalqualities for satisfactory working . “Job analysis is performed upon ongoing jobs . As jobs are always subject to change, a job analysis may become obsolete with the change in the job . Here , Job means a regular assignment to individual employees including their duties , responsibilities , skill and knowledge etc.
Job description
Job description is a
functional description of what the job entails . It is descriptive in nature
and defines the purpose and scope of a job . It is an organized statement
describing the job in terms of its title , location , duties , responsibilities
, working conditions , hazards and relationship with other jobs . It tells us
what is to be done, how it is be done and why Thus, job description is an
abstract of information received from the job analysis report . It gives information
regarding the responsibilities , and type of which should be employed for
performing the job .
Job specification
Job specification is a statement of the minimum acceptable human qualities required for the proper performance of the job . It is a written record of the physical , mental ,social psychological and behavioral characteristics which a person should possess in order to perform the job effectively . It is obtained from the job description reports . Job specification can also be defined as the “ statement which specifies the type of employees required c”. It helps in the selection of employees . Job specification can be compared with the specification of material . As material specification helps in the procurement of material , job specification helps in the procurement of employees. Thus, it serves as a guide in the requirement and selection processes . It is also helpful in training and appraisal of the employees.a
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