Submission of mba spring 2012

SUBMISSION OF MBA SPRING 2012
ASSIGNMENTS
SEM:2
:SUBJECT CODES:
MB 0044
MB 0045
MB 0046
MB 0047
MB 0048
MB 0049

NAME:SHRADDHA SINGH
ROLL NO:581128190
COURSE:MBAN1
SEM:2

ROLL NO. 581128190 1 NAME:SHRADDHA SINGH

MB0044 – Production and Operations Management

Assignment Set – 2

ROLL NO. 581128190 NAME:SHRADDHA SINGH

Q1. What is productivity? Write a brief note on capital productivity.

Answer: Productivity is a measure of the efficiency of production. Productivity is a ratio of
production output to what is required to produce it (inputs). The measure of productivity is defined
as a total output per one unit of a total input.

Capital deployed in plant, machinery, buildings and the distribution systems as well as working capital are
the components of the cost of manufacturing. Demand fluctuations, uncertainties of production owing to
breakdowns, and inventories being created drag the productivity down. Therefore, strategies are needed
to maximize the utilization of the funds allotted towards capital. The strategies included are:

 Outsourcing strategies
 Methods improvement
 Balancing of workstations
 Quality circles
 Rationalization of packaging methods

Outsourcing strategies

When capacity requirements are determined it is easy to figure out whether some goods or services
can be outsourced. Outsourcing can reduce the capital and manpower requirements. Also the
available capacities can be used to augment core competencies thus reducing the cost of the product
or service to the customer. However, lack of expertise, quality considerations, nature of demand and
cost factors may restrict outsourcing.

 Lack of Expertise: The outsourced firm may not have the requisite expertise to do the job
required.
 Quality Considerations: Loss of control over operations may result in lower quality.
 Nature of Demand: When the load is uniform and steady, it may not be worthwhile to
outsource. Absence of supervision and control may be a hindrance to meet any urgent
requirements of the customer. This affects the business especially if no production
facilities are built in the organisation.
 Cost: It may not be worthwhile when the fixed costs that go along with making the product
does not get reduced considerably.

Methods improvement

Methods Improvement starts with Methods Analysis. The focus of this process is to find out how a

job is done and breaking it down to elemental tasks so that they are amenable for analysis. This is
done for both running jobs and new jobs. For a new job, the description becomes the input for
analysis. For current jobs, the analyst depends on observations, records and suggestions of the
persons involved in the job. When improved methods are suggested, they are
implemented and records created for assessing the consequences of the methods improvement
procedures.

The analyst should involve all concerned persons in the process so that acceptance becomes
possible and opportunities open up for further improvements. Moreover, the people actually
involved would be interested in improving their productivity and will help the analyst in the
process.

Balancing of workstations

Assembly lines carry out operations in a sequence so that the product gets completed in stages.
Since the workflow has to be uniform and operations may require different periods for completion the
necessity of Line Balancing is felt. Capacities at workstations are so adjusted that a product takes
approximately the same amount of time during each stage in the
process of assembly.
Quality circles

Kaoru Ishikawa is generally considered to have promoted the concept of Quality Circles. It is well known
that he is the originator of fishbone diagrams to identify the root cause of any problem (See Figure 1.5
Example of a fishbone diagram). The causes for the existence of a problem are classified as pertaining
to the material, processes or method or any factor that goes into production. The matter is further
investigated and pursued till the exact cause is determined.


Quality Circles use these principles in solving problems. A Quality Circle is composed of a small group
of employees who genuinely care about others, and who preferably does similar work, that is:

Meeting voluntarily with a leader on a regular basis
Identifying the problems
Analyzing the causes
Recommending their solutions to management
Implementing solutions, wherever possible

The teams select projects as per these problems and implement actions to achieve improvement in the
processes with a view to improve quality. Since these activities are carried out without affecting the
regular work and involve little involvement of the managers, team work gets reinforced and results in
continuous improvement in methods and quality. The capital deployed is minimal, if at all, and therefore
productivity is enhanced.

Rationalization of packaging methods

With logistics becoming an important function of the supply chain and outsourcing becoming the norm,
packaging has become an important aspect. Space is at a premium and therefore stacking and storing
have to more scientific. Movements inside the premises from one location to another location are being
done with automated systems. Also there is a need for the packaging systems to be designed for safe
transit and continuous monitoring – both for quantities and operations need to be there. In case of
outsourced products the materials used and their design should facilitate reuse of the same, which brings
about economy.

Q2. Describe briefly the automated flow lines.

Answer: When several automated machines are linked by a transfer system which moves the parts
by using handling machines which are also automated, we have an automated flow line. After
completing an operation on a machine, the semi-finished parts are moved to the next machine in the
sequence determined by the process requirements and a flow
line is established. The parts at various stages from raw material to ready for fitment or assembly are
processed continuously to attain the required shapes or acquire special properties to enable them to
perform desired functions. The materials need to be moved, held, rotated, lifted, and positioned for
completing different operations. Sometimes, a few of the operations can be done on a single machine
with a number of attachments. They are moved further to other machines for performing further
operations. Human intervention may be needed to verify that the operations are taking place according to
standards. When these can be achieved with the help of automation and the processes are conducted
with self-regulation, we will have automated flow lines established. (See Figure 4.2 Automated flow lines)

The main consideration is to balance times that different machines take to complete the operations
assigned to them. It is necessary to design the machines in such a way that, the operation times are the
same throughout the sequence in the flow of the martial. In fixed automation or hard automation, where
one component is manufactured using several operations and machines, it is possible to achieve this
condition. We assume that product life cycles are sufficiently stable to invest heavily on the automated
flow lines to achieve reduced cost per unit.

The global trends are favoring flexibility in the manufacturing systems. The costs involved in changing the
set up of automated flow lines are high. So, automated flow lines are considered only when the product is
required to be made in high volumes over a relatively long period. Designers now incorporate flexibility in
the machines which will take care of small changes in dimensions by making adjustments or minor
changes in the existing machine or layout. The change in movements needed can be achieved by
programming the machines. Provisions for extra pallets or tool holders or conveyors are made in the
original design to accommodate anticipated changes. The logic to be followed is to find out whether the
reduction in cost per piece justifies the costs of designing, manufacturing, and setting up automated flow
lines. Group Technology and Cellular Manufacturing along with conventional Product and Process
Layouts are still resorted to, as they allow flexibility for the production system.

As the methodologies of JIT and Lean Manufacturing have become important and relevant in
manufacturing, many companies have realized that well designed flow lines suit their purpose well. Flow
lines compel engineers to put in place equipments that balance their production rates. It is not possible
to think of inventories (Work In Process) in a flow line. Bottlenecks cannot be permitted. By necessity,
every bottleneck gets focused upon and solutions found to ease them.

Production managers see every bottleneck as an opportunity to hasten the flow and reduce
inventories. However, it is important to note that setting up automated flow lines will not be suitable
for many industries.


Q3. What is meant by Total Quality Management? Mention the 14 points of Deming‟s approach to
management.

Answer: TQM is viewed from many angles – as a philosophy, as an approach and as a journey
towards excellence. The main thrust is to achieve customer satisfaction by involving everybody in the
organisation, across all functions with continuous improvement driving all activities. TQM systems
are designed to prevent poor quality from occurring.
Deming's TQM helps organizations to improve the quality of the products and services they offer.
Deming‘s approach is
summarized in his 14 points.

1. Constancy of purpose for continuous improvement

2. Adopt the TQM philosophy for economic purposes

3. Do not depend on inspection to deliver quality

4. Do not award any business based on price alone

5. Improve the system of production and service constantly

6. Conduct meaningful training on the job

7. Adopt modern methods of supervision and leadership

8. Remove fear from the minds of everyone connected with the organisation

9. Remove barriers between departments and people

10. Do not exhort, repeat slogans, and put up posters

11. Do not set-up numerical quotas and work standards

12. Give pride of workmanship to the workmen

13. Education and training to be given vigorously

14. State and exhibit top management‘s commitment for quality and productivity

Q4. Describe briefly the Project Monitoring and control.

Answer: Any project aimed at delivering a product or a service has to go through phases in a
planned manner, in order to meet the requirements. It is possible to work according to the project

plan only by careful monitoring of the project progress. It requires establishing control factors to keep
the project on the track of progress. The results of any stage in a project, depends on the inputs to
that stage. It is therefore necessary to control all the inputs and the corresponding outputs from a
stage. A project manager may use certain standard tools to keep the project on track. The project
manager and the team members should be fully aware of the techniques and methods to rectify the
factors influencing delay of the project and its product.

To analyze the project, methodologies such as, PERT (Program Evaluation Review Technique) and
CPM (Critical Path
Method) may be used.

 In the PERT method, one can find out the variance and use the variance to analyze the various
probabilistic estimates pertaining to the project.
 Using the CPM, one can estimate the start time and the finish time for every event of the project in its
WBS (Work
Breakdown Structure).

The analysis charts can be used to monitor, control, track, and execute a project. The various steps
involved in monitoring and controlling a project from start to end are listed below. (See Figure 9.3 Steps
for monitoring and controlling a project)

 Preliminary work: The team members must understand the project plans, project stage schedule,
progress controls, tracking schedules, summary of the stage cost and related worksheets. All the
members have to understand the tolerances in any change and maintain a change control log. They
must realize the need and importance of quality for which they have to strictly follow a quality review
schedule and frequently discuss the quality agendas.

They must understand the stage status reports, stage end reports, stage end approval reports.

 Project progress: The members must keep a track of the project progress and communicate the
same to other related
members of the project. They must monitor and control project progress, through the use of regular
check points, quality charts, and statistical tables; control the quality factors which are likely to
deviate from expected values as any deviation may result in changes to the stage schedule. The
project manager ensures that these changes are made smoothly and organizes review meeting with
the project management group. Thus all the members are aware about the progress of the project at
all times. This helps them to plan well in advance for any exigency arising due to deviation from
planned schedule.
 Stage control: The project manager must establish a project check point cycle. For this, suitable
stage version control procedures may be followed. The details are to be documented stage wise.
Project files have to be frequently updated with suitable version control number and revision status
should be maintained for each change. Team members are identified who will exercise controls at
various points of the project.
 Resources: The project manager has to plan the resources required for various stages of the
project. He has to brief both the project team and the key resources about the objectives of every
stage, planned activities, products, organisation metrics, and the project controls. This increases
the visibility into the project performance and hence a quality control can be achieved. Allocating a
right resource at the right place and the right time will significantly enhance the efficiency and
effectiveness of the resource.
 Quality control: Quality control is very important in any project. Quality control is possible if the
project members follow the quality charts and norms very strictly. The following lists the possible
ways to control quality: (See Figure
9.4 Phases of quality control)


 Schedule quality review: Project members are recommended to schedule the quality review at the
beginning and also the end of every stage. This helps the project manager and team members to
plan well in advance for any unforeseen deviation.
 Agenda for quality review: The project manager should create and distribute a quality review
agenda specifying the objectives, products, logistics, roles, responsibilities, and time frames. This
increases the effectiveness of the review and also reduces the time gap.
 Conduct quality review: The quality review is to be conducted in a structured and formal manner.
Quality review should focus on product development and its quality factors. The project members
should check whether the review meets the prescribed quality standards.

Progress control: The progress control of a project can be achieved by considering the following: (See
Figure 9.5 Phases of progress control)

 Monitor performance: The first step for any project control mechanism is to monitor the
progress. There are numerous ways to monitor and measure various project parameters. For
example, the team members log in details of actual start date, actual finish date, actual hours
worked per task, estimated hours to complete the task, elapsed time in hours to complete the
task, any miscellaneous costs incurred during a stage. These inputs become the base to monitor
the performance of the project and its stages.
 Update schedule:
Update the schedule for:
 Actual start date for tasks started
 Actual finish date for tasks finished
 Actual hours worked per task
 latest estimated work in hours to complete the task


 Update costs: Update the stage cost summary worksheet with actual costs incurred during the
period and estimated remaining costs. Miscellaneous costs will be automatically updated from
the scheduler, since they are calculated from actual work.

 Re-plan stage schedule: Review the tracking Gantt and Cost workbook and identify any
deviation from the baseline. Analyze the cause of the deviation. Refer back to the project
control factors to help determine the appropriate corrective action and adjust the schedule
accordingly. Determine if the stage has exceeded the progress, cost and quality tolerance
levels agreed with the project management team. Review status of open issues and
determine any further action required on these issues. Review the status of any outstanding
quality reviews.

 Conduct team status review: Conduct a status meeting with the project team. This is
important to bring everyone on the same page of the project progress.
 Create status report: The status report provides a record of current achievement and
immediate expectations of
the project. The status has to be effectively communicated to all concerned parties.
Create flash report: Summarize the accomplishments for the month, schedule status,
upcoming tasks for the month and any major issues. Distribute the same to all project
team members and stakeholders.
* Project status reports: As discussed earlier, the status report provides a record of
current achievements and immediate expectations of the project. This is generated on
a regular basis depending upon the type, requirements and phase of the project.
Typically it is generated for a week.
* Approvals: In any project, it is important to have top management or project sponsors into
confidence about all the aspects of the project. This project stage reviews the decisions
taken and actions planned and get it approved by the top management. The goals of such
review are to improve quality by finding defects and to improve productivity by finding
defects in a cost effective and timely manner. The group review process includes several
stages like planning, preparation, overview of a group review meeting, rework
recommendations and follow-up.


Q5. Write a brief note on Just-In-Time (JIT).
Answer: Just-In-Time (JIT) manufacturing is a process by which companies don't keep lots of excess
inventory; instead, they manufacture a product as an order comes in.
The objective of JIT manufacturing system is to: * Eliminate waste that is, minimise the amount of
equipment, materials, parts, space, and worker‘s time, which adds agreat value to the product
* Increase productivity

JIT means making what the market demands when it is in need. It is the most popular systems that
incorporate the generic elements of lean systems. Lean production supplies customers with exactly
what the customer wants, when the customer wants, without waste, through continuous improvement.

Deploying JIT results in decrease of inventories and increases the overall efficiencies. Decreasing
inventory allows reducing wastes which in turn results in saving lots of money. There are many
advantages of JIT. JIT:

* Increases the work productivity * Reduces operating costs
* Improves performance and throughput * Improves quality
* Improves deliveries * Increases flexibility and innovativeness

For industrial organisations to remain competitive, cost efficiencies have become compulsory. JIT
helps in this process. It is extended to the shop floor and also the inventory systems of the vendors.
JIT has been extended to mean continuous improvement. These principles are being applied to the
fields of Engineering, Purchasing, Accounting, and Data processing.

However, for organizations to completely implement JIT manufacturing system, they need to have a
proper commitment along with the following basic facilities - proper material, quality, equipment,
and people involvement.

Q6. What is value engineering? Explain its significance.

Answer: Value Engineering (VE) or Value Analysis is a methodology by which we try to find
substitutes for a product or an operation.

The concept of value engineering originated during the Second World War. It was developed by the
General Electric Corporations (GEC). Value Engineering has gained popularity due to its potential for
gaining high Returns on Investment (ROI). This methodology is widely used in business re-engineering,
government projects, automakers, transportation and distribution, industrial equipment, construction,
assembling and machining processes, health care and environmental engineering, and many others.


Value engineering process calls for a deep study of a product and the purpose for which it is used, such
as, the raw materials used; the processes of transformation; the equipment needed, and many others. It
also questions whether what is being used is the most appropriate and economical.
This applies to all aspects of the product.

Value Engineering helps your organization in:

*Lowering O & M costs *Improving quality management
*Improving resource efficiency *Simplifying procedures
*Minimizing paperwork *Lowering staff costs
*Increasing procedural efficiency *Optimizing construction expenditures
*Developing value attitudes in staff *Competing more successfully in marketplace

Value Engineering helps you to learn how to:

Improve your career skills
Separate "Symptoms" from "problems"
Solve "root cause" problems and capture opportunities
Become more competitive by improving "benchmarking" process
Take command of a powerful problem solving methodology to use in any situation


MB0045 –Financial Management

Assignment Set- 2
Q1. The following data is available in respect of a company :

Equity Rs.10lakhs,cost of capital 18%

Debt Rs.5lakhs,cost of debt 13%

Calculate the weighted average cost of funds taking market values as weights assuming tax rate
as 40%

Answer:is to determine the cost of each component.Ke = ( D1/P0) + g= (2/32) + 0.1= 0.1625 or

16.25%Kp = [D + {(F

—

P)/n}] / {F+P)/2}

= [14 + (105

—

84)/8] / (105+84)/2

=16.625/94.5= 0.1759 or

17.59%Kr = Ke which is 16.25%Kd = [I(1

—

T) + {(F

–

P)/n}] / {F+P)/2}

= [12(1

—

0.4) + (105

—


90)/7] / (105+90)/2= [7.2 + 2.14] / 97.5= 0.096 or

9.6%

Kt = I(1

–

T)= 0.11(1

–

0.4)= 0.066 or

6.6%

Step II

is to calculate the weights of each source.

We = 200/750 = 0.267Wp = 100/750 = 0.133Wr = 100/750 = 0.133Wd = 300/750 = 0.4Wt = 50/750 = 0.06

Step III

Multiply the costs of various sources of finance with corresponding weightsand WACC is calculated by adding all these
components

WACC = We Ke + Wp Kp +Wr Kr + Wd Kd + Wt Kt

= (0.267*0.1625) + (0.133*0.1759) + (0.133*0.1625) + (0.4*0.092) + (0.06*0.066)= 0.043 + 0.023 + 0.022 +
0.0384 + 0.004= 0.1457 or

14.57%

The value of WACC is 14.57%


Q2. ABC Ltd. provides the information as shown in table 6.21 regarding the cost, sales, interests
and selling prices. Calculate the DFL.

20,000 units

Fixed costs Rs.3,500

Variable cost Rs.0.05 per unit

Interest on borrowed Nil
funds

Selling price per unit 0.20

Answer: EBIT 200000

Less interest on borrowed funds - NIL
EBT 150000
DFL= EBIT ÷ {EBIT—I—{Dp/(1-T)}}
200000/(200000—50000—{25000/(1—0.50)}

DFL=2.0
The degree of financial leverage of ABC ltd is found to be 2.0.

Q3. Two companies are identical in all respects except in the debt equity profile. Company X has
14% debentures worth Rs. 25,00,000 whereas company Y does not have any debt. Both companies
earn 20% before interest and taxes on their total assets of Rs. 50,00,000. Assuming a tax rate of
40%, and cost of equity capital to be 22%, find out the value of the companies X and Y using NOI
approach?
Hint: use the formula K0 = [B/(B+S)]Kd + [S/(B+S)]Ke

Answer: S= 1000,000/.22 =4545454.5
B=25,00,000

=K0=[25,00,000/[2500000+4545454.5)].14+[4545454.5/2500000+4545454.5)].22
0.0496+.142 =.1915 or 19.15%

V = 5000000/0.1915 = 26,109,660.57


Q4. Examine the importance of capital budgeting.

Answer: Capital budgeting decisions are the most important decisions in corporate financial management.
These decisions make or mar a business organisation. These decisions commit a firm to invest its current
funds in the operating assets (i.e. long-term assets) with the hope of employing them most efficiently to
generate a series of cash flows in future. These decisions could be grouped into:

• Decision to replace the equipments for maintenance of current level of business or decisions aiming at
cost reductions, known as replacement decisions

• Decisions on expenditure for increasing the present operating level or expansion through improved
network of distribution

• Decisions for production of new goods or rendering of new services

• Decisions on penetrating into new geographical area

• Decisions to comply with the regulatory structure affecting the operations of the company, like
investments in assets to comply with the conditions imposed by Environmental Protection Act

• Decisions on investment to build township for providing residential accommodation to employees working
in a manufacturing plant The reasons that make the capital budgeting decisions most crucial for finance
managers are:

• These decisions involve large outlay of funds in anticipation of cash flows in future For example,
investment in plant and machinery. The economic life of such assets has long periods. The projections of
cash flows anticipated involve forecasts of many financial variables. The most crucial variable is the sales
forecast.

• For example, Metal Box spent large sums of money on expansion of its production facilities based on its
own sales forecast. During this period, huge investments in R & D in packaging industry brought about new
packaging medium totally replacing metal as an important component of packing boxes. At the end of the
expansion Metal Box

Ltd found itself that the market for its metal boxes has declined drastically.

The end result is that metal box became a sick company from the position it enjoyed earlier prior to the
execution of expansion as a blue chip. Employees lost their jobs. It affected the standard of living and cash
flow position of its employees. This highlights the element of risk involved in these type of decisions.

• Equally we have empirical evidence of companies which took decisions on expansion through the addition
of new products and adoption of the latest technology, creating wealth for share-holders.


The best example is the Reliance Group.

• Any serious error in forecasting sales, the amount of capital expenditure can significantly affect the firm.
An upward bias might lead to a situation of the firm creating idle capacity, laying the path for the cancer of
sickness.

• Any downward bias in forecasting might lead the firm to a situation of losing its market to its competitors.

• Long time investments of the funds sometimes may change the risk profile of the firm.

• Most of the capital budgeting decisions involve huge outlay. The funds required during the phase of
execution must be synchronised with the flow of funds. Failure to achieve the required coordination
between the inflow and outflow may cause time over run and cost over-run.

These two problems of time over run and cost overrun have to be prevented from occurring in the
beginning of execution of the project.

Quite a lot of empirical examples are there in public sector in India in support of this argument that cost
overrun and time over run can make a company‘s operation unproductive.

• Capital budgeting decisions involve assessment of market for company‘s product and services, deciding
on the scale of operations, selection of relevant technology and finally procurement of costly equipment.

If a firm were to realise after committing itself to considerable sums of money in the process of
implementing the capital budgeting decisions taken that the decision to diversify or expand would become a
wealth destroyer to the company, then the firm would have experienced a situation of inability to sell the
equipments bought. Loss incurred by the firm on account of this would be heavy if the firm were to scrap
the equipments bought specifically for implementing the decision taken.

Sometimes these equipments will be specialised costly equipments. Therefore, capital budgeting decisions
are irreversible. All capital budgeting decisions involves three elements. These three elements are:

 cost

 quality

 timing

Decisions must be taken at the right time which would enable the firm to procure the assets at the least
cost for producing products of required quality for the customer. Any lapse on the part of the firm in
understanding the effect of these elements on implementation of capital expenditure decision taken, will
strategically affect the firms profitability.


• Liberalisation and globalisation gave birth to economic institutions like world trade organisations. General
Electrical can expand its market into India snatching the share already enjoyed by firms like Bajaj
Electricals or Kirloskar Electric company. Ability of GE to sell its products in India at a rate less than the rate
at which Indian companies sell cannot be ignored.

Therefore, the growth and survival of any firm in today‘s business environment demands a firm to be pro-
active. Pro-active firms cannot avoid the risk of taking challenging capital budgeting decisions for growth.

• The social, political, economic and technological forces generate high level of uncertainty in future cash
flow streams associated with capital budgeting decisions. These factors make these decisions highly
complex.

• Capital budgeting decisions are very expensive. To implement these decisions, firms will have to tap the
capital market for funds. The composition of debt and equity must be optimal keeping in view the
expectations of investors and risk profile of the selected project.

Therefore capital budgeting decisions for growth have become an essential characteristic of successful
firms today.

Q5. Explain briefly Capital Rationing.

Answer: Capital Rationing:When there is a scarcity of funds, capital rationing is resorted
to.Capital rationing means the utilization of existing funds in most profitable manner by
selectingthe acceptable projects in the descendin g order or ranking with limited available
funds. The firmmust be able to maximize the profits by combining the most profitable
proposals. Capitalrationing may arise due to (i) external factors such as high borrowing rate or non -
availability of

loan funds due to constraints of Debt-Equity Ratio; and (ii) Internal Constraints Imposed
bymanagement. Project should be accepted as a whole or rejected. It cannot be accepted andexecuted
in piecemeal.IRR or NPV are the best basis of evaluation even under Capital Ra tioning
situations. Theobjective is to select those projects which have maximum and positive NPV.
Preferenceshould be given to interdependent projects. Projects are to be ranked in the order of
NPV.Where there is multi-period Capital Rationing, Linear Prog ramming Technique should
be usedto maximize NPV. In times of Capital Rationing, the investment policy of the
company maynot be the optimal one.In nutshell Capital Rationing leads to:(i) Allocation of
limited resources among ranked acceptable investments.(i i) This function enables
management to select the most profitable investment first.(iii) It helps a company use
limited resources to the best advantage by investing only in theprojects that offer the
highest return.(iv) Either the internal rate of return method or the net preset value method may be used
inranking investments.


Ways of Resorting Capital Rationing :

There are various ways of resorting to capital rationing,some of which are :

(i) By Way of Retained Earnings :

A firm may put up a ceiling when it has been financinginvestment proposals only by way of retained earnings (ploughing back of
profits). Since theamount of capital expenditure in that situation cannot exceed the amount of retained earnings,it is said to be an
example of capital rationing.

(ii) By Way of Responsibility Accounting :

Capital Rationing may also be introduced by following the concept of responsibility accounting where by management
may introduce capitalrationing by authorising a particular department to make investment only upto a specified limit,beyond which
the investment decisions are to be taken by higher-ups.(iii) By Making Full Utilization of Budget as Primary
Consideration : In Capital Rationing it may alsobe more desirable to accept several small investment proposals than a
few large investment proposals so that there may be full utilization of budgeted amount. This may result inaccepting
relatively less profitable investment proposals if full utilisation of budget is aprimary consideration. Thus Capital
Rationing does not always lead to optimum results.

Q6.Explain the concepts of working capital

Answer :Money required by the company to meet out day – today expenses to finance production and
stocks to pay wages and other production etc. is called the working capital of the company. Working capital
is used in operating the business. It is mostly dept is circulation by releasing it back after selling the
products and reinvesting it in further production. It is because of this regular cycle that the working capital
requirements are usually for short periods. Though, both fixed and working capitals shall be recovered from
the business, the differences lies in the rate of their recovery. Working capital shall be recovered much
more quickly as compared to fixed capitals which would last for several years. As the process of production
become more round about and complicated the production to fixed working capital increase
correspondingly.

Therefore, working capital management refers to the management of current assets and current liabilities.
Working capital, however, represents investment in current assets, such as cash, marketable securities,
inventories and bills receivables. Current liabilities mainly include bills payable, notes payable and
miscellaneous accruals. Net working capital is the excess of current assets over current liabilities here.
Current assets are those assets which are normally converted into cash within an accounting year; and
current liabilities are usually paid within an accounting year.

What for is working capital required by firm very much depends on the nature of the business which the firm
is conducting. If the firm has business which deals with public utility services, obviously the requirement will
be low.


It is primarily because the amount becomes available as soon as services are sold and also the services
arranged by the firm and immediately sold, without much difficulty and complication. On the other hand
trading concerns need heavy amounts because these require funds for carrying goods traded. Similarly
many industrial units will also need heavy amounts for carrying on their business. Many manufacturing
concerns will also need sufficiently heavy amounts, that of course depends on the nature of commodities
which are being manufactured.


MB0046 – Marketing Management

ASSIGNMENT- Set 2
ROLL NO. 581128190 NAME:SHRADDHA SINGH

Q.1 what do you mean by marketing functions? Briefly explain the important marketing functions.
Answer:The delivery of goods and services from producers to their ultimate consumers or users includes
many different activities. These different activities are known as marketing functions. Different thinkers have
described these functions in different ways. Some of the most important functions of marketing are briefly
discussed below:
Marketing Research and Information Management:
Marketers need to take decisions scientifically. Marketing research function is concerned with gathering,
analyzing and interpreting data in a systematic and scientific manner. The types of market information
could be analysis of market size and characteristics, consumer tastes and preferences and changes in
them from time to time, channels of distribution and communication and their effectiveness, economic,
social, political and technological environment and changes therein. A company can procure such
information from specialized market research agencies, government or can decide to collect themselves.
Advertising and Sales Promotion:
Advertising is a mass media tool used to inform, persuade or remind customers about products or services.
It is an impersonal form of communication targeted at a chosen group through paid space or time.
Sales Promotion is a short-term incentive given to customers or intermediaries to promote sales. It
supplements advertising and personal selling and can be used at the time of launching a new product or
even during its maturity period.
Product Planning and Management:
A Marketer should identify the needs and wants of consumers, develop suitable products / services and
make them available. Marketer is also required to maintain the product and its variations in size, weight,
package and price range according to the changing needs and requirements of his customers. Information
available through Market Research helps product management in taking appropriate decisions while
planning the marketing efforts.
Selling:
This function of marketing is concerned with transferring of products to the customer. An important part of
this function is organizing sales force and managing their activities. Sales force management includes
recruitment, training, supervision, compensation and evaluation of salesmen. They need to be assigned
targets and territories where they can operate. The salesmen interact with prospective purchasers face-to-
face in order to sell the goods. The purchaser may be end customer or an intermediary, such as a retailer
or a dealer.


Physical Distribution:
Moving and handling of products from factory to consumers come under this function. Order processing,
inventory, management, warehousing and transportation are the key activities in the physical distribution
system.
Pricing:
This is perhaps the most important decision taken by marketer, as it is the only revenue fetching function
and success and failure of the product may depend upon this decision. Therefore, the decision regarding
how much to charge should be taken such that the price is acceptable to the prospective buyers and at the
same time fetches profits for the company. While deciding on the price, the factors to be considered are
competition, competitive prices, company‟ s marketing policy, government policy, and the buying capacity
of target market etc.

Q.2 Define the term “Brand Equity “? Discuss the components of Brand Equity.

Answer: Brand equity is set of assets linked to a brand„s name and symbol that adds value to the product
or service and/or that firm’s customer.
Components of brand equity:
Brand Loyalty: Is consumer's commitment to repurchase the brand and can be demonstrated by
repeated buying of a product or service or other positive behaviors such as word of mouth
advocacy. True brand loyalty implies that the consumer is willing, occasionally at least, to put aside
their own desires in the interest of the brand. This will help organization to reduce the promotion
cost. For example, many girls in India use only Ponds products, though competitors‟ products like
Fa, Spinz, Cuticura, and Mysore Sandal are present in the market and vice versa.
Brand Awareness: The number of customers exposed to the brand name. Higher the brand
awareness, higher will be the brand equity. Organizations put all the effort in the introduction stage
of the product to create awareness among the customers. For example, Xerox Company has huge
brand awareness since photocopier machines were introduced by this company and even today
photocopies are referred as Xerox copies.
Perceived Quality: The customer perception about the actual quality level of the product. For
example, when a customer purchases Levis jeans he knows that it indicates quality even though
there are several cheaper brands of jeans available in the market.


Brand Associations:
The attribute of the brand that customer associates with his/ her belief. A person may associate the brand
for power, strength or protectiveness. For example, a customer may associate Nike brand not just for
sports shoes but also any accessory associated with sports. So, for him, Nike represents sports.

Q.3 Why are marketing channels indispensable? List the functions of marketing channels.

Answer:Marketing channels are a set of independent organizations comprising of the marketing
intermediaries who are involved in the distribution of the goods or services from the factory to the
consumption points at the right time or even before the time.

Functions of marketing channels:
Helps in Physical distribution: Transporting goods and storing them in the assigned warehouses
or godowns.
Promotes Communication: Marketing intermediaries promote the company‘s products. Here
channel member provides the information regarding the products and pushes it to the customers.
Provides Information: Retailers and wholesalers collect the information or feedbacks from the
customers and provide the same to the company or manufacturer.
Plays a key role in Title transforming: Marketing intermediaries purchase the goods from the
company and transform the title of goods or ownership to the next channel intermediary or
customer.
Supports Relationship management: Here marketing intermediaries try to understand the needs
of consumers, try to match his needs and satisfy them.

Q.4.Explain the different methods which allows a media planner to decide budget allocation

Answer:Media vehicle selection, number of insertions and message structure depend on the budget
allotted for the communication program. A popular channel may charge more for advertisement but
organization gets better viewership. A newspaper having high circulation charges premium for the
advertisement but all the organization may not have enough budgets to support such campaign. Hence
marketer would like to decide what is the budget for the communication program? And how shall it be
allotted optimally? There are four different methods on which a media planner decides the allocation of
advertisement budget.


 Affordable method:This method is used by small companies who don‟ t have enough
communication budgets. In this method company allots the fixed amount for the communication
program. The advantage of this method is company can have better control over the spending on
the communication. The disadvantage is if sales require higher communication effort, company is
not in a position to allocate the budget.

 Percentage of sales method:In this method company allots the budget on the basis of total sales
forecasted. This is the simplest method. Marketer can have better control over the budget and also
have flexibility to allocate the budget.

 Follow the Competitor method:The Company sets its promotion budget on the basis of
competitors advertising effort. Here company closely monitors the developments of the
competitors‟ communication program and study the industry trends in communication budget prior
to setting up communication budget.

 Objective and task method:The procedure involved in estimating the advertisement budget by
this method are First, Objectives are set for the communication programs. Second, identifying the
task to be performed to achieve the objective and third, estimating the cost of achieving these
objectives.

Q.5 Define the term” direct marketing” Explain the different methods adopted for direct marketing

Answer:When the company or organization is involved in marketing activities (usually selling products)
without the use of any intervening media or channel, then it is called as Direct Marketing. The company
directly sells its products to the final consumer and the consumer is expected to respond immediately or at
the earliest. Direct marketing is sometimes called as B2C marketing for example, direct factory shoe sale.
Following are the methods of Direct Marketing:
 Direct mail:It is the most common method used in direct marketing, it involves sending postal
mails to the consumer‘s address and consumers maybe randomly chosen or specifically selected
as targets. For example, credit card applications forms sent by banks, travel guides or manuals
sent by tour operators, free trial packs of products sent by companies, subscriptions offers for
magazines etc.

 Telephone marketing: Telephone marketing is used to sell the product directly to consumer. The
growth of BPOs in India fuelled the development of telephone marketing. In the case of BPOs, two
types of verticals exist. They are inbound call center and outbound call center. In case of inbound
call center, customer is given a toll free number for enquiry and executives try to sell the product to
such customers. In out bound call center employees call the customers and sell the products.


The expansion of Indian telecommunication industry and its cheapest tariffs in the world attracted
domestic sellers to use this type of channel.

 Catalogue marketing:According to Philip Kotler, catalogue marketing is direct marketing through
print, video or electronic catalogues that are mailed to select customers, made available in stores
or presented online. The growth of catalogue marketing in India is in a nascent stage. The notable
example in this type of marketing worldwide is J.C. Penny.

 Kiosk marketing:Organizations spreads the information and keep ordering machines called kiosks
in the shopping malls and other places. For example, Ambi Pur a perfume company recently
organized a kiosk related marketing campaign in the Nirmal life style Mumbai. Company used
inflatable as shown in the pictures to attract the small boys.
Parents who came along with their children stopped at Kiosk and got the information from the company.
The objective of campaign was to create awareness about the product among the target customers.

 Online marketing:Marketing the organization‘s product on the virtual medium using the company
websites as selling point or ordering point for the consumers. Sometimes companies use e-mails to
offer their products and make a sale to the prospective consumers or even existing consumers.

Q.6 List the important differences between International marketing and Domestic marketing.

Answer:International marketing is defined as ―The performance of business activities designed to plan,
price, promote and direct the company‘s flow of goods and services to consumers or users in more than
one nation for a profit‖.
A company that wants to sell their product in other than domestic market should understand the
environmental factors, consumer behavior, market forces and other characters relevant to the international
market. After understanding the definition, several questions may arise in your mind like why marketer
should go to the international market? And what is the difference between international marketing and
domestic marketing? As we discussed in the introduction part, companies enter into the international
market to tap the potential, to support the customer requirements or to avoid the unprofitable domestic
market. The differences between domestic marketing and international marketing are listed below:


Characteristics International Marketing Domestic Marketing
Culture Multi culture Single culture and in some cases
multi culture
Data accessibility Very difficult Easy
Data reliability Very Low High
Control Difficult Relatively easy
Consumer preferences Vary from country to country Vary in small extent
Product mix Adaptability required Standardization required
Business operation More than one country Home country only
Currency exposure Required Required only if there is importing


MB0047 – Management Information Systems

Assignment - Set- 1
Q1.What is MIS? Define the characteristics of MIS? What are the basic Functions of MIS? Give
some Disadvantage of MIS?

Answer:Organized approach to the study of information needs of a management at every level in making
operational, tactical, and strategic decisions. Its objective is to design and implement man-machine
procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent, and
timely manner. Modern, computerized systems continuously gather relevant data, both from inside and
outside the organization. This data is then processed, integrated, and stored in a centralized database (or
data warehouse) where it is constantly updated and made available to all who have the authority to access
it, in a form that suits their purpose.
Characteristics of MIS:
MIS is mainly designed to take care of the needs of the managers in the organization.
MIS aids in integrating the information generated by various departments of the organization.
MIS helps in identifying a proper mechanism of storage of data.
MIS also helps in establishing mechanism to eliminate redundancies in data.
MIS as a system can be broken down into sub systems.
The role and significance of MIS in business and its classification is explained. It is possible to understand
the various phases of development in MIS based on the type of system required in any organization.

Functions of MIS
1. Data processing: It includes the collection, transmission, storage, processing and output of data. It
simplifies the statistics and reduces to the lowest cost by supplying an unified format.
2. Function of prediction: It predicts the future situation by applying modern mathematics, statistics or
simulation.
3. Function of plan: It arranges reasonably the plans of each functional department in accordance with the
restrictions afforded by enterprises and provides the appropriate planning reports according to different
management.
4. Function of control: It monitors and inspects the operation of plans and comprises with the differences
between operation and plan in accordance with the data afforded by every functional department, and be
assistant to managers to control timely each method by analyzing the reasons why the differences comes
into being.
5. Function of assistance: It derives instantly the best answers of related problems by applying to various of
mathematics‘ mode and analyzing a plentiful data stored in computers in the hope of using rationally
human resource, financial resource, material resource and information resource for relative abundant
economic benefits.


Disadvantages of MIS
1.highly senstive requires constant monitoring.
2.buddgeting of MIS extremely difficult.
3.Quality of outputs governed by quality of inputs.
4.lack of flexiblity to update itself.
5.effectiveness decreases due to frequent changes in top management
6.takes into account only qualitative factors and ignores non-qualitative factors like morale of worker,
attitude of worker etc.

Q2. Explain Knowledge based system? Explain DSS and OLAP with example?

Answer: KBS are the systems based on knowledge base. Knowledge base is the database maintained for
knowledge management which provides the means of data collections, organization and retrieval of
knowledge. The knowledge management manages the domain where it creates and enables organization
for adoption of insights and experiences.
There are two types of knowledge bases.
a. Machine readable knowledge bases: The knowledge base helps the computer to process through. It
makes the data in the computer readable code which makes the operator to perform easier. Such
information sare used by semantic web. Semantic web is a web that will make a description of the system
that a system can understand.
b. Human readable knowledge bases: They are designed to help people to retrieve knowledge. The
information need to be processed by the reader. The reader can access the information and synthesize
their own.
KBS refers to a system of data and information used for decision making. The system is automated
to work on the knowledge based data and information required in a particular domain of management
activity. The processing is done based on the past decisions taken under suitable conditions. Decision
making is based on the fact that the condition is similar to the past situation hence the decision is also is
similar.
Examples of KBS are intelligent systems, robotics, neural networks etc.
Decision Support Systems (DSS)
DSS is an interactive computer based system designed to help the decision makers to use all l the
resources available and make use in the decision making. In management many a time problems arise out
of situations for which simple solution may not be possible. To solve such problems you may have to use
complex theories. The models that would be required to solve such problems may have to be identified.
DSS requires a lot of managerial abilities and managers judgment.
You may gather and present the following information by using decision support application:
• Accessing all of your current information assets, including legacy and relational data sources, cubes, data
warehouses, and data marts
• Comparative sales figures between one week and the next


• Projected revenue figures based on new product sales assumptions
• The consequences of different decision alternatives, given past experience in a context that is described.

Manager may sometimes find it difficult to solve such problems. E.g. – In a sales problem if there is multiple
decision variables modeled as a simple linear problem but having multiple optima, it becomes difficult to
take a decision. Since any of the multiple optima would give optimum results. But the strategy to select the
one most suitable under conditions prevailing in the market, requires skills beyond the model.
It would take some trials to select a best strategy. Under such circumstances it would be easy to take
decision if a ready system of databases of various market conditions and corresponding appropriate
decision is available. A system which consists of database pertaining to decision making based on certain
rules is known as decision support system. It is a flexible system which can be customized to suit the
organization needs. It can work in the interactive mode in order to enable managers to take quick
decisions. You can consider decision support systems as the best when it includes high-level summary
reports or charts and allow the user to drill down for more detailed information.
A DSS has the capability to update its decision database. Whenever manager feels that a particular
decision is unique and not available in the system, the manager can chose to update the database with
such decisions. This will strengthen the DSS to take decisions in future..
There is no scope for errors in decision making when such systems are used as aid to decision making.
DSS is a consistent decision making system. It can be used to generate reports of various lever
management activities. It is capable of performing mathematical calculations and logical calculation
depending upon the model adopted to solve the problem. You can summarize the benefits of DSS into
following:
• Improves personal efficiency • Expedites problem solving
• Facilitates interpersonal communication • Promotes learning or training
• Increases organizational control • Generates new evidence in support of a decision
• Creates a competitive advantage over competition • Encourages exploration and discovery on the part
of the decision maker • Reveals new approaches to thinking about the problem space

Online Analytical Processing (OLAP)
OLAP refers to a system in which there are predefined multiple instances of various modules used in
business applications. Any input to such a system results in verification of the facts with respect to the
available instances. A nearest match is found analytically and the results displayed form the database. The
output is sent only after thorough verification of the input facts fed to the system. The system goes through
a series of multiple checks of the various parameters used in business decision making. OLAP is also
referred to as a multi dimensional analytical model. Many big companies use OLAP to get good returns in
business.


The querying process of the OLAP is very strong. It helps the management take decisions like which month
would be appropriate to launch a product in the market, what should be the production quantity to maximize
the returns, what should be the stocking policy in order to minimize the wastage etc.
A model of OLAP may be well represented in the form of a 3D box. There are six faces of the box. Each
adjoining faces with common vertex may be considered to represent the various parameter of the business
situation under consideration. E.g.: Region, Sales & demand, Product etc

Q3. What are Value Chain Analysis & describe its significance in MIS? Explain what is meant by
BPR? What is its significance? How Data warehousing & Data Mining is useful in terms of MIS?

Answer: Business Process Re-engineering :The existing system in the organization is totally reexamined
and radically modified for incorporating the latest technology. This process of change for the betterment of
the organization is called as Business process re-engineering. This process is mainly used to modernize
and make the organizations efficient. BPR directly affects the performance. It is used to gain an
understanding the process of business and to understand the process to make it better and re-designing
and thereby improving the system.
BPR is mainly used for change in the work process. Latest software is used and accordingly the business
procedures are modified, so that documents are worked upon more easily and efficiently. This is known as
workflow management.

Significance of BPR
Business process are a group of activities performed by various departments, various organizations or
between individuals that is mainly used for transactions in business. There may be people who do this
transaction or tools. We all do them at one point or another either as a supplier or customer. You will really
appreciate the need of process improvement or change in the organizations conduct with business if you
have ever waited in the queue for a longer time to purchase 1 kilo of ricefrom a Public Distribution Shop
(PDS-ration shop). The process is called the check-out process. It is called process
because uniform standard system has been maintained to undertake such a task. The system starts with
forming a queue, receiving the needed item form the shop, getting it billed, payment which involves billing,
paying amount and receiving the receipt of purchase and the process ends up with the exit from the store.
It is the transaction between customer and supplier.
The above activities takes place between the customer and supplier which forms the process steps this
example explains the business process. The business process may be getting admission to the college and
graduating from the college, building house, and implementing new technology to an organization (Example
EDUNXT in SMUDE), etc
A Process can be represented by triangle and following figure shows continuous process of Business.
Business process reengineering is a major innovation changing the way organizations conduct their
business. Such changes are often necessary for profitability or even survival.

BPR is employed when major IT projects such as ERP are undertaken. Reengineering involves changes in
structure, organizational culture and processes. Many concepts of BPR changes organizational structure.
Team based organization, mass customization; empowerment and telecommutingare some of the
examples. The support system in any organization plays a important role in BPR. ES, DSS, AI (discussed
later) allows business to be conducted in different locations, provides flexibility in manufacturing permits
quicker delivery to customers and supports rapid paperless transactions among suppliers, manufacturers
and retailers. Expert systems can enable organizational changes by providing expertise to non experts. It is
difficult to carry out BPR calculations using ordinary programs like spreadsheets etc.
Experts make use of applications with simulations tools for BPR. Reengineering is basically done to
achieve cost reduction, increase in quality, improvement in speed and service. BPR enable a company to
become more competitive in the market. Employees work in team comprising of managers and engineers
to develop a product. This leads to the formation of interdisciplinary teams which can work better than mere
functional teams. The coordination becomes easier and faster results can be achieved. The entire business
process of developing a product gets a new dimension. This has led to reengineering of much old
functional process in organizations.
Data ware house is center part of data repository. Data warehousingprovides a strategic approach to all the
business. Data warehouse is broadly famous for its characteristics like:
a. Subject oriented: Data warehouse has the ability to analyze the data. The ability to define by subject
matter makes DW subject oriented.
b. Integrated: This resolves the problems of conflicts and inconsistencies existing in the units of measure.
c. Non volatile: Once the data is entered in the warehouse it shall not change. This characteristics is very
important because after all the purpose of heuristic data is for future use.
d. Time variant: The data warehouse focus on change over time. To discover new trends in business,
analysts need large amount of data which is contrasting to OLTP (Online transaction Processing) which
works on heuristic data.

Data Warehousing – Data Warehouse is defined as collection of database which is referred as relational
database for the purpose of querying and analysis rather than just transaction processing. Data warehouse
is usually maintained to store heuristic data for future use. Data warehousing is usually used to generate
reports. Integration and separation of data are the two basic features need to be kept in mind while creating
a datawarehousing. The main output from data warehouse systems are; either tabular listings (queries)
with minimal formatting or highly formatted "formal" reports on business activities. This becomes a
convenient way to handle the information being generated by various processes. Data warehouse is an
archive of information collected from wide multiple sources, stored under a unified scheme, at a single site.
This data is stored for a long time permitting the user an access to archived data for years. The data stored
and the subsequent report generated out of a querying process enables decision making quickly. This
concept is useful for big companies having plenty of data on their business processes.


Big companies have bigger problems and complex problems. Decision makers require access to
information from all sources. Setting up queries on individual processes may be tedious and inefficient.
Data warehouse may be considered under such situations.
Data warehouse Architecture:
Data Mining – Data mining is primarily used as a part of information system today, by companies with a
strong consumer focus -retail, financial, communication, and marketing organizations. It enables these
companies to determine relationships among "internal" factors such as price, product positioning, or staff
skills, and "external" factors such as economic indicators, competition, and customer demographics. And, it
enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it
enables them to "drill down" into summary information to view detail transactional data. With data mining, a
retailer could use point-of-sale records of customer purchases to send targeted promotions based on an
individual's purchase history. By mining demographic data from comment or warranty cards, the retailer
could develop products and promotions to appeal to specific customer segments.
Data Mining is a collaborative tool which comprises of database systems, statistics, machine
learning, visualization and information science. Based on the data mining approach used, different
techniques form the other discipline can be used such as neural networks, artificial intelligence, fuzzy logic,
knowledge representation, high performance Data mining refers to extracting or mining knowledge from
large amount of data. There may be other terms which refer data mining such as knowledge mining,
knowledge extraction, data/pattern analysis, data archeology, and data dredging. The Knowledge discovery
as a process may consist of following steps:
1. Data Cleaning: It removes noise and inconsistent data.
2. Data integration: It is where multiple data sources are combined.
3. Data selection: Data relevant to the analysis task are retrieved from the database.
4. Data transformation: Data are transformed or consolidated into forms appropriate for mining by
performing summary or aggregation operations, for instance.
5. Data mining: An essential process where intelligent methods are applied in order to extract data
patterns.
6. Pattern evaluation: To identify the truly interesting patterns representing knowledge based on some
interesting measure.
7. Knowledge presentation: Visualization and knowledge representation techniques are used to present the
mined knowledge to the users.
When you look at the above step you will find that data mining is a very important step in
knowledge representation. It interacts with the user for knowledge base.
So it is found that there is necessity of a typical architecture for data mining as a big process. The
architecture of the data mining has the following components:
1 Database, data warehouse and information repository: This is one or a set of databases, data
warehouse, and information repository which can be used for data cleaning and data integration.

2 Database server: This Server is responsible for fetching the relevant data

3 Data mining engine: This helps in accessing the user through applications. It accesses data from the
warehouse with the help of standard data connectivity mechanisms. Usually database drivers are used to
connect the database.
4 Patterns evaluation model: It acquires the data to be evaluated form the database, producing the pattern
edge. This model scans the data. It searches and creates the interesting patterns based on the thresholds.
5 Graphical user interface: It communicates between the user and the data mining system. It allows the
user to interact with the system and specifies the data mining queries or task.
6 Data mining is applicable to any kind of information repository. Some of these may be relational
databases, data warehouse, transactional databases, advanced database management systems, www and
files. Advance database systems include object oriented databases, object relational databases, and
application oriented databases.
7 The best example for data mining which is so close to our lives is Google. The success of Google
depends on the use of data mining techniques in the analysis of data in the search engine to meet your
search demand.

Q4. Explain DFD & Data Dictionary? Explain in detail how the information requirement is
determined for an organization?

Answer: DFD :-Data flow diagrams represent the logical flow of data within the system. DFD do not explain
how the processes convert the input data into output. They do not explain how the processing takes place.
DFD uses few symbols like circles and rectangles connected by arrows to represent data flows.
DFD can easily illustrate relationships among data, flows, external entities an stores. DFD can also be
drawn in increasing levels of detail, starting with a summary high level view and proceeding o more detailed
lower level
views.
A number of guidelines should be used in constructing DFD.
• Choose meaningful names for the symbols on the diagram.
• Number the processes consistently. The numbers do not imply the sequence.
• Avoid over complex DFD.
• Make sure the diagrams are balanced.
Data Dictionary :The data dictionary is used to create and store definitions of data, location,
format for storage and other characteristics. The data dictionary can be used to retrieve the definition of
data that has already been used in an application. The data dictionary also stores some of the description
of data structures, such as entities, attributes and relationships. It can also have software to update itself
and to produce reports on its contents and to answer some of the queries.


A schedule is made for the development of the system. While preparing the schedule due consideration is
given to the importance of the system in the overall information requirement. Due regard is also given to
logical system development. For example, it is necessary to develop the accounting system first and then
the analysis.
Further, unless the systems are fully developed their integration is not possible. This development schedule
is to be weighed against the time scale for achieving certain information requirement linked to a business
plan. If these are not fully met, it is necessary to revise the time schedule and also the development
schedule, whenever necessary.
decisions with the financial decisions. The system development schedule is linked with the information
requirements which in turn, are linked with the goals and objectives of the business.
The selection of the architecture, the approach to the information system development and the choice of
hardware and software are the strategic decisions in the design and development of the MIS in the
organisation. The organisations which do not care to take proper decisions in these areas suffer from over-
investment, under-utilisation and are not able to meet the critical information requirements.

Q5. What is ERP? Explain its existence before and its future after? What are the advantages
andDisadvantages of ERP? What is Artificial Intelligence? How is it different from Neural Networks?

Answer:Enterprise Resource Planning :To be considered an ERP system, a software package must
provide the function of at least two systems. For example, a software package that provides both payroll
and accounting functions could technically be considered an ERP software package. However, the term is
typically reserved for larger, more broadly based applications. The introduction of an ERP system to
replace two or more independent applications eliminates the need for external interfaces previously
required between systems, and provides additional benefits that range from standardization and lower
maintenance to easier and/or greater reporting capabilities.
Examples of modules in an ERP which formerly would have been stand-alone applications include:
Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM), Human Resources,
Warehouse Management and Decision Support System.
Enterprise Resource Planning is a term originally derived from manufacturing resource planning that
followed material requirements planning . MRP evolved into ERP when "routings" became a major part of
the software architecture and a company's capacity planning activity also became a part of the standard
software activity. ERP systems typically handle the manufacturing, logistics, distribution, inventory,
shipping, invoicing, and accounting for a company. Enterprise Resource Planning or ERP software can aid
in the control of many business activities, like sales, marketing, delivery, billing, production, inventory
management, quality management, and human resource management.
ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K problem in their legacy
systems.


Many companies took this opportunity to replace their legacy information systems with ERP systems. This
rapid growth in sales was followed by a slump in 1999, at which time most companies had already
implemented their Y2K solution.
ERPs are often incorrectly called back office systems indicating that customers and the general public are
not directly involved. This is contrasted with front office systems like customer relationship management
(CRM) systems that deal directly with the customers, or the eBusiness systems such as eCommerce,
eGovernment, eTelecom, and eFinance, or supplier relationship management (SRM) systems.
ERPs are cross-functional and enterprise wide. All functional departments that are involved in operations or
production are integrated in one system. In addition to manufacturing, warehousing, logistics, and
information technology, this would include accounting, human resources, marketing, and strategic
management.

ERP II means open ERP architecture of components. The older, monolithic ERP systems became
component oriented.
EAS – Enterprise Application Suite is a new name for formerly developed ERP systems which include
(almost) all segments of business, using ordinary Internet browsers as thin clients.

ERP Before and After
Before : Prior to the concept of ERP systems, departments within an organization (for example, the human
resources (HR)) department, the payroll department, and the financial department) would have their own
computer systems. The HR computer system (often called HRMS or HRIS) would typically contain
information on the department, reporting structure, and personal details of employees. The payroll
department would typically calculate and store paycheck information. The financial department would
typically store financial transactions for the organization. Each system would have to rely on a set of
common data to communicate with each other. For the HRIS to send salary information to the payroll
system, an employee number would need to be assigned and remain static between the two systems to
accurately identify an employee. The financial system was not interested in the employee-level data, but
only in the payouts made by the payroll systems, such as the tax payments to various authorities,
payments for employee benefits to providers, and so on. This provided complications. For instance, a
person could not be paid in the payroll system without an employee number.

After
ERP software, among other things, combined the data of formerly separate applications. This made the
worry of keeping numbers in synchronization across multiple systems disappears. It standardized and
reduced the number of software specialties required within larger organizations.


Advantages and Disadvantages
Advantages – In the absence of an ERP system, a large manufacturer may find itself with many software
applications that do not talk to each other and do not effectively interface. Tasks that need to interface with
one another may involve:
• A totally integrated system
• The ability to streamline different processes and workflows
• The ability to easily share data across various departments in an organization
• Improved efficiency and productivity levels
• Better tracking and forecasting
• Lower costs
• Improved customer service

Change how a product is made, in the engineering details, and that is how it will now be made. Effective
dates can be used to control when the switch over will occur from an old version to the next one, both the
date that some ingredients go into effect, and date that some are discontinued. Part of the change can
include labelling to identify version numbers.
Some security features are included within an ERP system to protect against both outsider crime, such as
industrial espionage, and insider crime, such as embezzlement. A data tampering scenario might involve a
disgruntled employee intentionally modifying prices to below the breakeven point in order to attempt to take
down the company, or other sabotage. ERP systems typically provide functionality for implementing internal
controls to prevent actions of this kind. ERP vendors are also moving toward better integration with other
kinds of information security tools.
Disadvantages – Many problems organizations have with ERP systems are due to inadequate investment
in ongoing training for involved personnel, including those implementing and testing changes, as well as a
lack of corporate policy protecting the integrity of the data in the ERP systems and how it is used.
While advantages usually outweigh disadvantages for most organizations implementing an ERP system,
here are some of the most common obstacles experienced:
Usually many obstacles can be prevented if adequate investment is made and adequate training is
involved, however, success does depend on skills and the experience of the workforce to quickly adapt to
the new system.
• Customization in many situations is limited
• The need to reengineer business processes
• ERP systems can be cost prohibitive to install and run
• Technical support can be shoddy
• ERP's may be too rigid for specific organizations that are either new or want to move in a new direction in
the near future.


Artificial Intelligence: Artificial Intelligence is the science and technology based on various
functions to develop a system that can think and work like a human being. It can reason, analyze, learn,
conclude and solve problems. The systems which use this type of intelligence are known as artificial
intelligent systems and their intelligence is referred to as artificial intelligence. It was said that the computer
don‘t have common sense. Here in AI, the main idea is to make the computer think like human beings, so
that it can be then said that computers also have common sense. More precisely the aim is to obtain a
knowledge based computer system that will help managers to take quick decisions in business.
Artificial Intelligence can be classified into various branches like Natural Language Processing (NLP),
Speech Recognition, Automated Programming, Machine Learning, Pattern Recognition and Probabilistic
Networks. Most of the software developed for AI have been through Prolog, C++, Java and LISP. These
programming languages provide facility of creating various functions of business activity, extension of a
function, handling dynamic situations in business, providing uniformity in application etc.
A business decision making process depends upon the level of risk and uncertainty involved in the
problem. To model the uncertainty and risk of natural language used in developing a AI for business
application the concept of fuzzy logic is used. For problems related finance applications apart from fuzzy
logic concepts, two other concepts of AI are being researched. These are genetic algorithm and chaotic
models. AI is also being applied to the functions of marketing like – Selling, Forecasting, and
Communication etc.
Artificial Intelligence and Neural Networks : Artificial intelligence is a field of science and
technology based on disciplines such as computer science, biology, psychology, linguistics, mathematics
and engineering. The goal of AI is to develop computers that can simulate the ability to think, see, hear,
walk, talk and feel. In other words, simulation of computer functions normally associated with human
intelligence, such as reasoning, learning and problem solving.
AI can be grouped under three major areas: cognitive science, robotics and natural interfaces.
Cognitive science focuses on researching on how the human brain works and how humans think and learn.
Applications in the cognitive science area of AI include the development of expert systems and other
knowledge-based systems that add a knowledge base and some reasoning capability to information
systems. Also included are adaptive learning systems that can modify their behavior based on information
they acquire as they operate. Chess-playing systems are some examples of such systems.
Fussy logic systems can process data that are incomplete or ambiguous. Thus, they can solve semi-
structured problems with incomplete knowledge by developing approximate inferences and answers, as
humans do.
Neural network software can learn by processing sample problems and their solutions. As neural nets start
to recognize patterns, they can begin to program themselves to solve such problems on their own.
Neural networks are computing systems modeled after the human brain‘s mesh like network of
interconnected processing elements, called neurons. The human brain is estimated to have over 100 billion
neuron brain cells. The neural networks are lot simpler in architecture. Like the brain, the interconnected
processors in a neural network operate in parallel and interact dynamically with each other.


This enables the network to operate and learn from the data it processes, similar to the human brain. That
is, it learns to recognize patterns and relationships in the data. The more data examples it receives as
input, the better it can learn to duplicate the results of the examples it processes. Thus, the neural networks
will change the strengths of the interconnections between the processing elements in response to changing
patterns in the data it receives and results that occur.
For example, neural network can be trained to learn which credit characteristics result in good or bad loans.
The neural network would continue to be trained until it demonstrated a high degree of accuracy in correctly
duplicating the results of recent cases. At that point it would be trained enough to begin making credit
evaluations of its own.
Genetic algorithm software uses Darwinian (survival of the fittest), randomizing and other mathematics
functions to simulate evolutionary processes that can generate increasingly better solutions to problems.

Q6. Distinguish between closed decision making system & open decision making system? What
is„What – if„ analysis? Why is more time spend in problem analysis & problem definition as
compared to the time spends on decision analysis?

Answer: closed decision making system :The decision-making systems can be classified in a number of
ways. There are two types of systems based on the manager's knowledge about the environment. If the
manager operates in a known environment then it is a closed decision-making system. The conditions of
the closed decision-making system are:
a) The manager has a known set of decision alternatives and knows their outcomes fully in terms of value,
if implemented. b) The manager has a model, a method or a rule whereby the decision alternatives can be
generated, tested, and ranked for selection. c) The manager can choose one of them, based on some goal
or
objective criterion.
Few examples are a product mix problem, an examination system to declare pass or fail, or an acceptance
of the fixed deposits.
Open decision-making system :If the manager operates in an environment not known to him, then the
decision-making system is termed as an open decision-making system. The conditions of this system in
contrast closed decision-making system are:
a) The manager does not know all the decision alternatives. b) The outcome of the decision is also not
known fully. The knowledge of the outcome may be a probabilistic one. c) No method, rule or model is
available to study and finalise one decision among the set of decision alternatives.
d) It is difficult to decide an objective or a goal and, therefore, the manager resorts to that decision, where
his aspirations or desires are met best.
Deciding on the possible product diversification lines, the pricing of a new product, and the plant location,
are some decision-making situations which fall in the category of the open decision-making systems.


The MIS tries to convert every open system to a closed decision-making system by providing information
support for the best decision. The MIS gives the information support, whereby the manager knows more
and more about environment and the outcomes, he is able to generate the decision alternatives, test them
and select one of them. A good MIS achieves this.

What if analysis
Decisions are made using a model of the problem for developing various solution alternatives and testing
them for best choice. The model is built with some variables and relationship between variables. In reality,
the considered values of variables or relationship in the model may not hold good and therefore solution
needs to be tested for an outcome, if the considered values of variables or relationship change. This
method of analysis is called 'what if analysis.'
For example, in decision-making problem about determining inventory control parameters (EOQ, Safety
Stock, Maximum Stock, Minimum Stock, Reorder level) lead time is assumed fairly constant and stable for
a planning period. Based on this, the inventory parameters are calculated. Inventory manager wants to
know how the cost of holding inventory will be affected if lead time is reduced by one week or increased by
one week. The model with changed lead time would compute the cost of holding inventory under new
conditions. Such type of analysis can be done for purchase price change, demand forecast variations and
so on. Such analysis helps a manager to take more learned decisions. ‗What if analysis‘ creates confidence
in decision-making model by painting a picture of outcomes under different conditions?

Decision Analysis
A decision is made but such decision needs to be analysed for conditions and assumptions considered in
the decision model. The process is executed through analytical modelling of problem and solution.
Problem Definition
The starting point of a problem definition is the information gathered in the problem analysis stage. The
different aspects surrounding the design problem have been analysed and should be taken into account in
the problem definition.
For defining a problem this implies that it is not sufficient to describe the existing state. Therefore, we speak
consciously of the situation someone is or is not content with. A description of the situation is therefore a
description of a state plus the relevant causal model(s), including the assumed patterns of behaviour of the
people and organizations involved. A situation is only a problem if the problem-owner wishes to, and want
to do something about it. This implies that a situation must be conceivable that is more desirable than the
present one: the goal situation. The existing situation, however, can also be formulated in such a manner
that a problem does arise. A problem definition is usually set up at the end of the problem analysis phase.


Problem Analysis
You can use problem analysis to gather information that helps you determine the nature of a problem
encountered on your system.
The problem analysis information is used to:
• Determine if you can resolve the problem yourself.
• Gather sufficient information to communicate with a service provider and quickly determine the service
action that needs to be taken.

The method of finding and collecting error information depends on the state of the hardware at the time of
the failure. This procedure directs you to one of the following places to find error information:
• Hardware Management Console (HMC) error logs
• The operating system's error log
• The control panel

• Advanced System Management Interface (ASMI) error logs Hence more time is spent Problem Analysis
and Problem Definiti


MB 0048: Operations Research

ASSIGNMENT- Set 1
Q1. A toy company manufactures two types of dolls, a basic version doll-A and a deluxe version
doll-B. Each doll of type B takes twice as long to produce as one of type A, and the company would
have time to make maximum of 1000 per day. The supply of plastic is sufficient to produce 1000
dolls per day (both A & B combined). The deluxe version requires a fancy dress of which there are
only 500 per day available. If the company makes a profit of Rs 3.00 and Rs 5.. per doll, respectively
on doll A and B, then how many of each doll should be produced per day in order to maximize the
total profit. Formulate this problem.

Answer: Let X1 and X2 be the number of dolls produced per day of type A and B, respectively.

Let the A require t hrs. So that the doll B require 2t hrs.

So the total time to manufacture X1 and X2 dolls should not exceed 2000t hrs.

Therefore, tX1 + 2tX2 ≤ 2000t

Other constraints are simple. Then the linear programming problem becomes:

Maximize p = 3 X1 + 5 X2

Subject to restrictions,

X1 + 2X2 ≤ 2000 (Time constraint)

X1 + X2 ≤ 1500 (Plastic constraint)

X2 ≤ 600 (Dress constraint)

And non-negatively restrictions

X1 , X2 ≥ 0

Q2. What are the advantages of Linear programming techniques?

Answer: 1. The linear programming technique helps to make the best possible use of available productive
resources (such as time, labor, machines etc.)

2. It improves the quality of decisions. The individual who makes use of linear programming methods
becomes more objective than subjective.


3. It also helps in providing better tools for adjustment to meet changing conditions.

4. In a production process, bottle necks may occur. For example, in a factory some machines may be in
great demand while others may lie idle for some time. A significant advantage of linear programming is
highlighting of such bottle necks.

5. Most business problems involve constraints like raw materials availability, market demand etc. which
must be taken into consideration. Just we can produce so many units of product does not mean that they
can be sold. Linear programming can handle such situation also.

Q3. Solve the following Assignment Problem

Operations M1 M2 M3 M4

O1 10 15 12 11

O2 9 10 9 12

O3 15 16 16 17

Answer: Since the number of rows are less than number of columns, adding a dummy row and applying
Hungarian method,

Row reduction matrix

O1 10 15 12 11

O2 9 10 9 12

O3 15 16 16 17

O4 0 0 0 0

Optimum assignment solution

O1 [0] 5 2 1
O2 x 1 [0] 3
O3 1 [0] x x
O4 x x x [0]

Hungarian Method leads to multiple solutions. Selecting (03, M2) arbitrarily.

O1 – M1 10

O2 – M3 09

O3 – M2 16

O4 – M4 00
-------------------------
TOTAL 35

Therefore, the optimum assignment schedule is O1 – M1, O2 – M3, O3 – M2 AND O4 – M4.

Q4. What is integer programming?

Answer: If the unknown variables are all required to be integers, then the problem is called an integer
programming (IP) or integer linear programming (ILP) problem. In contrast to linear programming, which
can be solved efficiently in the worst case, integer programming problems are in many practical situations
(those with bounded variables) NP-hard (non-deterministic polynomial-time hard), in computational
complexity theory, is a class of problems that are, informally, "at least as hard as the hardest problems in
NP"). 0-1 integer programming or binary integer programming (BIP) is the special case of integer
programming where variables are required to be 0 or 1 (rather than arbitrary integers). This problem is also
classified as NP-hard, and in fact the decision version was one of Karp's 21 NP-complete problems.

If only some of the unknown variables are required to be integers, then the problem is called a mixed
integer programming (MIP) problem. These are generally also NP-hard.

There are however some important subclasses of IP and MIP problems that are efficiently solvable, most
notably problems where the constraint matrix is totally uni-modular and the right-hand sides of the
constraints are integers.

Advanced algorithms for solving integer linear programs include:

cutting-plane method
branch and bound
branch and cut
branch and price
if the problem has some extra structure, it may be possible to apply delayed column generation.


Submission of mba spring 2012

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