Group A — Short Answer Questions (1 mark)

A system is a set of interrelated components working together to achieve common objectives. In industrial management, it views the organization as a unified whole where inputs (raw materials, labor, capital) are transformed through processes into outputs (finished goods/services), with feedback controlling the system. Key characteristics: it has boundaries, receives inputs, processes them, produces outputs, and interacts with the external environment.

An OPEN SYSTEM continuously interacts with its environment, exchanging matter, energy, and information. Example: A manufacturing company that takes raw materials from suppliers (input from environment) and sells products to customers (output to environment). A CLOSED SYSTEM has no interaction with its environment — it is self-contained. Example: A sealed chemical reaction vessel. In practice, no industrial system is perfectly closed; most operate as open systems.

The four fundamental parameters are: (1) Inputs — resources like raw materials, labor, capital, information; (2) Transformation Process — activities converting inputs to outputs (production, assembly, services); (3) Outputs — finished goods, services, or results; (4) Feedback — information about output quality and quantity used to control and improve the system.

According to Henry Fayol, "Management is to forecast and plan, to organize, to command, to coordinate and to control." He defined it as a universal process consisting of five core functions (POSDCORB) applicable to all organizations, both business and non-business.

The four core functions are: (1) PLANNING — setting objectives and deciding on actions to achieve them; (2) ORGANIZING — arranging resources and tasks to implement plans; (3) DIRECTING/LEADING — guiding, motivating, and supervising people to perform tasks; (4) CONTROLLING — measuring performance against standards and taking corrective action.

Organization structure is the formal framework that defines how tasks are divided, grouped, and coordinated within an organization. It establishes reporting relationships (who reports to whom), departmentalization, span of control, and the hierarchy of authority. It provides clarity on roles, responsibilities, and communication channels.

(1) To facilitate efficient coordination and communication among different departments and individuals. (2) To clearly define roles, responsibilities, and reporting relationships so that tasks are completed efficiently and accountability is established.

Division of labor (specialization) is the process of breaking down a complex task into smaller, simpler tasks assigned to different workers based on their skills. Primary advantage: It increases productivity and efficiency by allowing workers to develop expertise in specific tasks, reducing wastage of time and effort (as advocated by Adam Smith and F.W. Taylor).

SCALAR PROCESS refers to the vertical chain of command — the hierarchy of authority from top management to the lowest level, defining who reports to whom (the "chain of superiors"). FUNCTIONAL PROCESS refers to the horizontal grouping of similar activities into departments (e.g., production, finance, marketing) for specialization and efficiency. Scalar is about authority flow; Functional is about activity grouping.

Span of control is the number of subordinates a manager can effectively supervise. Influencing factors: (1) Nature of work — complex work requires narrower span; (2) Ability of manager — experienced managers handle wider spans; (3) Time available for supervision; (4) Degree of decentralization; (5) Use of technology and communication systems.

Delegation of authority is the process by which a superior transfers a portion of their authority and responsibility to a subordinate to perform specific tasks. It involves three elements: (1) Assignment of duties/responsibility, (2) Granting of authority/power to act, and (3) Creation of accountability — the subordinate remains answerable to the superior. Delegation does NOT mean abdication — ultimate accountability stays with the superior.

CENTRALIZATION concentrates decision-making authority at top levels. Advantages: consistency, quick crisis decisions, better control. DECENTRALIZATION distributes authority to lower/middle levels. Advantages: faster decisions, employee development, local flexibility. Decentralization is preferred when the organization is large, geographically dispersed, or needs quick local responses.

ORGANIZATIONAL CULTURE is the shared set of values, beliefs, norms, and practices that characterize how members think and behave — deep-seated, long-term, socially constructed. ORGANIZATIONAL CLIMATE is the employees' shared perception of the work environment — how it feels to work there — more temporary and emotionally experienced. Culture is "what we believe"; Climate is "how we feel about working here."

Employee morale is the overall attitude, satisfaction, and confidence that employees feel toward their work, organization, and colleagues. High morale reflects enthusiasm, willingness to work hard, loyalty, and satisfaction with working conditions. Morale is a group-level concept reflecting the collective spirit of the workforce.

Generally, high morale is positively correlated with high productivity — satisfied, motivated employees work harder and more efficiently. However, the relationship is not always direct: high morale may exist in a low-productivity environment if workers are satisfied with low output standards; and low morale often leads to absenteeism, turnover, and poor quality. Morale is a necessary but not always sufficient condition for productivity.

Job satisfaction is the positive emotional state resulting from an individual's appraisal of their job experiences — how content they are with their role. Two key influencing factors: (1) WORK CONDITIONS — physical environment, safety, tools, working hours; (2) RECOGNITION AND REWARDS — fair compensation, promotions, appreciation. Other factors include job security, relationships with supervisors/peers, and opportunities for growth.

(1) FENCING OF MACHINERY — all dangerous parts of machinery must be securely fenced to protect workers. (2) EMERGENCY STOP DEVICES — every machine must have easily accessible stopping/starting devices. Other provisions include: workers must not enter areas with naked flames near flammable materials, pregnant women cannot work at dangerous machines, and every factory must have adequate fire-fighting equipment.

The Factories Act, 1948 limits adult workers to a maximum of 48 hours per week (8 hours per day). No worker can work more than 9 hours in any single day (including overtime). One weekly holiday is mandatory. Overtime beyond 9 hours/day or 48 hours/week must be compensated at twice the ordinary rate of wages.

CPM = Critical Path Method. PERT = Program Evaluation and Review Technique. Both are network analysis tools used for project planning, scheduling, and controlling complex projects involving many interdependent activities.

CPM uses DETERMINISTIC (single) time estimates — each activity has one fixed duration based on past experience. PERT uses PROBABILISTIC (three) time estimates — Optimistic (a), Most Likely (m), and Pessimistic (b) — and calculates expected duration using $t_e = (a + 4m + b) / 6$. CPM is used when activity times are well-known; PERT is used for R&D projects with uncertainty.

An ACTIVITY is a task or operation that consumes time, resources, and effort. It is represented by an arrow in a network diagram and has a defined start and end. An EVENT (or node) is a specific point in time marking the START or COMPLETION of one or more activities. It does NOT consume time or resources. Events = circles/nodes; Activities = arrows.

A dummy activity (dotted arrow) is an imaginary activity that does NOT consume time or resources. It is introduced to: (1) Show correct dependency relationships when two activities share a common predecessor; (2) Avoid ambiguity in network diagrams; (3) Ensure each activity has unique identification. Dummy activities are never numbered in activity lists.

EST (Earliest Start Time) is the earliest time at which an activity can begin, assuming all predecessor activities have been completed as early as possible. EFT (Earliest Finish Time) is the earliest time at which an activity can finish: $\text{EFT} = \text{EST} + \text{Activity Duration}$. EST/EFT are computed by the FORWARD PASS method through the network.

LFT (Latest Finish Time) is the latest time by which an activity must finish without delaying the project. LST (Latest Start Time) is the latest time by which an activity can start: $\text{LST} = \text{LFT} - \text{Activity Duration}$. LST/LFT are computed by the BACKWARD PASS method from the final event of the network.

The Critical Path is the longest path through the network from start event to end event. It represents the minimum time required to complete the project. Activities on the critical path have ZERO float — any delay directly delays the entire project. The critical path is found by identifying events where $\text{EST} = \text{LST}$ (or $\text{EFT} = \text{LFT}$).

Total Float is the maximum time by which an activity can be delayed without delaying the project completion date. Formula: $\text{Total Float} = \text{LST} - \text{EST} = \text{LFT} - \text{EFT}$. Activities on the critical path have Total Float = 0. Total float is shared among activities on the same path.

FREE FLOAT is the time by which an activity can be delayed without delaying the EARLIEST start time of any successor. Formula: $\text{FF} = \text{EST}(\text{successor}) - \text{EFT}(\text{current})$. INDEPENDENT FLOAT is the portion of total float that belongs exclusively to one activity. Formula: $\text{IF} = \text{Total Float} - \text{Free Float}$. Independent float is available only when preceding activities finish early AND succeeding activities start late.

Network crashing is shortening project duration by allocating additional resources (extra workers, overtime, better equipment) to critical activities at increased cost. The goal is to find the optimum project duration at minimum total cost by balancing: (1) Reduced indirect costs (shorter project = less overhead) and (2) Increased direct costs (crashing = more resource cost). Crashing is applied only to critical path activities.

Cost Slope is the additional cost per unit time when an activity is crashed. Formula: $\text{Cost Slope} = \frac{\text{Crash Cost} - \text{Normal Cost}}{\text{Normal Time} - \text{Crash Time}}$. It represents the rate at which crashing costs increase. Activities with the lowest cost slope are crashed first (most economical) until another path becomes critical.

Materials Management is the integrated function of planning, organizing, and controlling the flow of materials from initial procurement through manufacturing to final distribution. It encompasses purchasing, storekeeping, inventory control, and materials handling. Ultimate objective: To ensure the right materials are available in the right quantity, at the right time, at the right place, and at the minimum total cost.

(1) To procure the right quality of materials at the right price and right time, ensuring uninterrupted production. (2) To maintain good supplier relationships and negotiate favorable terms while minimizing total procurement costs (purchase price + ordering cost + carrying cost).

CENTRALIZED: One purchasing department buys for all units/plants. Advantages: bulk discounts, better control, uniform standards, expert buyers. Disadvantages: slow response, less local flexibility. DECENTRALIZED: Each department/plant buys independently. Advantages: fast response, local adaptation, accountability. Disadvantages: no bulk discounts, duplication, less control. Centralized suits large uniform needs; Decentralized suits diverse/local needs.

A Purchase Requisition is an internal document prepared by the department needing materials, requesting the purchasing department to procure specified items. It contains: item description, quantity required, specification, budget code, date required, and authorized signature. It is the FIRST step in the purchasing cycle and triggers the purchase process.

Storekeeping is the function of receiving, storing, protecting, and issuing materials/equipment in a systematic manner. Primary functions: (1) Receiving and inspecting incoming materials; (2) Storing materials safely and systematically; (3) Issuing materials against authorized requisitions; (4) Maintaining accurate inventory records; (5) Preventing losses from theft, damage, or obsolescence.

A BIN CARD is a card attached to each storage bin, showing the quantity of a specific item held in that bin. It records: item name, bin number, receipts, issues, and balance — updated after EACH transaction. It is a STORE-LEVEL record. A STORES LEDGER is a formal accounting record (like a ledger account) for each item, showing the monetary value (quantity × price). Key difference: Bin Card = physical/quantitative record at the bin; Stores Ledger = financial/accounting record in the ledger.

Codification assigns a unique code/number to each store item to: (1) Eliminate confusion from similar item names; (2) Simplify and speed up record-keeping and retrieval; (3) Enable computerization of inventory systems; (4) Standardize naming across departments; (5) Facilitate classification and analysis (e.g., ABC analysis); (6) Reduce storage and handling costs through systematic arrangement.

Inventory Control is the systematic management of stocked goods to maintain optimal inventory levels — ensuring materials are available when needed while minimizing carrying costs. It involves: setting reorder points, determining order quantities, monitoring stock levels, and controlling wastage/obsolescence. The goal is to balance the costs of holding inventory against the costs of stockouts.

EOQ = Economic Order Quantity. It is the optimal order quantity that minimizes total inventory cost. Formula: $\text{EOQ} = \sqrt{\frac{2 \times D \times O}{H}}$ where: $D$ = Annual demand (units), $O$ = Ordering cost per order (Rs.), $H$ = Carrying cost per unit per year (Rs.).

ABC Analysis classifies inventory items based on their ANNUAL USAGE VALUE (consumption value = unit cost × annual consumption), following the Pareto Principle (80/20 rule). A-items: Top ~10% of items accounting for ~70% of total usage value (high value, tight control). B-items: Next ~20% of items accounting for ~20% of value (moderate control). C-items: Remaining ~70% of items accounting for ~10% of value (loose control).

Wilson's Model determines the optimal order quantity and reorder point to minimize total inventory cost. Key assumptions: (1) Demand is constant and known; (2) Replenishment is instantaneous; (3) No quantity discounts; (4) Carrying cost is proportional to average inventory. The model produces the EOQ formula and recommends placing a new order when stock reaches the Reorder Point (ROP) = Lead time demand.

In the Two-Bin System, stock is kept in two bins. Items are consumed from Bin 1 first. When Bin 1 is EMPTY, an order is placed for quantity = EOQ, and consumption shifts to Bin 2 (which contains exactly enough stock to cover demand during lead time). When Bin 2 is also empty, the new order arrives and refills Bin 1. The system provides a simple visual reorder point without needing continuous monitoring.

MRP = Material Requirements Planning. It is a computer-based system that calculates what materials are needed, how many, and when. The TWO MAIN INPUTS are: (1) MASTER PRODUCTION SCHEDULE (MPS) — what end products to make and when; (2) BILL OF MATERIALS (BOM) — the component structure showing what materials/subassemblies are needed for each product. Additional input: Inventory Status File.

JOB PRODUCTION: One-off or small batches, custom-made. Characteristics: high variety, low volume, general-purpose machines, skilled labor, flexible layout, high cost/unit. Example: shipbuilding. CONTINUOUS/MASS PRODUCTION: Standardized products in large quantities. Characteristics: low variety, high volume, specialized machines, semi-skilled labor, fixed/line layout, low cost/unit. Example: automobile assembly lines.

PPC is the process of planning the production workflow in advance and controlling it to ensure production targets are met efficiently. It bridges the gap between planning and execution. Core functions: Routing, Loading, Scheduling, Dispatching, Expediting, Inspection, Evaluating, and Corrective Action. PPC ensures that the right quantity of the right quality product is delivered at the right time at minimum cost.

(1) TIMING — determining WHEN each operation should start and finish, based on priorities, deadlines, and available capacity. (2) SEQUENCING — deciding the ORDER in which jobs should be processed on each machine to minimize idle time, meet delivery dates, and maximize utilization. Scheduling converts the production plan into a time-based timetable.

A Gantt Chart is a horizontal bar chart showing a project schedule — tasks, their start/end dates, durations, and progress. Each bar represents an activity; its length represents duration. Developed by Henry L. Gantt (American mechanical engineer) around 1910-1915. Widely used in PPC for scheduling, monitoring, and comparing planned vs. actual progress.

Critical Ratio (CR) is a dynamic scheduling priority index measuring job urgency. Formula: $\text{CR} = \frac{\text{Due Date} - \text{Current Date}}{\text{Processing Time Remaining}}$. Interpretation: CR > 1 → ahead of schedule (low priority); CR = 1 → on schedule (normal priority); CR < 1 → overdue (highest priority). Jobs with lower CR are scheduled first.

A bottleneck is the slowest/most constrained stage in a production system — the operation with the lowest capacity that limits the throughput of the entire system. It creates a queue of work-in-process (WIP) upstream and causes idle time downstream. Identifying and eliminating bottlenecks is critical for improving overall system efficiency (Theory of Constraints by Goldratt).

Value Analysis is a systematic, function-oriented approach to analyzing the functions of a product/component to achieve the required function at the LOWEST TOTAL COST without compromising quality. Value Formula: $V = \frac{F}{C}$ where $V$ = Value, $F$ = Function (utility/performance), $C$ = Cost. High value = high function at low cost. VA aims to increase V by increasing F, decreasing C, or both.

DARSIRI = Data gathering → Analysis → Research → Solution → Implementation → Review → Inspection. (1) Data: Collect all information about the product; (2) Analysis: Identify functions, costs, and problem areas; (3) Research: Explore alternative ways to perform each function; (4) Solution: Select the best alternative; (5) Implementation: Put the solution into practice; (6) Review: Evaluate results; (7) Inspection: Verify solution works and maintain standards.

COST CONTROL is maintaining costs within predetermined standards/budgets through planning, monitoring, and corrective action. It focuses on PREVENTING cost overruns and is a TEMPORARY measure for a specific period. COST REDUCTION is the permanent, continuous effort to lower costs WITHOUT compromising quality. It challenges existing standards and seeks better methods. Cost Control = "costs should not exceed budget"; Cost Reduction = "costs can be reduced further."

ERP is an integrated software system that manages and automates core business processes across an entire organization using a single shared database. It integrates functions like finance, HR, manufacturing, supply chain, and sales. Two major benefits: (1) IMPROVED DATA CONSISTENCY — single source of truth eliminates data redundancy and errors; (2) ENHANCED DECISION-MAKING — real-time information across departments enables faster, better-informed decisions.