Reference no: EM132708893

MHH624713 Industrial Studies - National University of Science and Technology

Aim To develop an understanding of overall concepts of various Industrial management functions.

Learning Outcome 1: Analyze management accounts and appraise capital investments.
Learning Outcome 2: Describe the underlying principles of production planning and control, and evaluate inventory costs.
Learning Outcome 3: Demonstrate the principles of industrial maintenance and product reliability and apply Monte Carlo simulation technique to evaluate the performance of systems.

Task 1 (Capital Investment Appraisal)

BioChem Company, a pharmaceutical manufacturing unit, cannot afford to have any power outage as this would lead to loss of time and production shortages. While preparing their annual budget they have allocated 8000 OMR for the purchase of a high power diesel generator set. Owning the generator would demand proper maintenance of the generator also, which would cost the company 250 OMR in the first year. Subsequently the maintenance charges will increase at the rate of 10% every year due to wear and tear of the moving parts. Moreover, there will be no demand for second hand generators in the market and the company does not get any resale value for the generator if they wish to sell it at any point of time.

Alternatively, a Diesel Generator could be arranged on lease from an equipment supplier for an annual lease amount of 1400 OMR and the company does not have to worry about the maintenance of the equipment as this would be taken care by the supplier itself.

a. Determine which of these two alternatives, outright purchase or leasing, would be economically beneficial for the company, if the money is valued at 8% per year. The company plans to use the generator for 8 years.
b. However, if the company policy wishes to purchase the equipment what factors do the company has to consider to justify their decision, even if the decision is not economical?

Marking Scheme:

• Determining the NPV of each alternative (purchasing/leasing) 20 Marks
• Discussion of reasons for selection of economical alternative 03 Marks
• Justification of reasons for purchase of equipment 02 Marks

Task 2 (Job Sequencing)

Urban Office LLC, a major office furniture manufacturer and supplier, manufactures office tables according to the customer requirements. They have a workshop facility where the table is fabricated and a painting facility where the final finishing and painting of the table is done. The company follows a Job Order scheduling process where each job is scheduled using appropriate priority rules. During a particular period, the company receives six different orders from six different customers. The six orders with the respective processing time are listed in the table 2. The orders are listed in the sequence in which the orders are received. Considering the finite capacity scheduling method, determine the most appropriate job sequence which will maximize the number of jobs which can be completed on time. Discuss the reasons for the selection of the sequence. If all the jobs could not be finished on time, what appropriate measures could be taken to solve the problem?

Task 3 (Maintenance Management)

Pacific Manufacturing Company has a 2.5 HP industrial pump which, in the recent past, has shown some problems. This has interrupted the production line and has led to unexpected down time of the production line. The maintenance department is considering to take preemptive measures to face this problem. Table 3.a shows the frequency of breakdown of the pump over the past year (52 weeks), which was taken from the company's maintenance records.

Table 3.a - Frequency of breakdown in the past one year

a. From the data given in Table 3.a, prepare a probability distribution table (PDT).
b. Using the random numbers given in Table 3.b, simulate the probable breakdowns of the pump for the coming year (next 52 weeks).

Table 3.b - Random Number Table

c. From the data obtained, suggest a suitable course of action which is most appropriate for the company. Justify your statement with proper reasons.

Task 4 (Material Requirements Planning)

Garden Tools Company is a major manufacturer of garden hand tools. Their product range is given in the Figure 4.a. The company has a production unit in Bid Bid where they manufacture the component parts in economic batches and assembles them into the final product in required quantities as and when there is a demand for the product.

All the five tools have similar construction which contains of a wooden handle, a steel ferrule and the part end which may be a weeder, rake, weeding fork, trowel or a fork as the case may be (the construction of a hand rake is shown in the Figure 4.b).

The company uses the same type of handle and ferrule for all the tools. The company has an efficient production system in which the individual parts are manufactured as and when the demand arises.

1. Prepare individual BOM product trees for the five products.
2. Determine when the purchase orders are to be released for the wooden handle and steel ferrule if the expected customer demand for the final products are as given in the Table 4.a.

Attachment:- Capital Investment Appraisal.rar