WEEK 7|Case study 2 - Ace Gears (Manufacturing):

Question 1

why are manufacturing companies important?

Answer 1

1. They help in boosting the GDP
2. Employment

Question 2

What’s a value chain?

Answer 2

A finished car has many subassemblies such as engine, chassis, door, leather seats, music systems and each of these subassemblies are made up many other subsystems which require a lot of raw materials. A manufacturer producing a car either buys these subassemblies from someone else or decides to purchase the raw materials and makes it themselves.

Question 3

what are some of the key questions or analysis that could be performed on a manufacturing company?

Answer 3

1. Sales and Revenue Analysis
2. Production Planning and Analysis
3. Profitability Analysis
4. Raw Materials Requirement Analysis
5. Human Resources Requirement Analysis

Question 4

What are OEMs , Tier 1 Companies?

Answer 4

An Original Equipment Manufacturer or OEM is a company that manufactures and sells products or parts of a product that their buyer, another company, sells to its own customers while putting the products under its own branding. OEMs commonly operate in the auto and computer industries.

A tier1company is the most important member of a supply chain, supplying components directly to the original equipment manufacturer (OEM) that set up the chain.

Question 5

What is an ERP system?

Answer 5

ERP is a software which integrates various departments of the company. Data Flows seamlessly between departments. It is very helpful in effective functioning of the company.

Question 6

How is the planning happening in manufacturing companies?

Answer 6

It starts from the sales forecast and works backwards to monthly, weekly,daily and hourly schedules which are required to satisfy the sales forecast. planners are to be cautious of the lead time for manufacturing. If i needed a product today.. i should have started the process 3 months back.. and similarly.. we need to be cautious of the lead time to satisfy the sales forecast.

This sales forecast or planning happens by taking into various macro / micro economic factors. Year on Year (YoY), Quarter on Quarter (QoQ) analysis, seasonality analysis etc.

1. Strategic Business Plan (Time frame - Many Years)
2. Sales & Operations Plan (One Year)
3. Master Production Schedule (few Months)
4. Material Requirements Plan
5. Capacity Requirements Plan
   a. Detailed Production Scheduling
   b. Production Activity Control
6. Purchasing Plan

Question 7

what’s the manufacturing team comprises of?

Answer 7

1. Sales Manager
2. Production Scheduler
3. Shop Floor Manager
4. Purchase Manager
5. Finance Manager
6. HR Manager

Question 8

What is Bill of Materials?

Answer 8

It is a tree with the finished product as the head node and all the subassemblies will be child nodes, Each child node could have various subassemblies or raw materials linked to that node . The tree lists all the raw materials involved in the production of the final product or sub-assemblies or components.

Question 9

How important is the inventory in manufacturing companies?

Answer 9

Inventories help is smoothing out ups and downs in the production quantity . Low inventory means that the company could not cope with the shock of sudden increase in demand or sales. Whereas, if inventory is high, though company could smooth out variability in demand or sales, it increases costs. So, a trade-offs should be reached in this situation and we must arrive at a optimal amount of inventory to get into the win-win situation.

Question 10

What are some of the excel formulas that are used in the analysis of manufacturing data?

Answer 10

=TEXT(“lookup value”,”mmm”) ==> Gives month of a year
Sheet copy
paste Transpose
roundup()
=iferror(“calculation”,”Action_if_it_is_error”)
What-if analysis
=OFFSET(column()+5)

Question 11

What is Overall Equipment Effectiveness(OEE)?

Answer 11

Gold Standard in measuring manufacturing productivity

OEE is the product of Availability , Performance and quality.
Availability = (Planned Production Hours - Lost Time)/Planned Production Hours = %
Performance = Actual Machine Speed / Design Machine Speed = %
Quality = Number of Good Products / Total Products Made = %

Question 12

What is ABC Analysis?

Answer 12

It is an inventory evaluation technique , in which items are classified into three categories (A- High Value, Tightly controlled, acurate record maintainence with just in time purchasing planned orders ,
B- Medium valued, moderately controlled,good record maintainence with planned orders (Safety Stock)
C - Low valued, Minimally controlled, Simple record maintainence with EOQ orders.

Question 13

What is Safety Stock?

Answer 13

Safety Stock = (Maximum Usage) - (Average Usage)

Lead time demand is assumed to be the annual average demand for the item

Reorder Point (ROP) - It is the minimum inventory or stock level for a specific product that triggers the reordering of more inventory when reached.
ROP = Demand during lead time + safety stock

Question 14

What is EOQ?

Answer 14

Economic Order Quantity (Q) = sqrt ((2* Demand in units * order cost (per purchase order )/Holding cost (per unit,per year)