3. ECONOMIC ORDER QUANTITY
(PURCHASING MODEL)
• MODEL 1:(Purchasing model without shortage)
1. EOQ,Q* = SQRT(2 × Demand × Cost Per Order / Carrying Cost Per
Order).
2.No of orders = D / Q*.
3. Time between orders , t* = Q* / D.
4. Total inventory cost = (D × P) + ( D / Q* × Co) + ( Q* / 2 × Cc).
3
4. Problem 1 :
• Alpha industry estimates that it will sell 2000units of its
product for the forthcoming year. The ordering cost is RS100
per order and the carryong cost per unit per year is 20% of
purchase price per unit .The purchase price per unit is
RS50.Find
• EOQ.
• No of orders / year.
• Time between succesive orders.
• Total inventory cost .
4
5. CON....
• Soulation:
Given , D = 12,000 unit / year
Co = RS 100 / order
Cc = 20% of purshase cost
= 20 / 100 × 50 = RS 10 / unit / year
P = RS 50.
i. EOQ = Q* =SQRT(2 × Demand × Co / Cc)
=SQRT(2 × 12000 × 100 /10)
= 489.89
= 490 unit.
5
6. CON.........
2.No of orders = D / Q*
= 12000 / 490 = 24.48.
3. Time between orders , t* = Q* / D
= 490 / 12000 = 0.040 Year
= 0.408 × 12 × 30)
= 14.7 days
= 15 days
4.Total inventory cost = (D × P) + ( D / Q* × Co) + ( Q* / 2 ×Cc)
= (D × P) + Sqrt(2 × 12000 × 100 × 10)
= RS 6,04,898.96.
6
8. QUESTION ON
INTEGRATED MATERIAL MANAGEMENT
1. what is the need for integrated material management?
2.Advantage of integrated material management?
3.Objective of integrated material management?
4.What is Integrated Materials Management, how the concept evolved?
5.What is Inventory control?
6.Define purchasing system.Types of purchasing system?
7.What is Storage Management?
8.What is Material Management Planning & Control?
9.What are the funcation of Material Management Planning & Control?
10.What are the 5R's?
8
9. ANSWER
1. what is the need for integrated material management?
• Requisition of the materials according to requirements at appropriate time.
• Decision about the optimum size of the order which is popularly known as
economic ordering quantity (EOQ).
• To keep the updated records of the materials received, issued and held in
balance.
• To report the inventory data to those who use them as the decision tools.
2.Advantage of integrated material management?
• Better Accountability
• Better Coordination
• Better Performance
• Adaptability to EDP
9
10. CON...
3.Objective of integrated material management?
• The objectives of integrated materials management can be classified in two
categories
• Primary
• Secondary.
Primary Objectives:
• To purchase the required materials at minimum possible prices by
following the prescribed purchase policies and encouraging healthy
competition.
• Secondary Objectives:
• To make economic 'make or buy' decisions.
• To ensure standardization of materials.
10
11. CON........
4.What is Integrated Materials Management, how the concept evolved?
• Integrated material management is a systematic and dynamic process of
management which coordinates, supervises, executes the tasks associated with the
flow of materials throughout an organization in an integrated fashion or manner.
• Integrated material management as the function responsible for the coordination of
planning, sourcing, purchasing, moving, storing and controlling materials in an
optimum manner so as to provide a pre-decided service to the customer at a
minimum costs.
INTEGRATED MATERIAL MANAGEMENTINTEGRATED MATERIAL MANAGEMENT
• Inventory control.
• Purchasing.
• Store management.
• Material planning & control.
11
12. CON.........
5.What is Inventory control?
• IDLE RESOURCE OF AN ENTERPRISE.
• THIS INVOLVES PYSICAL CONTROL MATERIALS PRESERVATION OF
STORES, MINIIMISATION OF OBSOLESCENCE AND DAMAGE THROUGH
TIMELY DISPOSAL AND EFFICIANT HANDLING.
6.Define purchasing system.Types of purchasing system?
• SELECTION OF SOURCES OF SUPPLY .
• FINALISATION OF TERMS OF PURCHASE .
• PLACEMENT OF PURCHASE ORDERS .
• FOLLOWUP.
• MAINTANACE OF SMOOTH RELATIONS WITH SUPPLAIERS .
• EVALUATING AND RATING .
12
13. CON.........
TYPES OF PURCHASING SYSTEMTYPES OF PURCHASING SYSTEM
1. PRE-PURCHASE SYSTEM
2. ORDERING SYSTEM
3. POST- PURCHASE SYSTEM
7.What is Storage Management?
• TO PROVIDE ADEQUATE AND PROPER STORAGE AND
PRESERVATION TO THE VARIOUS ITEMS.
• TO MEET THE DEMANDS OF THE CONSUMING DEPARTMENTS
BY PROPER ISSUE AND ACCOUNT FOR THE CONSUMPTION.
• TO MINIMISE OBSOLESECENS,SURPLUS ect
13
14. CON.........
8.What is Material Management Planning & Control?
• Material Planning & Control is the scientific way of requirement of
raw materials, components spares and other items that go in to meeting
production needs with economic investment policies.
9.What are the funcation of Material Management Planning & Control?
• Involes estimating the individuals requirement of parts.
• Preparing material buget.
• Forcasting the level of inventories.
• Scheduling the orders and monitoring the performance.
14
15. CON......
10.What are the 5R's?
• Right quality
• Right quantity
• Right place
• Right time
• Right price
15
17. 1. Align the Strategic Technology Direction with the Bank’s
Overall Strategic Direction and Outlook
• You have to know the long term strategic goals of the bank overall (i.e.
• Growth, branching, new products and services etc.)
• And select technology solutions that fit your requirements .
• More importantly, where you want to be in the future.
• The risk of implementing a solution that doesn’t fit your bank’s vision .
• Strategy and the cost of switching later can be two to five times your
annual.
• Technology expenditure amount.
• Often times the bank’s strategic direction is unclear or ill-defined. In these
• We recommend that the bank take a step back and work on clarifying
• The overall strategic direction and outlook for the bank. Without this
• Direction as a guiding light, all too often the bank’s technology decisions
• End up driving the overall strategic direction by accident.
17
18. CON.......
2. Appoint an Internal Technology Vendor Evaluation Team
• There are often capable individuals at the bank who, given the time and
resources, can select an appropriate technology vendor.
• This effort shouldnot be driven from an information technology
perspective instead it must be a business-led effort based upon the business
requirements of the bank.
• Senior managers and employees that represent each of the major
• Business functions can bring broad knowledge of your bank’s business,
• Operations and existing technologies to the process. This team, typically
• Comprised of six to eight members, will be responsible for determining
• Both business and technical requirements, identifying potential solutions
• And vendors, preparing the necessary requests for vendor proposals,
• Evaluating the resulting proposals and recommending a technology
• Vendor and solution to senior management.
18
19. 3. Complete a Technology Assessment
• A current technology audit is integral to understanding the current
• Technology environment and then mapping the future needs of the bank
• To determine the gaps and overlaps that are needed to be resolved by the
• Prospective vendor solution.
• The technology assessment should include an inventory of your bank’s
• Current systems and hardware, analysis of operational statistics, and a
• Review of overall costs. Additionally, you should assess employees’ and
• Management’s overall satisfaction with current technology systems. This
• Process will produce gaps between what your current technology can
• Deliver and what you need to realize your strategic goals.
19
20. 4. Prepare a Critical Business Needs
Analysis
• This step defines those issues and needs that are specific to you. For
• Example, if your bank is a large commercial real estate lender, focus
• Must be given to those needs. Remember, not all core systems are alike.
• Each system will have its own unique features and functionality, so
• Focus on what’s important to your bank. This will guide the rest of your
• Decision-making.
• Review of overall costs. Additionally, you should assess employees’ and
• Management’s overall satisfaction with current technology systems. This
• Process will produce gaps between what your current technology can
• Deliver and what you need to realize your strategic goals.
20
21. 5. Select a Preliminary Set of Vendors
and Solutions
• Choosing the right vendor for your bank’s specific technology needs is
• A matchmaking process not just a search for the best technology
• Product, but for the best service provider to deliver it. As in any
partnership,
• There are key issues to consider.
• Do the management philosophies of the bank and vendor mesh?
• Will the vendor still be in this particular business five years from now
• Be sure to consider financial health and stability of the vendor, installation
• And integration support, training, maintenance agreements, upgrade
• And, perhaps most important, enhancement policies, customer service
• Reputation and the obvious cost considerations.
21
22. 6. Prepare a Comprehensive Request
for Proposal (RFP)
• Once potential vendors have been identified, request detailed proposals
• From each. The RFP doesn’t have to be a 500-page document identifying
• All the possible features and functions your bank is looking for. Instead,
• The document should provide sufficient information to allow the vendor
• Evaluation team to assess each vendor’s ability to meet your bank’s critical
• Business needs. A more detailed system feature and function analysis can
• Be sent later to those vendors on the “short list.” In some cases, the quality
• Of service and service level agreement may be more important to your
• Bank than feature/functions.
22
23. 7. Evaluate the Vendor Responses
to the RFP
• In response to the RFP, each vendor should demonstrate how they meet
• Your bank’s needs and why they are your best solution. Distribute the
• RFP responses among the vendor evaluation team and have each member
• Prepare a written evaluation. Have them look for inconsistencies in the
• Vendor’s proposals and weaknesses in their abilities to perform to your
• Bank’s expectations. While price is always a consideration, the level of
• Service, training, and integration with existing technology are crucial and
• Potentially more important. It is also critically important to document
• The evaluation criteria and the evaluation decisions being made as part of
• The bank’s vendor management program.
23
24. 8. Request Demonstrations and
Visit References
• Request that each of the vendors on the short list make detailed
demonstrations
• Of their systems, at your bank’s site if possible. All vendors
• Should be prepared to discuss their proposals in detail. Also, request that
• Each vendor arrange for members of the vendor evaluation team to visit
• Current users of their system.
• Experienced technology purchasers go into these demonstrations,
discussions,
• And on-site reference visits armed with information. Prepare
• Questions beforehand and make sure the vendors’ sales representatives
• And current users of the system provide satisfactory answers. Besides
• Senior management, it is often helpful for the employee end users of the
• Technology to attend vendor presentations and be given the opportunity to
the question.
24
26. ECNOMIC BATCH QUANTITY
1. EBQ,Q* = SQRT(2 × Annual Demand × Cost Per Order /
Carrying Cost Per Order ×( 1- Annual Demand / K)
2.Production time , t* = Q* / K.
3. Consumption time without production = Q* ( 1- R/ K)/R
4.Cycle time = t* + t1* .
Where,
R= Annual Demand.
K= Production rate.
Co = Setup cost.
26
27. PROBLEM
1. If a product is to be manufactured within the company whose
demand is
24,000 units per year . The production rate of the company is
48,000 units per year . The cost of selling up production is Rs
200 per setup. The holding cost per unit year is RS 20.
Find,
1. Economic batch quantity ( EBQ)
2. Prodution time.
3. Consumption time without production .
4.Cycle time.
27
28. SOLUTION
• GIVEN
R = 24,000 Unit per year.
K = 48,000 Unit per year.
Co = Rs 200/setup.
Cc = Rs 20/unit/year.
i. EBQ,Q* = SQRT(2 × Annual Demand × Cost Per Order / Carrying Cost
Per Order ×( 1- Annual Demand / K)
= SQRT ( 2 × 24000 × 200 / 20 ( 1 - 24000 / 48000)
= 979.79
= 980 units.
i. Production time , t* = Q* / K.
= 980 / 48000
= 0.0204 year = 0.0204 × 12× 30
= 7 days.
28
29. CON.....
3. Consumption time without production = Q* ( 1- R/ K)/R
= 980 ( 1 - 24000 / 48000) / 24000
= 0.0204 year
= 7 days .
4. Cycle time = t* + t1*
= 7 + 7
= 14 days .
29
30. VENDOR RATING PROBLEM
• Calculate the vendor rating for
the following . the item under
consideration is the same from
all suppliers .
• weightage :
1.Quality = 70%
2. price = 15%
3.Delivery= 15%
Supplier
data
A B C
Quantity
supplied
100 110 120
Quantity
accept
93 98 108
price of
item(rs)
5 5.20 4.90
Delivery
promise
(weeks)
6 6 6
Actual
Delivery
(weeks)
7 6.2 6.6
36. PART A
1. What are the primary objectives of material management ?
• Low Prices .
• Lower Inventories
• Reduction in Real Cost .
• Regular Supply .
2. State some of the benefits of standardization ?
• Rationalize different varieties of products
• Decrease the volume of products in the store and also the
manufacturer cost.
• Improve the management and design.
• Speed up the management of orders.
36
37. con........
3. Write a short note on cash budget ?
• An estimation of the cash inflows and outflows for a business or
individual for a specific period of time.
• Cash budgets are often used to assess whether the entity has sufficient
cash to fulfill regular operations and/or whether too much cash is being
left in unproductive capacities.
4. What are the 5R's?
• Right quality
• Right quantity
• Right place
• Right time
• Right price
37
38. con....
5. A company uses annually 14000 units of a raw material costing Rs 125
per unit . Placing each order costs Rs 550 and the carrying cost are
15% per unit per year of the average inventory. find the EOQ ?
Given , D = 14,000 unit / year
Co = RS 550 / order
Cc = 15% of purshase cost
= 15 / 100 × 125 = RS 19 / unit / year
P = RS 125.
EOQ = Q* =SQRT(2 × Demand × Co / Cc)
=SQRT(2 × 14000 × 550 /19)
= 659 .75 units
= 660 unit.
38
40. Objectives
ETIV Project
Development of didactical training material to promote,
stimulate and support the implementation of EMAS II
Regulation
Case study
Supply information on EMAS implementation in a plastics
manufacturing enterprise, representing a „Case Study“ on
EMAS implementation
TISCO PROFILE
40
41. Object of the case study
•Implementation of EMAS in the KASKO Ltd., Slavkov
Summary of the case study:
This case study is divided in four main parts:
•Introduction
•General data
•EMAS implementation – Analysis
•EMAS implementation – Evaluation and conclusion
41
42. WHAT ARE THE MAJOR PROBLEM
FACED BY TISCO
INTRODUCTION
Massive environment pollution as the negative subsequence
of the communistic regime in the Czech Republic
A noticeable improvement of environment after the year 1989:
• Equipment renovation
• Progressive technologies
• Positive changes in the legislation
• Ecological thinking in the whole Czech society.
42
43. CON......
• Participation in the environment protection systems
• Aim of EMAS system - to support constant progress of the
environment made by organisations acting
• EMAS system - convenient for use in SMEs
• Bad knowledge of principles and implementation conditions
amongst the SMEs´ managers in the Czech Republic
43
44. DESCRIPTION OF THE TYPE OF THE COMPANY
• Criteria for a Small and Medium Enterprise in the Czech Republic
according the definition of the Ministry of Industry and Trade of the Czech
Republic .
•CHARACTERISTICS OF THE ENTERPRISE
•The KASKO Company Ltd. was established in 1992
•Czech company with no participation of foreign capital
•Main business programme of the company: development procedure,
production, assembly and distribution of plastic constituents, design and
production of injection forms
WHAT ARE THE BUSINESS BENEFITS
AND PROCLAIMS ACCORDING TCASE
44
45. •CHARACTERISTICS OF THE ENTERPRISE
•Production
•Injected plastic pressed pieces till the weight of 1 100 g and assembly of
them.
•Products are assigned for automobile industry.
•Share of products for electrical engineering enterprises is increasing.
•The production is realized in the pressing plant, where are:
•12 injection moulding presses and
•1 extrusion press
•Production of KASKO Ltd. is increasing year by year
IT SIDE BENEFITS
45
46. ENVIRONMENTAL POLICY
•To provide training of the staff oriented on encouraging the mental attitude to
the environment protection .
•To reduce use of raw materials and energy usage on production by
permanent, consistently persuade analysis .
•To inform employees and the public about the influence of your production on
the environment .
•To promote introduction of the environmental management system to
business partners .
NG BUSINESS AGILITY THROUGH SAP
46
47. SIGNIFICANT ENVIRONMENTAL ASPECTS
• Environmental aspect – component of activity, products or service of the
organization, which might have an influence on the environment
• Direct environmental aspects – aspects referring to the organization
activity of which the progress is being controlled
• Indirect environmental aspects – aspects referring to activity of the
organization, which can not be fully controlled by the organization
• Register of environment aspects - contains processes, company
activities with its rating of environmental aspects and impacts
WHAT ARE THE BUSINESS BENEFITS AND PROCLAIMS
ACCORDING TO THE CASE
HE CASEIMPLEMENTAT
IONS AT TATA S TEEL
47
48. THE OUTCOME
•WHAT SHOULD THEY DO?
SIGNIFICANT ENVIRONMENTAL ASPECTS
The register of environment aspects is being continuously
checked by internal audits and once a year examined by
management.
In the KASKO Ltd. are specified environmental aspects in
processes:
• Supply, stocking and manipulations
• Granulates for the press preparation
• Exchange of form and switch to another material
• Starting up the production
• Moulding
48
49. FUTURE MOVESWHAT ARE THE MAJOR PROBLEM FACE ACCORDIND
TO THE CASE
The environmental aspects introduced above have following
impacts on the environment:
• Refuse production
• Processing waste production
• Dangerous waste production
• Primary resources consumption
• Downgrade of work environment
• Soil and water contamination
• Air pollution
• Waste water production
49
50. CONCLUSION
•LEGAL AND OTHER REQUIREMENTS
•Registers created in the KASKO Ltd., containing obligatory legal and
other requirements to environmental protection .
• Register of relevant legal requirements :
• Waste and Containers .
• Water Management .
• Protection Of The Air .
• Treatment of Chemical Substances and Chemical Preparations .
• Prevention of Major Accidents .
• Register of relevant technical standards .
• Register of external decisions .
50
51. WHAT SHOULD THEY DO
OBJECTIVES AND TARGETS AND THEIR FULFILLMENT
1. Decrease the amount of material to crush gradually by 5% on
every100 kg of production The target was not fulfilled .
2. Decrease the production of further on unused plastic waste
gradually by 5% on every 100 kg of production Target was not
fulfilled .
3. Decrease the electricity consumption gradually by 3% on every 1 kg
of production The target was not fulfilled .
4. Decrease the consumption of drinking water gradually by 5% in 1
working hour Target was fulfilled .
52. OBJECTIVES AND TARGETS AND THEIR
FULFILLMENT
5. Decrease the production of hazardous waste (absorbing reagents,
contaminated metal containers) gradually by 5% on the number of
mould exchanges Target was partly fulfilled .
6. Decrease the consumption of container materials (paper, plastic
containers) gradually by 3% on every 100 kg of production Target
was fulfilled .
7. Improve the appearance of company’s surroundings with
appropriate modification and planting of green plants Target was
fulfilled .
53. ENVIRONMENTAL MANAGEMENT PROGRAMME
• The KASKO Ltd. introduced the Environmental Management
System in February 2001 following the international directive ISO
14001 .
• The management system is based around the procession-
oriented approach. The processes they were divided into:
• Main processes
• Managing processes
• Supporting processes
• The processes are described in detail in the Management
Handbook elaborated on the basis of ISO 9002 and later also the
requirements ISO 14001 and EMAS were incorporated.
54. WHAT ARE THE BUSINESS BENEFITS AND
PROCLAIMS ACCORDING TO THE CASE
TRAINING, AWARENESS AND COMPETENCE
• Department managers in cooperation with the personal
management and possibly the authorised representative for quality/
EMS identify training needs on all levels. The training needs are to
be identified in this case:
• For new employees .
• For employees transferred to a new work position .
• For employees transferred to a different kind of work content
• For permanent current employees at least once a year .
• For temporary employees .
55. COMMUNICATION
Targets:
Internal communication :
• To ensure efficient communication among various levels and
functions taking into account the customer’s requirements, QMS
and EMS .
External communication :
• Ensure the reception of incentives the involved parts .
• Establish contacts with the public .
• Provide te cooperation with expert companies .
• Provide the cooperation withj rescue teams (fire-fighters, gas
workers, emergency health aid, policy) .
56. MONITORING AND MEASUREMENT
• The KASKO Ltd. monitors, measures and evaluates its behaviour in
the area of EMS in the following fields :
• Functionality and efficiency of the system of environmental
management
• Meeting the environmental policy and objectives
• Environmental awareness of employees
• Monitoring and measuring of activities in the frame of selected
indicators.
The objective is to monitor:
• The activities, through which the company can influence the
environment
• The real state of EMS in comparison to the set targets and legal
duties.
57. EMERGENCY PREPAREDNESS AND RESPONSE
Emergency readiness
• The danger of a possible occurrence of emergency situations is
related mainly to the following activities:
• Storage of oil
• Matters and chemical substances and handling with them
• Usage of oil matters and chemical substances in production and
maintenance .
• Operation and maintenance of machines and forklifts
• Storage of combustible substances and handling with them
• Collecting dangerous wastes
58. INDUSTRIAL RISK ASSESMENT
• In the KASKO Ltd. a material concerning the risks identification has
been developed
• The following objects have been assessed: Working machines,
hydraulic machines, and hydraulic press for working of
thermoplastics.
• The identified dangers have been assessed from the standpoint of
risk level.
• Procedure of analysis of potential risks and defects :
• In the KASKO Ltd. a directive has been developed and approved,
which should be instrumental in determining procedures applied in
identifying the causes of occurrence of defects in products,
procedures, work system and customer complaints aimed at
adopting, documenting and verifying the efficiency of preventive
measures and corrections.
59. NON CONFORMANCE AND CORRECTIVE AND
PREVENTIVE ACTIONS
• Preventive measures are issued in order to prevent re-occurrence of defects
and discrepancies.
• Preventive measures are designed in advance before a potential occurrence
of the defect or discrepancy .
• The KASKO Ltd.it is possible to make use of the method 8D for solutions to
defects re-occurrence .
Procedure of 8D solution:
1. Handle the problem in team work
2. Describe the problem
3. Give an incentive to a temporary measure and verify it’s efficiency
4. Identify the essential cause/causes and verify, whether it represents the
real cause
60. EMS INTERNAL ENVIRONMENTAL AUDIT
• Every area (department) of the company is inspected at least
once a year. In areas of particular importance audit can be
executed more often.
• Audits are carried out by auditors, without any direct
responsibility for the activities performed by the department
subjected to inspection and have no ties to the function, where
the audit is executed.
• Auditors are qualified to audit the requirements ISO / TS 16949
and are familiar with company systems of quality and EMS, its
documentation and requirements of relevant regulations.
• The manager of the inspected area is responsible for
implementation of the correction.
• Implementation of correction and elimination of discrepancies
id monitored by the chief auditor.
61. MANAGEMENT REVIEW
• Discussion about the current information, tasks and problems takes
place at regular meetings at least twice a month. Minutes are
recorded from the meetings.
• Management is informed about outcomes of internal audits by the
authorised representative on the basis of respective protocol.
• Management is informed about outcomes of internal audits by the
authorised representative carried out in individual
departments/sections.
• A complex report on verification of management system is
submitted jointly a member of quality management and the
authorised representative for EMS to the company management at
least once a year
62. BASIC DIFFICULTIES FOUND DURING EMAS II
IMPLEMENTATION
• Within the process of implementation of the environmental
management system following the regulation ISO 14001 and the
directive EMAS the KASKO Ltd. did not encounter bigger difficulties.
• Some partial problems occurred during EMAS implementation:
• The lack of literature and other supporting materials on EMAS
implementation.
• To persuade regular employees of the benefits of the system and
make them implement the modification deriving from implementing
EMS (e.g. sorting of waste, records of monitoring into forms etc.)
• Access of external companies carrying out e.g. reconstruction
activities within the area of the KASKO Ltd.
63. BENEFITS AND NEGATIVES OF EMAS II
IMPLEMENTATION
• CONCLUSIONS :
• Implementation of the environmental management system in
compliance with ISO 14001 and EMAS proves to be
indisputably beneficial for the KASKO Ltd.
• Implementation of EMS was a good choice as well as
investment into the future development of the company.
• The most significant benefit is certainly environmental
protection in itself – the management of the KASKO Ltd. have
always been aware of the impact of production on the
environment and came to the conclusion that the best way how
to manage the activities affecting the environment is to
implement the environment management system.
• Other benefit can be seen in raising awareness – stronger
presentation of the company to the public eye and other
interested parties.