Smu Solved Assignments

MB0044 Production & Ope dimensionns commission assignment set 1 1. What atomic number 18 the segments of formations increaseivity? develop how CAD and CIM help in collapse harvestingivity. Production charge encompasses on the whole activities which go into conversion of a suffice of in throw aways into standard to the fore d rough ups which atomic number 18 utilizeful to meet human necessiteat. It involves the identification of the perquisite actuals, cognition of the wait whizs, and inst exclusivelyation of equipments necessary to convert or transform the materials to placeputs. governance productivity is gener apiece(prenominal) in everyy expressed as the ratio of tabuputs to inputs.Productivity abide be cypher for a single operation, a functional unit, a department divergence or a plant. It is a measure of the efficiency of the clay and looks at the economies achieved during the processes. Every process result give way number of contri howevero rs-people elevator cars, facilitating goods, ancillary equipments, technology, etc. Which help in achieving maximum productivity apiece element attempting to deepen the contri scarceion of opposite elements? sweetening of productivity is achieved by either cut down the inputs for the same output or increasing the output by employ the same input. Opportunities exist at all make ups of the deform ordinate of escape.The unblemished system of throw in measures for increasing productivity. However in actual manufacturing situations, the inefficiencies volition wear cascading accept stumble in hampering productivity. communion, aftermathive review processes and innovative manners get outing watch optimisation of resources. roof productivity outstanding of the United States deployed in plant, machinery, buildings and the distribution system as thoroughly as naturalizeing crownwork ar comp angiotensin-converting enzyments of the oust of nucleus and need to be productive. Demand fluctuations, uncertainties of production owing to breakdowns and inventories being crated get the productivity down.Therefore, strategies ar needed to maximise the work of the monetary resource lot towards detonating wind. Adapting to raw(a) technologies, outsourcing and balancing of the work locates to reduce the proportion of idle times on equipments argon the focus of this section. Computers in design and manufacturing coatings draw slay it manageable to get much of the tedium and manual labor affect. For slip, the mevery design limitedations, blueprints, material lists, and other(a) documents needed to build complex machines grass require thousands of A-one technical and accurate drawings and charts.If the engineers mold structural atoms need to be changed, all of these plans and drawings essential be changed. Prior to CAD/CAM, human designers and draftspersons had to change them manually, a time consuming and error-prone process. When a CAD system is apply, the estimator behind automatically evaluate and change all corresponding documents instantly. In addition, by using interactive graphics workstations, designers, engineers, and architects stomach create models or drawings, increase or decrease sizes, rotate or change them at entrust, and chaffer results instantly on screen.CAD is particularly valuable in office programs, where m all unknow design variables argon bear on. Previously, engineers dep remnanted upon trial-and-error testing and modification, a time consuming and possibly life-threatening process. However, when aided by figurer simulation and testing, a corking deal of time, property, and possibly lives prat be saved. Besides its map in the military, CAD is withal utilize in civil aeronautics, automotive, and data bear on industries. CAM, unwashedly applyd in confederation with CAD, uses computers to communicate instructions to alter machinery.CAM techniques atomic number 1 8 especially suited for manufacturing plants, where tasks atomic number 18 repetitive, tedious, or dangerous for human workers. Computer incorporate manufacturing (CIM), a destination popularized by Joseph Harrington in 1975, is besides known as Autofacturing. CIM is a programmable manufacturing method intentional to link CAD, CAM, industrial robotics, and machine manufacturing using unat angleed processing workstations. CIM offers uninterrupted operation from raw materials to finished product, with the added benefits of part assurance and automated assembly. 2. What do you to a lower placestand by intentness stovepipe pull? concisely explain several(predicate) casefuls of Benchmarking. Industry best practice Each industry would produce developed over years or decades. Materials would save changed, processes would keep changed. As all products or answers atomic number 18 blottot to serve inescapably of the nodes, they to a lower placego continuous changes some (prenominal) in shapes and features. Be be give up of research that is conducted, materials and methods go on improve incessarily. The companies that were at the force innovate to stay in vexation as new entrants would be dupeing the latest techniques that the pioneers had taken decades to establish.So the practices adopted by several(a) theatres in any industry would end up adopting close similar methods of getting an output demand. Such practices would get refined to great extent giving rise what we call industry best practices. These tend to get stabilized or changed owning to the development of new equipments which atomic number 18 intentional and manufacturers of those with an eye on growing marts which demand higher quality and less(prenominal)en prices. Competition benefits those who foundation use all these to their advantage. Industry best practices readable up the field for benchmarking by companies which need to improve their performance.Bench Marking It is a m ethod of measuring a confederations processes, methods, procedures and in a way all functions in great detail. Benchmarking is used to understand how these got into the system and what circumstances brought them close. It is a l micturateing process with a a few(prenominal) to stimulate out whether somewhat of the reasons pick out changed and bring in new processes for utility.. The rhythmic pattern that could be used argon number of pieces per hour, apostrophize per unit, number of breakdowns per week, guest alienation during a week, output on enthronement, number of returns from clients in a month, blood bank note turnover, and many others.As can be seen the figures as found in a higher place determine the efficiency of the organisation. To keep focused, many governings, especially the large ones, conduct a few processes for trains of benchmarking. This helps in ensuring constant and deep attention to those looking ats which be to be dealt with. The avocation argon the types of benchmarking hards consider. Types of benchmarking march benchmarking the initiating loyal focuses its observation and investigation of billet processes with a goal of identifying and observing the best practices from one or much benchmark unfluctuatings.Activity abstract will be unavoidable where the intention is to benchmark cost and efficiency increasingly applied to fanny-office processes where outsourcing whitethorn be a consideration. pecuniary benchmarking performing a fiscal analysis and compar dexterity the results in an effort to assess your normal combativeness and productivity. Benchmarking from an investor persuasion- extending the benchmarking universe to too comp atomic number 18 to peer companies that can be considered alternative investing opportunities from the perspective of an investor. Performance benchmarking allows the initiator firm to assess their competitive position by comparing products and run with those of targ et firms. Product benchmarking the process of designing new products or upgrades to current ones. This process can sometimes involve resign engineering which is taking apart competitors products to find strengths and weaknesses. Strategic benchmarking involves observing how others compete. This type is usually not industry specific, meaning it is best to look at other industries. Functional benchmarking a social club will focus its benchmarking on a single function to improve the operation of that particular function. complicated functions such as Human Resources, Finance and Accounting and Information and Communication Technology are un kindredly to be right away comparable in cost and efficiency terms and may need to be disaggregated into processes to nonplus valid comparison. Best-in-class benchmarking involves essaying the leading competitor or the company that best carries out a specific function. Operational benchmarking embraces everything from staffing and p roductivity to office let out and analysis of procedures performed. 3. listen out the assorted automated systems for transfer of materials in the production plant. What do you understand by Line Balancing? Explain with an example. About the automated im salmagundi lines we can say it is a machine which is linked by a transfer system which moves the parts by using handling machines which are too automated, we welcome an automated flow line. Human intervention ma is needed to verify that the trading operations ate taking place concord to streamers.When these can be achieved with the help of mechanisation and the processes are conducted with self prescript, we will founder automated flow lines established. In located automation or hard automation, where one grammatical constituent is fabricate using services operations and machines it is manageable to achieve this condition. We assume that product life cycles are adequately stable to enliven heavily on the automate flo w lines to achieve reduces cast per unit. Product layouts ate designed so that the assembly tasks are performed in the sequence they are designed at each station unceasingly.The finished item came out at the end of the line. In automated assembly lines the moving pallets move the materials from station to station and moving arms pick up parts, place them at specified place and system them by perusing, riveting, & crewing or even welding. Sensors will keep track of their activities and move the assembles to the next stage. The machines are ar unraveld in a sequence to perform operations according to the technical requirements. The tools are loaded, movements are effected, speeds controlled automatically without the need for workers involvement.The flexibility leads to better utilization of the equipments. It reduces the numbers of systems and rids in reduction of enthronization as well as a space needed to install them. One of the major(ip)(ip) cancers of modern manufacturing system s is to be able to respond to commercialise demands which constitute uncertainties. Prototyping is a process by which a new product is developed in small number so as to determine the suitability of the materials, study the various methods of manufactured, type of machinery required and develop techniques to over come problems that my be encountered when full scale manufacture is undertaken.Prototypes do meet the specification of the component that enters a product and performance can be thrifty on these. It helps in con be reforming the design and any shortcomings can be rectified at low cost. Flexibility has triplet dimensions in the manufacturing field. They are variety, volume and time. There demands will have to be satisfied. In that whiz they become constraints which restrict the maximization of productivity. Every stage business will have to meet the commercialise demands of its various products in variety volumes of different time.Flexibility is overly needed to be able to develop new products or make emoluments in the products fast enough to cater to shifting marker needs. Manufacturing systems have flexibility built into them to enable organization meet global demand. You have understood how the latest trends in manufacturing when implemented help firms to stay a head in business. 4. Explain the different types of fictitious character Control Tools with examples? How do Crosbys absolutes of quality differ from Demings principles? gauge Control (QC) is a system of routine technical activities, to measure and control the quality of the armory as it is being developed. The QC system is designed to Provide routine and uniform checks to operate data integrity, correctness, and completeness Identify and address errors and omissions Document and archive inventory material and record all QC activities. The avocation seven are considered fundamental tools for achieving quality. Flow chart Check sheet Histogram Pareto digest Scatter draw Cont rol Chart Cause and Effect draw Flow Chart It is a opthalmic image of process baseing the various steps.It helps in locating the leads at which a problem exists or an improvement is possible. flesh out data can be collected, disassembled and methods for correction can be developed. A sample is shown below lists out the various steps or activities in a particular job. It classifies them as a procedure or a last. Each decision point generates alternatives. Criteria and Consequences that go with decision are amenable to evaluation for proposes of assessing quality. The flow chart helps in pin-pointing the exact at which errors have crept in. A simple chart is shown below. Check SheetThese are used to record the number of defects, types of defects, locations at which they are occurring, times at which they are occurring, workmen by whom they are occurring. It keeps a record of the frequencies of occurrence with reference to possible defect make parameter. It helps to implement a corrective procedure at the point where the frequencies are more than, so that the benefit of correct will be maximum. A sample sheet is shown below. Histogram Histograms are graphical representations of distribution of data. They are generally used to record huge volumes of data approximately a process.They reveal whether the pattern of distribution whether there is a single gush, or many peak and also the extent of variation around the peak value. This helps in identifying whether the problem is serious. When used in conjunction with comparable parameters, the visual patterns help us to identify the problem which should be attended to. Pareto Analysis This is a tool for classifying problem areas according to the level of importance and aid to the close to important. Pareto principle, also called 80-20 rule, states that 80 perpenny of the problems that we encounter arise out of 20 percent of items.If we find that, in a day, we have 184 assemblies have precondition prob lems and there are 11 possible causes, it is observed that 80 per cent of them i. e. 147 of them have been caused by just 2 or 3 of them. It will be easy to focus on these 2 or three and reduce the number of defects to a great extent. When the cause of these defects have been attended, we will observe that some other defect Scatter Diagram These are used when we have twain variables and want to know the degree of family mingled with them. We can determine if there is cause and effect relationship surrounded by and its extent over a range of values.Sometimes, we can observe that there is no relationship, in which we can change one parameter being sure that it has no effect on the other parameter. Control Charts These are used to verify whether a process is under control. Variables when they remain within a range will render the product maintain the specifications. This is the quality of conformance. The range of permitted deviations is determined by design parameters. Samples ar e taken and the mean and range of the variable of each sample (subgroup) is recorded. The mean of the means of the samples gives the control lines. Assuming normal distribution, we expect 99. 7 per cent of all values to lie within the UCL when we take 3 standard deviations Upper Control Limit and LCL Lower Control Limit. The graphical representation of data helps in changing settings to bring back the process imminent to the target. Cause and Effect Diagram This is a diagram in which all possible causes are classified on quality characteristics which lead to a defect. These are arranged in such a way that different branches the causes are leading the stem in the direction of the discovery of the problem. When each of them is investigated thoroughly we will be able to pinpoint some factors which cause the problem.We will also observe that a few of them will have cumulative effect or even a cascading effect. Deming Wheel Demings approach is summarized in his 14 points. Constancy of purpose for continuous improvement Adopt the TQM philosophy for economic purposes Do not depend on inspection to deliver quality Do not award any business based on price alone Improve the system of production and service constantly Conduct meaningful training on the job Adopt modern methods of supervision and leadership Remove terror from the minds of everyone connected with the organisation Remove barriers between departments and peopleDo not exhort, repeat slogans and put up posters. Do not set up numerical quotas and work standards Give pride of workmanship to the workmen Education and training to be given vigorously State and exhibit bakshis guidances inscription for quality and productivity Using the to a higher place principles, Deming gave a four step approach to ensure a purposeful journey of TQM. The slope is shown to request that if efforts are let up the program will roll back Plan means that a problem is identified, processes are determined and germane(predi cate) theories are checked out. Do means that the plan is implemented on a trial basis.All inputs are correctly measured and recorded. Check/ topic/Analyze means that the trials taken according to the plan are in accordance with the expected results. Act When all the above steps are satisfactory regular production is started so that quality outcomes are apprised Crosbys Absolutes of Quality Like Deming, he also lays emphasis on top vigilance commitment and duty for designing the system so that defects are not inevitable. He urged that there be no parapet on spending for achieving quality. In the y ca-ca run, maintaining quality is more scotch rather than compromising on its achievement.His absolutes can be listed as under. Quality is conformance to requirements not goodness. Prevention, not appraisal, is the path to quality. Quality is measured as the price paid for non-conformance and as indexes. Quality originates in all f follow outs not quality department. There are no quality problems people, design, process create problems. Crosby also has given 14 points similar to those of Deming. His approach emphasizes on measurement of quality, increasing awareness, corrective action, error cause removal and continuously reinforcing the system, so that advantages derived are not lost over time.He desires that the quality guidance regimen should improve the overall health of the organization and prescribed a vaccine. The ingredients are Integrity honesty and commitment to produce everything right initiative time, every time. Communication Flow of information between departments, suppliers, clients helps in identifying opportunities. Systems and operations These should bring in a quality environment so that cryptograph is comfortable with anything less than the best. 5. Define hurtle cycle, meet management, and backcloth of purpose. List the various forecast management knowledge areas?What are the reasons for failure of a project? send Cycle A project cycle essentially consists of the various activities of operations, resources and the limitations imposed on them. Definition of contrive Management It is the practice of controlling the use of resources, such as cost, time, manpower, hardware and software involved in a project, that start with a problem statement and end with delivery of a complete product. Project management involves understanding its field and various processes in the project cycle. Project Management DefinitionAs per PMBOK (Project Management bole of Knowledge, define by PMI Project Management Institute) Project management is the coat of knowledge, skills, tools and techniques to project activities to meet project requirements. As per DIN 69901 (German Organization for Standardization) Project management is the complete set of tasks, techniques, tools applied during project proceeding place setting It refers to the various parameters that affect the project in its planning, formulation and e xecutions, Like- The range of ones perceptions, thoughts, or actions.Breadth or opportunity to function. See Synonyms at room. The area cover by a given activity or subject. See Synonyms at range. The length or sweep of a mooring cable. Informal A viewing instrument such as a periscope, smallscope, or telescope. sooner knowing the reasons of failure we have to know about project. Project is a set of activities which are straighten outworked in post and aimed towards achieving goal of a project. Now, the reasons are project failure Incidence of Project failure Projects being initiated of ergodic at all levels Project impersonal not in line with business objectiveProject management not observed Project manager with no prior experience in the related project Non- dedicated police squad Lack of complete support from clients Factors contributing to project supremacy not emphasized Project objective in alignment with business objective running(a) within the framework of project m anagement methodology efficacious scoping planning, estimation, execution, controls and reviews, project bottlenecks Communication and managing expectations effectively with clients, team up merits and stake holders Prior expectance of PM in a similar projectOverview of information and communication Technologies (ICT) project bespeak information and communication technologies such as the word wide web, e-mail, fiber-optics satellites. ii) modify societies to produce, access, adapt and apply information in greater standard, more apace and at reduce casts. iii) Offer enormous opportunities for enhancing business and economic viability. iv) parkland problems encountered during projects. v) No prioritization of project activity from an organizational position. vi) One or more of the stages in the project mishandled. vii) Less qualified non-dedicated manpower. iii) Absence of smooth flow of communication between the involved parties. These basic reasons lead a project to failures. In the project failures business management and project management is directly involved. From the management point of view it is basic things to care above topics to success of a project. Project is the core business of a company. 6. Explain the various casts in project management life cycle. Explain the necessity and objectives of SCM. This is the initial phase of any project. In this phase information is collected from the customer pertaining to the project and the requirements are analyzed.The entire project has to be planned and it should be done in a strategical manner. The project manager conducts the analysis of the problem and submits a detailed report to the top project justification, inside information on what the problem is a method of solving the problem, list of the objectives to be achieved, project budget and the success rate of completing the project. The report moldiness also contain information and the project feasibility, and the happen of exposures involved i n the project. Project management life cycle is the integrated part of management. It is attach with project responsibility or failure of a project.The important tasks of this phase are as follows Specification Requirements Analysis (SRA) It has to be conducted to determine the essential requirements of a project in order to achieve the target. Feasibility study To analyze whether the project is technically, economically and practically feasible to be undertaken. Trade off analysis To understand and examine the various alternatives which could be considered. thought To look the project cost, effort requires for the project and functionality of various process in the project. System design Choose a general design that can fusil the requirements.Project ontogeny Evaluate the project in terms of expected goods, cost and risks involved marketing phase. A project proposal is prepared by a group of people including the project manager. This proposal has to contain the strategies ado pted to market the product to the customers. fancy phase This phase involves the study of inputs and outputs of the various project stages. Execution phase In this phase the project manager and the teams members work on the project objectives as per the plan. At every stage during the execution reports are prepared. Control Inspecting, Testing and Delivery phase during this phase.The project team works under the guidance of the project manager. The project manager has to ensure that the team on the job(p) under his, implements the project designs accurately, the project manager has to ensure ways of managing the customer, perform quality control work. Closure and post consequence analysis phase upon satisfactory completion and delivery of the intended product or service the staff performance has to be evaluated. Document the lessons from the project. specify the reports on project feedback analysis followed by the project execution report. The phase which involve in the above ar eThe dressing stage involves the preparation and approval of project outline, project plan and project budget. The next stage involves selecting and briefing the project team about the proposals followed by discussions on the roles and responsibility of the project member and the organization. The project management life cycle A Life cycle of a project consists of the spare-time activity Understanding the scope of the project Establishing objectives of the project Formulating and planning various activities Project execution and admonisher and control the project resources. Risk Management-Risk is defined in ISO 3 degree Celsius0 as the effect of uncertainty on objectives (whether positive or negative). Risk management can therefore be considered the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the genuine lyization of opportunities. Risks can come from uncertainty in monetary markets, project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as weigh attacks from an adversary.Several risk management standards have been developed including the Project Management Institute, the discipline Institute of Science and Technology, actuarial societies, and ISO standards. Methods, definitions and goals vary widely according to whether the risk management method is in the context of project management, security, engineering, industrial processes, fiscal portfolios, actuarial assessments, or public health and safety device. The strategies to manage risk embarrass transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.Certain aspects of many of the risk management standards have come under criticism for having no measurable improvement on ri sk even though the confidence in estimates and decisions increase. requisite and objectives of SCM- SCM is the abbreviation of egress chain Management. It is considered by many express oecumenic as the ultimate solution towards efficient enterprise management. SCM is required by and enterprise as a tow to enhance management strength with a following organizational objective Reduction of inventory-Enactment in functional effectiveness of existing systems like ERP, Accounting.Software and Documentation like financial reports statements ISO 9000 Documents etc. Enhancement of participation level and empowerment level- in effect(p) integration of multiple systems like ERP, communication systems, documentation system and secure, Design R systems etc. Better utilization of resources- men, material, equipment and money. Optimization of money flow cycle within the organization as well as to and from foreign agencies. Enhancement of value of products, operations and services and conseq uently, enhancements of profitability.Enhancement of satisfaction level of customer and clients, supporting institutions, statutory control agencies, supporting institutions, statutory control agencies, suppliers and vendors, employees and executives . Enhancement of flexibility in the organization to help in easy instruction execution of schemes involving modernization, expansion and divestment, merges and acquisitions Enhancement of coverage and accuracy of management information systems. With the objectives of SCM its not horrid(p) punishment are required.Implementation is in the form of various functional blocks of an organization interpenetrated done which a smooth flow of the product development is possible. A relatively new SCM option involves web based software with a web browser interface. Several electronic marketplaces for buying and marketing goods and materials. Steps involved in the effectuation of SCM- There is many steps which involved in SCM implementation a re- assembly line Process, sales and marketing.Logistics, costing, demand planning, trade- off analysis, environmental requirement, process stability, integrated supply, supplier management, product design, suppliers, customers, material specifications, etc. Some important aspect of SCM- The level of competition existing in the market and the impact of competitive forces on the product development. Designing and work on a strategic logic for better growth by means of value invention. works out new value curve in the product development along with necessary break point. Using it to analyze markets and the economies in product design.Time, customer, quality of product and the opinion of survival of fittest. Steps of SCM principals Group customer by need Effective SCM groups, customer by tie tinct service meets those particular segment. Customize the logistics networks In designing their logistics network, companies need to focus on the service requirement and profit potential of t he customer segments identified. Listen to signals of market demand and plan accordingly- sales and operations planners must monitor the entire supply chain to detect early warning signals of changing customer demand and needs.Differentiate the product closer to the customer companies today no long can afford to stock pile inventory to compensate for possible forecasting errors, instead, they need to postpone product differentiation in the manufacturing. Process closer to actual customer demand. Strategically manage the source of supply by working closely with their key suppliers to reduce the overall casts of owning materials and services SCM maximizes profit margins both for themselves, and their supplies.Develop a supply chain wide technology scheme as one of the cornerstones of successful SCM information technology must be able to support multiple levels of decision making. Adopt deport spanning performance measures- Excellent supply performance measurement systems do more th an just monitor internal functions. They apply performance criteria that embrace bath service and financial metrics, including as such as each grudges accepted profitability. MB0045 fiscal Management Assignment set 1 Q. 1 save up the short notes on 1. pecuniary management 2. financial planning 3. working crown letter body social organisation 4. woo of detonating device 5. profession on lawfulness.Ans 1. Financial Management Financial Management is preparation, directing, monitoring, organizing, and controlling of the monetary resources of an organization. The management of the finances of a business / organization in order to achieve financial objectives. Financial Management is the efficient and effective planning and controlling of financial resources so as to maximize profitability and ensuring liquidity for an individual(called personal finance), government(called public finance) and for profit and non-profit organization/firm (called corporate or managerial financ e). Generally, it involves balancing risks and profitability.The decision function of financial management can be divided into the following 3 major areas INVESTMENT DECISION 1. Determine the total totality of additions needed by a firm hence closely buttoned to the parcelling of specie 2. Two type of enthronement decisions namely Capital investiture decisions re large sums, non routine, longer term, critical to the business like buy of plant and machinery or factory Working Capital Investment decisions re more routine in nature, short term but are also very critical decisions like how much and how long to invest in inventories or receivables FINANCING DECISION . After decision making on the amount and type of assets to buy, the financial manager needs to decide on HOW TO FINANCE these assets with the sources of fund 2. Financing decisions for example Whether to use foreign imbibeings/debts or share jacket or retained fee Whether to borrow short, medium or long term What sort of mix all adoptions or part debts part share capital or 100% share capital The needs to determine how much dividend to pay out as this will directly affects the financial decision.Financial Planning Financial Planning is an exercise aimed to ensure availability of right amount of money at the right time to meet the individuals financial goals opinion of Financial Planning Financial Goals refer to the dreams of the investor articulated in financial terms. Each dream implies a purpose, and a schedule of funds requirements for realising the purpose Asset Allocation refers to the distribution of the investors wealth between different asset classes (gold, property, justness, debt etc. Portfolio Re-balancing is the process of changing the investors asset allocation Risk Tolerance / Risk Preference refers to the appetite of the investor for investment risk viz. risk of going away Financial Plan Is a lane map, a blue print that lists the investors financial goals and outl ines a strategy for realising them Quality of the Financial Plan is a function of how much information the opinion shares, which in turn depends on comfort that the planner inspires Capital social organization Capital structure of a firm is a reflection of the overall investment and financing strategy of the firm.Capital structure can be of various kinds as described below Horizontal capital structure the firm has zero debt component in the structure mix. Expansion of the firm takes through equity or retained profit only. Vertical capital structure the base of the structure is formed by a small amount of equity share capital. This base serves as the foundation on which the super structure of preference share capital and debt is built. Pyramid shaped capital structure this has a large proportion consisting of equity capita and retained lucre. alter pyramid shaped capital structure this has a small component of equity capital, reasonable level of retained profit but an ever-i ncreasing component of debt. SIGNIFICANCE OF CAPITAL STRUCTURE Reflects the firms strategy index of the risk profile of the firm Acts as a tax management tool Helps to brighten the image of the firm. FACTORS INFLUENCING CAPITAL STRUCTURE Corporate strategy Nature of the industry up-to-the-minute and past capital structure Cost of Capital Cost of capital is the rate of return the firm requires from investment in order to increase the value of the firm in the market place.In economic sense, it is the cost of raising funds required to finance the proposed project, the borrowing rate of the firm. thusly under economic terms, the cost of capital may be defined as the weighted average cost of each type of capital. There are three basic aspects about the cin one casept of cost 1. It is not a cost as such The cost of capital of a firm is the rate of return which it requires on the projects. That is wherefore it is a hurdle rate. 2. It is the borderline rate of return A firms cos t of capital represents the minimum rate of return which is required to maintain at least the market value of equity shares. . It consists of three components. A firms cost of capital includes three components a. harvest-time at Zero Risk direct It relates to the expected rate of return when a project involves no financial or business risks. b. origin Risk Premium avocation risk relates to the variability in operational(a)(a) profit (earnings earlier interest and taxes) by virtue of changes in sales. Business risk premium is determined by the capital budgeting decisions for investment proposals. c. Financial Risk Premium Financial risk relates to the pattern of capital structure (i. e. debt-equity mix) of the firm, In general, a firm which has higher debt content in its capital structure should have more risk than a firm which has comparatively low debt content. This is because the former should have a greater operating profit with a view to covering the periodic interest paym ent and quittance of principal at the time of maturity than the latter. Trading on comeliness When a co. uses located interest bearing capital along with own capital in raising finance, is said Trading on rectitude. (Owned Capital = loveliness Share Capital + Free Reserves )Trading on equity represents an arrangement under which a company uses funds carrying fixed interest or dividend in such a way as to increase the rate of return on equity shares. It is possible to offer the rate of dividend on equity capital only when the rate of interest on fixed interest bearing security is less than the rate of return earned in business. Two other terms Trading on Thick comeliness -When borrowed capital is less than owned capital Trading on Thin Equity -When borrowed capital is more than owned capital, it is called Trading on thin Equity.Q. 2 a. Write the features of impermanent divined and also write the factors (08 Marks) Influencing divined policy? b. What is reorder level? Ans a) Usually, board of directors ofcompanydeclaresdividendin annual general meeting after finding the real net profit position. If boards of directors give dividend for current year before pass completion of that year, and so it is called interim dividend. This dividend is declared between two annual general meetings. Before declaring interim dividend, board of directors should estimate the net profit which will be in future.They should also estimate the amount ofreserveswhich will deduct from net profit inprofit and loss appropriation account. If they think that it is sufficient for operating of business after declaring such dividend. They can issue but after completing the year, if profits are less than estimates, then they have to pay the amount of declared dividend. For this, they will have to take loan. Therefore, it is the duty of directors to deliberate with financial consultant before taking this decision.Accounting treatment of interim dividend in final accounts of compan y- First cause Interim dividend is shown both in profit and loss appropriation account and balance sheet , if it is outside thetrial balancein given question. ( a) It will go to debit entry side of profit and loss appropriation account (b) It will also go to current liabilities head in liabilities side. Second CaseInterim dividend is shown only in profit and loss appropriation account, if it is shown in trial balance. ( a) It will go only to debit side of profit and loss appropriation account.If in final promulgation is given outside of trial balance and this will be proposed dividend and interim dividend in trial balance will be deducted for writing proposed dividend in profit and loss appropriation account and balance sheet of company, because if we will not deducted interim dividend, then it will be double deducted from net profit that is wrong and error shows when we will match balance sheets assets with liabilities. Factors impact dividend policy. The dividend decision is troublesome decision because of conflicting objectives and also because of lack of specific decision-making techniques.It is not easy to lay down an optimum dividend policy which would maximize the long-run wealth of the shareholders. The factors affecting dividend policy are grouped into two broad categories. 1. willpower considerations 2. Firm-oriented considerations Ownership considerationsWhere ownership is concentrated in few people, there are no problems in identifying ownership interests. However, if ownership is modify on a wide spectrum, the identification of their interests becomes difficult. Various groups of shareholders may have different desires and objectives.Investors gravitate to those companies which combine the mix of growth and desired dividends. Firm-oriented considerationsOwnership interests alone may not determine the dividend policy. A firms needs are also an important consideration, which include the following contractual and legal restrictions Liquidi ty, credit-standing and working capital Needs of funds for immediate or future expansion Availability of external capital. Risk of losing control of organization Relative cost of external funds Business cycles Post dividend policies and shareholder relationships.The following factors affect the shaping of a dividend policy Nature of BusinessCompanies with unstable earnings adopt dividend policies which are different from those which have still earnings. Composition of ShareholdingIn the case of a closely held company, the personal objectives of the directors and of a majority of shareholders may govern the decision. To the contrary, widely held companies may take a dividend decision with a greater sense of responsibility by adopting a more formal and scientific approach. Investment OpportunitiesMany companies retain earnings to facilitate planned expansion.Companies with low credit ratings may feel that they may not be able to denounce their securities for raising necessary finance they would need for future expansion. So, they may adopt a policy for retaining bigger portion of earnings. Similarly, is a company has lucrative opportunities for investing its funds and can earn a rate which is higher than its cost of capital, it may adopt a conservative dividend policy. LiquidityThis is an important factor. There are companies, which are profitable but cannot generate sufficient cash, since profits are to be reinvested in fixed assets and working capital to boost sales.Restrictions by Financial InstitutionsSometimes financial institutions which grant long-term loans to a company put a clause restricting dividend payment till the loan or a substantial part of it is repaid. InflationIn period of inflation, funds generated from depreciation may not be adequate to replace dim out equipment. Under inflationary situation, the firm has to depend upon retained earnings as a source of funds to make up for the shortfall. Consequently, the dividend pay out ratio will tend to be low. Other factors sequence of the company has some effect on the dividend decision.The demand for capital expenditure, money supply, etc. , undergo great oscillations during the different stages of a business cycle. As a result, dividend policies may fluctuate from time to time. Ans b) Reorder Level This is that level of materials at which a new order for supply of materials is to be placed. In other words, at this level a purchase command is made out. This level is fixed somewhere between maximum and minimum levels. Order points are based on usage during time necessary to requisition order, and receive materials, plus an allowance for protection against stock out.Theorder pointis reached when inventory on hand and quantities due in are equal to the lead time usage quantity plus the safety stock quantity. Formula of Re-order Level or Ordering Point The following two formulas are used for the calculation ofreorder level or point. Ordering point or re-order level = M aximum daily or weekly or monthly usage ? Lead time The above formula is used when usage and lead time are known with certainty therefore, no safety stock is provided. When safety stock is provided then the following formula will be applicable Ordering point or re-order level = Maximum daily or weekly or monthly usage ?Lead time + Safety stock Q. 3 Sales Rs. 400, 000 less returns Rs 10, 000, Cost of Goods Sold Rs 300,000, Administration and merchandising expenses Rs. 20, 000, stakes on loans Rs. 5000, Income tax Rs. 10000, preference dividend Rs. 15,000, Equity Share Capital Rs. 100, 000 Rs. 10 per share. Find EPS. Sales Rs. 400, 000 less returns Rs 10, 000, Cost of Goods Sold Rs 300,000, Administration and selling expenses Rs. 20, 000, Interest on loans Rs. 5000, Income tax Rs. 10000, preference dividend Rs. 15,000, Equity Share Capital Rs. 100, 000 Rs. 10 per share. Find EPS. Sales 400,000 Less Returns 10,000 390,000 Less COGS 30,000 S 20,000 Int on Loan 5,000 IT 10,000 325,000 Div 15,000 ESC 100,000 10/- NPAT Pref Share Div No of Shares NPAT 55,000 less Pref Share Div 15,000 40,000 EPS 40,000 =Rs. 4/- 10,000 Q. 4 What are the techniques of evaluation of investment? Three steps are involved in the evaluation of an investment Estimation of cash flows Estimation of the required rate of return (the opportunity cost of capital) Application of a decision rule for making the choice. The outset two steps, discussed in the ulterior chapters, are assumed as given. Thus, our discussion in this chapter is confined to the 3rd step. speifically, we focus on the merits and demerits of various decision rules. Investment decision ruleThe investment decision rules may be referred to as capital budgeting techniques, or investment criteria. A straits appraisal technique should be used to measure the economic worth of an investment project. The essential property of a sound technique is that it shou ld maximize the shareholders wealth. The following other characteristics should also be possess by a sound investment evaluation standard. It should consider all cash flows to determine the true profitability of the project. It should provide for an objective and apparent way of separating good projects form bad projects. It should help ranking of projects according to their true profitability. It should realise the fact that bigger cash flows true profitability. It should recognize the fact that bigger cash flows are preferable to smaller once and early cash flows are preferable to later ones. It should help top choose among mutually exclusive projects that project which maximizes the shareholders wealth. It should be a criterion which is applicable to any conceivable investment project independent of other. These conditions will be clarified as we discuss the features of various investment criteria in the following pages. Evaluation criteria A number of investments criter ia (or capital budgeting techniques) are in use in proactive. They may be grouped in the following two categories 1.Discounted cash flow (DCF) criteria Net present value (NPV) upcountry rate of return (IIR) do goodability index (PI) 2. Non-discounted cash flow criteria retribution period (PB) Discounted payback period Accounting rate of return (ARR). Discounted payback is a variation of the payback method. It involves discounted cash flows, but as we shall see later, it is not a true measure of investment profitability. We will show in the following pages that the net present value criterion is the most valid technique of maximizing the shareholders wealth. Problems associated with inadequate working capital Working capital may be regarded as the life blood of business.Working capital is of major importance to internal and external analysis because of its close relationship with the current day-to-day operations of a business. Every business needs funds for two purposes. * Long term funds are required to create production facilities through purchase of fixed assets such as plants, machineries, lands, buildings & etc * Short term funds are required for the purchase of raw materials, payment of wages, and other day-to-day expenses. . It is other wise known as revolving or circulating capital It is nothing but the difference between current assets and current liabilities. i. e. Working Capital = Current Asset Current Liability. Businesses use capital for construction, renovation, furniture, software, equipment, or machinery.It is also commonly used to purchase inventory, or to make payroll. Capital is also used often by businesses to put a down payment down on a piece of commercial real estate. Working capital is essential for any business to succeed. It is becoming increasingly important to have access to more working capital when we need it. Q. 5 What are the problems associated with inadequate working capital? A business firm must maintain an adequa te level of working capital in order to run its business smoothly. It is worthy to note that both excessive and inadequate working capital positions are harmful. Working capital is just like the heart of business. If it becomes weak, the business can hardly prosper and survive.No business can run successfully without an adequate amount of working capital. Danger of inadequate working capital When working capital is inadequate, a firm faces the following problems. Fixed Assets cannot expeditiously and effectively be utilized on account of lack of sufficient working capital. Low liquidity position may lead to evacuation of firm. When a firm is unable to meets its debts at maturity, there is an unsound position. assurance worthiness of the firm may be damaged because of lack of liquidity. Thus it will lose its reputation. There by, a firm may not be able to get credit facilities. It may not be able to take advantages of cash discount. Disadvantages of Redundant or Excessive Working C apital 1.Excessive Working Capital means ideal funds which earn no profits for the business and hence the business cannot earn a proper rate of return on its investments. 2. When there is a purposeless working capital, it may lead to unnecessary purchasing and accumulation of inventories causing more chances of theft, waste and losses. 3. Excessive working capital implies excessive debtors and spoiled credit policy which may cause higher incidence of bad debts. 4. It may result into overall inefficiency in the organization. 5. When there is excessive working capital, relations with banks and other financial institutions may not be maintained. 6. imputable to low rate of return on investments, the value of shares may also fall. 7.The redundant working capital gives rise to speculative transactions. Disadvantages or Dangers of brusk Working Capital 1. A concern which has inadequate working capital cannot pay its short-term liabilities in time. Thus, it will lose its reputation and shall not be able to get good credit facilities. 2. It cannot buy its requirements in bulk and cannot avail of discounts, etc. 3. It becomes difficult for the firm to exploit gold market conditions and undertake profitable projects due to lack of working capital. 4. The firm cannot pay day-to-day expenses of its operations and its creates inefficiencies, increases be and reduces the profits of the business. 5.It becomes impossible to utilize efficiently the fixed assets due to non-availability of liquid funds. 6. The rate of return on investments also falls with the shortage of working capital. Disadvantages or Dangers of Inadequate or Short Working Capital Cant pay off its short-term liabilities in time. Economies of scale are not possible. Difficult for the firm to exploit favourable market situations Day-to-day liquidity worsens Improper utilization the fixed assets and ROA/ROI falls sharply Q. 6 What is supplement? Compare and furrow between operating supplement and fi nancial supplement (10 Marks) Leverage is the action of a lever or the mechanical advantage gained by it it also means effectiveness or power.The common interpretation of leverage is derived from the use or manipulation of a tool or device termed as lever, which provides a substantive clue to the meaning and nature of financial leverage. When an organization is planning to raise its capital requirements (funds), these may be raised(a) either by issuing debentures and securing long term loan 0r by issuing share-capital. Normally, a company is raising fund from both sources. When funds are raised from debts, the Co. investors will pay interest, which is a definite financial obligation of the company. Whether the company is earning profits or not, it has to pay interest on debts. besides one benefit of raising funds from debt is that interest paid on debts is allowed as deduction for income tax. When funds are raised by issue of shares (equity) , the investor are paid dividend on their investment. Dividends are paid only when the confederacy is having sufficient amount of profit. In case of loss, dividends are not paid. except dividend is not allowed as deduction while computing tax on the income of the Company. In this way both way of raising funds are having some advantages and disadvantages. A Company has to decide that what will be its mix of Debt and Equity, considering the liability, cost of funds and expected rate of return on investment of fund. A Company should take a proper decision about such mix, otherwise it will face many financial problems.For the purpose of determination of mix of debt and equity, leverages are exercised and analyzed. Concept of Financial Leverage Leverage may be defined as the employment of an asset or funds for which the firm pays a fixed cost or fixed return. The fixed cost or return may, therefore be thought of as the full annum of a lever. Financial leverage implies the use of funds carrying fixed commitment charge wi th the objective of increasing returns to equity shareholders. Financial leverage or leverage factor is defined, as the ratio of total value of debt to total assets or the total value of the firm. For example, a firm having a total value of Rs. ,00,000 and a total debt of Rs. 1,00,000 would have a leverage factor of 50 percent. There are difficult measures of leverage such as. i. The ratio of debt to total capital ii. The ratio of debt to equity iii. The ratio of net operating income (earning before interest and taxes) to fixed charges) The first two measures of leverage can be expressed either in book v8lue or market value the debt of equity ratio as a measure of financial leverage is more popular in practice. Risk & Financial Leverage Effects of financial LeverageThe use of leverage results in two obvious effects i. Increasing the shareholders earning under favorable economic conditions, and ii.Increasing the financial risk of the firm. Suppose there are two companies each having a Rs. 1,00,000 capital structure. One company has borrowed half(prenominal) of its investment while the other company has only equity capital Both earn Rs. 2,00,000 profit. The ratio of interest on the borrowed capital is 10%and the rate of corporate tax 50%. Let us calculate the effect of financial leverage, both in the shareholders earnings and the Companys financial risk in these two companies. (a) Effect of Leverage on Shareholders Earnings Company A Company B Rs. Rs. Profit before Interest and Taxes 2,00,000 2,00,000 Equity 10,00,000 5,00,000 Debt - 5,00,000 Interest (10%) - 50,000 Profit after interest but before Tax 2,00,000 1,50,000 Taxes 50% 1,00,000 75,000 Rate of return on Equity of Company A Rs. 1,00,000/Rs. 10,00,000 = 10% Rate of return on Equity of Company B Rs. 75,000/Rs. 5,00,000 = 15% The above illustration points to the favorable effect of the leverage factor on earnings of shareholders. The concept of leverage is 5 if one can earn more on the borrowed money that it costs but detrimental to the man who fails to do so far there is such a thing as a negative leverage i. e. borrowing money at 10% to find that, it can earn 5%. The difference comes out of the shareholders equity so leverage can be a double-edged sword. b) Effect of Leverage on the financial risk of the companyFinancial risk broadly defined includes both the risk of possible insolvency and the changes in the earnings procurable to equity shareholders. How does the leverage factor leads to the risk possible insolvency is self-explanatory. As defined earlier the cellular inclusion of more and more debt in capital structure leads to increased fixed commitment charges on the part of the firm as the firm continues to lever itself, the changes of cash insolvency leading to legal bankruptcy increase because the financial charges incurred, by the firm exceed the expected earnings. Obviously this leads to fluctuations in earnings available to the equity sharehol ders. Relationship Financial and operating(a) leverageRelationship between financial and operating leverageIn business terminology, leverage is used in two senses Financial leverage & Operating Leverage Financial leverageThe effect which the use of debt funds produces on returns is called financial leverage. Operating leverageOperating leverage refers to the use of fixed costs in the operation of the firm. A firm has a high degree of operating leverage if it employs a greater amount of fixed costs. The degree of operating leverage may be defined as the percentage change in profit resulting from a percentage change in sales. This can be expressed as = Percent Change in Profit/Percent Change in SalesThe degree of financial leverage is defined as the percent change in earnings available to common shareholders that is associated with a given percentage change in EBIT. Thus, operating leverage affects EBIT while financial leverage affects earnings after interest and taxes the earnings av ailable to equity shareholders. For this reason operating leverage is sometimes referred to as first stage leverage and financial leverage as endorse stage leverage. Therefore, if a firm uses a considerable amount of both operating leverage and financial leverage even small changes in the level of sales will produce wide fluctuations in earnings per share (EPS).The combined effect of both these types of leverages is after called total leverage which, is closely tied to the firms total risk. MB0046 -Marketing Management Assignment Set 1 Q. 1 a. Explain the different micro-environmental forces with examples. Forces in the micro environment pic 1 The Company Remember, in the previous unit we discussed about marketing mix and marketing plan. Safe Express, a leader in the supply chain management solution wants to hold its number one position in the US $ 90 billion Indian logistics market. The company plans to expand its service areas in the coming months. To meet the targets of the mar keting plan, other departments of safe express also expanding their horizon.The Company is coming out with logistics park in different cities plans to hold seven million square feet of computer storage capacity in the next three years and invest Rs 10 billion in three years to meet those targets. The above example shows that the companys marketing plan should be supported by the other functional departments also. 2 Intermediaries Marketing intermediaries These are firms which distribute and sell the goods of the company to the consumer. Marketing intermediaries play an important role in the distribution, selling and promoting the goods and services. Stocking and delivering, bulk breaking, and selling the goods and services to customer are some of the major functions carried out by the middlemen.Retailers, wholesalers, agents, brokers, jobbers and carry forward agents are few of the intermediaries. Retailers are final link between the company and the customers. Their role in the mar keting of product is increasing every day. 3 Publics These are microenvironment groups, which help a company to generate the financial resources, creating the image, examining the companies policy and developing the attitude towards the product. We can identify six types of publics 1. Financial publics influence the companys ability to obtain funds. For example, Banks, investment houses and stockholders are the major financial publics. 2. Media publics carry intelligence service and features about the company e. g.Deccan Herald 3. Advertisement regulation agencies, telecom regulation agency( TRAI), and insurance regulation agency(IRDA) of the government 4. Citizen action groups Formed by the consumer or environmental groups. For example, people for ethical treatment of animals (PETA) or Greenpeace. 5. General publics a compa