AUG

12

OPERATION III SEMESTER

Question No.1 Explain different modes of discharge of contracts.Answer No.3: Different Modes of Discharge of Contracts (Secs.73-75)A contract may be discharged by (i) performance, (ii) tender; (iii) mutual consent; (iv) subsequent impossibility; (v) operation of law; (vi) breach.Discharge of contracts by performance or tenderThe obvious mode of discharge of a contract is by performances that is where the parties have done whatever was contemplated underThe contract, the contract comes to an end. Thus, where A contracts to sell his car to B for Rs 1,85,000, as soon as the car is delivered to B and Bpays the agreed price for it, the contract comes to an end by performance. The tender or offer of performance has the same effect as performance. If a promisor tenders performance of his promise but the other party refuses to accept, the promisor stands discharged of his obligations.Meaning of mutual consent (Sec.62)If the parties to a contract agree to substitute a new contract for it, or to rescind it or alter it, the original contract is discharged. A contract may terminate by mutual consent in any of the six ways viz. novation, rescission, alteration and remission, waiver and merger. Novation means substitution of a new contract for the original one.Discharge of contracts by impossibility of performanceA contract may be discharged because of impossibility of performance. There are two types of impossibility: (i) Impossibility may be inherent in the transaction (i.e., the contract), (ii) Impossibility may emerge later by the change of certain circumstances material to the contract.Discharge of a contract by operation of lawDischarge by operation of law may take place in four ways: (i) By death. Death of the promisor results in termination of the contract in cases involving personal skill or ability. (ii) By insolvency. The insolvency law provides for discharge of contracts under certain circumstances so where an order of discharge is passed by an insolvency court the insolvent stands discharged of all debts incurred previous to his adjudication. (iii) By merger.Discharge of contracts by breachA breach of contract is one party’s failure, without a legal excuse, to live

up to any of its promises under a contract. A contract terminates by breach of contract. If the promisor has not performed his promise in accordance with the terms of the contract or where the performance is not excused by tender, mutual consent or impossibility or operation of law, then this amounts to a breach of contract on the part of the promisor. The consequence of this is that the promisee becomes entitled to certain remedies. The breach of contract may arise in two ways:(i) Anticipatory and (ii) actual.Anticipatory breach of contracts: The anticipatory breach of contract occurs when a party repudiates it before the time fixed for performance has arrived or when a party by his own act disables himself from performing the contract.Actual breach of contracts: The actual breach can occur by (i) failure to perform as promised, (ii) making it impossible for the other party to perform. The failure to perform means that one party must not have performed a material part of the contract by a stated deadline. The actual breach by failure to perform may take place (a) at the time when performance is due, or (b) during the performance of the contract. Thus, if a person does not perform his part of the contract at the stipulated time, he will be liable for its breach.Question No.2: Distinguish between a contact of a guarantee and a contract of indemnity.Answer No.2: CONTRACT OF INDEMNITY  1 There are two parties to  the  contract  viz. the indemnifier   and  the indemnified2 The liability of the indemnifier to the indemnified is primary  CONTRACT OF GUARANTEE 1 There  are three parties to the contract viz. the creditor, the principal debtor and the surety.2  The liability of the surety to the creditor is collateral  or secondary the primary liability being that of the principal debtor Unlike contract of indemnity where indemnifier is liable for indemnified in a contract of guarantee the liability of the surety is co-extensive with that of principal debtor and the creditor can proceed with principal debtor and surety simultaneously. Even the creditor with notice to principal debtor can recover the dues from surety first .But the surety will have a legal  right to recover the monies he paid to creditor from the principal debtor Contract of indemnity1) there are 2 parties indemnifier and indemnity holder..2)there is 1 contract b\w indemnifier and indemnified..3)The nature of liability of indemnifier is primary and independent...4)in a contract of indemnity, the indemnifier promises without the request

of debtor..5)A contract of indemnify is for reimbursement.. Contract of Guarantee.........1)there are 3 parties Creditor, Principal Debtor And Surety..2)there are 3 contracts B\W creditor and principal, principal and surety, surety and creditor.3)Liability of surety is Secondary....4)contract of Guarantee is for security of a debt or performance of promise... CONTRACT OF INDEMNITY  1)Section 124 of the Indian Contract Act 1872 defines a "contract of indemnity" as a contract by which one party promises to save the other from loss caused to him by theconduct of the Promisor himself, or by the conduct of any other person.e.g = 'x' contracts to indemnify 'y' against the consequences of any legal proceedings which c may take against B in respect of a certain sum of Rs.200/=. 2  There are two parties to  the  contract  viz.  the indemnifier   and  the indemnity holder3 The liability of the indemnifier is primary4 In the Contract of indemnity the liability of the indemnifier  arises only on the happening of the contingency.5 In the contract of indemnity the loss falls on the indemnifier  except in certain special cases.6 There is only one contract in case of contract of indemnity i.e, b/w the indemnifier and indemnity holder.  CONTRACT OF GUARANTEE 1  Section 126 of the Indian Contract Act 1872 defines a contract of guarantee is a contract to perform the promiseor discharge the liability of a third person in case of his default”. The person who gives the guarantee is called the “surety”; the person in respect of whose default the guarantee is given is called the “principal debtor”, and the person to whom the guarantee is given is called the “creditor”. A guarantee may be either oral or written. e.g, 'P' lends Rs. 5000/= to 'Q' and 'R' promises to 'P' that if 'Q' does not pay the money back then 'R' will do so. 2 There  are three parties to the contract viz. the creditor, the principal debtor and the surety.3 The liability of the surety to the creditor is secondary i.e, the surety is liable only if the principal debtor fails to perform his obligation.4 In a contract of guarantee there is an existing debts or duty, the performance of which is guaranteed by the surety.5 In the contract of guarantee the surety , after discharges the debts owing to the creditor, can proceed against the principal debtor.6 In case of contract of guarantee there are three contracts.

 a) contract b/w the principal debtor  and the creditor.b) contract b/w the creditor and the surety.c) contract b/w the surety  and the principal debtor.

Indemnity means a promise to save a person harmless from the consequences of an act or to compensate. According Section 124 of the Indian Contract Act, 1872 contract of Indemnity state that the contract by which one party agree to save the other from the loss caused by him by the conduct of promissor himself. It is a bilateral contract whereas  Guarantee section 126 of the Indian Contract Act, 1872 state the contract of guarantee mean a contract to perform the promise or discharge. these are concurrence of three contracts.

THE words "guarantee" and "indemnity" are commonly used. These words are frequently encountered in hire purchase and loan agreements and in many other transactions. However, what these words mean is not always a matter of immediate concern.

When getting a bank loan, a person is often asked to provide a guarantee. Similarly those who obtain other facilities or scholarships have to provide guarantors. Sometimes the word "indemnity" is also added on in the document and one tends to think that it probably has something to do with the guarantee.

But a guarantee and indemnity do not mean the same thing. In its wider sense a contract of indemnity could include a contract of guarantee. However, beyond that a contract of indemnity certainly differs from a contract of guarantee. What is the difference?

As stated by Holroyd Pearce L.J. in Yeoman Credit Ltd vs Latter, an indemnity is a contract by one party to keep the other harmless against loss but a contract of guarantee is a contract to answer for the debt default or miscarriage of another who is to be primarily liable to the promise.

The concept of an indemnity and guarantee is reflected in our law as contained in the Contracts Act 1950. Section 77 states that: "A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity."

On the other hand, a contract of guarantee "is a contract to perform the promise, or discharge the liability of a third person in case of his default. The person who gives the guarantee is called the surety, the person in respect of whose default the guarantee is given is called the principal debtor, and the person to whom the guarantee is given is called the creditor. A guarantee may be either oral or written."

According to the Contracts Act, it would appear that a guarantee can be

oral. However, the provision on indemnity is silent on this aspect. Does it mean that an indemnity must be in writing? It could be argued that an indemnity could be oral too.

In a guarantee the liability arises at the point of time when the principal borrower or debtor defaults on his obligation. Where there is liability even though there is no default or breach by the principal debtor, it is not a contract of guarantee.

This difference is explained by Lopez L.J. in Guild & Co vs Conrad, an English decision of the Court of Appeal, where it is stated that a promise to be liable for a debt conditionally on the principal debtor making default is a guarantee. On the other hand, a promise to become liable for a debt whenever the person to whom the promise is made should become liable, is a different matter to be viewed separately. The essence of the matter is that there is a difference between a promise to pay the creditor if the debtor defaults on payment as compared to a promise to make payment irrespective of any default by anybody so long as the recovery of the money is unsuccessful.

In many jurisdictions, the words "guarantee" and "indemnity" are used interchangeably as if they mean the same thing, but the difference is in the fact that in a guarantee one agrees to assume responsibility for the obligation or debt of another if that other person defaults. However, in the case of an indemnity, one assumes a direct and primary obligation on the basis more of the occurrence of an event rather than a default.

In a contract of indemnity not only is there no requirement for a default by a third party as a condition of liability but there may not even be a third party involved for either the creation or exercise of the right.

By way of illustration, an insurance contract is an indemnity contract. A person who buys an insurance policy insures his property against damage. If and when the damage occurs, the insured is entitled to call upon the insurer to pay him. Of course, there may be conditions as to what can be claimed. The question of default does not arise.

Another example is where a dealer enters into an agreement to provide an item which is not  essential to an infant. He may ask for an indemnity if the infant does not pay. This is because if the infant does not pay he cannot be said to be in breach because the agreement will not be enforceable at all.

However, if a third party has agreed to indemnify the dealer for the loss, the indemnity will prevail and a person who has undertaken such an obligation will have to pay. But there is no breach or default by the infant. On the other hand, if in such a situation the third party had signed a guarantee, it would not be enforceable.

Thus a guarantee involves a default by a third party whilst an indemnity arises on the occurrence of an event. And whether a document is a

guarantee or indemnity will depend on its contents and not on the title given to the document.

Question NO.3: Briefly state special features of a partnership on the basis of which its existence can be determined under the Indian Partnership Act?

Answer No.3:

DefinitionA Partnership is defined by the Indian Partnership Act, 1932, as “the relations between persons who have agreed to share profits of the business carried on by all are any of them acting for all”. This Definition gives three minimum requirements to constitute a Partnership, viz:There must be an agreement entered into orally or in writing by the persons who desire to form a Partnership,The object of the agreement must be to share the profits of business intended to be carried on by the Partnership, andThe business must be carried on by all the partners or any of them acting for all of them.Agreement of PartnershipA Partnership is constructed by an agreement between the partners. The agreement may be in writing or oral. But from the practical point of view and particularly in view of the provisions of other Acts such as the Income Tax as well as Partnership Act an oral Partnership is not practicable, and therefore, a Partnership agreement is necessarily required to be in writing. Therefore, the mere fact that two persons as joint owners either as heirs or legatees are carrying on a business does not necessarily mean that they are partners and it they want to carry on the business in Partnership, then a Partnership agreement in writing becomes necessary.

Period of PartnershipA Partnership can be for a fixed period of time or it may be limited to a particular adventure as provided in Section 8 or it may be for duration at the will of the partners. Where the period of the Partnership is not fixed and the Partnership is not for a particular adventure then under Section 7 of the Act the Partnership shall be deemed to be a Partnership at will. 

Rights and duties of partnersSection 9 and 10 of the Act lay down the basic duties of every partner and the said duties are not subject to any contract on the contrary. Therefore, partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other and render accounts and full information of all things affecting the firm to any partner or his legal representative and every partner is bound to indemnify the firm for any loss caused to it by fraud in the conduct of the business of the firm.

Subject to this the mutual rights and duties of the partner may be decided by contract between the partner either express or implied.

Subject to any contrary to the contrary such duties and rights of each partner or provided in Sections 12 and 13 of the Partnership Act. They are:Every partner has a right to take part in the contact of the business,Every partner is bound to attend diligently to his duties in the contact of business,Any difference arising as to ordinary matters connected with the business may be decided by a majority of partner and no change in the nature of the business shall be made without the consent of all the partners,Every partner has as a right to have assess to and to inspect and copy any books of the firm,A partner is not entitled to receive remuneration for taking part in the conduct of the business,The partners are entitled to share equally the profits earned and shall contribute equally to the losses sustained by the firm,Where the partners is entitled to interest on the capital subscribed by them, such interest shall be payable only out of the profits,A partner making, for the purpose of the business, any payment or advance being the amount of capital he has agreed to subscribed, is entitled to interest thereon at the rate of 6% P.A,The firm shall indemnify a partner in respect of payment made and liabilities incurred by them,in the ordinary and proper course of conduct of the business andin doing such act in an emergency, for the purpose of protecting the firm from any loss, as would be done by a person of ordinary prudence, under similar circumstancesThe partners shall indemnify the firm from any loss caused due to his willful neglect in the conduct of the business of the firm. This rights and duties will be implied in the Partnership, unless the Partnership agreement provides to the contrary i.e., makes any variation in the said rights and duties. Similarly, subject to a contract to the contrary, if any partners derives any profit for himself from any transaction of the firm or from the use of the property or business connection with the firm or the firm name is liable to contact for the benefit and pay it to the firm, and if the partner carries a business of the same nature as and competing with that of the firm, he shall account for and pay to the firm all profits made by him in that business.Property of PartnershipThe property of a Partnership firm will consist of all the assets, movable and immovable brought in by any or all the partners into the firm and also include the goodwill. It may be stated that relaying upon the specific provision of Section 22 of the English Partnership Act, 1890, the Supreme Court has held that all the property of a Partnership firm, whether, movable or immovable is movable property, and therefore, on retirement of any partner or dissolution Partnership the division of even immovable property among the partners does not amount to transfer of property and the deed of

retirement or dissolution does not require registration. The Supreme Court has not considered the law of vesting and divesting of interest in an immovable property. A property required by A by purchase or otherwise his vested in him and even if A brings that property into Partnership and it is used for the Partnership business, the property is not automatically divested from A and vests in A and his other partners. Vesting and divesting can take effect only by act of parties or by operation of law. And, therefore, the property brought in by A cannot become vested in the other partners unless there is a regular transfer of the property by A to himself and other partners. Similarly if possible vested in the partners is divided, among them, it amounts to transfer of one partner’s interest to the other, and such transfer is necessary to vest and divest the title from one to the other. Even in English law, in spite of the provisions of the Partnership act above referred to, to the countenancing practice is to affect the transfer of property brought in or taken out of the Partnership by a deed of conveyance. 

Capital of a firmA Partnership firm may or may not have any capital in the form of money or any other property. It is also not necessary that each partner must contribute to the capital of the firm if any. It is a matter of agreement between the parties by which they can regulate their relations and rights towards the capital. Capital of a firm is however different from the assets of a firm. Capital is the initial amount in cash or kind brought in by one or more or all partners to start the business. It is also distinct from the loan advanced by any partner. The propionate share of each partner in the capital may not also be the same or equal to their shares in the profits and losses of the firm. On dissolution the capital contributed by a partner is refundable to him subject to payment of all debts and liabilities [section 48 (b) (iii) of the act]. Therefore it is necessary to provide specifically about the capital contribution to be made by each partner. 

Retirement of a partnerUnder the Partnership Act no person can be admitted into Partnership without the consent of the other partner or partners unless there is any contrary to the contract (s. 31). Any partner may, with the consent of all the other partners or in terms of the deed of Partnership where the Partnership is at will, by giving notice in writing to all other partners, to that effect, dissolve the Partnership or retire from Partnership. A retiring partner, however, continues to be liable to third parties even if the liability is taken over by the remaining partners (S 32). Therefore in a deed of retirement it is necessary to provide that in the event of the retiring partner being held liable by a third party, the remaining partners shall indemnify him to that extent, when the liabilities are taken over by the remaining partners. Insolvency of a partner also causes compulsory retirement of an insolvent partner (S. 35). It is, therefore, generally provided in a deed of Partnership when there are more than two partners that the insolvency of any partner will not dissolve the Partnership. If a partner retires, unless there is contract to the contrary, the retiring partner cannot use the firm name, represent himself as carrying on the business of the firm or solicit the customers of the Firm (S. 36). Therefore, in a

deed of retirement it is generally not necessary to make explicit that the retiring partner shall not do any of these things. But, if he is to be restrained from carrying on similar business for a specified period or in a specified area, such condition can be provided in the deed of retirement and it is legal (S 36 (2).

DissolutionThe Act also provides that a Partnership firm may be dissolved under the following circumstances namely (a) as a result of any agreement between all the partners (b) by adjudication of all the partners or all partners but one as insolvent, or (c) by the happening of an event which makes it unlawful for the business of the firm to be carried on in Partnership or (d) subject to agreement between the parties, on the happening of any of the following events such as (i) efflux of time, (ii) completion of the adventure, (iii) death of a partner, and (iv) insolvency of a partner. In these last four cases the Partnership agreement may provide events. Even if the deed provides that the Partnership will not be dissolved on the death or insolvency of a partner, it does not mean that on the death or insolvency of a partner he ceases to have interest in the Partnership property. In such cases his interest in the Partnership property will survive to his heirs in case of his death and to his assignees in case of insolvency. In the absence of a term in the deed of Partnership to that effect, it cannot be that, the Partnership shall continue, and notwithstanding the death of a partner it will operate to extinguish his proprietary rights in the assets of the Firm. A Partnership can also be dissolved by the Court under the circumstances mentioned in Section 44 of the Act. Where the Partnership is ‘at will’ the Partnership can be dissolved by any partner or partners giving notice his/their intention to dissolve the firm. 

Types of PartnershipThe result of this summary of the Act is that a Partnership is generally created by agreement between the partners. A Partnership can be formed between (i) one or more individuals or (ii) between an individual and a person representing a H.U.F. or (iii) between an individual and other partner representing his firm, or between Limited Company or a Corporation and an Individual or Partnership firm. (iv) between two Partnership firms (v) or between a Limited Company or a Corporation and an individual or Partnership firm (vi) between a Partnership firm and H.U.F. (vii) between members of HUF in their individual and independent capacity (viii) between a HUF and a member of that HUF independently. 

Partnership under Companies ActSection 11 of the Companies Act, 1956, provides that the number of partners in a firm shall not exceed 20, and a Partnership firm having more than 20 persons will be illegal. When there is Partnership firm between two firms all the partners of each firm will be taken into account for the purpose of these provisions but if a Partnership is between the Kartha or any member of HUF on the one hand and another individual or individuals on the other, the members of the joint family will not be taken into account. Applicant Hindu undivided family carrying on business as such, not being a Partnership

the number of the members of the family are more than 20. But where two or more hindu Undivided Families are carrying on business in Partnership the number of the members of those families except minors will be taken into account for the purpose of section 11 of the Companies Act.

Partnership under Income Tax ActA Partnership to be recognized for the purpose of Income Tax liability of the partners and their firm is required to comply with certain provisions of the Income Tax Act. While therefore drafting a deed of Partnership the provisions of the Act are required to be taken into account.

Registration of PartnershipA Partnership firm is required to be registered under section 58 and 59 of the Partnership Act, though it is not compulsory. Every change in the constitution of a Partnership is also required to be registered. But if it is not registered, then there are certain handicaps stated in section 69 of the Act, the main handicap being that a Partnership firm or its partner cannot file a suit against a third party. For the purpose of Income tax benefits it is necessary to register a Partnership will the Department under S. 184 and 185 of the Income Tax Act, 1961. But once a firm is registered then it is not necessary to register it again if there is any change in the constitution of the firm by adding a partner or omission of a partner by death or resignation.

Limited PartnershipThe concept of limited Partnership is not recognized by Indian Law. It is prevalent inEngland and America and other countries. In England, the limited Partnership is governed by the Partnership Act of 1907. It consists of general partners who are the main partners with exclusive right of management and their liability is unlimited. But they can take any limited partner who contributes some capital to the firm and whose liability is limited to that amount provided he does not participate in the management or withdraw any part of the capital contributed by him during the term of the Partnership. However a limited Partnership is not a separate legal entity like a limited company. Generally a limited partner joins a firm to participate in a particular scheme or adventure of the firm. 

Stamp DutyOn a Deed of Partnership the stamp duty under the Indian Stamp Act is a fixed one. Article 45 of the Indian Partnership Act, Article 47 in Maharashtra and Article 44 in Gujarat of Bombay Stamp Act speaks about duty payable for registration. The stamp duty is payable on a deed of retirement or a deed of dissolution under the same Articles. But in Maharashtra, and Gujarat if the deed of retirement or deed of dissolution affects any transfer of an immovable property, it will attract stamp duty as on a conveyance on the market value of the property.

Registration

A Partnership deed is not required to be registered under the Registration Act even if an immoveable property is brought in the firm. Similarly, a deed of retirement or a deed of dissolution is not required to be registered. According to Supreme Court, a division of even immoveable properties on dissolution is not required to be registered as it does not amount to a transfer. The correctness of this view is doubtful and it is desirable to get such a deed of dissolution or retirement registered for the sake of caution or safety. 

Question No.4:  Distinguish between condition and warranty. State the circumstance under which a condition can be waived and treated as a warranty.Answer No.4: i. Meaning of Condition and Warranties

ii. Difference between Condition and Warranties

iii. Express and Implied Condition

iv. Implied Warranties

It is usual for a seller to make certain representations and statements in praise of his goods while selling goods to the buyer. For example, Dehra Duni Basmati Rice, Kashmiri Apples, etc. Some of the statements or representations made by the seller are considered essential and they go to the root of the contract. Where the statement of representation made by the seller is an assertion of fact, it is considered as a stipulation which forms part of the contract of sale. This stipulation in a contract of sale may be a condition or a warranty.

Conditions and Warranties:A stipulation in a contract of sale with reference to goods may be a condition or a warranty [Sec. 12(1)].

Condition:A condition is a stipulation which is essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated [Sec. 12(2)].

Thus, a condition is regarded as the very basis or foundation of the contract. If there is a breach of a condition, the contract will fail and it will entitle the aggrieved party to put an end to the contract.

Example:B asked a car dealer to suggest him a suitable car for touring purposes. The dealer suggested to buy a "Buggatti" car. B accordingly purchased the car but found it unfit for the purpose. Held, the suitability of the car for touring purposes was so important that its non-fulfdment defeated the

very purpose. Hence B could return the car and get back the price [Baldry v. Marshal.

Warranty:A warranty is a stipulation collateral to the main purpose of the contract. The breach of which gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated [Sec. 12(3)].

A warranty is not regarded as the very basis of a contract or its foundation. Hence a breach of warranty does not give the aggrieved party, a right to reject the goods and repudiate the contract. The party will have to accept the goods but can claim damages for breach of warranty.

It should be noted that whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract and vice-versa [Sec. 12(4)].

When a breach of condition is to be treated as a breach of warranty?

The law has provided two cases, one optional and the other compulsory.

(i) Optional or Voluntary Waiver:When a contract of sale is subject to any condition to be fulfilled by the seller, the buyer has the option to treat the breach of condition as a breach of warranty. In such a case, he may (a) waive the condition altogether, or (b) treat the breach of the condition as a breach of warranty and claim damages [Sec. 13(1)].

It should be noted that this option once exercised becomes final and the party later on cannot insist on the fulfillment of the condition.

(ii) Compulsory treatment of breach of condition as a breach of warranty [Sec. 13(2)]:Where a contract of sale is not severable and the buyer has accepted the goods or a part thereof, the breach of condition can only be treated as a breach of warranty and the goods cannot be rejected unless there is a term of the contract, express or implied, to that effect. The buyer cannot reject the goods but can only claim damages. Here law compulsorily treats a breach of condition as a branch of warranty.

Example:Certain goods were sold by sample by A to B, who in turn sold them by sample to C. The goods were not found according to the sample. C rejected the goods and gave a notice to B. B sued A. Held, C could reject the goods but not B, as B had accepted the goods by selling them to C.

Hence C can get the price back but B cannot get the refund. B can claim damages for a breach of condition as a breach of warranty [Hardy & Co. v. Hillerns and Fowler],

Express and Implied Conditions and Warranties:Express conditions and warranties are those which the parties agree expressly:Orally or in writing. For example, cash to be paid on delivery of goods, cash and carry, i.e., pay cash and take delivery of the goods immediately.

Implied conditions and warranties are those which are implied by the law in the absence of any agreement or the contrary. These are given in Sees. 14 to 17 discussed below:

Implied Conditions :1. Conditions as to title [Sec. 14(a)]:In a contract of sale, unless the circumstances of the contract are such as to show a "different intention, there is an implied condition on the part of the seller that:

(i) In the case of sale, the seller has a right to sell the goods, and

(ii) In the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.

The buyer is entitled to repudiate the contract if he finds that the title of the seller to the goods is defective.

Example:A purchased a motor car from B and used it for months. B had no title to the car. A had to return the car to the true owner. Held, A could get back the price as there was a breach of implied condition as to title [Rowland v. Divall].

It should be noted that the term right to sell implies that the seller has a right to pass property in the goods to the buyer. A person will be deemed to have no right to sell, if he infringes the right of a third party, i.e., infringement of a trade mark.

Example:A firm of confectioner's materials agreed to sell condensed milk in tins. The plaintiffs received the shipping documents and paid the price. The goods on arrival were found to be infringing the registered trade mark of another manufacturer. Consequently, the tins were detained by the custom authorities. Held, the seller was guilty of breach of implied

condition as to title [Niblett v. Confectioner's Materials. Co. Ltd.

Effect of Acquiring Title Subsequent to Sale :It should be noted that where the seller had no title to the goods at the time of sale, subsequent acquisition of title to the goods by the seller will purge the defect of title of both the original as well as the subsequent buyers [Butterworth v. Kingsway Motors].

2. Condition as to description (Sec. 15):There is an implied condition that the goods shall correspond to description where they have been sold by description.

In Bowes v. Shand, the observations made by the learned judge are very interesting:

"If you contract to sell peas, you cannot oblige a party to take beans. If the description of the article rendered is different in any respect, it is not the article bargained for and the other party is not bound to take it."

Nature and Scope of Description :1. It should be noted that the description must be of a fact and not of mere option.

Example:A, while selling his horse to B, says that it is luck. This description of the horse is an opinion and does not give rise to any legal action. If on the other hand, A says his horse and claim back the price paid.

2. A manufacturer of goods is bound to supply the goods of his own make and not that of other manufactures, even if the goods are of the same quality [Jhonson v. Raylton.]

3. Where the seller has agreed to supply goods of a particular brand, the goods must bear that brand. The buyer is not bound to accept goods which do not bear the label, even though the goods of that brand have been made by the same manufacturer.

4. Packing of the goods must be according to description. If it is not so, the buyer is entitled to reject the goods.

Example:There was a sale of canned fruits in cases containing thirty tins each. The whole quantity of goods was supplied. But nearly half the cases contained only 24 tins in place of 30 tins, as agreed. The buyer rejected the goods. Held, the buyer was entitled to reject the goods as they were

not according to description [Re Moor & Co. Landaur & Co.]

5. The expression "contract for the sale of goods by description" applies to all cases where the buyer has not seen the goods, but solely relies on the description given by the seller.

Example:A second hand machine was sold. The buyer has not seen the machine but the seller described it as a new one. However, it was found to be very old. Held, the machine was not according to description [Varley v. Whipp].

6. It also applies to cases where the buyer has agreed that he will not reject the goods and the dispute shall be referred to arbitration.

Example:A buyer agreed to purchase certain quantity of goods with the condition that the property in goods was deemed to have been passed to the buyer when goods were put on board and, if any dispute arose, the buyers were not to reject the goods but the dispute was to be referred to arbitration. Since the goods were not according to the description, the buyer rejected the goods. Held, he was entitled to reject [Vigers v. Sanderson],

3. Sale by sample (Sec. 17):In a sale by sample, there must be a term in the contract, express or implied to that effect. Unless it is so, the seller is not bound to sell the goods according to sample.

However, the term may be express or implied.

Express:When parties expressly mention in the contract that the sale is by sample.

Implied:When there is a custom of the trade recognized by law. For example, sale of tobacco is always by sample. This custom is recognized all over the world.

In a sale by sample, there are three implied conditions, which are as follows:1. The bulk shall correspond to sample:In a sale by sample, there is an implied condition that the bulk shall correspond to the sample in quality.

2. The buyer shall be given a reasonable opportunity to compare the goods with the sample:In a sale by sample, the buyer shall be given a reasonable opportunity to compare the bulk with the sample.

3. Condition of merchantability in respect of latent defects:There is an added implied condition of merchantability in respect of those defects which cannot be discovered by ordinary inspection, i.e., latent defects. Such defects, in fact, are discovered when the goods are put to use or by examination in laboratories. However, seller is not liable for apparent or visible defects which can be discovered by examination.

4. Sale by description as well as sample:If the sale is by sample as well as description, there is twin condition that the goods shall correspond not only to sample but also to description (Sec. 15).

Example:A agreed to sell to C some oil described as "foreign refined rape oil, warranted only equal to sample." The goods supplied were equal to sample but contained an admixture of hemp oil Held, C could reject the goods [Nichol v. Godts],

5. Condition as to quality or fitness [Sec. 16(1)]:Ordinarily, there is no implied condition as to quality or fitness. In the absence of anything to the contrary, the doctrine of 'let the buyer beware' applies.

However, Sec. 16(1) provides that where the buyer expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgement, and the goods are of a description which it is in the course of the seller's business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose.

Example:B ordered six buses to be used for heavy traffic in a hilly area. The supplier supplied Fiat lorries. The lorries proved useless and broke down. Held, there was a breach of condition of fitness [Bristol Tramway Co. v. Fiat Motors Ltd.].

The condition also applies if purpose is made known by implication.

Example:

A purchased  woollen underwear from B, a retailer, who was dealing in goods of that description. By using the underwear, A developed skin disease. Held, the goods were not fit for their purpose and A was entitled to avoid the contract and claim damages. The sellers were supposed to know that under-wears were required for the particular purpose for being worn only next to skin [Grant v. Australian Knitting Mills].

6. Condition as to merchantability [Sec. 16(2)]:Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality.

Merchantability implies that the goods are marketable under the description by which they are ordinarily known in the market. Merchantability means that there is no defect in the goods which render them unfit for sale. For example, if sugar becomes sharbat (syrup), it cannot be called merchantable.

However, merchantability does not mean that there will be a queue of ready buyers to buy the goods in question.

Again, merchantability does not mean that goods shall comply or conform to the laws of a foreign country so as to be merchantable. '

Example:A large quantity of 'Webb's Indian Tonic' was sold F.O.B. England. The tonic contained a certain percentage of salicylic acid. The buyer did not know of it. The seller knew that these goods were required for Argentina. The local law of Argentina prohibited the sale of any articles of food containing salicylic acid.

7. Condition as to wholesomeness:In the case of eatables and other provisions, there is an added implied condition that the goods shall be wholesome, i.e., free from any defect which renders them unfit for human consumption.

Example:A purchased milk from B, a milk dealer. The milk contained typhoid germs. A's wife on asking the milk got infected and died. Held, A was entitled to get damages [Frost v. Aylesbury Diary Co. Ltd.],

Implied Warranties :In a contract of sale, there are the following implied warranties:

1. Implied warranty as to quiet possession [Sec. 14(b)]:

In a contract of sale, unless the circumstances of the contract show a contrary intention, there is an implied warranty that the buyer shall have and enjoy quiet possession of the goods. If the buyer is disturbed in the enjoyment of goods, he can claim damages from the seller.

2. Implied warranty against encumbrances [Sec. 14(C)]:Another implied warranty in a contract of sale is that the buyer is not to suffer due to any right in favour of a third party.

Unless the circumstances of the case are such as to show a contrary intention, there is an implied warranty that the goods shall be free from any charge or encumbrance in favour of any party not declared or known to the buyer before or at the time contract is made. [Sec. 14(C)].

Example:In Kishan Chand vs Ram Partap, it was held that in the absence of anything to the contrary, the shares sold are free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time contract is made.

Sale of Dangerous Goods:In case of sale of dangerous goods, the seller is under an obligation to warn the buyer of the probable danger. Failure to do so will make the seller liable to pay damages.

The duty is imposed on the seller by law. It does not arise out of implied conditions and warranties.

Example:A sold a tin of disinfectant to B, knowing that it was likely to be dangerous to B, if opened without special care. B opened the tin, whereupon disinfectant powder went into her eyes, causing injury. Held, A was liable in damages to B as he failed to warn B of the probable danger [Clark v. Army and Navy Society Ltd.]

Effect of express agreement to the contrary [Sec. 16(4)]:If the parties chose to agree that there* shall be certain warranties or conditions, the implied conditions and warranties will not apply, if they are inconsistent with them. If they are not inconsistent, then implied conditions and warranties will apply.

Again, these implied conditions and warranties may be negative by the course of dealing between the parties or by the custom or usage of trade.

Doctrine of Caveat Emptor:The doctrine of 'Caveat Emptor', i.e., let the buyer beware means that the

buyer while purchasing goods must act with a "third eye and ear" , i.e., he should be careful to see that the goods purchased will serve his purpose well. The seller is under no obligation to tell the defects of his articles. If the buyer is not careful and he finds later on that the goods do not serve his purpose, he cannot hold the seller liable for it. However, the law has recognized certain exceptions to protect the interest of the buyers.

The important exceptions to this general rule are as follows:1. Implied conditions as to quality or fitness:As pointed out above, where the buyer has, at the time of making contract, made known his particular purpose to the seller so as to depend upon the skill and judgment of the seller, there is an implied condition that the goods will be fit for the particular purpose of the buyer.

It should be noted that the above rule shall not apply in the following cases:1. When the goods have been sold under a patent name or trade mark and the buyer does not rely on the seller's skill and judgment.

2. When the seller is not ordinarily dealing in the goods which are being sold, e.g., where the goods are sold privately. Thus, if you dispose of your old T.V. or radio set, this condition of quality or fitness will not apply.

In these two cases (a) and (b), a buyer is not protected.

2. Sale of goods by description:Where the goods have been sold by description by the dealer who deals in the goods of that description (whether he is the manufacturer or producer or not) there is an implied condition that goods shall be of merchantable quality.

However, this rule will not apply when:(i) The dealer ordinarily does not deal in the goods in question, i.e., in case of a private sale as explained above:

(ii) Where the buyer has examined the goods and such examination would have disclosed those defects.

3. Usage or custom of trade:An implied condition or warranty as to quality or fitness may be applied by usage or custom of trade.

4. Consent by fraud:Although seller is under no obligation to tell the defects of his articles, yet he cannot actively or fraudulently conceal defects which on a reasonable

examination cannot be discovered. If he does so, the buyer has a right to reject the goods or/and claim damages.

Question No.5:  What is meant by memorandum of Association? Explain in brief.Answer No.5: Memorandum of association is one of the documents

which has to filed with the registrar of companies at the time of incorporation of a company. Section 2(28)defines a memorandum to mean “the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this act.” The definition, however, either does not give us any idea as to what a memorandum of association really is nor does it point out the role which it plays in the affairs of the company.

The memorandum of association is an extremely important document in relation to the affairs of the company. It is a document which sets out the constitution of the company and is really the foundation on which the structure of the company is based. It contains the fundamental conditions upon which alone the company is allowed to be incorporated. A company may pursue only such objects and exercise only such powers as are conferred expressly in the memorandum or by implication therefore i.e. such powers as are incidental to the attainment of the objects. A company cannot depart from the provisions contained in its memorandum, however, great the necessity may be. If it does, it defines its relation with the outside world and the scope of its activities. The purpose of the memorandum is to enable shareholders, creditors and those who deal with the company to know what is the permitted range of the enterprise.

It defines as well as confines the powers of the company; it not only shows the object of its formation, but also the utmost possible scope of its operation beyond which its action cannot go. Lord Cairns in Ashbury Railway Carriage Co. V. Riche pointed out,” The memorandum is as it were, the area beyond which the action of the company cannot go; inside that area the shareholders may make such regulations for their own government as they think fit.”

Purpose of memorandum:The purpose of the memorandum is two fold.1. The intending share holder who contemplates the investment of his capital shall know within what field it is to be put at risk.

2. Anyone who shall deal with the company shall know without reasonable doubt whether the contractual relation into which he

contemplates entering with the company is one relating to a matter within its corporate objects.

At least seven persons in the case of public company and at least two in the case of a private company must subscribe to the memorandum. The memorandum shall be printed, divided into consecutively numbered paragraphs, and shall be signed by each subscriber, with his address, description and occupation added, the presence of at least one witness who will attest the same.

Contents of Memorandum:According to section 13, the memorandum of association of every company must contain the following clauses:

1. The name of the company with ‘limited’ as the last word of the name in the case of a public limited company and with ‘private limited’ as the last word in the case of a private limited company.

2. The state in which the registered office of the company is to be situated.

3. The objects of the company to be classified as:

a. The main objects of the company to be pursued by the company on its incorporation and objects incidental to the attainments of the main objects, and

b. Other objects not included above

4. In the case of companies with object not confined to one state, the states to whose territories the objects extend.

5. The liability of members is limited if the company is limited by shares or by guarantee.

6. In the case of a company having a share capital, the amount of share capital with which the company proposes to be registered and its division into shares of a fixed amount.

An unlimited company need not include items 5 and 6 in its memorandum.

In the case of a company limited by guarantee, its memorandum of association shall state that each member undertakes to contribute to the assets of the company, in the event of its being wound up while he is a member or within or year after wards for the payment of the debts and

liabilities of the company.

Every subscriber to the memorandum shall take at least one share and shall write opposite to his name the number of shares taken by him.

Different clauses:A brief discussion of the various clauses are as follows:

Name clause:A company may be registered with any name it likes. But no company shall be registered by a name which in the opinion of the central government is undesirable and in particular which is identical or which too nearly resembles the name of an existing company. Where a company is registered by a name so similar to that of another company, that the public are likely to be deceived, the court will grant an injunction restraining it from using that name.Every public company must write the word ‘limited’ after its name and every private limited company must write the word ‘private limited’ after its name. The use of the word ‘company’ is however, not compulsory. Companies, whose liabilities are not limited, are prohibited from using the word ‘limited’. The words ‘limited’ may be dispensed with in the name of charitable companies. But companies formed to promote art, science, religion etc, which do not propose to pay dividend but intend to apply all its profits towards the working of the company, can be registered without the word ‘limited’ under licenses granted by the central government.

A company cannot adopt a name which violates the provisions of the emblems and names act 1950. This act prohibits the use of the name and emblems of the united nation, and the world health organization, the official seal and emblem of the central and the state governments, the Indian National Flag, the name and pictorial representation of Mahatma Gandhi and the prime minister of India.

If a limited company makes a contract without using the word ‘limited’ the directors who make the contract on behalf of the company would be personally liable.

Every company is required to publish its name outside its registered office, and outside every place where it carries on business, to have its name engraved on its seal and to have its name on all business letters, bill heads, notices and other official publications of the company.

Registered office clause:This clause states the name of the state where the registered office of the company is to situate. The registered office clause is important for

two reasons. Firstly, it ascertains the domicile and nationality of a company. This domicile clings to it throughout its existence. Secondly, it is the place where various registers relating to the company must be kept and to which all communications and notices must be sent. A company need not carry on its business at its registered office.

A company shall have its registered office. Such office must be in existence from the date on which the company begins to carry on business or within 30 days after incorporation, whichever is earlier. Notice of situation of the registered office and every change therein must be given within 30 days from the date of incorporation of the company of after the date of change, as the case may be.

Objects clause:The objects clause is the most important clause in the memorandum of association of a company. It is not merely a record of what is contemplated by the subscribers, but it serves a two-told purpose:(a) It gives an idea to the prospective shareholders the purposes for which their money will be utilized.

(b) It enables the persons dealing with the company to ascertain its powers.

In case of companies which were in existence immediately before the commencement of the companies’ act 1965, the objects clause has simply to state the objects of the company. But in the case of a company to be registered after the amendment, the objects clause must state separately:

(a) Main objects. This sub-clause has to state the main objects to be pursued by the company on its incorporation and objects incidental or ancillary to the attainment of the main objects.

(b) Other objects. This sub-clause shall state other objects which are not included in the above clause.

Further, in the case of a non-trading company. Whose objects are not confined to one states clause must mention specifically the states to whose territories the objects extend.

The subscribers to the memorandum of association may choose and object or objects for their company. There are, however, certain restrictions.

1. The objects should not be against the policy of the constitution. For example, the object should not be such as to encourage untouched

ability which has been abolished under our constitution.

2. The objects should not include anything which is illegal or against public policy. For example, forming a company for dealing in lotteries or for trading with the alien enemies.

3. The object must not be against the provisions of the companies act, as for example, authorizing the company to purchase its own shares.

On its being registered, the company has power to do whatever is necessary to do for attaining the objects stated in the memorandum, and to do whatever else is incidental to or consequential upon the attainment of the main object. It is, therefore, clear that any act of the company outside its stated, objects is ultra viruses and therefore void and cannot be ratified even by the whole body of shareholders.

Liability clause:This clause states that the liability of the members of the company is limited. In the company is limited. In the case of a company limited by shares, the member is liable only to the amount unpaid on the shares taken by him. In the case of a company limited by guarantee the members are liable to the amount undertaken to be contributed by them to the assets of the company in the event of its being wound up. However, this clause is omitted from the memorandum of association of unlimited companies.Any alteration in the memorandum compelling a member to take up more shares, or which increases his liability, would be null and void.

If a company carries on business for more than six months, while the number of members is less than 7, in the case of public company and less than 2 in case of a private company each member aware of this fact, is liable for all the debts contracted by the company after the period of six months has elapsed.

Capital clause:The memorandum of a company limited by shares must state the authorized or nominal share capital, the different kinds of shares, the authorized or nominal share capital, the different kinds of shares, and the nominal value of each share. The capital clause need not state anything else and it is usually better that it should not do so.Association or subscription clause:This clause provides that those who have agreed to subscribe to the memorandum must signify their willingness to associate and form a company. According to section 12 of the act, at least seven persons are required to sign the memorandum in the case of a public company, and

at least two persons in the case of a private company.The memorandum has to be signed by each subscriber in the presence of at least one witness who must attest the signatures. Each subscriber must write opposite his name the number of shares he shall take. No subscriber of the memorandum shall take less than one share. This clause need not be numbered.

Question No6. Write short note on Right to Information Act

Answer No.6: Introduction:

This legislation may be termed as one of the rarest legislations in the

Indian Legal History which provides for setting out the practical regime of

‘Right to Information’ for Citizens to secure access to information under

the control of public authorities and in order to promote transparency &

accountability in the working of every public authority, the constitution of

a Central Information Commission and State Information Commissions

and for matters connected therewith or incidental thereto.

This Legislation will prove to be a ‘Landmark’, since it isenacted NOT for

the people to follow but for the Government to follow.

Through this legislation, the Government has made an attempt to

administer itself, be answerable to the people & penalize itself for lacking

in providing the required information and regain people’s lost confidence

in the bureaucratic system and setup.

Extent and Commencement:

This Act extends to the whole of India except the State of Jammu and

Kashmir. This Act of Parliament received the assent of the President of

India on the 15th June, 2005.

Some Important Definitions:

1.Information [Section 2(f)]:

Information means any material in any form, including records,

documents, memos,     e-mails, opinions, advices, press

releases, circulars, orders, logbooks, contracts, reports, papers,

samples, models, data material held in any electronic form and

information relating to any private body which can be accessed by a

public authority under any other law for the time being in force.

2. Record [Section 2(i)]:

Record includes—

(a) any document, manuscript and file;

(b) any microfilm, microfiche and facsimile copy of a document;

(c) any reproduction of image or images embodied in such microfilm

(whether enlarged or not)

(d) any other material produced by a computer or any other device.

3. Right to Information [Section 2(j)]:

Right to Information means the right to information accessible under

this Act which is held by or under the control of any public authority and

includes the right to —

(i) inspection of work, documents, records;

(ii) taking notes, extracts or certified copies of documents or records;

(iii) taking certified samples of material;

(iv) obtaining information in the form of diskettes, floppies, tapes, video

cassettes or in any other electronic mode or through printouts where

such information is stored in a computer or in any other device.

4. Public Authority [Section 2(h)]:

Public Authority means any authority or body or institution of self-

government established or constituted—

(a) by or under the Constitution;

(b) by any other law made by Parliament;

(c) by any other law made by State Legislature;

(d) by notification issued or order made by the appropriate Government,

and includes any—

(i) body owned, controlled or substantially financed;

(ii) non-Government organisation substantially financed, directly or

indirectly by funds provided by the appropriate Government;

Exemption from disclosure of information [Section 8]:

Like any other legislation, this Act also provides for exemptions to the

Government from disclosure of information regarding information – which

would cause a breach of privilege of Parliament or the State Legislature /

harm the competitive position of a third party / endanger the life or

physical safety of any person / impede the process of investigation or

apprehension or prosecution of offenders / weaken confidence of

the Foreign Government / Disclose the Records of deliberations of the

Council of Ministers, Secretaries and other Officers / relates to personal

information which has no relationship to any public activity or interest, or

which would cause unwarranted invasion of the privacy of the individual

unless the Central Public Information Officer or the State Public

Information Officer or the appellate authority, as the case may be, is

satisfied that the larger public interest justifies the disclosure of such

information / involve infringement of copyright.

IMPACT: To hide or avoid giving the required information demanded, the

Officers of the concerned Public Authorities may resort to take advantage

of these Exemptions. Hence it may be necessary for the ‘Information

Seeker’ to be clear in his mind about the exact interpretation of the

provisions and exemptions so that he may not be taken for a ride by the

officials and can claim his Right to information rightfully.

Administration of the Act [Section 12]:

A body to be known as the ‘Central Information Commission’ is

constituted to exercise the powers conferred on, and to perform the

functions assigned to, it under this Act. The Central Information

Commission shall consist of—The Chief Information Commissioner

and such number of Central Information Commissioners as may be

deemed necessary.

Every State Government shall constitute a body to be known as the

_____________ (name of the State) Information Commission

to exercise the powers conferred on, and to perform the functions

assigned to, it under this Act. The State Information Commission shall

consist of— The State Chief Information Commissioner and such number

of State Information Commissioners as may be deemed necessary.

The Central Information Commission or State Information Commission

shall, while inquiring into any matter under this section, have the same

powers as are vested in a civil court while trying a suit under the Code of

Civil Procedure, 1908.

Every public authority shall designate as many officers as the Central

Public Information Officers or State Public Information Officers, as the

case may be, in all administrative units or offices under it as may be

necessary to provide information to persons requesting for the

information under this Act. Every public authority shall designate an

officer at each sub-divisional level or other sub-district level as a Central

Assistant Public Information Officer or a State Assistant Public

Information Officer, as the case may be, to receive the applications for

information or appeals under this Act for forwarding the same forthwith to

the Central Public Information Officer or the State Public Information

Officer or senior officer specified or the Central Information Commission

or the State Information Commission, as the case may be.

Timeframes within which the desired information should be made

available by the concerned Public Authority:

A person who desires to obtain any information shall make a request in

writing or through electronic means in English or Hindi or in the official

language of the area in which the application is being made,

accompanying such fee as may be prescribed, to—

(a) the Central Public Information Officer or State Public Information

Officer, as the case may be, of the concerned public authority;

(b) the Central Assistant Public Information Officer or State Assistant

Public Information Officer, as the case may be, specifying the particulars

of the information sought by him or her.

An applicant making request for information shall not be required to give

any reason for requesting the information or any other personal details

except those that may be necessary for contacting him.

On receipt of a request the Central Public Information Officer or State

Public Information Officer shall as expeditiously as possible, and in any

case within Thirty Days   of the receipt of the request, either provide the

information on payment of such fee as may be prescribed or reject the

request for a reason. If the Central Public Information Officer or State

Public Information Officer fails to give decision on the request for

information within the said period it shall be deemed to have refused the

request. The person making request for the information shall be provided

the information free of charge where a public authority fails to comply

with the time limits specified.

IMPACT: Making requests for information through electronic means may

not be easy practically, since not all the Public Authority offices are fully

computerized and may not have computer savvy staff. The urban class

who may resort to make request through electronic means may get

discouraged. Explanations like, ‘Computer error’, ‘Server down’ may be

resorted to, for avoiding furnishing of information.

Penalties for not making available the desired information:

If without any reasonable cause, the concerned Officer refuses to receive

an application for information or has not furnished information within the

time specified or malafidely denied the request for information or

knowingly given incorrect, incomplete or misleading information or

destroyed information which was the subject of the request or obstructed

in any manner in furnishing the information, a penalty of two hundred and

fifty rupees each day till application is received or information is

furnished, so however, the total amount of such penalty shall not exceed

twenty-five thousand rupees   shall be imposed and / or disciplinary action

against the concerned Officer may be taken. Provided that the Central

Public Information Officer or the State Public Information Officer, as the

case may be, shall be given a reasonable opportunity of being heard

before any penalty is imposed or disciplinary action is taken against him.

CONCLUSION:

The enactment of the Right to Information Act, 2005 makes a noteworthy

attempt to streamline the working of the Public Authorities in respect of

providing information to the people. The Authorities will require being

technology savvy, alert and need to imbibe in them the not before

attitude, of being answerable to the citizens. The Public Authorities will

now require tightening their belts so as to serve the people and truly

contribute to the Information Technology era. As for the citizens, this Act

makes them aware of their one of the Constitutional Rights – Right to

Information and gives them the opportunity to exercise it in good faith.

Posted 12th August 2012 by dinesh  

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SMU SOLUTION

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12

OPERATION III SEMESTER

Question No.1: Explain the role of MRP in production planning system?Answer No.1: Material Requirements Planning (MRP)Material requirements planning (MRP) is a computer-based inventory

management system designed to assist production managers in

scheduling and placing orders for dependent demand items. Dependent

demand items are components of finished good such as raw materials,

component parts, and subassemblies or which the amount of inventory

needed depends on the level of production of the final product. For

example, in a plant that manufactured bicycles, dependent demand

inventory items might include aluminum, tires, seats, and derailleurs.

The first MRP systems of inventory management evolved in the 1940s

and 1950s. They used mainframe computers to explode information from

a bill of materials for a certain finished product into a production and

purchasing plan for components. Before long, MRP was expanded to

include information feedback loops so that production personnel could

change and update the inputs into the system as needed. The next

generation of MRP, known as manufacturing resources planning or MRP

II, also incorporated marketing, finance, accounting, engineering, and

human resources aspects into the planning process. A related concept

that expands on MRP is enterprise resources planning (ERP), which

uses computer technology to link the various functional areas across an

entire business enterprise.

MRP works backward from a production plan for finished goods to

develop requirements for components and raw materials. "MRP begins

with a schedule for finished goods that is converted into a schedule of

requirements for the subassemblies, component parts, and raw materials

needed to produce the finished items in the specified time frame,"

William J. Stevenson wrote in his book Production/Operations

Management. "Thus, MRP is designed to answer three

questions: what is needed? How much is needed? and when is it

needed?"

MRP breaks down inventory requirements into planning periods so that

production can be completed in a timely manner while inventory levels

related carrying costrel kept to a minimum. Implemented and used

properly, it can help production managers’ plan for capacity needs and

allocate production time. But MRP systems can be time consuming and

costly to implement, which may put them out of range for some small

businesses. In addition, the information that comes out of an MRP

system is only as good as the information that goes into it. Companies

must maintain current and accurate bills of materials, part numbers, and

inventory records if they are to realize the potential benefits of MRP.

MRP INPUTS

According to Stevenson, the information input into MRP systems comes

from three main sources: a bill of materials, a master schedule, and an

inventory records file. The bill of materials is a listing of all the raw

materials, component parts, subassemblies, and assemblies required to

produce one unit of a specific finished product. Each different product

made by a given manufacturer will have its own separate bill of materials.

The bill of materials is arranged in a hierarchy, so that managers can see

what materials are needed to complete each level of production. MRP

uses the bill of materials to determine the quantity of each component

that is needed to produce a certain number of finished products. From

this quantity, the system subtracts the quantity of that item already in

inventory to determine order requirements.

The master schedule outlines the anticipated production activities of the

plant. Developed using both internal forecasts and external orders, it

states the quantity of each product that will be manufactured and the

time frame in which they will be needed. As Stevenson explained, the

master schedule separates the planning horizon into time "buckets,"

which are usually calendar weeks. The schedule must cover a time

frame long enough to produce the final product. This total production

time is equal to the sum of the lead times of all the related fabrication and

assembly operations. It is important to note that master schedules are

often generated according to demand and without regard to capacity. An

MRP system cannot tell in advance if a schedule is not feasible, so

managers may have to run several possibilities through the system

before they find one that works.

The inventory records file provides an accounting of how much inventory

is already on hand or on order, and thus should be subtracted from the

material requirements. "The inventory records file is used to store

information on the status of each item by time period," Stevenson noted.

"This includes gross requirements, scheduled receipts, and expected

amount on hand. It also includes other details for each item, such as

supplier, lead time, and lot size."

MRP PROCESSING

Using information culled from the bill of materials, master schedule, and

inventory records file, an MRP system determines the net requirements

for raw materials, component parts, and subassemblies for each period

on the planning horizon. MRP processing first determines gross material

requirements, then subtracts out the inventory on hand and adds back in

the safety stock in order to compute the net requirements.

As Stevenson explained, the main outputs from MRP include three

primary reports and three secondary reports. The primary reports consist

of: planned order schedules, which outline the quantity and timing of

future material orders; order releases, which authorize orders to be

made; and changes to planned orders, which might include cancellations

or revisions of the quantity or time frame. The secondary reports

generated by MRP include: performance control reports, which are used

to track problems like missed delivery dates and stock outs in order to

evaluate system performance; planning reports, which can be used in

forecasting future inventory requirements; and exception reports, which

call managers' attention to major problems like late orders or excessive

scrap rates.

Although working backward from the production plan for a finished

product to determine the requirements for components may seem like a

simple process, it can actually be extremely complicated, especially

when some raw materials or parts are used in a number of different

products. Frequent changes in product design, order quantities, or

production schedule also complicate matters. "The importance of the

computer becomes evident when you consider that a typical firm would

have not one but many end items for which it needs to develop material

requirements plans, each with its own set of components," Stevenson

explained. "Differences in timing of demands and quantities needed,

revisions caused by late deliveries, high scrap rates, and canceled

orders all have an impact on processing."

BENEFITS AND DRAWBACKS OF MRP

MRP systems offer a number of potential benefits to manufacturing firms.

Some of the main benefits include helping production managers to

minimize inventory levels and the associated carrying costs, track

material requirements, determine the most economical lot sizes for

orders, compute quantities needed as safety stock, allocate production

time among various products, and plan for future capacity needs. The

information generated by MRP systems is useful in other areas as well.

"A range of people in a typical manufacturing company are important

users of the information provided by an MRP system," Stevenson wrote.

"Production planners are obvious users of MRP. Production managers,

who must balance work loads across departments and make decisions

about scheduling work, and plant foremen, who are responsible for

issuing work orders and maintaining production schedules, also rely

heavily on MRP output. Other users include customer service

representatives, who must be able to supply customers with projected

delivery dates, purchasing managers, and inventory managers."

MRP systems also have several potential drawbacks, however. First,

MRP relies upon accurate input information. If a small business has not

maintained good inventory records or has not updated its bills of

materials with all relevant changes, it may encounter serious problems

with the outputs of its MRP system. The problems could range from

missing parts and excessive order quantities to schedule delays and

missed delivery dates. At a minimum, an MRP system must have an

accurate master production schedule, good lead time estimates, and

current inventory records in order to function effectively and produce

useful information.

Another potential drawback associated with MRP is that the systems can

be difficult, time consuming, and costly to implement. Many businesses

encounter resistance from employees when they try to implement MRP.

For example, employees who once got by with sloppy record keeping

may resent the discipline MRP requires. Or departments that became

accustomed to hoarding parts in case of inventory shortages might find it

difficult to trust the system and let go of that habit.

The key to making MRP implementation work is to provide training and

education for all affected employees. "It is vital to identify whose power

base will be affected by a new system," William J. Sawaya wrote

in Industrial Management. "These persons must be converted or the

system will fail. Key personnel must be convinced that they personally

will be better served by the new system than by any other alternative."

One way to improve employee acceptance of MRP systems is to adjust

reward systems to reflect production and inventory management goals.

"People generally act in their own self-interest," Sawaya noted. "If the

performances measures that are used in determining compensation and

promotion do not adequately address materials management, then no

system in the world can significantly improve the situation."MRP II

In the 1980s, MRP technology was expanded to create a new approach

called manufacturing resources planning, or MRP II. "The techniques

developed in MRP to provide valid production schedules proved so

successful that organizations became aware that with valid schedules

other resources could be better planned and controlled," Gordon Minty

noted in his book Production Planning and Controlling. "The areas of

marketing, finance, and personnel were affected by the improvement in

customer delivery commitments, cash flow projections, and personnel

management projections."

Minty went on to explain that MRP II "has not replaced MRP, nor is it an

improved version of it. Rather, it represents an effort to expand the scope

of production resource planning and to involve other functional areas of

the firm in the planning process," such as marketing, finance,

engineering, purchasing, and human resources. MRP II differs from MRP

in that all of these functional areas have input into the master production

schedule. From that point, MRP is used to generate material

requirements and help production managers plan capacity. MRP II

systems often include simulation capabilities so managers can evaluate

various options.

Question No.2: Describe the different types of waiting line models.Answer No.2:

Introduction There are many cases when we face the waiting situation. We find ourselves in suchSituations everyday at checkouts, in supermarkets, banks, restaurants, etc. In order to reduce the time spent in waiting systems, one solution would be to supplement the checkout clerks, but this is not always the most economical strategy to improve services.One of the factors influencing consumers' perception on service quality is the efficiency of waiting systems. The waiting time is inevitable in the case of random requests. Thus, providing the capacity for a sufficient service is needed, but it is involving high costs. This is the premise from which the queuing theory starts in designing service systems (Alecu, F., 2004).Customer flow management refers to customer flow handling as well as to their experiences from the first contact with the company until the delivery of goods/services. Customer flow management plays a key role in increasing the productivity, sales and also in reducing costs, since each customer will be directed to the right place,  at the right time and will be served by the adequately operator. Thus, the steps of the customer flow are as follows• Pre-reception – involves using programming in advance, thus resulting a shorterwaiting time. It can be made by phone or using the Internet;• Reception – customer flow management is opting to place customers in different waiting lines, depending on their needs;• Waiting – waiting time optimization can be achieved by improving the staff planningand increasing the processes flexibility;• Service – once the customers are waiting in a line, the staff can start the requiredservices;

• Post-service – after serving, waiting and proceeding times are recorded by the staff;• Administration – the records can be used to the current processes assessment, bygenerating reports, in order to determine the operational efficiency.

Literature reviewWaiting line models consists of mathematical formulas and relations used to determine the operating characteristics of these lines. Among these features we mention (Williams, A., S., 2003):• The probability that there is no item in the system;• The average of the items in the waiting line;• The average of the existent items in the system (the items in the waiting line and theitems being served);• The average time an item spends in the waiting line;• The average time an item spends in the system (consists of the waiting time besidesthe service time);• The probability that an item has to wait for the service. 

Research methodologyIn order to highlight the characteristics of a waiting system, we consider the example of aFast-food restaurant. Although every fast-food restaurant wants to provide a service as prompt as possible, there are many cases when the personal can’t handle the customers. Thus the waiting situations arise.

Single-channel waiting lineThe way the customers are served in a fast-food restaurant is an example of a single-channel waiting line. That is, the customer order is taken and as the transaction is completed, the order of the next customer in the waiting line is taken. Thus, each customer of the restaurant goes through a single-channel where he places the order, pays and picks-up the products. If there are more customers than can be served, a waiting line arises. The diagram below shows a single-channel waiting line for the fast-food restaurant:

Distribution of arrivalsA feature of the arrival process is the probability distribution of arrivals in a given timeperiod. In many situations, arrivals occur randomly and independently of other arrivals, such that the estimation of an arrival occurrence is difficult to determine. Thus, the Poisson distribution is the best solution to describe the arrivals pattern.  Service time distributionService time starts when a customer places an order and finishes when the customer receives the order.  Service time is not constant, but it depends on how large the order is.

Waiting line discipline 

When talking about waiting systems and lines, it is necessary to specify the way the elements are arranged for serving, in other words it has to specify the waiting line discipline. In case of fast-food restaurant, as in other many cases, the queue discipline is the FIFO type (First In First Out). In other words, the customers are served in order of their arrival in the waiting line. There are situations when the waiting line discipline is type of LIFO (Last In First Out). Such an example is given by persons who are going to use an elevator. Thus, the last person entered the elevator will be the first person to leave it. There are real systems in which the requests need to be served before other based on some priorities (Benderschi O., 2009).

Single-channel waiting line model, with Poisson arrivals and exponential service time In order to be able to highlight the way the existing formulas can provide informationrelated to the waiting line characteristics, we turn to our fast-food restaurant example.

Question No.3: Give examples of the practical applications of Just in Time (JIT)Answer No.3: A typical approach to completing multiple daily tasks is to put some aside and process them later in a batch. An unintended consequence of batching is to increase the number of times patients contact our offices to repeat their request or to find out if the work has been done. Reducing turnaround time reduces the number of phone calls, thereby reducing the net amount of work for the office staff.

The time it takes to make a referral, conduct a patient visit, or phone in a prescription refill is the same if we do it now, in ten minutes, or five days from now. Performing tasks in continuous flow (or just-in-time processing) requires rapidly switching from one task to another. Just-in-time processing initially appears to take more work, but in fact results in less work. This is not an easy transition for all individuals and will require pilot testing. 

Performing all tasks immediately is not possible or appropriate as it would require constantly interrupting the flow of work. Practices must test the best balance between immediately addressing tasks versus interruption.

The following are some practical examples of just-in-time processing:

                               Attempt to do today’s work today, whether the work is scheduling appointments, answering messages, processing refills, or completing forms. A system that does today's work today takes care of each day’s demand on the day it is generated. This ensures that the future is protected for tomorrow’s work. Doing today’s work today can reduce no-show appointments, rework, and repeat phone calls and messages.

                               Document the encounter during or immediately after the interaction. Allowing time in the provider’s schedule to document the patient encounter during the normal flow of the clinic prevents the backlog of documentation at the end of the provider’s day. Such a process increases efficiency since the provider can more quickly recall the details of the visit at the time of the encounter rather than several hours later. Such a system requires adjustments in scheduling such as adding a few minutes to each appointment length so that documentation can be done either during or in between visits (see below) or by scheduling "pauses" (5 or 10 minute blocks of open time) during the course of the day that can be used for documentation or other non-visit related activities by the provider.

                               Attend to refills or messages between patient appointments. Scheduling a few minutes between patient appointments or extending the scheduled time for an appointment for a few minutes enables the provider to answer phone or email messages, respond to questions from other members of the care team, or write or re-new prescriptions. This process reduces the need for interruptions during the patient visit or for batching such activities until the end of the day (see Use Continuous Flow to Avoid Batching).

                               Do an interruption analysis. Interruptions during a patient interaction with a provider can unnecessarily extend the visit and can potentially damage the quality of the interaction. A quick interruption analysis can help a practice pinpoint the causes of the interruptions (e.g., looking for equipment or supplies, answering phone calls, responding to a care team member’s question, etc.) so that they can be minimized or eliminated. One simple method is for a provider to keep a list of all the interruptions that occur over the course of a morning or afternoon on one particular day.

Small business owners turn to just-in-time inventory to save money and reduce waste, while still providing their customers with the products they want and need. Just-in-time inventory systems let small business owners produce products after they receive a request from customers, rather than having already assembled products on the shelves waiting for purchase. This inventory system was established by Toyota in the 1970s, and is still used by various small businesses today. Gift Basket Drop-ShippingDrop-shipping companies let small business owners use the just-in-time inventory system to service their customers. For example, an

entrepreneur who wants to start a gift basket business can purchase all of the supplies to create gift baskets for a variety of holidays and occasions. If no one purchases the baskets, though, the entrepreneur is stuck with excess inventory and more than likely will lose money. On the opposite end of the spectrum, a business owner could partner with a drop-ship gift basket company and place orders as they arrive. This way the business can avoid having inventory on hand and order simply based solely on customer demand. Fast-Food RestaurantsFast-food restaurants use just-in-time inventory to serve their customers on a daily basis during breakfast, lunch and dinner. Fast food restaurants have cheese, burger patties and all the fixings and toppings on hand, but they don't start assembling and cooking their hamburgers, sundaes or fish sandwiches until a customer places an order.FloristA florist, operating her business out of her home, can use a just-in-time inventory system to manager her orders, save time and money, while still getting quality finished products to her clients. A local, home-based florist can take orders from customers for everything from weddings and baby showers to corporate events. Once an order is place, instead of reaching into inventory that's been sitting (and starting to look unattractive), the florist can visit a nearby flower shop or flower mart to pick up the flowers needed to make the arrangements. Print-on-Demand PublishingMany authors, across various genres, forgo the traditional approach to securing book deals and self-publish their work. Self-published authors can elect to print a large portion of books at once, in hope that they sell, or they can take advantage of just-in-time inventory by working with a printer that offers print-on-demand services. Print-on-demand companies don't print the books until a customer places an order. Computer ManufacturersComputer manufacturers use just-in-time inventory to control the manufacturing and ordering of their computer systems. Rather than a warehouse filled with pre-assembled computers, the companies places orders for computer parts as customers make purchases. The computer firms by their parts from various suppliers.

Question No.4: Explain the aggregate planning process.

Answer No.4:

AGGREGATE PLANNING

Learning Objective:

To take the first steps in translating forecasts for demand into a production plan.  

Aggregate Planning:

Attempts to match the supply of and demand for a product or service by determining the appropriate quantities and timing of inputs, transformation, and outputs.  Decisions made on production, staffing, inventory and backorder levels.

Characteristics of aggregate planning:Considers a "planning horizon" from about 3 to 18 months, with periodic updatingLooks at aggregate product demand, stated in common termsLooks at aggregate resource quantities, stated in common termsPossible to influence both supply and demand by adjusting production rates, workforce levels, inventory levels, etc., but facilities cannot be expanded.Production Plan (manufacturing aggregate plan):A managerial statement of the period-by-period (time-phased) production rates, work-force levels, and inventory investment, given customer requirements and capacity limitations.

Staffing Plan (service aggregate plan):A managerial statement of the period-by-period staff sizes and labour-related capacities, given customer requirements and capacity limitations.

Objectives of Aggregate Planning

Objective of aggregate planning frequently is to minimize total cost over the planning horizon.

Other objectives should be considered:maximize customer serviceminimize inventory investmentminimize changes in workforce levelsminimize changes in production ratesmaximize utilization of plant and equipment

Aggregate Planning Strategies

Active strategy:Attempts to handle fluctuations in demand by focusing on demand managementUse pricing strategies and/or advertising and promotionDevelop counter-cyclical productsRequest customers to backorder or advance-orderDo not meet demand

Passive strategy (reactive strategy):Attempts to handle fluctuations in demand by focusing on supply and capacity managementVary size work force size by hiring or layoffsVary utilization of labour and equipment through overtime or idle timeBuild or draw from inventorySubcontract productionNegotiate cooperative arrangements with other firmsAllow backlogs, back orders, and/or stock outsMixed strategy:Combines elements of both an active strategy and a passive (reactive) strategyFirms will usually use some combination of the two

Passive (reactive) Strategies in Aggregate Planning: Basic Approaches

Chase approach

Capacities (workforce levels, production schedules, output rates, etc.) are adjusted to match demand requirements over the planning horizon.

Advantages:anticipation inventory is not required, and investment in inventory is lowlabour utilization is kept highDisadvantages:expense of adjusting output rates and/or workforce levelsalienation of workforce

Level ApproachCapacities (workforce levels, production schedules, output rates, etc.) are kept constant over the planning horizon.

Advantages:stable output rates and workforce levelsDisadvantages:greater inventory investment is requiredincreased overtime and idle timeresource utilizations vary over time

Aggregate Planning Methods: Intuitive MethodsIntuitive methods use management intuition, experience, and rules-of-thumb, frequently accompanied by graphical and/or spreadsheet analysis.

Advantage:easy to use and explainDisadvantage:many solutions are possible, most of which are not optimal

Aggregate Planning Example:

Suppose you have the following forecasts for demand to meet:

Month 1 2 3 4 5 6Demand 1000 1200 1500 1900 1800 1600Relevant Costs:

Regular production cost $35/unit

Lost sales $100/unit

Inventory carrying costs $10/unit/month

Subcontracting costs $60/unit

Hiring costs $1500/worker

Firing costs $3000/worker

Beginning workforce level 20 workers

Capacity per worker 50 units/month

Initial inventory level 700 units

Closing inventory level 100 units

LEVEL PRODUCTION STRATEGYFind the requirements for the period of the plan and produce the average amount needed per month to meet the plan.

First determine the average requirements per month:Avg. requirements = total requirements - opening inv. + closing inv.Number of periods

Avg. requirements = (9000 - 700 + 100)/6 = 1400 units/periodSteps:

1. Enter the production data2. Determine hire/fire to get to production level desired3. Update inventory levels4. Does the inventory run out - If it does recalculate average production

needed and go to step 15. Calculate totals for each category6. Calculate costs

LEVEL STRATEGY

Period 1 2 3 4 5

Req. 1000 1200 1500 1900 1800

Prod.

Inv.(700)

Hire

Fire

Sub.

Costs:1. Regular production costs:2. Inventory carrying costs:3. Hiring Costs:

TOTAL COSTS: _________CHASE STRATEGYProduce exactly what is required every period.Hire and fire to adjust monthly production to monthly requirements.The first and last period production levels are adjusted to account for opening inventory and closing inventory requirements.

Period 1 2 3 4 5

Req. 1000 1200 1500 1900 1800

Prod.

Inv.(700)

Hire

Fire

Sub.

Costs:1. Regular production costs:2. Inventory carrying costs:3. Hiring Costs:4. Firing Costs:

TOTAL COSTS: _____________

Question No.5: Differentiate between Mass Production and Toyota Production SystemAnswer No.5: Preparing Your Production Plan

 What is a production plan?

A production plan is that portion of your intermediate-range business plan that your manufacturing / operations department is responsible for developing. The plan states in general terms the total amount of output that the manufacturing department is responsible to produce for each period in the planning horizon. 

The output is usually expressed in terms of pesos or other units of measurement (e.g. tons, liters, kgs.) or units of the aggregate product (this refers to the weighted average of all the products in your company).

The production plan is the authorization of your manufacturing department to produce the items at a rate consistent with your company's overall corporate plan. 

This production plan needs to be translated into a master production schedule so as to schedule the items for completion promptly, according to promised delivery dates; to avoid the overloading or under loading of the production facility; and so that production capacity is efficiently utilized and low production costs result. 

Why is it important to have a carefully developed production plan? 

Production planning is one of the planning functions that a firm needs to perform to meet the needs of its customers. It is a medium-range planning activity that follows long-range planning in P/OM such as process planning and strategic capacity planning. Firms need to have an aggregate planning or production planning strategy to ensure that there is sufficient capacity to meet the demand forecast and to determine the best plan to meet this demand. 

A carefully developed production plan will allow your company to meet the following objectives: 

• Minimize costs / maximize profits • Maximize customer service • Minimize inventory investment • Minimize changes in production rates • Minimize changes in work-force levels • Maximize the utilization of plant and equipment 

How is a production plan prepared? 

Activity 1 Determination of Requirements The 1 st activity in Production Planning is the determination of the requirements for the planning horizon. Demand forecasting plays an important role in the conduct of these three tasks. Managers thus need to be aware of the various factors that would affect the accuracy of the demand and sales forecast. 

Activity 1 involves the conduct of the following tasks: ACTIVITY 1 Tasks Description 

1 Draw up the sales forecast for each product or service over the appropriate planning period 2 Combine the individual product / service demands into one aggregate demand 

3 Transform the aggregate demand for each time period into staff, process, and other elements of productive capacity 

There are company factors that could influence the level of demand for the firm's products. These internal factors include the company's marketing effort; the product design itself; the strategies to improve customer service; and the quality and price of the product. 

There are also external factors or marketplace factors that significantly affect demand such as the level of competition or possible reaction by competitors to a firm's business strategy; the perception of consumers about the products and the consumer behavior as affected by their socio-demographic profile. Lastly, there are random factors that could affect the accuracy of demand forecasts such as the overall condition of the economy and the occurrence of business cycle. 

Activity 2 How to Meet the Requirements 

The next major activity involves the identification of the alternatives that the firm may employ to meet production forecasts as well as the constraints and costs involved. Specifically, this activity involves the following tasks: 

ACTIVITY 2 Tasks Description 

1 Develop alternative resource schemes to meet the cumulative capacity requirements 2 Identify the most appropriate plan that meets aggregate demand at the lowest operating cost 

Once the most appropriate plan has been selected, then the firm evaluates the plan and later on finalizes it for implementation. For more efficient and effective planning process, the formation of a production planning team composed of managers from manufacturing, marketing, purchasing and finance, is recommended. 

What are the inputs to the production planning process? 

To be able to perform the aggregate planning process, the following information should be available to this production planning team. These data include the following: • Materials / purchasing Information • Operations / manufacturing Information • Engineering / process Designs • Sales, marketing and distribution Information • Financial and accounting information • Human resources information 

How do you address the demand fluctuations? 

There are three basic production planning strategies that the company can choose from to address demand fluctuations. These are the (1) Chase Demand strategy, (2) Level Production strategy, and the (3) Mixed Strategy. 

Strategy Description 

Demand Chase Strategy Matches the production rate to the order or demand rate through the hiring and firing of employees as the order rate varies 

Level Production Strategy Maintains a stable workforce working at a constant production rate with the shortages and surpluses being absorbed by any of the following: • Changing the inventory levels • Allow order backlogs (commit to the customer that you will deliver the product (s) at a much later date) • Employ marketing strategies (e.g. promotional activities) 

Mixed Strategy The strategies here could include combination of any of the following: • Having a stable workforce but employ variable work hours (e.g., increase no. of shifts, flexible work schedules or overtime) • Subcontracting / outsourcing 

• Changing inventory levels 

Source: Dilworth, James B. Production and Operations Management: Manufacturing and Services . Fifth Edition. McGraw-Hill, Inc. 1993 

What are the important considerations in selecting the production planning strategy? 

Demand Chase Strategy 

Specific Methods Costs Remarks 

Hire additional workers as demand increases Employment costs for advertising, travel, interviewing, training, and others 

Shift premium costs if additional shift is added Skilled workers may not be available when needed 

Layoff workers as demand decreases Cost of severance pay & increases in unemployment insurance costs The company must have adequate capital investment in equipment for the peak work force level 

Level Production Strategy 

Specific Methods Costs Remarks 

Produce in earlier period and hold until product is needed Cost of holding

inventory Service operations cannot hold service inventory 

Offer to deliver the product or service later, when capacity is available Delay in receipt of revenue, at minimum; company may lose customers Manufacturing companies with perishable products often use this method 

Exert special marketing efforts to shift the demand to slack period Advertising costs, discounts, other promotional programs Exemplifies the inter-relationship 

among functions within an organization 

Mixed Strategy 

Specific Methods Costs Remarks 

Work additional work hours without changing the workforce size Overtime premium pay The time available for maintenance work without interrupting production is reduced 

Staff for high production levels so that overtime is not necessary Excess personnel wages during period of slack demand Work force may be used for deferred maintenance during periods of low demand 

Subcontract work to outside firms Continuing company overhead; subcontractor's overhead and profits The capacity of other firms can be utilized, but there is less control of schedules and quality levels 

Revise make-or-buy decisions to purchase items when capacity is fully loaded Waste of company skills, tooling and equipment unutilized in slack periods These methods require capital investments sufficient for the peak production rate, that will be underutilized in slack periods 

Differentiate between Mass Production and Toyota Production System

Job Shop Production usually refers to manufacturers that produce items that are "one of a kind", for example, manufactures of automation systems and tooling. Manufacturers who produce a wide variety of items in very low volumes also fall into the job shop category. For example, very large mining trucks are produced in volumes typically less than 400 annually. Each truck has thousands of components so you can imagine that there are significant challenges in production scheduling, purchasing and inventory control with this type of manufacturing company as with all job shops. 

Mass production refers to the manufacture of high volumes of a limited range of products. For example, aerosol containers and beer cans fall into this category. In modern mass production plants, a high degree of automation and computerized information technology is used to reduce

costs in order to remain competitive. Quality control utilizing statistical methods is very important since a lot of scrap can be generated in a hurry if production processes go out of whack. 

Batch production refers to a production control method whereby the range of products manufactured in a plant is made in batches. In the past, large batches of each product were made to gain efficiencies by reducing the amount of non value adding time spent changing over from one product type to another. However, this type of production results in high inventories and excessive lead times. The Toyota Production System was developed to overcome the limitations imposed by changeovers and allows manufacturers to produce in synch with customer demands at a high level of quality and low cost. Its success is obvious as Toyota is likely the best automotive manufacturer in the world today.

Production Systems of Toyota and GM The differences between these two production systems are very clear, in fact it can be said that they are the total opposite of each other in terms of their approach to, and methods of, production.

One of several aspects of the Toyota production system that differ from The GM system is that Toyota puts a flow into the manufacturing process, while GM has lathes located in the lathe area, milling machines in the milling area Toyota places a lathe, milling machine and a drilling machine in the actual sequence of the manufacturing process. This means that instead of having one worker per machine, one worker oversees many machines or processes. GM, however, has a group of workers skilled only in lathe operation, a group skilled only in milling. The GM plant layout will have 50 or more lathes in one location. When machining is completed the items are collected and taken to the subsequent drilling process and after that the milling process. In the US there is a union for each job function, with many unions in each company. Lathe operators are only allowed to operate lathes and a drilling job must only be taken to a drilling operator. As a result because the operators are single skilled a welding job required at the lathe section cannot be done there but must be taken to a welding operator. As a consequence there are a large number of people and machines and for GM, mass production is the only way to achieve cost reduction under such conditions. When large quantities are produced, the labour cost per car and depreciation burden are reduced. This requires high performance, high speed machines that are both large and expensive. This type of planned mass production is a system in which each process makes many parts and forwards them to the next process. This method naturally generates an abundance of waste.

The basis of the Toyota production system is the absolute elimination of waste. The two pillars needed to support this are: -

Just-In-Time

Autonomation (automation with a human touch)Just-in-time (JIT) means that, in a flow process, the right parts needed in assembly reach the assembly line at the time they needed. Toyota establishing this flow throughout can approach zero inventory. From a production management point of view this is an ideal state. However, with a product made from thousands of parts like a car, the number of processes involved is enormous. It is extremely difficult to apply JIT to the production plan of every process in an orderly way. Therefore to manufacture using JIT so that each process receives the exact item needed, when it is needed and in the quantity needed, conventional management methods do not work well. The conventional way (and the way GM manufactures) was to supply materials from an earlier process to a later process. Toyota uses the reverse; a later process goes to an earlier process to pick up only the right part in the quantity needed at the exact time needed. This makes it logical for the earlier processes to make only the number of parts that are withdrawn. In terms of communication it simply requires what and how many are needed. Toyota calls this means of indication 'Kanban' and allows parts to be pulled into the production line not pushed, as they are in the GMs production process as GMs mass production system relies on having a large inventory available so that the parts can be moved from the warehouse when needed This generates high storage costs that Toyota simply does not have to worry about. This is controlled through a MRP and a MRPii system.The second pillar of Toyotas' system is called autonomation though this is not to be confused with simple automation. GM favours machine automation and because today's machines have such high performance, a small abnormality such as a piece of scrap falling into the machine can damage it and hence defective parts are soon produced and with a machine of this type mass production of defective parts cannot be prevented. Toyotas auto nomination is also known as automation with a human touch and is a machine that is attached to an automatic stopping device as well as various safety devices and Baka-Yoke1 fool proofing systems.

Autonomation also changes the function of management as well. An operator is not needed while a machine is working normally, only when the machine stops because of an abnormal situation does if get human attention. As a result one worker can attend several machines, making it possible to reduce the number of operators and increase production efficiency. In addition to this if a worker is always watching the machine waiting for an abnormality to occur he will immediately repair it without the managing supervisor being made aware of it and so improvement will never be achieved and costs will never be reduced. As GM favours having one worker manning a single machine the worker will be able to repair it, or get the maintenance team to repair it but as GM has a large

buffer inventory the underlying problem will not be solved. Stopping the machine when there is trouble will force awareness on everyone involved with the production line at Toyota. This will allow the problem to be clearly understood and so will make improvement possible.

The fundamentals of Toyotas production system are effectively encompassed by the plea 'avoid muri, muda, mura'. 'Muri' means excess, 'muda' means waste and 'mura' means unevenness. The alliterative quality of the three words, as well as their symbolic brevity, has made them a popular expression at Toyota. The expression is in stark contrast to GMs management approach.

§Muri. GMs principle of ordering in economic order quantities (EOQ) is, with Toyotas JIT system, an example of Muri, or excess. JIT calls for ordering in lots that are smaller than the EOQ, ideally just one unit.

This is because the EOQ formula fails to account fort several benefits of smaller batch sizes, including scrap/quality improvement; less rework; and fast feedback on errors, which leads to problem awareness and solution. The EOQ takes order cost as a given, but in Toyotas system order cost is continually reduced.§Muda. GMs principle of statistical sampling of batches by its quality control department presumes and allows for a certain percentage of defectives, which Toyota views as Muda, or waste.In the view of Toyotas JIT system is that there should be an elimination of waste altogether (ideally) so that there can be no batches to sample from and no chance of a certain percentage of defective parts per batch. Toyota system perceives quality to come from the source featuring workers, not the QC department, responsible for preventing defective parts from occurring and then moving on, undetected, to subsequent processes.Mura. GMs buffer stock approach calls for inventory to protect one worker centre from the output variability of the preceding work centre is, according to Toyotas JIT approach, irrational acceptance of mura, or unevenness.Toyota does the exact opposite; it removes buffer stock to expose the variability and hence corrects the underlying causes whereas GM prefers to add buffer inventory to mask and so temporarily solve the problem.

The functions of management differ greatly between the production systems. While GM has static goals where the management focus is on control or minimising variance from standards. GMs view of control encompasses budget, use of materials and various other factors including quality. Toyota, on the other hand, has "over the years...developed its own imperative-the precious habit of improvement."2. Control keeps things stable but while GM maintains its

stability, Toyota keeps improving.

The function of managers has changed in the two organisations. The work of Frederick Taylor and Frank and Lillian Gilbreth in scientific management perfected work-study techniques and so allowed the workers task to be standardised. In work study, first the work method is improved i.e. made simpler to do as well as more efficient; secondly the improved method is timed which provides a time standard; thirdly, workers are trained in the standard method and finally the jobs are scheduled, supervised and controlled with reference to the standard method and time. Management has changed from simply managers telling the workers what to do into more closed loop management systems. The performance of these systems is similar to an electromechanical system that requires monitoring to ensure compliance with the overall plan, and any discrepancies between plan and performance analysed and corrected. From a management point of view can be interpreted as plan, perform, analyse and replan, thus completing the loop. A management control system simply cannot work properly if the loop is not closed and in industry is the cause of much inefficiency in many spheres. Quality problems will inevitably result in JIT problems and this almost always will be the result of an open-loop system.

The relationship between management and the workplace has also changed in order for JIT and other production techniques used by both Toyota and GM to be implemented effectively, in an environment where previous it was a management manages and the workforce works. Managers now have to focus on motivation. The best way to do this is to ensure the company's objectives are consistent with their own. This requires mangers to obtain a belief in and commitment to the idea that the workforce has loyalties, goals and needs similar to their own. It is essential that managers wholeheartedly accept that their subordinates have the following basic qualities: -An innate loyalty to the company and their colleaguesA desire to see the company as a community

A wish to be proud of the company's products and share in the process of making the products a success in the marketplace. If a manger can realise these needs and expectations, it is highly unlikely that motivation of the workforce will be found wanting. However while a good manager can go a long way towards achieving some of these ideals in his or her department it is unlikely that they will achieve anymore than local success.

In conclusion it is clear to see how the functions of management have changed and that they are now much more feedback orientated and also focus more on motivation and satisfaction to improve productivity within

the workforce. Management functions have also became a lot more involved with teamwork, including the workforce when solving problems which results in better solutions as it is the workforce who are producing the products so a solution that has been devised with their help will not only improve production but also enhance their motivation.

Question No.6: What are the three major challenges faced by Computer Integrated Manufacturing?Answer No.6: Computer-integrated manufacturing (CIM) is the use of

computer techniques to integrate manufacturing activities. These

activities encompass all functions necessary to translate customer needs

into a final product. CIM starts with the development of a product concept

that may exist in the marketing organization; includes product design and

specification, usually the responsibility of an engineering organization;

and extends through production into delivery and after-sales activities

that reside in a field service or sales organization. Integration of these

activities requires that accurate information be available when needed

and in the format required by the person or group requesting the data.

Data may come directly from the originating source or through an

intermediate database according to Jorgensen and Krause. CIM systems

have emerged as a result of the developments in manufacturing and

computer technology. According to Kusiak the computer plays an

important role integrating the following functional areas of a CIM system:

                Part and product design. There are four phases that are crucial in

part and product design. They include preliminary design, refinement,

analysis, and implementation.

                Tool and fixture design. Tooling engineers using computer-aided

design (CAD) tools to develop the systems or fixtures that produce the

parts.

                Process planning. The process planner designs a plan that outlines

the routes, operations, machines, and tools required. He or she also

attempts to minimize cost, manufacturing time, and machine idle time

while maximizing productivity and quality.

                Programming of numerically controlled machines and material

handling systems.

                Production planning. There are two concepts used here including

materials requirement planning (MRP) and machine loading and

scheduling.

                Machining. This is part of the actual manufacturing process, including

turning, drilling, and face milling for metal removal operations.

                Assembly. After they are manufactured, parts and subassemblies are

put together with other parts to create a finished product or subassembly.

                Maintenance. Computers can monitor, intervene, and even correct

machine malfunctions as well as quality issues within manufacturing.

                Quality control. This involves three steps including system design,

parameter design, and tolerance design.

                Inspection. This stage determines if there have been errors and

quality issues during the manufacturing of the product.

                Storage and retrieval. These tasks involve raw materials, work-in-

process inventory, finished goods, and equipment. 

CIM ORIGIN

The term computer-integrated manufacturing was coined by Dr. Joseph

Harrington in his 1974 book bearing that name. Until the 1970s, the most

aggressive and successful automation was seen in production

operations. Discrete parts manufacturing used highly mechanized

machines that were driven and controlled by cams and complex devices

such as automatic screw machines. Process manufacturers made use of

these cam-driven controllers and limit switches for operations such as

heat treating, filling and canning, bottling, and weaving states Robert

Thacker of the Society of Manufacturing Engineers. The historical

approach to automation focused on individual activities that result in the

incorporation of large amounts of computerized activities. In the 1980s,

managing information became an important issue. 

CIM BENEFITS

According to the U.S. National Research Council, CIM improves

production productivity by 40 to 70 percent, as well as enhances

engineering productivity and quality. CIM can also decrease design costs

by 15 to 30 percent, reduce overall lead time by 20 to 60 percent, and cut

work-in-process inventory by 30 to 60 percent. Managers who use CIM

believe that there is a direct relationship between the efficiency of

information management and the efficiency and the overall effectiveness

of the manufacturing enterprise. Thacker's view is that many CIM

programs focus attention on the efficiency of information management

and the problems that come with it instead of developing new and more

sophisticated manufacturing machines, material transformation

processes, manufacturing management processes, and production

facilities. Computer-integrated manufacturing can be applied to

nonmanufacturing organizations by changing the manufacturing focus

toward a service orientation. CIM and Job Definition Format (JDF) are

becoming increasingly beneficial to printing companies to streamline their

production process.

 

THE CIM PLAN

A plan for a CIM system should provide a description of projects for

automating activities, assisting activities with technology, and integrating

the information flows among these activities. The planning process

includes six crucial steps:

                project activation

                business assessment

                business modeling

                needs analysis

                conceptual design

                CIM plan consolidation and economic analysis

This process, according to Jorgensen and Krause, also acts as a building

block for the future of the organization integrating these functions in order

to diminish them as an impediment to integration.

 

CONCEPTUAL DESIGN

The conceptual design of a CIM environment consists of individual

systems that fulfill the required capabilities, an overall architecture

incorporating the systems and the communication links, and a migration

path from the current systems architecture. Functional requirements

must be compared to the current inventory of systems and available

technology to determine system availability. Jorgensen and Krause state

that the following techniques are used in satisfying system requirements:

                exploiting unused and available functional capabilities of current

systems;

                identifying functional capabilities available for, but not installed on,

current in-house systems;

                locating systems that are commercially available but not currently in-

house;

                recognizing state-of-the-art technology that is not immediately

commercially available on a system;

                foreseeing functional capabilities of systems on the technical horizon;

and

                Determining whether the requirement is beyond the capabilities of

systems on the technical horizon. 

MANAGING A CIM

Managers must understand that short-term goals must support the long-

term goal of implementing a CIM. Top management establishes long-

term goals for the company and envisions the general direction of the

company. The middle management then creates objectives to achieve

this goal. Upper management sees the focus as being very broad,

whereas middle management must have a more narrow focus.

In deciding to implement a CIM, there are three perspectives that must

be considered: the conceptual plan, the logical plan, and the physical

plan. The conceptual plan is used to demonstrate a knowledgeable

understanding of the elements of CIM and how they are related and

managed. Thacker goes on to say that the conceptual plan states that by

integrating the elements of a business, a manager will produce results

better and faster than those same elements working independently.

The logical plan organizes the functional elements and logically

demonstrates the relationships and dependencies between the elements.

Thacker details that it further shows how to plan and control the

business, how to develop and connect an application, communications,

and database network.

The physical plan contains the actual requirements for setting the CIM

system in place. These requirements can include equipment such as

hardware, software, and work cells. The plan is a layout of where the

computers, work stations, robots, applications, and databases are

located in order to optimize their use within the CIM and within the

company. According to Thacker, sooner or later it becomes the CIM

implementation plan for the enterprise.

CIM is challenged by technical and cultural boundaries. The technical

challenge is first complicated by the varying applications involved.

Thacker claims that it is also complicated by the number of vendors that

the CIM serves as well as incompatibility problems among systems and

lack of standards for data storage, formatting, and communications.

Companies must also have people who are well-trained in the various

aspects of CIM. They must be able to understand the applications,

technology, and communications and integration requirements of the

technology.

CIM cultural problems begin within the division of functional units within

the company such as engineering design, manufacturing engineering,

process planning, marketing, finance, operations, information systems,

materials control, field service, distribution, quality, and production

planning. CIM requires these functional units to act as whole and not

separate entities. The planning process represents a significant

commitment by the company implementing it. Although the costs of

implementing the environment are substantial, the benefits once the

system is in place greatly outweigh the costs. The implementation

process should ensure that there is a common goal and a common

understanding of the company's objectives and that the priority functions

are being accomplished by all areas of the company according to

Jorgensen and Krause.

Posted 12th August 2012 by dinesh  

0 Add a comment2.

AUG

12

OPERATION III SEMESTER

Question No.1: Define Supply Chain. Discuss the various supply chain elements.Answer No.1: Supply Chain ManagementDefinitionA supply chain is the stream of processes of moving goods from the customer order through the raw materials stage, supply, production, and distribution of products to the customer. All organizations have supply chains of varying degrees, depending upon the size of the organization and the type of product manufactured. These networks obtain supplies and components, change these materials into finished products and then distribute them to the customer.Managing the chain of events in this process is what is known as supply chain management. Effective management must take into account coordinating all the different pieces of this chain as quickly as possible without losing any of the quality or customer satisfaction, while still keeping costs down.The first step is obtaining a customer order, followed by production, storage and distribution of products and supplies to the customer site. Customer satisfaction is paramount. Included in this supply chain process are customer orders, order processing, inventory, scheduling, transportation, storage, and customer service. A necessity in coordinating all these activities is the information service network.In addition, key to the success of a supply chain is the speed in which these activities can be accomplished and the realization that customer

needs and customer satisfaction are the very reasons for the network. Reduced inventories, lower operating costs, product availability and customer satisfaction are all benefits which grow out of effective supply chain management.The decisions associated with supply chain management cover both the long-term and short-term. Strategic decisions deal with corporate policies, and look at overall design and supply chain structure. Operational decisions are those dealing with every day activities and problems of an organization. These decisions must take into account the strategic decisions already in place. Therefore, an organization must structure the supply chain through long-term analysis and at the same time focus on the day-to-day activities.Furthermore, market demands, customer service, transport considerations, and pricing constraints all must be understood in order to structure the supply chain effectively. These are all factors, which change constantly and sometimes unexpectedly, and an organization must realize this fact and be prepared to structure the supply chain accordingly.Structuring the supply chain requires an understanding of the demand patterns, service level requirements, distance considerations, cost elements and other related factors. It is easy to see that these factors are highly variable in nature and this variability needs to be considered during the supply chain analysis process. Moreover, the interplay of these complex considerations could have a significant bearing on the outcome of the supply chain analysis process.There are six key elements to a supply chain:ProductionSupplyInventoryLocationTransportation, andInformationThe following describes each of the elements:1. ProductionStrategic decisions regarding production focus on what customers want and the market demands. This first stage in developing supply chain agility takes into consideration what and how many products to produce, and what, if any, parts or components should be produced at which plants or outsourced to capable suppliers. These strategic decisions regarding production must also focus on capacity, quality and volume of goods, keeping in mind that customer demand and satisfaction must be met. Operational decisions, on the other hand, focus on scheduling workloads, maintenance of equipment and meeting immediate client/market demands. Quality control and workload balancing are issues which need to be considered when making these decisions.2. SupplyNext, an organization must determine what their facility or facilities are able to produce, both economically and efficiently, while keeping the quality high. But most companies cannot provide excellent performance with the manufacture of all components. Outsourcing is an excellent alternative to be considered for those products and components that

cannot be produced effectively by an organization’s facilities. Companies must carefully select suppliers for raw materials. When choosing a supplier, focus should be on developing velocity, quality and flexibility while at the same time reducing costs or maintaining low cost levels. In short, strategic decisions should be made to determine the core capabilities of a facility and outsourcing partnerships should grow from these decisions.3. InventoryFurther strategic decisions focus on inventory and how much product should be in-house. A delicate balance exists between too much inventory, which can cost anywhere between 20 and 40 percent of their value, and not enough inventory to meet market demands. This is a critical issue in effective supply chain management. Operational inventory decisions revolved around optimal levels of stock at each location to ensure customer satisfaction as the market demands fluctuate. Control policies must be looked at to determine correct levels of supplies at order and reorder points. These levels are critical to the day to day operation of organizations and to keep customer satisfaction levels high.4. LocationLocation decisions depend on market demands and determination of customer satisfaction. Strategic decisions must focus on the placement of production plants, distribution and stocking facilities, and placing them in prime locations to the market served. Once customer markets are determined, long-term commitment must be made to locate production and stocking facilities as close to the consumer as is practical. In industries where components are lightweight and market driven, facilities should be located close to the end-user. In heavier industries, careful consideration must be made to determine where plants should be located so as to be close to the raw material source. Decisions concerning location should also take into consideration tax and tariff issues, especially in inter-state and worldwide distribution.5. TransportationStrategic transportation decisions are closely related to inventory decisions as well as meeting customer demands. Using air transport obviously gets the product out quicker and to the customer expediently, but the costs are high as opposed to shipping by boat or rail. Yet using sea or rail often times means having higher levels of inventory in-house to meet quick demands by the customer. It is wise to keep in mind that since 30% of the cost of a product is encompassed by transportation, using the correct transport mode is a critical strategic decision. Above all, customer service levels must be met, and this often times determines the mode of transport used. Often times this may be an operational decision, but strategically, an organization must have transport modes in place to ensure a smooth distribution of goods.6. InformationEffective supply chain management requires obtaining information from the point of end-use, and linking information resources throughout the chain for speed of exchange. Overwhelming paper flow and disparate computer systems are unacceptable in today's competitive world. Fostering innovation requires good organization of information. Linking

computers through networks and the internet, and streamlining the information flow, consolidates knowledge and facilitates velocity of products. Account management software, product configurations, enterprise resource planning systems, and global communications are key components of effective supply chain management strategy.What is Supply Chain Management?

Supply Chain Management is the long term plan management of activities that involves acquisition and conversion of finished material products and delivered to customers. It is the system that makes and delivers the products based on market demand.

The supply chain includes information flows, material flows, and financial flows.

Facilitation of Supply Chain Management: Supply Chain Management is facilitated by:

                 Structure,                 Process, and                 Technology.

Functions of Supply Chain Management: Supply Chain Management serves two important functions such as:

                 Market Mediation, and                 Physical.

The objective of supply chain system differs from situation to situation. The cost efficiency plays the critical factor for functional products. The important factor for innovative products is responsiveness. The combination of Leanness and Agility develops Legality.

Elements of Supply Chain Management: There are three types of supply chain elements, namely:

                 Strategic:i.            Supply chain design,

ii.            Long term planning, and

iii.            Resource acquisition.

                 Tactical:i.            Production and Distribution planning,

ii.            Medium term planning, and

iii.            Resource allocation.

                 Operational:i.            Shipment scheduling,

ii.            Short term planning, and

iii.            Resource scheduling.

Steps involved in Supply Chain Management: There are several steps involved in Supply Chain Management such as:

Step: 1 – Design of supply chain.

Step: 2 – Optimization of supply chain.

Step: 3 – Planning of material flow.

Step: 4 – Short Term Scheduling and transaction process.

Goal of Supply Chain Management: The most effective supply chain management will definitely result in business improvement. Therefore supply chain management is focused on several activities like:

                 Effective growth in income,                 Reduction of cost, and                 Best Asset Utilization.

There are several important points to be noted in supply chain management. Some of them are: The customers should be segmented, according to their service needs. Make some partial changes in the supply chain to meet high profits. Modify the logistic network.

The product differentiation must be delayed until the last moment. Always have a good relationship with the suppliers. The efficient supply chain system should be done by technology strategy. Overall Supply Chain Management is the best one if it is handled in the right way.

Question No.2: Discuss the elements of LogisticsAnswer No.2: Logistics management consists of eight elements called wings of logistics.  These are discussed in a nutshell below.1. Customer Order ProcessingFlow of Actions1. Filling up the order form2. Deciding the specifications of the product3. Deciding the quality check list of the product4. Deciding the delivery schedule5. Deciding the location of deliveryImportant Factors1. Cost of order processing2. Whether the company is capable of producing a component3. Detailed list of specificationsTechniques

1. Electronic data Interchange (EDI)2. E-ERP or CPFR3. Web portal2. Location AnalysisFlow of Actions1. Cost of transportation of raw materials and finished goods Proximity to suppliers Proximity to customers2. Availability and type of land3. Availability of secondary resources4. Availability of desired manpower at affordable cost5. Communal harmony6. Governmental regulation and taxationImportant Factors1. Cost of operations as a percentage of sales2. Shelf life of product3. Inventory ControlFlow of Actions1. On hand inventory analysis2. Communicating the quantity, quality and timing of material with thesupply points.3. Getting the material of right quality, quantity and at right timeImportant Factors1. Inventory control at planning stage2. Lead time3. Cost vs. importance of raw materialTechniques1. DRP and replenishment order control2. Fixed order interval system3. Economic order quantity with ROP system4. Selective inventory control (ABC, VED, FSN analysis etc.)5. Order forecasting using statistical tools4. Material HandlingFlow of Actions1. Type of material (Business significance like raw material, finishedGoods etc.)2. Material handling requirements of the material (Fragile, inflammable)3. Cost ratio of material handling to material cost.4. Material default location, identification and traceabilityImportant Factors1. Material breakage2. Pilferage3. Cost of material handling4. Number of handlingsTechniques1. Operational research2. Material flow analysis3. Computerized material retrieval system4. ASRS  (Advanced Storage & Retrieval System)SC’OrEBMS.COM – Elements of Logistics Management (Additional Notes)5. Packaging

Flow of Actions1. Packaging requirement for the material (Refrigeration, Fragile etc.)2. Primary packaging3. Secondary packaging4. Cost of packaging5. Transportation requirement for packaging (Vibration proof, water orMoisture tight)Important Factors1. Protection to product2. Holding the product3. Communicating the message to customers4. Customer requirement for packaging5. Reverse logistics for packaging6. Recycling of packaging material7. Cost of packagingTechniques1. Standardized box packaging2. Containerization of packaging3. Direct part marking4. ISO 140015. Recycling of packaging materials6. Reusable packaging materials7. Eco-friendly packaging materials8. Bar coding9. Bumpy bar coding10. GPS tracking system11. RFID6. TransportationFlow of Actions1. Mode of transportation2. Cost of product3. Speed of transportation4. Ambience requirement of material (Refrigeration, Vacuum)5. Cost of transportation6. Urgency of the product to customersImportant Factors1. Urgency of the product2.Cost of product3. Cost of transportationTechniques1. Containerized transportation2. Cool Chain Transport (Refrigerated Vans/Containers)3. Multi-modal Logistics4. Milk Run Distribution systems5. Cross Docking6. Direct Shipment7. WarehousingFlow of Actions1. Location of the warehouse2. Inventory level at the warehouse3. Storage requirement of the product

4. Packaging and repackaging requirement of the product5. Shelf life of the productImportant Factors1. Availability of space2. Availability of proper material handling systems3. Strategic location4. Packing and Re-packing facilities5. Information and allied servicesTechniques1. Third Party Logistics2. Third party warehousing8. Customer ServiceFlow of Actions1. Contractual services offered to client2. Type of customer service required for the product3. Location of the service centre4. Service level at the service centre5. Cost of service vs. replacementImportant Factors1. Contractual requirement of customer service2. Service quality3. Reverse logisticsTechniques1. AMC (Annual Maintenance Contracts) and free replacements2. Limited (free) trial period3. Guarantee & warrantee4. User clubs5. Help lines, toll free number, call centers6. CRM

Quick Response Manufacturing (QRM)In today’s world of competitive environment, one of the key success factors forManufacturing firms in speed-not only speed of delivery, but of concept, design andProduction.  New opportunities open for those manufacturing firms, who can getproducts to market before the competition and success hinges on the ability to movequickly.

Kanban SystemThe kanban system is an information system to harmoniously control the productionquantities in every process. It is a tool to achieve just-in-time production. In thissystem what kind of units and how many units needed are written tin a tag-like cardcalled kanban. The kanban is sent to the people of the preceding process from thesubsequent process. As a result, many processes in a plant are

connected with eachother. This connecting of processes in a factory allows for better control of necessaryquantities for various products. The kanban system is supported by the following:• Smoothing of production• Reduction of set up time design of machine layout• Standardization of jobs• Improvement activities• Autonomation

Two-bin SystemThe Working of the SystemTo begin with, the stock from the first bin is consumed. The emptying of first binindicates that the stock has reached ROL and the replenishment action is initiated. Thequantities in the second bin are consumed during the replenishment period. Thissystem reduces the work involved in record keeping and entering (clerical) errors.Two containers of inventory; reorder when the first is empty, use the contents of thesecond until order received.This system operates on reorder level (R.O.L.) system and it physically segregates thestock of entire items into two bins.  The second bin contains quantity equal to R.O.L.i.e. (LC + S) and it means to satisfy demand during the replenishment period.  Thefirst bin contains the quantity = (Q – LC) to satisfy demand between the receipt ofmaterials and placing the next order.  LC is the lead time consumption. Q is the orderquantity.S = Safety stockL = Lead timeC = Consumption rateQ = Reorder quantity

JUST IN TIME (JIT)JIT is a Japanese management philosophy, which has been applied in practice sincethe early 1970s in many Japanese manufacturing organizations. It was first developedand perfected within the Toyota manufacturing plants by Taiichi Ohno as a means ofmeeting consumer demands with minimum delays. Taiichi Ohno is frequentlyreferred to as the father of JIT.

It has now come to mean producing with minimum waste. Waste is taken in its mostgeneral sense and includes time and resources as well as materials. There are seventypes of waste namely: Waste from overproduction Waste of waiting time Transportation waste Processing waste Inventory waste Waste of motion Waste from product defects

Question No.3 (a) Explain the six step approach of effective forecasting(b) Describe dynamic replenishment

Answer No.3 (a) The Six Step Approach

A common sense approach to the problem of yard pests such as weeds, insects, and diseases is Integrated Pest Management (IPM). A key component of IPM is preventing conditions which allow pest problems to develop. When pest problems do develop, IPM relies on a combination of several techniques to keep them at acceptable levels without excessive use of chemical controls. Unlike traditional four-step lawn care programs, IPM can be implemented through a six step program that is tailored to meet the specific needs of your yard.

1. Determine your soil’s nutrient needs

Soil tests are valuable tools to help you determine your soil’s nutrient levels and fertilizer needs. Because your landscape is unique, a soil test is the only way to determine how much fertilizer, if any, to add. A soil test will also let you know how acidic your soil is so you can determine your liming needs. The University of Massachusetts inAmherst will test your soil for a small fee. Refer to the Determining Your Soil’s Needs section.

2. Select grass seeds suitable to your location

Choose seed that is compatible with your location. Grass species vary in their maintenance needs, nitrogen requirements, tolerance for weather conditions and in their water needs. Consider: your soil test results, watering needs, sun/shade exposure, expected wear and tear, and intended maintenance. This will help you determine what your grass needs to thrive in your environment. Also keep in mind that some types of grass can reduce insect problems. Generally an insect resistant mixture of grasses that includes a high percentage of fine fescues will ensure a drought resistant lawn.

3. Mow frequently and mow high

By mowing frequently with sharpened mower blades and keeping the grass height at 2-3 inches your lawn will be less stressed and will be encouraged to grow stronger roots. Leave the clippings on the surface to allow organic nutrients to be recycled into the soil.

4. Follow efficient watering practices

Always follow the water restrictions within your town. Check the grass conditions. You should water when you begin to notice: folding blades of grass, bluish green color to the grass, or footprints that remain on the lawn for several minutes. Water very early in the morning to avoid fungal activity. Water deeply (4-6 inches) but infrequently. Plan your watering according to the weather forecast. During periods of no rainfall, you should have one inch of water per week on your lawn. Refer to the Water Use section.

5. Determine if you have a pest problem

There are thousands of insects in the yard, many of which are beneficial or harmless. For example, the Big Eyed Bug is a beneficial insect that preys on the Chinch Bug, which is a lawn pest. It is not necessary to control all insects, weeds or disease organisms to have a healthy yard. You only need to control for pests if they are likely to cause a problem. For example, a lawn can tolerate anywhere from 8 – 10 grubs per square foot before it needs to be treated. Once you are sure that you have a pest problem, learn about its life cycle, the conditions it needs to survive and the options open to you to ensure control. Refer to the Commonly Encountered Pests section.

6. Select an appropriate control

Once a pest has been identified and is considered to be present at an unacceptable level, you must apply an appropriate control measure. Control measures include mechanical/ physical controls, biological controls, and chemical controls.

       Mechanical controls are non-chemical. Many insects can be removed by hand. Hoeing, hand pulling, and mulching are effective physical control methods for weeds.

       Biological controls are also non-chemical approaches that use insects, such as nematodes, and bacteria, such as Bt, to rid your lawn of pests. However, it is important to keep in mind that although they are non-chemical they are still considered a pesticide.

       Chemical controls. Be very careful when using pesticides. Always READ AND FOLLOW THE LABEL DIRECTIONS! If you choose to use a pesticide:

       Select a pesticide which poses the lowest risk to health and the environment. Choose a pesticide with the signal word “Caution” instead

of “Warning” or “Danger.” Apply “ready-to-use” pesticides instead of pesticides that require mixing.

       Do not alter the rate of application or increase the frequency of application beyond what is stated on the label.

       Choose a pesticide that is selective to the target pest. Many common pesticides are broad spectrum and will kill a wide variety of organisms, including beneficial insects.

       Do not apply pesticides where a sensitive resource such as your well, a stream or a pond could be impacted. Consider slope, proximity, and potential for drift.

       Protect yourself. At a minimum, gloves (rubber, nitrile or neoprene) and long sleeve shirts should be worn. Rubber boots, a hat, goggles and a facemask, respirator, or face shield are also recommended.

       Store pesticides in a locked area inaccessible to children, vandals and pets.Answer No.3(b) Describe dynamic replenishment

The Dynamic Replenishment solution consists of four key components:Centralization of inventoriesDevelopment of inventory targets based on replenishment timeAbsorption of variation in demand and supply by strategic buffersSynchronization of supply flow achieved through a focus on the status of inventory pulled into the system over time

For most organizations, once product is pushed out into the channel, it is very difficult to move it to another location if that inventory is required somewhere else. This is typically due to IT system limitations, local hoarding of inventory, or, most commonly, the cost associated with cross-shipping. Often sites requiring more products prefer to simply order more, rather than cross-ship, which results in increased total system inventory.

In the Dynamic Replenishment framework, a central warehouse is used to service regional warehouses and/or consumption points, giving organizations the ability to serve inventory to the locations that need it most based on actual consumption. Another benefit of establishing a central warehouse in the Dynamic Replenishment framework is to absorb demand variability. Variability in consumption is highest at consumption locations. By introducing a central warehouse that serves multiple locations, variability is actually reduced. Since the demand from a supply point is the aggregated consumption of all the points it feeds, statistical fluctuations average out. So, as the number of consumption points the central warehouse serves increases, the variability at the central warehouse decreases. This results in the central warehouse holding more than the inventories at all the regional warehouses combined. However, the total system inventory is typically reduced significantly.

The next step in the Dynamic Replenishment solution is to develop inventory targets at each point in the supply chain, for each item based on both consumption and replenishment. The target should be based on

maximum consumption of each SKU within the average replenishment time, factored by the level of unreliability of the replenishment time. The parameters used to determine the initial inventory target are:Consumption rateVariability in consumptionReplenishment timeVariability in replenishment time

It is important not to worry too much about determining the initial inventory targets. Once the system starts pulling SKUs, targets will dynamically adjust to meet demand requirements.

Once targets are in place, the move to pull inventory based on consumption and frequent replenishment can begin in earnest. To do so, the management of strategic buffers is imperative. Zone charts are used to manage buffers in order to absorb demand and supply variation, allowing the monitoring of inventory targets periodically.

BENEFITS1          So what are some of the benefits of the Dynamic Replenishment solution?

         Increases ability to fulfill all demand.         Improves overall customer satisfaction.         Determines the optimal level of inventory required to meet service

requirements.         Improves inventory utilization (ROI).         Improves ability to respond to upside requests.         Significantly reduces manual effort required for distribution and

scheduling processes.         Increases flexibility to support actual demand.         Reduces dating and spoilage.

TRANSITIONING TO DYNAMIC REPLENISHMENT

Internal change management is required in order for the Dynamic Replenishment

model to be successful. Changes include:A significant portion of the hospital's inventory will be held in the

centralwarehouse with only enough inventory to cover maximum demand within lead time and meet any applicable regulatory requirements at the point of consumption.

Internal metrics will be implemented to support the solution (see below).

Forecasts will be used for planning, not for execution.Hospitals must agree on targets set in line with consumption.Performance measurements will be based on replenishing to hub

targets.Batching, AKA min/max replenishment, will be eliminated.Hospital staff buy-in must be established for going live.

MEASURING SUCCESS

A number of new metrics are required to measure the success of the Dynamic Replenishment solution:

Zone Tracking = Consecutive days that inventory is in the red zone.In order to provide the best service to the customer while maintaining low inventory levels, it is very important to not stock out.

Time to Reliable Replenishment (TRR) = Order processing + logistics flow time

Red Zone Excursions = On-hand quantity in the red zone for a to-be determined number of consecutive days that depends on the required service level. The purpose of the red zone excursion metric is to minimize stock outs and proactively address low inventory levels.

Stock Outs = Zero on hand quantity at the hospital on a given day. Indicates poor customer service and, in retail, is an indicator of lost sales.

Fulfillment Ratio = The recommended ship quantity/actual ship quantity. The fulfillment ratio is used to measure the central warehouse’s ability to replenish hub targets.

Per-bed-day medical/surgical supply expenses

Question No.4: Evaluate the supply chain strategies for purchasing itemsAnswer No.4: Executive Buy-In

Before implementing any purchasing best practices, there has to be the backing of senior company executives. Without the buy-in of senior executives, including the CEO and CFO, any attempts at developing a world class purchasing strategy will be smothered by middle management. Changes that have to be made in any company must be backed by senior executives in order to achieve results.

Rationalization of Existing DataAny company that has been procuring data over a period of time will have a database of vendors that contain current, duplicate, out of date and incorrect data. If you company has a number of geographically separate purchasing departments, the level of inaccuracy is multiplied. For a world class purchasing strategy to be implemented, the data from each purchasing department has to be updated to reflect the current vendor data and to be rationalized to eliminate duplicate, incorrect and unnecessary data. The benefits of having accurate data to your company is that it allows decisions to be made accurately. It allows your purchasing department to analyze spending at vendors that are used in

more than one purchasing area. After a greater understanding of where money is spent across the enterprise, the company will have a greater leverage with vendors.

Take Advantage of Vendor Incentive ProgramsIt has been the norm for companies to pay vendors as late as possible. If the vendor has a contract for 45 days then they would never receive their payment before that 45th day. To encourage companies to pay their bills prior to the negotiated contract date, vendors have offered rebates, discounts and other incentives. But vendors have found that despite the incentives, companies still are not paying early. One theory is that companies enter the payment terms into their ERP system and forget about it. Checks are cut based on that data and the vendor incentives are never realized. A world class purchasing strategy should embrace these discounts and companies should make sure that they are taking every incentive possible. In these difficult economic times, companies cannot afford to pass up significant discounts. In addition, negotiations with vendors should also include obtaining greater discounts for payment on receipt of goods or even pre-payment.

Implement Vendor EvaluationA good purchasing strategy should include a method by which vendors are measured. The evaluation process should include not only delivery performance, but track less obvious metrics such as under or over delivery, quality of items delivered and the performance of the vendor’s customer service. These metrics may not always be a measurable value, but sometimes the metric is subjective. If policy guidelines are implemented for subjective evaluation, then all vendors can be measured equally. Don’t forget to let the vendors know they are being evaluated. If they know their customers are watching them, perhaps they will raise their game.

Hire Purchasing ProfessionalsSo many companies’ believe that basic clerical skills are the only pre-requisite for a position in the purchasing department. This view is incredibly naïve considering that these clerks are in charge of spending vast amounts of company resources. The purchasing professional is the key to implementing a world class purchasing organization. The skills required for world class purchasing organizations include knowledge of the business they are purchasing for, analytical skills, negotiation skills and interpersonal skills. By depriving your purchasing department of employees versed in these skills, your company can find itself tied into contracts will the wrong vendors, for the wrong material, and at the wrong price.

Reducing the Number of VendorsCompanies have hundreds of vendors, some have thousands, many have thousands, even tens of thousands. Having thousands of vendors in your system, not only takes a considerable amount of maintenance, it can also be extremely costly. If a purchasing department orders items from twenty different vendors each day, that can mean twenty purchase

orders that have to be sent, twenty shipping costs that need to be paid and twenty goods receipts that need to be processed when the goods arrive. In addition the added costs, there are probably savings that are not being realized. How many of those twenty vendors sell the same or similar products. If the twenty vendors are reduced to five, then the processing costs will be reduced and probably the cost of the material has been negotiated lower.

Centralized PurchasingIf your company has a number of geographically dispersed locations, you may think that it is impossible to implement a world class purchasing strategy. It is prudent for companies need to think of their overall spend as a central function. Having a centralized purchasing organization, a company can review its total purchasing and select vendors that can provide a majority of items at the best costs. This scenario will not cover all items used at all of the locations and the central purchasing organization would have to work with the locations to identify local suppliers that facilitate the needs of the remote location.

Getting the Most from VendorsNegotiating an agreement with a vendor can be a long drawn out affair with neither party happy with the outcome. Having a poor relationship with your vendor at the start of the contract is not the way in which world class purchasing organizations operate. Vendors are an important part of your supply chain. The materials they provide are required on specific dates so that your order is shipped to the customer on the date promised. Making your vendor a partner rather than just another vendor will help ensure that your orders are correct and on time. Negotiations with your vendors should focus on the benefits of being a vendor; showing them that if you are successful, they will be successful. Negotiations that focus on penalty clauses and fines for poor quality and missed delivery dates will leave the vendor less than willing to accomodate your requirements.

Maximizing TechnologyThere are some companies that still use rolodexes, paper purchase requisitions and call in their purchase orders to vendors. Most have some kind of purchasing software, even if it an Excel spreadsheet, that tracks orders and overall spend. With the introduction of Enterprise Resource Planning (ERP) software, companies are able to integrate their purchasing departments into their supply chain to take advantage of real-time data. However, that is where many companies stop. World class purchasing strategies go further to reap the benefits offered to them by their ERP systems. Companies can adopt workflow techniques within their ERP systems to automate approvals and payments, thus reducing time that the purchasing staff has to intervene. Data that is produced by thousands of purchasing transactions can be used in data warehouses to help purchasing professionals with metrics in vendor evaluation and contract negotiation.

Question No.5: How can differential advantage be achieved through Supply Chain Management?Answer No.5: In benchmarking the Supply Chain Management (SCM)

practices of hundreds of companies, we have learned that many

companies actually achieve competitive advantage by leveraging the

management of their supply chains. In this and the next two columns

(January 17 and January 31), we will explore the most powerful of these

SCM competitive advantage principles. The most important, and the one

we will present in this column, is embodied in the following statements:

                      Stick to your core competencies and outsource non-core competencies.

                      Coordinate these functions across supply chain partners.

What is a core competency? The answer I hear from many executives is,

"It is what we do well." My response is, "What if you are really good at

running the company cafeteria?" This may be well done, but it does not

help the company make money or achieve advantage over the

competition. A more accurate answer to this question is core

competencies are the things we have to do well to achieve competitive

advantage. This may include superior R&D, superior production, superior

marketing, or you guessed it, superior supply chain management. It the

last case, this is a process of identifying what your company has to do

well, and at the same time, identifying what your supply chain partners

have to do well so the overall supply chain is successful.

To do this, I encourage companies to go through a simple, yet often

insightful exercise. Think about one of your supply chain partners and

create a 2 by 2 table with the first column labeled, "What Our Company

Does Well," the second column labeled, "What Our Company Does Not

Do Well," the first row labeled, "What Our Supply Chain Partner Does

Well," and the second row labeled, "What Our Supply Chain Partner

Does Not Do Well." I have done this exercise with dozens of companies

to identify what are their core competencies (that they should never let

someone else do for them) and what are the core competencies of their

supply chain partners.

We are looking for two things here. The first are functions the supply

chain partner does not do well, but are your core competencies. These

are functions you can do for your partners that will tie them more closely

to you as either a supplier or a customer (both of which are sources of

competitive advantage.) The second are functions that the supply chain

partner does well, that your company does not. These are functions you

should let your supply chain partner do for you, which will get the function

done better and at less cost to you (again, a source of competitive

advantage..Of course, all these combinations require close coordination

with the supply chain partner to ensure optimal performance of the

functions and elimination of duplication of effort.

In closing, let me provide an example of how this works. Company A is in

the consumer appliance business. Through the 2 by 2 exercise, they

identified their core competencies as their brand name (which they

already realized) and their inventory management capabilities (which

they had not previously realized was a strength of theirs, but not of their

major retail partner.)The retail partner's core competency was location

and merchandising of their stores that created considerable exposure for

Company A products. This led to Company A taking over more of the

inventory management function for the retailer and led to Company A

training their salespeople to see themselves, "not as account managers,

but as asset managers." This change in orientation led to salespeople

seeing their job as not selling product to retailers, but rather as selling

product through the retailer to the final consumer, to achieve profitability

for both companies. Company A trains their salespeople to act as

inventory management consultants to retailers to help them manage their

Company A inventory levels.

Since retailers can depend upon Company A to have the product desired

in stock, and deliver it quickly, salespeople help retailers change their

inventory management decision rules to carry less inventory (a source of

profitability for the retailers.) In addition, salespeople work with retailers

to determine the fast selling items, which items affect sales of other

items, which items create the most store traffic, and share successful

merchandising strategies across non-competitive retailers. The result is

greater profitability for the retailers (one retailer credits Company A's

advice with saving it from bankruptcy) and greater sales for Company A.

Further, since -- from the retailer's perspective -- Company A provides

not only products that create retail store traffic, but also expertise,

retailers are very loyal to this company and work with Company A to sell

more of their product -- often to the exclusion of competitors.

From Company A, we see a manufacturer achieving greater profitability

(greater sales with lower inventory levels) and increasing market share,

not just from making a quality product, but from realizing who are their

key customers, what they value (retail store traffic and sales, with lower

inventory levels), and treating them well -- sources of supply chain

management competitive advantage for both the vendor and the retailer.

All achieved because both companies know their core competencies and

outsource non-core competencies to their supply chain partners.

Question No.6: Describe the steps in procurement processAnswer No.6: For every procurement project, a formal and

professional procurement process will save time, save money and reduce risk. This article shows you how to hit the ground running with a procurement project and to deliver a professional result.

You will learn how you can use a professional process template to avoid the many pitfalls of a procurement project.

Who should use this article?

This article will help in a range of situations and scenarios:

                   If you are responsible for a procurement project and you have limited access to expert procurement advice

                   You procurement project is not within the scope of your organizations core business

                   Your project is highly specialized where detailed technical knowledge and some procurement expertise is more desirable than expert procurement skills with limited technical know-how.Why Use a Formal Procurement Process?

A formal procurement process is sometime seen as cumbersome or bureaucratic but for any procurement exercise it is important to follow a few key steps. If you are not a procurement expert, you will make mistakes. No doubt you will learn from them but why learn from your

mistakes when you can learn from someone else’s.

A procurement process template provides a model and a framework to work within to:

                   Save you time; ensure that you get the right solution to meet your business needs;

                   Ensure you pay the right price (that’s the right price, not necessarily the lowest price!);

                   Ensure you avoid overlooking vital steps that may come back to haunt you later.By using a standard procurement process, you will find that suppliers will be familiar with the steps you take. They will know what to expect and will know that they are dealing with a professional organization.

A few words of warning.

Every project is different. Some procurement projects are small and every step of a formal process may not be required. Alternatively, some projects are highly complex or regulated and a generic framework will not be appropriate or sufficient. Despite this, every procurement project follows the same broad process . The key thing to remember is to adapt the process to fit the project.

The Procurement Process

The procurement process can be divided into five steps.

Define the business need

You need to understand what the fundamental business requirement is. At this point, it is important to understand the difference between a requirement and a solution. For example, the business requirement is to source some software to help to get information published on the company intrantet. An item of software to publish information on the company intranet is a solution – not a requirement. The requirement is to be able to publish information on the intranet. It may be that an outsourced solution is a better option.

Develop the Procurement Strategy

Depending on the scale of your project, there could be a very wide range

of potential solutions and approaches to your business need and a number of ways of researching the market and selecting a supplier.

Supplier Selection and Evaluation

After researching the market and establishing your procurement approach, you need to evaluate the solutions available. This may involve a formal tender process or an on-line auction. You criteria for comparing different solutions and suppliers are critical. Weight the key criteria heavily and don’t attach too much importance to aspects that will have little impact on the solution.

Negotiation and award.

Even when you have selected a supplier it is important that detailed negotiations are undertaken. This is not just about price. Think in terms of Total Cost of Ownership. A cheap product is not so cheap if the carriage costs are huge or if the maintenance contract is onerous.

Consider carefully the process by which the goods or services will be ordered and approved; how they will be delivered and returned if necessary; how the invoice process will work and on what terms payment will be made. Considering the whole Purchase to Pay process (P2P) at the outset can reduce costs and risk significantly

Induction and Integration

No goods or services should be ordered of delivered until the contract is signed, but this is not the end. It is vital that the supplier is properly launched integrated. The P2P process needs to be in place and need to be understood on both the buy-side and the supplier side. Any service levels that have been agreed need to be measured and KPIs put in place. Regular reviews should be established.

Posted 12th August 2012 by dinesh  

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12

OPERATION III SEMESTER

Question No.1: Summarise the advantages of ERP SystemsAnswer No.1: Advantages: 

Integration  

Integration can be the highest benefit of them all. The only real project aim for implementing ERP is reducing data redundancy and redundant data entry. If this is set as a goal, to automate inventory posting to G/L, then it might be a successful project. Those companies where integration is not so important or even dangerous, tend to have a hard time with ERP. ERP does not improve the individual efficiency of users, so if they expect it, it will be a big disappointment. ERP improves the cooperation of users. 

Efficiency  

Generally, ERP software focuses on integration and tend to not care about the daily needs of people. I think individual efficiency can suffer by implementing ERP. The big question with ERP is whether the benefit of integration and cooperation can make up for the loss in personal efficiency or not. 

Cost reduction  

It reduces cost only if the company took accounting and reporting seriously even before implementation and had put a lot of manual effort in it. If they didn't care about it, if they just did some simple accounting to fill mandatory statements and if internal reporting did not exists of has not been financially-oriented, then no cost is reduced. 

Less personnel  

Same as above. Less reporting or accounting personnel, but more sales assistants etc. 

Accuracy  

No. People are accurate, not software. What ERP does is makes the lives of inaccurate people or organization a complete hell and maybe forces them to be accurate (which means hiring more people or distributing work better), or it falls. 

Installing an ERP system has many advantages - both direct and indirect. The direct advantages include improved efficiency information integration for better decision-making, faster response time to customer queries, etc.The indirect benefits include better corporate image, improved customer

goodwill, customer satisfaction and so on. Some of the benefits are quantitative (tangible) while others are non-quantitative (intangible).Tangible benefits are those measured in monetary terms and intangible benefits cannot be measured in monetary terms but they do have a very significant business impact.Tangible benefits:Improves the productivity of process and personnelLowering the cost of products and services purchasedPaper and postage cost reductionsInventory reductionLead time reductionReduced stock obsolescenceFaster product / service look-up and ordering saving time and moneyAutomated ordering and payment, lowering payment processing and paper costsIntangible benefits:Increases organizational transparency and responsibilityAccurate and faster access to data for timely decisionsCan reach more vendors, producing more competitive bids ;Improved customer responseSaves enormous time and effort in data entry ;More controls thereby lowering the risk of mis-utilization of resourcesFacilitates strategic planningUniform reporting according to global standards

Advantages of ERP (Enterprise Resource Planning) System:

1. Complete visibility into all the important processes across various departments of an organization (especially for senior management personnel).2. Automatic and coherent work-flow from one department / function to another to ensure smooth transition/ completion of processes.3. A unified and single reporting system to analyze the statistics/ numbers/ status etc in real time, across all the functions / departments.4. Since same software is used across all departments – this can avoid individual departments having to buy and maintain their own software systems.5. Certain ERP vendors can extend their ERP systems to provide Business Intelligence functionalities as well.6. Advanced e-commerce integration is possible with ERP systems that can handle web based order tracking/ processing.7. There are various modules in an ERP system like Finance/ Accounts, Human Resource Management, Manufacturing, Marketing / Sales, Supply Chain / Warehouse Management, CRM, Project Management, etc.8. Since ERP is a modular software system, its possible to implement either a few modules (or) many modules based on the requirements of an organization. If more modules implemented, the integration between various departments might be better.9. Single Database is implemented on the back-end to store all the

information required by the ERP system and that enables centralized storage / back-up of all enterprise data.10. ERP systems are more secure as centralized security policies can be applied to them and all the transactions happening via the ERP systems can be tracked.11. ERP systems provide visibility and hence enable better/ faster collaboration across all the departments.12. It is possible to integrate other systems (like bar-code reader, for example) to the ERP system through an API (Application Programming Interface).13. ERP systems make it easier for order tracking, inventory tracking, revenue tracking, sales forecasting and related activities.14. ERP systems are a boon for managing globally dispersed enterprise companies.Question No.2: Evaluate the importance of integrated information systems in an organization’s success

Answer No.2: The importance of management information systems AbstractPresents a discussion on the importance of management information systems in management. It explains the role of information, as an essential tool for managers in planning and decision making. It describes MIS as a well co-ordinated information system, a database that is to provide management with needed information to plan and make decisions. Modern technology has further made the resort to MIS in management imperative because of the changing circumstances and environment. Also identifies some problems which can hinder effective use of MIS. These are lack of management involvement in the design; poor appreciation of management support. Finally, recommends that organizations, both private and public; commercial and non-commercial should endeavour to set up an MIS unit in their organizations so that adequate information can be put at the disposal of their management.  

The information concept

The concept of information in an organizational sense is more complex and difficult than the frequent use of this common word would suggest. Every society, no doubt, is an information society and every organization is an information organization. Therefore, information is a basic resource like materials, money and personnel. Information can be considered either as an abstract concept (ideas) or as a commodity, usually in the form of letters and reports.

The information management concept

Information management has been defined as the organization-wide capability of creating, maintaining, retrieving and making immediately

available the right information, in the right place, at the right time, in hands of the right people, at the lowest cost, in the best media, for use in decision making (Langemo, 1980). In the same vein, Best (1988) defines information management as the economic, efficient and effective co-ordination of the production, control, storage and retrieval and dissemination of information from external and internal sources, in order to improve the performance of the organization. This definition is narrow in perspective in that it does not take care of managing the characteristics of information itself (content, ownership, representation and equality), irrespective of the storage medium, equipment that processes it and the system that employs it. In summary, therefore, the key issue involved in information management is managing information in an organization using modern information technologies.  

Management information systems (MIS)

One approach by which organizations can utilize computing capability is through the development of MIS. There is no universally accepted definition of MIS and those that exist reflect the emphasis and perhaps prejudices of their authors. However, the term "management information system" can be seen as a database management system tailored to the needs of managers or decision makers in an organization. MIS isa system using formalized procedures to provide management at all levels in all functions with appropriate information based on data from both internal and external sources, to enable them to make timely and effective decisions for planning, directing and controlling the activities for which they are responsible (Argyris, 1991).It will be noted from the above definition that the emphasis is on the uses to which the information is put. Planning, directing and controlling are the essential ingredients for "management".In essence, the processing of data into information and communicating the resulting information to the user is the key function of MIS. It should, therefore, be noted that MIS exist in organizations in order to help them achieve objectives, to plan and control their processes and operations, to help deal with uncertainty, and to help in adapting to change or, indeed, initiating change. The question one may then ask is: What are the management functions that MIS facilitates and what are the various decision levels at which management information can be put into use? It is through a thorough answer to this question that the importance of MIS in management can be realized. However, before we can examine management functions, it is essential we discuss organization processes and structures.  

Organization processes and structures

It is pertinent to mention at this juncture that the activities of the information system take place within the organizational structure and that the MIS seeks to serve the organization's objectives. Therefore, it is important for information specialists to have a working knowledge of what organizations are, their structures and factors which influence their methods and operations. There is no universally-accepted definition of

an organization, but Kempner's (1976) is quite an interesting one. He states that anorganization is a pattern of ways in which large numbers of people engage in a complexity of tasks, relate themselves to each other in the conscious, systematic establishment and accomplishment of mutually agreed purposes (Kempner, 1976).

Management functions and levels

It should be noted that the value of any information is derived from the actions that management takes as a result of using that information. It follows that information specialists need to know what type of tasks and functions management have to perform so that they are able to produce relevant and usable information. The functions of management can be grouped into five areas: planning; decision making; organization and co-ordinating; leadership and motivation and control. Obviously, the emphasis given to each area varies from manager to manager and is especially dependent on the level of the manager in the organization. There are clear differences in information requirements between a manager at the operational or transactional level, such as transport supervisor, and a manager at the tactical level, such as accounts or sales manager, or at the strategic level, such as managing director/board of directors. At the highest (strategic) level, structured, formal MIS may actually be counter-productive, for at these levels informal MIS and external influences become increasingly important.

The nature of planning and decision making and the available techniques

Planning and decision making have rightly been called the primary management tasks and these tasks occur at every level of management, although naturally the type of planning and decision making will vary between the levels. Planning is the process of deciding in advance what is to be done and how it is to be done. The planning process results in plans which are predetermined courses of action that reflect organizational objectives and these plans are implemented by decisions and actions. Thus, effective planning and decision making are inextricably linked, for without decisions and actions, the planning process is a sterile exercise.In order to provide appropriate information, MIS designers must be aware of the types of decisions at the various levels of the organization. A useful classification is that given by H.A. Simon who classified decision making into programmed and non-programmed. Programmed decisions are those that are routine and repetitive and where decision rules are known. Conversely, non-programmed decisions are novel and unstructured and the nature of the problem and decision rules are complex and little understood. It follows from these brief descriptions that radically different information and procedures are required for the different decision types, which have obvious implication for MIS design.

The importance of MIS to management

In all but the smallest organizations management rarely observe operations directly. They attempt to make decisions, prepare plans and control activities by using information which they obtain from formal sources - for example, the organization's MIS - and also by informal means such as face-to-face conversations, telephone calls, through social contacts and so on.A management information system is generally thought of as an integrated, user-machine system providing information to support operations, management and decision-making functions in an organization. As a matter of fact, an MIS is a special-purpose system useful for management in an organization. MIS is an accessible and rapid conveyor belt for appropriate high quality information from its generation to its users. The heart of an effective MIS, therefore, is a carefully conceived, designed and executed database. Its level corresponds to adaptive decisions. The characteristics of MIS in practice include:

                               an information focus, designed for managers in an organization;                               structured information flow;                               an integration of data processing jobs by business function,

such as production of MIS, personnel MIS and so on; and                               inquiry and report generation, usually with a database.

Question No.3 (a) List the technologies that increase the power and effectiveness of an ERP system(b) Differentiate between commercial and open source ERP

Answer No.3 (a) The world of technology and business consulting is tainted by horror stories of ERP projects gone wrong. Companies such as Hershey's have had widely publicized lawsuits against ERP software vendors because of their failed implementations. In some extreme cases, these companies sue because they couldn't ship product or their entire business shut down because the software did not work correctly. 

So how does one increase the likelihood of ERP success and ERP benefits realization? Many assume success or failure is the fault of the software you purchase, but in reality, 95% of a project's success or failure is in the hands of the company implementing the software, not the software vendor. Here are just a few ERP implementation critical success factors that we have seen:

1. Focus on business processes and requirements first. Too often, companies get tied up in the technical capabilities or platforms that a particular software supports. None of this really matters. What really matters is how you want your business operations to run and what your key business requirements are. Once you have this defined, you can engage in a more effective ERP software selection process.

2. Focus on achieving a healthy ERP ROI (Return on Investment), including post-implementation performance measurement. This requires doing more than just developing a high-level business case to get approval from upper management or your board of directors. It also entails establishing key performance measures, setting baselines and targets for those measures, and tracking performance after go-live. This is the only way to maximize the business benefits of ERP.

3. Strong project management and resource commitment. At the end of the day, your company owns the success or failure of a large ERP project, so you should manage it accordingly. This includes ensuring you have a strong project manager and your "A-players" from the business to support and participate in the project.

4. Commitment from company executives. Any project without support from it's top-management will fail. Support from a CIO or IT Director is fine, but it's not enough. No matter how well-run a project is, problems arise (such as conflicting business needs), so the CEO and your entire C-level staff needs to be on board to drive some of these 

5. Take time to plan up front. An ERP vendor's motive is to close a deal as soon as possible. Yours should be to make sure it gets done right. Too often, companies jump right in to a project without validating the software vendor's understanding of business requirements or their project plan. The more time you spend ensuring these things are done right at the beginning of the project, the less time you'll spend fixing problems later on.

6. Ensure adequate training and change management. ERP systems involve big change for people, and the system will not do you any good if people do not understand how to use it effectively. Therefore, spending time on money on training, change management, job design, etc. is crucial to any ERP project.

7. Make sure you understand why you're implementing ERP. This is arguably the most important one. It's easy to see that many big companies are running SAP or Oracle and maybe you should too, but it's harder to consider that maybe you don't need an ERP system at all. Perhaps process improvement, organizational redesign, or targeted best-of-breed technology will meet your business objectives at a lower cost. By clearly understanding your business objectives and what you're trying to accomplish with an ERP system, you will be able to make a more appropriate decision on which route to take, which may or may not involve ERP.

By ensuring you have these 7 critical success factors in place, your organization will be much more likely to maximize the business benefits of ERP. Click here to learn more about our ERP webcasts, white papers, podcasts, and other thought leadership in the ERP space.Most manufacturers consider their employees the secret of their success. In today's cost-competitive world, companies have shifted their emphasis

from just adding headcount to get things done to improving employee productivity. Empowering employees by giving them timely information boosts productivity, and this is exactly what an integrated information system—an enterprise resource planning (ERP) system—does.

Objective managers recognize wasted labor in their operations—people scrambling to compile information for meetings, time spent sorting out which numbers are the right ones to use, manual processes that slow down production. Ultimately, these can impair customer satisfaction.

Implementing smart business practices, such as delegating decision-making down the ranks of front line employees, can help control wasted labor. But these practices work only when managers provide their people with the right information at the right time so they can manage their responsibilities. This is especially true for employees in customer-facing roles.

Many opportunities for employee productivity increases can be found in areas that aren't part of direct manufacturing or production costs. That may seem counter-intuitive since the justification for many ERP implementations is reducing inventory and headcount. For example, if a company has been running lean anyway—let's say it has an efficient production workforce and carries minimal raw materials and work-in-process inventories—a manager may feel the opportunity for improvement outside those areas is limited. But the truth is that using a state-of-the-art ERP system, such as Microsoft Dynamics, can help create an environment that boosts indirect labor productivity.

Employee productivity in manufacturing operations

Until recently, a manufacturer could deliver products made entirely within its own walls. Global manufacturing has restructured the industry, taking advantage of low cost labor rates available in emerging countries and specialist firms. Shrinking opportunity windows and aggressive new competitors have forced manufacturers to use design, manufacturing, channel, and distribution partners, creating more complex, networked supply chains that employees must manage expertly. Tightly integrated ERP systems help successfully address these new management challenges.

Manage formulas better

                               New product development and launch. New products are introduced faster and more effectively when employees have good information and collaboration tools. Your company must quickly assess if it's working on the right projects and coordinate projects and engineers. In today's environment, the organization must also manage intellectual property and collaboration, integrating marketing, sales, and all supply chain activity, both internally and externally. The integrated nature of an ERP system makes the sharing and timely delivery of information easier.

                               Building the right product at the right time. Inventory, by its very nature, is wasted investment. It consumes employee time, production capacity, and ties up valuable working capital. ERP tools for

demand management, inventory visibility, and integrated scheduling are just some of the ways ERP can help you minimize inventory build-up and ensure more productive manufacturing operations.

                               Making it right the first time. The analytics ERP systems contain can provide good visibility into manufacturing performance and quality, enabling production to stay on track and maintain the highest quality output. Identifying issues early helps ensure efficient use of your production and employee assets.

                               Efficient supplier interactions. Supply chain visibility shrinks the time people spend on busywork and the cost of expediting materials. Electronic kanbans automate communication and eliminate much of the overhead of paperwork and messages. With access to key demand and schedule data, partners can often answer questions themselves, freeing your employees for other tasks.In addition to helping improve productivity in production operations, ERP systems can help most well-run manufacturing companies realize more of their business potential by equipping them to manage overhead and support operations.

SG&A costs: Labor productivity beyond manufacturing operations

A typical manufacturing company has sales, general, and administrative (SG&A) costs of 13 to 14 percent. Because this overhead cost is a pure expense, any amount that can be eliminated flows directly to the bottom line. For example, a $20 million company with 5 percent EBITDA (earnings before interest, taxes, depreciation, and amortization) profits that reduces its SG&A cost by just one percentage point through improved productivity will show an impressive 20 percent increase in EBITDA.

Here are some likely targets for cutting SG&A costs:

                               Responsive customer service. With information from an ERP system, service representatives can solve customer problems quickly, often on the first call. A collaborative work environment can open up parts of your systems for customers to use directly. Customer self service can yield a huge productivity increase, not only for your employees, but for your customers too.

                               Efficient financial reporting and management. Even something as simple as closing the books faster at the end of the month or quarter can have a profound impact. Integrated information sharing and standardized reporting and analysis can eliminate sneaker nets, which means your people spend less time figuring which set of numbers to use and more time on analysis, decision-making, and planning.

                               IT department productivity. Last but not least, productivity in the information technology (IT) department will likely soar once the maintenance of aging systems is eliminated. Spending less time repairing and integrating older, incomplete systems frees up time for IT staff to concentrate on extending user adoption, utilization, and improving overall benefit from the ERP system.

Customer satisfaction: The goal of increased productivity

Managers in today's manufacturing companies receive tons of data—about equipment, products, orders, deliveries, conditions, quality, and customers. Understanding how managing all that information contributes to increased customer satisfaction and ultimately better top- and bottom-line financial performance is the key to success. That's why so many companies are moving to platforms and systems that help integrate isolated silos of information, provide powerful analytics, and bring the power of the desktop to every management task.

Those companies know that building a fact–based, decision-making organization means putting the insight of your enterprise data into the hands of your staff. Equipped with the data available in ERP systems, and supported by powerful desktop tools, employees throughout the organization can achieve higher productivity and give customers faster, higher quality service.

Answer 3(b) Differentiate between commercial and open source ERPEnterprise resource planning is available in two states. One of them is referred as commercial while the other is called open source ERP.

Some of the differences are as follows:Pricing

Commercial ERP is an expensive package and suitable only for bigger corporations. The prices do vary significantly but according to the size of the company and volume of business. In any cases they have been found to be extremely costly irrespective of the quantum in which they are purchased. These packages are not subject to flexibility and molding. Their usage modalities are rarely liberal and cause troubles when they are modified. Hence the deployments also turn out to be costly and inconvenient due to the procedures involved, in the future. Another major allegation against the package is that they consist of lot of hidden costs.

The greatest advantage of Open source ERP application is that it is available at free of cost. This is a motivating factor to companies that shun the idea of ERP for the sake of price tags. Even the licenses are available along with the source code. This essentially makes sure that the procedures for training are very easy. In the case of commercial ERP vendors don't disclose the prices initially for it would make any sane person to refuse the order. He is later blamed for inflating the costs. This feature is unknown in open source ERP as everything is free.

Flexibility

This important feature was found absent in commercial ERP. It was a difficult task to make them suit the working pattern. Instead of modifying those in wake of the inherent difficulties companies had no other choice but to change their way of business. This was often a debacle even though it was argued that the best ERP were designed for the best business practices.

However when it comes to open source ERP everything was decided by the code .Therefore companies can do the necessary modifications in code and without much support from the vendor. Another advantage of open source is that it does not interfere with the regular schedule of the company during the implementation stage. However the open source ERP is devoid of this trouble as the regular business can go uninterrupted irrespective of ERP implementation or deployment or reengineering process or anything else to do with ERP is carried on a full fledged scale. This is a major difference between commercial and open source ERP applications.

Duration, Dependence and Results

The time allotted for implementing open source ERP is very less when compared with commercial ERP than open source. The innumerable number of complexions in commercial ERP calls for longer time span. It consumes a lot of time not only during implementation but in every stage of ERP process due to the nature of work involved.

When it comes to the question of relying on the vendor the open source ERP vendor enjoys a considerable edge than the commercial ERP. Since open source is a (self) built in process companies rely less on vendors and takes care of needs by themselves. The productivity is also high in open source ERP systems and the failure rates are very low.

Training

Lots of training is required for using commercial ERP. It calls for lots of investments in terms of time and money. There are lots of controversies regarding them. If they don't give the necessary impetus the results will be poor. Similarly the companies are largely debating the validity of training sessions designed and handled exclusively by the ERP vendor.

On the other hand Open Source ERP does not require much training. The source code is more than a training manual. The results are also bound to be effective because the user gets to learn through the process of self teaching. The company need not spend much on training and makes a minimal utilization of the resources. This is another way of reducing the level of dependence on the ERP vendor.

Security

Commercial ERP systems are less secure when compared with open source erp applications. They are by and large prone to the traps and pitfalls of hackers (no matter however tight is the segregation of the components). Even though open source ERP makes everything transparent and available in the public domain it bring into the notice of user whenever something goes wrong.

Conclusion

The differences between commercial and open source ERP applications show the Edge enjoyed by open source ERP players. However the fact remains that they are not recognized well in the market for fear of failure as customers are still prepared to pay for results. They can go a long way only if the awareness is high (which is encouraging in the current scenario).

Question No.4: Describe the main functions of material management module.Answer No.4: Management is the process of reaching organizational goals by working with and through people and other organizational resources. 

Management has the following 3 characteristics:

1.           It is a process or series of continuing and related activities.

2.           It involves and concentrates on reaching organizational goals.

3.           It reaches these goals by working with and through people and other organizational resources.

MANAGEMENT FUNCTIONS:

The 4 basic management functions that make up the management process are described in the following sections:

1.           PLANNING

2.           ORGANIZING

3.           INFLUENCING

4.           CONTROLLING.

PLANNING: Planning involves choosing tasks that must be performed to attain organizational goals, outlining how the tasks must be performed, and indicating when they should be performed.

Planning activity focuses on attaining goals. Managers outline exactly what organizations should do to be successful. Planning is concerned with the success of the organization in the short term as well as in the long term.

ORGANIZING:

Organizing can be thought of as assigning the tasks developed in the planning stages, to various individuals or groups within the organization. Organizing is to create a mechanism to put plans into action.

People within the organization are given work assignments that

contribute to the company’s goals. Tasks are organized so that the output of each individual contributes to the success of departments, which, in turn, contributes to the success of divisions, which ultimately contributes to the success of the organization.

INFLUENCING:

Influencing is also referred to as motivating, leading or directing. Influencing can be defined as guiding the activities of organization members in his direction that helps the organization move towards the fulfillment of the goals.

The purpose of influencing is to increase productivity. Human-oriented work situations usually generate higher levels of production over the long term than do task oriented work situations because people find the latter type distasteful.

CONTROLLING:

Controlling is the following roles played by the manager:

1.           Gather information that measures performance

2.           Compare present performance to pre established performance norms.

3.           Determine the next action plan and modifications for meeting the desired performance parameters.

Controlling is an ongoing process.

Question No.5: Discuss the three types of information essential for a successful ERP system

Answer No.5 BARRIERS TO SUCCESSTypically, there are three process barriers that prevent many ERP implementations from being successful.  These barriers result in an elongated development cycle with poorly defined and managed requirements and, as a result, poorly defined measures of success.  The implementation team often is tasked with chasing a series of fluid requirements, no process for managing changes to the project scope, and a false belief that technology alone will prevail.  These teams are, without fail, disappointed with the results. Specifically, the three most common mistakes of ERP implementations are the following: Focusing on technology:  The technology "silver bullet" approach is one sometimes sold by vendors. However, there is no evidence anywhere in the history of IT that software alone will solve a business problem.Ignoring the importance of requirements definition: Organizations too often ignore the need to define an optimal process and then use the

technology as an enabler for the process. In too many instances, organizations either try to adopt a process that is inherent in the ERP solution, even if it does not fit their business requirements, or they try to shoehorn their legacy processes into a software package that is not designed to support their processes.  In both cases, they sub optimize the capabilities in the technology and don't take advantage of the opportunity to streamline their business process—the entire point of technology implementations.Jumping from the requirements definition to the development phase: Pressed to deliver systems against predefined timelines that don't take into account all of the necessary implementation steps, organizations often rush the process, neglecting to build both a solid implementation plan and solid agreement across the organization as to what it will take to develop and implement the solution before implementing the technologyLEVERAGING THE POWER OF THE PROJECT MANAGEMENT OFFICE FOR ERP SUCCESSAs organizations embark on their ERP initiatives, many ignore key issues that can easily be addressed through a professional project management organization.  Some of the most critical items that cannot be overlooked are:  the integration of client, implementer, and software vendor goals and plans; constant management of the project's scope; and a method for gaining visibility into project health at all levels of the organization and throughout the life of the project.The first point—integration of client, implementer, and vendor objectives—is essential. Too often, client organizations abdicate responsibility for project implementation under the assumption that their vendors (both the software provider and the implementer) will have identified and addressed the problem.  Issues arise because all parties do not agree up front on priorities, schedules, escalation procedures, and communication channels.  By the time this comes to the fore, the problems can be insurmountable.In addition, management of project scope and requirements can be a sticking point.  Many organizations jump into the implementations without defining the project in "bite-sized chunks" that can be accomplished in a reasonable period of time. As schedules drag on and requirements are heaped on the initial phase, the customer loses faith in the initiative and organizational inertia can take hold.  If requirements are managed scrupulously and reflected in the form of clearly articulated scope elements, the entire project is more likely to succeed, and chances are better for its ultimate adoption and survival.The final barrier lies in visibility at all levels of the organization.  Without this, small issues can snowball into major hurdles—often it isn't what you know, but rather it's when you find out.  If executives, managers, vendors, and clients all have timely visibility into project status, looming issues, and resource requirements/constraints on a regular basis, the

entire team is more likely to get ahead of the problem and find a solution without significant impact to the project as a whole. But how can an organization ensure that it will avoid these pitfalls and implement successfully?  A project management office (PMO) can be a key success factor.  A PMO is a central organization with responsibility for management, oversight, communication, and tracking either for a single significant project (like an ERP implementation) or for all of the projects of a department or enterprise.  The PMO can provide the needed structure and discipline, as well as assume an organizational leadership role to support ERP solution deployment. According to Gartner, "The recent success of the many project offices that addressed the year 2000 problem has proven the project office to be a "best practice" for delivering successful projects." Additionally, Gartner notes, "…a project office is a shared competency designed to integrate project management within an enterprise.  A project office can be a key resource in establishing an enterprise competency in project analysis, design, management, and review.  Given the appropriate governance, it can improve communication, establish an enterprise standard for project management and help reduce the disastrous effect of failed development projects on enterprise effectiveness and productivity."In its basic configuration, the PMO supports core project management-related functions including scope management, baseline change management, project scheduling, resource management, cost management, and project reviews. Some organizations expand PMO processes to include additional functions such as risk management, earned value, and requirements management.  Ultimately, in its most robust state, the PMO supports portfolio management, which in addition to the core and/or enhanced functions, supports selection, prioritization, performance measurement, and ongoing management of multiple projects and internal investments. Portfolio management enables companies to align IT and business management objectives, one of the key components missing in previous ERP implementations.  In this configuration the PMO supports enterprise and project requirements, hence the term "enterprise PMO."  Figure 1 summarizes the PMO process domain showing the progression from core to enterprise management capability.ROLES OF THE PMOIn complex ERP implementations, the PMO assumes a variety of roles depending on the needs of the specific projects and organizations being served.  Tactically, the PMO can provide direct support to ERP initiatives in several areas such as scope definition, project plan development, resource estimation, detailed scheduling, and performance reporting.  Strategically, the PMO can help senior executives manage a portfolio of projects, including customer and internal initiatives.The role of the PMO can be summarized into five core functions:

Project Management Solution Architect: In this role the PMO assumes a leadership function in defining the combination of processes, technologies, and standards required to meet the strategic and tactical project management requirements of the organization.Process Champion: Very few processes survive, improve, and add maximum value without active support.  In the role of process champion the PMO develops, implements, and continuously improves project management processes based on organizational feedback, management requirements, and industry best practices. Implicit in this role is the need to provide value to project and senior management stakeholders alike.Mentor and Coach: As mentor and coach, the PMO assumes an active role in promoting knowledge, understanding processes, and achieving buy-in from stakeholders across the organization. The focus of mentoring is on promoting an understanding of the relevant PMO processes, but may extend to an understanding of general project management knowledge that is relevant to the stakeholder. This role also includes developing andimplementing (or recommending) project management training.Facilitator: This role includes working directly with project teams and conducting project work shops designed to gain project team consensus on key project parameters such as scope, resource requirements, project plans, and schedule dependencies.Knowledge Broker: In this role, the PMO ensures that all project-critical management data and information necessary for process implementation and decision-making are available to all stakeholders through procedural or technological means. This includes the analysis and reporting of project metrics including cost/schedule performance metrics and risk metrics, as well as providing quantitative and qualitative analyses including variance analysis, critical path analysis, and trend analysis. The relative importance of each role varies based on a number of factors including organizational project management maturity and size, complexity of the projects within the portfolio, end-customer requirements, and the type of analysis and metrics used to select, prioritize, monitor, and control projects.   Gartner notes, "Through 2004, information systems organizations that establish enterprise standards for project management, including a project office with suitable governance, will experience half the major project cost overruns, delays, and cancellations of those that fail to do so (0.7 probability)."DRIVING RESULTSOnce a PMO is in place to provide the structured and disciplined processes needed to manage ERP implementations, communication and corporate culture factors must be considered. The PMO alone cannot ensure a successful ERP implementation. These factors include:Staffing/Training: Once a PMO is implemented challenges often arise, as the customer team is unfamiliar with PMO technology and

methodologies. To successfully leverage PMO technology all members of the team must understand the discipline, rigor, and sound processes a PMO can provide. If a basic understanding is not put in place through training, the integrity of the data can be compromised.Gaining Trust: An issue of trust can arise from using a third-party integrator. Frequently disclosure becomes an issue, as not all integrators are willing to provide complete information to the customer. The key to developing and/or gaining trust is to operate with an open book policy, working as a cohesive team rather than two separate companies.Define Success: As success is relative to each organization, it is essential to understand what constitutes success ahead of time. For example, if an ERP implementation runs over budget, but encompasses all the functionality desired by the stakeholders, it may be considered a success. Additionally, if an ERP system is implemented and remains on budget and on schedule but lacks some desired functionality, it may not be considered a success. Only through open and honest communication will all parties understand what constitutes an ERP success. Deploying a PMO streamlines and facilitates the ERP implementation process. Companies who leverage the strength of a PMO can mitigate risk, minimize costs, and ultimately, expect smoother implementations. Putting in place solid project management techniques through the use of technologies such as a PMO can provide the needed structure to successfully guide companies through previously murky implementations. Question No.6: Briefly describe the functioning of a ERP System.

Answer No.6: Enterprise resource Planning (ERP) covers the techniques and concepts employed for the integrated management of businesses as a whole, from the viewpoint of the effective use of management resources, to improve the efficiency of an enterprise.

The packages are used in order to Handle the entire range of business functions necessary for the company’s operations, Targeted at everything from small businesses to large organizations and Global adaptation

Knowledge of how to organize and run a project of this magnitude, Enough experience in handling problems and issues that arise during the implementation, Good people skills, Good leadership skills, Excellent training skills

Direct Benefits      Improved efficiency      Information integration for better decision-making      Faster response time to customer queries

Indirect Benefits

      Better corporate image      Improved customer goodwill      Customer satisfaction

Other Benefits1)      Reduction of lead-time2)      On-time shipment3)      Reduction in cycle time4)      Improved resource utility5)      Better customer satisfaction6)      Improved supplier performance7)      Increased flexibility8)      Reduction in quality costs9)      Improve information accuracy and decision-making capability

ERP Implementation Lifecycle      Pre-evaluation Screening      Package Evaluation      Project Planning Phase      Gap Analysis      Reengineering      Configuration      Implementation Team Training      Testing      Going Live      End-user Training      Post-implementation

ERP implementation methodology.      Understanding the problem      Defining Solutions      Getting down to work      Going live

Limitations of ERPThe limitations of ERP systems are as follows

(i)      Managers cannot generate custom reports or queries without help from a programmer

(ii)    Provide current status only(iii)   Data in the ERP application is not integrated with other enterprise or

division systems and does not include external intelligenceERP market and its advantagesReasons for the growth of ERP market

      To enable improved business performance      To support business growth requirements      To provide flexible, integrated, real-time decision support      To eliminate limitation in legacy systems      To take advantage of the untapped mid-market

Advantages of ERP      Business integration      Flexibility      Better analysis and planning capabilities

      Use of latest technologyKnowledge areas of ERP project management.

1. Project integration management2. Scope management3. Time Management4. Cost Management5. Quality management6. Human Resource Management7. Communication management8. Risk management9. Procurement Management

Posted 12th August 2012 by dinesh  

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AUG

12

OPERATION III SEMESTER

Question No.1: Explain the different types of methods study used to observe workers/operators and develop a new process for performing a task in a better way?

Answer No.1: Training is a set of a systematic processes designed to

meet learning objectives related to trainees' current or future jobs. These

processes can be grouped into the following phases; needs analysis,

design, development, implementation, and evaluation. The phases are

sequential, with the outputs of the previous phases providing the inputs

to those that follow. Figure 1 depicts the phases and their relationships.

Training delivery methods consist of the techniques and materials used

by trainers to structure learning experiences. Different training delivery

methods are better or worse at achieving various learning objectives.

During the design phase (see Figure 1) the different methods are

examined to determine their appropriateness for the learning objectives.

Once appropriate methods have been identified, they are applied to the

training plan in the development phase.

There are three categories of learning objectives: knowledge, skills, and

attitudes (KSAs). Knowledge objectives are of three types: declarative,

procedural, and strategic. Declarative knowledge is the person's store of

factual information. Procedural knowledge is the person's understanding

about how and when to apply the facts. Strategic knowledge is used for

planning, monitoring, and revising goal-directed activity. Skill reflects

one's proficiency at specific tasks such as operating a piece of

equipment, giving a presentation, or making a business decision.

Attitudes are beliefs and/or opinions about objects and events and the

positive or negative affect (feelings) associated with them. Attitudes

affect motivation levels, which in turn influence a person's behavior. Most

training programs have learning objectives for knowledge, skill, and

attitudes; these programs need to combine several methods into an

integrated whole because no single method can do everything well.

The various training delivery methods can be divided into cognitive and

behavioral approaches. Cognitive methods provide information orally or

in written form, demonstrate relationships among concepts, or provide

the rules for how to do something. They stimulate learning through their

impact on cognitive processes and are associated most closely with

changes in knowledge and attitudes. The lecture, discussion, e-learning

and, to some extent, case studies are cognitive methods. Though these

types of methods can influence skill development, it is not their strength.

Conversely, behavioral methods allow the trainee to practice behavior in

a real or simulated fashion. They stimulate learning through experience

and are best at skill development and attitude change. Equipment

simulators, business games, role plays, the in-basket technique,

behavior modeling and, to some

Figure 1Model of the Training Process

Extent, case studies are behavioral methods. Both behavioral and cognitive methods can be used to change attitudes, though they do so through different means. On-the-job training is a combination of many methods and is effective at developing knowledge, skills, and attitudes, but is best at the latter two.

Section 1.01     LECTURE METHOD

The lecture is best used for creating a general understanding of a topic.

Several variations in the lecture format allow it to be more or less formal

and/or interactive. In the pure lecture, communication is one wayrom

trainer to trainees. It is an extensive oral presentation of material. A good

lecture begins with an introduction that lays out the purpose, the order in

which topics will be covered, and ground rules about interruptions (e.g.,

questions and clarification). This is followed by the main body of the

lecture in which information is given. The topic areas should be logically

sequenced so that the content of preceding topics prepares trainees for

the following topics. The lecture should conclude with a summary of the

main learning points and/or conclusions.

Section 1.02     DISCUSSION METHOD

The discussion method uses two-way communication between the

lecturer and the trainees to increase learning opportunities. This method

uses a short lecture (20 minutes or less) to provide trainees with basic

information. This is followed by a discussion among the trainees and

between the trainees and the trainer that supports, reinforces, and

expands upon the information presented in the short lecture. Verbal and

nonverbal feedback from trainees allows the trainer to determine if the

desired learning has occurred. If not, the trainer may need to spend more

time on this area and/or present the information again, but in a different

manner.

Section 1.03     E-LEARNING

Many companies have implemented e-learning, which encompasses

several different types of technology assisted training, such as distance

learning, computer-based training (CBT), or web-based training (WBT).

Distance learning occurs when trainers and trainees are in remote

locations; typically, technology is used to broadcast a trainer's lecture to

many trainees in many separate locations. Distance learning provides

many of the same advantages and disadvantages as the lecture method.

Distance learning can be much less expensive than paying for trainees in

multiple locations to travel for a lecture, but it may reduce motivation to

learn because of the remoteness of the trainer.

E-learning is an alternative to classroom-based training, and it can

provide a number of advantages. E-learning can:

                     reduce trainee learning time, by allowing trainees to progress at

their own pace

                     reduce the cost of training, particularly by reducing costs

associated with travel to      a training location

                     provide instructional consistency, by offering the same training

content to employees worldwide

                     allow trainees to learn at their own pace thereby reducing any

boredom or anxiety that may occur

                     provide a safe method for learning hazardous tasks with

computer simulations

                     increase access to training to learners in locations around the

worldSection 1.04      

Section 1.05     SIMULATIONS

Simulations are designed to mimic the processes, events, and

circumstances of the trainee's job. Equipment simulators, business

games, in-basket exercises, case studies, role playing, and behavior

modeling, are types of simulations.

(a)      EQUIPMENT SIMULATORS.

Equipment simulators are mechanical devices that incorporate the same

procedures, movements and/or decision processes that trainees must

use with equipment back on the job. Among those trained with this

method are airline pilots, air traffic controllers, military personnel, drivers,

maintenance workers, telephone operators, navigators, and engineers.

To be effective the simulator and how it is used must replicate, as closely

as possible, the physical and psychological (time pressures, conflicting

demands, etc.) aspects of the job site. To facilitate this, the equipment

operators and their supervisors should be involved in the simulation

design and pre-testing. This reduces potential resistance to the training

and, more importantly, increases the degree of fidelity between the

simulation and the work setting.

(b)     BUSINESS GAMES.

Business games attempt to reflect the way an industry, company, or

functional area operates. They also reflect a set of relationships, rules,

and principles derived from appropriate theory (e.g., economics,

organizational behavior, etc.). Many business games represent the total

organization, but some focus on the functional responsibilities of

particular positions within an organization (e.g., marketing director,

human resource manager). These are called functional

simulations. Games that simulate entire companies or industries provide

a far better understanding of the big picture. They allow trainees to see

how their decisions and actions influence not only their immediate target

but also areas that are related to that target.

(c)      IN-BASKET TECHNIQUE.

The in-basket technique simulates the type of decisions that would

typically be handled in a particular position such as a sales manager or

operations manager. It affords an opportunity to assess and/or develop

decision-making skills and attitudes. To begin the exercise, trainees are

given a description of their role (a current or future job) and general

information about the situation. Trainees are then given a packet of

materials (such as requests, complaints, memos, messages, and

reports) which make up the in-basket. They are asked to respond to the

materials within a particular time period (usually 2 to 4 hours). When the

in-basket is completed, the trainer asks the trainee to identify the

processes used in responding to the information and to discuss their

appropriateness. The trainer provides feedback, reinforcing appropriate

decisions and processes or asking the trainee to develop alternatives. A

variation is to have trainees discuss their processes in a group format

moderated by the trainer. Here the trainer should attempt to get the

trainees to discover what worked well, what didn't and why.

(d)     CASE STUDY.

Case studies are most often used to simulate strategic decision-making

situations, rather than the day-to-day decisions that occur in the in-

basket. The trainee is first presented with a history of the situation in

which a real or imaginary organization finds itself. The key elements and

problems, as perceived by the organization's key decision makers, may

also be provided. Case studies range from a few pages in length to more

than a hundred. Trainees are asked to respond to a set of questions or

objectives. Responses are typically, though not always, in written form.

Longer cases require extensive analysis and assessment of the

information for its relevance to the decisions being made. Some require

the trainee to gather information beyond what was in the case. Once

individuals have arrived at their solutions, they discuss the diagnoses

and solutions that have been generated in small groups, large groups, or

both. In large groups a trainer should facilitate and direct the discussion.

The trainer must guide the trainees in examining the possible alternatives

and consequences without actually stating what they are.

(e)     ROLE PLAY.

The role play is a simulation of a single event or situation. Trainees who

are actors in the role play are provided with a general description of the

situation, a description of their roles (e.g., their objectives, emotions, and

concerns) and the problem they face.

(f)       BEHAVIOR MODELING.

Behavior modeling is used primarily for skill building and almost always

in combination with some other technique. Interpersonal skills, sales

techniques, interviewee and interviewer behavior, and safety procedures

are among the many types of skills that have been successfully learned

using this method. While live models can be used, it is more typical to

video tape the desired behavior for use in training. The steps in behavior

modeling can be summarized as follows:

1.               Define the key skill deficiencies

2.               Provide a brief overview of relevant theory

3.               Specify key learning points and critical behaviors to watch for

4.               Have an expert model the appropriate behaviors

5.               Have trainees practice the appropriate behaviors in a structured role

play

6.               Have the trainer and other trainees provide reinforcement for

appropriate imitation of the model's behaviorSection 1.06      

Section 1.07     ON-THE-JOB TRAINING

The most common method of training, on-the-job training (OJT) uses

more experienced and skilled employees to train less skilled and

experienced employees. OJT takes many forms and can be

supplemented with classroom training. Included within OJT are the job-

instruction technique, apprenticeships, coaching, and mentoring. Formal

OJT programs are typically conducted by employees who can effectively

use one-on-one instructional techniques and who have superior technical

knowledge and skills. Since conducting one-on-one training is not a skill

most people develop on their own, train-the-trainer training is required for

OJT trainers. In addition to training the trainers, formal OJT programs

should carefully develop a sequence of learning events for trainees. The

formalized instructional process that is most commonly used is called the

job-instruction technique.

(a)      JOB-INSTRUCTION TECHNIQUE (JIT).

The JIT was developed during World War II and is still one of the best

techniques for implementation of OJT nearly forty years later. It focuses

on skill development, although there are usually some factual and

procedural-knowledge objectives as well. There are four steps in the JIT

process: prepare, present, try out and follow up.

Prepare. Preparation and follow up are the two areas that are most often

ignored in OJT programs. Preparation should include a written

breakdown of the job. Ignoring this step will prevent the trainer from

seeing the job through the eyes of the trainee. When the trainer is very

skilled there are many things he does on the job without thinking about

them. This can result in their being overlooked in training without a

systematic analysis and documentation of the job tasks prior to beginning

training.(b)     APPRENTICESHIP TRAINING.

Apprenticeship training dates back to the Middle Ages, when skilled

craftsmen passed on their knowledge to others as a way of preserving

the guilds. Today, apprenticeship programs are partnerships between

labor unions, employers, schools, and the government. They are most

often found in the skilled trades and professional unions such as boiler

engineers, electrical workers, pipe fitters, and carpenters. The typical

apprenticeship program requires two years of on-the-job experience and

about 180 hours of classroom instruction, though requirements vary. An

apprentice must be able to demonstrate mastery of all required skills and

knowledge before being allowed to graduate to journeyman status. This

is documented through testing and certification processes. Journeymen

provide the on-the-job training, while adult education centers and

community colleges typically provide the classroom training. Formal

apprenticeship programs are regulated by governmental agencies that

also set standards and provide services.

(c)      COACHING.

The coaching process, viewed from the coach's perspective, generally

follows the outline below. Note the similarities between JIT and this

process.

1.               Understand the trainee's job, the KSAs and resources required to

meet performance expectations, and the trainee's current level of

performance.

2.               Meet with the trainee and mutually agree on the performance

objectives to be achieved.

3.               Mutually arrive at a plan/schedule for achieving the performance

objectives.

4.               At the work site, show the trainee how to achieve the objectives,

observe the trainee's performance, then provide feedback.

5.               Repeat step 4 until performance improves.

(d)     MENTORING.

pararing is a form of coaching in which an ongoing relationship is

developed between a senior and junior employee. This technique

focuses on providing the junior employee with political guidance and a

clear understanding of how the organization goes about its business.

Mentoring is more concerned with improving the employee's fit within the

organization than improving technical aspects of performance, thus

differentiating it from coaching. Generally, though not always, mentors

are only provided for management-level employees.

Question No.2: Describe the various algorithms for balancing material flow.

Answer No.2: A mass balance (also called a material balance) is an application of conservation of mass to the analysis of physical systems. By accounting for material entering and leaving a system, mass flows can be identified which might have been unknown, or difficult to measure without this technique. The exact conservation law used in the analysis of the system depends on the context of the problem but all revolve around mass conservation, i.e. that matter cannot disappear or be created spontaneously.[1]

Therefore, mass balances are used widely in engineering and environmental analyses. For example mass balance theory is used to design chemical reactors, analyse alternative processes to produce chemicals as well as in pollution dispersion models and other models of physical systems. Closely related and complementary analysis techniques include the population balance, energy balance and the somewhat more complex entropy balance. These techniques are required for thorough design and analysis of systems such as the refrigeration cycle.

In environmental monitoring the term budget calculations is used to describe mass balance equations where they are used to evaluate the monitoring data (comparing input and output, etc.) In biology the dynamic

energy budget theory for metabolic organisation makes explicit use of time, mass and energy balances.

The general form quoted for a mass balance is The mass that enters a system must, by conservation of mass, either leave the system or accumulate within the system.

Mathematically the mass balance for a system without a chemical reaction is as follows:[1]

Strictly speaking the above equation holds also for systems with chemical reactions if the terms in the balance equation are taken to refer to total mass i.e. the sum of all the chemical species of the system. In the absence of a chemical the amount of any chemical species flowing in and out will be the same; This gives rise to an equation for each species in the system. However if this is not the case then the mass balance equation must be amended to allow for the generation or depletion (consumption) of each chemical species. Some use one term in this equation to account for chemical reactions, which will be negative for depletion and positive for generation. However, the conventional form of this equation is written to account for both a positive generation term (i.e. product of reaction) and a negative consumption term (the reactants used to produce the products). Although overall one term will account for the total balance on the system, if this balance equation is to be applied to an individual species and then the entire process, both terms are necessary. This modified equation can be used not only for reactive systems, but for population balances such as occur in particle mechanics problems. The equation is given below; Note that it simplifies to the earlier equation in the case that the generation term is zero.[1]

        In the absence of a nuclear reaction the number of atoms flowing in and out are the same, even in the presence of a chemical reaction

        To perform a balance the boundaries of the system must be well defined

        Mass balances can be taken over physical systems at multiple scales.

        Mass balances can be simplified with the assumption of steady state, where the accumulation term is zero

Question NO.3: (a) Differentiate between EDI, EPOS and Bar Coding.(b) Explain in brief the four way classification in generic operations strategies.

Answer No.3 (a) There are many different ways for suppliers to obtain POS data from their retail partners, such as emailed reports or web

portals. Walmart’s Retail Link offers by far the most detailed view. Unfortunately other retailers’ portals make it difficult to impossible to get granular views (e.g.: SKU and door level). Happily there is another choice: An EDI document called an 852.These documents are typically available to any supplier who wants them. Once set up, the process can be automatic (That is until it is not – more on that later). And the delivery of these documents is automatic as well.The challenge is that these documents are unstructured, nonstandard and incomplete. And they are sent as one week “snapshots”. Another note of caution: Almost always there is no way to get history prior to turning on the document.Because the EDI Point of Sales standard allows for a wide degree of variability - and because the POS documents do not contain all the information needed for retail sales analysis - there is no easy mapping or translation. Rather the process involves scrubbing, synthesizing as well as adding business rules, proprietary formulas and algorithms. And the nature of this data is highly dynamic, so the parsing framework must be amenable to change.Because EDI 852 files are so large, the code for these parsers must also be highly efficient and should run on very fast hardware.Our approach has been to first run the EDI 852 documents through a pre-parser, as the data files we receive often contain multiple 852’s, or 852’s and 856’s or even other data. Then we use various parsers to scrub POS, store lists, item description files and other relevant data sets and upload them to their separate tables. All in all this involves hundreds of stored procedures and computer programs coded over several people-years that are constantly updated.We have learned that there are many variables we need to be close to: change in layout, incomplete layout, unrecognized characters that cannot be handled, error checking and handling of even minor discrepancies. There are times we need to reprocess data. We even reformat data such as item files for more efficient and effective import. Mid-week we might discover a retailer miss-sent data. Or mid-season a retailer changes the EDI format. We also run periodic validation.BAR CODING    Bar Coding is a series of parallel vertical lines (bars and space), that can be read by bar code scanners. It is used worldwide as part of product packages, as price tags, carton labels, on invoices even in credit card bills and when it is read by scanners, a wealth of data is made available at the users and when use withGS1.UCC (Global India one Numbering Uniform Code Council Inc. USA) numbering system. The bar code become unique and universal and can be recognized anywhere in the world. Bar coding is an international concept today. It facilitates unique product identification through using international symbologies/numbering system, promotes brand image and would enable timely and accurate capture of product information. This would result in wide ranging benefits including lowering of inventory costs, lower overall supply chain costs and hence reduced costs for Indian products, increasing efficiency of Indian industry and adherence to stringent quality assurance norms through product traceability. For Micro

and Small manufacturing enterprise which have resource constraints but need to compete for global and domestic business opportunities with larger adoption of IT tools to enhance their efficiency and productivity, market accessibility and cost effectiveness is a business imperative today. Bar coding has been in use extensively for the past 25 years worldwide and is now finding increase usage as well across industry sector. Recognized the importance of bar coding O/o DC (MSME), Ministry of Micro, Small and Medium Enterprises, Govt. of India has notified an attractive financial assistance scheme for registered Micro and Small manufacturing enterprise vide their notification No.10 (6)/2000-EP&M dt.27th Nov., 2001 for adoption of international numbering systems in bar coding and E-commerce applications w.e.f. Ist January 2002. As per the scheme Micro and Small manufacturing enterprise, who have adopted bar code on or after Ist  January, 2002 are now eligible to get the financial assistance 75% (upto Rs.18,750/-) of the one time registration fee paid to GS1 India. Further, it was also decided that SSI/tiny units who got registered for bar coding during the previous year i.e. on or after 01.1.01 will also be eligible for reimbursement of 75% of their one time registration fee. The scope of the present scheme has been enhanced w.e.f. 1st June 2007. Accordingly, it has been decided that 75% (Rs. 3750/-) of the annual fee (recurring) for GS1 company prefix by GS1 India for adoption of bar code certification for the first three years would also be reimbursed to Micro and Small entrepreneurs, in addition to reimbursement of one time registration fee as charged by GS1 (formerly EAN India)  

Section 1.08                        Answer No.3 (b) Lower-Cost, Broad-Target StrategyThe lower-cost, broad-target strategy is the business strategy most commonly associated with large retail chains such as grocery stores and department retailers. Businesses adopting this strategy strive to set their place in the market as the lowest-cost producer or distributor of a given product or class of products. The broad-target aspect of the strategy means the business offers a wide range of products, attempting to tap into the largest possible customer base. These businesses obtain preferential access to products in the form of discounted bulk purchasing. The downside to this strategy is that when two companies are using this model, a price war ensues, diminishing profits for both lower-cost, broad-target businesses.

Section 1.09     Lower-Cost, Narrow-Target StrategyThe lower-cost, narrow-target strategy is typically found in genre-specific retailers. These retailers use the same bulk-purchasing and cost-reduction technique as larger generalist stores, but focus their inventory selection and marketing efforts on a more specialized market segment. A store focusing exclusively on audio and video equipment would be an example of a lower-cost, narrow-target strategy endeavor. The chief advantage of this strategy is it makes the business a premier destination

for obtaining goods of that particular category, but at the cost of excluding all other types of business.

Section 1.10     Broad-Target, Differentiation StrategyA broad-target, differentiation strategy focuses on building brand power and prestige for the company and its broadly appealing product lines. An example of a business using a broad-target differentiation strategy could be a designer electronics store specializing in a single brand name. The marketing focus and differentiation aspect of the company is placed on the uniquely valued attributes on which the retailer places special emphasis when compared with the broader competition. Some businesses using a broad-target differentiation strategy focus on the aesthetic qualities of their product, while others focus on performance and engineering.

Section 1.11     Narrow-Target, Differentiation StrategyA narrow-target, differentiation strategy also focuses on building brand prestige, but taps a more select niche of the overall market. An example of a narrow-target, differentiation strategy-based business would be a premium handcrafted furniture showroom or a premium-quality jewelery store. This business model focuses on building a small base of elite clientele to whom they offer the best available products in their given specialization. The chief advantage to a narrow-strategy business is that it can command the highest prices, and therefore often the highest markup in its niche. The downside is a smaller, more defined customer base. A major economic shift in a region, such as a recession or natural disaster, can cause great difficulty for narrow-target, differentiation strategy-based businesses, as such hardships might neutralize demand for their premium goods.

Question No.4: Discuss the various approaches used to determine the quality of the product/services

Answer No.4: 1. Different understandings of qualityMany sectors have debated how to define quality.  A commonly quoted remark in discussions about quality is: ―Quality…you know what it is, yet you don‘t know what it is (Pirsig, 1974). Another common quote is: ―Some things are better than others; that is, they have more quality. But when you try to say what the quality is, apart from the things that have it, it all goes poof.Chambers dictionary defines quality both as grade of goodness and as excellence. This indicates the ambiguity in its meaning: namely, that it can mean both good’ and how good‘. Similarly, among other things, Webster’s dictionary describes quality, as a degree of excellence and superiority in kind. The Oxford English Dictionary (OED) gives similar definitions the ―degree of excellence of a thing, general excellence‖ and of high quality. ‗Degree of excellence’ implies that you can talk about something of good quality or poor in quality. The other definitions imply

that ‗quality’ itself means excellence (as in quality product’ or ‗their work has quality‘). Such ambiguity leads to many interpretations.It is therefore necessary to describe what is meant by the term in any particular context.Historically, the concept of quality assurance evolved from the manufacturing sector(OED, 2006). In this sector, quality is about minimizing variability and ensuring thatManufactured products conform to clear specifications. The essence of this concern isThat customers could expect the product to perform reliably. Quality therefore means zero defects‘. While manufacturing companies focus on controlling product variability, service businesses have a more comprehensive view of quality. They are concerned not only with minimizing defects, but also with managing emotions, expectations and experiences. Service businesses are now shifting the focus from ‗zero defects‘in products to zero defections‘of customers. In the service view of quality, businesses must recognize that specifications are not just set by a manufacturer who tells the consumer what to expect. Instead, consumers may also participate in setting specifications. Here, quality means consumer satisfaction’. In software and information products, the concept of quality usually incorporates both the conformity and service views of quality. On the one hand, there are a basic set of features that must always work. On the other hand, when customers have problems using a software package, they define quality according to the technical support they experience. The idea of quality in software products has yet another dimension. Software users expect a continuous stream of novel features: upgrades; high performance and reliability; and ease of installation, use and maintenance. Their perception of quality consists of a synthesis of conformity, adaptability, innovation and continuous improvement. In many MODULE 4: Understanding and assessing quality10ways, this is the way quality is perceived in higher education – as a synthesis of a range of expectations of many stakeholders.Quality as exceptionality This is the more traditional concept of quality. It is associated with the notion of providing a product or service that is distinctive and special, and which confers status on the owner or user. In higher education, an institution that demonstrates exceptionally high standards is seen as a quality institution.This approach may be applicable for ‗excellence awards‘or to identify a very few high-level institutions. But it poses a practical problem for QA agencies. A QA agency may commend institutions that demonstrate exceptional standards. However, it is not possible for the agency to condemn all other institutions. That would not serve accountability or self improvement purposes. Therefore, a ‗quality as exceptionality’ approach is not generally in vogue among QA agencies. However, there may be areas in higher education where this approach is necessary. This could include, for example, evaluating doctoral programmes or cutting-edge research. There may even be some institutions within a system which choose to be assessed against criteria of excellence (such as flagship universities). Thus, while it cannot be used across the higher education system, excellence cannot be dismissed as one of the ways in which

quality is defined. Quality as conformance to standards This view has its origins in the quality control approach of the manufacturing industry. Here, the word ‗standard‘is used to indicate pre-determined specifications or expectations. As long as an institution meets the pre-determined standards, it can be considered a quality institution fit for a particular status. MODULE 4: Understanding and assessing quality11 This is the approach followed by most regulatory bodies for ensuring that institutions or programmes meet certain threshold levels. Conformity to standards may result in approval to start programmes or recognition for a particular status or funding depending on the context. Of course, the issue of standards becomes crucial here. Sometimes they are defined in a formal way. This could be, for example, the number of full-time professors, the percentage of them with final degrees, or the number of articles published per full-time equivalent (FTE) faculty member. While this makes assessment fairly easy, it may also make it irrelevant. Indeed, it is usually possible to comply with formal requirements without paying attention to the substantive issues they are meant to safeguard. Quality as fitness for purpose This approach is based on the view that quality has no meaning except in relation to the purpose of the product or service. Obviously one does not need a super computer to do basic multiplications. What may be considered a quality system for basic computation is different from what is required for scientific experiments. However, this approach begs the questions: Who will determine the purpose?‘ and What are appropriate purposes?‘. The answers to these questions depend on the context in which quality is viewed. The purposes may be determined by the institution itself, by the government, or by a group of stakeholders. Quality as effectiveness in achieving institutional goals This is one version of the ‗fitness-for–purpose‘approach mentioned above, in which the purposes are determined by the institution. In this approach, a high quality institution is one that clearly states its mission (purpose) and is efficient in achieving it. This approach may raise issues such as the way in which the institution might set its goals (high, moderate or low), and how appropriate those goals could be. Quality as meeting customers’ stated or implied needsThis is also a variation of the fitness-for-purpose approach. This is where the purpose iscustomer needs and satisfaction. The issue here is whether customer satisfaction can be equated with what is good for the customer. Are needs‘the same as `wants‘? In higher education, this would mean that what students want may not be the same as what is actually good for them.  It is more reliable to consider different groups such asgovernment, students and parents in determining ‗customer needs‘and ‗customersatisfaction‘, rather than a single category of customers, such as students. Phrases or notions such as ‗value for money‘, ‗added value‘and ‗transformative process‘are also used to define quality in higher education. In the ‗value for money‘point of view, something has quality when it meets the expectations of consumers in relation to the amount they pay for it. Quality therefore corresponds to the satisfaction of consumers. These

consumers may be students (who are direct consumers and invest their active time in learning), parents (who pay for the educational services of their children) or the government (that sets national policies and invests public money for educational services). From the ‗added value‘point of view, an institution that enables a student to enhance his/her knowledge, competence and employability is seen as successful in its efforts and therefore in generating quality. The transformative process considers how higher education plays a role in developing a variety of generic competences in students, apart from providing them with a body of academic knowledge.While Harvey and Green (1993) and Green (1994) have explored and differentiated every possible definition of quality, there has been criticism that the ramifications of so many MODULE 4: Understanding and assessing quality 12definitions of the term might be unhelpful. For example, the transformation‘, value added‘, and value for money‘definitions of quality prompt criticism that they are all characteristics ‗expected as outcomes‘of processes. If one does not pay attention to what is expected‘, the definitions will coil back, rendering them meaningless. It is here that fitness for purpose‘ FFP is seen by some quality assurance experts as a meaningful way of defining quality. Box 1 explains how quality viewed as  FFP  can embrace all thedefinitions described above.

Question No5: What is EOQ? Explain EOQ model of inventory and state its assumptions

Answer No.5: Economic Order Quantity (EOQ):

Learning Objective:1. Definite and explain economic order quantity (EOQ).2. How is economic order quantity (EOQ) calculated?1. Definition of EOQ2. Formula3. Example:

Section 1.12     Definition and Explanation:

Economic order quantity (EOQ) is that size of the order which gives maximum economy in purchasing any material and ultimately contributes towards maintaining the materials at the optimum level and at the minimum cost.In other words, theeconomic order quantity (EOQ) is the amount of inventory to be ordered atone time for purposes of minimizing annual inventory cost.The quantity to order at a given time must be determined by balancing two factors: (1) the cost of possessing or carrying materials and (2) the cost of acquiring or ordering materials. Purchasing larger quantities may decrease the unit cost of acquisition, but this saving may not be more than offset by the cost of carrying materials in stock for a longer period of time.The carrying cost of inventory may include:Interest on investment of working capital

Property tax and insuranceStorage cost, handling costDeterioration and shrinkage of stocksObsolescence of stocks.

Section 1.13     Formula of Economic Order Quantity (EOQ):

The different formulas have been developed for the calculation of economic order quantity (EOQ). The following formula is usually used for the calculation of EOQ.

A  =  Demand for the yearCp   =  Cost to place a single orderCh  =  Cost to hold one unit inventory for a year* = ×

Section 1.14     Example:

Pam runs a mail-order business for gym equipment.  Annual demand for the Trico Flexers is 16,000.  The annual holding cost per unit is $2.50 and the cost to place an order is $50. Calculateeconomic order quantity (EOQ)

(a)      Calculation:

Section 1.15     Underlying Assumptions of Economic Order Quantity:

1. The ordering cost is constant.2. The rate of demand is constant3. The lead time is fixed4. The purchase price of the item is constant i.e no discount is available5. The replenishment is made instantaneously; the whole batch is delivered

at once.

Question No.6 (a) What are the various descriptive statistics measures of central tendency(b) List the different types of failure in operations and describe the three main ways of measuring failure

Answer No.6 (a) Descriptive statistics are ways of summarizing large

sets of quantitative (numerical) information.  If you have a large number of measurements, the best thing you can do is to make a graph with all the possible scores along the bottom (x axis), and the number of times you came across that score recorded vertically (y axis) in the form of a bar.  But such a graph is just plain hard to do statistical analyses with, so we have other, more numerical ways of summarizing the data.Here is a small set of data:  The grades for 15 students.  For our purposes, they range from 0 (failing) to 4 (an A), and go up in steps of .2.John -- 3.0Mary -- 2.8George -- 2.8Beth -- 2.4Sam -- 3.2Judy -- 2.8Fritz -- 1.8Kate -- 3.8Dave -- 2.6Jenny -- 3.4Mike -- 2.4Sue -- 4.0Don -- 3.4Ellen -- 3.2Orville -- 2.2Here is the information in bar graph form:

Central tendencyCentral tendency refers to the idea that there is one number that best summarizes the entire set of measurements, a number that is in some way "central" to the set.The mode.  The mode is the measurement that has the greatest frequency, the one you found the most of.  Although it isn't used that much, it is useful when differences are rare or when the differences are non numerical.  The prototypical example of something is usually the mode.The mode for our example is 3.2.  It is the grade with the most people (3).The median.  The median is the number at which half your measurements are more than that number and half are less than that number.  The median is actually a better measure of centrality than the mean if your data are skewed, meaning lopsided.  If, for example, you have a dozen ordinary folks and one millionaire, the distribution of their wealth would be lopsided towards the ordinary people, and the millionaire would be an outlier, or highly deviant member of the group. 

The millionaire would influence the mean a great deal, making it seem like all the members of the group are doing quite well.  The median would actually be closer to the mean of all the people other than the millionaire.The median for our example is 3.0.  Half the people scored lower, and half higher (and one exactly).The mean.  The mean is just the average. It is the sum of all your measurements, divided by the number of measurements.  This is the most used measure of central tendency, because of its mathematical qualities.  It works best if the data is distributed very evenly across the range, or is distributed in the form of a normal or bell-shaped curve (see below).  One interesting thing about the mean is that it represents the expected value if the distribution of measurements were random!  Here is what the formula looks like:

So 3.0 + 2.8 + 2.8 + 2.4 + 3.2 + 2.8 + 1.8 + 3.8 + 2.6 + 3.4 + 2.4 + 4.0 + 3.4 + 3.2 + 3.2 is 43.8.  Divide that by 15 and that is the mean or average for our example: 2.92.

Statistical dispersionDispersion refers to the idea that there is a second number which tells us how "spread out" all the measurements are from that central number.The range.  The range is the measure from the smallest measurement to the largest one.  This is the simplest measure of statistical dispersion or "spread."The range for our example is 2.2, the distance from the lowest score, 1.8, to the highest, 4.0.Inter quartile range.  A slightly more sophisticated measure is the inter quartile range.  If you divide the data into quartiles, meaning that one fourth of the measurements are in quartile 1, one fourth in 2, one fourth in 3, and one fourth in 4, you will get a number that divides 1 and 2 and a number that divides 3 and 4.  You then measure the distance between those two numbers, which therefore contains half of the data.  Notice that the number between quartile 2 and 3 is the median!The inter quartile range for example is .9, because the quartiles divide roughly at 2.45 and 3.35.  The reason for the odd dividing lines is because there are 15 pieces of data, which, of course, cannot be neatly divided into quartiles!The standard deviation.  The standard deviation is the "average" degree to which scores deviate from the mean.  More precisely, you measure how far all your measurements are from the mean, square each one, and add them all up.  The result is called the variance.  Take the square root of the variance, and you have the standard deviation.  Like the mean, it is the "expected value" of how far the scores deviate from the mean.  Here is what the formula looks like:

So, subtract the mean from each score and square them and sum:  5.1321.  Then divide by 15 and take the square root and you have the standard deviation for our example:  .5849....  One standard deviation above the mean is at about 3.5; one standard deviation below is at about 2.3.

The normal curveAt its simplest, the central tendency and the measure of dispersion describe a rectangle that is a summary of the set of data.  On a more sophisticated level, these measures describe a curve, such as the normal curve, that contains the data most efficiently.This curve, also called the bell-shaped curve, represents a distribution that reflects certain probabilistic events when extended to an infinite number of measurements.  It is an idealized version of what happens in many large sets of measurements:  Most measurements fall in the middle, and fewer fall at points farther away from the middle.  A simple example is height:  Very few people are below 3 feet tall; very few are over 8 feet tall; most of us are somewhere between 5 and 6.  The same applies to weight, IQs, and SATs!  In the normal curve,  the mean, median, and mode are all the same.

One standard deviation below the mean contains 34.1% of the measures, as does one standard deviation above the mean.  From one to two below contains 13.6%, as does from one to two above.  From two to three standard deviations contains 2.1% on each end.  An other way to look at it:  Between one standard deviation below and above, we have 68% of the data; from two below to two above, we have 95%; from three below to three above, we have 99.7%Because of its mathematical properties, especially its close ties to probability theory, the normal curve is often used in statistics, with the assumption that the mean and standard deviation of a set of measurements define the distribution.  Hopefully, it is obvious that this is not at all true for nearly all cases.  The best representation of your measurements is a diagram which includes all the measurements, not just their mean and standard deviation!  Our example above is a clear example - a normal curve with a mean of 2.92 and a standard deviation

of .58 is quite different from the pattern of the original data.  A good real life example is IQ and intelligence:  IQ tests are intentionally scored in such a way that they generate a normal curve, and because IQ tests are what we use to measure intelligence, we often assume that intelligence is normally distributed, which is not at all necessarily true!(b) List the different types of failure in operations and describe the three main ways of measuring failure

1. You start your business for the wrong reasons.Would the sole reason you would be starting your own business be that you would want to make a lot of money? Do you think that if you had your own business that you'd have more time with your family? Or maybe that you wouldn't have to answer to anyone else? If so, you'd better think again.

On the other hand, if you start your business for these reasons, you'll have a better chance at entrepreneurial success:

                       You have a passion and love for what you'll be doing, and strongly believe -- based on educated study and investigation -- that your product or service would fulfill a real need in the marketplace.

                       You are physically fit and possess the needed mental stamina to withstand potential challenges. Often overlooked, less-than-robust health has been responsible for more than a few bankruptcies.

                       You have drive, determination, patience and a positive attitude. When others throw in the towel, you are more determined than ever.

                       Failures don't defeat you. You learn from your mistakes, and use these lessons to succeed the next time around. Head, SBA economist, noted that studies of successful business owners showed they attributed much of their success to "building on earlier failures;" on using failures as a "learning process."

                       You thrive on independence, and are skilled at taking charge when a creative or intelligent solution is needed. This is especially important when under strict time constraints.

                       You like -- if not love -- your fellow man, and show this in your honesty, integrity, and interactions with others. You get along with and can deal with all different types of individuals.2. Poor ManagementMany a report on business failures cites poor management as the number one reason for failure. New business owners frequently lack relevant business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Unless they recognize what they don't do well, and seek help, business owners may soon face disaster. They must also be educated and alert to fraud, and put into place measures to avoid it.

Neglect of a business can also be its downfall. Care must be taken to regularly study, organize, plan and control all activities of its operations. This includes the continuing study of market research and customer data, an area which may be more prone to disregard once a business

has been established.

A successful manager is also a good leader who creates a work climate that encourages productivity. He or she has a skill at hiring competent people, training them and is able to delegate. A good leader is also skilled at strategic thinking, able to make a vision a reality, and able to confront change, make transitions, and envision new possibilities for the future.

3. Insufficient CapitalA common fatal mistake for many failed businesses is having insufficient operating funds. Business owners underestimate how much money is needed and they are forced to close before they even have had a fair chance to succeed. They also may have an unrealistic expectation of incoming revenues from sales.

It is imperative to ascertain how much money your business will require; not only the costs of starting, but the costs of staying in business. It is important to take into consideration that many businesses take a year or two to get going. This means you will need enough funds to cover all costs until sales can eventually pay for these costs.  This business startup calculator will help you predict how much money you'll need to launch your business.

4. Location, Location, LocationYour college professor was right -- location is critical to the success of your business. Whereas a good business location may enable a struggling business to ultimately survive and thrive, a bad location could spell disaster to even the best-managed enterprise.

Some factors to consider:

                       Where your customers are                       Traffic, accessibility, parking and lighting                       Location of competitors                       Condition and safety of building                       Local incentive programs for business start-ups in specific targeted

areas                       The history, community flavor and receptiveness to a new business

at a prospective site5. Lack of PlanningAnyone who has ever been in charge of a successful major event knows that were it not for their careful, methodical, strategic planning -- and hard work -- success would not have followed. The same could be said of most business successes.

It is critical for all businesses to have a business plan. Many small businesses fail because of fundamental shortcomings in their business planning. It must be realistic and based on accurate, current information and educated projections for the future.

Components may include:

                       Description of the business, vision, goals, and keys to success

                       Work force needs                       Potential problems and solutions                       Financial: capital equipment and supply list, balance sheet, income

statement and cash flow analysis, sales and expense forecast                       Analysis of competition                       Marketing, advertising and promotional activities                       Budgeting and managing company growth

In addition, most bankers request a business plan if you are seeking to secure addition capital for your company.

6. OverexpansionA leading cause of business failure, overexpansion often happens when business owners confuse success with how fast they can expand their business. A focus on slow and steady growth is optimum. Many a bankruptcy has been caused by rapidly expanding companies.

At the same time, you do not want to repress growth. Once you have an established solid customer base and a good cash flow, let your success help you set the right measured pace. Some indications that an expansion may be warranted include the inability to fill customer needs in a timely basis, and employees having difficulty keeping up with production demands.

If expansion is warranted after careful review, research and analysis, identify what and who you need to add in order for your business to grow. Then with the right systems and people in place, you can focus on the growth of your business, not on doing everything in it yourself.

7. No WebsiteSimply put, if you have a business today, you need a website. Period.

In the U.S. alone, the number of internet users (approximately 77 percent of the population) and e-commerce sales ($165.4 billion in 2010, according to the US Department of Commerce) continue to rise and are expected to increase with each passing year. 

At the very least, every business should have a professional looking and well-designed website that enables users to easily find out about their business and how to avail themselves of their products and services. Later, additional ways to generate revenue on the website can be added; i.e., selling ad space, drop-shipping products, or recommending affiliate products.

Remember, if you don't have a website, you'll most likely be losing business to those that do. And make sure that website makes your business look good, not bad -- you want to increase revenues, not decrease them.

When it comes to the success of any new business, you -- the business owner -- are ultimately the "secret" to your success. For many successful business owners, failure was never an option. Armed with drive, determination, and a positive mindset, these individuals view any setback as only an opportunity to learn and grow. Most self-made millionaires

possess average intelligence. What sets them apart is their openness to new knowledge and their willingness to learn whatever it takes to succeed.

Posted 12th August 2012 by dinesh  

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AUG

12

OPERATION III SEMESTER

Question No.1 Explain different modes of discharge of contracts.Answer No.3: Different Modes of Discharge of Contracts (Secs.73-75)A contract may be discharged by (i) performance, (ii) tender; (iii) mutual consent; (iv) subsequent impossibility; (v) operation of law; (vi) breach.Discharge of contracts by performance or tenderThe obvious mode of discharge of a contract is by performances that is where the parties have done whatever was contemplated underThe contract, the contract comes to an end. Thus, where A contracts to sell his car to B for Rs 1,85,000, as soon as the car is delivered to B and Bpays the agreed price for it, the contract comes to an end by performance. The tender or offer of performance has the same effect as performance. If a promisor tenders performance of his promise but the other party refuses to accept, the promisor stands discharged of his obligations.Meaning of mutual consent (Sec.62)If the parties to a contract agree to substitute a new contract for it, or to rescind it or alter it, the original contract is discharged. A contract may terminate by mutual consent in any of the six ways viz. novation, rescission, alteration and remission, waiver and merger. Novation means substitution of a new contract for the original one.Discharge of contracts by impossibility of performanceA contract may be discharged because of impossibility of performance. There are two types of impossibility: (i) Impossibility may be inherent in the transaction (i.e., the contract), (ii) Impossibility may emerge later by the change of certain circumstances material to the contract.Discharge of a contract by operation of lawDischarge by operation of law may take place in four ways: (i) By death. Death of the promisor results in termination of the contract in

cases involving personal skill or ability. (ii) By insolvency. The insolvency law provides for discharge of contracts under certain circumstances so where an order of discharge is passed by an insolvency court the insolvent stands discharged of all debts incurred previous to his adjudication. (iii) By merger.Discharge of contracts by breachA breach of contract is one party’s failure, without a legal excuse, to live up to any of its promises under a contract. A contract terminates by breach of contract. If the promisor has not performed his promise in accordance with the terms of the contract or where the performance is not excused by tender, mutual consent or impossibility or operation of law, then this amounts to a breach of contract on the part of the promisor. The consequence of this is that the promisee becomes entitled to certain remedies. The breach of contract may arise in two ways:(i) Anticipatory and (ii) actual.Anticipatory breach of contracts: The anticipatory breach of contract occurs when a party repudiates it before the time fixed for performance has arrived or when a party by his own act disables himself from performing the contract.Actual breach of contracts: The actual breach can occur by (i) failure to perform as promised, (ii) making it impossible for the other party to perform. The failure to perform means that one party must not have performed a material part of the contract by a stated deadline. The actual breach by failure to perform may take place (a) at the time when performance is due, or (b) during the performance of the contract. Thus, if a person does not perform his part of the contract at the stipulated time, he will be liable for its breach.Question No.2: Distinguish between a contact of a guarantee and a contract of indemnity.Answer No.2: CONTRACT OF INDEMNITY  1 There are two parties to  the  contract  viz. the indemnifier   and  the indemnified2 The liability of the indemnifier to the indemnified is primary  CONTRACT OF GUARANTEE 1 There  are three parties to the contract viz. the creditor, the principal debtor and the surety.2  The liability of the surety to the creditor is collateral  or secondary the primary liability being that of the principal debtor Unlike contract of indemnity where indemnifier is liable for indemnified in a contract of guarantee the liability of the surety is co-extensive with that of principal debtor and the creditor can proceed with principal debtor and surety simultaneously. Even the creditor with notice to principal debtor can

recover the dues from surety first .But the surety will have a legal  right to recover the monies he paid to creditor from the principal debtor Contract of indemnity1) there are 2 parties indemnifier and indemnity holder..2)there is 1 contract b\w indemnifier and indemnified..3)The nature of liability of indemnifier is primary and independent...4)in a contract of indemnity, the indemnifier promises without the request of debtor..5)A contract of indemnify is for reimbursement.. Contract of Guarantee.........1)there are 3 parties Creditor, Principal Debtor And Surety..2)there are 3 contracts B\W creditor and principal, principal and surety, surety and creditor.3)Liability of surety is Secondary....4)contract of Guarantee is for security of a debt or performance of promise... CONTRACT OF INDEMNITY  1)Section 124 of the Indian Contract Act 1872 defines a "contract of indemnity" as a contract by which one party promises to save the other from loss caused to him by theconduct of the Promisor himself, or by the conduct of any other person.e.g = 'x' contracts to indemnify 'y' against the consequences of any legal proceedings which c may take against B in respect of a certain sum of Rs.200/=. 2  There are two parties to  the  contract  viz.  the indemnifier   and  the indemnity holder3 The liability of the indemnifier is primary4 In the Contract of indemnity the liability of the indemnifier  arises only on the happening of the contingency.5 In the contract of indemnity the loss falls on the indemnifier  except in certain special cases.6 There is only one contract in case of contract of indemnity i.e, b/w the indemnifier and indemnity holder.  CONTRACT OF GUARANTEE 1  Section 126 of the Indian Contract Act 1872 defines a contract of guarantee is a contract to perform the promiseor discharge the liability of a third person in case of his default”. The person who gives the guarantee is called the “surety”; the person in respect of whose default the guarantee is given is called the “principal debtor”, and the person to whom the guarantee is given is called the “creditor”. A guarantee may be either oral or written. e.g, 'P' lends Rs. 5000/= to 'Q' and 'R' promises to 'P' that if 'Q' does not pay the money back then 'R' will do so. 2 There  are three parties to the contract viz. the creditor, the principal

debtor and the surety.3 The liability of the surety to the creditor is secondary i.e, the surety is liable only if the principal debtor fails to perform his obligation.4 In a contract of guarantee there is an existing debts or duty, the performance of which is guaranteed by the surety.5 In the contract of guarantee the surety , after discharges the debts owing to the creditor, can proceed against the principal debtor.6 In case of contract of guarantee there are three contracts. a) contract b/w the principal debtor  and the creditor.b) contract b/w the creditor and the surety.c) contract b/w the surety  and the principal debtor.

Indemnity means a promise to save a person harmless from the consequences of an act or to compensate. According Section 124 of the Indian Contract Act, 1872 contract of Indemnity state that the contract by which one party agree to save the other from the loss caused by him by the conduct of promissor himself. It is a bilateral contract whereas  Guarantee section 126 of the Indian Contract Act, 1872 state the contract of guarantee mean a contract to perform the promise or discharge. these are concurrence of three contracts.

THE words "guarantee" and "indemnity" are commonly used. These words are frequently encountered in hire purchase and loan agreements and in many other transactions. However, what these words mean is not always a matter of immediate concern.

When getting a bank loan, a person is often asked to provide a guarantee. Similarly those who obtain other facilities or scholarships have to provide guarantors. Sometimes the word "indemnity" is also added on in the document and one tends to think that it probably has something to do with the guarantee.

But a guarantee and indemnity do not mean the same thing. In its wider sense a contract of indemnity could include a contract of guarantee. However, beyond that a contract of indemnity certainly differs from a contract of guarantee. What is the difference?

As stated by Holroyd Pearce L.J. in Yeoman Credit Ltd vs Latter, an indemnity is a contract by one party to keep the other harmless against loss but a contract of guarantee is a contract to answer for the debt default or miscarriage of another who is to be primarily liable to the promise.

The concept of an indemnity and guarantee is reflected in our law as contained in the Contracts Act 1950. Section 77 states that: "A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity."

On the other hand, a contract of guarantee "is a contract to perform the promise, or discharge the liability of a third person in case of his default. The person who gives the guarantee is called the surety, the person in respect of whose default the guarantee is given is called the principal debtor, and the person to whom the guarantee is given is called the creditor. A guarantee may be either oral or written."

According to the Contracts Act, it would appear that a guarantee can be oral. However, the provision on indemnity is silent on this aspect. Does it mean that an indemnity must be in writing? It could be argued that an indemnity could be oral too.

In a guarantee the liability arises at the point of time when the principal borrower or debtor defaults on his obligation. Where there is liability even though there is no default or breach by the principal debtor, it is not a contract of guarantee.

This difference is explained by Lopez L.J. in Guild & Co vs Conrad, an English decision of the Court of Appeal, where it is stated that a promise to be liable for a debt conditionally on the principal debtor making default is a guarantee. On the other hand, a promise to become liable for a debt whenever the person to whom the promise is made should become liable, is a different matter to be viewed separately. The essence of the matter is that there is a difference between a promise to pay the creditor if the debtor defaults on payment as compared to a promise to make payment irrespective of any default by anybody so long as the recovery of the money is unsuccessful.

In many jurisdictions, the words "guarantee" and "indemnity" are used interchangeably as if they mean the same thing, but the difference is in the fact that in a guarantee one agrees to assume responsibility for the obligation or debt of another if that other person defaults. However, in the case of an indemnity, one assumes a direct and primary obligation on the basis more of the occurrence of an event rather than a default.

In a contract of indemnity not only is there no requirement for a default by a third party as a condition of liability but there may not even be a third party involved for either the creation or exercise of the right.

By way of illustration, an insurance contract is an indemnity contract. A person who buys an insurance policy insures his property against damage. If and when the damage occurs, the insured is entitled to call upon the insurer to pay him. Of course, there may be conditions as to what can be claimed. The question of default does not arise.

Another example is where a dealer enters into an agreement to provide an item which is not  essential to an infant. He may ask for an indemnity if the infant does not pay. This is because if the infant does not pay he cannot be said to be in breach because the agreement will not be enforceable at all.

However, if a third party has agreed to indemnify the dealer for the loss, the indemnity will prevail and a person who has undertaken such an obligation will have to pay. But there is no breach or default by the infant. On the other hand, if in such a situation the third party had signed a guarantee, it would not be enforceable.

Thus a guarantee involves a default by a third party whilst an indemnity arises on the occurrence of an event. And whether a document is a guarantee or indemnity will depend on its contents and not on the title given to the document.

Question NO.3: Briefly state special features of a partnership on the basis of which its existence can be determined under the Indian Partnership Act?

Answer No.3:

DefinitionA Partnership is defined by the Indian Partnership Act, 1932, as “the relations between persons who have agreed to share profits of the business carried on by all are any of them acting for all”. This Definition gives three minimum requirements to constitute a Partnership, viz:There must be an agreement entered into orally or in writing by the persons who desire to form a Partnership,The object of the agreement must be to share the profits of business intended to be carried on by the Partnership, andThe business must be carried on by all the partners or any of them acting for all of them.Agreement of PartnershipA Partnership is constructed by an agreement between the partners. The agreement may be in writing or oral. But from the practical point of view and particularly in view of the provisions of other Acts such as the Income Tax as well as Partnership Act an oral Partnership is not practicable, and therefore, a Partnership agreement is necessarily required to be in writing. Therefore, the mere fact that two persons as joint owners either as heirs or legatees are carrying on a business does not necessarily mean that they are partners and it they want to carry on the business in Partnership, then a Partnership agreement in writing becomes necessary.

Period of PartnershipA Partnership can be for a fixed period of time or it may be limited to a particular adventure as provided in Section 8 or it may be for duration at the will of the partners. Where the period of the Partnership is not fixed and the Partnership is not for a particular adventure then under Section 7 of the Act the Partnership shall be deemed to be a Partnership at will. 

Rights and duties of partners

Section 9 and 10 of the Act lay down the basic duties of every partner and the said duties are not subject to any contract on the contrary. Therefore, partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other and render accounts and full information of all things affecting the firm to any partner or his legal representative and every partner is bound to indemnify the firm for any loss caused to it by fraud in the conduct of the business of the firm.

Subject to this the mutual rights and duties of the partner may be decided by contract between the partner either express or implied.

Subject to any contrary to the contrary such duties and rights of each partner or provided in Sections 12 and 13 of the Partnership Act. They are:Every partner has a right to take part in the contact of the business,Every partner is bound to attend diligently to his duties in the contact of business,Any difference arising as to ordinary matters connected with the business may be decided by a majority of partner and no change in the nature of the business shall be made without the consent of all the partners,Every partner has as a right to have assess to and to inspect and copy any books of the firm,A partner is not entitled to receive remuneration for taking part in the conduct of the business,The partners are entitled to share equally the profits earned and shall contribute equally to the losses sustained by the firm,Where the partners is entitled to interest on the capital subscribed by them, such interest shall be payable only out of the profits,A partner making, for the purpose of the business, any payment or advance being the amount of capital he has agreed to subscribed, is entitled to interest thereon at the rate of 6% P.A,The firm shall indemnify a partner in respect of payment made and liabilities incurred by them,in the ordinary and proper course of conduct of the business andin doing such act in an emergency, for the purpose of protecting the firm from any loss, as would be done by a person of ordinary prudence, under similar circumstancesThe partners shall indemnify the firm from any loss caused due to his willful neglect in the conduct of the business of the firm. This rights and duties will be implied in the Partnership, unless the Partnership agreement provides to the contrary i.e., makes any variation in the said rights and duties. Similarly, subject to a contract to the contrary, if any partners derives any profit for himself from any transaction of the firm or from the use of the property or business connection with the firm or the firm name is liable to contact for the benefit and pay it to the firm, and if the partner carries a business of the same nature as and competing with that of the firm, he shall account for and pay to the firm all profits made by him in that business.Property of Partnership

The property of a Partnership firm will consist of all the assets, movable and immovable brought in by any or all the partners into the firm and also include the goodwill. It may be stated that relaying upon the specific provision of Section 22 of the English Partnership Act, 1890, the Supreme Court has held that all the property of a Partnership firm, whether, movable or immovable is movable property, and therefore, on retirement of any partner or dissolution Partnership the division of even immovable property among the partners does not amount to transfer of property and the deed of retirement or dissolution does not require registration. The Supreme Court has not considered the law of vesting and divesting of interest in an immovable property. A property required by A by purchase or otherwise his vested in him and even if A brings that property into Partnership and it is used for the Partnership business, the property is not automatically divested from A and vests in A and his other partners. Vesting and divesting can take effect only by act of parties or by operation of law. And, therefore, the property brought in by A cannot become vested in the other partners unless there is a regular transfer of the property by A to himself and other partners. Similarly if possible vested in the partners is divided, among them, it amounts to transfer of one partner’s interest to the other, and such transfer is necessary to vest and divest the title from one to the other. Even in English law, in spite of the provisions of the Partnership act above referred to, to the countenancing practice is to affect the transfer of property brought in or taken out of the Partnership by a deed of conveyance. 

Capital of a firmA Partnership firm may or may not have any capital in the form of money or any other property. It is also not necessary that each partner must contribute to the capital of the firm if any. It is a matter of agreement between the parties by which they can regulate their relations and rights towards the capital. Capital of a firm is however different from the assets of a firm. Capital is the initial amount in cash or kind brought in by one or more or all partners to start the business. It is also distinct from the loan advanced by any partner. The propionate share of each partner in the capital may not also be the same or equal to their shares in the profits and losses of the firm. On dissolution the capital contributed by a partner is refundable to him subject to payment of all debts and liabilities [section 48 (b) (iii) of the act]. Therefore it is necessary to provide specifically about the capital contribution to be made by each partner. 

Retirement of a partnerUnder the Partnership Act no person can be admitted into Partnership without the consent of the other partner or partners unless there is any contrary to the contract (s. 31). Any partner may, with the consent of all the other partners or in terms of the deed of Partnership where the Partnership is at will, by giving notice in writing to all other partners, to that effect, dissolve the Partnership or retire from Partnership. A retiring partner, however, continues to be liable to third parties even if the liability is taken over by the remaining partners (S 32). Therefore in a deed of retirement it is necessary to provide that in the event of the retiring partner being held liable by a third party, the

remaining partners shall indemnify him to that extent, when the liabilities are taken over by the remaining partners. Insolvency of a partner also causes compulsory retirement of an insolvent partner (S. 35). It is, therefore, generally provided in a deed of Partnership when there are more than two partners that the insolvency of any partner will not dissolve the Partnership. If a partner retires, unless there is contract to the contrary, the retiring partner cannot use the firm name, represent himself as carrying on the business of the firm or solicit the customers of the Firm (S. 36). Therefore, in a deed of retirement it is generally not necessary to make explicit that the retiring partner shall not do any of these things. But, if he is to be restrained from carrying on similar business for a specified period or in a specified area, such condition can be provided in the deed of retirement and it is legal (S 36 (2).

DissolutionThe Act also provides that a Partnership firm may be dissolved under the following circumstances namely (a) as a result of any agreement between all the partners (b) by adjudication of all the partners or all partners but one as insolvent, or (c) by the happening of an event which makes it unlawful for the business of the firm to be carried on in Partnership or (d) subject to agreement between the parties, on the happening of any of the following events such as (i) efflux of time, (ii) completion of the adventure, (iii) death of a partner, and (iv) insolvency of a partner. In these last four cases the Partnership agreement may provide events. Even if the deed provides that the Partnership will not be dissolved on the death or insolvency of a partner, it does not mean that on the death or insolvency of a partner he ceases to have interest in the Partnership property. In such cases his interest in the Partnership property will survive to his heirs in case of his death and to his assignees in case of insolvency. In the absence of a term in the deed of Partnership to that effect, it cannot be that, the Partnership shall continue, and notwithstanding the death of a partner it will operate to extinguish his proprietary rights in the assets of the Firm. A Partnership can also be dissolved by the Court under the circumstances mentioned in Section 44 of the Act. Where the Partnership is ‘at will’ the Partnership can be dissolved by any partner or partners giving notice his/their intention to dissolve the firm. 

Types of PartnershipThe result of this summary of the Act is that a Partnership is generally created by agreement between the partners. A Partnership can be formed between (i) one or more individuals or (ii) between an individual and a person representing a H.U.F. or (iii) between an individual and other partner representing his firm, or between Limited Company or a Corporation and an Individual or Partnership firm. (iv) between two Partnership firms (v) or between a Limited Company or a Corporation and an individual or Partnership firm (vi) between a Partnership firm and H.U.F. (vii) between members of HUF in their individual and independent capacity (viii) between a HUF and a member of that HUF independently. 

Partnership under Companies Act

Section 11 of the Companies Act, 1956, provides that the number of partners in a firm shall not exceed 20, and a Partnership firm having more than 20 persons will be illegal. When there is Partnership firm between two firms all the partners of each firm will be taken into account for the purpose of these provisions but if a Partnership is between the Kartha or any member of HUF on the one hand and another individual or individuals on the other, the members of the joint family will not be taken into account. Applicant Hindu undivided family carrying on business as such, not being a Partnership the number of the members of the family are more than 20. But where two or more hindu Undivided Families are carrying on business in Partnership the number of the members of those families except minors will be taken into account for the purpose of section 11 of the Companies Act.

Partnership under Income Tax ActA Partnership to be recognized for the purpose of Income Tax liability of the partners and their firm is required to comply with certain provisions of the Income Tax Act. While therefore drafting a deed of Partnership the provisions of the Act are required to be taken into account.

Registration of PartnershipA Partnership firm is required to be registered under section 58 and 59 of the Partnership Act, though it is not compulsory. Every change in the constitution of a Partnership is also required to be registered. But if it is not registered, then there are certain handicaps stated in section 69 of the Act, the main handicap being that a Partnership firm or its partner cannot file a suit against a third party. For the purpose of Income tax benefits it is necessary to register a Partnership will the Department under S. 184 and 185 of the Income Tax Act, 1961. But once a firm is registered then it is not necessary to register it again if there is any change in the constitution of the firm by adding a partner or omission of a partner by death or resignation.

Limited PartnershipThe concept of limited Partnership is not recognized by Indian Law. It is prevalent inEngland and America and other countries. In England, the limited Partnership is governed by the Partnership Act of 1907. It consists of general partners who are the main partners with exclusive right of management and their liability is unlimited. But they can take any limited partner who contributes some capital to the firm and whose liability is limited to that amount provided he does not participate in the management or withdraw any part of the capital contributed by him during the term of the Partnership. However a limited Partnership is not a separate legal entity like a limited company. Generally a limited partner joins a firm to participate in a particular scheme or adventure of the firm. 

Stamp DutyOn a Deed of Partnership the stamp duty under the Indian Stamp Act is a fixed one. Article 45 of the Indian Partnership Act, Article 47 in Maharashtra and Article 44 in

Gujarat of Bombay Stamp Act speaks about duty payable for registration. The stamp duty is payable on a deed of retirement or a deed of dissolution under the same Articles. But in Maharashtra, and Gujarat if the deed of retirement or deed of dissolution affects any transfer of an immovable property, it will attract stamp duty as on a conveyance on the market value of the property.

RegistrationA Partnership deed is not required to be registered under the Registration Act even if an immoveable property is brought in the firm. Similarly, a deed of retirement or a deed of dissolution is not required to be registered. According to Supreme Court, a division of even immoveable properties on dissolution is not required to be registered as it does not amount to a transfer. The correctness of this view is doubtful and it is desirable to get such a deed of dissolution or retirement registered for the sake of caution or safety. 

Question No.4:  Distinguish between condition and warranty. State the circumstance under which a condition can be waived and treated as a warranty.Answer No.4: i. Meaning of Condition and Warranties

ii. Difference between Condition and Warranties

iii. Express and Implied Condition

iv. Implied Warranties

It is usual for a seller to make certain representations and statements in praise of his goods while selling goods to the buyer. For example, Dehra Duni Basmati Rice, Kashmiri Apples, etc. Some of the statements or representations made by the seller are considered essential and they go to the root of the contract. Where the statement of representation made by the seller is an assertion of fact, it is considered as a stipulation which forms part of the contract of sale. This stipulation in a contract of sale may be a condition or a warranty.

Conditions and Warranties:A stipulation in a contract of sale with reference to goods may be a condition or a warranty [Sec. 12(1)].

Condition:A condition is a stipulation which is essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated [Sec. 12(2)].

Thus, a condition is regarded as the very basis or foundation of the contract. If there is a breach of a condition, the contract will fail and it will

entitle the aggrieved party to put an end to the contract.

Example:B asked a car dealer to suggest him a suitable car for touring purposes. The dealer suggested to buy a "Buggatti" car. B accordingly purchased the car but found it unfit for the purpose. Held, the suitability of the car for touring purposes was so important that its non-fulfdment defeated the very purpose. Hence B could return the car and get back the price [Baldry v. Marshal.

Warranty:A warranty is a stipulation collateral to the main purpose of the contract. The breach of which gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated [Sec. 12(3)].

A warranty is not regarded as the very basis of a contract or its foundation. Hence a breach of warranty does not give the aggrieved party, a right to reject the goods and repudiate the contract. The party will have to accept the goods but can claim damages for breach of warranty.

It should be noted that whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract and vice-versa [Sec. 12(4)].

When a breach of condition is to be treated as a breach of warranty?

The law has provided two cases, one optional and the other compulsory.

(i) Optional or Voluntary Waiver:When a contract of sale is subject to any condition to be fulfilled by the seller, the buyer has the option to treat the breach of condition as a breach of warranty. In such a case, he may (a) waive the condition altogether, or (b) treat the breach of the condition as a breach of warranty and claim damages [Sec. 13(1)].

It should be noted that this option once exercised becomes final and the party later on cannot insist on the fulfillment of the condition.

(ii) Compulsory treatment of breach of condition as a breach of warranty [Sec. 13(2)]:Where a contract of sale is not severable and the buyer has accepted the goods or a part thereof, the breach of condition can only be treated as a breach of warranty and the goods cannot be rejected unless there is a term of the contract, express or implied, to that effect. The buyer cannot reject the goods but can only claim damages. Here law compulsorily

treats a breach of condition as a branch of warranty.

Example:Certain goods were sold by sample by A to B, who in turn sold them by sample to C. The goods were not found according to the sample. C rejected the goods and gave a notice to B. B sued A. Held, C could reject the goods but not B, as B had accepted the goods by selling them to C. Hence C can get the price back but B cannot get the refund. B can claim damages for a breach of condition as a breach of warranty [Hardy & Co. v. Hillerns and Fowler],

Express and Implied Conditions and Warranties:Express conditions and warranties are those which the parties agree expressly:Orally or in writing. For example, cash to be paid on delivery of goods, cash and carry, i.e., pay cash and take delivery of the goods immediately.

Implied conditions and warranties are those which are implied by the law in the absence of any agreement or the contrary. These are given in Sees. 14 to 17 discussed below:

Implied Conditions :1. Conditions as to title [Sec. 14(a)]:In a contract of sale, unless the circumstances of the contract are such as to show a "different intention, there is an implied condition on the part of the seller that:

(i) In the case of sale, the seller has a right to sell the goods, and

(ii) In the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.

The buyer is entitled to repudiate the contract if he finds that the title of the seller to the goods is defective.

Example:A purchased a motor car from B and used it for months. B had no title to the car. A had to return the car to the true owner. Held, A could get back the price as there was a breach of implied condition as to title [Rowland v. Divall].

It should be noted that the term right to sell implies that the seller has a right to pass property in the goods to the buyer. A person will be deemed to have no right to sell, if he infringes the right of a third party, i.e.,

infringement of a trade mark.

Example:A firm of confectioner's materials agreed to sell condensed milk in tins. The plaintiffs received the shipping documents and paid the price. The goods on arrival were found to be infringing the registered trade mark of another manufacturer. Consequently, the tins were detained by the custom authorities. Held, the seller was guilty of breach of implied condition as to title [Niblett v. Confectioner's Materials. Co. Ltd.

Effect of Acquiring Title Subsequent to Sale :It should be noted that where the seller had no title to the goods at the time of sale, subsequent acquisition of title to the goods by the seller will purge the defect of title of both the original as well as the subsequent buyers [Butterworth v. Kingsway Motors].

2. Condition as to description (Sec. 15):There is an implied condition that the goods shall correspond to description where they have been sold by description.

In Bowes v. Shand, the observations made by the learned judge are very interesting:

"If you contract to sell peas, you cannot oblige a party to take beans. If the description of the article rendered is different in any respect, it is not the article bargained for and the other party is not bound to take it."

Nature and Scope of Description :1. It should be noted that the description must be of a fact and not of mere option.

Example:A, while selling his horse to B, says that it is luck. This description of the horse is an opinion and does not give rise to any legal action. If on the other hand, A says his horse and claim back the price paid.

2. A manufacturer of goods is bound to supply the goods of his own make and not that of other manufactures, even if the goods are of the same quality [Jhonson v. Raylton.]

3. Where the seller has agreed to supply goods of a particular brand, the goods must bear that brand. The buyer is not bound to accept goods which do not bear the label, even though the goods of that brand have been made by the same manufacturer.

4. Packing of the goods must be according to description. If it is not so,

the buyer is entitled to reject the goods.

Example:There was a sale of canned fruits in cases containing thirty tins each. The whole quantity of goods was supplied. But nearly half the cases contained only 24 tins in place of 30 tins, as agreed. The buyer rejected the goods. Held, the buyer was entitled to reject the goods as they were not according to description [Re Moor & Co. Landaur & Co.]

5. The expression "contract for the sale of goods by description" applies to all cases where the buyer has not seen the goods, but solely relies on the description given by the seller.

Example:A second hand machine was sold. The buyer has not seen the machine but the seller described it as a new one. However, it was found to be very old. Held, the machine was not according to description [Varley v. Whipp].

6. It also applies to cases where the buyer has agreed that he will not reject the goods and the dispute shall be referred to arbitration.

Example:A buyer agreed to purchase certain quantity of goods with the condition that the property in goods was deemed to have been passed to the buyer when goods were put on board and, if any dispute arose, the buyers were not to reject the goods but the dispute was to be referred to arbitration. Since the goods were not according to the description, the buyer rejected the goods. Held, he was entitled to reject [Vigers v. Sanderson],

3. Sale by sample (Sec. 17):In a sale by sample, there must be a term in the contract, express or implied to that effect. Unless it is so, the seller is not bound to sell the goods according to sample.

However, the term may be express or implied.

Express:When parties expressly mention in the contract that the sale is by sample.

Implied:When there is a custom of the trade recognized by law. For example, sale of tobacco is always by sample. This custom is recognized all over

the world.

In a sale by sample, there are three implied conditions, which are as follows:1. The bulk shall correspond to sample:In a sale by sample, there is an implied condition that the bulk shall correspond to the sample in quality.

2. The buyer shall be given a reasonable opportunity to compare the goods with the sample:In a sale by sample, the buyer shall be given a reasonable opportunity to compare the bulk with the sample.

3. Condition of merchantability in respect of latent defects:There is an added implied condition of merchantability in respect of those defects which cannot be discovered by ordinary inspection, i.e., latent defects. Such defects, in fact, are discovered when the goods are put to use or by examination in laboratories. However, seller is not liable for apparent or visible defects which can be discovered by examination.

4. Sale by description as well as sample:If the sale is by sample as well as description, there is twin condition that the goods shall correspond not only to sample but also to description (Sec. 15).

Example:A agreed to sell to C some oil described as "foreign refined rape oil, warranted only equal to sample." The goods supplied were equal to sample but contained an admixture of hemp oil Held, C could reject the goods [Nichol v. Godts],

5. Condition as to quality or fitness [Sec. 16(1)]:Ordinarily, there is no implied condition as to quality or fitness. In the absence of anything to the contrary, the doctrine of 'let the buyer beware' applies.

However, Sec. 16(1) provides that where the buyer expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgement, and the goods are of a description which it is in the course of the seller's business to supply (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be reasonably fit for such purpose.

Example:

B ordered six buses to be used for heavy traffic in a hilly area. The supplier supplied Fiat lorries. The lorries proved useless and broke down. Held, there was a breach of condition of fitness [Bristol Tramway Co. v. Fiat Motors Ltd.].

The condition also applies if purpose is made known by implication.

Example:A purchased  woollen underwear from B, a retailer, who was dealing in goods of that description. By using the underwear, A developed skin disease. Held, the goods were not fit for their purpose and A was entitled to avoid the contract and claim damages. The sellers were supposed to know that under-wears were required for the particular purpose for being worn only next to skin [Grant v. Australian Knitting Mills].

6. Condition as to merchantability [Sec. 16(2)]:Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or producer or not), there is an implied condition that the goods shall be of merchantable quality.

Merchantability implies that the goods are marketable under the description by which they are ordinarily known in the market. Merchantability means that there is no defect in the goods which render them unfit for sale. For example, if sugar becomes sharbat (syrup), it cannot be called merchantable.

However, merchantability does not mean that there will be a queue of ready buyers to buy the goods in question.

Again, merchantability does not mean that goods shall comply or conform to the laws of a foreign country so as to be merchantable. '

Example:A large quantity of 'Webb's Indian Tonic' was sold F.O.B. England. The tonic contained a certain percentage of salicylic acid. The buyer did not know of it. The seller knew that these goods were required for Argentina. The local law of Argentina prohibited the sale of any articles of food containing salicylic acid.

7. Condition as to wholesomeness:In the case of eatables and other provisions, there is an added implied condition that the goods shall be wholesome, i.e., free from any defect which renders them unfit for human consumption.

Example:

A purchased milk from B, a milk dealer. The milk contained typhoid germs. A's wife on asking the milk got infected and died. Held, A was entitled to get damages [Frost v. Aylesbury Diary Co. Ltd.],

Implied Warranties :In a contract of sale, there are the following implied warranties:

1. Implied warranty as to quiet possession [Sec. 14(b)]:In a contract of sale, unless the circumstances of the contract show a contrary intention, there is an implied warranty that the buyer shall have and enjoy quiet possession of the goods. If the buyer is disturbed in the enjoyment of goods, he can claim damages from the seller.

2. Implied warranty against encumbrances [Sec. 14(C)]:Another implied warranty in a contract of sale is that the buyer is not to suffer due to any right in favour of a third party.

Unless the circumstances of the case are such as to show a contrary intention, there is an implied warranty that the goods shall be free from any charge or encumbrance in favour of any party not declared or known to the buyer before or at the time contract is made. [Sec. 14(C)].

Example:In Kishan Chand vs Ram Partap, it was held that in the absence of anything to the contrary, the shares sold are free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time contract is made.

Sale of Dangerous Goods:In case of sale of dangerous goods, the seller is under an obligation to warn the buyer of the probable danger. Failure to do so will make the seller liable to pay damages.

The duty is imposed on the seller by law. It does not arise out of implied conditions and warranties.

Example:A sold a tin of disinfectant to B, knowing that it was likely to be dangerous to B, if opened without special care. B opened the tin, whereupon disinfectant powder went into her eyes, causing injury. Held, A was liable in damages to B as he failed to warn B of the probable danger [Clark v. Army and Navy Society Ltd.]

Effect of express agreement to the contrary [Sec. 16(4)]:If the parties chose to agree that there* shall be certain warranties or conditions, the implied conditions and warranties will not apply, if they

are inconsistent with them. If they are not inconsistent, then implied conditions and warranties will apply.

Again, these implied conditions and warranties may be negative by the course of dealing between the parties or by the custom or usage of trade.

Doctrine of Caveat Emptor:The doctrine of 'Caveat Emptor', i.e., let the buyer beware means that the buyer while purchasing goods must act with a "third eye and ear" , i.e., he should be careful to see that the goods purchased will serve his purpose well. The seller is under no obligation to tell the defects of his articles. If the buyer is not careful and he finds later on that the goods do not serve his purpose, he cannot hold the seller liable for it. However, the law has recognized certain exceptions to protect the interest of the buyers.

The important exceptions to this general rule are as follows:1. Implied conditions as to quality or fitness:As pointed out above, where the buyer has, at the time of making contract, made known his particular purpose to the seller so as to depend upon the skill and judgment of the seller, there is an implied condition that the goods will be fit for the particular purpose of the buyer.

It should be noted that the above rule shall not apply in the following cases:1. When the goods have been sold under a patent name or trade mark and the buyer does not rely on the seller's skill and judgment.

2. When the seller is not ordinarily dealing in the goods which are being sold, e.g., where the goods are sold privately. Thus, if you dispose of your old T.V. or radio set, this condition of quality or fitness will not apply.

In these two cases (a) and (b), a buyer is not protected.

2. Sale of goods by description:Where the goods have been sold by description by the dealer who deals in the goods of that description (whether he is the manufacturer or producer or not) there is an implied condition that goods shall be of merchantable quality.

However, this rule will not apply when:(i) The dealer ordinarily does not deal in the goods in question, i.e., in case of a private sale as explained above:

(ii) Where the buyer has examined the goods and such examination

would have disclosed those defects.

3. Usage or custom of trade:An implied condition or warranty as to quality or fitness may be applied by usage or custom of trade.

4. Consent by fraud:Although seller is under no obligation to tell the defects of his articles, yet he cannot actively or fraudulently conceal defects which on a reasonable examination cannot be discovered. If he does so, the buyer has a right to reject the goods or/and claim damages.

Question No.5:  What is meant by memorandum of Association? Explain in brief.Answer No.5: Memorandum of association is one of the documents

which has to filed with the registrar of companies at the time of incorporation of a company. Section 2(28)defines a memorandum to mean “the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this act.” The definition, however, either does not give us any idea as to what a memorandum of association really is nor does it point out the role which it plays in the affairs of the company.

The memorandum of association is an extremely important document in relation to the affairs of the company. It is a document which sets out the constitution of the company and is really the foundation on which the structure of the company is based. It contains the fundamental conditions upon which alone the company is allowed to be incorporated. A company may pursue only such objects and exercise only such powers as are conferred expressly in the memorandum or by implication therefore i.e. such powers as are incidental to the attainment of the objects. A company cannot depart from the provisions contained in its memorandum, however, great the necessity may be. If it does, it defines its relation with the outside world and the scope of its activities. The purpose of the memorandum is to enable shareholders, creditors and those who deal with the company to know what is the permitted range of the enterprise.

It defines as well as confines the powers of the company; it not only shows the object of its formation, but also the utmost possible scope of its operation beyond which its action cannot go. Lord Cairns in Ashbury Railway Carriage Co. V. Riche pointed out,” The memorandum is as it were, the area beyond which the action of the company cannot go; inside that area the shareholders may make such regulations for their own

government as they think fit.”

Purpose of memorandum:The purpose of the memorandum is two fold.1. The intending share holder who contemplates the investment of his capital shall know within what field it is to be put at risk.

2. Anyone who shall deal with the company shall know without reasonable doubt whether the contractual relation into which he contemplates entering with the company is one relating to a matter within its corporate objects.

At least seven persons in the case of public company and at least two in the case of a private company must subscribe to the memorandum. The memorandum shall be printed, divided into consecutively numbered paragraphs, and shall be signed by each subscriber, with his address, description and occupation added, the presence of at least one witness who will attest the same.

Contents of Memorandum:According to section 13, the memorandum of association of every company must contain the following clauses:

1. The name of the company with ‘limited’ as the last word of the name in the case of a public limited company and with ‘private limited’ as the last word in the case of a private limited company.

2. The state in which the registered office of the company is to be situated.

3. The objects of the company to be classified as:

a. The main objects of the company to be pursued by the company on its incorporation and objects incidental to the attainments of the main objects, and

b. Other objects not included above

4. In the case of companies with object not confined to one state, the states to whose territories the objects extend.

5. The liability of members is limited if the company is limited by shares or by guarantee.

6. In the case of a company having a share capital, the amount of share capital with which the company proposes to be registered and its division

into shares of a fixed amount.

An unlimited company need not include items 5 and 6 in its memorandum.

In the case of a company limited by guarantee, its memorandum of association shall state that each member undertakes to contribute to the assets of the company, in the event of its being wound up while he is a member or within or year after wards for the payment of the debts and liabilities of the company.

Every subscriber to the memorandum shall take at least one share and shall write opposite to his name the number of shares taken by him.

Different clauses:A brief discussion of the various clauses are as follows:

Name clause:A company may be registered with any name it likes. But no company shall be registered by a name which in the opinion of the central government is undesirable and in particular which is identical or which too nearly resembles the name of an existing company. Where a company is registered by a name so similar to that of another company, that the public are likely to be deceived, the court will grant an injunction restraining it from using that name.Every public company must write the word ‘limited’ after its name and every private limited company must write the word ‘private limited’ after its name. The use of the word ‘company’ is however, not compulsory. Companies, whose liabilities are not limited, are prohibited from using the word ‘limited’. The words ‘limited’ may be dispensed with in the name of charitable companies. But companies formed to promote art, science, religion etc, which do not propose to pay dividend but intend to apply all its profits towards the working of the company, can be registered without the word ‘limited’ under licenses granted by the central government.

A company cannot adopt a name which violates the provisions of the emblems and names act 1950. This act prohibits the use of the name and emblems of the united nation, and the world health organization, the official seal and emblem of the central and the state governments, the Indian National Flag, the name and pictorial representation of Mahatma Gandhi and the prime minister of India.

If a limited company makes a contract without using the word ‘limited’ the directors who make the contract on behalf of the company would be personally liable.

Every company is required to publish its name outside its registered office, and outside every place where it carries on business, to have its name engraved on its seal and to have its name on all business letters, bill heads, notices and other official publications of the company.

Registered office clause:This clause states the name of the state where the registered office of the company is to situate. The registered office clause is important for two reasons. Firstly, it ascertains the domicile and nationality of a company. This domicile clings to it throughout its existence. Secondly, it is the place where various registers relating to the company must be kept and to which all communications and notices must be sent. A company need not carry on its business at its registered office.

A company shall have its registered office. Such office must be in existence from the date on which the company begins to carry on business or within 30 days after incorporation, whichever is earlier. Notice of situation of the registered office and every change therein must be given within 30 days from the date of incorporation of the company of after the date of change, as the case may be.

Objects clause:The objects clause is the most important clause in the memorandum of association of a company. It is not merely a record of what is contemplated by the subscribers, but it serves a two-told purpose:(a) It gives an idea to the prospective shareholders the purposes for which their money will be utilized.

(b) It enables the persons dealing with the company to ascertain its powers.

In case of companies which were in existence immediately before the commencement of the companies’ act 1965, the objects clause has simply to state the objects of the company. But in the case of a company to be registered after the amendment, the objects clause must state separately:

(a) Main objects. This sub-clause has to state the main objects to be pursued by the company on its incorporation and objects incidental or ancillary to the attainment of the main objects.

(b) Other objects. This sub-clause shall state other objects which are not included in the above clause.

Further, in the case of a non-trading company. Whose objects are not confined to one states clause must mention specifically the states to

whose territories the objects extend.

The subscribers to the memorandum of association may choose and object or objects for their company. There are, however, certain restrictions.

1. The objects should not be against the policy of the constitution. For example, the object should not be such as to encourage untouched ability which has been abolished under our constitution.

2. The objects should not include anything which is illegal or against public policy. For example, forming a company for dealing in lotteries or for trading with the alien enemies.

3. The object must not be against the provisions of the companies act, as for example, authorizing the company to purchase its own shares.

On its being registered, the company has power to do whatever is necessary to do for attaining the objects stated in the memorandum, and to do whatever else is incidental to or consequential upon the attainment of the main object. It is, therefore, clear that any act of the company outside its stated, objects is ultra viruses and therefore void and cannot be ratified even by the whole body of shareholders.

Liability clause:This clause states that the liability of the members of the company is limited. In the company is limited. In the case of a company limited by shares, the member is liable only to the amount unpaid on the shares taken by him. In the case of a company limited by guarantee the members are liable to the amount undertaken to be contributed by them to the assets of the company in the event of its being wound up. However, this clause is omitted from the memorandum of association of unlimited companies.Any alteration in the memorandum compelling a member to take up more shares, or which increases his liability, would be null and void.

If a company carries on business for more than six months, while the number of members is less than 7, in the case of public company and less than 2 in case of a private company each member aware of this fact, is liable for all the debts contracted by the company after the period of six months has elapsed.

Capital clause:The memorandum of a company limited by shares must state the authorized or nominal share capital, the different kinds of shares, the authorized or nominal share capital, the different kinds of shares, and the

nominal value of each share. The capital clause need not state anything else and it is usually better that it should not do so.Association or subscription clause:This clause provides that those who have agreed to subscribe to the memorandum must signify their willingness to associate and form a company. According to section 12 of the act, at least seven persons are required to sign the memorandum in the case of a public company, and at least two persons in the case of a private company.The memorandum has to be signed by each subscriber in the presence of at least one witness who must attest the signatures. Each subscriber must write opposite his name the number of shares he shall take. No subscriber of the memorandum shall take less than one share. This clause need not be numbered.

Question No6. Write short note on Right to Information Act

Answer No.6: Introduction:

This legislation may be termed as one of the rarest legislations in the

Indian Legal History which provides for setting out the practical regime of

‘Right to Information’ for Citizens to secure access to information under

the control of public authorities and in order to promote transparency &

accountability in the working of every public authority, the constitution of

a Central Information Commission and State Information Commissions

and for matters connected therewith or incidental thereto.

This Legislation will prove to be a ‘Landmark’, since it isenacted NOT for

the people to follow but for the Government to follow.

Through this legislation, the Government has made an attempt to

administer itself, be answerable to the people & penalize itself for lacking

in providing the required information and regain people’s lost confidence

in the bureaucratic system and setup.

Extent and Commencement:

This Act extends to the whole of India except the State of Jammu and

Kashmir. This Act of Parliament received the assent of the President of

India on the 15th June, 2005.

Some Important Definitions:

1.Information [Section 2(f)]:

Information means any material in any form, including records,

documents, memos,     e-mails, opinions, advices, press

releases, circulars, orders, logbooks, contracts, reports, papers,

samples, models, data material held in any electronic form and

information relating to any private body which can be accessed by a

public authority under any other law for the time being in force.

2. Record [Section 2(i)]:

Record includes—

(a) any document, manuscript and file;

(b) any microfilm, microfiche and facsimile copy of a document;

(c) any reproduction of image or images embodied in such microfilm

(whether enlarged or not)

(d) any other material produced by a computer or any other device.

3. Right to Information [Section 2(j)]:

Right to Information means the right to information accessible under

this Act which is held by or under the control of any public authority and

includes the right to —

(i) inspection of work, documents, records;

(ii) taking notes, extracts or certified copies of documents or records;

(iii) taking certified samples of material;

(iv) obtaining information in the form of diskettes, floppies, tapes, video

cassettes or in any other electronic mode or through printouts where

such information is stored in a computer or in any other device.

4. Public Authority [Section 2(h)]:

Public Authority means any authority or body or institution of self-

government established or constituted—

(a) by or under the Constitution;

(b) by any other law made by Parliament;

(c) by any other law made by State Legislature;

(d) by notification issued or order made by the appropriate Government,

and includes any—

(i) body owned, controlled or substantially financed;

(ii) non-Government organisation substantially financed, directly or

indirectly by funds provided by the appropriate Government;

Exemption from disclosure of information [Section 8]:

Like any other legislation, this Act also provides for exemptions to the

Government from disclosure of information regarding information – which

would cause a breach of privilege of Parliament or the State Legislature /

harm the competitive position of a third party / endanger the life or

physical safety of any person / impede the process of investigation or

apprehension or prosecution of offenders / weaken confidence of

the Foreign Government / Disclose the Records of deliberations of the

Council of Ministers, Secretaries and other Officers / relates to personal

information which has no relationship to any public activity or interest, or

which would cause unwarranted invasion of the privacy of the individual

unless the Central Public Information Officer or the State Public

Information Officer or the appellate authority, as the case may be, is

satisfied that the larger public interest justifies the disclosure of such

information / involve infringement of copyright.

IMPACT: To hide or avoid giving the required information demanded, the

Officers of the concerned Public Authorities may resort to take advantage

of these Exemptions. Hence it may be necessary for the ‘Information

Seeker’ to be clear in his mind about the exact interpretation of the

provisions and exemptions so that he may not be taken for a ride by the

officials and can claim his Right to information rightfully.

Administration of the Act [Section 12]:

A body to be known as the ‘Central Information Commission’ is

constituted to exercise the powers conferred on, and to perform the

functions assigned to, it under this Act. The Central Information

Commission shall consist of—The Chief Information Commissioner

and such number of Central Information Commissioners as may be

deemed necessary.

Every State Government shall constitute a body to be known as the

_____________ (name of the State) Information Commission

to exercise the powers conferred on, and to perform the functions

assigned to, it under this Act. The State Information Commission shall

consist of— The State Chief Information Commissioner and such number

of State Information Commissioners as may be deemed necessary.

The Central Information Commission or State Information Commission

shall, while inquiring into any matter under this section, have the same

powers as are vested in a civil court while trying a suit under the Code of

Civil Procedure, 1908.

Every public authority shall designate as many officers as the Central

Public Information Officers or State Public Information Officers, as the

case may be, in all administrative units or offices under it as may be

necessary to provide information to persons requesting for the

information under this Act. Every public authority shall designate an

officer at each sub-divisional level or other sub-district level as a Central

Assistant Public Information Officer or a State Assistant Public

Information Officer, as the case may be, to receive the applications for

information or appeals under this Act for forwarding the same forthwith to

the Central Public Information Officer or the State Public Information

Officer or senior officer specified or the Central Information Commission

or the State Information Commission, as the case may be.

Timeframes within which the desired information should be made

available by the concerned Public Authority:

A person who desires to obtain any information shall make a request in

writing or through electronic means in English or Hindi or in the official

language of the area in which the application is being made,

accompanying such fee as may be prescribed, to—

(a) the Central Public Information Officer or State Public Information

Officer, as the case may be, of the concerned public authority;

(b) the Central Assistant Public Information Officer or State Assistant

Public Information Officer, as the case may be, specifying the particulars

of the information sought by him or her.

An applicant making request for information shall not be required to give

any reason for requesting the information or any other personal details

except those that may be necessary for contacting him.

On receipt of a request the Central Public Information Officer or State

Public Information Officer shall as expeditiously as possible, and in any

case within Thirty Days   of the receipt of the request, either provide the

information on payment of such fee as may be prescribed or reject the

request for a reason. If the Central Public Information Officer or State

Public Information Officer fails to give decision on the request for

information within the said period it shall be deemed to have refused the

request. The person making request for the information shall be provided

the information free of charge where a public authority fails to comply

with the time limits specified.

IMPACT: Making requests for information through electronic means may

not be easy practically, since not all the Public Authority offices are fully

computerized and may not have computer savvy staff. The urban class

who may resort to make request through electronic means may get

discouraged. Explanations like, ‘Computer error’, ‘Server down’ may be

resorted to, for avoiding furnishing of information.

Penalties for not making available the desired information:

If without any reasonable cause, the concerned Officer refuses to receive

an application for information or has not furnished information within the

time specified or malafidely denied the request for information or

knowingly given incorrect, incomplete or misleading information or

destroyed information which was the subject of the request or obstructed

in any manner in furnishing the information, a penalty of two hundred and

fifty rupees each day till application is received or information is

furnished, so however, the total amount of such penalty shall not exceed

twenty-five thousand rupees   shall be imposed and / or disciplinary action

against the concerned Officer may be taken. Provided that the Central

Public Information Officer or the State Public Information Officer, as the

case may be, shall be given a reasonable opportunity of being heard

before any penalty is imposed or disciplinary action is taken against him.

CONCLUSION:

The enactment of the Right to Information Act, 2005 makes a noteworthy

attempt to streamline the working of the Public Authorities in respect of

providing information to the people. The Authorities will require being

technology savvy, alert and need to imbibe in them the not before

attitude, of being answerable to the citizens. The Public Authorities will

now require tightening their belts so as to serve the people and truly

contribute to the Information Technology era. As for the citizens, this Act

makes them aware of their one of the Constitutional Rights – Right to

Information and gives them the opportunity to exercise it in good faith.

Posted 12th August 2012 by dinesh  

0 Add a comment3.

AUG

12

OPERATION III SEMESTER

Question No.1: What is the significance of research in social and business sciences?

Answer No.1: Significance of Research in Social and Business

Sciences

According to a famous Hudson Maxim, “All progress is born of inquiry.

Doubt is often better than overconfidence, for it leads to inquiry, and

inquiry leads to invention”. It brings out the significance of research,

increased amounts of which makes progress possible. Research

encourages scientific and inductive thinking, besides promoting the

development of logical habits of thinking and 

organization.

The role of research in applied economics in the context of an economy

or business is greatly increasing in modern times. The increasingly

complex nature of government and business has raised the use of

research in solving operational problems. Research assumes significant

role in formulation of economic policy, for both the government and

business. It provides the basis for almost all government policies of an

economic system. Government budget formulation, for example,

depends particularly on the analysis of needs and desires of the people,

and theavailability of revenues, which requires research. Research helps

to formulate alternative policies, in addition to examining the

consequences of these alternatives. Thus, research also facilitates the

decision making of policy-makers, although in itself it is not a part of

research. In the process, research also helps in the proper allocation of a

country’s scare resources. Research is also necessary for collecting

information on the social and economic structure of an economy to

understand the process of change occurring in the country. Collection of

statistical information though not a routine task, involves various

research problems. Therefore, large staff of research technicians or

experts is engaged by the government these days to undertake this

work. Thus, research as a tool of government economic

policy formulation involves three distinct stages of operation which are as

follows:

                     Investigation of economic structure through continual

compilation of facts

                     Diagnoses of events that are taking place and the analysis

of the forces underlying them; and

                     The prognosis, i.e., the prediction of future developments

Research also assumes a significant role in solving various operational

and planning problems associated with business and industry. In several

ways, operations research, market research, and motivational research

are vital and their results assist in taking business decisions. Market

research is refers to the investigation of the structure and development of

a market for the formulation of efficient policies relating to purchases,

production and sales. Operational research relates to the application of

logical, mathematical, and analytical techniques to find solution to

business problems such as cost minimization or profit maximization, or

the optimization problems. Motivational research helps to determine why

people behave in the manner they do with respect to market

characteristics. More specifically, it is concerned with the analyzing

the motivations underlying consumer behaviour. All these researches are

very useful for business and industry, which are responsible for business

decision making.

Research is equally important to social scientist for analyzing social

relationships and seeking explanations to various social problems. It

gives intellectual satisfaction of knowing things for the sake of

knowledge. It also possesses practical utility for the social scientist to

gain knowledge so as to be able to do something better or in a more

efficient manner. This, research in social sciences is concerned with both

knowledge for its own sake, and knowledge for what it can contribute to

solve practical problems.

Question No.2: What is the meaning of hypothesis? Discuss the types of hypothesis.

Answer No.2: A statement that explains or makes generalizations about a set of facts or principles, usually forming a basis for possible experiments to confirm its viability.Usage The words hypothesis, law, and theory refer to different kinds of statements, or sets of statements, that scientists make about natural phenomena. A hypothesis is a proposition that attempts to explain a set of facts in a unified way. It generally forms the basis of experiments designed to establish its plausibility. Simplicity, elegance, and consistency with previously established hypotheses or laws are also major factors in determining the acceptance of a hypothesis. Though a hypothesis can never be proven true (in fact, hypotheses generally leave some facts unexplained), it can sometimes be verified beyond reasonable doubt in the context of a particular theoretical approach. A scientific law is a hypothesis that is assumed to be universally true. A law has good predictive power, allowing a scientist (or engineer) to model a physical system and predict what will happen under various conditions. New hypotheses inconsistent with well-established laws are generally rejected, barring major changes to the approach. An example is the law of conservation of energy, which was firmly established but had to be qualified with the revolutionary advent of quantum mechanics and the uncertainty principle. A theory is a set of statements, including laws and hypotheses, that explains a group of observations or phenomena in terms of those laws and hypotheses. A theory thus accounts for a wider variety of events than a law does. Broad acceptance of a theory comes when it has been tested repeatedly on new data and been used to make accurate predictions. Although a theory generally contains hypotheses that are still open to revision, sometimes it is hard to know where the hypothesis ends and the law or theory begins. Albert Einstein's theory of relativity, for example, consists of statements that were originally considered to be hypotheses (and daring at that). But all the hypotheses of relativity have now achieved the authority of scientific laws, and

Einstein's theory has supplanted Newton's laws of motion. In some cases, such as the germ theory of infectious disease, a theory becomes so completely accepted, it stops being referred to as a theory.

1. 1. Types of hypotheses-a. Inductive is a generalization based on specific observations.b. Deductive is derived from theory and provides evidence that supports, expands, or contradicts the theory.c. Non directional - states that relation or difference between variables exists.d. Directional - states the expected direction of the relation or difference.e. Null - states that there is no significant relation or difference between variables.

Hypotheses1. Hypotheses  are tentative statements of the expected relationships

between two or more variables1. There is a significant positive relationship between self-concept and math

achievement2. The class using math manipulative will show significantly higher levels of

math achievement than the class using a traditional algorithm approach2. Reasons for using hypotheses 1. Provides specific focus2. Provides for testing of the relationships between variables3. Directs the investigation4. Allows the investigator to confirm or not confirm relationships5. Provides a framework for reporting the results and explanations deriving

from them6. When supported provides empirical evidence of the predictive nature of

the relationships between variables7. Provides a useful framework for organizing and summarizing the results

and conclusions3. Types of hypotheses 1. Inductive and deductive 1. Inductive hypotheses are formed through inductively reasoning from

many specific observations to tentative explanations2. Deductive hypotheses are formed through deductively reasoning

implications of theory2. Research or statistical 1. Research hypotheses are conjectural statements of the expected results1. Directional: a specific outcome is anticipated (e.g., the class using

manipulative will demonstrate higher achievement levels than the class using a traditional instructional approach)

2. Non-directional: an outcome is anticipated but the specific nature of it is unsure (e.g., there will be achievement differences between the groups of children using co-operative group strategies or individualized instruction)

2. Statistical hypotheses are statements of a relationship or difference that can be tested statistically

1. Null hypothesis : a statistical statement that no difference or relationship exists

1. This is purely statistical in nature2. This does not represent the outcome anticipated by the researcher3. See Table 2.2 for examples of research problems, research hypotheses,

and null hypotheses as well as the relationships among them4. Criteria for evaluating research hypotheses 1. Stated in declarative form2. Consistent with known facts, prior research, or theory3. Logical extension of the research problem4. States an expected relationship between two or more variables5. Can be tested6. Is clear and concise2. Criteria for evaluating quantitative research problems 1. Problem is researchable2. Problem is important3. Problem should indicate the type of research4. Problem specifies the population being investigated5. Problem specifies the variables and the relationships between or among

them2. Qualitative research problems1. Identifies a central phenomena (i.e., an issue or process) being

investigated1. Examples of issues1. Drug abuse in high schools2. Teacher burnout3. Alienation of children with special needs2. Examples of processes1. How teachers change to a standards-based curriculum2. How students react to high stakes testing programs3. How students incorporate teachers' expectations into their studies2. Characteristics 1. Includes a single, central phenomena2. Open-ended3. General in nature4. Evolving, that is, problems change as data is collected and reflected

upon1. Foreshadowed problems2. Emerging and reformulated questions5. Neutral with respect to what will be learned1. No predictions2. No expected outcomes3. Criteria for evaluating qualitative research problems 1. The problem should not be too general or too specific2. The problem should be amenable to change as data are collected and

analyzed3. The problem should not be biased with restrictive assumptions or desired

findings4. The problem should be written in "how" and "what" forms to focus on

describing the phenomena5. The problem should include a central question as well as the participants

and the site1. What is central phenomena for participants at research site ?

Question No.3 What is the frequency Distribution? What are the types of and general rules for graphical representation of data?

Answer No.3: A frequency distribution is one of the most common graphical tools used to describe a single population. It is a tabulation of the frequencies of each value (or range of values). There are a wide variety of ways to illustrate frequency distributions, including histograms, relative frequency histograms, density histograms, and cumulative frequency distributions. Histograms show the frequency of elements that occur   within   a certain range of values, while cumulative distributions show the frequency of elements that occur   below   a certain value.   Frequency Histogram

1. A graphical representation of a single dataset, tallied into classes.2. Frequency defined as the number of values that fall into each class.3. Histogram consists of a series of rectangles whose widths are defined by

the limits of the classes, and whose heights are determined by the frequency in each interval.

4. Histogram depicts many attributes of the data, including location, spread, and symmetry.

1. No rigid set of rules that determine the number of classes or class interval.

2. Between 5 and 20 classes suitable for most datasets.3. Equal sized class widths are found by dividing the range by the number

of classes.4. Formal guide by which class intervals can be derived is the formula: K =

1 + 3.3 * log nwhere K is the number of classes and n is the number of variables.Relative Frequency Histogram

1. Relative frequency defined as the fraction of times the value occurs, or the frequency of value(s) ÷ number of observations in the set.

2. Relative frequencies usually of more interest than the absolute frequencies.

3. Relative frequency histogram constructed by assigning the relative frequencies as heights of the rectangles.

4. Sum of all relative frequencies in a dataset is 1.Density Histogram

1. Similar to frequency histogram except heights of rectangles are calculated by dividing relative frequency by class width.

2. Resulting rectangle heights called densities, vertical scale called density scale.

3. Noteworthy property: (class width * density) = relative frequency.4. Total area of all rectangles equals 1.

Histogram ShapesUnimodal: Rises to single peak, then declines.Bimodal: Has two distinct peaks.Multimodal: More than two peaks.Descriptions of skew may also be applied to histograms (see Measures of Central Tendency section.)Cumulative Frequency Distributions

1. Cumulative frequency distributions contain all information present in histograms, plus the following:

1. Allows user to easily estimate frequencies over several class intervals.2. Provides better estimates of probabilities since there is no arbitrary

division of data into classes.2. Cumulative distribution function is plotted with cumulative probabilites on

the vertical axis and data values on the horizontal axis.3. Cumulative frequencies are obtained by the formula F = m / (n + 1)

where m is the mth value in order of magnitude of the series and n is the number of terms in the series.

4. F gives the probability that a randomly chosen value will not exceed the data value by which F was calculated.

5. Probability of any exact value occurring is zero.6. Concave downward (upward) cumulative frequency distributions

indicative of positively (negatively) skewed data.Question No.4: List down various measures of central tendency and explain the difference between them?   

 Answer No.4

1. Define the terms measurement, evaluation, and assessment. Differentiate one from the other.

2. I dentify two reasons why measurement is a critically important component of quantitative research.

3. Differentiate the four measurements scales and provide educationally relevant examples of each.

4. Define the term descriptive statistics.5. Describe the characteristics of a frequency distribution, frequency

polygon, and histogram. Explain how each can be used to describe data.6. Describe the characteristics of a normal distribution, a positively skewed

distribution, and an negatively skewed distribution.7. Explain the concept of central tendency and describe the characteristics

of the mode, median, and mean as measures of central tendency.8. Explain the concept of variation and describe the characteristic of the

range and standard deviation as measures of variation.9. Explain the relationship between the standard deviation and the normal

curve.10. Explain the concept of relationship and describe the characteristics of the

correlation coefficient as a measure of relationship. Interpret correlation coefficients in terms of direction and strength.

11. Define validity as it relates to educational measures, identify five characteristics of validity, and explain the effect of validity on research.

12. I dentify three sources of validity evidence and give an example of each.13. Define reliability of measurement as it relates to educational

measures, identify several sources of measurement error, and explain the effect of reliability of research.

14. I dentify five types of reliability estimates and give an example of each.15. I dentify the conditions affecting reliability and  i dentify the ways by which

it can be enhanced.16. Explain the relationship between validity and reliability.

1. Educational measurement1. Definition of terms 1. Measurement: assignment of numbers to differentiate values of a

variable2. Evaluation: procedures for collecting information and using it to make

decisions for which some value is placed on the results3. Assessment - multiple meanings1. Measurement of a variable2. Evaluation3. Diagnosis of individual difficulties4. Procedures to gather information on student performance2. Purpose of measurement for research 1. Obtain information about the variables being studied2. Provide a standard format for recording observations, performances, or

other responses of subjects3. Provide for a quantitative summary of the results from many subjects3. Measurement scales 1. Nominal - categories1. Race2. Gender3. Types of schools (e.g., public, private, parochial)2. Ordinal - ordered categories1. Finishing position in a race2. Ranks in the military3. Grade levels3. Interval - equal intervals between numbers on the scale1. Test scores2. Achievement levels4. Ratio - equal intervals and an absolute zero (0)1. Height2. Weight3. Time2. Descriptive statistics1. Definition of terms1. Statistics: procedures that summarize and analyze quantitative data2. Descriptive statistics : statistical procedures that summarize a set of

numbers in terms of central tendency, variation, or relationships2. Types of descriptive statistics 1. Frequency distributions: an organization of the data set indicating the

number of times (i.e., frequency) each score was present1. Types of presentations1. Frequency table2. Frequency polygon3. Histogram2. Shapes of distributions 1. Normal - a set of scores that are equally distributed around a middle

score (i.e., the mean)2. Positively skewed - a set of scores characterized by a large number of

low scores and a small number of high scores3. Negatively skewed - a set of scores characterized by a large number of

high scores and a small number of low scores4. See Figure 6.22. Central tendency - what is the typical score 1. Mode: the most frequently occurring score2. Median: the score above and below which one-half of the scores occur3. Mean1. The arithmetic average of all scores2. Statistical properties make it very useful3. Concerns related to outlying scores3. Variability - how different are the scores 1. Range: the difference between the highest and lowest scores2. Standard deviation:1. The average distance of the scores from the mean2. The relationship to the normal distribution 1. ±1 SD 68% of all scores in a distribution2. ±2 SD 97% of all scores in a distribution3. Use of percentile ranks - the percentage of scores at or below a specified

score4. See Figure 6.44. Relationship - how do two sets of scores relate to one another1. Correlation1. A measure of the relationship between two variables2. Strength - 0.00 to 1.001. 0.00 indicates no relationship and consequently no predictability2. 1.00 indicates perfect relationship and consequently perfect predictability3. Direction - positive (+) or negative (-)1. Positive: high and low scores on the first variable are related to high and

low scores respectively on the second variable2. Negative: high and low scores on the first variable are related to low and

high scores respectively on the second variable2. Scatter plots - visualizations of correlations1. See the following web site for an interactive scatter plot demonstrating

varying levels of correlations3. Descriptive statistics inform the researcher of the meaning of data 3. Validity of measurement1. Validity: the extent to which inferences are appropriate, meaningful, and

useful2. Characteristics of validity1. Refers to the interpretation of the results2. A matter of degree3. Specific to a particular use or interpretation4. A unitary concept5. Involves an overall evaluative judgment3. Sources of validity evidence1. Test content - evidence of the extent to which items on a test are

representative of the larger domain of content or items from which they are drawn

2. Internal structure - evidence of the extent to which the relationships between items and parts of the instrument are consistent with those

reflected in the theoretical basis of the instrument or its intended use3. Relationships with other variables - evidence of the extent to which

scores from an instrument are related to similar as well as different traits1. Convergent evidence - scores correlate with measures of the same thing

being measured2. Discriminate evidence - scores do not correlate with measures of

something different than that being measured3. Predictability - the extent to which test scores predict performance on a

criterion variable4. Importance of validity to research 1. If the research results are to have any value, validity of the measurement

of a variable must exist1. Use of established and "new" instruments and the implications for

establishing validity2. Importance of establishing validity prior to data collection (e.g., pilot

tests)2. Validity as a matter of degree (i.e., the extent to which...)3. Judged on the basis of available evidence4. Varying levels of validity evidence are reported in articles4. Reliability of measurement1. Reliability : the extent to which scores are free from error1. Error is measured by consistency2. Sources of error   (see Table 6.3, p. 138)1. Test construction and administration (e.g., ambiguous questions,

confusing directions, changes in scoring, interrupted testing, etc.)2. Subject's characteristics (e.g., test anxiety, lack of motivation, fatigue,

guessing, etc.)3. Estimating reliability1. Reliability coefficients range from 0.00 to 1.00 regardless of the formulas

used to calculate them1. 0.00 indicates no reliability or consistency2. 1.00 indicates total reliability or consistency2. Generalizability theory - a recent trend in estimating reliability that

includes both systematic and random errors2. Types of reliability evidence1. Stability (i.e., test-retest)1. Testing the same subject using the same test on two occasions2. Limitation - carryover effects from the first to second administration of the

test2. Equivalence (i.e., parallel form)1. Testing the same subject with two parallel (i.e., equal) forms of the same

test taken at the same time2. Limitation - difficulty in creating parallel forms3. Equivalence and stability1. Testing the same subject with two forms of the same test taken at

different times2. Limitation - difficulty in creating parallel forms4. Internal consistency1. Testing the same subject with one test and "artificially" splitting the test

into two halves2. Forms

1. KR 201.      Dichotomously scored items (i.e., right or wrong)2.      Typical of cognitive measures2. Cronbach alpha       Non-dichotomously scored items (e.g., strongly agree, agree, disagree,

strongly disagree)a.      Typical of non-cognitive measures3. Limitations - must have a minimum of ten (10) questions5. Agreement1. Used when traditional estimates such as stability, equivalence,

equivalence and stability, or internal consistency are not applicable2. Typically some form of agreement is used (e.g., raters agreeing with one

another)3. Situations in which this estimate is used1. Observational measures - agreement between raters making the same

observation2. Insufficient numbers of test items on an instrument - agreement across

the percentage of responses that are the same for several subjects3. Data with highly skewed distributions - percentage of agreement in the

number of subjects3. Importance of reliability 1. If the results are to have any value, reliability of the measurement of a

variable must exist1. Established prior to conducting the research (e.g., pilot study)2. Necessary but not sufficient condition for validity (i.e., to be valid, an

instrument must be reliable, but a reliable instrument is not necessarily valid)

2. Conditions affecting reliability 1. Length of the test (i.e., longer tests are typically more reliable)2. Subjects1. Instruments used with heterogeneous samples typically have higher

reliability than those used with homogeneous samples2. Scores for older subjects are typically more reliable than those for

younger children3. Trait being measured (i.e., cognitive traits are more reliable than affective

characteristics)3. Enhancing reliability 1. Standardized administration procedures (e.g., directions, conditions, etc.)2. Appropriate reading level3. Reasonable length of the testing period4. Counterbalancing the order of testing if several tests are being given

Question No.5: Select and topic for research and explain how you will use both secondary and primary sources to gather the required information.

Answer No.5:MANAGEMENTManagement can be explained as an art or science, (in fact it is a combination of art and science) of getting things done by the people, by planning, coordinating, organizing, directing and controlling the activities

to meet specified goals, with in the frame work of agreed policies. The above explanation put emphasis on getting things done, Planning, Organizing, Coordinating, and controlling and specific objectives and agreed policies. Today’s manager needs scientific base as well as personal tactics to manage the people under him to achieve the desired goals. Above discussion about product, production and management will help us to understand what exactly the Production Management or Production, and Operations Management is.

PRODUCTIONProduction means application of processes. (Technology) to the raw material to add the use and economic values to arrive at desired product by the best method, with out sacrificing the desired quality. We have three ways of Production, they are:(i) Production by Disintegration:  By separating the contents of Crude oil or a mixture thedesired products are produced. For example the crude oil is disintegrated into various fuel oils. Similarly salt production is also an example for product produced by disintegrated. We can use Mechanical or Chemical or both technologies to get the desired product, so that it will have desired use value.(ii) Production by Integration: In this type of Production various Components of the products are assembled together to get the desired product. In this process, Physical and Chemical Properties of the materials used may change. The examples are: Assembly of Two wheelers, Four wheelers and so on.(iii) Production by Service:  Here the Chemical and Mechanical Properties of materials are improved without any physical change. The example for this is Heat Treatment of metals. In real world, a combination of above methods is used. In general production is the use of any process or procedure designed to transform a set of inputelements into a set of output elements, which have use value and economic value.

DEFINITION OF PRODUCTION MANAGEMENTIt may be defined as:(i) The performance of the management activities with regards to selecting, designing, operating, Controlling and updating production system.(ii) It is the processes of effectively planning, coordinating and controlling the production, that is the operations of that part of an enterprise, it means to say that production and operations Management is responsible for the actual transformation of raw materials into finished products.(iii) Production management is a function of Management, related to planning, coordinating and controlling the resources required for production to produce specified product by specified methods, by optimal utilization of resources.(iv) Production management is defined as management function which plans, organizes, coordinates, directs and controls the material supply and Processing activities of an enterprise, so that specified products are produced by specified methods to meet an approved sales programme.

These activities are being carried out in such a manner that Labour, Plant and Capital available are used to the best advantage of the organization.

Question No.6 Write short notes on the following:(a)  Dispersion(b) Mathematical averages

Answer No.6:        Definitions1. According to AX. Bowley, "Dispersion is the measure of variation of the items."2. According to Brooks and Dicks, "Dispersion is the degree of the variation of the variable about a central value."3. According to Spiegal, "The degree to which numerical data tend to spread about an average value is called variation or dispersion of the data."Importance of Dispersion1. Dispersion can control the various conclusions drawn from central tendency.2. Dispersion measures the inequalities in the distribution of income and wealth.3. Dispersion can evaluate the average profit, average sales, average cost etc. in industry, trade or business.4. It is used to control price and output.5. It removes the defects of the averages and presents doubtful conclusions in their true form.Properties of Dispersion1. It should be rigidly defined and free from any ambiguity.2. It should be simple to follow.3. It should be easy for computation and free from complicated procedure of calculations.4. It should be based on all the items of the series.5. It should be capable of further algebraic treatment.6. It should be greatly affected by the values of extreme items of a series.7. It should not be affected by fluctuations of sampling.

B) Mathematical averages

Averages

MeanThere are three main types of average:

                       mean -  The mean is what most people mean when they say 'average'. It is found by adding up all of the numbers you have to find the mean of, and dividing by the number of numbers. So the mean of 3, 5, 7, 3 and 5 is 23/5 = 4.6 .

                       mode - The mode is the number in a set of numbers which occurs the most. So the modal value of 5, 6, 3, 4, 5, 2, 5 and 3 is 5, because there are more 5s than any other number.

                       median - The median of a group of numbers is the number in the middle, when the numbers are in order of magnitude. For example, if the set of numbers is 4, 1, 6, 2, 6, 7, 8, the median is 6

Grouped DataWhen you are given data which has been grouped, you can't work out the mean exactly because you don't know what the values are exactly (you just know that they are between certain values). However, we calculate an estimate of the mean with the formula: ∑fx / ∑f , where f is the frequency and x is the midpoint of the group (∑ means 'the sum of').

ExampleWork out an estimate for the mean height, when the heights of 23 people are given by the first two columns of this table:

Height (cm) Number of People (f) Midpoint (x) fx

101-120 1 110.5 110.5

121-130 3 125.5 376.5

131-140 5 135.5 677.5

141-150 7 145.5 1018.5

151-160 4 155.5 622

161-170 2 165.5 331

171-190 1 180.5 180.5

In this example, the data is grouped. You couldn't find the mean the "normal way" (by adding up the numbers and dividing by the number of numbers) because you don't know what the values are. You know that three people have heights between 121 and 130cm, for example, but you don't know what the heights are exactly. So we estimate the mean, using "∑fx / ∑f".

A good way of setting out your answer would be to add two columns to the table, as I have. 

"Midpoint" means the midpoint of each of the groups. So the first entry is

the middle of the group 101-120 = 110.5 .

Now,∑fx (add up all of the values in the last column) = 3316.5∑f = 23

So an estimate of the mean is 3316.5/23 = 144cm (3s.f.)This short video shows you how to find the mean, mode and median from a frequency table for both discrete and grouped data.

Posted 12th August 2012 by dinesh  

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