#1.

Objectives of Materials Management:

Primary Objectives: Making available
(supply) of materials in specified quantity
and quality at economic cost and
maintaining the continuity of supply.
Minimization of investments in materials
and inventory costs and assuring high
inventory turnover.

➢ Right price, high turnover, Low

procurement & storage cost,
Continuity of supply, Consistency in
quality, Good supplier relations,
Development of personnel, Good
information system

Secondary Objectives: Secondary

objectives help to achieve the primary
objectives.

1. Purchasing the items from a reliable

source at economic price.

2. Reduction of costs by using various cost

reduction techniques such as variety
reduction, standardization and
simplification, value analysis, inventory
control, purchase research etc.

3. Co-ordination of the functions such as

planning, scheduling, storage and
maintenance of materials.

➢ Forecasting, Inter-departmental
harmony, Product improvement,
Standardization, Make or buy
decision, New materials & products,
Favorable reciprocal relationships

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#2. Elements of Integrated Materials Management

#3. Five basic phases of project management

1. Project conception and initiation

An idea for a project will be carefully

examined to determine whether or not it
benefits the organization. During this phase,
a decision-making team will identify if the
project can realistically be completed.

2. Project definition and planning

A project plan, project charter and/or project

scope may be put in writing, outlining the
work to be performed. During this phase, a
team should prioritize the project, calculate
a budget and schedule, and determine what
resources are needed.

3. Project launch or execution

Resources' tasks are distributed, and teams

are informed of responsibilities. This is a
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good time to bring up important project
related information.

4. Project performance and control

Project managers will compare project status

and progress to the actual plan, as resources
perform the scheduled work. During this
phase, project managers may need to adjust
schedules or do what is necessary to keep the
project on track.

5. Project close

After project tasks are completed and the

client has approved the outcome, an
evaluation is necessary to highlight project
success and/or learn from project history.

Projects and project management processes

vary from industry to industry; however,
these are more traditional elements of a
project. The overarching goal is typically to
offer a product, change a process or to solve
a problem in order to benefit the
organization.

#4. Basic elements of purchasing

Purchasing Cycle: The purchase procedure

followed varies from company to company
and also from one industry to other. The
purchasing cycle is represented as shown in
fig below.

The basic elements in purchasing are:

1. The origin of demand for materials and

components based upon the requisitions
made to purchase department by user
departments with all the details like
descriptions, quantity and quality
specifications.

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2. Specifications are checked and verified
and purchase plan is made for items
demanded
3. Selection of source of supply.
4. Preparation of purchase order by supplier
(order acceptance) and acceptance of terms
and conditions.
5. Follow up to ensure prompt delivery of
right quality and quantity of materials.
6. Incoming inspection of materials (both to
check quality and quantity) to ensure correct
material as per specification.

7. Checking supply invoice against purchase

order and goods received and payments are
made.

#5. Draw chart of Purchasing cycle

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#6 #7. Types of Plant Layout:

(a) Product or Line Layout

All the machines are arranged in the

sequence, machines are arranged in a
straight line. The raw materials are fed at one
end and taken out as finished product to the
other end. Special purpose machines are
used which perform the required jobs

The material moves to another machine

sequentially without any backtracking or
deviation. It requires a very little material
handling. It is used for mass production of
standardized products.

Product layout is depicted below:

Advantages:

1. Reduced material handling cost

2. Perfect line balancing which eliminates

bottlenecks and idle capacity.

3. Short manufacturing cycle

4. Simplified production planning and

control

5. Small amount of work-in-progress

inventory

6. Lesser wage cost

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Disadvantages:

1. Lack of flexibility of operations

2. Large capital investment

3. Dependence of whole activity on each

part.

4. Same machines duplicated for

manufacture of different products

5. Delicate special purpose machines require

costly maintenance / repairs.

(b) Process or Functional Layout

all machines performing similar type of

operations are grouped at one location
groups. This type of layout is used for batch
production. It is preferred when the product
is not standardized, and the quantity
produced is very small.

Advantages:

1. Greater flexibility

2. Lower investment due to general purpose

machines

3. Higher utilization of production facilities

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4. Variety of jobs makes the work
challenging and interesting.

5. Breakdown of one machine does not result

in complete stoppage of work.

Disadvantages:

1. Material handling costs are high due to

backtracking
2. Production planning and control is
difficult
3. More space requirement
4. As the work has to pass through
different departments; it is quite
difficult to trace the responsibility for
the finished product.
5. More skilled labor is required resulting
in higher cost.
6. More frequent inspection is needed
which results in costly supervision
(c) Combination Layout:

Combines the advantage of process &

product layout. Manufacturing concerns
where several products are produced in
repeated numbers with no likelihood of
continuous production, combined layout is
followed.
Process layout is used to produce various
operations like stamping, welding, heat
treatment being carried out in different
work centers as per requirement. The final
assembly of the product is done in a product
type layout.

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(d) Fixed Position Layout:

Men, materials and machines are brought to

a product that remains in one place owing to
its size. Ship-building, air-craft
manufacturing, heavy construction of dams,
bridges, buildings etc. are typical examples
of such layout.

Advantages:
• The investment on layout is very
small.
• The layout is flexible as change in job
design and operation sequence can be
easily incorporated.
• Adjustments can be made to meet
shortage of materials or absence of
workers by changing the sequence of
operations.

Disadvantages:
• As the production period being very
long so the capital investment is very
high.
• Very large space is required for
storage of material and equipment
near the product.
• As several operations are often carried
out simultaneously so there is
possibility of confusion and conflicts
among different workgroups.

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#8. What is the meaning of crashing a project.
Crashing is a schedule compression
technique used to reduce or shorten the
project schedule. The PM can various
measures to accomplish this goal. Some of
the common methods used are. Adding
additional resources to the critical path tasks.

#9. What is a work breakdown structure?

"A ordered decomposition of the total scope
of work to be carried out by the project team
to accomplish the project objectives and
create the required deliverables."

A work-breakdown structure element may

be a product, data, service, or any
combination thereof. A WBS also provides
the necessary framework for detailed cost
estimating and control along with providing
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guidance for schedule development and
control.[3]

The figure on the left shows a work

breakdown structure construction technique
that demonstrates the 100% rule and the
"progressive elaboration" technique. At
WBS Level 1 it shows 100 units of work as
the total scope of a project to design and
build a custom bicycle. At WBS Level 2, the
100 units are divided into seven elements.
The number of units allocated to each
element of work can be based on effort or
cost; it is not an estimate of task duration.

The three largest elements of WBS Level 2

are further subdivided at Level 3. The two
largest elements at Level 3 each represent
only 17% of the total scope of the project.
These larger elements could be further
subdivided using the progressive
elaboration technique described above.

WBS design can be supported by software

(e.g. a spreadsheet) to allow automatic
rolling up of point values. Estimates of effort
or cost can be developed through discussions
among project team members. This
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collaborative technique builds greater
insight into scope definitions, underlying
assumptions, and consensus regarding the
level of granularity required to manage the
projects.

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 #10. What is the use of Gantt charts in project management?
• A Gantt chart is a horizontal bar chart
developed in 1917 by Henry L. Gantt.
Frequently used in project management, a
Gantt chart provides a graphical illustration
of a schedule that helps to plan, coordinate,

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and track specific tasks in a project towards
completion

#11. What is meant by network scheduling?

A network scheduler, also called packet

scheduler, queueing discipline, qdisc or
queueing algorithm, is an arbiter on a node
in packet switching communication
network. It manages the sequence of
network packets in the transmit and receive
queues of the network interface controller

#12. Explain in detail what is fixed asset and working asset.

A FIXED ASSET is a long-term tangible

piece of property that a firm owns and uses in
its operations to generate income. Fixed
assets are not expected to be consumed or
converted into cash within a year. Fixed
assets are known as property, plant, and
equipment (PP&E). They are also referred to
as capital assets. Fixed assets can include
buildings, computer equipment, software,
furniture, land, machinery and vehicles. For
example, if a company sells produce, its
delivery trucks are fixed assets. If a business
creates a company parking lot, the parking lot
is a fixed asset.

WORKING CAPITAL, also known as net

working capital. This is an indicator of how
well the company can meet its financial
obligations. It is the difference between a
company’s current assets, like cash, accounts
receivable (customers’ unpaid bills) and
inventories of raw materials and finished
goods, and current liabilities, like accounts
payable, accrued expense, notes payable.
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 Working Capital = Current Assets - Current
Liabilities

#13. Explain with example return on investment (ROI)

Return on investment (ROI) measures the

gain or loss generated on an investment
relative to the amount of money invested.
ROI is usually expressed as a percentage and
is typically used for personal financial
decisions, to compare a company's
profitability or to compare the efficiency of
different investments.

ROI = (Net Profit / Cost of Investment) x 100

For example, an investor buys $1,000 worth

of stocks and sells the shares two years later
for $1,200. The net profit from the
investment would be $200 and the ROI
would be calculated as follows:

ROI = (200 / 1,000) x 100 = 20%

#14. what are the examples of variable costs fixed costs:
Examples of Variable cost

• Direct materials. The most purely variable

cost of all, these are the raw materials that go
into a product.
• Piece rate labor. This is the amount paid to
workers for every unit completed (note:
direct labor is frequently not a variable cost,
since a minimum number of people are
needed to staff the production area; this
makes it a fixed cost).
• Production supplies. Things like machinery
oil are consumed based on the amount of
machinery usage, so these costs vary with
production volume.
• Billable staff wages. If a company bills out
the time of its employees, and those
employees are only paid if they work
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 billable hours, then this is a variable cost.
However, if they are paid salaries (where
they are paid no matter how many hours they
work), then this is a fixed cost.
• Commissions. Salespeople are paid a
commission only if they sell products or
services, so this is clearly a variable cost.
• Freight out. A business incurs a shipping
cost only when it sells and ships out a
product. Thus, freight out can be considered
a variable cost.

Examples of Fixed cost

• Depreciation. This is the gradual charging to
expense of the cost of a tangible asset (such as
production equipment) over the useful life of
the asset.
• Insurance. This is a periodic charge under an
insurance contract.
• Interest expense. This is the cost of funds
loaned to a business by a lender. This is only
a fixed cost if a fixed interest rate was
incorporated into the loan agreement.
• Property taxes. This is a tax charged to a
business by the local government, which is
based on the cost of its assets.
• Rent. This is a periodic charge for the use of
real estate owned by a landlord.
• Salaries. This is a fixed compensation amount
paid to employees, irrespective of their hours
worked.
• Utilities. This is the cost of electricity, gas,
phones, and so forth. This cost has a variable
element but is largely fixed.

#15 What are the various types of accounting. Explain any 5 of them.

1. Not-for-profit accounting

Is concerned with recording events,

preparing reports, and planning operations
of not-for-profit organizations such as
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charities, churches, educational institutions,
and government agencies etc.

2. International accounting

It deals with the issues and complications

involved in doing trade in world markets.
Many companies have expanded their
business internationally. Such companies
employ accountants who possess detailed
knowledge about custom and taxation laws
of various countries.

3. Government accounting

It is concerned with the allocation and

utilization of government budgets. It ensures
that the central or state government funds
released for various purposes are being
utilized efficiently. The proper record
keeping makes the audit of completed
projects possible.

4. Forensic accounting

Forensic accounting deals with legal issues

faced by business enterprises. Accountants
in this area uses their knowledge, skills and
techniques to deal with legal matters such as
dispute resolution, claim settlement, fraud
investigation, court and litigation cases etc.

5. Fiduciary accounting

It refers to the management of financial

records by a person to whom the custody and
management of some property has been
entrusted for the benefit of another person.
Estate accounting, trust accounting, and
receivership are some examples of fiduciary
accounting.

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