A PROJECT REPORT ON

PARETO ANALYSIS AND ACTIVITY BASED COSTING OF WATER TUBE BYPASS

SUBMITTED TO THE UNIVERSITY OF PUNE, PUNEIN THE PARTIAL FULFILMENT OF THE REQUIREMENTS

FOR THE AWARD OF THE DEGREE OF

BACHELOR OF ENGINEERING(PRODUCTION SANDWICH)

BY

MR.ANAND VIJAY SEAT NO. B3217501

UNDER THE GUIDANCE OFProf. V.Y. SONAWANE

DEPARTMENT OF PRODUCTION ENGINEERINGALL INDIA SHRI SHIVAJI MEMORIAL SOCIETY’S

COLLEGE OF ENGINEERING, PUNE – 01(YEAR 2008-09)

1

ALL INDIA SHRI SHIVAJI MEMORIAL SOCIETY’S COLLEGE OF ENGINEERING, PUNE – 01

DEPARTMENT OF PRODUCTION ENGINEERING

CERTIFICATE

This is to certify that the Project Report entitled

PARETO ANALYSIS AND ACTIVITY BASED COSTING OF

WATER TUBE BYPASSSubmitted by

MR. ANAND VIJAY SEAT NO. B3217501

is a bonafide work carried out under the supervision and guidance of Prof. V.

Y. SONAWANE and it is approved for the partial fulfillment of the

requirements of University of Pune, Pune for the award of the Degree of

Bachelor of Engineering (Production Sandwich). The Project Report has not

been earlier submitted to any other Institute or University for the award of any

Degree or Diploma.

(Prof. V. Y. SONAWANE)Guide,Production Engineering Department

(Prof. D. H. Joshi) Head, Production Engineering Department

(External Examiner)

Place: PuneDate:

2

3

ACKNOWLEDGEMENT

We are deeply indebted to our Project Guide Prof. V. Y. SONAWANE,

for his valuable Suggestions, Scholarly guidance, constructive criticism and

constant encouragement at every step of the Project.

We also, would like to express our deepest gratitude to Prof. D.H.Joshi,

Head of Production Engineering Department and Dr. J.D. Bapat, Principal,

AISSMS College of Engineering for granting the permission to choose this

undertaking as our B.E. Project.

We wish to thank Mr. Vijay Nimse (Sr. Er. Q&A) and Mrs. Vrunda

Zende (HR Manager) for constant guidance, co-operation, inspiration, practical

approach and constructive criticism, which provided me the much needed

impetus to work hard. I also thank all other persons who directly and indirectly

contributed in successful completion of the Project.

My gratitude is also towards the management of BHOR

ENGINEERING PVT LTD, SHIVENE, PUNE. for giving me opportunity to

work in their esteemed organization.

. . MR.ANAND VIJAY

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CONTENTS

TITLE PAGE ICERTIFICATE OF COLLEGE IICERTIFICATE OF COMPANY IIIACKNOWLEDGEMENT IVCONTENTS VLIST OF TABLE VIILIST OF PHOTOS VIILIST OF FIGURES VIIILIST OF GRAPHS VIIILIST OF CHARTS VIIIABSTRACT IX

SR NO TITLE PAGE

NO

1. INTRODUCTION 1

1.1 INTRODUCTION 1

1.2 AIM OF PROJECT 1

1.3 WHY WE TOOK THIS PROJECT 1

1.4 ACTION PLAN 2

2. TUBE WATER BYPASS 3

2.1 INTRODUCTION 3

2.2 PROCESS DESCRIPTION 4

2.2.1 CASTING 4

2.2.2 BRAZING 8

2.2.2.

1

HOW DOES BRAZING JOIN MATERIALS 8

2.2.2.

2

DIFFERENCES BETWEEN SOLDERING, WELDING, 9

AND BRAZING

2.2.2.

3

BRAZE WELDING 10

2.2.2. BRAZING FUNDAMENTALS 11

5

4

2.2.2.

5

FLUX 11

2.2.2.

6

BRAZING STRENGTH AND JOINT

GEOMETRY 12

2.2.2.

7

FILLER MATERIALS 13

2.2.2.

8

ADVANTAGES OF BRAZING 14

2.2.3 PIPE BEADING 15

2.2.4 PIPE BENDING 16

2.3 PROCESS FLOW DIAGRAM 18

2.4 INSPECTION 22

2.4.1 DIMENSIONAL SPECIFICATIONS 22

2.4.2 CHECKING AIDS LIST 23

2.4.3 LAYOUT INSPECTION 24

3. PARETO ANALYSIS 25

3.1 INTRODUCTION 25

3.2 PROBLEMS OF PARETO ANALYSIS 28

3.3 PARETO ANALYSIS STEP BY STEP 29

3.4 COMPARATIVE STUDY 31

3.4.1 PARETO ANALYSIS IN THE MONTH OF FEB 31

3.4.2 PARETO ANALYSIS IN THE MONTH OF JUNE 31

3.5 PROCESS STUDY 32

3.6 IDENTIFICATION OF PROBLEMS 32

3.7 GAP ANALYSIS 32

3.8 SOLUTIONS TO THE PROBLEMS 33

3.9 AFTERMATH OF IMPLEMENTATION 36

4. ACTIVITY BASED COSTING 37

4.1 INTRODUCTION 37

4.2 NON VALUE ADDING ACTIVITY 40

4.2.1 DEFINITION 40

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4.3 ACTIVITY BASED COSTING METHODOLOGY 40

4.4 CALCULATION 42

4.4.1 TOTAL ABC COSTING FOR THE

PRODUCT WATER TUBE BYPASS 42

5. OVERALL BENEFITS 45

6. LEARNINGS 45

7. CONCLUSION 46

8. REFERENCES 47

LIST OF TABLE

TABLE NO TITLE PAGE NO

2.1 GAUGES INSTRUMENTS AND TESTING

EQUIPMENT

32

2.2 PARAMETERS AND THEIR METHOD OF INSPECTION

40

3.1 ACTIVITIES AND THEIR DURATION IN FEB 33

3.2 ACTIVITIES AND THEIR DURATION IN JUNE

36

LIST OF PHOTOS

PHOTO NO TITLE PAGE NO

2.1 WATER TUBE BYPASS ATTACHED TO THE

ENGINE KTA 50G

3

2.2 PARTS OF WATER TUBE BYPASS 4

2.3 CASTED CHILD PART 7

7

2.4 BEADING OF THE PIPE OF WATER TUBE

BYPASS

15

2.5 CNC PIPE BENDING MACHINE 16

3.1 SPOT FACE AND THEIR BOLTS 35

LIST OF FIGURES

FIG. NO. TITLE PAGE NO.

2.1 EXAMPLE OF BRAZING 10

2.2 AIR BENDING AND BOTTOMING 17

2.3 BOTTOMING AND COINING 17

2.4 OUTER AND INTERNAL DIAMETER OF

WATER TUBE BYPASS

22

2.5 HEIGHT AND LENGTH OF WATER TUBE

BYPASS

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3.1 TYPICAL PARETO GRAPH 27

LIST OF GRAPHS

GRAPH.NO TITLE PAGE NO3.1 PARETO DIAGRAM EXAMPLE 303.2 PARETO ANALYSIS IN FEB 313.3 PARETO ANALYSIS IN JUNE 31

8

LIST OF CHARTS

CHART NO

TITLE PAGE NO

3.1 GAP ANALYSIS IN FEB 333.2 GAP ANALYSIS IN JUNE 36

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ABSTRACT

One of the biggest challenges the industry faces today is to cope with the

ongoing development and technological advances. Thus Innovation is the most

valued characteristic in any development. New products are thus very essential

for improving market share.

The project deals with reducing the rejection of the product water tube bypass.

In conventional system each and every time the desired productivity is not

attained. This leads to decrementation in customer desire.

Sometimes the deteriorating quality of the product also leads in the short of

target. In our product case we were achieving the target but because of poor

quality, there were lots of rejections. Thus we took the project to find out the

pain area of water tube bypass production. We used pareto analysis to

highlight the problems. Through pareto analysis we targeted the major problem

causing rejections. we provided solutions to them. While analysing through

pareto we observed a lot of non value activities in the production process. We

used gap analysis to determine the gap in actual time being spent and the ideal

time. We had to bridge the gap in the actual and ideal time, thus providing

solutions to the problem was not sufficient, so we used activity based costing

to reduce non value added activities and estimate the actual profit obtained by

eliminating them.

1. INTRODUCTION

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1.1 INTRODUCTION

One of the most important decisions that a manufacturing company should

make is to determine its productivity which will maximize profit. Given that a

company has capacity constraints, it may not be able to produce every unit of

product demanded by the market. The best action to take in this case is to focus

on the most profitable products for the company and to use all the existing

resources of the company to produce these products. In this way the company

can increase its profitability because it will use its existing resources to

produce the most profitable products.

Thus in the similar way water tube bypass is one of the hero product of

company BHOR ENGINEERING PRIVATE LIMITED. It has a continuous

demand and in order to fulfil those we took this project.

1.2 AIM OF THE PROJECT

To reduce rejections of product no 3055712 using pareto analysis and

performing activity based costing to eliminate non value added activities

1.3 WHY WE TOOK THIS PROJECT

Bhor is the sole supplier of tube water bypass to Cummins India limited. As

bhor is the sole supplier of this specific product attached in Cummins heavy

engines , thus any kind of irregularities in the product will affect the Cummins

production. As the no of rejections were increasing, there was an urgent need

to look into the problems associated with this product.

Thus in order to reduce the rejections and rework performed we took this

project, and as it the law of nature and policy of any firm to get maximum

output at minimum investment .

Thus the various possible ways to reduce rejections and reworks being

performed are as follows-

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1. increasing man power

2. increasing working hours

3. outsourcing

4. improving the prevailing conditions

Thus keeping in mind the guidelines and the boundaries given by the company

guide we decided to focus on the prevailing working conditions.

1.4 ACTION PLAN

An action plan was thus prepared which included all the problems identified,

improvements required for them and savings in the estimated cost.

1. performing pareto analysis

2. identifying problems using pareto analysis

3. elimination of problems

4. reducing non value added activities using ABC

5. monitoring of results

2. TUBE WATER BYPASS

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2.1 INTRODUCTION

Tube water bypass is a connector between the thermostat and water pump in a

generator produced by Cummins India Ltd. The generator has an output of

1200 kva. When the engine heats upto 850c mouth of thermostat opens and

water circulation starts from engine to radiator and vice-versa. This activity

ends when the temperature of water falls below 800c. this generator is the heart

of engine having model no KTA SDG. This engine is used fro construction

and boring purpose at a very massive magnitude. The connector water from the

radiator to engine, water in the engine gets heated because of the running

temperature. As the temperature of the water reaches 800 c it starts melting the

waxed placed at the mouth of the thermostat. Hence the mouth of the

thermostat automatically opens and water rushes through the water bypass

back to radiator. Thus the water bypass needs to withstand a temperature of

about 800c to 1000c. the tube water bypass is termed as part no

3055712( Which we are going to use as reference from now onwards).

Photo 2.1 Water Tube Bypass attached to the engine KTA 50G

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Photo 2.2 Parts of Water Tube Bypass

2.2 PROCESS DESCRIPTION

2.2.1 CASTING

Grey iron sand casting is an easy and economical process to create basic part

shape. Sand casting is the oldest, most common, and simplest of the casting

processes. The sand casting process is also the least costly of the casting

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processes. Normally the sand casting process is used for low temperature

alloys, such as aluminum, copper, grey iron, magnesium, and nickel alloys.

However, the sand casting process can be used for higher temperature metal,

such as steel and stainless steel alloys, when other production processes would

not be practical. Grey Iron sand castings are often used to produce prototypes,

due to the speed and relative low cost of production when compared to other

manufacturing techniques.

The grey iron sand casting process is very simple. A pattern is made in the

shape of the desired part. The pattern can be made in wood, plastic, or metal.

Simple grey iron sand castings can be made in a single piece, called a solid

pattern. More complex designs are made in two parts, called split patterns.

The patterns are then packed into sand, mixed with a binder, which helps

harden the sand into a semi-permanent shape. Once the sand mold is cured, the

pattern is removed, leaving a hollow space in the sand in the shape of the

desired grey iron part. Cores can be inserted into the mold to create holes and

to improve the net shape. Simple molds are open at the top and the melted grey

iron is poured into the mold. When the grey iron cools the sand is removed and

the grey iron sand casting is ready for secondary operations, such as machining

and finishing.

The grey iron sand casting process is used to obtain only the basic shape of the

part, or used for parts when larger tolerances are acceptable, such as manhole

covers or storm drain grates. Grey iron will not bend, and is also frequently

used for housing where tensile strength is not critical, such as engine blocks,

pump housings, valve bodies, and decorative castings.

This section provides a brief description of the major casting processes, for the

benefit of readers who are unfamiliar with the industry. Metal casting involves

pouring molten metal into a mould containing a cavity of the desired shape to

produce a metal product. The casting is then removed from the mould and

excess metal is removed, often using shot blasting, grinding or welding

processes. The product may then undergo a range of processes such as heat

treatment, polishing and surface coating or finishing. The casting techniques

described in this section are variations of the process

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described in the previous paragraph. The different techniques have been

designed to overcome specific casting problems or to optimise the process for

specific metals, product designs and scales or other operational considerations

such as automation.

All casing processes use a mould, either permanent or temporary, which is a

‘negative’ of the desired shape. Once the metal is poured and has solidified it

forms the ‘positive’ shape of the desired product. Processes differ in the

number of stages that are required to produce the final casting. Die casting is

the simplest technique in terms of the number of stages used. The process uses

a permanent mould (-ve) to produce the final casting (+ve). Processes, such as

sand moulding and shell casting, use a temporary mould (-ve) which is

typically produced using a permanent pattern or die (+ve). Investment casting

and lost foam casting techniques use a temporary mould (-ve) that is build

around a temporary pattern (+ve). For repetitive work, patterns are often

produced using a permanent mould or die (-ve). Table 1 summarises the

patterns and moulds typically used for these five common casting techniques

Sand moulding systems use sand as a refractory material and a binder that

maintains the shape of the mould during pouring. A wide range of sand/binder

Cleaner Production Manual for the Queensland Foundry Industry November

1999 Page 7 systems are used. Green (wet) sand systems, the most common

sand system, use bentonite clay as the binder, which typically makes up

between 4% and10% of the sand mixture. Water, which makes up around 2–

4% of the sand mixture, activates the binder. Carbonaceous material such as

charcoal (2–10% of total volume) is also added to the mixture to provide a

reducing environment. This stops the metal from oxidising during the pouring

process. Sand typically comprises the remaining 85–95% of the total mixture

(Environment Canada, 1997). Other sand moulding processes utilise a range of

chemical binders. Oil binders are combinations of vegetable or animal oils and

petrochemicals.Typical synthetic resin binders include phenolics,

phenolformaldehyde, ureaformaldehyde, urea-formaldehyde/furfuryl alcohol,

phenolic isocyanate, and alkyl isocyanate. Chemical resin binders are

frequently used for foundry cores and less extensively for foundry moulds

(Environment Canada, 1997).

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Advantages of casting

Use is widespread; technology well developed.

Materials are inexpensive, capable of holding detail and resist deformation

when heated.

o Process is suitable for both ferrous and non-ferrous metal castings.

o Handles a more diverse range of products than any other casting

method.

o Produces both small precision castings and large castings of up to

1 tonne.

Can achieve very close tolerances if uniform compaction is achieved.

o Mould preparation time is relatively short in comparison to many

Other processes.

The relative simplicity of the process makes it ideally suited to

mechanisation.

o High levels of sand reuse are achievable (USEPA, 1998).

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Photo 2.3 Casted Child Part

2.2.2 BRAZING

Brazing is a joining process whereby a filler metal or alloy is heated to melting

temperature above 450°C (842°F), or, by the traditional definition that has

been used in the United States, above 800°F (425°C) and distributed between

two or more close-fitting parts by capillary action. At its liquid temperature,

the molten filler metal and flux interacts with a thin layer of the base metal,

cooling to form a strong, sealed joint. By definition the melting temperature of

the braze alloy is lower (sometimes substantially) than the melting temperature

of the materials being joined. The brazed joint becomes a sandwich of different

layers, each metallurgically linked to the adjacent layers. Common brazements

are about 1/3 as strong as the parent materials due either to the inherent lower

yield strength of the braze alloy or to the low fracture toughness of

intermetallic components. To create high-strength brazes, a brazement can be

annealed to homogenize the grain structure and composition (by diffusion)

with that of the parent material.

2.2.2.1 How Does Brazing Join Materials

In furnace brazing, the parts or assemblies being joined are heated to

the melting point of the filler metal being used. This allows the molten filler

metal to flow via capillary action into the closefitting surfaces of the joint and

to form an alloy of the materials at the transition point upon solidification. The

base metals do not melt, but they can alloy with the molten filler metal by

diffusion to form a metallurgical bond. Because the metallurgical properties at

the brazed joint may differ from those of the base metals

Selection of the appropriate filler metal is critical. Depending on the

desired properties of the application, the brazing operation can be used to

impart a leaktight seal and/or structural strength, with excellent appearance

characteristics, in addition to joining for the purpose of extending section

length, e.g., in piping or tubing materials.

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2.2.2.2 Differences Between Soldering, Welding, And Brazing

The joining techniques of soldering, welding, and brazing have many

similarities; however, each process has its own characteristics and specific

indications for use. Generally, the criteria for selecting one process over the

other depend on the physical and economic requirements of the base metals

and/or end-use of the assembly being joined.

As with brazing, soldering does not involve the melting of the base

metals. However, the filler metal used has a lower melting point (often referred

to as “liquidus”) than that of brazing filler metals (below approximately 840°

F, or 450° C) and chemical fluxes must be used to facilitate joining. In

soldering operations, heat may be applied in a number of ways, including the

use of soldering irons, torches, ultrasonic welding equipment,

Resistance welding apparatus, infrared heaters, orspecialized ovens. A

major advantage of soldering is its low-temperature characteristic which

minimizes distortion of the base metals, and makes it the preferred joining

method for materials that cannot tolerate brazing or welding temperatures.

However, soldered joints must not be subjected to high stresses, as soldering

results in a relatively weak joint. Welding, on the other hand, forms a

metallurgical joint in much the same way as brazing. Welding filler metals

flow at generally higher temperatures. than brazing filler metals, but at or just

below the melting point of the base metals being joined. Fluxes are often

employed to protect and assist in wetting of the base metal surfaces.

Heating sources include plasma, electron beam, tungsten and

submerged arc methods, as well as resistance welding and, more recently,

laser-based equipment and even explosive welding. A disadvantage of welding

is its requirement for higher temperatures, which melts the base metal at the

joint area and can result in distortion and warpage of temperature-sensitive

base metals and stress-induced weakness around the weldment area. It is

generally used for joining thick sections

High strength is required and small areas of large assemblies (spot

welding) where a degree of base-metal distortion is acceptable. Welding can

also cause adverse changes in the mechanical and metallurgical properties in

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the base metals’ Heat Affected Zone (HAZ), requiring furthercorrective heat

treatments.

2.2.2.3. Braze welding

In another similar usage, brazing is the use of a bronze or brass filler

rod coated with flux together with an oxyacetylene torch to join pieces of steel.

The American Welding Society prefers to use the term braze welding for this

process, as capillary attraction is not involved, unlike the prior silver brazing

example. Braze welding takes place at the melting temperature of the filler

(e.g., 870 °C to 980 °C or 1600 °F to 1800 °F for bronze alloys) which is often

considerably lower than the melting point of the base material (e.g., 1600 °C

(2900 °F) for mild steel).

Figure 2.1 Example Of Brazing

In Braze Welding or Fillet Brazing, a bead of filler material reinforces

the joint. A braze-welded tee joint is shown here.

Braze welding has many advantages over fusion welding. It allows you

to join dissimilar metals, to minimize heat distortion, and to reduce extensive

pre- heating. Another side effect of braze welding is the elimination of stored-

up stresses that are often present in fusion welding. This is extremely

important in the repair of large castings. The disadvantages are the loss of

strength when subjected to high temperatures and the inability to withstand

high stresses.

The equipment needed for braze welding is basically identical to the

equipment used in brazing. Since braze welding usually requires more heat

than brazing, an oxyacetylene or oxy-mapp torch is recommended.

‘Braze welding’ is also used to mean the joining of plated parts to

another material. Carbide, cermet and ceramic tips are plated and then joined

to steel to make tipped band saws. The plating acts as a braze alloy.

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2.2.2.4 Brazing fundamentals

In order to attain the highest strengths for brazed joints, parts must be

closely fitted and the base metals must be exceptionally clean and free of

oxides. For capillary action to be effective joint clearances of 50 to 150 µm

(0.002 to 0.006 inch) are recommended. In braze-welding, where a thick bead

is deposited, tolerances may be relaxed to 0.5 mm (0.020 inch). Cleaning of

surfaces can be done in several ways. Whichever method is selected, it is

vitally important to remove all grease, oils, and paint. For custom jobs and part

work, this can often be done with fine sand paper or steel wool. In pure brazing

(not braze welding), it is vitally important to use sufficiently fine abrasive.

Coarse abrasive can lead to deep scoring that interferes with capillary action

and final bond strength. Residual particulates from sanding should be

thoroughly cleaned from pieces. In assembly line work, a "pickling bath" is

often used to dissolve oxides chemically. Diluted sulfuric acid is often used.

Pickling is also often employed on metals like aluminum that are particularly

prone to oxidation.

Using an abrasive to clean oil or grease physically removes some of it

just as any wiping would. However to get the parts clean it is necessary to use

a saponifier that will change the oils and greases to soap. Oven cleaners and

detergents work well.

2.2.2.5 Flux

In most cases, flux is required to prevent oxides from forming while the

metal is heated and also helps to spread out the metal that is used to seal the

joint. The most common fluxes for bronze brazing are borax-based. The flux

can be applied in a number of ways. It can be applied as a paste with a brush

directly to the parts to be brazed. Commercial pastes can be purchased or made

up from powder combined with water (or in some cases, alcohol). Brazing

pastes are also commercially available, combining filler metal powder, flux

powder, and a non-reacting vehicle binder. Alternatively, brazing rods can be

heated and then dipped into dry flux powder to coat them in flux. Brazing rods

can also be purchased with a coating of flux, or a flux core. In either case, the

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flux flows into the joint when the rod is applied to the heated joint. Using a

special torch head, special flux powders can be blown onto the workpiece

using the torch flame itself. Excess flux should be removed when the joint is

completed. Flux left in the joint can lead to corrosion. During the brazing

process, flux may char and adhere to the work piece. Often this is removed by

quenching the still-hot workpiece in water (to loosen the flux scale), followed

by wire brushing the remainder.

The flux chars and adheres to the workpiece when it is used up and / or

overheated. Warm flux can be extremely tenacious. Once the flux has cooled

to room temperature it is much easier to remove. The goal is to use enough

flux and a proper heating cycle so that the flux is not all used up.

The flux does not interact with the materials being brazed but serves as

a barrier and oxygen interceptor. It often has some cleaning properties

including the ability to remove oxides but should not be counted on for this.

When hot quenching remember that you are in effect, heat treating the

materials. Quenching will change material properties.

Many types of brazing flux contain toxic chemicals, sometimes very

toxic. Silver brazing flux often contains Cadmium, which can cause very fast

onset of metal fume fever (within minutes in extreme cases), especially if

brazing fumes are inhaled due to inadequate ventilation.

2.2.2.6 Brazing Strength And Joint Geometry

Brazing is different from welding, where higher temperatures are used,

the base material melts, and the filler material (if used at all) has the same

composition as the base material. Given two joints with the same geometry,

brazed joints are generally not as strong as welded joints although a properly

designed and executed brazed joint can be stronger than the parent metal.

Careful matching of joint geometry to the forces acting on the joint and

properly maintained clearance between two mating parts can lead to very

strong brazed joints. The butt joint is the weakest geometry for tensile forces.

The lap joint is much stronger, as it resists through shearing action rather than

tensile pull and its surface area is much larger. To get braze joints roughly

22

equivalent in strength to a weld a general rule of thumb is to make the overlap

equal to 3 times the thickness of the pieces of metal being joined.

2.2.2.7 Filler Materials

A variety of alloys of metals, including silver, tin, zinc, copper and

others are used as filler for brazing processes. There are specific brazing alloys

and fluxes recommended, depending on which metals are to be joined. Metals

such as aluminum can be brazed, although aluminum requires more skill and

special fluxes. It conducts heat much better than steel and is more prone to

oxidation. Some metals, such as titanium, cannot be brazed because they are

insoluble with other metals, or have an oxide layer that forms too quickly at

high temperatures.

However Titanium can be prepared to be successfully brazed if the

tendency for oxidation is allowed for. If the material is deoxidized and

protected by plating, vacuum or other means then you have a chemically active

surface that can make for very strong joints. This is not true with unprepared

Titanium and the braze joint is a chemical join that is not dependent on the

metal solubility.

Brazing filler material is commonly available as flux-coated rods, very

similar to stick-welding electrodes. Typical sizes are 3 mm (1/8") diameter.

Some widely available filler materials are:

Nickel-Silver: Usually with blue flux coating. 600 MPa (85,000 psi)

tensile strength, 680 - 950°C (1250-1750°F) working temperature. Used

for carbon and alloy steels and most metals not including aluminum.

Bronze: Available with white borax flux coating. 420 MPa (60,000 psi)

tensile strength. 870°C (1600°F) working temperature. Used for copper,

steel, galvanized metal, and other metals not including aluminum.

Brass: Uncoated plain brass brazing rod is often used, but requires the use

of some type of additional flux.

Nb Flux coating colours are manufacturer specific and do not indicate

specific alloy types.

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2.2.2.8 Advantages Of Brazing

Although there is a popular belief that brazing is an inferior substitute

for welding, it has advantages over welding in many situations. For example,

brazing brass has a strength and hardness near that of mild steel and is much

more corrosion-resistant. In some applications, brazing is highly preferred. For

example, silver brazing is the customary method of joining high-reliability,

controlled-strength corrosion-resistant piping such as a nuclear submarine's

seawater coolant pipes. Silver brazed parts can also be precisely machined

after joining, to hide the presence of the joint to all but the most discerning

observers, whereas it is nearly impossible to machine welds having any

residual slag present and still hide joints.

The lower temperature of brazing and brass-welding is less likely to

distort the work piece, significantly change the crystalline structure (create

a heat affected zone) or induce thermal stresses. For example, when large

iron castings crack, it is almost always impractical to repair them with

welding. In order to weld cast-iron without recracking it from thermal

stress, the work piece must be hot-soaked to 870°C (1600 °F). When a

large (more than 50 kg (100 lb)) casting cracks in an industrial setting,

heat-soaking it for welding is almost always impractical. Often the casting

only needs to be watertight, or take mild mechanical stress. Brazing is the

preferred repair method in these cases.

The lower temperature associated with brazing vs. welding can increase

joining speed and reduce fuel gas consumption.

Brazing can be easier for beginners to learn than welding.

For thin workpieces (e.g., sheet metal or thin-walled pipe) brazing is less

likely to result in burn-through.

Brazing can also be a cheap and effective technique for mass production.

Components can be assembled with preformed plugs of filler material

positioned at joints and then heated in a furnace or passed through heating

stations on an assembly line. The heated filler then flows into the joints by

capillary action.

Braze-welded joints generally have smooth attractive beads that do not

require additional grinding or finishing. The most common filler materials

24

are gold in colour, but fillers that more closely match the color of the base

materials can be used if appearance is important.

2.2.3 PIPE BEADING

A tube beading apparatus for cold forming an annular external bead on

a metal tube, the apparatus having a clamp to secure the tube, a beading die to

form the bead and a powered ram to advance the die against the end of the

tube. The beading die has a tube receiving channel surrounding a central

mandrel which extends past the forward wall of the beading die, with the

mandrel sized to fit into the bore of the tube to prevent deformation of the bore

and with the tube receiving channel sized equal or smaller than the outer

diameter of the tube, so that when the die is forced onto the end of the tube the

tube wall is deformed into the annular bead. The shoulder of the clamp

aperture holding the tube and the shoulder of the tube receiving channel are

rounded to properly form the bead.

Photo 2.4 Beading Of The Pipe Of Water Tube Bypass

25

2.2.4 PIPE BENDING

Photo 2.5 Cnc Pipe Bending Machine

Bending is a process by which metal can be deformed by plastically deforming

the material and changing its shape. The material is stressed beyond the yield

strength but below the ultimate tensile strength. The surface area of the

material does not change much. Bending usually refers to deformation about

one axis.

Bending is a flexible process by which many different shapes can be produced.

Standard die sets are used to produce a wide variety of shapes. The material is

placed on the die, and positioned in place with stops and/or gages. It is held in

place with hold-downs. The upper part of the press, the ram with the

appropriately shaped punch descends and forms the v-shaped bend.

Bending is done using Press Brakes. Press Brakes normally have a capacity of

20 to 200 tons to accommodate stock from 1m to 4.5m (3 feet to 15 feet).

Larger and smaller presses are used for specialized applications.

Programmable back gages, and multiple die sets available currently can make

for a very economical process.

26

Air Bending is done with the punch touching the workpiece and the workpiece,

not bottoming in the lower cavity. This is called air bending. As the punch is

released, the work piece ends up with less bend than that on the punch (greater

included angle). This is called spring-back. The amount of spring back

depends on the material, thickness, grain and temper. The spring back usually

ranges from 5 to 10 degrees. Usually the same angle is used in both the punch

and the die to minimize setup time. The inner radius of the bend is the same as

the radius on the punch.

Fig. 2.2 Air Bending And Bottoming

Bottoming or Coining is the bending process where the punch and the

workpiece bottom on the die. This makes for a controlled angle with very little

spring back. The tonnage required on this type of press is more than in air

bending. The inner radius of the work piece should be a minimum of 1

material thickness in the case of bottoming; and up to 0.75 material thickness,

in the case of coining.

Fig 2.3 bottoming and coining

27

2.3. PROCESS FLOW DIAGRAM

Received machined casting

Casting inspection as per drawing

Store in storage area

Receive raw material

Raw material inspection as per drawing

Store in storage area

28

Pipe cutting

Deburring

Pipe bending

Inspection

29

Pipe beading

Casting and pipe brazing

Deburring

Pressure testing

Part identification

30

Assembly phosphating ,cleaning and oiling

Final inspection

Painting and packing

Loading and dispatch

2.4. INSPECTION

31

2.4.1 DIMENSIONAL SPECIFICATIONS

Figure 2.4 Outer And Internal Diameter Of Water Tube Bypass

32

Figure 2.5 Height And Length Of Water Tube Bypass

2.4.2 Checking aids list

Sr. No.

GAUGE/INSTURMENTS/

TEST EQUIPMENTS

PARAMETER

CHECKED

GAUGE/INSTURMENTS/

TEST EQUIPMENTS

NO.

CALIBRATIO

N FREQ.

CALIBRATION AGENCY

LEAST COUNT

1 Vernier Caliper Wall Thickness/h

ole dia.

BE - V - 03 1 Year Caliber Gauges & Instrument

0.02mm

2 Height gauge CTC & Leng

th

BE - HG - 01 1 Year Caliber Gauges & Instrument

0.02mm

3 Micrometer Thickness BE - MS - 01-01 1 Year Caliber Gauges & Instrument

0.01mm

Table 2.1 Gauges Instruments And Testing Equipment

33

2.4.3 Layout inspection

Table 2.2 Parametres And Their Method Of Inspection

Sr No .Parameters on

DrgSpecification

Method of Inspection

1 Dimension 65.5 ± 1.5 Height Gauge

2Dimension 190.5 ± 1.5 Height Gauge

3OD 88.9 ± 0.2 Vernier Caliper

Thickness 1.65± 0.2 Vernier Caliper

4Dimension 268.7± 1.5 Height Gauge

5Dimension 221.5± 1.5 Height Gauge

6CD 526.5±n 0.5 Height Gauge

7Pressure Test 2kg/cm.sq Pressure Gauge

8ID 89.2 ± 0.2 Vernier Caliper

9CD 65.02 ± 0.5 Vernier Caliper

10CD 109.22 ± 0.5 Vernier Caliper

11Hole dia 10.23 ± 0..2 Vernier Caliper

12Spot Face 20.5 + 0.5 Vernier Caliper

13Flatness 0.25 Filler Gauge

13Bead Dia 93.67 ± 0.76 Vernier Caliper

14Burr ,sharp edges

No burr , sharp edges

Visual Inspection

15Paint Red Oxide Supplier T C

16Packing Polybag Visual

17Mtrl for ref 1 MS 30035 Supplier T C

34

3. PARETO ANALYSIS

3.1 INTRODUCTION

Pareto analysis is a statistical technique in decision making that is used for

selection of a limited number of tasks that produce significant overall effect. It

uses the Pareto principle - the idea that by doing 20% of work you can

generate 80% of the advantage of doing the entire job. Or in terms of quality

improvement, a large majority of problems (80%) are produced by a few key

causes (20%).

Pareto analysis is a formal technique useful where many possible courses of

action are competing for your attention. In essence, the problem-solver

estimates the benefit delivered by each action, then selects a number of the

most effective actions that deliver a total benefit reasonably close to the

maximal possible one.

Pareto analysis is a creative way of looking at causes of problems because it

helps stimulate thinking and organize thoughts. However, it can be limited by

its exclusion of possibly important problems which may be small initially, but

which grow with time. It should be combined with other analytical tools such

as Failure mode and effects analysis and Fault tree analysis for example.

Pareto effect.

In practically every industrial country a small proportion of all the factories

employ a disproportionate number of factory operatives. In some countries 15

percent of the firms employ 70 percent of the people. This same state of affairs

is repeated time after time. In retailing for example, one usually finds that up to

80 percent of the turnover is accounted for by 20 percent of the lines.

This effect, known as the 80 : 20 rule, can be observed in action so often that it

seems to be almost a universal truth. As several economists have pointed out,

at the turn of the century the bulk of the country’s wealth was in the hands of a

small number of people.

This fact gave rise to the Pareto effect or Pareto’s law: a small proportion of

causes produce a large proportion of results. Thus frequently a vital few causes

may need special attention wile the trivial many may warrant very little. It is

this phrase that is most commonly used in talking about the Pareto effect – ‘the

35

vital few and the trivial many’. A vital few customers may account for a very

large percentage of total sales. A vital few taxes produce the bulk of total

revenue. A vital few improvements can produce the bulk of the results.

The Pareto effect is named after Vilfredo Pareto, an economist and sociologist

who lived from 1848 to 1923. Originally trained as an engineer he was a one

time managing director of a group of coalmines. Later he took the chair of

economics at Lausanne University, ultimately becoming a recluse. Mussolini

made him a senator in 1922 but by his death in 1923 he was already at odds

with the regime. Pareto was an elitist believing that the concept of the vital few

and the trivial many extended to human beings.

Much of his writing is now out of favour and some people would like to re-

name the effect after Mosca, or even Lorenz. However it is too late now – the

Pareto principle has earned its place in the manager’s kit of productivity

improvement tools.

This method stems in the first place from Pareto’s suggestion of a curve of the

distribution of wealth in a book of 1896. Whatever the source, the phrase of

‘the vital few and the trivial many’ deserves a place in every manager’s

thinking. It is itself one of the most vital concepts in modern management. The

results of thinking along Pareto lines are immense.

For example, we may have a large number of customer complaints, a lot of

shop floor accidents, a high percentage of rejects, and a sudden increase in

costs etc. The first stage is to carry out a Pareto analysis. This is nothing more

than a list of causes in descending order of their frequency or occurrence. This

list automatically reveals the vital few at the top of the list, gradually tailing off

into the trivial many at the bottom of the list. Management’s task is now clear

and unavoidable: effort must be expended on those vital few at the head of the

list first. This is because nothing of importance can take place unless it affects

the vital few. Thus management’s attention is unavoidably focussed where it

will do most good. Another example is stock control. You frequently find an

elaborate procedure for stock control with considerable paperwork flow. This

is usually because the systems and procedures are geared to the most costly or

fast-moving items. As a result trivial parts may cost a firm more in paperwork

than they cost to purchase or to produce. An answer is to split the stock into

three types, usually called A, B and C. Grade A items are the top 10 percent or

36

so in money terms while grade C are the bottom 50-75 percent. Grade B are

the items in between. It is often well worthwhile treating these three types of

stock in a different way leading to considerable savings in money tied up in

stock.

Production control can use the same principle by identifying these vital few

processes, which control the manufacture, and then building the planning

around these key processes. In quality control concentrating in particular on

the most troublesome causes follows the principle. In management control, the

principle is used by top management looking continually at certain key figures.

Thus it is clear that the Pareto concept – ‘the vital few and the trivial many’ –

is of utmost importance to management.

The Pareto chart

A Pareto chart is a graphical representation that displays data in order of

priority. It can be a powerful tool for identifying the relative importance of

causes, most of which arise from only a few of the processes, hence the 80:20

rule. Pareto Analysis is used to focus problem solving activities, so that areas

creating most of the issues and difficulties are addressed first.

Figure 3.1 typical pareto graph

37

3.2 PROBLEMS OF PARETO ANALYSIS

Difficulties associated with Pareto Analysis:

Misrepresentation of the data.

Inappropriate measurements depicted.

Lack of understanding of how it should be applied to particular problems.

Knowing when and how to use Pareto Analysis.

Inaccurate plotting of cumulative percent data.

Overcoming the difficulties

Define the purpose of using the tool.

Identify the most appropriate measurement parameters.

Use check sheets to collect data for the likely major causes.

Arrange the data in descending order of value and calculate % frequency

and/or cost and cumulative percent.

Plot the cumulative percent through the top right side of the first bar.

Carefully scrutinise the results. Has the exercise clarified the situation?

Even in circumstances which do not strictly conform to the 80 : 20 rule the

method is an extremely useful way to identify the most critical aspects on

which to concentrate. When used correctly Pareto Analysis is a powerful and

effective tool in continuous improvement and problem solving to separate the

‘vital few’ from the ‘many other’ causes in terms of cost and/or frequency of

occurrence.

It is the discipline of organising the data that is central to the success of using

Pareto Analysis. Once calculated and displayed graphically, it becomes a

selling tool to the improvement team and management, raising the question

why the team is focusing its energies on certain aspects of the problem.

38

3.3 PARETO ANALYSIS STEP BY STEP

Pareto Analysis is a statistical technique in decision making that is used for the

selection of a limited number of tasks that produce significant overall effect. It

uses the Pareto Principle (also know as the 80/20 rule) the idea that by doing

20% of the work you can generate 80% of the benefit of doing the whole job.

Or in terms of quality improvement, a large majority of problems (80%) are

produced by a few key causes (20%). This is also known as the vital few and

the trivial many.

In the late 1940s quality management guru Joseph M. Juran suggested the

principle and named it after Italian economist Vilfredo Pareto, who observed

that 80% of income in Italy went to 20% of the population. Pareto later carried

out surveys on a number of other countries and found to his surprise that a

similar distribution applied.

The 80/20 rule can be applied to almost anything:

80% of customer complaints arise from 20% of your products or services.

80% of delays in schedule arise from 20% of the possible causes of the

delays.

20% of your products or services account for 80% of your profit.

20% of your sales-force produces 80% of your company revenues.

20% of a systems defects cause 80% of its problems.

The Pareto Principle has many applications in quality control. It is the basis for

the Pareto diagram, one of the key tools used in total quality control and Six

Sigma.

In PMBOK Pareto ordering is used to guide corrective action and to help the

project team take action to fix the problems that are causing the greatest

number of defects first.

Pareto Analysis Seven steps to identifying the important causes using

Pareto Analysis Form a table listing the causes and their frequency as a

percentage.

Arrange the rows in the decreasing order of importance of the causes, i.e.

the most important cause first.

Add a cumulative percentage column to the table.

Plot with causes on x-axis and cumulative percentage on y-axis.

39

Join the above points to form a curve.

Plot (on the same graph) a bar graph with causes on x-axis and percent

frequency on y-axis.

Draw a line at 80% on y-axis parallel to x-axis. Then drop the line at the

point of intersection with the curve on x-axis. This point on the x-axis

separates the important causes on the left and less important causes on

the right.

Graph 3.1 pareto diagram example

This is a simple example of a Pareto diagram using sample data showing the

relative frequency of causes for errors on websites. It enables you to see what

20% of cases are causing 80% of the problems and where efforts should be

focussed to achieve the greatest improvement.

The value of the Pareto Principle for a project manager is that it reminds you to

focus on the 20% of things that matter. Of the things you do during your

project, only 20% are really important. Those 20% produce 80% of your

results. Identify and focus on those things first, but don't totally ignore the

remaining 80% of causes.

3.4 COMPARATIVE STUDY

3.4.1 Pareto analysis in the month of feb.

40

Graph 3.2 Pareto Analysis In Feb

3.4.2 Pareto analysis in the month of june.

Graph 3.3 Pareto Analysis In June

3.5 PROCESS STUDY

41

It is a scientific methodology that was developed in the 18th century in

England to counter their problems in cotton industries.

The basic principles that are associated with the process study are:-

It aims at identifying each and every aspect of a method by constantly

observing the operator and the process.

With the help of templates, flow process charts, therbligs and diagrams

this processes are recorded.

These recorded data’s are then analyzed till a new format or method is

developed

3.6 IDENTIFICATION OF PROBLEMS

1. dimensional inaccuracy

2. damages while storage

3. abnormalities in bending

4. leakages

5. rust and foreign material

6. improper packing,painting

7. improper beading

8. improper casting

3.7 GAP ANALYSIS

Based on the observations and analysis that we did in our process study

we prepared a chart explaining the all possible reasons along with their

timings that contributes towards the gap between the non productive hours

and productive hours.

42

Chart 3.1 Gap Analysis In Feb

Table 3.1 Activities And Their Duration In Feb

S.No. Activities Time in hours

1. Pipe cutting 0.08

2. Pipe bending 0.05

3. Pipe beading 0.06

4. brazing 0.11

5. Cleaning and painting 0.16

6. casting 0.16

3.8 SOLUTIONS TO THE PROBLEMS

1. Problem- rejection due to dimensional inaccuracy

The product was being rejected because its dimension was not in the specified

tolerance limit. The various dimensional inaccuracy occurred in – length of

the tube, outer diameter (o.d), internal diameter (i.d) , centre distance (c.d)

Cause – The dimensional inaccuracy in the product occurred due to human

element , lack of regular quality inspection, errors in the fixture.

43

Action plan - Generating awareness regarding accuracy, quality inspection at

regular interval , eliminating errors

2. Problem – damages while storage

Cause – improper storage , considering natural conditions (rust )

Action plan - Identification of Lot & Size , Well preservaton , avoid damage

Reaction plan- Inform to Q.A.Manager for the further action

3. Problem – wrinkles, ball marks and length variation in bending

Cause – wrinkles were seen in some pieces at the inner bend surface which

were because of over use of mandrel , ball marks occurred at the outer bend of

the tube because of insufficient lubrication

Action plan - Right angle Inspection in fixture

Reaction plan – use of mandrel as per its lifetime ,

4. Problem- leakages

Cause-improper brazing

Action plan - generating awareness, Brazing fixture with brazing attachment

5. Problem- Rust & Foreign Material

Cause- improper acid phosphating,cleaning and assembly

Action plan - applying rust preventive oil by using spray gun

6. Problem- improper packing,painting

Cause- nonUniform painting except matching face

Action plan – including the inspection by operator, 100% inspection by

operator , 100% Inspection by operator Dispatch Supervisor

Reaction plan - If painting not done properly repeat the operation, If packing

not ok repeat the process, Well preservation packaging and identification

taging

7. Problem - improper beading

Cause – the rolling beading machine has no of parts rejected too much.

Action plan – press beading machine replaced the rolling beading machine

44

8 . Problem – casting problem various casting problems and their respective action

and reaction plan -

a) not appropriate spot face

action plan- rework being done

reaction plan- to check cautiously while reciving the casted product

Photo 3.1 Spot Face And Their Bolts

b) undersize chamfering

action plan – rework done in house

reaction plan – providing specific tolerance to the vendor

c) flatness error

action plan – grinding to have desired flatness

reaction plan – maintaining the flatness from the early stage

d) excess casting

action plan – in house reworking

reaction plan – checking while receiving the report

e) problem- improper fitment - due to defects in casting chamfering was not upto

the mark which prohibited the tube to fit properly.

action plan -rework on casting , foolproofing the fixture so that if there is any

misalignment in the fitting it won’t set in the fixture

45

3.9 AFTERMATH OF IMPLEMENTATION

Chart 3.2 Gap Analysis In June

Table 3.2 Activities And Their Duration In June

S.No. Activities Time in hours

1. Pipe cutting 0.08

2. Pipe bending 0.03

3. Pipe beading 0.03

4. brazing 0.10

5. Cleaning and painting 0.15

6. casting 0.03

46

4. ACTIVITY BASED COSTING

4.1 INTRODUCTION

Activity Based Costing (ABC) is a method for developing cost estimates in

which the project is subdivided into discrete, quantifiable activities or a work

unit. The activity must be definable where productivity can be measured in

units (e.g., number of samples versus manhours). After the project is broken

into its activities, a cost estimate is prepared for each activity. These individual

cost estimates will contain all labour, materials, equipment, and subcontracting

costs, including overhead, for each activity.

Each complete individual estimate is added to the others to obtain an overall

estimate. Contingency and escalation can be calculated for each activity or

after all the activities have been summed. ABC is a powerful tool, but it is not

appropriate for all cost estimates. This project outlines the ABC method and

using it

Activity-based Costing (ABC) is a dynamic and systematic accounting

methodology for realistically calculating the actual cost of doing business,

regardless of organizational structure. ABC originated from the efforts of Dr.

Robert Kaplan of Harvard, who also conceptualized the Balanced Scorecard.

   

Activity-based costing involves the creation of models of the actual costs

incurred by a company at each stage of its core processes.  In fact, a cost is

attached to every activity, such that the cost of executing each activity may

built into the cost of producing the products or services offered by the

company.  As a result, the cost contribution of each activity to the total cost

incurred by the company to manufacture its goods or render its services is

determined, and a better understanding of the company's cost structures is

achieved.  The drawback of implementing ABC is that it requires time and

resources to implement it properly.

   

Proponents of ABC believe that the major thrusts of a company such as

continuous process improvement and simplification to boost productivity can

only be attained if the real cost and time required to produce its goods and

47

services is determined.  This will prevent indiscriminate cost-cutting measures

(such as miscalculated downsizing) that may actually result in worse

performance and profitability.

  

An activity is defined as a process, function, task, or step that occurs over time

and generates results that the company uses to produce and sell its products

and services. An activity consumes resources as it transforms its inputs into

outputs, and therefore incurs a 'cost' every time it occurs.  Allowing an

organization, or even every employee involved, to understand the cost of doing

each activity gives it a better chance to perform the activity better while

minimizing costs.  In fact, the cost attached to an activity may be used as a

metric for organizational or personnel performance.

  

ABC entails the complex task of identifying discrete activities and identifying

the measure of output for each of these activities. Each activity also needs to

be classified as either 'value-added' or 'non-value-added.'  Value-added

activities are activities that add value to the product or service that the

customer is willing to pay for.  Thus, all steps required to manufacture a

product or enhance its quality or reliability are value-added activities.  On the

other hand, non-value-added activities are activities that do not contribute any

value to the final product, and are other activities that the customer doesn't

really want to pay for.  Staging of products and unnecessary inspection are

examples of non-value-added activities. Non-value added activities, in general,

must be eliminated if possible.

  

Activity-based costing consists of the following steps: 1) analysis of activities;

2) cost data gathering; 3) tracing of costs to activities; 4) establishment of

output metrics; and 5) cost analysis.

The analysis of activities of a company starts with identifying which activities

will be covered by the analysis. Experts recommend the analysis of at least half

a dozen organizational units with a common functional orientation to start the

program. The analysis of each activity includes, among other things,

determining the following: 1) whether it is value-adding or non-value-adding;

48

2) whether it is primary or secondary; and 3) whether it is absolutely required

or not (discretionary).

   

As discussed earlier, value-adding activities contribute something of 'value'

directly to the manufacture of the products or rendering of the services sold to

the customer, while non-value-adding activities do not. Primary activities

directly support the company's mission while secondary activities simply

support the primary activities. Required activities need to be performed all the

time, while discretionary activities are those that are only performed if allowed

by management.

   

Cost data gathering involves the determination of the costs incurred by the

activities being analyzed.  These costs include salaries of the people

performing the activities, material costs, equipment and furniture costs, and

even R&D costs. Actual cost data are preferred but if they're unavailable,

estimates based on cost formulas may be used.  

   

The tracing of costs to activities refers to the process of determining where the

total cost of each output comes from. Every output of an organization was

produced by one or more activities, each of which incurred costs when

undertaken. This step aims to determine where the costs are being incurred in

producing an output, by determining which activities are needed to produce

that output and what costs are incurred in each of these activities.

      

The establishment of output metrics pertains to determining the total cost of

producing an output. It consists of the calculation of the actual activity unit

cost for each primary activity and the generation of the bill of activities.  The

activity unit cost of an activity is the total input cost divided by the primary

activity output volume.  The total input cost should include both the costs

incurred by the primary activity and its associated secondary activities.  The

bill of activities is the list of activities (and their corresponding consumed

amounts) needed to produce the output. The total cost of the bill of activities is

the sum of each activity unit cost multiplied by its corresponding activity

amount consumed.  

49

      

The analysis of costs is the step wherein the activity unit costs and bills of

activities are analyzed to identify areas for further improvement in the

companies' business processes.  This is where non-value added activities are

properly identified for elimination, resulting in better business performance

and greater efficiency.

                    

4.2 NON VALUE ADDING ACTIVITY

4.2.1 Definition

Activity or task that incurs expenditure of time and/or money, but does not

contribute to the customer satisfaction, service, or value. All such activities,

however, are not unnecessary but include essential functions such as

accounting, inspection, storage, transportation, etc. Other non value adding

activities such as recall, rework, and waste of effort, must be minimized or

eliminated.

4.3 ACTIVITY BASED COSTING METHODOLOGY

For many years, construction firms and industry trade groups have collected

cost data from a multitude of different construction projects. The amount of

work associated with that cost was also collected with the cost data. For

example, collected data included the cost of the paint, labour, equipment, and

overhead to paint a room, the amount of surface area painted, and the

manpower required to paint the room. This practice allows construction

professionals to obtain a cost per area and manpower per area. These costs are

based on an activity, such as painting, and are known as ABC.

A. Activity Based Costing Definition

ABC can be defined by the following equation:

C/A = HD + M + E + S

Where C/A = Estimated cost per activity

H = Number of labour hours required to perform the activity one time

50

D = Wages per labour hour

M = Material costs required to perform the activity one time

E = Equipment costs to perform the activity one time

S = Subcontracting costs to perform the activity one time

The total cost for performing the activity will be based on the number of times

the activity is performed during a specific time frame. Cost estimators have

assembled large databases of activity based cost information. The R.S. Means

Company updates its published cost references on a yearly basis, and they are

an excellent source of ABC information for the construction industry.

B. Use of Activity Based Costing Methodology

ABC methodology is used when a project can be divided into defined

activities. These activities are at the lowest function level of a project at which

costs are tracked and performance is evaluated. Depending on the project

organization, the activity may coincide with an element of the work breakdown

structure (WBS) or may combine one or more elements of the WBS. However,

the activities must be defined so there is no overlap between them. After the

activity is defined, the unit of work is established. All costs for the activity are

estimated using the unit of work. The estimates for the units of work can be

done by performing detailed estimates, using cost estimating relationships,

obtaining outside quotes for equipment, etc. All costs including overhead,

profit, and markups should be included in the activity cost.

C. Identification of Activities

When defining an individual activity, the cost estimator must balance the need

for accuracy with the amount of time available to prepare the estimate. An

estimator may be able to develop an extremely accurate cost estimate by

defining smaller and smaller activities; however, the amount of time required

to prepare ABC estimates for each of these activities may not justify the

increased accuracy. The total estimated project cost may be sufficiently

accurate if 10 activities are used instead of 15. On the other hand, reliable cost

information may not be accessible if the activity categories are too general.

Since the activity is the basis for the estimate, it

is very important that the activity be selected correctly.

51

4.4 CALCULATION

C/A = HD + M + E + S

where C/A = Estimated cost per activity

H = Number of labor hours required to perform the activity one time

D = Wages per labor hour

M = Material costs required to perform the activity one time

E = Equipment costs to perform the activity one time

S = Subcontracting costs to perform the activity one time

4.4.1 TOTAL ABC COSTING FOR THE PRODUCT WATER TUBE

BYPASS

C/A= C/A1 + C/A2 + C/A3 + C/A4 + C/A5 + C/A6

A1 =PIPE CUTTING

A2 = PIPE BENDING

A3 = PIPE BEADING

A4 = BRAZING

A5 = ACID PHOSPHATING

A6= CASTING

CALCULATION FOR RESPECTIVE ACTIVITIES INDIVIDUALLY IN

FEB

1. PIPE CUTTING = C/A1 = HD+M+E+S

= Rs( 5/60 * 24 +84 +10+0)

= Rs 96

2. PIPE BENDING = C/A2 = HD+M+E+S

52

= Rs (3/60 *24 +0 +20 +0)

= Rs 21.2

3. BEADING = C/A3 = HD+M+E+S

= Rs( 4/60 * 24 + 0 + 2 + 0)

= Rs 3.6

4. BRAZING = C/A4 = HD+M+E+S

= Rs (7/60 * 24 +0 +17 +0)

= Rs 19.8

5. ACID PHOSPHATING = C/A5 = HD+M+E+S

= Rs (10/60 * 24 + 15 + 5 + 0)

= Rs 24

6. CASTING = C/A6 = HD+M+E+S

= Rs (10/60 * 24 + 0 + 0 + 150)

= Rs 154

TOTAL COST = 96+21.2+3.6+19.8+24+154

=318.60

CALCULATION FOR RESPECTIVE ACTIVITIES INDIVIDUALLY IN

JUNE

1. PIPE CUTTING = C/A1 = HD+M+E+S

= Rs ( 5/60 * 24 +84 +10+0)

= Rs 96

2. PIPE BENDING = C/A2 = HD+M+E+S

= Rs ( 2/60 *24 +0 +20 +0)

= Rs 20.8

53

3. BEADING = C/A3 = HD+M+E+S

= Rs (2/60 * 24 + 0 + 2 + 0)

= Rs 2.8

4. BRAZING = C/A4 = HD+M+E+S

= Rs (6/60 * 24 +0 +17 +0)

= Rs 18.40

5. ACID PHOSPHATING = C/A5 = HD+M+E+S

= Rs ( 9/60 * 24 + 15 + 5 + 0)

= Rs 23.6

6. CASTING = C/A 6 = HD+M+E+S

= Rs (2/60 * 24 + 0 + 0 + 150)

= Rs 150.80

TOTAL COST = Rs (96 + 20.8 + 2.8 + 18.40 + 23.6 + 150.8)

= Rs 312.4

NET SAVINGS

Savings per piece = Rs 318.60 - 312.40

= Rs 6.20

Thus counting for a month = Rs 6.20*2700

= 16742.17

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5. OVERALL BENEFITS

1. Reduction in nva hours

2. Quality and performance of the company have improved

3. Safety aspects have improved

4. Ease of operation have been achieved

5. Parallel deployment of the action plan on other products such as

3055710 , 3178319, 3178320 has reduced their nva hours .

6. Nva of the product can be further reduced if the pending action is

implemented. Thus this project gives a scope for further improvement.

7. Company got the clear idea of their exact profit being made, thus to

recover their nva cost either they are going to add it internally in their

costing or they are targeting nva reduction at large

6. LEARNINGS

Understanding of pareto analysis, activity based costing TPM and other

world class manufacturing methods such as KANBAN.

Supervision skills

CONCLUSION.

55

Undergoing an inplant training in well established and one of the best

professionally managed company like BHOR ENGINEERING PRIVATE

LIMITED. during these six months of training was a career. The training

offered me the exposure to industrial environment which cannot be stimulated

in any of the engineering colleges. I understood the scope, functions and job

responsibilities of various departments of an industrial organization. It enabled

me to get familiarized with the various processes, products and their

applications along with relevant aspects shop management. I gained

knowledge of various press machines, welding procedures and lot more. I also

realized the need for cooperative efforts of various persons at different levels

in achieving set goals and targets. I also realized the importance of effective

communications. The training thus proved to be an enriching experience which

is bound to help me in years to come.

As our training revolves around implementing our technical know how into

industrial environments. I executed the project through which I benefited a lot.

The project is on the product water tube bypass. Using the pareto analysis, the

major problems were identified and realistic solutions were found and put to

practice. Our next target was reducing non value adding hours, for that purpose

we used gap analysis and later on with the activity based costing we calculated

the total cost incurred by the company in manufacturing tube water bypass.

56

REFERENCES

[1].Arkansas Business and Economic Review (Winter 1997), pp. 1-8.

Hubbell,

[2].Blair, Alistair “EVA Fever,” Management Today (January 1997),

pp. 42-45.

[3].Cooper, Robin “The Rise of Activity-Based Costing – Part One:

What is an Activity-Based Cost System?”

[4].Harvard Business Review (September-October 1988), pp. 96-102.

Dodd, James L. and Chen, Shimin “EVA: A New Panacea?” B&E

Review (July-September 1996), pp. 26-28. Dodd, James L. and

Chen, Shimin “Economic Value Added (EVA),”

[5].Journal ofCost Management (Summer 1988a), pp. 45-54. Cooper,

Robin “The Rise of Activity-Based Costing – Part Two: When Do

I Need an Activity-Based Cost System?”

[6].Journal of Cost Management (Fall 1988b), pp. 41-58. Cooper,

Robin “The Rise of Activity-Based Costing – Part Three: How

Many Cost Drivers Do You Need, and How Do You Select

Them?”

[7].Journal of Cost Management (Winter 1989a), pp. 34-46. Cooper,

Robin “The Rise of Activity-Based Costing – Part Four: What Do

Activity-Based Cost Systems Look Like?”

[8].Journal of Cost Management (Spring 1989b), pp. 38-49. Cooper,

Robin and Kaplan, Robert S. “Measure Cost Right: Make the Right

Decisions,”

[9].Journal of Cost Management (Spring 1996a), pp. 18-29. Hubbell,

William W. “A Case Study in Economic Value Added and

Activities-Based Management”

[10]. Journal of Cost Management (Summer 1996b), pp. 20-29.

Reimann, Bernard. C. “Managing for The Shareholder: An

Overview of Value-Based Planing”,

57

[11]. Planing Review (January-February 1988), pp. 10-22. Stewart, G.

Benett, The Quest for Value: A Guide for Senior Managers, Harper

Business, New York (1991).

[12]. William W. “Combining Economic Value Added and Activities-

Based Management,”

LINKS

[1]. http://www.emeraldinsight.com/Insight/viewContentItem.do;jsess ionid=7674ED017AA9530EBF9BD2065DAFB634?contentType=Article&contentId=1558494

[2]. http://www.bestpracticehelp.com/Problem_Management_and_Pareto_Analysis.pdf

[3]. http://www.mindtools.com/pages/article/newTED_01.htm

[4]. http://ocw.mit.edu/NR/rdonlyres/Civil-and-Environmental- Engineering/1-040Spring-2004/55BC6C7D-6489-4717-BA26- 4B06AFDFE047/0/l16diagnsprjctrl.pdf

[5]. http://www.projectsmart.co.uk/pareto-analysis-step-by-step.html

[6]. http://owic.oregonstate.edu/pubs/EM8771.pdf

[7]. http://www.gogetpapers.com/Tutorials/Pareto_Analysis

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