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Objectives of production and operation management:Main objective To attain maximum output with given set of resources (input).

To produce maximum with lowest cost. Subsidiary objective To control pollution and wastage. To ensure optimum capacity utilization. To exercise inventory control. To control and reduce cost of operation. To ensure optimum utilization of resources. To ensure timely delivery of output. To ensure quality of products. To suggest changes in machinery and equipment. Nature or features or characteristics of production and operation management Its a transformational process The production and operation management is concerned with the conversion of raw material. Its result into value addition In this at every successive level some value is added to the previous one. Example sand at sea shore does not ass any value but sand used in construction adds to the value. Its a system itself Its a complete step wise process i.e. a proper well defined sequence is followed in production and operation management. It exists for certain objective First there is an objective and to meet that particular objective a complete procedure is followed. Its carried out in part of organization Its meaning is that production is not alone in the organization rather there are certain other acts also like finance, research and development etc. Inter relationship among the system No system can ever work in isolation and depends on others for certain help. So, there exists an interrelationship among different system. Stratum formulation A production system consist of various strata of corporate hierarchy in which every stratum has a role to play depending upon the size of the firm. Every stratum enjoys certain benefits as a result of stratum performance. Specialization of function As different functions are performed separately, due to this they are repetitively performed by same people and there is specialization of functions. Increase in entropy

Its a measure of degradation of the matter and energy in the universe to an ultimate stage. To check this degradation process fresh blood must be infused in every production system. ISO finality Uniformity in objectives its the process of reaching the same goal by different rates. There are different approaches for converting the input into outputs. Increase in productivity As there is specialization in functions so the speed of doing a task increases as a result there is increase in productivity. Decrease in cost Specialization leads to less wastage. Timely dependent Its dependent timely on certain factors. Function of production and operation management To achieve the predefine objectives there are certain functions that the production and operation management should perform. 1. Planning 2. Organizing 3. Controlling Planning Product design and development Deals with issues of converting market feedback on the requirements pertaining to the type of product to be produced into specifications and drawings that helps in production. Production process selection Helps evaluate different process option possible to produce the type of product in terms of volumes and variety and other factors to select the best suited process. Planning facility location Deals in evaluating different possible locations for production and selecting the most suitable one that meets the organizational objectives of producing in required quantities at minimal costs. Planning facility layout Refers to studying various options in term of plant and machinery layout that enables smooth flow materials for smooth production. Capacity planning Deals with the issues pertaining to planning the capacity for the plant that enables cost competitive production even with certain degree of fluctuations in the required volumes. Organizing Work study Also known as time and motion study that aims at improving the cycle time required for producing a product. Material management

Aims at establishing sources for the required material in terms of inputs materials or consumable at the right time. So no delays in production occur also unwanted inventories are not created. Purchasing management Is responsible for making the input material available in time, at the right price and in the right quantity and quality. Controlling Stores management Refers to managing the stores inputs materials, consumables and finished stocks while avoiding over stock of materials. Store are accountable for recording the stock and consumption for these materials. Quality control Is responsible for monitoring the quality requirements of the product so that no defective parts are passed on to the consumers. inventory management is responsible for maintaining minimum inventory for all critical materials and ensuring no over stocking take place. Scope of production and operation management Plant location While performing the task of producing products and services business system utilizes facility like plant, machinery, warehouses etc. plant location is considered important because it directly has bearing on factors like financial, employment and distribution patterns. Capacity planning Capacity is the measure of ability to produce goods and services or it may be called as rate of output. Its seen that full capacity is never used due to certain constraints e.g. production the different constraints can be input, market demand, government. Aggregate planning Its a process that follows capacity planning and its medium range forecast. The plan do not necessarily have to be some detailed as to provide specific instructions for daily or weekly operations such as loading, sequencing, expending and dispatching. Scheduling of activities It simply means sequencing of different activities according to these importance and resources which are available. Economics It shows and helps in finding out how the best utilization of limited resources can be made to satisfy the unlimited wants of the people or society as a whole. Computers In production the desired result are feeded and stored for references purposes. Its being said that computers in todays hi-tech world are being used in each and every field. So how production and operation management can be remained untouched by it. HRM

It start for recruitment, selection of employees and see that various task are being performed in the best way. Statistics and mathematics The data is collected, analyzed and interpreted as per our requirement. And its later on used to solve the problem in best possible manner. Decision area of production and operation management On the basis of function on the basis of level Technology selection and allocation strategic decisions Capacity management tactical decisions Scheduling operational decisions System maintenance On the basis of function Technology selection and management The very first decision which has to be taken in production and operation management is regarding the type of technology because in this hi-tech world it keeps on changing everyday and decisions regarding how the management has to perform its functions are taken. Capacity management The decisions has to be taken regarding the capacity as full capacity is never being used due to certain constraints and because of it they have to decide maximum capacity which can be used and how it can be managed. Scheduling or time allocation Here, as we know that a proper sequence is followed so time is divided among these activities. Time is allocated so that no activity which could be completed in les time is taking excessively more time. System maintenance Its concerned with controlling aspect. The overall maintenance of complete system is also important because any fault in one subsystem can cause a great problem in the overall result. On the basis of level Strategic decision These decision are taken at top level. Alternative manufacturing approaches and alternative approaches to automation are used. Example product selection and design, facility design, process selection and planning, capacity planning, facilities layout and material handling. Tactical decision Decision which are taken by middle level. To cope with the decisions level and also relating to factors which are out of control how to control and manage them. Example summary reports which compare overall planned or standard performance for such classification as cost per unit and labour used. Operational decisions Reports comparing actual performance to production schedule and highlighting areas where bottlenecks occur. Example production planning, production control, inventory control, method study, cost reduction control and quality control. such decisions are taken by bottom level.

5(a)

MB0044 : List the objectives of JIT. Explain briefly characteristics of JIT.


MB0044 : List the objectives of JIT. Explain briefly characteristics of JIT. Answer : Just-In-Time (JIT) manufacturing is a process by which companies dont keep lots of excess inventory; instead, they manufacture a product as an order comes in. It is a management philosophy of continuous and forced problem solving. The objective of JIT manufacturing system is to: Eliminate waste that is, minimise the amount of equipment, materials, parts, space, and workers time, which adds a great value to the product Increase productivity JIT means making what the market demands when it is in need. It is the most popular systems that incorporate the generic elements of lean systems. Lean production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement. Deploying JIT results in decrease of inventories and increases the overall efficiencies. Decreasing inventory allows reducing wastes which in turn results in saving lots of money. There are many advantages of JIT: Increases the work productivity Reduces operating costs Improves performance and throughput Improves quality Improves deliveries Increases flexibility and innovativeness For industrial organisations to remain competitive, cost efficiencies have become compulsory. JIT helps in this process. It is extended to the shop floor and also the inventory systems of the vendors. JIT has been extended to mean continuous improvement. These principles are being applied to the fields of Engineering, Purchasing, Accounting, and Data processing. Characteristics of JIT The consequent savings are to be utilised for reducing cost and rendering better service to the customer. Shigeo Shingo an authority on JIT at Toyota classifies the wastes to be eliminated as follows. The seven wastes to be eliminated according to JIT are: Over production Inventory Waiting time Movement Effort Defective products Over processing 1. Over production: Over production is to manufacture products before it is actually needed. If the demand for that product decreases, the extra parts or products produced may not be useful or needed. Also over production results in high storage costs and is also difficult to detect defects. So, over production is considered a waste.

2. Inventory: Excess procurement or production builds up stock of materials which are not immediately used, thus locking space and funds carrying heavy costs. The figure 13.2, illustrates the inventories at different levels of an organisation Supplier distribution, Production, and Customer distribution. 3. Waiting time: Waste of time happen when goods are not moving or being processed. The operator, the machine or the part will either be not working or be worked upon. The duration of waiting is can be said to be unproductive and may create more serious consequences. 4. Movement: Any unnecessary movement is a waste of energy; it causes blockages, disrupting movements and delaying the flow of other items creating delays. 5. Effort: The people, who work, do not make a study as to how the products on which they are making are utilised and do not realise the purpose for which they are made. This lack of education will lead to waste of resources. Finally, they end up in shortage of resources when needed. 6. Defective products: The defective products lead to a tremendous loss to the company. This is because they use up the same equipments, workmen and the time that would be used to make good products. Thus defective products use up resources and result in losses. 7. Over Processing: Some steps like unnecessary processing or production do not add value to the final output. As a result, it is waste of all the inputs that go into the process.

1(i)Economic order quantity (EOQ)



Economic order quantity (EOQ) refers to the optimal order size that will result in the lowest ordering and carrying costs for an item of inventory based on its expected usage. EOQ model answers the following key quantum of inventory management. What should be the quantity ordered for each replenishment of stock? How many orders are to be placed in a year to ensure effective inventory management? EOQ is defined as the order quantity that minimises the total cost associated with inventory management. EOQ is based on the following assumptions: Constant or uniform demand: The demand or usage is even through-out the period Known demand or usage: Demand or usage for a given period is known i.e. deterministic Constant unit price: Per unit price of material does not change and is constant irrespective of the order size Constant Carrying Costs: The cost of carrying is a fixed percentage of the average value of inventory Constant ordering cost: Cost per order is constant whatever be the size of the order

Aassumptions os eoq
EOQ is one of the most common known inventory control technique. This technique involves some assumptions: 1. demand is known and constant 2. the lead time is known and constant 3. the receipt of inventory is instantaneous 4. quantity discounts are not possible 5. the only variable costs are the ordering cost and the holding cost. 6. orders are placed so that stockouts are avoided.

if the annual demand for a product is 350,000 units, then the annual carrying cost rate is 25 percent of the cost per unit, the product costs 14.75 dollar per unit to purchase, and each time the product is ordered the related ordering cost is 53.00 dollar (a) what is the EOQ ? (b) what is the TSC at the EOQ ? (c) how much would the TSC increase if the order quantity must be 2,500 units because of a standard shipping size.
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Assuming JIT, no safety stocks, no demand volatility, flat and linear demand (no slopes, trends, seasonality) and all costs are nominal & not discounted: 1) EOQ = (2350'00053/(0.2514.75)) = 400(3710/59) 3171.91

2) TC = 53350000/EOQ + 0.2514.75EOQ/2 = 25218890 11696.4 3) TC = 53350000/2500 + 0.2514.752500/2 = 96235/8 12029.4 TC = TC - TC +332.955

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