Академический Документы
Профессиональный Документы
Культура Документы
Demand Forecasting – Need, Types, Objectives and Steps. Overview of Qualitative and
Quantitative methods. Capacity Planning – Long range, Types, Rough cut plan, Capacity
Requirements Planning (CRP), Developing capacity alternatives. Aggregate Planning –
Approaches, costs, relationship to Master Production schedule. Overview of MRP, MRP II and
ERP
Product Design – Influencing factors, Approaches, Legal, Ethical and Environmental issues.
Process – Planning, Selection, Strategy, Major Decisions. Service Operations – Types,
Strategies, Scheduling (Multiple resources and cyclical scheduling). Work Study – Objectives,
Procedure. Method Study and Motion Study. Work Measurement and Productivity – Measuring
Productivity and Methods to improve productivity.
Project Management – Scheduling Techniques, PERT, CPM, Crashing CPM networks – Simple
Problems. Facility Location – Theories, Steps in Selection, Location Models – Simple Problems.
Facility Layout – Principles, Types, Planning tools and techniques.
Total: 45
TEXT BOOKS
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REFERENCES
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➢ Production as a system
➢ Production as an organizational function
➢ Decision making in production
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convert inputs into products and services. Thus, it becomes clear that every organization,
irrespective of its nature and purpose has a production function where departments and personnel
play a central role in achieving the objectives of the organization.
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After the economic reforms of 1991 and the advent of LPG in the Indian economy, major
changes have been observed in the business environment. It becomes inevitable for organizations
to change with the changing business environment if it wishes to stay back in the market and
reap profits. Indian industries now face fierce competition from MNCs and if managers of our
industries want to win this competition, they need to accept new responsibilities and reframe
their roles. The same applies for production and operations managers in India. Following are the
responsibilities of production and operation managers in India.
4. Flexibility: The ability to adapt quickly to changes in volume of demand, in the product
mix demanded, and in product design or in delivery schedules, has become a major
competitive advantage to the firms.
5. Time Reduction: Reduction of manufacturing cycle time and speed to market for a new
product provides competitive edge to the firm over other firms. When companies can
provide products at the same price and quality, quicker delivery (short lead times)
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6. Technology: Advances in technology have led to a vast array of new products, new
processes and new materials and components. Automation, computerization, information
and communication technologies have revolutionized the way companies operate.
Technological changes in products and processes can have great impact on
competitiveness and quality, if the advanced technology is carefully integrated into the
existing system.
7. Worker Involvement: The recent trend is to assign responsibility for decision making and
problem solving to the lower levels in the organization. This is known as employee
involvement and empowerment, for example quality circles and quality improvement
teams.
10. Corporate Downsizing (Right Sizing): Companies are forced for downsizing or right
sizing due to competition, lowering productivity, need for improved profit and for higher
dividend payment to shareholders.
11. Supply Chain Management: Management of supply chain, from suppliers to final
customers reduces the cost of transportation, warehousing and distribution throughout the
supply chain.
12. Lean Production: Lean production systems use minimal resources to produce high
volume of high quality goods with some variety. These systems use flexible
manufacturing systems and multi-skilled work force to have advantages of both mass
production and job production (or craft production).
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Speed
Speed is a shorthand way of saying ‗Speed of response‘. It means the time between an external
or internal customer requesting a product or service, and them getting it. Again, there are internal
and external affects.
Externally speed is important because it helps to respond quickly to customers. Again,
this is usually viewed positively by customers who will be more likely to return with
more business. Sometimes also it is possible to charge higher prices when service is fast.
The postal service in most countries and most transportation and delivery services charge
more for faster delivery, for example.
The internal affects of speed have much to do with cost reduction. The chapter identifies
two areas where speed reduces cost (reducing inventories and reducing risks). The
examples used are from manufacturing but the same thing applies to service operations.
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Usually, faster throughput of information (or customers) will mean reduced costs. So, for
example, processing passengers quickly through the terminal gate at an airport can reduce
the turn round time of the aircraft, thereby increasing its utilisation. What is not stressed
in the chapter is the affect the fast throughput can have on dependability. This is best
thought of the other way round, ‗how is it possible to be on time when the speed of
internal throughput within an operation is slow?‘ When materials, or information, or
customers ‗hangs around‘ in a system for long periods (slow throughput speed) there is
more chance of them getting lost or damaged with a knock-on effect on dependability.
Dependability
Dependability means ‗being on time‘. In other words, customers receive their products or
services on time. In practice, although this definition sounds simple, it can be difficult to
measure. What exactly is on time? Is it when the customer needed delivery of the product or
service? Is it when they expected delivery? Is it when they were promised delivery? Is it when
they were promised delivery the second time after it failed to be delivered the first time? Again,
it has external and internal affects.
Externally (no matter how it is defined) dependability is generally regarded by customers
as a good thing. Certainly being late with delivery of goods and services can be a
considerable irritation to customers. Especially with business customers, dependability is
a particularly important criterion used to determine whether suppliers have their contracts
renewed. So, again, the external affects of this performance objective are to increase the
chances of customers returning with more business.
Internally dependability has an affect on cost. The chapter identifies three ways in which
costs are affected – by saving time (and therefore money), by saving money directly, and
by giving an organisation the stability which allows it to improve its efficiencies. What
the chapter does not stress is that highly dependable systems can help increase speed
performance. Once more, think about it the other way round – ‗how can an operation
which is not dependable ever promise its customers fast response?‘
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Flexibility
This is a more complex objective because we use the word ‗flexibility‘ to mean so many
different things. The important point to remember is that flexibility always means ‗being able to
change the operation in some way‘. The chapter identifies some of the different types of
flexibility (product/service flexibility, mix flexibility, volume flexibility, and delivery
flexibility). It is important to understand the difference between these different types of
flexibility, but it is more important to understand the affect flexibility can have on the operation.
Guess what! There are external and internal affects.
Externally the different types of flexibility allow an operation to fit its products and
services to its customers in some way. Mix flexibility allows an operation to produce a
wide variety of products and services for its customers to choose from. Product/service
flexibility allows it develop new products and services incorporating new ideas which
customers may find attractive. Volume and delivery flexibility allow the operation to
adjust its output levels and its delivery procedures in order to cope with unexpected
changes in how many products and services customers want, or when they want them, or
where they want them.
Once again, there are several internal affects associated with this performance objective.
The chapter deals with the three most important, namely flexibility speeds up response,
flexibility saves time (and therefore money), and flexibility helps maintain dependability.
Cost
The chapter makes two important points here. The first is that the cost structure of different
organisations can vary greatly. Note how the different categories of cost vary in the four
examples given in the chapter. Second, and most importantly, the other four performance
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objectives all contribute, internally, to reducing cost. This has been one of the major revelations
within operations management over the last twenty years.
"If managed properly, high quality, high speed, high dependability and high flexibility can not
only bring their own external rewards, they can also save the operation cost."
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The main point here is that the two types of service offered by the company have very different
characteristics in terms of which performance objectives are important. Any company must
understand how its different products and services require different objectives.
Job-Shop Production
Job-shop production are characterised by manufacturing one or few quantity of products
designed and produced as per the specification of customers within prefixed time and cost. The
distinguishing feature of this is low volume and high variety of products.
Batch Production
American Production and Inventory Control Society (APICS) defines Batch Production as a
form of manufacturing in which the job pass through the functional departments in lots or
batches and each lot may have a different routing.
Mass Production
Manufacture of discrete parts or assemblies using a continuous process are called Mass
Production. This production system is justified by very large volume of production. The
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machines are arranged in a line or product layout. Product and process standardisation exists and
all outputs follow the same path.
Continuous Production
Production facilities are arranged as per the sequence of production operations from the first
operations to the finished product. The items are made to flow through the sequence of
operations through material handling devices such as conveyors, transfer devices, etc.
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level
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Demand Forecasting – Need, Types, Objectives and Steps. Overview of Qualitative and
Quantitative methods. Capacity Planning – Long range, Types, Rough cut plan, Capacity
Requirements Planning (CRP), Developing capacity alternatives. Aggregate Planning –
Approaches, costs, relationship to Master Production schedule. Overview of MRP, MRP II and
ERP
Demand Forecasting:
Forecasting Defined : Forecasting is the first step in planning. It is defined as estimating the
future demand for products and services and the resources necessary to produce these outputs.
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(ii) Quantitative methods involve either projection of historical data or the development of
association models which attempt to use causal variables to arrive at the forecasts.
1. Time series models use a series of past data to make a forecast for the future. Time series is a
time-ordered sequence of observations taken at regular intervals over a period of time.
Yc = T. S. C. R multiplicative model
Yc = T + S + C + R additive model
where T is Trend, S is Seasonal, C is Cyclical, and R is Random components of a series.
Seasonal effects are similar variations occurring during corresponding periods, e.g., December
retail sales. Seasonal can be quarterly, monthly, weekly, daily, or even hourly indexes.
Cyclical factors are the long-term swings about the trend line. They are often associated with
business cycles and may extend out to several years in length.
Random component are sporadic (unpredictable) effects due to chance and unusual
occurrences. They are the residual after the trend, cyclical, and seasonal variations are removed.
Trend: Three methods for describing trend are: (1) Moving average, (2) Hand fitting, and
(3) Least squares.
MOVING AVERAGE
A centered moving average (MA) is obtained by summing and averaging the values from a given
number of periods repetitively, each time deleting the oldest value and adding a new value.
∑x
MA =
Number of Period
A weighted moving average (MAw) allows some values to be emphasized by varying the
weights assigned to each component of the average. Weights can be either percentages or a real
number.
∑ (Wt)X
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MAwt =
∑Wt
HAND FITTING
A hand fit or freehand curve is simply a plot of a representative line that (subjectively) seems to
best fit the data points. For linear data, the forecasting equation will be of the form:
Yc = a + b (X) (signature)
where Yc is the trend value, a is the intercept (where line crosses the vertical axis), b is the slope
(the rise, y, divided by the run, x), and X is the time value (years, quarters, etc.). The
―signature‖ identifies the point in time when X = 0, as well as the X and Y units.
LEAST SQUARES
Least squares are a mathematical technique of fitting a trend to data points. The resulting line of
best fit has the following properties: (1) the summation of all vertical deviations about it is zero,
(2) the summation of all vertical deviations squared is a minimum, and (3) the line goes through
the means X and Y. For linear equations, the line of best fit is found by the simultaneous solution
for a and b of the following two normal equations:
∑Y = na b∑X
∑XY = a∑Xb∑X2
EXPONENTIAL SMOOTHING
Exponential smoothening is a moving-average forecasting technique that weights past data in an
Exponential manner so that most recent data carry more weight in the moving average.
With simple Exponential smoothening, the forecast Ft is made up of the last period forecast Ft–1
plus a portion, α, of the difference between the last periods actual demand At–1 and last period
forecast Ft–1.
Ft = Ft–1 + (At–1– Ft–1).
Adjusted Exponential Smoothing
Adjusted exponential smoothing models have all the features of simple exponential smoothing
models, plus they project into the future (for example, to time period t + 1) by adding a trend
correction increment, Tt, to the current period smoothed average, Ft Ft+1=FtTt
The components of a trend-adjusted forecast that utilizes a second smoothing coefficient β. The
βvalue determines the extent to which the trend adjustment relies on the latest difference in
forecast amounts ( F t -F t-1) versus the previous trend Tt–1
A low βgives more smoothing of the trend and may be useful if the trend is not well-
established. A high βwill emphasize the latest trend and be more responsive to recent
changes in trend. The initial trend adjustment Tt–1 is sometimes assumed to be zero.
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Qualitative Quantitative
Methods Methods
Capacity
Amount of output a system is capable of achieving over a specific period of time.
Actual output
Efficiency =
Effective capacity
Actual output
Utilisation =
Design capacity
Capacity Planning:
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Selecting a capacity alternative most suited to achieve the strategic mission of the firm. Capacity
planning involves capacity decisions that must merge consumer demands with human, material
and financial resources of the organization
- The long range planning generally considers planning horizons of one year or longer. A
time period of one year or longer is needed to provide sufficient time to build a new
facility, to expand the existing facility or to move to a new facility due to forecasted
changes in demand.
- We determine long-term capacity needs by forecasting demand over a time horizon and
then converting those forecasts into capacity requirements
Long-term considerations relate to overall level of capacity, such as facility size (affected by
trends and cycles)
• 1.Long range capacity planning: T>1 year.
Decisions: planning for capacity that requires a long time to acquire.
e.g. Plant/building/equipment/high cost facility
• 2. Intermediate range capacity planning: T(6-18 months).
Decisions: planning for capacity requirement (month or quarterly).
e.g. work force size/new tools/inventory/…..
• 3. short range capacity planning: T (1-6moth).
Decisions: weekly (or daily) capacity planning.
e.g. overtime use/personnel transfer/alternative routings/……
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Long Term Capacity: Long range capacity of an organization is dependent on various other
capacities like design capacity, production capacity, sustainable capacity and effective capacity.
Design capacity is the maximum output possible as indicated by equipment manufacturer under
ideal working condition.
Production capacity is the maximum output possible from equipment under normal working
condition or day.
Sustainable capacity is the maximum production level achievable in realistic work condition and
considering normal machine breakdown, maintenance, etc.
Effective capacity is the optimum production level under pre-defined job and work-schedules,
normal machine breakdown, maintenance, etc.
Medium Term Capacity: The strategic capacity planning undertaken by organization for 2 to 3
years of a time frame is referred to as medium term capacity planning.
Short Term Capacity: The strategic planning undertaken by organization for a daily weekly or
quarterly time frame is referred to as short term capacity planning.
Finite and infinite Capacity planning: If time is fixed by the customer required delivery date or
processing cycle, it is possible to accept time as the primary constraint and plan backwards to
accommodate these times. In such cases, planning backwards to infinite capacity offers a
potential solution to the problem. On the other hand if the processing time is not a constraint in
cases where products are produced to stock and sell, it is simpler to use a forward plan based on
finite capacity i.e., based on available resources.
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(RCCP) is the process of determining if the plan is feasible; it determines whether the
organization has sufficient capacity to carry out the plan. Although RCCP is more refined than
resource requirements planning (RRP), it is called ―rough cut" because it is less refined than
capacity requirements planning (CRP).
Rough cut capacity planning involves validating the works orders produced by the MRP system.
This is achieved through calculating the capacity required to complete the works order and
comparing this against the available capacity. Should the available capacity be greater than the
required capacity, then the plan is valid, otherwise the MRP system will have to recalculate the
works orders to attain a valid capacity plan. Normally the analysis is based around key resources
or bottlenecks - if there is sufficient capacity available at these resources then it is assumed that
there is sufficient capacity available throughout the rest of the system.
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CRP Inputs
CRP Outputs
Rescheduling information which call for capacity modifications or revision of MPS.
Verification of planned orders for MRP system and
Load reports.
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Aggregate Planning:
• Aggregate planning involves planning the best quality to produce in the intermediate-
range horizon (3 months to one year)
• Aggregate production planning is the process of determining output levels of product
groups over the next 6 to 18 months period.
• Objectives of Aggregate Planning
i. The overall objective is to balance conflicting objectives involving customer
service, work force stability, cost and profit.
ii. To establish company-wide strategic plan for allocating resources.
iii. To develop an economic strategy to meet customer demand.
Inputs to and Outputs from Aggregate Production Planning
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4. Identify company policies that are pertinent (e.g., policy regarding safety stock
maintenance, maintaining stable workforce etc.).
5. Determine unit costs for regular time, overtime, subcontracting, holding
inventories, back orders, layoffs etc.
6. Develop alternative resource plans for providing necessary production capacity to
support the cumulative aggregate demand and compute the cost of each
alternative plan.
7. Select the resource plan from among the alternatives considered that satisfies
aggregate demand and best meets the objectives of the firm.
Approaches to Aggregate Planning
1. Top down approach
2. A bottom-up approach or subplan consolidation approach
Rough-cut Capacity Planning
This is done in conjunction with the tentative master production schedule to test its
feasibility in terms of capacity before the master production schedule (MPS) is finalised.
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Over view of MRP (or) Information Flow in Planning and controlling with MRP.
MRP - It is a technique for determining the quantity and timing for the acquisition of
dependent demand items needed to satisfy MPS
Master Schedule
Make items
Buy items
CRP
Purchase Order
Detailed Production Plans
Vendor
feed-back Production Activity Control
Objectives of MRP
1. To improve customer service by meeting delivery schedules promised and shortening delivery
lead times.
2. To reduce inventory costs by reducing inventory levels.
3.To improve plant operating efficiency by better use of productive resources.
Three main purposes of a basic MRP system are to:
• Control inventory levels
• Assign operating priorities
• Assign capacity to load production systems.
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Computational procedure of
MRP
(a) BOM - A listing of all of the raw materials, parts, subassemblies, and assemblies
needed to produce one unit of a product
(b) Inventory status file – It contains important information such as what items
should be ordered and when orders should be released
(c) Gross Requirements – Project the use of the items
(d) Schedule receipts – indicates when the previously released orders if any are
scheduled to be received and available for use
(e) On hand inventory – It indicate the number of units projected to be available at
the end of each time period.
(f) Net requirement – Calculated by subtracting from the gross requirements for that
period.
(g) Planned order release- It indicate when orders should be placed ot meet the
requirements for the item.
Issues in MRP
a. Lot Sizing
b. Safety Stock
c. Scrap allowance
d. Pegging
e. Cycle counting
f. Updating
g. Time fence
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Manufacturing
Business Plan (Materials, Capacity
Production Schedules)
Production Plan
Purchasing (Vendor
MPS orders)
Rough cut
capacity plan
Engineering (Process
and product design)
MRP
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Organisation
payroll/Employee cost I
accounting m
Accounts receivable a
E *Order General ledger *Facilities
D Management Job/Project Management Maintenance g
I *Distribution Fixed Assets planning and i
Management Accounts Payable implementation n
Budgeting
Inventory g
Logistics/Distribution
Materials
Data Model
Operational planning and Operational planning and
execution - Materials execution - Materials
*Routing *Pay roll *Recruitment
*Order processing *Costing and Budgeting
*Supplier Management *Job evaluation and performance
*Inventory/Warehouse appraisal
management *Quality control and
*Distribution management planning
*Maintenance engineering and
*Scheduling and WIP scheduling *Fixed assets
Management management
*Resource MIS
Product: ―A product is a bundle of physical services and symbolic particulars expected to yield
satisfactions or benefits to the buyer‖ – by Phillip Kotler
Product design: ―Product design in its broadest sense includes the whole development of the
product through all the preliminary stages until actual manufacturing begins‖
– by C.S. Deverell
New product development (Steps)
Advance product
Needs Advance Design
planning
identification
Detailed
Engineering
Design
Product ideas
Feasibility
studies
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Interrelationship (or) interaction (or) linkage of product planning and process planning
Product development
New
Technology
Operation
design
Operation Content
Operation
method
Plant planning systems
Product Design: Concerned with form and function of a product. It refers to the arrangement
of elements or parts that collectively form a product.
Process Design: Concerned with the overall sequence of operations required to achieve the
design specification of the product.
Production Design: Concept of designing products from the point of view of producibility.
Objectives of Product Design
(i) The overall objective is profit generation in the long run.
(ii) To achieve the desired product quality.
(iii) To reduce the development time and cost to the minimum.
(iv) To reduce the cost of the product.
(v) To ensure producibility or manufacturability (design for manufacturing and assembly).
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Reverse
Engineering
Research and
development
Manufacturabi
lity
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Concurrent aided design
engineering (CAD)
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Environmental Issues
Product Pollution
Designer should anticipate environmental trends and design products that are clean enough for
future environmental standards.
Process Pollution
Product designer must avoid the process that causing pollution from solvents, combustible
products, wastes etc. or he may change the processes at the early stages.
Ease of recycling product
Everyone has a moral obligation about the happens to the product after it‘s useful life is over?
Can it be recycled into new even be able to profit in some manner from recycling of it‘s product.
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Process design: Concerned with the overall sequences of operations required to achieve the
product specifications
Operations design: Concerned with the design of the individual manufacturing operation.
Process Selection
Process selection refers to the way production of goods or services is organised.
Three primary questions to be addressed before deciding on process selection are:
(i) How much variety of products or services will the system need to handle?
(ii) What degree of equipment flexibility will be needed?
(iii) What is the expected volume of output?
Process Selection Decisions
Processes by market orientation
1. Make to stock
2. Assemble to order
3. Make to order
4. Engineer to order
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Process Strategy
An organisation‘s approach to selection of the process for the conversion of resource inputs into
outputs.
Key aspects in process strategy include:
i. Make or buy decisions
ii. Capital intensity and
iii. Process flexibility
Product-Focused production
Product or material flow
Production operations
Components Subassemblies
Assemblies
4-17
Purchased components
6
and subassemblies
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1 2 3 6 6 7
8
4 5 5
1
4
2 3 7
No Change Change
Representation 4-20
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Major Strategy:
1. Process choice
2. Nature of product/Services
3. Vertical integration
4. Resource flexibility
5. Customer involvement
6. Capital intensity
Capital Intensity
• Low automation
• High automation
Effective Process
Design
Figure 3.1 – Major Decisions for Copyright © 2010 Pearson
Effective Processes Education, Inc. Publishing
as Prentice Hall.
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Project
Building NONE
Job Shop
Printing
Heavy
Batch
Equipment
Auto
Assembly assembly
line
Sugar
Continuous NONE Refinery
4-26
Vertical integration – degree to which a firms own production system or service facility
handles the entire supply chain
1. Backward integration – firms movement upstream towards sources of raw material and
parts
2. Forward integration – downstream by acquiring more channels of distribution such as
its own distribution centers and retail sources
• Outsourcing
• Make-or-buy decision
Flexible workforce – A workforce whose members are capable of doing many tasks
either at their own workstation or as they move form one workstation to another
Workforce
Equipment
Customer involvement –
1. Self service
2. Product selection
3. Time and location
Capital Intensity
Automation is one way to address the mix of capital and labor
Fixed Automation
Flexible Automation
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SERVICE OPERATIONS
Planning and Scheduling service systems is different from planning and scheduling
manufacturing systems.
Competitive priorities for service firm:
• Low service product costs.
• Fast and on time delivery
• High quality services
• Customer service
• Flexibility.
Three types of service operations
Quasi manufacturing: In quasi manufacturing physical goods are more dominant then
service associated with the product. Here the stress is on cost of production, technology,
products, product quality and prompt delivery. It may be either a standardized or
customized product.
Customer-as-participants: Here there is a high involvement of customer the physical
goods may not be that must sufficient. Services can be either customized or standardized.
Customer- as-product: Here the service is performed on customer. Service here is
customized physical goods may or may not significant.
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Strategies:
Two common strategies for scheduling services are:
• Schedule for peak demand
• Chase Demand. Other Possible Strategies
Other possible strategies for services are:
• Reservation strategy
• Customer participation
• Adjustable capacity
• Cross-Training
• Sharing capacity.
Scheduling Multiple Resources:
In some service organization it is necessary to coordinate the uses of more than one resource.
The complexity of scheduling the resources increases with multiple resources used by the service
systems.
Cyclical Schedule or Rotating Schedule:
Cyclical or rotating schedule rotates employees through a series of workdays or working hours.
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• Methods engineering includes work simplification, job design, value analysis and the
like.
• Work study method was developed to improve performance of a given work.
• Work study is the body of knowledge concerned with analysis of the work methods, and
the standard of proposed work methods.
• Objective of work study is to improve operational efficiency.
• The purpose of work study is to determine the best or most effective method of
accomplishing a necessary operation.
• Time study and motion study are results of practices developed by F.W. Taylor, Frank
and Lillian Gilbreth.
• Time study: Exercising control over the output in respect of a job by setting standards for
performance.
• Time study may be used to compare the effectiveness of alternative work methods.
Objectives:
To analyse the present method of doing a job, systematically in order to develop a new
and better method
To measure the work content of a job by measuring the time required to do the job for a
qualified worker and hence to establish standard time
To increase the productivity by ensuring the best possible use of human, machine and
material resources and to achieve bet quality product/service at minimum possible cost.
To improve operational efficiency
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Motion study is the science of eliminating wastefulness resulting from using unnecessary; ill-
directed and inefficient motion. The aim of motion study is to find and perpetuate the scheme of
least waste methods of labour.
Micro motion study provides a valuable technique for making minute analysis of those
operations that are short in cycle, contain rapid movements and involve high production over a
long period of time.
Micro-motions are also known as ‗Therbligs‘.
Examples of Therbligs
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1. Search (Sr)
2. Select (St)
3. Grasp (G)
4. Transport empty (TE)
5. Transport loaded (TL)
6. Hold (H)
7. Release load (RL)
8. Position (P)
9. Pre-position (PP)
10. Inspect (I)
11. Assemble (A)
12. Disassemble (DA)
13. Use (U)
14. Unavoidable delay (UD)
15. Avoidable delay (AD)
16. Plan (Pn)
17. Rest for overcoming fatigue (R)
18. Find (F)
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5. Add the relaxation allowance time to the normal time for each element to arrive at the
work content.
6. Determine the frequency of occurrences of each element in the job, multiply the work
content of each element by its frequency (i.e., number of time the element occurs in the
job) and add up the times to arrive at the work content for the job.
7. Add contingency allowance if any to arrive at the standard time to do the job.
The following are the principal techniques by which work measurement is carried out:
1. Time study
2. Activity sampling
3. Predetermined motion time systems
4. Synthesis from standard data
5. Estimating
6. Analytical estimating
7. Comparative estimating
Of these techniques we shall concern ourselves primarily with time study, since it is the basic
technique of work measurement. Some of the other techniques either derive from it or are
variants of it.
1. Time Study
Time Study consists of recording times and rates of work for elements of a specified job carried
out under specified conditions to obtain the time necessary to carry out a job at a defined level of
performance.
In this technique the job to be studied is timed with a stopwatch, rated, and the Basic Time
calculated.
1.1 Requirements for Effective Time Study
The requirements for effective time study are:
a. Co-operation and goodwill
b. Defined job
c. Defined method
d. Correct normal equipment
e. Quality standard and checks
f. Experienced qualified motivated worker
g. Method of timing
h. Method of assessing relative performance
i. Elemental breakdown
j. Definition of break points
k. Recording media
One of the most critical requirements for time study is that of elemental breakdown. There are
some general rules concerning the way in which a job should be broken down into elements.
They include the following. Elements should be easily identifiable, with definite beginnings and
endings so that, once established, they can be repeatedly recognised. These points are known as
the break points and should be clearly described on the study sheet. Elements should be as short
as can be conveniently timed by the observer. As far as possible, elements - particularly manual
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ones - should be chosen so that they represent naturally unified and distinct segments of the
operation.
1.2 Performance Rating
Time Study is based on a record of observed times for doing a job together with an assessment
by the observer of the speed and effectiveness of the worker in relation to the observer's concept
of Standard Rating.
This assessment is known as rating, the definition being given in BS 3138 (1979):
The numerical value or symbol used to denote a rate of working.
Standard rating is also defined (in this British Standard BS3138) as:
"The rating corresponding to the average rate at which qualified workers will naturally work,
provided that they adhere to the specified method and that they are motivated to apply
themselves to their work. If the standard rating is consistently maintained and the appropriate
relaxation is taken, a qualified worker will achieve standard performance over the working day
or shift."
Industrial engineers use a variety of rating scales, and one which has achieved wide use is the
British Standards Rating Scale which is a scale where 0 corresponds to no activity and 100
corresponds to standard rating. Rating should be expressed as 'X' BS.
Below is an illustration of the Standard Scale:
Rating Walking Pace
0 no activity
50 very slow
75 steady
100 brisk (standard rating)
125 very fast
150 exceptionally fast
The basic time for a task, or element, is the time for carrying out an element of work or an
operation at standard rating.
Basic Time = Observed Time x Observed Rating
The result is expressed in basic minutes - BM's.
The work content of a job or operation is defined as: basic time + relaxation allowance + any
allowance for additional work - e.g. that part of contingency allowance which represents work.
1.3 Standard Time
Standard time is the total time in which a job should be completed at standard performance i.e.
work content, contingency allowance for delay, unoccupied time and interference allowance,
where applicable.
Allowance for unoccupied time and for interference may be important for the measurement of
machine-controlled operations, but they do not always appear in every computation of standard
time. Relaxation allowance, on the other hand, has to be taken into account in every
computation, whether the job is a simple manual one or a very complex operation requiring the
simultaneous control of several machines. A contingency allowance will probably figure quite
frequently in the compilation of standard times; it is therefore convenient to consider the
contingency allowance and relaxation allowance, so that the sequence of calculation which
started with the completion of observations at the workplace may be taken right through to the
compilation of standard time.
Contingency allowance
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A contingency allowance is a small allowance of time which may be included in a standard time
to meet legitimate and expected items of work or delays, the precise measurement of which is
uneconomical because of their infrequent or irregular occurrence.
Relaxation allowance
A relaxation allowance is an addition to the basic time to provide the worker with the
opportunity to recover from physiological and psychological effects of carrying out specified
work under specified conditions and to allow attention to personal needs. The amount of the
allowance will depend on the nature of the job. Examples are:
Personal 5-7%
Energy output 0-10%
Noisy 0-5%
Conditions 0-100%
e.g. Electronics 5%
Other allowances
Other allowances include process allowance which is to cover when an operator is prevented
from continuing with their work, although ready and waiting, by the process or machine
requiring further time to complete its part of the job. A final allowance is that of Interference
which is included whenever an operator has charge of more than one machine and the machines
are subject to random stoppage. In normal circumstances the operator can only attend to one
machine, and the others must wait for attention. This machine is then subject to interference
which increased the machine cycle time.
It is now possible to obtain a complete picture of the standard time for a straightforward manual
operation.
2. Activity Sampling
Activity sampling is a technique in which a large number of instantaneous observations are made
over a period of time of a group of machines, processes or workers. Each observation records
what is happening at that instant and the percentage of observations recorded for a particular
activity or delay is a measure of the percentage of time during which the activity or delay occurs.
The advantages of this method are that
1. It is capable of measuring many activities that are impractical or too costly to be
measured by time study.
2. One observer can collect data concerning the simultaneous activities of a group.
3. Activity sampling can be interrupted at any time without effect.
The disadvantages are that
1. It is quicker and cheaper to use time study on jobs of short duration.
2. It does not provide elemental detail.
The type of information provided by an activity sampling study is:
a. The proportion of the working day during which workers or machines are producing.
b. The proportion of the working day used up by delays. The reason for each delay must be
recorded.
c. The relative activity of different workers and machines.
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conditions under which it is made) are used to build up the time for a job at a defined level of
performance.
The systems are based on the assumption that all manual tasks can be analysed into basic
motions of the body or body members. They were compiled as a result of a very large number of
studies of each movement, generally by a frame-by-frame analysis of films of a wide range of
subjects, men and women, performing a wide variety of tasks.
The first generation of PMT systems, MTM1, were very finely detailed, involving much analysis
and producing extremely accurate results. This attention to detail was both a strength and a
weakness, and for many potential applications the quantity of detailed analysis was not
necessary, and prohibitively time -consuming. In these cases "second generation" techniques,
such as Simplified PMTS, Master Standard Data, Primary Standard Data and MTM2, could be
used with advantage, and no great loss of accuracy. For even speedier application, where some
detail could be sacrificed then a "third generation" technique such as Basic Work Data or MTM3
could be used.
4. Synthesis
Synthesis is a work measurement technique for building up the time for a job at a defined level
of performance by totaling element times obtained previously from time studies on other jobs
containing the elements concerned, or from synthetic data.
Synthetic data is the name given to tables and formulae derived from the analysis of accumulated
work measurement data, arranged in a form suitable for building up standard times, machine
process times, etc by synthesis.
Synthetic times are increasingly being used as a substitute for individual time studies in the case
of jobs made up of elements which have recurred a sufficient number of times in jobs previously
studied to make it possible to compile accurate representative times for them.
5. Estimating
The technique of estimating is the least refined of all those available to the work measurement
practitioner. It consists of an estimate of total job duration (or in common practice, the job price
or cost). This estimate is made by a craftsman or person familiar with the craft. It normally
embraces the total components of the job, including work content, preparation and disposal time,
any contingencies etc, all estimated in one gross amount.
6. Analytical estimating
This technique introduces work measurement concepts into estimating. In analytical estimating
the estimator is trained in elemental breakdown, and in the concept of standard performance. The
estimate is prepared by first breaking the work content of the job into elements, and then utilising
the experience of the estimator (normally a craftsman) the time for each element of work is
estimated - at standard performance. These estimated basic minutes are totalled to give a total job
time, in basic minutes. An allowance for relaxation and any necessary contingency is then made,
as in conventional time study, to give the standard time.
7. Comparative estimating
This technique has been developed to permit speedy and reliable assessment of the duration of
variable and infrequent jobs, by estimating them within chosen time bands. Limits are set within
which the job under consideration will fall, rather than in terms of precise capital standard or
capital allowed minute values. It is applied by comparing the job to be estimated with jobs of
similar work content, and using these similar jobs as "bench marks" to locate the new job in its
relevant time band - known as Work Group.
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Productivity
Production refers to the total output.
• Productivity: The amount of goods and services produced with resources used.
• Partial productivity: Output in a given period divided by labors hours used in the period.
Measuring Productivity:
Productivity refers to output relative to the inputs. Inputs in any production process comprise
capital, labour materials and energy. Productivity of each resource can be measured separately.
Such measurement gives partial productivity. Productivity of all resources put together gives
productivity on the total facto basis. This method of calculating productivity considering all
resources is called multi-factor approach to measuring productivity.
Partial productivity = Out put in a given period / Labour hours used in the period
Total productivity = Out put in a given period / Labour + Capital+ Material+ Energy used in the
same period
- To understand the factors that influences the relationship between output and input.
- In long run, it cannot be achieved only by increased worker effort. The real growth can
come abut only through capital investments in newer and better machines, equipment and
facilities
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- Own the best of machines, but if the people do not work with dedication, productivity
cannot increase. Employees‘ job performance depends on their ability and motivation.
Ability depends on the quality of people hired. Motivation is the effort of leadership.
- Other ways are - production planning and control, inventory control , operations
research, cost control, budgetary control, marketing research, preventive maintenance and
the like, help improve productivity.
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Materials Budgeting
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Purchasing
The term ‗purchasing‘ refer to buying of a material or an item from a company or division that
supplies materials. Since a manufacturing firm is involved in the conversion of raw material into
finished goods, it should ensure that right type of material are purchased in the right time. A one
percent saving in cost is equivalent to 10 percent increase in turnover.
Objectives of Purchasing
The basic objective of the purchasing function is to ensure continuity of supply of raw materials,
sub-contracted items and spare parts and to reduce the ultimate cost of the finished goods. In
other words, the objective is not only to procure the raw materials at the lowest price but to
reduce the cost of the final product.
The objectives of the purchasing department can be outlined as under:
To avail the materials, suppliers and equipments at the minimum possible costs: These
are the inputs in the manufacturing operations. The minimization of the input cost increases the
productivity and resultantly the profitability of the operations.
To ensure the continuous flow of production through continuous supply of raw materials,
components, tools etc. with repair and maintenance service.
To increase the asset turnover: The investment in the inventories should be kept minimum
in relation to the volume of sales. This will increase the turnover of the assets and thus the
profitability of the company.
To develop an alternative source of supply: Exploration of alternative sources of supply of
materials increases the bargaining ability of the buyer, minimisation of cost of materials and
increases the ability to meet the emergencies.
To establish and maintain the good relations with the suppliers: Maintenance of good
relations with the supplier helps in evolving a favourable image in the business circles. Such
relations are beneficial to the buyer in terms of changing the reasonable price, preferential
allocation of material in case of material shortages, etc.
To achieve maximum integration with other department of the company: The purchase
function is related with production department for specifications and flow of material,
engineering department for the purchase of tools, equipments and machines, marketing
department for the forecasts of sales and its impact on procurement of materials, financial
department for the purpose of maintaining levels of materials and estimating the working
capital required, personnel department for the purpose of manning and developing the
personnel of purchase department and maintaining good vendor relationship.
To train and develop the personnel: Purchasing department is manned with varied types of
personnel. The company should try to build the imaginative employee force through training and
development.
Efficient record keeping and management reporting: Paper processing is inherent in the
purchase function. Such paper processing should be standardised so that record keeping can be
facilitated. Periodic reporting to the management about the purchase activities justifies the
independent existence of the department.
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Purchase Cycle
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Purchase Functions
1. Obtaining prices
2. Selecting vendors
3. Awarding purchase orders
4. Follow up on delivery promise
5. Adjusting and settling complaints
6. Selecting and training of purchase personnel
7. Vendor relations
Purchasing Policies
• Ancillary Development: The firms sub-contracts, i.e., decides to buy the parts from outside
suppliers. Mostly the fabricated parts, components are brought from outside suppliers by the
firms.
• Make or buy: Another purchasing policy is whether to buy the parts or components from
outside supplier or manufacture within the firm. The decisions lie depending in various
factors.
• Speculative buying: Speculative buying is conducted with the hope of making profit out of
price changes. Here the profit is made by buying at low price and selling at higher price.
Vendor rating:
The evaluation of supplier or vendor rating provides valuable information which help in
improving the quality of the decision. In the vendor rating three basic aspects are considered
namely quality, service and price
The Development Project Committee of the National Association of Purchasing Agents (U.S.A.)
has suggested following methods for evaluating the performance of past suppliers.
1. The categorical plan: Under this method the members of the buying staff related with the
supplier like receiving section, quality control department, manufacturing department etc., are
required to assess the performance of each supplier. The rating sheets are provided with the
record of the supplier, their product and the list of factors for the evaluation purposes. The
members of the buying staff are required to assign the plus or minus notations against each
factor.
2. The weighted-point method: The weighted-point method provides the quantitative data for
each factor of evaluation. The weights are assigned to each factor of evaluation according to the
need of the organization, e.g., a company decides the three factors to be considered—quality,
price and timely delivery. It assigns the relative weight to each of these factors as under:
Quality ……… 50 points
Price ……… 30 points
Timely delivery ……… 20 points
3. Critical incidents method: Record of events related to buyer vendor relationships is
maintained in each vendor‘s file. They reflect positive and negative aspect of actual
performance. This kind of documentation useful in discussing ways and means of improving
performance, acknowledging the existence of good relationships, determining the competence of
a vendor, and if necessary considering termination
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4. The cost-ratio plan: Under this method, the vendor rating is done on the basis of various
costs incurred for procuring the materials from various suppliers. The cost-ratios are ascertained
delivery etc. The cost-ratios are ascertained for the different rating variables such as quality,
price, timely delivery etc. The cost-ratio is calculated in percentage on the basis of total
individual cost and total value of purchases.
5. Checklist system: A simple checklist is used to evaluate the vendors. Check list may
be something like Reliability, technical capability, after sales service, availability, buying
convenience etc
Value Analysis
Value engineering or value analysis had its birth during the World War II Lawrence D. Miles
was responsible for developing the technique and naming it. Value analysis is defined as ―an
organized creative approach which has its objective, the efficient identification of unnecessary
cost-cost which provides neither quality nor use nor life nor appearance nor customer features.‖
Value analysis focuses engineering, manufacturing and purchasing attention to one objective-
equivalent performance at a lower cost.
Function .
Value =
Cost
Steps in Value Analysis
In order to answer the above questions, three basic steps are necessary:
1. Identifying the function: Any useful product has some primary function which must be
identified—a bulb to give light, a refrigerator to preserve food, etc. In addition it may have
secondary functions such as withstanding shock, etc. These two must be identified.
2. Evaluation of the function by comparison: Value being a relative term, the comparison
approach must be used to evaluate functions. The basic question is, ‗Does the function
accomplish reliability at the best cost‘ and can be answered only comparison.
3. Develop alternatives: Realistic situations must be faced, objections should overcome and
effective engineering manufacturing and other alternatives must be developed.
Stores Management
Stores play a vital role in the operations of company. It is in direct touch with the user
departments in its day-to-day activities. The most important purpose served by the stores is to
provide uninterrupted service to the manufacturing divisions. Further, stores are often equated
directly with money, as money is locked up in the stores.
Nature of Stores
Store as building where inventories are kept.
Storage is the function of receiving, storing, and issuing materials.
Stores ensure ready accessibility of major materials there-by efficient service to users.
Minimisation of stores cost, and continuous supply is the prime function of stores.
Stores layout is a fundamental factor in determining the efficient performance of stores
department.
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A satisfactory storage system compromises between the use of space and the use of time.
Random location means that items can be stored in any storage position which is
available.
Keeping stock on one side of the aisle in which case the layout is called comb type .
Stores manual is a written statement of policies, and procedures.
Layout:
Comb type layout: Stock may be kept on one side of the aisle in which case it is called comb
type.
Aisle
Tree type layout: Goods may be placed on either side of the aisle in which case, the method is
called tree type layout
Aisle
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OBJECTIVES OF CODIFICATION
The objectives of a rationalized material coding system are:
1. Bringing all items together.
2. To enable putting up of any future item in its proper place.
3. To classify an item according to its characteristics.
4. To give an unique code number to each item to avoid duplication and ambiguity.
5. To reveal excessive variety and promote standardization and variety reduction.
6. To establish a common language for the identification of an item.
7. To fix essential parameters for specifying an item.
8. To specify item as per national and international standards.
9. To enable data processing and analysis.
Inventory
A physical resource that a firm holds in stock with the intent of selling it or transforming it into a
more valuable state.
Raw Materials
Works-in-Process
Finished Goods
Maintenance, Repair and Operating (MRO)
Objectives:
The main objective of inventory management is to maintain inventory at appropriate level to
avoid excessive or shortage of inventory because both the cases are undesirable for business.
Thus, management is faced with the following conflicting objectives:
1. To keep inventory at sufficiently high level to perform production and sales activities
smoothly.
2. To minimize investment in inventory at minimum level to maximize profitability.
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Inventory Control:
Inventory Control is the supervision of supply, storage and accessibility of items in order to
ensure an adequate supply without excessive oversupply.
Inventory Costs
Inventory costs includes ordering cost plus carrying costs.
Ordering Cost
Cost of procurement and inbound logistics costs form a part of Ordering Cost. Ordering Cost is
dependant and varies based on two factors - The cost of ordering excess and the Cost of ordering
too less.
Both these factors move in opposite directions to each other. Ordering excess quantity will result
in carrying cost of inventory. Where as ordering less will result in increase of replenishment cost
and ordering costs.
These two above costs together are called Total Stocking Cost. If you plot the order quantity vs
the TSC, you will see the graph declining gradually until a certain point after which with every
increase in quantity the TSC will proportionately show an increase.
This functional analysis and cost implications form the basis of determining the Inventory
Procurement decision by answering the two basic fundamental questions - How Much to Order
and When to Order.
How much to order is determined by arriving at the Economic Order Quantity or EOQ.
Carrying Cost
Inventory storage and maintenance involves various types of costs namely:
Inventory Storage Cost
Cost of Capital
Inventory carrying involves Inventory storage and management either using in house facilities or
external warehouses owned and managed by third party vendors. In both cases, inventory
management and process involves extensive use of Building, Material Handling Equipments, IT
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It is that quantity where the total of ordering cost and holding cost remains lowest.
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(b) B-Item: Moderate control, the items being of moderate value. The control need be exercised
at middle level of authority.
‗B‘ ITEM
Intermediate
Must have:
• Moderate control
• Purchase based on rigid requirements
• Reasonably strict watch & control
• Moderate safety stocks
• Managed by middle level management
(c) C-Item: The items being of low value, the control can be exercised at gross root level of
authority, i.e., by respective user department managers.
‗C‘ ITEMS
Larger in number, but consume lesser amount of resources
Must have:
• Ordinary control measures
• Purchase based on usage estimates
• High safety stocks
ABC analysis does not stress on items those are less costly but may be vital
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Overview of JIT
What is a “Just-in-time System”?
―Just-in-time‖: A philosophy of manufacturing based on planned elimination of all waste
and continuous improvement of productivity.
Just in time is a ‗pull‘ system of production, so actual orders provide a signal for when a product
should be manufactured. Demand-pull enables a firm to produce only what is required, in the
correct quantity and at the correct time.
This means that stock levels of raw materials, components, work in progress and finished goods
can be kept to a minimum. This requires a carefully planned scheduling and flow of resources
through the production process. Modern manufacturing firms use sophisticated production
scheduling software to plan production for each period of time, which includes ordering the
correct stock. Information is exchanged with suppliers and customers through EDI (Electronic
Data Interchange) to help ensure that every detail is correct.
Supplies are delivered right to the production line only when they are needed. For example, a car
manufacturing plant might receive exactly the right number and type of tyres for one day‘s
production, and the supplier would be expected to deliver them to the correct loading bay on the
production line within a very narrow time slot.
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Advantages of JIT
Lower stock holding means a reduction in storage space which saves rent and insurance
costs
As stock is only obtained when it is needed, less working capital is tied up in stock
There is less likelihood of stock perishing, becoming obsolete or out of date
Avoids the build-up of unsold finished product that can occur with sudden changes in
demand
Less time is spent on checking and re-working the product of others as the emphasis is on
getting the work right first time
Disadvantages of JIT
There is little room for mistakes as minimal stock is kept for re-working faulty product
Production is very reliant on suppliers and if stock is not delivered on time, the whole
production schedule can be delayed
There is no spare finished product available to meet unexpected orders, because all
product is made to meet actual orders – however, JIT is a very responsive method of
production
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Project Management – Scheduling Techniques, PERT, CPM, Crashing CPM networks – Simple
Problems. Facility Location – Theories, Steps in Selection, Location Models – Simple Problems.
Facility Layout – Principles, Types, Planning tools and techniques.
Project Management:
A project is an organized endeavour to accomplish a specified non-routine or low volume task.
Although projects are not repetitive, they take significant amount of time to complete and are
large scale or complex enough to be recognized and managed as separate undertakings.
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Scheduling:
Scheduling is the process of deciding how to commit resources between a variety of
possible tasks. Time can be specified (scheduling a flight to leave at 8:00) or floating as
part of a sequence of events.
Scheduling Techniques
Gantt Chart:
During the era of scientific management, Henry Gantt developed a tool for displaying the
progression of a project in the form of a specialized chart. An early application was the tracking
of the progress of ship building projects. Today, Gantt's scheduling tool takes the form of a
horizontal bar graph and is known as a Gantt chart, a basic sample of which is shown below:
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The horizontal axis of the Gantt chart is a time scale, expressed either in absolute time or in
relative time referenced to the beginning of the project. The time resolution depends on the
project - the time unit typically is in weeks or months. Rows of bars in the chart show the
beginning and ending dates of the individual tasks in the project.
In the above example, each task is shown to begin when the task above it completes. However,
the bars may overlap in cases where a task can begin before the completion of another, and there
may be several tasks performed in parallel. For such cases, the Gantt chart is quite useful for
communicating the timing of the various tasks.
For larger projects, the tasks can be broken into subtasks having their own Gantt charts to
maintain readability.
PERT:
Complex projects require a series of activities, some of which must be performed sequentially
and others that can be performed in parallel with other activities. This collection of series and
parallel tasks can be modeled as a network.
In 1957 the Critical Path Method (CPM) was developed as a network model for project
management. CPM is a deterministic method that uses a fixed time estimate for each activity.
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While CPM is easy to understand and use, it does not consider the time variations that can have a
great impact on the completion time of a complex project.
The Program Evaluation and Review Technique (PERT) is a network model that allows for
randomness in activity completion times. PERT was developed in the late 1950's for the U.S.
Navy's Polaris project having thousands of contractors. It has the potential to reduce both the
time and cost required to complete a project.
The Network Diagram
In a project, an activity is a task that must be performed and an event is a milestone marking the
completion of one or more activities. Before an activity can begin, all of its predecessor activities
must be completed. Project network models represent activities and milestones by arcs and
nodes. PERT originally was an activity on arc network, in which the activities are represented on
the lines and milestones on the nodes. Over time, some people began to use PERT as an activity
on node network. For this discussion, we will use the original form of activity on arc.
The PERT chart may have multiple pages with many sub-tasks. The following is a very simple
example of a PERT diagram:
PERT Chart
The milestones generally are numbered so that the ending node of an activity has a higher
number than the beginning node. Incrementing the numbers by 10 allows for new ones to be
inserted without modifying the numbering of the entire diagram. The activities in the above
diagram are labeled with letters along with the expected time required to complete the activity.
Steps in the PERT Planning Process
The activities are the tasks required to complete the project. The milestones are the events
marking the beginning and end of one or more activities. It is helpful to list the tasks in a table
that in later steps can be expanded to include information on sequence and duration.
2. Determine Activity Sequence
This step may be combined with the activity identification step since the activity sequence is
evident for some tasks. Other tasks may require more analysis to determine the exact order in
which they must be performed.
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Using the activity sequence information, a network diagram can be drawn showing the sequence
of the serial and parallel activities. For the original activity-on-arc model, the activities are
depicted by arrowed lines and milestones are depicted by circles or "bubbles".
If done manually, several drafts may be required to correctly portray the relationships among
activities. Software packages simplify this step by automatically converting tabular activity
information into a network diagram.
4. Estimate Activity Times
Weeks are a commonly used unit of time for activity completion, but any consistent unit of time
can be used.
A distinguishing feature of PERT is its ability to deal with uncertainty in activity completion
times. For each activity, the model usually includes three time estimates:
Optimistic time - generally the shortest time in which the activity can be completed. It is
common practice to specify optimistic times to be three standard deviations from the mean so
that there is approximately a 1% chance that the activity will be completed within the optimistic
time.
Most likely time - the completion time having the highest probability. Note that this time is
different from the expected time.
Pessimistic time - the longest time that an activity might require. Three standard deviations
from the mean is commonly used for the pessimistic time.
PERT assumes a beta probability distribution for the time estimates. For a beta distribution, the
expected time for each activity can be approximated using the following weighted average:
To calculate the variance for each activity completion time, if three standard deviation times
were selected for the optimistic and pessimistic times, then there are six standard deviations
between them, so the variance is given by:
[ ( Pessimistic - Optimistic ) / 6 ]2
The critical path is determined by adding the times for the activities in each sequence and
determining the longest path in the project. The critical path determines the total calendar time
required for the project. If activities outside the critical path speed up or slow down (within
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limits), the total project time does not change. The amount of time that a non-critical path
activity can be delayed without delaying the project is referred to as slack time.
If the critical path is not immediately obvious, it may be helpful to determine the following four
quantities for each activity:
These times are calculated using the expected time for the relevant activities. The earliest start
and finish times of each activity are determined by working forward through the network and
determining the earliest time at which an activity can start and finish considering its predecessor
activities. The latest start and finish times are the latest times that an activity can start and finish
without delaying the project. LS and LF are found by working backward through the network.
The difference in the latest and earliest finish of each activity is that activity's slack. The critical
path then is the path through the network in which none of the activities have slack.
The variance in the project completion time can be calculated by summing the variances in the
completion times of the activities in the critical path. Given this variance, one can calculate the
probability that the project will be completed by a certain date assuming a normal probability
distribution for the critical path. The normal distribution assumption holds if the number of
activities in the path is large enough for the central limit theorem to be applied.
Since the critical path determines the completion date of the project, the project can be
accelerated by adding the resources required to decrease the time for the activities in the critical
path. Such a shortening of the project sometimes is referred to as project crashing.
6. Update as Project Progresses
Make adjustments in the PERT chart as the project progresses. As the project unfolds, the
estimated times can be replaced with actual times. In cases where there are delays, additional
resources may be needed to stay on schedule and the PERT chart may be modified to reflect the
new situation.
Benefits of PERT
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Limitations
CPM:
In 1957, DuPont developed a project management method designed to address the challenge of
shutting down chemical plants for maintenance and then restarting the plants once the
maintenance had been completed. Given the complexity of the process, they developed the
Critical Path Method (CPM) for managing such projects.
CPM models the activities and events of a project as a network. Activities are depicted as nodes
on the network and events that signify the beginning or ending of activities are depicted as arcs
or lines between the nodes. The following is an example of a CPM network diagram:
CPM Diagram
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CPM Limitations
CPM was developed for complex but fairly routine projects with minimal uncertainty in the
project completion times. For less routine projects there is more uncertainty in the completion
times, and this uncertainty limits the usefulness of the deterministic CPM model. An alternative
to CPM is the PERT project planning model, which allows a range of durations to be specified
for each activity.
Example:
St. Paul‟s Hospital
Immediate
Activity Description Predecessor(s)
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Critical Path:
The longest path in the network
Defines the shortest time project can be completed
Critical path activity delay --- project delay
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This # discusses the use of project networks and the critical path method to evaluate options for
developing a system in crash mode. Often, it is possible to expedite a project by pouring
additional resources (personnel, computing power, etc.) into one or more critical path activities,
essentially trading cost for time. Crash mode analysis is a technique for studying the cost/time
tradeoff by manipulating the project network (# 21).
Table 22.1 lists the activities associated with a generic system development project. The initial
project network is shown as Figure 22.1. The time to complete each activity is shown above the
activity arrow. The earliest event time and latest event time for each event are noted to the right
of the event circle. Note that there are two critical paths, 1-2-3-7-8 and 1-2-3-4-7-8.
Table 22.2 provides additional information about the completion times and costs for each of the
activities. For example, the normal completion time for activity 1-2 is 2 weeks, but the crash
mode time (the shortest possible time for completing the activity) is only 1 week. Saving that
week is expensive, however. Normally, activity 1-2 is expected to cost $5000, but operating in
crash mode will increase the cost by $3000 to $8000. Thus, the cost per week saved (the cost
increase divided by the number of weeks saved) is $3000.
Table 22.1 The Activities Associated with the # Example
Duration
Activity Description (Weeks)
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Figure 22.2 The project network with crash times and crash costs per week saved.
For example, suppose the system designer decides to crash those activities that promise to save
the greatest amount of time (2-3 and 4-7). Figure 22.3 shows the new project network; note that
activities 2-3 and 4-7 use the crash mode time estimates while the other activities use the normal
time estimate. Changing some of the activity times changes the computed earliest and latest
event times which, in turn, (potentially) changes the critical path. The new project network has a
single critical path (1-2-3-7-12). The total elapsed time is 12 weeks, a saving of 3 weeks. From
Table 22.2, the extra cost associated with activity 2-3 is $6,000, and the extra cost associated
with 4-7 is $6,000, so the total project cost is $64,000, an increase of $12,000 over performing
all activities in normal mode.
Additional alternatives can be considered. For example, Figure 22.4 shows the project network
for performing only activity 2-3 in crash mode. Once again there are two critical paths. The total
elapsed time is 13 weeks and the total system cost is $58,000, an increase of $6,000 over
performing all activities in normal mode.
Table 22.3 summarizes the elapsed times and total system costs for several alternatives,
including performing all activities on the critical path in crash mode. Clearly, the option of
crashing 4-7 (14 weeks, $58,000) can be eliminated because crashing 2-3 (13 weeks, $58,000)
saves an extra week for the same cost. Note that crashing activity 7-8 (14 weeks, $53,000) saves
one week at a cost of only $1,000, an outcome consistent with the cost per week saved
computations in Table 22.2. Although the optimal solution is not obvious, the cost/time tradeoff
is clearly defined, giving the responsible managers the information they need to make a decision.
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Figure 22.3 The project network with activities 2-3 and 4-7 performed in crash mode.
Figure 22.4 The project network with only activity 2-3 performed in crash mode.
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Facility location:
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Location Theories:
This location theory was propounded by Alfred Weber in 1909. But he fails to explain all subtle
variances in decision-making but does provide a simple set of guidelines.
Weber classified locational factors into two brad categories – primary and secondary. Materials
and labour constitute primary factors that contribute to dispersal of industries over different
regions. Industrial units are materials oriented, if their cost of transportation to units is higher.
Industrial plants are market-oriented when cost of transporting finished goods to markets is
higher. Another primary factor is labour. Weber assumes that centers flush with cheap and
skilled labour pull industries towards themselves
Banking credit, insurance, communication and rent and rates constitute the secondary factors of
location. Some of these attract industries to certain areas from different places and some other
contribution to their dispersal from original places. The latter are called the degglomerating
factors and the former is agglomerating factors.
Steps in selection:
To be systematic in choosing a plant location, the entrepreneur would do well to proceed step by
step, the steps being
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Location Models:
- Factor rating method
- Point rating method
- Break –even analysis
- Quantitative factor analysis
1. Factor rating method
Popular because a wide variety of factors can be included in the analysis
Six steps in the method
1. Develop a list of relevant factors called critical success factors
2. Assign a weight to each factor
3. Develop a scale for each factor
4. Score each location for each factor
5. Multiply score by weights for each factor for each location
6. Recommend the location with the highest point score
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has estimated the variable cost and fixed cost and then the total cost for the each location against
the production quantity. This is shown in the table.
Fixedcost Variable cost
SITE
(Rupees in lakhs) (Rupees per unit)
A 2.5 1000
B 3 750
C 4 500
Solution:
Considering site A and B,
the total cost for site A for ‗x‘ quantities = 250000 + 1000x. --------- (1)
the total cost for site B for ‗x‘ quantities = 300000 + 750x. --------- (2)
Therefore from (1) and (2),
x = (300000 – 250000)/(1000-750)
= 200 units.
Considering site B and C,
the total cost for site B for ‗x‘ quantities = 300000 + 750x. ---------- (3)
the total cost for site C for ‗x‘ quantities = 400000 + 500x. --------- (4)
Therefore from (3) and (4),
x = (400000 – 300000)/(750-500)
= 400 units.
Result,
If ‗x‘ < 200 units, select site A as it has minimum fixed value.
If 200 < ‘x‘ < 400 units, select site B as it has minimum variable cost compared to A and
minimum total cost compared to C.
If ‗x‘ > 400 units, select site C as it has the least variable cost.
Graphical representation:
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Facility layout:
A Facility or plant layout is the placing of the right items coupled with the right place and the
right method, to permit the flow of production process through the shortest possible distance in
the shortest possible time.
Definition: Plant layout refers to the arrangement of physical facilities such as machines,
equipment, tools, furniture etc. in such a manner so as to have quickest flow of material at the
lowest cost and with the least amount of handling in processing the product from the receipt of
raw material to the delivery of the final product.
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1. Integration of all factors - The plant should integrate all the essential resources of men,
machines and materials in order to give an optimum level of production.
2. Minimum Movement - The less the movement of men, machines and materials, the less will
be the cost of production. Thus, minimum movement of theses resources will provide cost
efficiency.
3. Unidirectional flow - All materials should progressively move towards the same direction i.e.
towards the stage of completion. Any back-tracking should be avoided here.
4. Efficient space handling - The space used up during the plant work also costs money as more
the space required, more will be the floor rent. The materials should be organized in stacks in a
proper and recognizable order to maintain space efficiency.
6. Maximum observation capacity - The layout of the plant should such that all of its resources
and workforce can be observed and evaluated at all points in time. This helps in better
supervision of work and helps in increasing both effectiveness and safety.
7. Maximum accessibility - The layout of the plant should ensure that all essential resources are
accessible to the labour and machines without any delay. The aisles should be free from
obstacles. The materials should be placed as close,to the machines concerned, as possible.
8. Minimum Handling - The ineffective handling of materials leads to a rise in cost. Materials
should be handled in stacks and transferred in one go. Handling of a material twice in the same
direction must be avoided.
9. Maximum protection - The layout should ensure the protection of the materials and machines
while they are in the working or the storage stage. The security system should be efficient
without making too many doors or barriers.
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10. Maximum flexibility - The plant layout should not be rigid and permanent. If the need arises,
the plant layout should be able to change itself without being expensive.
5. Inherent safety - The environment of the plant should be safe for the workers as well as the
machines. There should be fire extinguishers and fire exits placed strategically. There should be
minimum contact of the labour to toxic chemicals and environment.
Types Of Layout:
There are mainly four types of plant layout:
· Low cost of material handling, due to straight and short route and absence of backtracking
· Smooth and continuous operations
· Continuous flow of work
· Lesser inventory and work in progress
· Optimum use of floor space
· Simple and effective inspection of work and simplified production control
· Lower manufacturing cost per unit
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PROCESS LAYOUT:
In this type of layout the machines of a similar type are arranged together at one place. 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.
COMBINED LAYOUT:
· A combination of process & product layout is known as combined layout.
· Manufacturing concerns where several products are produced in repeated numbers with
no likelihood of continuous production, combined layout is followed
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· 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.
Templates: Templates are patterns which consist of a thin plate of wood or metal, which a
serves as a gauge or a guide in mechanical work. A plant layout template is a scaled
representation of physical object in a layout. This object may be amachine, materials handling
equipment, a worker or even materials. The templates are fixed to a plan drawing and are moved
around the drawing to explore the various layout possibilities until a layout, which eliminate
unnecessary handling and back tracking of materials and offers flexibility to admit revisions at
the least cost, emerges. The template method is particularly useful in developing a layout,for an
existing department or building or when the configuration of the building to already established
through other layout techniques
Line Balancing:
Line: an assembly line composed of several work stations, at which specific operations are
performed.
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• Line Balancing is the process of assigning tasks to workstations in such a way that the
workstations (operations) have approximately equal time requirements.
• For Product Layouts (Sequence of tasks!)
• Multiple tasks can be assigned to one workstation.
Cycle Time of Workstation
• The time a workstation needs to complete its set of assigned tasks once.
Example: Workstation A is assigned 2 tasks, task one needs 0.5 minute and task two 1 minute.
So the Cycle Time (CT) of Workstation A is?
The CT of a product line containing multiple workstations is the longest CT of the workstations.
(Line CT)
Precedence Diagram:
• Task assignments must respect precedence relationships and other technological
constraints.
• Precedence diagram: Tool used in line balancing to display elemental tasks and sequence
requirements
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Number of Workstations:
Question: How does one determine the number of workstations to use?
Answer: By specifying a desired line cycle time or, equivalently by specifying an output rate.
(How are cycle time and output related?)
Suppose OT = 8 hours per day (480 minutes per day) and D = 400 units per day. Then CT = ??
CT = 480/400= 1.2 minutes per unit per workstation, Sum of task times = 2.5 minutes per unit.
Nmin =???
Line Efficiency:
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