PRODUCTION MANAGEMENT

Is the sequence of technical processes requiring either directly the mental and physical skill of craftsman and consists of changing the shape, size and properties of materials, and ultimately converting them into useful articles. Is a function of management, related to planning coordinating and controlling the resources required for production to produce specified product by specified methods, by optimal utilization of resources .

OBJECTIVES OF PRODUCTION MANAGEMENT

to produce goods/services of right quality and quantity at the right time and manufacturing cost Right quality-the quality established based on the customers
needs. Right quantity-manufacturing organization should produce products in right number. Right time-timeliness of delivery is one of the impportant parameter to judge effectiveness of production department. Right manufacturing cost-manufacturing costs are established before the product is actually manufactured.

BENEFICIARIES OF EFFICIENT PRODUCTION

MANAGEMENT
consumer

consumer
investors employee
investors

suppliers
community nation

employee

suppliers

community

nation

SCOPE
Facility location-selecting appropriate location for the production is a key decision as large investment is made in building plant and machinery. Plant layouts and material handling-the objective of plant layout is to design a physical arrangement of facilities thats meets the required o/p qlty and qty most economically. Product design-is the process of designing the various features of product and developing the ideas about its production.

CONTD
Process design-is the process of determination of the production process, its sequence, layout of facilities for converting the raw material into finished product. Production and planning control-is the process of planning the production, setting the exact route of each item, fixing the starting and finishing dates for each item, giving production orders to shops and to following up the progress of products according to orders. Quality control-is the entire collection of activities which ensures that the operation will produce optimum qlty prdts at mini.cost.

CONTD..
Materials management-is concerned with the acquisition, control and use of materials needed and flow of goods and services connected with the production process. Maintenance management-is concerned with the detailed analysis of the production facilities, maintenance procedures and equipment policy.

FUNCTIONS ..
Is depend upon the size of the firm The general functions are 1.Forecasting the demand for the products to determine factors of production 2.Arranging factors required of production. 3.Arranging the services such as maintenance, material handling, inspection and quality contrl etc. which are required to attain the targeted level of prdtn. 4.Effective utilization of the factors of the production.

FRAME WORK
product plant processes programme personnel

prod uct pers onn el 5ps plan t

prog ram me

proc ess es

PRODUCT LIFE CYCLE

Product life cycle includes 1. Introduction 2. Growth 3. Maturity 4. Decline

BENEFIT OF PRODUCT LIFE CYCLE

The product life cycle model can be used by consultants and managers to analyse the maturity stage of products and industries. Understanding which stage a product is in provides information about expected future sales growth and the kinds of strategies that should be implemented.

PRODUCT LIFE CYCLE

GROWTH INTRODUCTION

MATURITY

DECLINE

SALES

TIME

TYPES OF PRODUCTION
Intermittent production 1.Job shop production 2.Batch production 3.Project industries Continuous production 1.Mass production 2.Process production Cellular production Assembly lines

INTERMITTENT PRODUCTION
The goods are manufactured specially to fulfill orders made by customers rather than for stock. Flow of material is intermittent. The production facilities are flexible enough to handle a wide variety of products and sizes.

METHODS OF PRODUCTION
Job or unit production Mass or continues production Batch or Quantity production

JOB OR UNIT PRODUCTION

Oldest method Used for small production Individual requirement of the consumers can met Each job order stand alone Provides flexibility in operation General purpose machines are required It is mainly concerned with special projects, models, proto-types, special machinery etc. examples, turbo-generators, large engines, ship building.

3 types of job production can be defined, according to the regularity of the manufacture
A small no of pieces produced only once A small no of pieces produced intermittently when the need arises A small no of pieces produced periodically at known intervals of time

CHARACTERISTICS Small production runs - one or few no of single product designed and manufactured strictly to customers specification. The flow of materials the flow of mtls and components btw different stages of manufacture is highly discontinuous due to imbalanced operation wise work content. layout of plant and equipment they are arranged according to process layout. Skill required Quality of supervision Cost of production the unit cost is high

ADVANTAGES: 1.It is only method which can meet the individual requirements 2.There is no managerial problem, because of very less number of workers. 3.Requires less money and easy to start. 4.Less risk of loss 5.No chance of failure of factory DISADVANTAGES: 1.No scope of commercial economy 2.Purchase of raw materials is less hence cost of raw materials may be slightly more. 3.Labour cost is increases.

BATCH PRODUCTION

Manufacture of a no of similar articles, either to meet a specific order or to satisfy continuous demand. Examples shoe making, cloth manufacturing, and chemical plants and medicine etc. Characteristics:

Short runs short production runs and frequent changes in set ups. Investment need high investment. The production is generally made to stock. Planning planning, routing and scheduling changes with fresh batch of orders. Skill of labour Quality of supervision is less than that of job order production. Flexibility

MASS PRODUCTION

Large scale production It is a continues production It has no non-producing time It requires specially planned lay out Example automobile industry, electrical and household appliances, toy manufacturing etc. Characteristics:

Flow of material it is continuous and there is little or no queuing at any stage of processing. Machines and plant layout special purpose machines are used and plant and assembly stages are laid out on the basis of product layout. Material handling- less and mostly mechanised by conveyors, transfer machines. Manufacturing cycle time is very short. Flexibility interruptions seriously affect production.

PRODUCTION PROCEDURE
Sales forecast phase Production planning activity phase Production phase Dispatching phase

PRODUCTION PROCEDURE
Production procedure starts with the customer and ends up with satisfying the needs of customer by delivering the required products. Production procedure cycle includes

Sales forecast phase Production planning activity phase Production phase Dispatching phase

SALES FORECAST
The manufacturing cycle is triggered by customer orders or forecast of customer demand and current product availability in the manufacturers finished goods warehouse. Marketing or sales dept after a thorough analysis and market research comes out with details like acceptability of product, reactions to new modifications and designs etc.

PRODUCTION PLANNING PHASE

Production budget is prepared by finance dept in consultation with production dept The engineering dept is instructed to prepare drawing, specifications etc Management reviews the sales forecast and the budget to take decisions about quantities to be produced Decide production sequence Inventory levels are checked in order to meet the requirements Production planning section supplies the complete data on production schedule to dispatching section

PRODUCTION PHASE & DISPATCHING PHASE

During the manufacturing phase of the process, the manufacturer produces to the production schedule. When the product is completely made, then finished product is shipped to the customer, retailer, distributor or finished- product warehouse after inspection. The objective of shipping process is ship the product by the promised due date while meeting quality requirements and keeping costs down.

PRODUCTION SYSTEM
INPUTS
PRODUCTION PROCESS

OUT PUTS

-RAW MATERIALS -MAN -MACHINE -POWER/ENERGY -PLANT AND FACILITIES

-OPERATION OR PROCESSES -INSPECTION -STORAGE -PPC

PRODUCT OR SERVICES

INVENTORY
It is defined as the list of movable goods which helps directly or indirectly in the production of goods for sale. It is just a sort of investment in the form of raw materials, tools, gauges, supplies etc. It is also defined as a comprehensive list of movable items which are required for manufacturing the products and to maintain the plant facilities in working conditions.

CLASSIFICATION OF INVENTORIES
Direct inventories Indirect inventories Direct inventories the inventories which play a direct role in the manufacture of a product and become an integral part of finished product are called direct inventories. They are further classified as:

Raw materials In process inventories (work in progress) semi finished goods Purchased parts Finished goods

Indirect inventories are those materials which help the raw materials to get converted into the finished product, but do not become an integral part of the finished products. Further classified as:

Tools
Standard tools used on machines Hand tools such as hand saw, chisel etc.

Supplies
Miscellaneous consumable stores such as cotton waste, jute etc Abrasive materials such as emery cloth, grphite etc. Brushes, maps, bags, boxes etc. Oils, greases, general office supplies, printed forms etc.

INVENTORY CONTROL
It means making the desired item of required quality and in required quantity, available to various departments when needed. Too much inventory creates a problem of their storage, huge investment and the maintenance of stored items from damage. Inventory control may be defined as the scientific method of finding how much stock should be maintained in order to meet the production demands and be able to provide right type of material at right time in the right quantities and at competitive prices.

INVENTORY FUNCTIONS (NEED)

To ensure against delays in deliveries To allow for possible increase in output. Maintain smooth and efficient production flow To keep better customer relations To take advantage of quality discounts To utilize to advantage price fluctuations To ensure against scarcity of materials in the market To have a better utilization of men and machinery

ADVANTAGES No shortage of materials at any stage of production Materials are made available at most economical rates Delays or interruptions in production due to non availability of material do not occur Exact and accurate delivery dates can be forecast Production schedule and delivery dates are maintained Materials are protected from spoilage, deterioration Increase in overall efficiency / productivity of the company

IMPORTANCE OF INVENTORY CONTROL

It is a planned approach of ascertaining when to order, how much to order and how much to stock so that costs involved in buying and storing are optimally minimum without interrupting production or affecting sales. Basically it deals with two problems

When should an order be placed? How much should be ordered? It controls and minimizes accumulation and buildup of surplus stocks

EOQ
The order size at which the total cost is minimum is called economic order quantity or EOQ or Q(optimal order size) EOQ is that order quantity which will minimize the total variable cost of managing the inventory

MODELS OF INVENTORY

The inventory models can be classified into deterministic and probabilistic models. The various deterministic models are:

PURCHASE MODEL WITH INSTANTANEOUS

REPLENISHMENT AND WITHOUT SHORTAGE In this model, orders of equal size are placed at periodical intervals. The items against an order are replenished instantaneously and the items are consumed at a constant rate.

Let, D be the annual demand in units CO be the ordering cost/order CC be the carrying cost/unit/year P be the purchase price per unit Q be the order size

MANUFACTURING MODEL WITHOUT SHORTAGE

PURCHASE MODEL WITH SHORTAGES

MANUFACTURING MODEL WITH SHORTAGES

LEAD TIME, REORDER LEVEL, SAFETY STOCK

Q is economic order size, t is the cycle time Reorder level is the stock level at which an order is placed so that we receive the items against the order at the beginning of next cycle

PURCHASE INVENTORY MODEL

Fixed order quantity system (Q system): In this system of inventory whenever the stock level touches the reorder level an order is placed for a fixed quantity which is equal to EOQ

PERIODIC REVIEW SYSTEM (P SYSTEM)

In this the stock position is reviewed once in a fixed period time and an order is placed depending on the stock position in the Q system of inventory.

NETWORK ANALYSIS
A project is defined as a combination of inter related activities that must be executed in a certain order before the entire task can be completed. Network analysis is the general name given to certain specific techniques which can be used for the planning, management and control of projects Network analysis is a system which plans projects A network is a combination of activities and events of a project.

OBJECTIVES OF NETWORK
Minimize total project cost and time. Effective utilization of resources. Minimizing delays and interruption of the project. Minimization of idle resources.

APPLICATION Construction of buildings, bridges, factories and irrigation projects. Administration Manufacturing Maintenance planning Research and development Inventory planning marketing

ACTIVITIES AND EVENTS

An activity is a task associated with a project. It is a physically identifiable part of a project which consumes time and resources Eg: lay pipe line is an activity. It is represented by an arrow, the tail of which represents its start, and the head, its finish.

Here A or 2-3 represents an activity. No 2 represents initial node(start)and 3 represents terminal node(finish)

DUMMY ACTIVITY
Usually a job or a task requires time and cost. But there are certain activities which do not take time and resources. They are known as dummy activity. Consider the example:

C A
2 4

B
3

EVENT Events represent instants in time when certain activities have been started or completed. An event describes start or completion of a task. An event or node in a network diagram is a junction of two or more arrows representing activities. Eg: pipe line laid is an event. Events are represented by circles.

Successor events: the events that follow an event are called successor events. Here event 3 is the immediate successor of 2

A
1 2

B
3

Predecessor events: the events that occur before an event are called predecessor events. In above diagram event 2 is the immediate predecessor of 3.

NETWORK DIAGRAM
A graph drawn connecting the various activities and events of a project, is a network diagram. They are of two types:

Event oriented diagrams (PERT network diagrams) Activity oriented diagrams (CPM network diagrams)

RULES FOR CONSTRUCTING NETWORK

DIAGRAM Each activity is represented by one and only one arrow in the network No two activities can be identified by the same head and tail events Except for the nodes at the beginning and at the end every node must have at least one activity preceding it and at least one following it. Only one activity may connect any two nodes

Earliest event time (TE) : the earliest occurrence time or earliest event time at which an event can occur. Earliest occurrence of an event say 2 is denoted by E2. Latest event time (TL) : the latest allowable occurrence time or the latest event time is the latest time by which an event must occur to keep the project on schedule. Latest occurrence of an event say 2 is denoted by L2

START AND FINISH TIMES OF AN ACTIVITY

1. Earliest start time(EST) : it is the earliest time by which an activity can commence. The EST of an activity = earliest occurrence of the tail event of the activity. So for activity 2-3, EST is E2 2. EFT : it is defined as the earliest time by which it can be finished. EFT= EST + Activity duration 3. LFT : it is the latest time by which an activity can be finished without delaying the completion of the project. LFT of an activity= latest expected time of head event. For an activity 2-3, LFT= L3 4. LST : it is the latest time by which an activity can be started without delaying the completion of the project.LST= LFT- Activity duration.

SLACK AND FLOAT

Slack is a term associated with events. It denotes the flexibility range with in which an event can occur. It is the difference btw earliest event time and latest event time. Slack of the event 2 is L2-E2. Float is associated with activity. It denotes the range with in which activity starts time or its finish time may fluctuate without affecting the completion of the project. Types:
Total float Free float Independent float Interfering float

Total float is the excess of the max available time over the activity time. Thus, total float= LFT-EFT or LST-EST Free float = EST of successor EFT of the present activity. Independent float = EST of subsequent activity LFT for preceding activity- duration. Interfering float is the difference btw total float and free float.

CRITICAL PATH
Critical path is that sequence of activities which determines the total project time. Among the paths that which is longest on the basis of final duration is called the critical path. A critical path is the one which connects the activities having zero float.

CPM

It is a network technique which consists of

Planning the sequence of activities to be performed in a network Scheduling the time and resources to various operations Controlling the performance so that they are not deviating from the plans.

CPM is generally used for repetitive type projects or for those projects for which fairly accurate estimate of time for completion of activity can be made and for which cost estimation can be made with fair degree of accuracy. It can be used effectively in production planning, road systems and traffic schedules, communication networks etc.

STEPS INVOLVED IN CPM

List all the activities or tasks and draw a network diagram Find the earliest event time(TE) and latest event time(TL) of each event and show in the network diagram Calculate EST, EFT,LST and LFT for each activity Determine the float for each activity Identify the critical activities (having zero floats) Draw double line in the network passing through the critical activities. The double line shaws the critical path Calculate the total project duration.

FORWARD PASS(EARLIEST START TIME ROULE)

Earliest occurrence of an event=0, if there is no predecessor event. Eg : E1=0 1 2 E1=0 Earliest occurrence of an event= Earliest occurrence of predecessor event + duration of predecessor activity.ie E2= E1 + duration of 1-2

E1=0

E2=4

STEPS

Identify the events and activities and prepare a suitable network Events are numbered in ascending order from left to right Obtain the various time estimates for each activity. Calculate expected time(te) for each activity te = (t0+4tm+tp )/6 Determine TE and TL Compute float and determine critical path and activities Find total expected duration time (te) by adding the time estimates for various activities on critical path Find variance of the time estimates of all activities. Variance =( ( tp - t0 )/6)2 Variance of project duration (2) = sum of variances of time estimates of all critical activities. find the probability of finishing the project on same fixed target by using table of normal distribution. The value of Z is obtained by, Z = (due date expected date of completion)/ Where = standard deviation of critical path.

IMPORTANCE OF CPM AND PERT

Helps the management to concentrate their attention to the critical activities and their completion in time Provides the best way of planning and scheduling a project Gives complete information about duration, slackness etc. Suggests areas for increasing efficiency and reduction of costs Helps to formulate new schedules when the existing schedules can not be met Minimize delay in completion of the project