OM Notes

Operation Management
BA7201
OPERATIONS MANAGEMENT
LT P C 3 0 0 3
COURSE OBJECTIVE: To provide a broad introduction to the field of operations management and explain the concepts, strategies, tools and techniques for managing the transformation process that can lead to Competitive advantage. COURSE OUTCOME: Understanding of the strategic and operational decisions in managing manufacturing and service organizations and appreciation of the role of operations management function in an organization. UNIT I INTRODUCTION TO OPERATIONS MANAGEMENT 9 Operations Management ature, !mportance, historical development, transformation processes, differences bet"een services and goods, a s#stem perspective, functions, challenges, current priorities, recent trends$ Operations %trateg# %trategic fit , frame"or&$ %uppl# Chain Management UNIT II FORECASTING, CAPACITY AND FACILITY DESIGN 9 'emand (orecasting eed, T#pes, Ob)ectives and %teps. Overvie" of *ualitative and *uantitative methods. Capacit# +lanning ,ong range, T#pes, 'eveloping capacit# alternatives. Overvie" of sales and operations planning. Overvie" of M-+, M-+ !! and .-+. (acilit# ,ocation Theories, %teps in %election, ,ocation Models. (acilit# ,a#out +rinciples, T#pes, +lanning tools and techniques. UNIT III DESIGN OF PRODUCT, PROCESS AND WORK SYSTEMS 9 +roduct 'esign !nfluencing factors, /pproaches, ,egal, .thical and .nvironmental issues. +rocess +lanning, %election, %trateg#, Ma)or 'ecisions. 0or& %tud# Ob)ectives, +rocedure. Method %tud# and Motion %tud#. 0or& Measurement and +roductivit# Measuring +roductivit# and Methods to improve productivit#. UNIT IV MATERIALS MANAGEMENT 9 Materials Management Ob)ectives, +lanning, 1udgeting and Control. +urchasing Ob)ectives, (unctions, +olicies, 2endor rating and 2alue /nal#sis. %tores Management ature, ,a#out, Classification and Coding. !nventor# Ob)ectives, Costs and control techniques. Overvie" of 3!T. UNIT V SC EDULING AND PROJECT MANAGEMENT 9 +ro)ect Management %cheduling Techniques, +.-T, C+M$ %cheduling 4 "or& centers nature, importance$ +riorit# rules and techniques, shopfloor control$ (lo" shop scheduling 3ohnson5s /lgorithm 6antt charts$ personnel scheduling in services. TOTAL: !" PERIODS
TE#TBOOKS 7. -ichard 1. Chase, -avi %han&ar, (. -obert 3acobs, icholas 3. /quilano, Operations and %uppl# Management, Tata Mc6ra" 8ill, 79th .dition, 9:7:. 9. orman 6aither and 6regor# (razier, Operations Management, %outh 0estern Cengage ,earning, 9::9. REFERENCES 7. 0illiam 3 %tevenson, Operations Management, Tata Mc6ra" 8ill, ;th .dition, 9::;. 9. -ussel and Ta#lor, Operations Management, 0ile#, (ifth .dition, 9::<. =. >anish&a 1edi, +roduction and Operations Management, Oxford Universit# +ress, 9::?. ?. Char# %. , +roduction and Operations Management, Tata Mc6ra" 8ill, Third .dition, 9::@. A. /s"athappa > and %hridhara 1hat >, +roduction and Operations Management, 8imala#a +ublishing 8ouse, -evised %econd .dition, 9::@. <. Mahadevan 1, Operations Management Theor# and practice, +earson .ducation, 9::B. B. +annerselvam -, +roduction and Operations Management, +rentice 8all !ndia, %econd .dition, 9::@.
UNIT I INTRODUCTION TO OPERATIONS MANAGEMENT 9 O$%&'()*+, M'+'-%.%+( / N'(0&%, I.$*&('+1%, 2),(*&)1'3 4%5%3*$.%+(, (&'+,6*&.'()*+ $&*1%,,%,, 4)66%&%+1%, 7%(8%%+ ,%&5)1%, '+4 -**4,, ' ,9,(%. $%&,$%1()5%, 60+1()*+,, 12'33%+-%,, 10&&%+( $&)*&)()%,, &%1%+( (&%+4,: O$%&'()*+, S(&'(%-9 / S(&'(%-)1 6)( , 6&'.%8*&;: S0$$39 C2')+ M'+'-%.%+(< P&*401()*+ S9,(%., / N'(0&% +roduction is regarded as one of the most crucial functions of management in modern organizations. Obviousl#, to sell a product and earn profits, organizations need to firstl# have a product "hich carters to an unsatisfied need of the consumers. / product "hich is efficientl# produced helps the organization to reap more advantages in terms of cost saving, resource utilization leading to reduced inventor# costs and dela# times and enhanced customer lo#alt#. +roduction becomes the most important function in organizations implementing 3ust in Time techniques C3!TD. +roduction is sometimes confused "ith manufacturing. The definition of both is same though, the onl# difference is that production can be used to describe the process of producing both tangible as "ell as intangible product, i.e. both goods and services "hereas manufacturing is referred to the process of producing tangible products i.e. goods. The nature of production can be explained under three headsE +roduction as a s#stem +roduction as an organizational function 'ecision ma&ing in production 1< P&*401()*+ ', ' ,9,(%.E / s#stem can be understood as a group of independent but interrelated elements comprising a unified "hole$ Fa vast s#stem of production and distribution and consumption &eep the countr# goingF. 0e can thus identif# three s#stems namel# a. P&*401()*+ S9,(%.E The basic function of a production s#stem is to convert a set of inputs into a set of desired outputs. !nputs are resources such as materials, personnel, capital, utilities and information. The ob)ective of an enterprise is to provide goods or services, and to earn profits. These da#s, man# firms are focusing on continuous improvement and customer delight. / continuous search for areas of improvement in the production s#stem is needed. (or this, a clear understanding of recent developments in production s#stem, industrial engineering and management is necessar#. To achieve these ob)ectives, the firms need to convert some inputs li&e men, material, mone#, energ#, information, etc, into useful outputs li&e finished products and services in required quantit# and qualit#. The transformation of the inputs into pre specified outputs is achieved through production process. b. C*+5%&,)*+ S07=,9,(%.E !t is a sub4s#stem of the larger production s#stem "here the inputs are converted into outputs. The resources ta&en in as the inputs are processed to obtain the desired outputs &no"n as the final product. c. C*+(&*3 S07=,9,(%.E !t is a sub4s#stem of the larger production s#stem "here a portion of the output is monitored for feedbac& signals to provide corrective action if required. This sub4 s#stem is responsible for maintaining the acceptable standards of cost, qualit# and quantit#. !f the produced output varies from "hat is required, corrective actions are ta&en to meet the standards. Thus, the control sub4s#stem ensures a uniform level of s#stem performance b# providing feedbac& information so that corrective action can be triggered b# managers in case of deviation from set standards. +roduction s#stem model comprisesE
2< P&*401()*+ ', '+ *&-'+)>'()*+'3 60+1()*+: /s an organizational function the conversion process of inputs into final goods and services is at the heart of the production function. This ma&es the conversion subs#stem the core of production s#stem, "here labor, materials and machines are used to convert inputs into products and services. Thus, it becomes clear that ever# organization, irrespective of its nature and purpose has a production function "here departments and personnel pla# a central role in achieving the ob)ectives of the organization. 3< D%1),)*+ .';)+- )+ P&*401()*+E Operation managers have to ma&e crucial decisions related to the planning, organizing, staffing, directing and controlling the process of conversion of the inputs into desired outputs. The# are expected to ma&e decisions at each level and implement them too. The decisions made b# operation managers can be categorized asE
I.$*&('+1% *6 P&*401()*+ F0+1()*+: +roduction function can offer competitive advantage to a firm in the follo"ing areasE %horter ne"4product4lead time More inventor# turns %horter manufacturing lead time 8igher qualit# 6reater flexibilit# 1etter customer service -educed "astage
Differences between services and goods

7. 9. =. ?. A. <. S%&5)1%, Tangible outputs Outputs cannot be inventoried .xtensive customer contact %hort lead times ,abour intensive %ervice qualit# sub)ectivel# determined 7. 9. =. ?. A. <. G**4, Tangible products +roducts can be inventoried ,ittle customer contacts ,ong lead times Capital intensive +roduct qualit# ob)ectivel# determined.
C2'33%+-%,: 7. -ealit# of global competition 9. *ualit#, customer services, and cost challenges =. -apid expansion of advanced technologies ?. Continued gro"th of the service sector A. %carcit# of operations resources <. %ocial4responsibilit# issues O(2%& 12'33%+-%,: Competitive pressure due to economic reforms 6ro"ing customer expectations Technological developments .nvironmental issues
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C0&&%+( P&)*&)()%,:
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C0&&%+( P&)*&)(9 ,o" production cost
'eliver# performance
8igh4qualit# productGservice
Customer service and flexibilit#
D%6)+)()*+ S*.% 8'9, *6 1&%'()+Unit cost of each -edesign of productsG services productGservice, including e" technolog# labour, material and overhead !ncrease in production rates costs -eduction of scrap or "aste -eduction of inventories (ast deliver# ,arger finished4goods inventories (aster production rates *uic&er shipping methods On4time deliver# More realistic promises 1etter control of production of orders 1etter information s#stems Customer5s perceptions of !mprove productGservicesE degree of excellence exhibited /ppearance b# productsGservices Malfunction or defect rates +erformance and function 0ear, endurance abilit# /fter4sales services /bilit# to quic&l# change Change in t#pe of processes production to other used productsGservices, customer Use of advanced technologies responsiveness -eduction of amount of "or& in process through lean manufacturing !ncrease in capacit#.
Recent Trends in Operations Management:

7. Global Market PlaceE 6lobalization of business is the reason "h# man# manufacturing firms felt the need of operations in man# countries "here the# have certain economic advantage. This has increased the level of competition among manufacturing firms throughout the "orld. 9. Production/Operations StrategyE /n operations strateg# becomes important for overall success of business and the necessit# for relating it to their overall business strateg#.
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=. Total Quality ManagementE This approach has been adopted b# firms to achieve customer satisfaction b# a never4ending quest for improving the qualit# of goods and services. ?. FlexibilityE The abilit# to adapt quic&l# to changes in volume of demand, in the product mix demanded, and in product design or in deliver# schedules, has become a ma)or competitive advantage to the firms. A. Time Reduction: -eduction of manufacturing c#cle time and speed to mar&et for a ne" product provides competitive edge to the firm over other firms. 0hen companies can provide products at the same price and qualit#, quic&er deliver# Cshort lead timesD provide one firm competitive edge over the other. <. Tec nology: /dvances in technolog# have led to a vast arra# of ne" products, ne" processes and ne" materials and components. /utomation, computerization, information and communication technologies have revolutionized the "a# companies operate. Technological changes in products and processes can have great impact on competitiveness and qualit#, if the advanced technolog# is carefull# integrated into the existing s#stem. B. !orker "n#ol#ement: The recent trend is to assign responsibilit# for decision ma&ing and problem solving to the lo"er levels in the organization. This is &no"n as emplo#ee involvement and empo"erment, for example qualit# circles and qualit# improvement teams. @. Re$engineering: This involves drastic measures or brea& through improvements to improve the performance of a firm. !t involves the concept of clean4slate approach or starting from scratch in redesigning the business processes. ;. %n#ironmental "ssues: There is increasing emphasis on reducing "aste, rec#cling "aste, using less4toxic chemicals and using biodegradable materials for pac&aging. 7:. &orporate 'o(nsi)ing *Rig t Si)ing+: Companies are forced for do"nsizing or right sizing due to competition, lo"ering productivit#, need for improved profit and for higher dividend pa#ment to shareholders. 77. Supply & ain Management: Management of suppl# chain, from suppliers to final customers reduces the cost of transportation, "arehousing and distribution throughout the suppl# chain. 79. ,ean Production: ,ean production s#stems use minimal resources to produce high volume of high qualit# goods "ith some variet#. These s#stems use flexible manufacturing s#stems and multi4s&illed "or& force to have advantages of both mass production and )ob production Cor craft productionD. O$%&'()*+, S(&'(%-9 / S(&'(%-)1 6)(, 6&'.%8*&;: S0$$39 C2')+ M'+'-%.%+(: %trategic fit expresses the degree to "hich an organization is matching its resources and capabilities "ith the opportunities in the external environment. The matching ta&es place through strateg# and it is therefore vital that the compan# have the actual resources and capabilities to execute and support the strateg#. %trategic fit can be used activel# to evaluate the current strategic situation of a compan# as "ell as opportunities such as MH/ and divestitures of organizational divisions. %trategic fit is related to the -esource4based vie" of the firm "hich suggests that the &e# to profitabilit# is not onl# through positioning and industr# selection but
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rather through an internal focus "hich see&s to utilize the unique characteristics of the compan#5s portfolio of resources and capabilities.I7J / unique combination of resources and capabilities can eventuall# be developed into a competitive advantage "hich the compan# can profit from. 8o"ever, it is important to differentiate bet"een resources and capabilities. -esources relate to the inputs to production o"ned b# the compan#, "hereas capabilities describe the accumulation of learning the compan# possesses. -esources can be classified both as tangible and intangibleE
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UNIT II FORECASTING, CAPACITY AND FACILITY DESIGN 9 D%.'+4 F*&%1',()+- / N%%4, T9$%,, O7?%1()5%, '+4 S(%$,< O5%&5)%8 *6 @0'3)('()5% '+4 @0'+()('()5% .%(2*4,< C'$'1)(9 P3'++)+- / L*+- &'+-%, T9$%,, D%5%3*$)+- 1'$'1)(9 '3(%&+'()5%,< O5%&5)%8 *6 ,'3%, '+4 *$%&'()*+, $3'++)+-< O5%&5)%8 *6 MRP, MRP II '+4 ERP< F'1)3)(9 L*1'()*+ / T2%*&)%,, S(%$, )+ S%3%1()*+, L*1'()*+ M*4%3,< F'1)3)(9 L'9*0( / P&)+1)$3%,, T9$%,, P3'++)+- (**3, '+4 (%12+)A0%,< D%.'+4 F*&%1',()+-: F*&%1',()+- D%6)+%4 : (orecasting is the first step in planning. !t is defined as estimating the future demand for products and services and the resources necessar# to produce these outputs. D%.'+4 6*&%1',()+- ), +%%4%4 6*&: K e" facilit# +lanning K +roduction +lanning K 0or& force scheduling K (inancial planning T9$%, *6 F*&%1',(, K T%12+*3*-)1'3 6*&%1',(,: Concerned "ith rates of technological progress K E1*+*.)1 6*&%1',(,: %tatements of expected future business conditions. K D%.'+4 6*&%1',(,: +ro)ections of demand for a compan#Ls products or services throughout some future period. O7?%1()5%, *6 D%.'+4 F*&%1',()+S2*&( &'+-% *7?%1()5%, *6 4%.'+4 6*&%1',()+-: i. (ormulation of production strateg# and polic# ii. (ormulation of pricing polic# iii. +lanning and control of sales iv. (inancial planning M%4)0. *& L*+-=R'+-% O7?%1()5%,: i. ,ong4range planning for production capacit# ii. ,abour requirements C.mplo#ment levelsD iii. -estructuring the capital structure S(%$, )+ (2% F*&%1',()+- P&*1%,, The seven basic steps i. 'etermine the purpose Cob)ectivesD of the forecast ii. %elect the items for "hich forecasts are needed iii. 'etermine the time horizon for the forecast iv. %elect the forecasting model Cmethod or techniqueD v. 6ather and anal#se the data needed for the forecast vi. +repare the forecast vii. Monitor the forecast O5%&5)%8 *6 @0'3)('()5% '+4 @0'+()('()5% .%(2*4,:
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@0'3)('()5% .%(2*4, consist mainl# of sub)ective inputs, often of non4numerical description. J0&9 *6 %B%10()5% opinion method involves ta&ing opinion of a small group of high4level managers and results in a group estimate of demand. S'3%,6*&1% 1*.$*,)(% .%(2*4 is based on estimate of expected sales b# sales persons. M'&;%( &%,%'&12 .%(2*4 *& 1*+,0.%& ,0&5%9 .%(2*4 determines consumer interest in a product or service b# means of a consumer surve#. D%3$2) .%(2*4 is a )udgemental method "hich uses a group process that allo"s experts to ma&e forecasts.
@0'+()('()5% .%(2*4, involve either pro)ection of historical data or the development of association models "hich attempt to use causal #ariables to arrive at the forecasts. 1< T).% ,%&)%, .*4%3, use a series of past data to ma&e a forecast for the future. Time series is a time4ordered sequence of observations ta&en at regular intervals over a period of time. -c M T. S. &. R multiplicati#e model -c M T N S N & N R additi#e model "here T is Trend, S is %easonal, & is C#clical, and R is -andom components of a series. T&%+4 is a gradual long4term directional movement in the data Cgro"th or declineD. S%',*+'3 effects are similar variations occurring during corresponding periods, e.g., 'ecember retail sales. %easonal can be quarterl#, monthl#, "ee&l#, dail#, or even hourl# indexes. C913)1'3 6'1(*&, are the long4term s"ings about the trend line. The# are often associated "ith business c#cles and ma# extend out to several #ears in length. R'+4*. 1*.$*+%+( are sporadic CunpredictableD effects due to chance and unusual occurrences. The# are the residual after the trend, c#clical, and seasonal variations are removed. T&%+4E Three methods for describing trend areE C7D Moving average, C9D 8and fitting, and C=D ,east squares. M*5)+- A5%&'-% / centered moving average CM/D is obtained b# summing and averaging the values from a given number of periods repetitivel#, each time deleting the oldest value and adding a ne" value. Ox M/ M umber of +eriod A 8%)-2(%4 .*5)+- '5%&'-% CMA8D allo"s some values to be emphasized b# var#ing the "eights assigned to each component of the average. 0eights can be either percentages or a real number. O C!tD/ M/(t 0 O!t '+4 F)(()+/ hand fit or freehand curve is simpl# a plot of a representative line that Csub)ectivel#D seems to best fit the data points. (or linear data, the forecasting equation "ill be of the formE -c M a N b */+ CsignatureD "here -c is the trend value, a is the intercept C"here line crosses the vertical axisD, b is the slope Cthe rise, Py1 divided b# the run, PxD, and / is the time value C#ears, quarters, etc.D. The QsignatureR identifies the point in time "hen / M :, as "ell as the / and - units.
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L%',( SA0'&%, ,east s2uares are a mathematical technique of fitting a trend to data points. The resulting line o3 best 3it has the follo"ing propertiesE C7D the summation of all vertical deviations about it is zero, C9D the summation of all vertical deviations squared is a minimum, and C=D the line goes through the means / and -. (or linear equations, the line of best fit is found b# the simultaneous solution for a and b of the follo"ing t"o normal e2uations: O- 0 na SPbO/ O/- M aO/SbO/4 EB$*+%+()'3 S.**(2)+.xponential smoothening is a moving4average forecasting technique that "eights past data in an .xponential manner so that most recent data carr# more "eight in the moving average. 0ith simple .xponential smoothening, the forecast Ft is made up of the last period forecast Ft7 plus a portion, T, of the difference bet"een the last periods actual demand 5t7 and last period forecast Ft7. Ft M Ft7 N C5t7 Ft7D. A4?0,(%4 EB$*+%+()'3 S.**(2)+/d)usted exponential smoothing models have all the features of simple exponential smoothing models, plus the# pro)ect into the future Cfor example, to time period t N 7D b# adding a trend correction increment, Tt1 to the current period smoothed average, (t Ft67M P FtSTt The components of a trend4ad)usted forecast that utilizes a second smoothing coefficient UP. The UPvalue determines the extent to "hich the trend ad)ustment relies on the latest difference in forecast amounts C F t $F t$7PD versus the previous trend Tt87 / lo" UPPgives more smoothing of the trend and ma# be useful if the trend is not "ell4established. / high UPP"ill emphasize the latest trend and be more responsive to recent changes in trend. The initial trend ad)ustment Tt7 is sometimes assumed to be zero. R%-&%,,)*+ A+4 C*&&%3'()*+ M%(2*4, -egression and correlation techniques quantif# the statistical association bet"een t"o or more variables. CaD Simple regression expresses the relationship bet"een a dependent variable - and a independent variable / in terms of the slope and intercept of the line of best fit relating the t"o variables. CbD Simple correlation expresses the degree or closeness of the relationship bet"een t"o variables in terms of a correlation coefficient that provides an indirect measure of the variabilit# of points from the line of best fit. either regression nor correlation gives proof of a cause4effect relationship. 'ifferences bet"een qualitative and quantitativeE @0'3)('()5% M%(2*4, Uses "hen situation is vague and little data available e" products @0'+()('()5% M%(2*4, Used in stable situations 8istorical data available .xisting products
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e" technolog#
Current technolog# !nvolves mathematical techniques
.xampleE forecasting ne"l# online sales
introduced .xampleE sales of color T2s
C'$'1)(9 P3'++)+-: Capacit# planning is the process of determining the production capacit# needed b# an organization to meet changing demands for its products. Capacit# planning involves activities such asE 7. /ssessing existing capacit# 9. (orecasting future capacit# needs =. !dentif#ing alternative "a#s to modif# capacit# ?. .valuating financial, economical and technological capacit# alternatives %electing a capacit# alternative most suited to achieve the strategic mission of the firm. Capacit# planning involves capacit# decisions that must merge consumer demands "ith human, material and financial resources of the organization C'$'1)(9 $3'++)+- / L*+- &'+-%: 4The long range planning generall# considers planning horizons of one #ear or longer. / time period of one #ear or longer is needed to provide sufficient time to build a ne" facilit#, to expand the existing facilit# or to move to a ne" facilit# due to forecasted changes in demand. 40e determine long4term capacit# needs b# forecasting demand over a time horizon and then converting those forecasts into capacit# requirements ,ong4term considerations relate to overall level of capacit#, such as facilit# size Caffected b# trends and c#clesD 7. ,ong range capacit# planningE TV7 #ear. 'ecisionsE planning for capacit# that requires a long time to acquire. e.g. +lantGbuildingGequipmentGhigh cost facilit# 9. !ntermediate range capacit# planningE TC<47@ monthsD. 'ecisionsE planning for capacit# requirement Cmonth or quarterl#D. e.g. "or& force sizeGne" toolsGinventor#GW.. =. short range capacit# planningE T C74<mothD. 'ecisionsE "ee&l# Cor dail#D capacit# planning. e.g. overtime useGpersonnel transferGalternative routingsGWW 0a#s of Changing ,ong -ange Capacit#E K.xpand Capacit# %ubcontract "ith other companies to become suppliers of the expanding firm5s components or entire products /cquire other companies, facilities, or resources 'evelop sites, buildings, bu# equipment
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.xpand, update, or modif# existing facilities -eactivate facilities on standb# status K-educe Capacit# %ell existing facilities, sell inventories, and la#off or transfer emplo#ees Mothball facilities and place on standb# status, sell inventories, and la#off of transfer emplo#ees 'evelop and phase in ne" products as other products decline T#pes of Capacit# +lanningE K ,ong term Capacit# +lanning K %hort4term Capacit# +laning K (inite Capacit# +lanning K !nfinite Capacit# +lanning. T"o categories of factors affecting capacit# planning areE K Controllable (actors K ,ess Controllable (actors. L*+- T%&. C'$'1)(9E ,ong range capacit# of an organization is dependent on various other capacities li&e design capacit#, production capacit#, sustainable capacit# and effective capacit#. 'esign capacit# is the maximum output possible as indicated b# equipment manufacturer under ideal "or&ing condition. +roduction capacit# is the maximum output possible from equipment under normal "or&ing condition or da#. %ustainable capacit# is the maximum production level achievable in realistic "or& condition and considering normal machine brea&do"n, maintenance, etc. .ffective capacit# is the optimum production level under pre4defined )ob and "or&4schedules, normal machine brea&do"n, maintenance, etc. M%4)0. T%&. C'$'1)(9E The strategic capacit# planning underta&en b# organization for 9 to = #ears of a time frame is referred to as medium term capacit# planning. %hort Term Capacit#E The strategic planning underta&en b# organization for a dail# "ee&l# or quarterl# time frame is referred to as short term capacit# planning. (inite and infinite Capacit# planningE !f time is fixed b# the customer required deliver# date or processing c#cle, it is possible to accept time as the primar# constraint and plan bac&"ards to accommodate these times. !n such cases, planning bac&"ards to infinite capacit# offers a potential solution to the problem. On the other hand if the processing time is not a constraint in cases "here products are produced to stoc& and sell, it is simpler to use a for"ard plan based on finite capacit# i.e., based on available resources. D%5%3*$)+- 1'$'1)(9 '3(%&+'()5%,: /side from the general considerations about the development of alternatives Ci.e., conduct a reasonable search for possible alternatives, consider doing nothing, ta&e care not to overloo& non4quantitative factorsD, there are other things that can be done to enhance capacit# managementE
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1D D%,)-+ 63%B)7)3)(9 )+(* ,9,(%.,< The long4term nature of man# capacit# decisions and the ris&s inherent in long4term forecasts suggest potential benefits from designing flexible s#stems. CFor example pro#ision 3or 3uture expansionD. 2D D)66%&%+()'(% 7%(8%%+ +%8 '+4 .'(0&% $&*401(, *& ,%&5)1%,< Mature products or services tend to be more predictable in terms of capacit# requirements, and the# ma# have limited life span. 3D T';% ' E7)- $)1(0&%F '$$&*'12 (* 1'$'1)(9 12'+-%,< 0hen developing capacit# alternatives, it is important to consider ho" parts of the s#stem interrelate. C 3or example increase capacity (it out enoug car parkD. !D P&%$'&% (* 4%'3 8)(2 1'$'1)(9 E120+;,<F Capacit# increases are often acquired in fairl# large chun&s rather than smooth increments. "D A((%.$( (* ,.**(2 *0( 1'$'1)(9 &%A0)&%.%+(,< Unevenness in capacit# requirements also can create certain problems. GD I4%+()69 (2% *$().'3 *$%&'()+- 3%5%3< +roduction units t#picall# have an ideal or optimal level of operation in terms of unit cost of output. Production units a#e an optimal rate o3 output 3or minimum cost Minimum cost and optimal operating rate are 3unctions o3 si)e o3 a production unit
O5%&5)%8 *6 ,'3%, '+4 *$%&'()*+, $3'++)+- CA--&%-'(% P3'++)+-D S'3%, '+4 *$%&'()*+, $3'++)+- CSHOPD: The process of planning future aggregate resource levels so that suppl# is in balance "ith demand. S('66)+- $3'+: / sales and operations plan of a service firm, "hich centers on staffing and other human resourcerelated factors. P&*401()*+ $3'+: / sales and operations plan of a manufacturing firm, "hich centers on production rates and inventor# holdings A--&%-'()*+: The sales and operations plan is useful because it focuses on a general course o3 action, consistent "ith the compan#5s strategic goals and ob)ectives, "ithout getting bogged do"n in details. +roduct famil#E / group of customers, services, or products that have similar demand requirements and common process, labor, and materials requirements.
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/ compan# can aggregate its (ork3orce in various "a#s as "ell, depending on its flexibilit#. The compan# loo&s at time in t e aggregate months, quarters, or seasonsXrather than in da#s or hours. P3'+ O7?%1()5%,: S)B *7?%1()5%, 0,0'339 '&% 1*+,)4%&%4 40&)+- 4%5%3*$.%+( *6 ' $3'+: 7. 9. =. ?. A. <. Minimize CostsGMaximize +rofits Maximize Customer %ervice Minimize !nventor# !nvestment Minimize Changes in +roduction -ates Minimize Changes in 0or&force ,evels Maximize Utilization of +lant and .quipment
R%'1()5% A3(%&+'()5%,: -eactive alternatives are actions that can be ta&en to cope "ith demand requirements. /nticipation inventor# is inventor# that can be used to absorb uneven rates of demand or suppl#. W*&;6*&1% '4?0,(.%+(E 8iring and la#ing off to match demand. W*&;6*&1% 0()3)>'()*+E Use of overtime and undertime. V'1'()*+ ,12%403%,E Use of plant4"ide vacation period, vacation Qblac&outR periods. S071*+(&'1()+-E Outsourcing to overcome short4term capacit# shortages. B'1;3*-,, B'1;*&4%&,, and S(*1;*0(,: 1ac&logE /n accumulation of customer orders that have been promised for deliver# at some future date. 1ac&orderE / customer order that cannot be filled immediatel# but is filled as soon as possible. %toc&outE /n order that is lost and causes the customer to go else"here. P3'++)+- S(&'(%-)%,: C2',% ,(&'(%-9E / strateg# that involves hiring and la#ing off emplo#ees to match the demand forecast. L%5%3 ,(&'(%-9E / strateg# that &eeps the "or&force constant, but varies its utilization and inventor# to match the demand forecast.
29
M)B%4 ,(&'(%-9E / strateg# that considers and implements a fuller range of reactive alternatives than an# one QpureR strateg#. C*+,(&')+(, '+4 C*,(,: The planner usuall# considers several t#pes of costs "hen preparing sales and operations plans. 7. -egular4Time CostsE These costs include regular4time "ages plus contributions to benefits, %ocial %ecurit#, retirement funds, and pa# for vacations and holida#s. 9. Overtime CostsE Overtime "ages t#picall# are 7A: percent of regular4time "ages. =. 8iring and ,a#off CostsE !nclude the costs of advertising )obs, intervie"s,training programs, exit intervie"s, severance pa#, and lost productivit#. ?. !nventor# 8olding Costs 1ac&order and %toc&out Costs
O5%&5)%8 *6 MRP C*&D I+6*&.'()*+ F3*8 )+ P3'++)+- '+4 1*+(&*33)+- 8)(2 MRP< M-+ 4 !t is a technique for determining the quantit# and timing for the acquisition of dependent demand items needed to satisf# M+%
30
!nformation flo" of planning and controlling "ith M-+
Business Plan
(orecast Current conditions
Production Plan Tentative MPS Master Schedule
Rough cut Capacity check
Inventory status file
MRP Program
Ma&e items
Product Structure file
1u# items
CRP Purchase Order etailed Production Plans

2endor feed4bac&
Production !ctivity Control
O7?%1()5%, *6 MRP 7. To improve customer service b# meeting deliver# schedules promised and shortening deliver# lead times. 9. To reduce inventor# costs b# reducing inventor# levels. =.To improve plant operating efficienc# b# better use of productive resources. Three main purposes of a basic M-+ s#stem are toE K Control inventor# levels K /ssign operating priorities K /ssign capacit# to load production s#stems.
MRP S9,(%. I+$0(, M',(%& P&*401()*+ S12%403%: One of the three primar# inputs in M-+, specifies "hat end products are to be produced, in "hat quantities and "hen.
31
B)33 *6 M'(%&)'3, 6)3%: +rovides the information regarding all the materials, parts and sub assemblies that go into the end product. I+5%+(*&9 S('(0, 6)3%: 6ives complete and up4to4date information on the on4hand inventories, gross requirements, scheduled receipts and planned order releases for the item. MRP S9,(%. O0($0(, +rimar# outputs of M-+ %#stemsE K +lanned order schedule K Changes in planned orders. %econdar# inputs of M-+ s#stemE K .xception reports K +erformance reports K +lanning reports C*.$0('()*+'3 $&*1%40&% *6 MRP
The MRP Computational Procedure

MPS "ile
Inventory Status "ile
MRP Processing #ogic
BOM "ile
Order release re$uirements % orders to &e released no'(
Order rescheduling % e)pedite* de+ e)pedite or cancel open order(
Planned order %future(
CaD 1OM 4 / listing of all of the ra" materials, parts, subassemblies, and assemblies needed to produce one unit of a product CbD !nventor# status file !t contains important information such as "hat items should be ordered and "hen orders should be released CcD 6ross -equirements +ro)ect the use of the items CdD %chedule receipts indicates "hen the previousl# released orders if an# are scheduled to be received and available for use CeD On hand inventor# !t indicate the number of units pro)ected to be available at the end of each time period. CfD et requirement Calculated b# subtracting from the gross requirements for that period. CgD +lanned order release4 !t indicate "hen orders should be placed ot meet the requirements for the item.
I,,0%, )+ MRP
32
a. b. c. d. e. f. g.
,ot %izing %afet# %toc& %crap allo"ance +egging C#cle counting Updating Time fence
L*(= S)>)+- R03%, 7. (ixed Order *uantit# C(O*D / rule that maintain the same order quantit# each time an order is issued F*&.03': C+ro)ected On4hand inventor# balance at end of "ee& tD M C!nventor# on hand at end of "ee& t47D N C%cheduled CorD planned receipts in "ee& tD 6ross requirement in "ee& tD 9. +eriodic Order *uantit# C+O*D4 / rule that allo"s a different order quantit# for each order issued but tends to issue the order at predetermined time intervals. F*&.03': C+O* lot size to arrive in "ee& tD M CTotal gross requirements for + "ee&s, including "ee& t D C+ro)ected on4hand inventor# balance at end of "ee& t47D =. ,ot for lot C,?,D / rule under "hich the lot size ordered covers the gross requirement of a single "ee&. F*&.03': C,?, lot sizeD M C6ross requirement in "ee& tD C+ro)ected on4hand inventor# balance at the end of "ee& t47D M'+06'1(0&)+- R%,*0&1% P3'++)+- CMRP II DE 1road4based resource co4ordination s#stem involving other areas of a firm in the planning process, such as mar&eting, finance and the human resource. Manufacturing -esource +lanning CM-+ !!D addresses the planning and control of activities related to materials, capacit#, finance, engineering, sales and mar&eting. Closed4loop M-+E / s#stem built around material requirement planning CM-+4!D and also including additional planning functions such as master production scheduling and capacit# requirement planning
33
)usiness !lan
Manufacturing (Materials, Capacit !ro"uction #c$e"ules%
!ro"uction !lan
M!#
(oug$ cut capacit plan M(!
'etaile" capacit plan
#$op floor control, purc$ase control
!urc$asing (&en"or or"ers%
34
1ngineering (!rocess an" pro"uct "esign% Mar/eting (sales or"er entr , "eli0er ,inance (Capital re-uirements for capacit , .or/ing capital *ccounting ()ills pa a+le, *ccounts
ERP: E+(%&$&),% R%,*0&1% P3'++)+ E+(%&$&),% R%,*0&1% P3'++)+- CERPD: / soft"are pac&age developed for optimum use of resources of an enterprise in a planned manner. !t integrates the entire enterprise starting from the supplier to the customer, covering, logistics, financial and human resources. (eatures of .-+ 7. /ccommodating variet# 9. !ntegrated Management !nformation =. %eamless integration ?. %uppl# chain management A. -esource management <.!ntegrated data model %cope of .-+ a. (inancials
35
b. ,ogistics c. 8uman resources d. 0or& flo" /pplication of .-+ .-+ is gaining popularit# in !ndia at a rapid pace. This is mainl# due to the need for reducing costs especiall# "hen the sales are sluggish in the sub4emerging mar&ets. F'1)3)(9 3*1'()*+: Meaning4 the establishment of an industr# at a particular place. Or The selection of a place for locating a plant is one of the problems, perhaps the most important, "hich is faced b# an entrepreneur "hile launching a ne" enterprise. !t is of 9 t#pes4 7. ,ocalization Gcentralization4means concentration of similar t#pe of industries at some particular place. ..g. textile in Mumbai. 9. 'elocalization G'ecentralization4means spreading of similar t#pe of industries at different places. ..g. ban&ing industries (actors affecting location H site decisionsE 7. /vailabilit# of ra" material 9. earness to the potential mar&et =. ear to the source of operating requirements li&e electricit#, disposal of "aste, drainage facilities. ?. %uppl# of labor A. Transport H communication facilities <. !ntegration "ith other group of companies B. %uitabilit# of land H climate @. /vailabilit# of housing, other amenities H services ;. ,ocal building H planning regulations 7:. %afet# requirements 77. Others li&e lo" interest on loans, special grants, living standards L*1'()*+ T2%*&)%,: This location theor# "as propounded b# /lfred 0eber in 7;:;. 1ut he fails to explain all subtle variances in decision4ma&ing but does provide a simple set of guidelines. 0eber classified locational factors into t"o brad categories primar# and secondar#. Materials and labour constitute primar# factors that contribute to dispersal of industries over different regions. !ndustrial units are materials oriented, if their cost of transportation to units is higher. !ndustrial plants are mar&et4oriented "hen cost of transporting finished goods to mar&ets is higher. /nother primar# factor is labour. 0eber assumes that centers flush "ith cheap and s&illed labour pull industries to"ards themselves 1an&ing credit, insurance, communication and rent and rates constitute the secondar# factors of location. %ome of these attract industries to certain areas from different places and some other
36
contribution to their dispersal from original places. The latter are called the degglomerating factors and the former is agglomerating factors. S(%$, )+ ,%3%1()*+: To be s#stematic in choosing a plant location, the entrepreneur "ould do "ell to proceed step b# step, the steps being 7. 'eciding on domestic or international location. 9. %election of region 4 /vailabilit# of ra" material 4 earness to the mar&et 4 /vailabilit# of po"er 4 Transport facilities 4 %uitabilit# of climate 4 6overnment polic# 4 Competition bet"een states =. %election of communit# 4 /vailabilit# of labour 4 Civic amenities for "or&ers 4 .xistence of complementar# and competing industries 4 (inance and research facilities 4 /vailabilit# of "ater and fire4fighting facilities 4 ,ocal taxes and restrictions 4 Momentum of a earl# start 4 +ersonal factors ?. %election of the site 4 %oil, size and topograph# 4 'isposal of "aste L*1'()*+ M*4%3,: 4 (actor rating method 4 +oint rating method 4 1rea& even anal#sis 4 *uantitative factor anal#sis 7. (actor rating method +opular because a "ide variet# of factors can be included in the anal#sis %ix steps in the method 7. 'evelop a list of relevant factors called critical success factors 9. /ssign a "eight to each factor =. 'evelop a scale for each factor ?. %core each location for each factor A. Multipl# score b# "eights for each factor for each location <. -ecommend the location "ith the highest point score
37
9. +oint -ating MethodE !n selecting a site or location, companies have several ob)ectives, but not all are of equal importance. The relative "eight a compan# assigns to each ob)ective or to each location factor ma# be represented b# the number of points a perfect site "ould receive in each categor#. .ach potential site is then evaluated "ith respect to ever# factor a compan# is loo&ing for and points are assigned for each factor. The site "ith the highest total number of points is considered superior to other sites. =. 1rea& even anal#sisE Method of cost4volume anal#sis used for industrial locations Three steps in the method 7. 'etermine fixed and variable costs for each location 9. +lot the cost for each location =. %elect location "ith lo"est total cost for expected production volume EB'.$3%: Consider a corporate office, "hich "ants to identif# the best location. The# have identified = locations after a preliminar# surve#. The# are locations /, 1 and C. The corporate has estimated the variable cost and fixed cost and then the total cost for the each location against the production quantit#. This is sho"n in the table. F)B%41*,( V'&)'73% 1*,( SITE CR0$%%, )+ 3';2,D CR0$%%, $%& 0+)(D / 9.A 7::: 1 = BA: C ? A:: %olutionE Considering site / and 1, the total cost for site / for Yx5 quantities M 9A:::: N 7:::x. 444444444 C7D the total cost for site 1 for Yx5 quantities M =::::: N BA:x. 444444444 C9D Therefore from C7D and C9D, x M C=::::: 9A::::DGC7:::4BA:D M 9:: units.
38
Considering site 1 and C, the total cost for site 1 for Yx5 quantities M =::::: N BA:x. 4444444444 C=D the total cost for site C for Yx5 quantities M ?::::: N A::x. 444444444 C?D Therefore from C=D and C?D, x M C?::::: =:::::DGCBA:4A::D M ?:: units. -esult, !f Yx5 Z 9:: units, select site / as it has minimum fixed value. !f 9:: Z 5x5 Z ?:: units, select site 1 as it has minimum variable cost compared to / and minimum total cost compared to C. !f Yx5 V ?:: units, select site C as it has the least variable cost. G&'$2)1'3 &%$&%,%+('()*+:
?. *ualitative factor anal#sis methodE !( economic criteria are not sufficientl# influential to decide the location alternative, a s#stem of "eighting the criteria might be useful in ma&ing a plant location decision. This approach is referred to as qualitative factor anal#sis. %tepsE 4 'evelop a list of relevant factos 4 /ssign a "eight to each factor to indicate its relative importance C 0eights ma# total upto 7.: 4 /ssign a common scale to each factor Csa# : to 7::D and designate an# minimum point to be scored b# an# location. 4 %core each potential location according to the designated scale and multipl# the scores b# the "eights to arrive at the "eighted scores. 4 Total the points for each location, and choose the location "ith the maximum points
39
Other ,ocation modelsE Center4of46ravit# MethodE This technique is used in determining the location of a facilit# "hich "ill either reduce travel time or lo"er shipping costs. 'istribution cost is seen as a linear function of the distance and quantit# shipped. The Center of 6ravit# Method involves the use of a visual map and a coordinate s#stem$ the coordinate points being treated as the set of numerical values "hen calculating averages. !f the quantities shipped to each location are equal , the center of gravit# is found b# ta&ing the averages of the x and # coordinates$ if the quantities shipped to each location are different , a "eighted average must be applied Cthe "eights being the quantities shippedD. Calculate [ and \ coordinates for Ycenter of gravit#5 /ssumes cost is directl# proportional to distance and volume shipped
"here dix di# *i
M M M
x4coordinate of location i #4coordinate of location i *uantit# of goods moved to or from location i
40
41
F'1)3)(9 3'9*0(: / (acilit# or plant la#out is the placing of the right items coupled "ith the right place and the right method, to permit the flo" of production process through the shortest possible distance in the shortest possible time. 'efinitionE +lant la#out refers to the arrangement of ph#sical facilities such as machines, equipment, tools, furniture etc. in such a manner so as to have quic&est flo" of material at the lo"est cost and "ith the least amount of handling in processing the product from the receipt of ra" material to the deliver# of the final product. Ob)ectives of good +lant ,a#outE ] / "ell designed plant la#out is one that can be beneficial in achieving the follo"ing Ob)ectivesE ] +roper and efficient utilization of available floor space ] Transportation of "or& from one point to another point "ithout an# dela# ] +roper utilization of production capacit#. ] -educe material handling costs ] Utilize labour efficientl# ] -educe accidents ] +rovide for volume and product flexibilit# ] +rovide ease of supervision and control ] +rovide for emplo#ee safet# and health ] /llo" eas# maintenance of machines and plant. ] !mprove productivit# C-!T.-!/ (O- 6OO' ,/\OUT 7. (lexibilit# 9. Maximum coordination =. Maximum visibilit# ?. Maximum accessibilit# A. Minimum distance <. Minimum handling B. Minimum discomfort4 proper light,ventilation etc. @. !nherent safet# ;. .fficient process flo" 7:. !dentification provision of space to "or&ers. T2% $&)+1)$3%, *6 $3'+( 3'9*0( 7. !ntegration of all factors 4 The plant should integrate all the essential resources of men, machines and materials in order to give an optimum level of production.
42
9. Minimum Movement 4 The less the movement of men, machines and materials, the less "ill be the cost of production. Thus, minimum movement of theses resources "ill provide cost efficienc#. =. Unidirectional flo" 4 /ll materials should progressivel# move to"ards the same direction i.e. to"ards the stage of completion. /n# bac&4trac&ing should be avoided here. ?. .fficient space handling 4 The space used up during the plant "or& also costs mone# as more the space required, more "ill be the floor rent. The materials should be organized in stac&s in a proper and recognizable order to maintain space efficienc#. <. Maximum observation capacit# 4 The la#out of the plant should such that all of its resources and "or&force can be observed and evaluated at all points in time. This helps in better supervision of "or& and helps in increasing both effectiveness and safet#. B. Maximum accessibilit# 4 The la#out of the plant should ensure that all essential resources are accessible to the labour and machines "ithout an# dela#. The aisles should be free from obstacles. The materials should be placed as close,to the machines concerned, as possible. @. Minimum 8andling 4 The ineffective handling of materials leads to a rise in cost. Materials should be handled in stac&s and transferred in one go. 8andling of a material t"ice in the same direction must be avoided. ;. Maximum protection 4 The la#out should ensure the protection of the materials and machines "hile the# are in the "or&ing or the storage stage. The securit# s#stem should be efficient "ithout ma&ing too man# doors or barriers. 7:. Maximum flexibilit# 4 The plant la#out should not be rigid and permanent. !f the need arises, the plant la#out should be able to change itself "ithout being expensive. A. !nherent safet# 4 The environment of the plant should be safe for the "or&ers as "ell as the machines. There should be fire extinguishers and fire exits placed strategicall#. There should be minimum contact of the labour to toxic chemicals and environment. T9$%, O6 L'9*0(E There are mainl# four t#pes of plant la#outE CaD +roduct or line la#out CbD +rocess or functional la#out CcD (ixed position or location la#out CdD Combined or group la#out +-O'UCT O- ,! . ,/\OUTE !n this t#pe of la#out the machines and equipments are arranged in one line depending upon the sequence of operations required for the product. !t is also called as line la#out. The material
43
moves to another machine sequentiall# "ithout an# bac&trac&ing or deviation i.e the output of one machine becomes input of the next machine. !t requires a ver# little material handling. !t is used for mass production of standardized products.
/dvantages of +roduct la#outE ] ] ] ] ] ] ] ,o" cost of material handling, due to straight and short route and absence of bac&trac&ing %mooth and continuous operations Continuous flo" of "or& ,esser inventor# and "or& in progress Optimum use of floor space %imple and effective inspection of "or& and simplified production control ,o"er manufacturing cost per unit
'isadvantages of +roduct la#outE ] 8igher initial capital investment in special purpose machine C%+MD ] 8igh overhead charges ] 1rea&do"n of one machine "ill disturb the production process. ] ,esser flexibilit# of ph#sical resources. +-OC.%% ,/\OUTE !n this t#pe of la#out the machines of a similar t#pe are arranged together at one place. This t#pe of la#out is used for batch production. !t is preferred "hen the product is not standardized and the quantit# produced is ver# small.
/dvantages of +rocess la#outE ] ,o"er initial capital investment is required. ] There is high degree of machine utilization, as a machine is not bloc&ed for a single product ] The overhead costs are relativel# lo" ] 1rea&do"n of one machine does not disturb the production process. ] %upervision can be more effective and specialized.
44
6reater flexibilit# of resources.
'isadvantages of +rocess la#outE ] Material handling costs are high due to bac&trac&ing ] More s&illed labour is required resulting in higher cost. ] 0or& in progress inventor# is high needing greater storage space ] More frequent inspection is needed "hich results in costl# supervision COM1! .' ,/\OUTE ] / combination of process H product la#out is &no"n as combined la#out. ] Manufacturing concerns "here several products are produced in repeated numbers "ith no li&elihood of continuous production, combined la#out is follo"ed (![.' +O%!T!O O- ,OC/T!O ,/\OUTE (ixed position la#out involves the movement of manpo"er and machines to the product "hich remains stationar#. The movement of men and machines is advisable as the cost of moving them "ould be lesser. This t#pe of la#out is preferred "here the size of the )ob is bul&# and heav#. .xample of such t#pe of la#out is locomotives, ships, boilers, generators, "agon building, aircraft manufacturing, etc.
/dvantages of (ixed position la#outE ] The investment on la#out is ver# small. ] The la#out is flexible as change in )ob design and operation sequence can be easil# incorporated. ] /d)ustments can be made to meet shortage of materials or absence of "or&ers b# changing the sequence of operations. 'isadvantages of (ixed position la#outE ] /s the production period being ver# long so the capital investment is ver# high. ] 2er# large space is required for storage of material and equipment near the product. ] /s several operations are often carried out simultaneousl# so there is possibilit# of confusion and conflicts among different "or&groups.
45
P3'++)+- T**3, '+4 T%12+)A0%,: T%.$3'(%,: Templates are patterns "hich consist of a thin plate of "ood or metal, "hich a serves as a gauge or a guide in mechanical "or&. / plant la#out template is a scaled representation of ph#sical ob)ect in a la#out. This ob)ect ma# be amachine, materials handling equipment, a "or&er or even materials. The templates are fixed to a plan dra"ing and are moved around the dra"ing to explore the various la#out possibilities until a la#out, "hich eliminate unnecessar# handling and bac& trac&ing of materials and offers flexibilit# to admit revisions at the least cost, emerges. The template method is particularl# useful in developing a la#out,for an existing department or building or "hen the configuration of the building to alread# established through other la#out techniques O$%&'()*+, ,%A0%+1% '+'39,),: This technique utilizes computer technolog# in designing the facilit# la#out b# sequencing out all activities and then arranging them in circular or in a straight line. L)+% B'3'+1)+-: ,ineE an assembl# line composed of several "or& stations, at "hich specific operations are performed. K Line Balancing is the process of assigning tas&s to "or&stations in such a "a# that the "or&stations CoperationsD have approximatel# equal time requirements. K (or +roduct ,a#outs C%equence of tas&s^D K Multiple tas&s can be assigned to one "or&station. C913% T).% *6 W*&;,('()*+ K The time a "or&station needs to complete its set of assigned tas&s once. .xampleE 0or&station / is assigned 9 tas&s, tas& one needs :.A minute and tas& t"o 7 minute. %o the C#cle Time CCTD of 0or&station / is_ The CT of a product line containing multiple "or&stations is the longest CT of the "or&stations. C,ine CTD
46
+recedence 'iagramE K Tas& assignments must respect precedence relationships and other technological constraints. K +recedence diagramE Tool used in line balancing to displa# elemental tas&s and sequence requirements
N0.7%& *6 W*&;,('()*+,: *uestionE 8o" does one determine the number of "or&stations to use_ /ns"erE 1# specif#ing a desired line c#cle time or, equivalentl# b# specif#ing an output rate. C8o" are c#cle time and output related_D D%,)&%4 C913% T).%
Operating Time per 'a# COTD 'esired Output per 'a# C'D
'esired ,ine CT =
%uppose OT M @ hours per da# C?@: minutes per da#D and ' M ?:: units per da#. Then CT M __
47
Minimum umber of 0or&stations -equiredE

min
%um of Tas& Times C#cle Time
C'DCtD OT
Mtas& sumtimes of tas& time s CT M ?@:G?::M 7.9 minutes per unit per "or&station, %um of M 9.A minutes per unit. t min M___
,ine .fficienc#E
,ine .fficienc# = %um of tas& times x7::a C actual DCCTD
CT M 7.9 minutes per unit per "or&station %um of tas& times M 9.A minutes per unit. ,ine .fficienc# M 9.AGC=`7.9D M<;.?a ,ine 1alancing +rocedureE 7. Calculate CT and Min. 9. /ssign tas&s to "or&stations moving from left to right through the precedence diagram. =. Tas&s eligible for assignment are a. tas&s "here all preceding tas&s have been assigned and b. tas&s "ith times that do not exceed the remaining time at the "or& station. ?. %elect an eligible tas& for assignment using one or more of the follo"ing rulesE a. /ssign the tas& "ith the greatest number of tas&s follo"ing it. b. /ssign the tas& "ith the longest tas& time. A. /fter each tas& assignment calculate time remaining at the current "or& station. <. Continue this until all tas&s have been assigned to "or&stations. B. Compute appropriate measures Ce.g., line percent idle time and line efficienc#D for the set of assignments.
48
UNIT III DESIGN OF PRODUCT, PROCESS AND WORK SYSTEMS 9 +roduct 'esign !nfluencing factors, /pproaches, ,egal, .thical and .nvironmental issues. +rocess +lanning, %election, %trateg#, Ma)or 'ecisions. 0or& %tud# Ob)ectives, +rocedure. Method %tud# and Motion %tud#. 0or& Measurement and +roductivit# Measuring +roductivit# and Methods to improve productivit#. P&*401(: Q/ product is a bundle of ph#sical services and s#mbolic particulars expected to #ield satisfactions or benefits to the bu#erR b# +hillip >otler +roduct designE Q+roduct design in its broadest sense includes the "hole development of the product through all the preliminar# stages until actual manufacturing beginsR b# C.%. 'everell N%8 $&*401( 4%5%3*$.%+( CS(%$,D
2ee"s i"entification *"0ance pro"uct planning 'etaile" 1ngineering 'esign 49 *"0ance 'esign
I+(%&&%3'()*+,2)$ C*&D )+(%&'1()*+ C*&D 3)+;'-% *6 $&*401( 4%,)-+ '+4 $&*1%,, 4%,)-+
!ro"uct i"eas ,easi+ilit stu"ies
!ro"uction process "esign an" "e0elopment
!ro"uct 10aluation an" impro0ement
!ro"uct use an" support
+roduct design /dvance product planning, /dvance design +roduction process design and Continuous development +roduct evaluation and interaction improvement, product use an" support
+rocess design Organizing the process flo" -elation of process design to process flo" .valuating the process design
+roduce and mar&et ne" productGservice
50
I+(%&&%3'()*+,2)$ C*&D )+(%&'1()*+ C*&D 3)+;'-% *6 $&*401( $3'++)+- '+4 $&*1%,, $3'++)+-
!ro"uct "e0elopment !ro"uct ,inal "esign 2e. 3ec$nolog
+roduct planning s#stem
!rocess (4 '
!rocess 'esign
5or/ station #election
5or/ flo. anal sis
Operation
Operation Content
Operation met$o" !lant planning s stems
P&*401( D%,)-+: Concerned "ith form and function of a product. !t refers to the arrangement of elements or parts that collectivel# form a product. P&*1%,, D%,)-+: Concerned "ith the overall sequence of operations required to achieve the design specification of the product. P&*401()*+ D%,)-+: Concept of designing products from the point of vie" of producibilit#. O7?%1()5%, *6 P&*401( D%,)-+ CiD The overall ob)ective is profit generation in the long run. CiiD To achieve the desired product qualit#. CiiiD To reduce the development time and cost to the minimum. CivD To reduce the cost of the product. CvD To ensure producibilit# or manufacturabilit# Cdesign for manufacturing and assembl#D.
51
I+630%+1)+- 6'1(*&, 6*& P&*401( 4%,)-+:

6nfluencing factors
Customer perspecti0es
Organisational perspecti0es
17 27 37 47
,unctions *est$etics 8ser ,rien"liness 1steem *ssociate" .it$ possession
17 6ntrinsic cost of material 27 6ntrinsic cost of la+our 37 (eplacement, 19c$ange an" "isposal
O(2%& F'1(*&, I+630%+1)+- P&*401( D%,)-+ i. Customer requirements ii. Convenience of the operator or user iii. Trade off bet"een function and form iv. T#pes of materials used v. 0or& methods and equipments vi. CostG+rice ratio vii. +roduct qualit# viii. +rocess capabilit# ix. .ffect on existing products x. +ac&aging A$$&*'12%, (* IE3%.%+(, )+ P&*401( 4%,)-+
(e0erse 1ngineering (esearc$ an" "e0elopment Manufactura+il it *pproac$es :1lements in pro"uct "esign (o+ust "esign
#tan"ar"i;atio n !ro"uct life c cle
Mo"ular "esign Computer ai"e" "esign (C*'% 52
Concurrent engineering
A$$&*'12%, (* P&*401( D%,)-+ i. 'esigning for the customer K !ndustrial design K 2oice of the customer K *ualit# function deplo#ment C*('D ii. 'esigning for Manufacture and /ssembl# C'(M/D K QOver4the4"all approachR K Concurrent engineering K 'esign for Manufacturing C'(MD 'esign for /ssembl# C'(/D iii. 'esigning for ease of production Cor for producibilit# or manufacturabilit#D K %pecification K %tandardisation K %implification iv. 'esigning for *ualit# a. 'esigning for robustness Cor robust designD b. 'esigning for production i. Modular design ii. 'esigning for automation c. 'esigning for reliabilit# v. 'esigning for .rgonomics vi. 'esigning for environmental protection vii. 'esigning for rec#cling viii. 'esigning of disassembl# C'('D ix. 'esigning for mass customisation 'ela#ed differentiation and modular designs are t"o tactics used to ma&e mass customisation possible. x. Other issues in product design are CaD Computer aided design CC/'D, CbD 2alue engineering or value anal#sis "hich K Computer aided designE Use of computer graphics for designing the product helps to generate a number of alternative designs and identif# the best alternative "hich meets the designer5s criteria. K 2alue engineeringG2alue anal#sisE Concerned "ith the improvement of design and specifications at various stages of product planning and development. L%-'3, E(2)*1'3 '+4 E+5)&*+.%+('3 ),,0%,: L%-'3 A,$%1( *6 P&*401( D%,)-+ : The imposition of rules and acts passed b# %tate and Central 6ovt. The standards related to code of practice for design, fabrication and testing of products prepared b# standards organization. The imposition of punitive damages b# the courts in product liabilit# cases. The resistance of consumer protection forums to badl# designed and manufacturing products. The resistance of public to damage of their environment. The most important la" to consider "hile dealing "ith the product liabilit# is the Consumer +rotection /ct of 7;@<. The sales of 6oods /ct of 7;A<.
53
O(2%& L%-'3 ),,0%,: +roduct liabilit# !ntellectual +ropert# E(2)1'3 ),,0%,: /ssessing the impact of the design on consumer +rotection of !ntellectual +ropert# +rivac# .xposure to the undesirable /dvertising of 'esign -ight to alter natural order 0hether designs should be tested on animals and humans .nvironmental impact %ustainable technolog# Minorit# groups E+5)&*+.%+('3 I,,0%, P&*401( P*330()*+ 'esigner should anticipate environmental trends and design products that are clean enough for future environmental standards. P&*1%,, P*330()*+ +roduct designer must avoid the process that causing pollution from solvents, combustible products, "astes etc. or he ma# change the processes at the earl# stages. E',% *6 &%1913)+- $&*401( .ver#one has a moral obligation about the happens to the product after it5s useful life is over_ Can it be rec#cled into ne" even be able to profit in some manner from rec#cling of it5s product. P&*1%,, P3'++)+- '+4 P&*1%,, D%,)-+ /fter the final design of the product has been approved and released for production, the production planning and control department ta&es the responsibilit# of process planning and process design for converting the product design into a tangible product. W2'( ), ' P&*1%,,J / process is a sequence of activities that is intended to achieve some result, for example, to create added value for the customers P&*1%,, $3'++)+-: Concerned "ith planning the conversion processes needed to convert the ra" material into finished products. S(%$, )+ $&*1%,, $3'++)+-: 1< /nal#sis part print 9. Consult "ith product engineer on product design changes =. ,ist the basic operation ?. 'etermine economical and practical manufacturing methods A. Combine the operation and put them in to sequence <. %pecif# the gauging required for process
54
P&*1%,, 4%,)-+: Concerned "ith the overall sequences of operations required to achieve the product specifications O$%&'()*+, 4%,)-+: Concerned "ith the design of the individual manufacturing operation. P&*1%,, S%3%1()*+ +rocess selection refers to the 8'9 production of goods or services is organised. Three primar# questions to be addressed before deciding on process selection areE CiD 8o" much variet# of products or services "ill the s#stem need to handle_ CiiD 0hat degree of equipment flexibilit# "ill be needed_ CiiiD 0hat is the expected volume of output_ P&*1%,, S%3%1()*+ D%1),)*+, +rocesses b# mar&et orientation 7. Ma&e to stoc& 9. /ssemble to order =. Ma&e to order ?. .ngineer to order
& aracteristics
P&*401(
Make$to$Stock
+roducer4specified ,o" variet# !nexpensive 1alance inventor#, capacit#, and service
Make$to$Order
Customer4specified 8igh variet# .xpensive Manage deliver# lead times and capacit#
O7?%1()5%,
M')+ *$%&'()*+, $&*73%.,
(orecasting +lanning production Control of invenntor#
'eliver# promises 'eliver# time
`+rocesses as production s#stems 7. +ro)ect 9. 3ob shop =. 1atch production ?. /ssembl# line A. Continuous flo" `+rocesses and customer involvement 7. %elf service 9. +rodut selection =. +artnership P&*1%,, S(&'(%-9
55
/n organisation5s approach to selection of the process for the conversion of resource inputs into outputs. >e# aspects in process strateg# includeE i. Ma&e or bu# decisions ii. Capital intensit# and iii. +rocess flexibilit# T9$%, *6 $&*1%,, 4%,)-+, C*&D P&*1%,, S(&'(%-9 C/D P&*401( /6*10,%4 Cproduction line or continuous productionD 4 Organised according to the t#pe of productGservice being produced 9 general form 7. 'iscrete unit manufacturing 9. +rocess manufacturing
Product+"ocused production
+roduct or material flo"
+roduction operations
-a" materials
Components ,
Components
%ubassemblies
-a" materials
- Components
%ubassemblies
/ssemblies
. (inished product
/ssemblies +urchased components 2 and subassemblies

,+-.
56
C1D P&*1%,,=F*10,%4 C!ntermittent production or )ob shopsD +roduction operations are grouped according to t#pe of processes. -eceiving and (oundr# ra" material -ough machine (abrication +ainting +ac&aging and shipping
4 1 2 3
%hear and (inish 'ebur punch Machine CCD R%$%()()5% F*10, ,9,(%.: !t falls bet"een product and process focuses s#stem modules Classic assembl# lineMass customization focus C'DM',, 10,(*.)>'()*+ 6*10,
/ssembl#
57
Mass customi3ation focus

Change +roduct Change
Repeat+!gain Transparent Customi3ation Sort+Through !daptive Customi3ation 5ither+Or Colla&orative Customi3ation "orm+Of Cosmetic Customi3ation
o Change Change -epresentation
,+/4
C.D 6roup Technolog#GCellular Manufacturing s#stem
58
M'?*& S(&'(%-9: 7. +rocess choice 9. ature of productG%ervices =. 2ertical integration ?. -esource flexibilit# A. Customer involvement <. Capital intensit#
Process Strategy
Process Structure 9 Customer-contract position (services) 9 Product-process position (manufacturing) 9 Layout Customer !nvolvement 9 Lo" involvement 9 #ig$ involvement Capital !ntensity 9 Lo" automation 9 #ig$ automation
ecisions
Resource Flexibility 9 Specialized 9 nlarged
Strategy for C$ange 9 Process reengineering 9 Process improvement
(igure =.7
Ma)or 'ecisions for .ffective +rocesses
ffective Process %esign
Copyright 6 /4-4 Pearson 5ducation* Inc7 Pu&lishing as Prentice 8all7
59
+rocess Choice it depends on volume and degree of customization +ro)ect, 3ob,1atch,,ine and Continuous.
PRODUCT-PROCESS MATRIX (Figure
4.5)
U%i/ue! o%e o* $ 0i%& (ro&u)# Low volu e! low "#$%&$r&i'$#io% Lo" volume& Mul#i(le (ro&u)#" #ig$er volume *ew $+or (ro&u)#" ,ig- volu e! -ig"#$%&$r&i'$#io%! )o o&i#.
Pro!ect
Buil"ing
N NE
Printing
Job Shop
Batch
Heavy Equipment Auto assembly
Assembly line
Continuous
N NE
Sugar Refinery
,+/2
2ertical integration degree to "hich a firms o"n production s#stem or service facilit# handles the entire suppl# chain 7. 1ac&"ard integration firms movement upstream to"ards sources of ra" material and parts 9. (or"ard integration do"nstream b# acquiring more channels of distribution such as its o"n distribution centers and retail sources 9 Outsourcing 9 Ma&e4or4bu# decision (lexible "or&force / "or&force "hose members are capable of doing man# tas&s either at their o"n "or&station or as the# move form one "or&station to another 0or&force .quipment Customer involvement 7. %elf service 9. +roduct selection =. Time and location Capital !ntensit# /utomation is one "a# to address the mix of capital and labor (ixed /utomation (lexible /utomation P&*1%,, S%3%1(%4 M0,( F)( 8)(2 V*30.% '+4 V'&)%(9
60
W*&; S(049=M%(2*4 S(049 '+4 W*&; M%',0&%.%+( K K K K K Methods engineering includes "or& simplification, )ob design, value anal#sis and the li&e. 0or& stud# method "as developed to improve performance of a given "or&. 0or& stud# is the bod# of &no"ledge concerned "ith anal#sis of the "or& methods, and the standard of proposed "or& methods. Ob)ective of "or& stud# is to improve operational efficienc#. The purpose of "or& stud# is to determine the best or most effective method of accomplishing a necessar# operation.
R%3'()*+,2)$ *6 T).% '+4 M*()*+ S(049 (* W*&; S(049 K K K Time stud# and motion stud# are results of practices developed b# (.0. Ta#lor, (ran& and ,illian 6ilbreth. Time stud#E .xercising control over the output in respect of a )ob b# setting standards for performance. Time stud# ma# be used to compare the effectiveness of alternative "or& methods.
O7?%1()5%,:
61
To anal#se the present method of doing a )ob, s#stematicall# in order to develop a ne" and better method To measure the "or& content of a )ob b# measuring the time required to do the )ob for a qualified "or&er and hence to establish standard time To increase the productivit# b# ensuring the best possible use of human, machine and material resources and to achieve bet qualit# productGservice at minimum possible cost. To improve operational efficienc#
S(%$, *& $&*1%40&% I+5*35%4 )+ W*&; S(049
62
M%(2*4 S(049 *& M%(2*4, A+'39,), K Method stud# is also &no"n as methods improvement. K +rime ob)ectives of method stud# are to eliminate "asteful and inefficient motions. S(%$, )+ .%(2*4 ,(049 7. S%3%1(4 select the "or& to be studied. 9. R%1*&44record all the relevant facts of the present method of direct observation. =. EB'.)+%4examine the facts criticall# in sequence, using special critical examination sheet. ?. D%5%3*$4develop the best method Ci.eD the most practical, economic and effective method, under prevailing circumstances. A. I+,('334install that method as standard practice <. M')+(')+4 maintain the standard practice b# regular routine chec&. M*()*+ S(049
63
M*()*+ ,(049 is the science of eliminating "astefulness resulting from using unnecessar#$ ill4 directed and inefficient motion. The aim of motion stud# is to find and perpetuate the scheme of least "aste methods of labour. Micro motion study provides a valuable technique for ma&ing minute anal#sis of those operations that are short in c#cle, contain rapid movements and involve high production over a long period of time. Micro4motions are also &no"n as YTherbligs5. EB'.$3%, *6 T2%&73)-, 7. %earch C%rD 9. %elect C%tD =. 6rasp C6D ?. Transport empt# CT.D A. Transport loaded CT,D <. 8old C8D B. -elease load C-,D @. +osition C+D ;. +re4position C++D 7:. !nspect C!D 77. /ssemble C/D 79. 'isassemble C'/D 7=. Use CUD 7?. Unavoidable dela# CU'D 7A. /voidable dela# C/'D 7<. +lan C+nD 7B. -est for overcoming fatigue C-D 7@. (ind C(D P&)+1)$3%, *6 M*()*+ E1*+*.9 +rinciples of motion econom# are divided into three groups. a. .ffective use of the operator b. /rrangement of the "or&place c. Tools and equipment W*&; .%',0&%.%+( '+4 $&*401()5)(9E 0or& measurement is the application of techniques designed to establish the time for a qualified "or&er to carr# out a specified )ob at a defined level of performance. T%12+)A0%, *6 W*&; M%',0&%.%+( The main techniques used to measure "or& areE 'irect Time %tud#. %#nthesis Method. /nal#tical .stimating. +re determined Motion Time %#stem C+MT%D. 0or& sampling or /ctivit# %ampling or -atio 'ela# Method. S(%$, )+ W*&; M%',0&%.%+(
64
0or& measurement involves seven steps. 7. 1rea& the )ob into elements 9. -ecord the observed time for each element b# means of either time stud#, s#nthesis or anal#tical estimating. =. .stablish elemental time values b# extending observed time into normal time for each element b# appl#ing a rating factor. ?. /ssess relaxation allo"ance for personal needs and ph#sical and mental fatigue involved in carr#ing out each element. A. /dd the relaxation allo"ance time to the normal time for each element to arrive at the "or& content. <. 'etermine the frequenc# of occurrences of each element in the )ob, multipl# the "or& content of each element b# its frequenc# Ci.e.1 number of time the element occurs in the )obD and add up the times to arrive at the "or& content for the )ob. B. /dd contingenc# allo"ance if an# to arrive at the standard time to do the )ob. T%12+)A0%, *6 8*&; .%',0&%.%+( The follo"ing are the principal techniques b# "hich "or& measurement is carried outE 7. Time stud# 9. /ctivit# sampling =. +redetermined motion time s#stems ?. %#nthesis from standard data A. .stimating <. /nal#tical estimating B. Comparative estimating Of these techniques "e shall concern ourselves primaril# "ith time stud#, since it is the basic technique of "or& measurement. %ome of the other techniques either derive from it or are variants of it. 1< T).% S(049 Time %tud# consists of recording times and rates of "or& for elements of a specified )ob carried out under specified conditions to obtain the time necessar# to carr# out a )ob at a defined level of performance. !n this technique the )ob to be studied is timed "ith a stop"atch, rated, and the 1asic Time calculated. 1<1 R%A0)&%.%+(, 6*& E66%1()5% T).% S(049 The requirements for effective time stud# areE Co4operation and good"ill 'efined )ob 'efined method Correct normal equipment *ualit# standard and chec&s .xperienced qualified motivated "or&er Method of timing Method of assessing relative performance .lemental brea&do"n 'efinition of brea& points
65
-ecording media One of the most critical requirements for time stud# is that of elemental brea&do"n. There are some general rules concerning the "a# in "hich a )ob should be bro&en do"n into elements. The# include the follo"ing. .lements should be easil# identifiable, "ith definite beginnings and endings so that, once established, the# can be repeatedl# recognised. These points are &no"n as the brea& points and should be clearl# described on the stud# sheet. .lements should be as short as can be convenientl# timed b# the observer. /s far as possible, elements 4 particularl# manual ones 4 should be chosen so that the# represent naturall# unified and distinct segments of the operation. 1<2 P%&6*&.'+1% R'()+Time %tud# is based on a record of observed times for doing a )ob together "ith an assessment b# the observer of the speed and effectiveness of the "or&er in relation to the observerLs concept of %tandard -ating. This assessment is &no"n as rating, the definition being given in 1% =7=@ C7;B;DE The numerical value or s#mbol used to denote a rate of "or&ing. %tandard rating is also defined Cin this 1ritish %tandard 1%=7=@D asE FThe rating corresponding to the average rate at "hich qualified "or&ers "ill naturall# "or&, provided that the# adhere to the specified method and that the# are motivated to appl# themselves to their "or&. !f the standard rating is consistentl# maintained and the appropriate relaxation is ta&en, a qualified "or&er "ill achieve standard performance over the "or&ing da# or shift.F !ndustrial engineers use a variet# of rating scales, and one "hich has achieved "ide use is the 1ritish %tandards -ating %cale "hich is a scale "here : corresponds to no activit# and 7:: corresponds to standard rating. -ating should be expressed as L[L 1%. 1elo" is an illustration of the %tandard %caleE -ating 0al&ing +ace : no activit# A: ver# slo" BA stead# 7:: bris& Cstandard ratingD 79A ver# fast 7A: exceptionall# fast The basic time for a tas&, or element, is the time for carr#ing out an element of "or& or an operation at standard rating. 1asic Time M Observed Time x Observed -ating The result is expressed in basic minutes 4 1MLs. The "or& content of a )ob or operation is defined asE basic time N relaxation allo"ance N an# allo"ance for additional "or& 4 e.g. that part of contingenc# allo"ance "hich represents "or&. 1<3 S('+4'&4 T).% %tandard time is the total time in "hich a )ob should be completed at standard performance i.e. "or& content, contingenc# allo"ance for dela#, unoccupied time and interference allo"ance, "here applicable. /llo"ance for unoccupied time and for interference ma# be important for the measurement of machine4controlled operations, but the# do not al"a#s appear in ever# computation of standard time. -elaxation allo"ance, on the other hand, has to be ta&en into account in ever# computation, "hether the )ob is a simple manual one or a ver# complex operation requiring the
66
simultaneous control of several machines. / contingenc# allo"ance "ill probabl# figure quite frequentl# in the compilation of standard times$ it is therefore convenient to consider the contingenc# allo"ance and relaxation allo"ance, so that the sequence of calculation "hich started "ith the completion of observations at the "or&place ma# be ta&en right through to the compilation of standard time. C*+()+-%+19 '33*8'+1% / contingenc# allo"ance is a small allo"ance of time "hich ma# be included in a standard time to meet legitimate and expected items of "or& or dela#s, the precise measurement of "hich is uneconomical because of their infrequent or irregular occurrence. R%3'B'()*+ '33*8'+1% / relaxation allo"ance is an addition to the basic time to provide the "or&er "ith the opportunit# to recover from ph#siological and ps#chological effects of carr#ing out specified "or& under specified conditions and to allo" attention to personal needs. The amount of the allo"ance "ill depend on the nature of the )ob. .xamples areE +ersonal A4Ba .nerg# output :47:a ois# :4Aa Conditions :47::a e.g. .lectronics Aa O(2%& '33*8'+1%, Other allo"ances include process allo"ance "hich is to cover "hen an operator is prevented from continuing "ith their "or&, although read# and "aiting, b# the process or machine requiring further time to complete its part of the )ob. / final allo"ance is that of !nterference "hich is included "henever an operator has charge of more than one machine and the machines are sub)ect to random stoppage. !n normal circumstances the operator can onl# attend to one machine, and the others must "ait for attention. This machine is then sub)ect to interference "hich increased the machine c#cle time. !t is no" possible to obtain a complete picture of the standard time for a straightfor"ard manual operation. 2< A1()5)(9 S'.$3)+/ctivit# sampling is a technique in "hich a large number of instantaneous observations are made over a period of time of a group of machines, processes or "or&ers. .ach observation records "hat is happening at that instant and the percentage of observations recorded for a particular activit# or dela# is a measure of the percentage of time during "hich the activit# or dela# occurs. The advantages of this method are that 7. !t is capable of measuring man# activities that are impractical or too costl# to be measured b# time stud#. 9. One observer can collect data concerning the simultaneous activities of a group. =. /ctivit# sampling can be interrupted at an# time "ithout effect. The disadvantages are that 7. !t is quic&er and cheaper to use time stud# on )obs of short duration. 9. !t does not provide elemental detail. The t#pe of information provided b# an activit# sampling stud# isE
67
a. The proportion of the "or&ing da# during "hich "or&ers or machines are producing. b. The proportion of the "or&ing da# used up b# dela#s. The reason for each dela# must be recorded. c. The relative activit# of different "or&ers and machines. 3< P&%4%(%&.)+%4 M*()*+ T).% S9,(%., / predetermined motion time s#stem is a "or& measurement technique "hereb# times established for basic human motions Cclassified according to the nature of the motion and the conditions under "hich it is madeD are used to build up the time for a )ob at a defined level of performance. The s#stems are based on the assumption that all manual tas&s can be anal#sed into basic motions of the bod# or bod# members. The# "ere compiled as a result of a ver# large number of studies of each movement, generall# b# a frame4b#4frame anal#sis of films of a "ide range of sub)ects, men and "omen, performing a "ide variet# of tas&s. The first generation of +MT s#stems, MTM7, "ere ver# finel# detailed, involving much anal#sis and producing extremel# accurate results. This attention to detail "as both a strength and a "ea&ness, and for man# potential applications the quantit# of detailed anal#sis "as not necessar#, and prohibitivel# time 4consuming. !n these cases Fsecond generationF techniques, such as %implified +MT%, Master %tandard 'ata, +rimar# %tandard 'ata and MTM9, could be used "ith advantage, and no great loss of accurac#. (or even speedier application, "here some detail could be sacrificed then a Fthird generationF technique such as 1asic 0or& 'ata or MTM= could be used. !< S9+(2%,), %#nthesis is a "or& measurement technique for building up the time for a )ob at a defined level of performance b# totaling element times obtained previousl# from time studies on other )obs containing the elements concerned, or from s#nthetic data. %#nthetic data is the name given to tables and formulae derived from the anal#sis of accumulated "or& measurement data, arranged in a form suitable for building up standard times, machine process times, etc b# s#nthesis. %#nthetic times are increasingl# being used as a substitute for individual time studies in the case of )obs made up of elements "hich have recurred a sufficient number of times in )obs previousl# studied to ma&e it possible to compile accurate representative times for them. "< E,().'()+The technique of estimating is the least refined of all those available to the "or& measurement practitioner. !t consists of an estimate of total )ob duration Cor in common practice, the )ob price or costD. This estimate is made b# a craftsman or person familiar "ith the craft. !t normall# embraces the total components of the )ob, including "or& content, preparation and disposal time, an# contingencies etc, all estimated in one gross amount. G< A+'39()1'3 %,().'()+This technique introduces "or& measurement concepts into estimating. !n anal#tical estimating the estimator is trained in elemental brea&do"n, and in the concept of standard performance. The estimate is prepared b# first brea&ing the "or& content of the )ob into elements, and then utilising the experience of the estimator Cnormall# a craftsmanD the time for each element of "or& is estimated 4 at standard performance. These estimated basic minutes are totalled to give a total )ob time, in basic minutes. /n allo"ance for relaxation and an# necessar# contingenc# is then made, as in conventional time stud#, to give the standard time.
68
7< C*.$'&'()5% %,().'()+This technique has been developed to permit speed# and reliable assessment of the duration of variable and infrequent )obs, b# estimating them "ithin chosen time bands. ,imits are set "ithin "hich the )ob under consideration "ill fall, rather than in terms of precise capital standard or capital allo"ed minute values. !t is applied b# comparing the )ob to be estimated "ith )obs of similar "or& content, and using these similar )obs as Fbench mar&sF to locate the ne" )ob in its relevant time band 4 &no"n as 0or& 6roup. P&*401()5)(9 +roduction refers to the total output. K +roductivit#E The amount of goods and services produced "ith resources used. K +artial productivit#E Output in a given period divided b# labors hours used in the period. Output in a given period Total productivit# M ,abour N Capital N Materials N .nerg# used in the same period M%',0&)+- P&*401()5)(9: +roductivit# refers to output relative to the inputs. !nputs in an# production process comprise capital, labour materials and energ#. +roductivit# of each resource can be measured separatel#. %uch measurement gives partial productivit#. +roductivit# of all resources put together gives productivit# on the total facto basis. This method of calculating productivit# considering all resources is called multi4factor approach to measuring productivit#. +artial productivit# M Out put in a given period G ,abour hours used in the period Total productivit# M Out put in a given period G ,abour N CapitalN MaterialN .nerg# used in the same period ,abour productivit# in = "a#s CiD Output per man4hour ,abour productivit# M Output G Man hours used CiiD,abour hours per unit of output ,abour productivit# M Total labour hours used G Output CiiiD/dded value per unit of labour cost ,abour productivit# M /dded value for the product total "ages G Total "ages M%(2*4, (* ).$&*5% $&*401()5)(9: 4 To understand the factors that influences the relationship bet"een output and input. 4 !n long run, it cannot be achieved onl# b# increased "or&er effort. The real gro"th can come a but onl# through capital investments in ne"er and better machines, equipment and facilities
69
4 4
O"n the best of machines, but if the people do not "or& "ith dedication, productivit# cannot increase. .mplo#ees5 )ob performance depends on their abilit# and motivation. /bilit# depends on the qualit# of people hired. Motivation is the effort of leadership. Other "a#s are 4 production planning and control, inventor# control , operations research, cost control, budgetar# control, mar&eting research, preventive maintenance and the li&e, help improve productivit#. +roduction function /reas of productivit# 4 !mproving volume of production 4 -educing re)ection rates 4 Minimizing re"or& rate 4 Maintaining deliver# schedules 4 Controlling idle time of machines and men 4 .stablishingGupdatingGimprovingGsetting industrial engineering orms. 4 Updating processes and procedures 4 Maintaining accurac# and timeliness of M!%. 4 'ecreasing machine set4up time. 4 Controlling overtime 4 6ood hours4&eeping 4 Chec&ing absenteeism, theftsGpilfers age and misconduct 4 .liminating accidents 4 .ffective grievance handling 4 .fficient training and team building 4 Minimizing inventor# and achieving better #ields 4 .nhancing customer satisfaction 4 Total qualit# management 4 1usiness process re4engineering C1+-.D 4 /utomation
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U !T !2 M/T.-!/,% M/ /6.M. T ; Materials Management Ob)ectives, +lanning, 1udgeting and Control. +urchasing Ob)ectives, (unctions, +olicies, 2endor rating and 2alue /nal#sis. %tores Management ature, ,a#out, Classification and Coding. !nventor# Ob)ectives, Costs and control techniques. Overvie" of 3!T. W29 M'(%&)'3, M'+'-%.%+(J Materials is one of the five M5sCMen, Material, Mone#, Machine and MethodsD of an industrial organization. Materials offer considerable scope for improving profit. Materials form an important form of current assets in an# organization. 2alue addition is the margin bet"een the ra" material value and finished goods value. %uppliers and materials management account for more than A: percent of total value. *ualit# of the finished product depends on qualit# of materials used. Conservation of materials and their availabilit# for posterit# is one of the plan&s of social responsibilit# of business. .xploring ne" sources of suppl# is a challenge for material management executives. M'(%&)'3, M'+'-%.%+( Material management involves organizing and coordinating all management functions that are responsible for ever# aspect of materials, storage, and transformation. 1u#ing, storage, and movement of material are the three basic ob)ectives of materials management. Optimum investment in inventor# is the prime ob)ective of materials management< 'evelopment of personnel is ver# important for long4term gro"th of a firm. .ngineering groups are primaril# responsible for standards of specifications. I.$*&('+1% *6 M'(%&)'3, M'+'-%.%+( 7. ,o"er prices for materials and equipment 9. (aster inventor# turnover =. Continuit# of suppl# ?. -educed lead time A. -educed transportation costs <. ,ess duplication of efforts B. .limination of buc&4 passing @. -educed materials obsolescence ;. !mproved supplier relationships and better records, and information 7:. 1etter interdepartmental cooperation 77. +ersonnel development
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Operations Management
F0+1()*+, *6 M'(%&)'3, M'+'-%.%+( 7. Materials planning and programming 9. -a" material purchase =. -eceiving, store &eeping, and "arehousing ?. !ssuing of material A. !nventor# control <. 2alue engineering B. Transportation of materials @. 2endor development ;. 2endor rating 7:. 'isposal of scrap and surpluses O7?%1()5%, P&).'&9 O7?%1()5%, 9. 1u#ing the best item at the lo"est cost =. -eduction in inventor# cost and 8igh inventor# turnover ?. Maintaining the flo" of production A. Maintaining the consistenc# of qualit# <. Optimization of acquisition and possession, resulting in lo"er cost B. Cordial relationship "ith suppliers @. Maintaining good records ;. Contribution to"ards competitiveness 7:. +ersonnel development S%1*+4'&9 O7?%1()5%, 7. +romotion of standardization "ith suppliers 9. 'evelopment of reciprocal relations "ith customers =. Committees to decide on economic ma&e or4 bu# decisions ?. 'evelopment of inter departmental relationships M'(%&)'3 P3'++)+- A+4 C*+(&*3 Material planning is a scientific technique of determining in advance the requirements of ra" materials, ancillar# parts and components, spares etc. as directed b# the production programme. !t is a subs#stem in the overall planning activit#. There are man# factors, "hich influence the activit# of material planning. These factors can be classified as macro and micro s#stems. 7. Macro 3actorsE %ome of the micro factors "hich affect material planning, are price trends, business c#cles 6ovt. import polic# etc. 9. Micro 3actorsE %ome of the micro factors that affect material planning are plant capacit# utilization, re)ection rates, lead times, inventor# levels, "or&ing capital, delegation of po"ers and communication.
M'(%&)'3, B04-%()+-
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T2% P&*1%,, *6 P&%$'&)+- M'(%&)'3 B04-%(,
M'(%&)'3, B04-%()+-: +rocess of preparing materials budget or purchase budget in terms of quantit# and mone# value of materials to be procured for a given period of time. Material 1udgeting is an estimate of expenses to be incurred in the procurement of material and its helps in effective execution and control of material plans. M'(%&)'3 C*+(&*3 (unction of maintaining constantl# availabilit# of all &inds of materials required for the manufacture of products. P0&12',)+The term Ypurchasing5 refer to bu#ing of a material or an item from a compan# or division that supplies materials. %ince a manufacturing firm is involved in the conversion of ra" material into finished goods, it should ensure that right t#pe of material are purchased in the right time. / one percent saving in cost is equivalent to 7: percent increase in turnover. O7?%1()5%, *6 P0&12',)+The basic ob)ective of the purchasing function is to ensure continuit# of suppl# of ra" materials, sub4contracted items and spare parts and to reduce the ultimate cost of the finished goods. !n other "ords, the ob)ective is not onl# to procure the ra" materials at the lo"est price but to reduce the cost of the final product. The ob)ectives of the purchasing department can be outlined as underE < T* '5')3 (2% .'(%&)'3,, ,0$$3)%&, '+4 %A0)$.%+(, '( (2% .)+).0. $*,,)73% 1*,(,: These are the inputs in the manufacturing operations. The minimization of the input cost increases the productivit# and resultantl# the profitabilit# of the operations. < T* %+,0&% (2% 1*+()+0*0, 63*8 *6 $&*401()*+ through continuous suppl# of ra" materials, components, tools etc. "ith repair and maintenance service.
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< T* )+1&%',% (2% ',,%( (0&+*5%&: The investment in the inventories should be &ept minimum in relation to the volume of sales. This "ill increase the turnover of the assets and thus the profitabilit# of the compan#. < T* 4%5%3*$ '+ '3(%&+'()5% ,*0&1% *6 ,0$$39: .xploration of alternative sources of suppl# of materials increases the bargaining abilit# of the bu#er, minimisation of cost of materials and increases the abilit# to meet the emergencies. < T* %,('73),2 '+4 .')+(')+ (2% -**4 &%3'()*+, 8)(2 (2% ,0$$3)%&,: Maintenance of good relations "ith the supplier helps in evolving a favourable image in the business circles. %uch relations are beneficial to the bu#er in terms of changing the reasonable price, preferential allocation of material in case of material shortages, etc. T* '12)%5% .'B).0. )+(%-&'()*+ 8)(2 *(2%& 4%$'&(.%+( *6 (2% 1*.$'+9: The purchase function is related "ith $&*401()*+ 4%$'&(.%+( for specifications and flo" of material, %+-)+%%&)+- 4%$'&(.%+( for the purchase of tools, equipments and machines, .'&;%()+4%$'&(.%+( for the forecasts of sales and its impact on procurement of materials, 6)+'+1)'3 4%$'&(.%+( for the purpose of maintaining levels of materials and estimating the "or&ing capital required, $%&,*++%3 4%$'&(.%+( for the purpose of manning and developing the personnel of purchase department and maintaining good vendor relationship. < T* (&')+ '+4 4%5%3*$ (2% $%&,*++%3: +urchasing department is manned "ith varied t#pes of personnel. The compan# should tr# to build the imaginative emplo#ee force through training and development. < E66)1)%+( &%1*&4 ;%%$)+- '+4 .'+'-%.%+( &%$*&()+-: +aper processing is inherent in the purchase function. %uch paper processing should be standardised so that record &eeping can be facilitated. +eriodic reporting to the management about the purchase activities )ustifies the independent existence of the department. P0&12',% C913%
+urchasing c#cle comprising of eight steps. 7. -ecognition of eed E !dentif#ing an item that is officiall# brought to the attention of purchasing department.
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9. 'escription of -equirementE +urchase requisition should give accurate information for ordering recognised product. =. %election of %ourceE -egistered suppliers "ho are approved b# the compan#. 1u#ing from single supplier helps develop long4term relationship and reduces the ris& and interruption in the suppl#. 1u#ing from multiple suppliers ma# not help in maintaining qualit# and helps get material at competitive prices. ?. 'etermination of +rice and /vailabilit# A. +lacing the Order <. Order /c&no"ledgement B. (ollo" Up and .xpediting @. Chec&ing The !nvoice and /pproval P0&12',% F0+1()*+, 7. Obtaining prices 9. %electing vendors =. /"arding purchase orders ?. (ollo" up on deliver# promise A. /d)usting and settling complaints <. %electing and training of purchase personnel B. 2endor relations P0&12',)+- P*3)1)%, K A+1)33'&9 D%5%3*$.%+(: The firms sub4contracts, i.e., decides to bu# the parts from outside suppliers. Mostl# the fabricated parts, components are brought from outside suppliers b# the firms. K M';% *& 709: /nother purchasing polic# is "hether to bu# the parts or components from outside supplier or manufacture "ithin the firm. The decisions lie depending in various factors. K S$%103'()5% 709)+-: %peculative bu#ing is conducted "ith the hope of ma&ing profit out of price changes. 8ere the profit is made b# bu#ing at lo" price and selling at higher price. V%+4*& &'()+-: The evaluation of supplier or vendor rating provides valuable information "hich help in improving the qualit# of the decision. !n the vendor rating three basic aspects are considered namel# qualit#, service and price The 'evelopment +ro)ect Committee of the ational /ssociation of +urchasing /gents CU.%./.D has suggested follo"ing methods for evaluating the performance of past suppliers. 1< T2% 1'(%-*&)1'3 $3'+: Under this method the members of the bu#ing staff related "ith the supplier li&e receiving section, qualit# control department, manufacturing department etc., are required to assess the performance of each supplier. The rating sheets are provided "ith the record of the supplier, their product and the list of factors for the evaluation purposes. The members of the bu#ing staff are required to assign the plus or minus notations against each factor. 2< T2% 8%)-2(%4=$*)+( .%(2*4: The "eighted4point method provides the quantitative data for each factor of evaluation. The "eights are assigned to each factor of evaluation according to the need of the organization, e.g., a compan# decides the three factors to be consideredXqualit#, price and timel# deliver#. !t assigns the relative "eight to each of these factors as underE
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*ualit# WWW A: points +rice WWW =: points Timel# deliver# WWW 9: points 3< C&)()1'3 )+1)4%+(, .%(2*4: -ecord of events related to bu#er vendor relationships is maintained in each vendor5s file. The# reflect positive and negative aspect of actual performance. This &ind of documentation useful in discussing "a#s and means of improving performance, ac&no"ledging the existence of good relationships, determining the competence of a vendor, and if necessar# considering termination !< T2% 1*,(=&'()* $3'+: Under this method, the vendor rating is done on the basis of various costs incurred for procuring the materials from various suppliers. The cost4ratios are ascertained deliver# etc. The cost4ratios are ascertained for the different rating variables such as qualit#, price, timel# deliver# etc. The cost4ratio is calculated in percentage on the basis of total individual cost and total value of purchases. "< C2%1;3),( ,9,(%.: / simple chec&list is used to evaluate the vendors. Chec& list ma# be something li&e -eliabilit#, technical capabilit#, after sales service, availabilit#, bu#ing convenience etc V'30% A+'39,), 2alue engineering or value anal#sis had its birth during the 0orld 0ar !! ,a"rence '. Miles "as responsible for developing the technique and naming it. 2alue anal#sis is defined as Qan organized creative approach "hich has its ob)ective, the efficient identification of unnecessar# cost4cost "hich provides neither qualit# nor use nor life nor appearance nor customer features.R 2alue anal#sis focuses engineering, manufacturing and purchasing attention to one ob)ective4 equivalent performance at a lo"er cost. (unction . 2alue M Cost S(%$, )+ V'30% A+'39,), !n order to ans"er the above questions, three 7',)1 ,(%$, are necessar#E 7. I4%+()69)+- (2% 60+1()*+: /n# useful product has some primar# function "hich must be identifiedXa bulb to give light, a refrigerator to preserve food, etc. !n addition it ma# have secondar# functions such as "ithstanding shoc&, etc. These t"o must be identified. 9. E5'30'()*+ *6 (2% 60+1()*+ 79 1*.$'&),*+: 2alue being a relative term, the comparison approach must be used to evaluate functions. The basic question is, Y'oes the function accomplish reliabilit# at the best cost5 and can be ans"ered onl# comparison. =. D%5%3*$ '3(%&+'()5%,: -ealistic situations must be faced, ob)ections should overcome and effective engineering manufacturing and other alternatives must be developed.
S(*&%, M'+'-%.%+( %tores pla# a vital role in the operations of compan#. !t is in direct touch "ith the user departments in its da#4to4da# activities. The most important purpose served b# the stores is to provide uninterrupted service to the manufacturing divisions. (urther, stores are often equated directl# "ith mone#, as mone# is loc&ed up in the stores.
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N'(0&% *6 S(*&%, %tore as building "here inventories are &ept. %torage is the function of receiving, storing, and issuing materials. %tores ensure read# accessibilit# of ma)or materials there4b# efficient service to users. Minimisation of stores cost, and continuous suppl# is the prime function of stores. %tores la#out is a fundamental factor in determining the efficient performance of stores department. / satisfactor# storage s#stem compromises bet"een the use of space and the use of time. -andom location means that items can be stored in an# storage position "hich is available. >eeping stoc& on one side of the aisle in "hich case the la#out is called comb t#pe . %tores manual is a "ritten statement of policies, and procedures. L'9*0(: Comb t#pe la#outE %toc& ma# be &ept on one side of the aisle in "hich case it is called comb t#pe.
/isle
Tree t#pe la#outE 6oods ma# be placed on either side of the aisle in "hich case, the method is called tree t#pe la#out
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/isle
C3',,)6)1'()*+ '+4 C*4)6)1'()*+: !t is one of the functions of stores management. Codification is a process of representing each item b# a number, the digit of "hich indicates the group, the sub4group, the t#pe and the dimension of the item. OBJECTIVES OF CODIFICATION The ob)ectives of a rationalized material coding s#stem areE 7. 1ringing all items together. 9. To enable putting up of an# future item in its proper place. =. To classif# an item according to its characteristics. ?. To give an unique code number to each item to avoid duplication and ambiguit#. A. To reveal excessive variet# and promote standardization and variet# reduction. <. To establish a common language for the identification of an item. B. To fix essential parameters for specif#ing an item. @. To specif# item as per national and international standards. ;. To enable data processing and anal#sis. I+5%+(*&9 / ph#sical resource that a firm holds in stoc& "ith the intent of selling it or transforming it into a more valuable state. -a" Materials 0or&s4in4+rocess (inished 6oods Maintenance, -epair and Operating CM-OD O7?%1()5%,: The main ob)ective of inventor# management is to maintain inventor# at appropriate level to avoid excessive or shortage of inventor# because both the cases are undesirable for business. Thus, management is faced "ith the follo"ing conflicting ob)ectivesE 7.To &eep inventor# at sufficientl# high level to perform production and sales activities smoothl#. 9. To minimize investment in inventor# at minimum level to maximize profitabilit#.
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O(2%& *7?%1()5%, *6 )+5%+(*&9 .'+'-%.%+( '&% %B$3')+%4 ', 0+4%&:= To ensure that the suppl# of ra" material H finished goods "ill remain continuous so that production process is not halted and demands of customers are dul# met. To minimize carr#ing cost of inventor#. To &eep investment in inventor# at optimum level. To reduce the losses of theft, obsolescence H "astage etc. To ma&e arrangement for sale of slo" moving items. To minimize inventor# ordering costs. I+5%+(*&9 C*+(&*3: I+5%+(*&9 C*+(&*3 is the supervision of suppl#, storage and accessibilit# of items in order to ensure an adequate suppl# "ithout excessive oversuppl#. !t can also be referred as internal control 4 an accounting procedure or s#stem designed to promote efficienc# or assure the implementation of a polic# or safeguard assets or avoid fraud and error etc. O7?%1()5%, *6 I+5%+(*&9 C*+(&*3 7. To ensure adequate suppl# of products to customer and avoid shortages as far as possible. 9. To ma&e sure that the financial investment in inventories is minimum C i.e.1 to see that the "or&ing capital is bloc&ed to the minimum possible extentD. =. .fficient purchasing, storing, consumption and accounting for materials is an important ob)ective. ?. To maintain timel# record of inventories of all the items and to maintain the stoc& "ithin the desired limits A. To ensure timel# action for replenishment. <. To provide a reserve stoc& for variations in lead times of deliver# of materials. B. To provide a scientific base for both short4term and long4term planning of materials. I+5%+(*&9 C*,(, !nventor# costs include ordering cost plus carr#ing costs. O&4%&)+- C*,( Cost of procurement and inbound logistics costs form a part of Ordering Cost. Ordering Cost is dependant and varies based on t"o factors 4 The cost of ordering excess and the Cost of ordering too less. 1oth these factors move in opposite directions to each other. Ordering excess quantit# "ill result in carr#ing cost of inventor#. 0here as ordering less "ill result in increase of replenishment cost and ordering costs. These t"o above costs together are called Total %toc&ing Cost. !f #ou plot the order quantit# vs the T%C, #ou "ill see the graph declining graduall# until a certain point after "hich "ith ever# increase in quantit# the T%C "ill proportionatel# sho" an increase. This functional anal#sis and cost implications form the basis of determining the !nventor# +rocurement decision b# ans"ering the t"o basic fundamental questions 4 8o" Much to Order and 0hen to Order. 8o" much to order is determined b# arriving at the .conomic Order *uantit# or .O*. C'&&9)+- C*,( !nventor# storage and maintenance involves various t#pes of costs namel#E !nventor# %torage Cost
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Cost of Capital !nventor# carr#ing involves !nventor# storage and management either using in house facilities or external "arehouses o"ned and managed b# third part# vendors. !n both cases, inventor# management and process involves extensive use of 1uilding, Material 8andling .quipments, !T %oft"are applications and 8ard"are .quipments coupled managed b# Operations and Management %taff resources. I+5%+(*&9 S(*&'-% C*,( !nventor# storage costs t#picall# include Cost of 1uilding -ental and facilit# maintenance and related costs. Cost of Material 8andling .quipments, !T 8ard"are and applications, including cost of purchase, depreciation or rental or lease as the case ma# be. (urther costs include operational costs, consumables, communication costs and utilities, besides the cost of human resources emplo#ed in operations as "ell as management. C*,( *6 C'$)('3 !ncludes the costs of investments, interest on "or&ing capital, taxes on inventor# paid, insurance costs and other costs associate "ith legal liabilities. The inventor# storage costs as "ell as cost of capital is dependant upon and varies "ith the decision of the management to manage inventor# in house or through outsourced vendors and third part# service providers.
I+5%+(*&9 C*+(&*3 T%12+)A0%,: E1*+*.)1 O&4%& @0'+()(9: .O* C.conomic Order *uantit#D 4.O* is the level of inventor# order that minimizes the total cost associated "ith inventor# management. The ob)ective is to find out and maintain optimum level of investment in inventor# to minimize the total cost associated "ith it. The total cost includesE C'&&9)+- C*,(: /re associated "ith the maintenanceGholding of inventor#. O&4%&)+- C*,(: /re costs associated "ith acquisition ofGplacing order for inventor#.
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!t is that quantit# "here the total of ordering cost and holding cost remains lo"est. -e4order levelE stoc& level at "hich fresh order is placed. /verage consumption per da# x lead time N buffer stoc& ,ead timeE 'uration time bet"een placing an order H receipt of material !deal 9 to < "ee&s. 7. A38'9, 7%((%& 1*+(&*3 CABCD 13',,)6)1'()*+< !n this anal#sis, the classification of existing inventor# is based on annual consumption and the annual value of the items. 8ence "e obtain the quantit# of inventor# item consumed during the #ear and multipl# it b# unit cost to obtain annual usage cost. The items are then arranged in the descending order of such annual usage cost. CaD A-Item: 2er# tight control, the items being of high value. The control need be exercised at higher level of authorit#. K/5 !T.M% %mall in number, but consume large amount of resources Must haveE K Tight control K -igid estimate of requirements K %trict H closer "atch K ,o" safet# stoc&s K Managed b# top management CbD B-Item: Moderate control, the items being of moderate value. The control need be exercised at middle level of authorit#. Y15 !T.M !ntermediate Must haveE K Moderate control K +urchase based on rigid requirements K -easonabl# strict "atch H control K Moderate safet# stoc&s K Managed b# middle level management CcD C-Item: The items being of lo" value, the control can be exercised at gross root level of authorit#, i.e., b# respective user department managers. YC5 !T.M% ,arger in number, but consume lesser amount of resources Must haveE K Ordinar# control measures K +urchase based on usage estimates K 8igh safet# stoc&s /1C anal#sis does not stress on items those are less costl# but ma# be vital This is based on cost criteria. !t helps to exercise selective control "hen confronted "ith large number of items it rationalizes the number of orders, number of items H reduce the inventor#. /bout 7: a of materials consume B: a of resources /bout 9: a of materials consume 9: a of resources /bout B: a of materials consume 7: a of resources
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2< )-2, .%4)0. '+4 3*8 C MLD 13',,)6)1'()*+< !n this anal#sis, the classification of existing inventor# is based on unit price of the items. The# are classified as high price, medium price and lo" cost items. 3<V)('3, %,,%+()'3 '+4 4%,)&'73% CVEDD 13',,)6)1'()*+< !n this anal#sis, the classification of existing inventor# is based on criticalit# of the items. The# are classified as vital, essential and desirable items. !t is mainl# used in spare parts inventor#. !<S1'&1%, 4)66)103( '+4 %',9 (* *7(')+ CSDED< !n this anal#sis, the classification of existing inventor# is based on the items. "<GOLF '+'39,),: !n this anal#sis, the classification of existing inventor# is based sources of the items. The# are classified as 6overnment suppl#, ordinaril# available, local availabilit# and foreign source of suppl# items. G<SOS '+'39,),: !n this anal#sis, the classification of existing inventor# is based nature of suppl# of items. The# are classified as seasonal and off4seasonal items. 7<F',( .*5)+-, ,3*8 .*5)+- '+4 +*+=.*5)+- CFSND< L<E1*+*.)1 *&4%& A0'+()(9 CEO@D< !nventor# models deal "ith idle resources li&e men, machines, mone# and materials. These models are concerned "ith t"o decisionsE ho" much to order Cpurchase or produceD and "hen to order so as to minimize the total cost. 9<M'B=M)+).0. ,9,(%.< 10<T8* 7)+ ,9,(%. O5%&5)%8 *6 JIT W2'( ), ' EJ0,(=)+=().% S9,(%.FJ Q3ust4in4timeRE / philosoph# of manufacturing based on planned elimination of all "aste and continuous improvement of productivit#. 3ust in time is a Ypull5 s#stem of production, so actual orders provide a signal for "hen a product should be manufactured. 'emand4pull enables a firm to produce onl# "hat is required, in the correct quantit# and at the correct time. This means that stoc& levels of ra" materials, components, "or& in progress and finished goods can be &ept to a minimum. This requires a carefull# planned scheduling and flo" of resources through the production process. Modern manufacturing firms use sophisticated production scheduling soft"are to plan production for each period of time, "hich includes ordering the correct stoc&. !nformation is exchanged "ith suppliers and customers through .'! C.lectronic 'ata !nterchangeD to help ensure that ever# detail is correct. %upplies are delivered right to the production line onl# "hen the# are needed. (or example, a car manufacturing plant might receive exactl# the right number and t#pe of t#res for one da#5s production, and the supplier "ould be expected to deliver them to the correct loading ba# on the production line "ithin a ver# narro" time slot. O5%&5)%8 *6 JIT .'+06'1(0&)+7. !nventor# reduction 9. *ualit# improvement =. ,ead time reduction ?. ,ead time reduction A. Continuous !mprovement <. Total +reventive Maintenance B. %trategic 6ain A45'+('-%, *6 JIT
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,o"er stoc& holding means a reduction in storage space "hich saves rent and insurance costs /s stoc& is onl# obtained "hen it is needed, less "or&ing capital is tied up in stoc& There is less li&elihood of stoc& perishing, becoming obsolete or out of date /voids the build4up of unsold finished product that can occur "ith sudden changes in demand ,ess time is spent on chec&ing and re4"or&ing the product of others as the emphasis is on getting the "or& &)-2( 6)&,( ().% D),'45'+('-%, *6 JIT There is little room for mista&es as minimal stoc& is &ept for re4"or&ing fault# product +roduction is ver# reliant on suppliers and if stoc& is not delivered on time, the "hole production schedule can be dela#ed There is no spare finished product available to meet unexpected orders, because all product is made to meet actual orders ho"ever, 3!T is a ver# responsive method of production
UNIT V SC EDULING AND PROJECT MANAGEMENT 9 +ro)ect Management %cheduling Techniques, +.-T, C+M$ %cheduling 4 "or& centers nature, importance$ +riorit# rules and techniques, shop floor control$ (lo" shop scheduling 3ohnson5s /lgorithm 6antt charts$ personnel scheduling in services. P&*?%1( M'+'-%.%+(E / pro)ect is an organized endeavor to accomplish a specified non4routine or lo" volume tas&. /lthough pro)ects are not repetitive, the# ta&e significant amount of time to complete and are large scale or complex enough to be recognized and managed as separate underta&ings. +ro)ect life c#cleE 7. The concept phaseE 'uring this phase, the organization realizes that a pro)ect ma# be needed or the organization is requested to propose a plan to perform a pro)ect for some customer.
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9. !nitial planning or feasibilit# phaseE 'uring the phase, the pro)ect manager plans the pro)ect to a level of detail, sufficient for initial scheduling and budgeting. =. 'etailed planning phaseE !f the pro)ect is approved, then detailed scheduling and budgeting is done in this phase. ?. Organisation phaseE 'uring this phase, a detailed pro)ect definition such as the "or& brea&do"n structure is examined. A. .xecution phaseE 'uring this phase the various activities planned and completed as per the schedule, utilizing the allotted resources. <. Termination phaseE This is the phase, during "hich the pro)ect is terminated or disbanded after completion. The personnel "ho "ere "or&ing in the pro)ect are assigned bac& to their regular )obs or to other )obs in the organisation or to other pro)ects in this phase -ole of a +ro)ect ManagerE 7. Manage the pro)ect5s scope to define the goals and "or& to be done, in sufficient detail to facilitate understanding and correct performance b# the participants 9. Manage the human resources involved in the pro)ect =. Manage communications to see that, the appropriate parties are informed ?. Manage time b# planning and meeting a schedule A. Manage qualit# so that, the pro)ects results are satisfactor# <. Manage costs so that, the pro)ect is performed at the minimum practical cost and "ith in budget if possible. T%&., U,%4 )+ P&*?%1( M'+'-%.%+( A1()5)(9 E / certain amount of "or& or tas& required in the pro)ect A1()5)(9 40&'()*+E !n C+M the best estimate of time to complete an activit# . !n +.-T the expected time or average time to complete an activit# C&)()1'3 '1()5)(9 E /n activit# that has no room for schedule slippages : if it slips the entire the entire pro)ect completion "ill slip. /n activit# "ith zero slac& A1()5)(9 E / certain amount of "or& or tas& required in the pro)ect A1()5)(9 40&'()*+E !n C+M the best estimate of time to complete an activit# . !n +.-T the expected time or average time to complete an activit# C&)()1'3 '1()5)(9 E /n activit# that has no room for schedule slippages : if it slips the entire the entire pro)ect completion "ill slip. /n activit# "ith zero slac& E5%+( :A 7%-)++)+- , ' 1*.$3%()*+ $*)+( ,*& ' .)3%,(*+% '11*.$3),2.%+( 8)(2)+ (2% $&*?%1( < A+ '1()5)(9 7%-)+, '+4 %+4, 8)(2 %5%+(, L'(%,( 6)+),2 CLFD : The latest that an activit# can finish from the beginning of the pro)ect L'(%,( ,('&( CLSD EThe latest that an activit# can start from the beginning of the pro)ect M*,( 3);%39 ().% C ( .D E The time for completing the activit# that is is the consensus best estimate, used in +.-T O$().),()1 T).% CtoDE The time for completing an activit# if all goes "ell E used in +.-T P%,,).),()1 T).% CtpDE The time for completing an activit# if bad luc& is encountered E used in +.-T P&%4%1%,,*& '1()5)(9 E /n activit# that must occur before another activit# . S3'1; E The amount of time that an activit# or group of activities can slip "ithout causing a dela# in the completion of the pro)ect S011%,,*& '1()5)(9 E /n activit# that must occur after another activit# C*+5%+()*+, 0,%4 )+ 4&'8)+- +%(8*&; 4)'-&'., CA&&*8, H C)&13%, D
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A1()5)(9 *+ A&&*8 CAOAD E The activities are denoted b# /rro"s and events are denoted b# circles A1()5)(9 *+ N*4%CAOND E /ctivities are denoted b# circlesCor nodesD and the precedence relation ships bet"een activities are indicated b# arro"s S12%403)+-: %cheduling is the process of deciding ho" to commit resources bet"een a variet# of possible tas&s. Time can be specified Cscheduling a flight to leave at @E::D or floating as part of a sequence of events. %cheduling Techniques 6antt ChartE 'uring the era of scientific management, 8enr# 6antt developed a tool for displa#ing the progression of a pro)ect in the form of a specialized chart. /n earl# application "as the trac&ing of the progress of ship building pro)ects. Toda#, 6anttLs scheduling tool ta&es the form of a horizontal bar graph and is &no"n as a 6antt chart, a basic sample of "hich is sho"n belo"E
The horizontal axis of the 6antt chart is a time scale, expressed either in absolute time or in relative time referenced to the beginning of the pro)ect. The time resolution depends on the pro)ect 4 the time unit t#picall# is in "ee&s or months. -o"s of bars in the chart sho" the beginning and ending dates of the individual tas&s in the pro)ect. !n the above example, each tas& is sho"n to begin "hen the tas& above it completes. 8o"ever, the bars ma# overlap in cases "here a tas& can begin before the completion of another, and there ma# be several tas&s performed in parallel. (or such cases, the 6antt chart is quite useful for communicating the timing of the various tas&s. (or larger pro)ects, the tas&s can be bro&en into subtas&s having their o"n 6antt charts to maintain readabilit#. G'+(( C2'&( E+2'+1%.%+(, This basic version of the 6antt chart often is enhanced to communicate more information. / vertical mar&er can used to mar& the present point in time. The progression of each activit# ma# be sho"n b# shading the bar as progress is made, allo"ing the status of each activit# to be &no"n "ith )ust a glance. 'ependencies can be depicted using lin& lines or color codes. -esource allocation can be specified for each tas&.
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Milestones can be sho"n. PERTE Complex pro)ects require a series of activities, some of "hich must be performed sequentiall# and others that can be performed in parallel "ith other activities. This collection of series and parallel tas&s can be modeled as a net"or&. !n 7;AB the Critical +ath Method CC+MD "as developed as a net"or& model for pro)ect management. C+M is a deterministic method that uses a fixed time estimate for each activit#. 0hile C+M is eas# to understand and use, it does not consider the time variations that can have a great impact on the completion time of a complex pro)ect. The +rogram .valuation and -evie" Technique C+.-TD is a net"or& model that allo"s for randomness in activit# completion times. +.-T "as developed in the late 7;A:Ls for the U.%. av#Ls +olaris pro)ect having thousands of contractors. !t has the potential to reduce both the time and cost required to complete a pro)ect. The et"or& 'iagram !n a pro)ect, an activit# is a tas& that must be performed and an event is a milestone mar&ing the completion of one or more activities. 1efore an activit# can begin, all of its predecessor activities must be completed. +ro)ect net"or& models represent activities and milestones b# arcs and nodes. +.-T originall# "as an activit# on arc net"or&, in "hich the activities are represented on the lines and milestones on the nodes. Over time, some people began to use +.-T as an activit# on node net"or&. (or this discussion, "e "ill use the original form of activit# on arc. The +.-T chart ma# have multiple pages "ith man# sub4tas&s. The follo"ing is a ver# simple example of a +.-T diagramE +.-T Chart The milestones generall# are numbered so that the ending node of an activit# has a higher number than the beginning node. !ncrementing the numbers b# 7: allo"s for ne" ones to be inserted "ithout modif#ing the numbering of the entire diagram. The activities in the above diagram are labeled "ith letters along "ith the expected time required to complete the activit#. %teps in the +.-T +lanning +rocess +.-T planning involves the follo"ing stepsE !dentif# the specific activities and milestones. 'etermine the proper sequence of the activities. Construct a net"or& diagram. .stimate the time required for each activit#. 'etermine the critical path. Update the +.-T chart as the pro)ect progresses. 7. !dentif# /ctivities and Milestones The activities are the tas&s required to complete the pro)ect. The milestones are the events mar&ing the beginning and end of one or more activities. !t is helpful to list the tas&s in a table that in later steps can be expanded to include information on sequence and duration. 9. 'etermine /ctivit# %equence This step ma# be combined "ith the activit# identification step since the activit# sequence is evident for some tas&s. Other tas&s ma# require more anal#sis to determine the exact order in "hich the# must be performed.
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=. Construct the et"or& 'iagram Using the activit# sequence information, a net"or& diagram can be dra"n sho"ing the sequence of the serial and parallel activities. (or the original activit#4on4arc model, the activities are depicted b# arro"ed lines and milestones are depicted b# circles or FbubblesF. !f done manuall#, several drafts ma# be required to correctl# portra# the relationships among activities. %oft"are pac&ages simplif# this step b# automaticall# converting tabular activit# information into a net"or& diagram. ?. .stimate /ctivit# Times 0ee&s are a commonl# used unit of time for activit# completion, but an# consistent unit of time can be used. / distinguishing feature of +.-T is its abilit# to deal "ith uncertaint# in activit# completion times. (or each activit#, the model usuall# includes three time estimatesE Optimistic time 4 generall# the shortest time in "hich the activit# can be completed. !t is common practice to specif# optimistic times to be three standard deviations from the mean so that there is approximatel# a 7a chance that the activit# "ill be completed "ithin the optimistic time. Most li&el# time 4 the completion time having the highest probabilit#. ote that this time is different from the expected time. +essimistic time 4 the longest time that an activit# might require. Three standard deviations from the mean is commonl# used for the pessimistic time. +.-T assumes a beta probabilit# distribution for the time estimates. (or a beta distribution, the expected time for each activit# can be approximated using the follo"ing "eighted averageE .xpected time M C Optimistic N ? x Most li&el# N +essimistic D G < This expected time ma# be displa#ed on the net"or& diagram. To calculate the variance for each activit# completion time, if three standard deviation times "ere selected for the optimistic and pessimistic times, then there are six standard deviations bet"een them, so the variance is given b#E I C +essimistic 4 Optimistic D G < J9 A. 'etermine the Critical +ath The critical path is determined b# adding the times for the activities in each sequence and determining the longest path in the pro)ect. The critical path determines the total calendar time required for the pro)ect. !f activities outside the critical path speed up or slo" do"n C"ithin limitsD, the total pro)ect time does not change. The amount of time that a non4critical path activit# can be dela#ed "ithout dela#ing the pro)ect is referred to as slac& time. !f the critical path is not immediatel# obvious, it ma# be helpful to determine the follo"ing four quantities for each activit#E .% 4 .arliest %tart time .( 4 .arliest (inish time ,% 4 ,atest %tart time ,( 4 ,atest (inish time These times are calculated using the expected time for the relevant activities. The earliest start and finish times of each activit# are determined b# "or&ing for"ard through the net"or& and determining the earliest time at "hich an activit# can start and finish considering its predecessor activities. The latest start and finish times are the latest times that an activit# can start and finish "ithout dela#ing the pro)ect. ,% and ,( are found b# "or&ing bac&"ard through the net"or&.
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The difference in the latest and earliest finish of each activit# is that activit#Ls slac&. The critical path then is the path through the net"or& in "hich none of the activities have slac&. The variance in the pro)ect completion time can be calculated b# summing the variances in the completion times of the activities in the critical path. 6iven this variance, one can calculate the probabilit# that the pro)ect "ill be completed b# a certain date assuming a normal probabilit# 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. %ince the critical path determines the completion date of the pro)ect, the pro)ect can be accelerated b# adding the resources required to decrease the time for the activities in the critical path. %uch a shortening of the pro)ect sometimes is referred to as pro)ect crashing. <. Update as +ro)ect +rogresses Ma&e ad)ustments in the +.-T chart as the pro)ect progresses. /s the pro)ect unfolds, the estimated times can be replaced "ith actual times. !n cases "here there are dela#s, additional resources ma# be needed to sta# on schedule and the +.-T chart ma# be modified to reflect the ne" situation. 1enefits of +.-T +.-T is useful because it provides the follo"ing informationE .xpected pro)ect completion time. +robabilit# of completion before a specified date. The critical path activities that directl# impact the completion time. The activities that have slac& time and that can lend resources to critical path activities. /ctivit# start and end dates.
,imitations The follo"ing are some of +.-TLs "ea&nessesE The activit# time estimates are some"hat sub)ective and depend on )udgement. !n cases "here there is little experience in performing an activit#, the numbers ma# be onl# a guess. !n other cases, if the person or group performing the activit# estimates the time there ma# be bias in the estimate. .ven if the activit# times are "ell4estimated, +.-T assumes a beta distribution for these time estimates, but the actual distribution ma# be different. .ven if the beta distribution assumption holds, +.-T assumes that the probabilit# distribution of the pro)ect completion time is the same as the that of the critical path. 1ecause other paths can become the critical path if their associated activities are dela#ed, +.-T consistentl# underestimates the expected pro)ect completion time. The underestimation of the pro)ect completion time due to alternate paths becoming critical is perhaps the most serious of these issues. To overcome this limitation, Monte Carlo simulations can be performed on the net"or& to eliminate this optimistic bias in the expected pro)ect completion time. CPM: !n 7;AB, 'u+ont developed a pro)ect management method designed to address the challenge of shutting do"n chemical plants for maintenance and then restarting the plants once the maintenance had been completed. 6iven the complexit# of the process, the# developed the C&)()1'3 P'(2 M%(2*4 CC+MD for managing such pro)ects.
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C+M provides the follo"ing benefitsE +rovides a graphical vie" of the pro)ect. +redicts the time required to complete the pro)ect. %ho"s "hich activities are critical to maintaining the schedule and "hich are not. C+M models the activities and events of a pro)ect as a net"or&. /ctivities are depicted as nodes on the net"or& and events that signif# the beginning or ending of activities are depicted as arcs or lines bet"een the nodes. The follo"ing is an example of a C+M net"or& diagramE
CPM Diagram
Steps in CPM Project Planning

7. 9. =. ?. A. <. %pecif# the individual activities. 'etermine the sequence of those activities. 'ra" a net"or& diagram. .stimate the completion time for each activit#. !dentif# the critical path Clongest path through the net"or&D Update the C+M diagram as the pro)ect progresses.
1 Specif! t"e #ndivid$al %ctivities

(rom the "or& brea&do"n structure, a listing can be made of all the activities in the pro)ect. This listing can be used as the basis for adding sequence and duration information in later steps.
& Determine t"e Se'$ence of t"e %ctivities

%ome activities are dependent on the completion of others. / listing of the immediate predecessors of each activit# is useful for constructing the C+M net"or& diagram.
( Draw t"e )etwor* Diagram

Once the activities and their sequencing have been defined, the C+M diagram can be dra"n. C+M originall# "as developed as an acti#ity on node C/O D net"or&, but some pro)ect planners prefer to specif# the activities on the arcs.
+ ,stimate %ctivit! Completion Time

The time required to complete each activit# can be estimated using past experience or the estimates of &no"ledgeable persons. C+M is a deterministic model that does not ta&e into account variation in the completion time, so onl# one number is used for an activit#Ls time estimate.
- #dentif! t"e Critical Pat"

The critical path is the longest4duration path through the net"or&. The significance of the critical path is that the activities that lie on it cannot be dela#ed "ithout dela#ing the pro)ect. 1ecause of its impact on the entire pro)ect, critical path anal#sis is an important aspect of pro)ect planning. The critical path can be identified b# determining the follo"ing four parameters for each activit#E
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.% 4 earliest start timeE the earliest time at "hich the activit# can start given that its precedent activities must be completed first. .( 4 earliest finish time, equal to the earliest start time for the activit# plus the time required to complete the activit#. ,( 4 latest finish timeE the latest time at "hich the activit# can be completed "ithout dela#ing the pro)ect. ,% 4 latest start time, equal to the latest finish time minus the time required to complete the activit#. The slack time for an activit# is the time bet"een its earliest and latest start time, or bet"een its earliest and latest finish time. %lac& is the amount of time that an activit# can be dela#ed past its earliest start or earliest finish "ithout dela#ing the pro)ect. The critical path is the path through the pro)ect net"or& in "hich none of the activities have slac&, that is, the path for "hich .%M,% and .(M,( for all activities in the path. / dela# in the critical path dela#s the pro)ect. %imilarl#, to accelerate the pro)ect it is necessar# to reduce the total time required for the activities in the critical path.
. /pdate CPM Diagram

/s the pro)ect progresses, the actual tas& completion times "ill be &no"n and the net"or& diagram can be updated to include this information. / ne" critical path ma# emerge, and structural changes ma# be made in the net"or& if pro)ect requirements change.
CPM 0imitations
C+M "as developed for complex but fairl# routine pro)ects "ith minimal uncertaint# in the pro)ect completion times. (or less routine pro)ects there is more uncertaint# in the completion times, and this uncertaint# limits the usefulness of the deterministic C+M model. /n alternative to C+M is the +.-T pro)ect planning model, "hich allo"s a range of durations to be specified for each activit#. .xampleE S(< P'03M, *,$)('3 D%,1&)$()*+ I..%4)'(% P&%4%1%,,*&C,D
A1()5)(9
90
14'48434> is the critical path "hich have longest time duration.
C&)()1'3 P'(2: The longest path in the net"or&

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'efines the shortest time pro)ect can be completed Critical path activit# dela# 444 pro)ect dela# E'&3)%,( S('&( '+4 E'&3)%,( F)+),2: 1egin at starting event and "or& for"ard .% is earliest start .% M : for starting activities .% M Maximum .( of all predecessors for non4starting activities .( is earliest finish .( M .% N /ctivit# time E'&3)%,( S('&( I E'&3)%,( F)+),2E
L'(%,( S('&( '+4 L'(%,( F)+),2: 1egin at ending event and "or& bac&"ard ,( is latest finish ,( M Maximum .( for ending activities
92
,( M Minimum ,% of all successors for non4ending activities ,% is latest start ,% M ,( /ctivit# time S12%403)+-: The allocation of resources overtime to accomplish specific tas&s. T"o basic t#pes of scheduling 7. 0or&force schedulingE / t#pe of scheduling that determines "hen emplo#ees "or&. 9. Operations schedulingE / t#pe of scheduling that assign )obs to machines or "or&ers to )obs. Ob)ectivesE 0or& Center 'efined T#pical %cheduling and Control (unctions 3ob4shop %cheduling .xamples of %cheduling -ules %hop4floor Control +rinciples of 0or& Center %cheduling !ssues in %cheduling %ervice +ersonnel
W*&; 1%+(&%: / "or& center is an area in a business in "hich productive resources are organized and "or& is completed Can be a single machine, a group of machines, or an area "here a particular t#pe of "or& is done Ob)ectivesE 7. Meet due dates 9. Minimize lead time =. Minimize setup time or cost ?. Minimize "or&4in4process inventor# A. Maximize machine utilization P&)+1)$3%, *6 W*&; C%+(%& S12%403)+-: 7. There is a direct equivalence bet"een "or& flo" and cash flo" 9. The effectiveness of an# )ob shop should be measured b# speed of flo" through the shop =. %chedule )obs as a string, "ith process steps bac&4to4bac& ?. / )ob once started should not be interrupted !nfinite loadingE "or& is assigned to a "or& center based on "hat is needed o consideration to capacit# (inite loadingE schedules each resource using the setup and run time required for each order. 'etermines exactl# "hat "ill be done b# each resource at ever# moment during the da#
93
(or"ard schedulingE the s#stem ta&es an order and schedules each operation that must be completed for"ard in time Can tell the earliest date an order can be completed 1ac&"ard schedulingE starts "ith due date and schedules the required operations in reverse sequence Can tell "hen an order must be started in order to be done b# a specific date P&)*&)(9 &03%, '+4 (%12+)A0%,: the rules used in obtaining a )ob sequence Can be simple or complex Can use one or more pieces of information Common rules sho"n on next slide (C(% (irst4come first served / priorit# sequencing rule "hich states that the )ob that arrived at the "or&station first has the highest priorit#. %T+ %hortest processing time / priorit# sequencing rule "hich states that the )ob requiring the shortest processing time is the +%B( )ob to be processed. .'' .arliest due date / priorit# sequencing rule "hich specifies that the )ob has the earliest due date is the next )ob to be processed. C- Critical ratio / ratio calculated b# dividing the time remaining until a )ob5s due date b# the total shop time remaining for the )ob including the setup, processing, move , and expected "aiting times of all remaining operations, including the operation being scheduled. C- M 'ue date Toda#5s date G Total shop time remaining %G-O %lac& per remaining operations / priorit# sequencing rule that determines priorit# b# dividing the slac& b# the number of operations that remain, including the one being scheduled. %G-O M C'ue date 4 Toda#5s dateD Total shop time remaining G operations remaining. umber of
%hop floor controlE M'?*& F0+1()*+,: 7. /ssigning priorit# of each shop order 9. Maintaining "or&4in4process quantit# information =. Conve#ing shop4order status information to the office ?. +roviding actual output data for capacit# control purposes A. +roviding quantit# b# location b# shop order for 0!+ inventor# and accounting purposes <. +roviding measurement of efficienc#, utilization, and productivit# of manpo"er and machines I+$0(IO0($0( C*+(&*3: I+$0( W*&;1%+(%& O0($0(
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+lanned input should never exceed planned output (ocuses attention on bottlenec& "or& centers F3*8 ,2*$ ,12%403)+- / J*2+,*+M, A3-*&)(2. / G'+(( 12'&(, +roduction s#stems for "hichE / number of operations have to be done on ever# )ob. These operations have to be done on all )obs in the same order, i.e., the )obs have to follo" the same route. The machines are assumed to be set up in series. Common assumptionsE Unlimited storage or buffer capacities in bet"een succesive machines Cno bloc&ingD. / )ob has to be proccessed at each stage on onl# one of the machines Cno parallel machinesD. J*2+,*+M, &03% / procedure that minimize ma&espan in scheduling a group of )obs on t"o "or&stations. The procedure is a follo"s %tep 7E %can the processing times at each "or&station and find the shortest processing time among the )obs not #et scheduled. !f there is a tie, chose one )ob arbitraril#. %tep 9E !f the shortest processing time is on "or&station 7, schedule the corresponding)ob as earl# as possible. !f the shortest processing time is on "or&station 9, schedule the corresponding )ob as late as possible. %tep =E .liminate the last )ob scheduled from further consideration, -epeat step 7 and 9 until all )obs have been scheduled. G'+(( 12'&(: / 6antt chart is a horizontal bar chart developed as a production control tool in 7;7B b# 8enr# ,. 6antt, an /merican engineer and social scientist. (requentl# used in pro)ect management, a 6antt chart provides a graphical illustration of a schedule that helps to plan, coordinate, and trac& specific tas&s in a pro)ect. / 6antt chart, commonl# used in pro)ect management, is one of the most popular and useful "a#s of sho"ing activities Ctas&s or eventsD displa#ed against time. On the left of the chart is a list of the activities and along the top is a suitable time scale. .ach activit# is represented b# a bar$ the position and length of the bar reflects the start date, duration and end date of the activit#. This allo"s #ou to see at a glanceE

0hat the various activities are 0hen each activit# begins and ends 8o" long each activit# is scheduled to last 0here activities overlap "ith other activities, and b# ho" much
95
The start and end date of the "hole pro)ect
To summarize, a 6antt chart sho"s #ou "hat has to be done Cthe activitiesD and "hen Cthe scheduleD.
/ simple 6antt chart
P%&,*++%3 ,12%403)+- )+ ,%&5)1%,: /ll production operations "hether manufacturing operations or quasi4manufacturing service operations must schedule personnel to "or& centers. /s in manufacturing operations, the principal means of performing services is through personnel or "or&force. %cheduling personnel in services involves three difficulties. 7. 'emand variabilit# 9. %ervice time variabilit# =. /vailabilit# of personnel "hen the# are needed. (or instance, in scheduling attendants in a health club, the follo"ing facts must be consideredE CiD CiiD The number of members at the club varies drasticall# both throughout the da# and throughout the "ee&. The hourl# pattern of the number of members at the club varies among the da#s of the "ee&. !f the attendants are required to assist the members in their exercises, then the number of attendance needed in each hour of the "ee& depends on the number of member at the club in each hour. 1ecause of the fluctuations in customer demand, operation managers often use t"o tactics to develop "or& schedules for emplo#ees. Use full4time emplo#ees exclusivel# Use of some full4time emplo#ees
C0,(*.%&=',=$'&()1)$'+(, Customer actuall# participates in service operation. (or eg$ retailing tourism etc., has huge involvement of customer in service operations. C0,(*.%&=',=$&*401(= %ervice is actuall# performed on the customer. (or eg$ hair dressing, medical treatment, surger# etc.,
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Operation Management

Differences between services and goods

C0&&%+( P&)*&)(9 ,o" production cost

Customer service and flexibilit#

Recent Trends in Operations Management:

Current technolog# !nvolves mathematical techniques

.xampleE forecasting ne"l# online sales

introduced .xampleE sales of color T2s

Production Plan Tentative MPS Master Schedule

Rough cut Capacity check

Inventory status file

Product Structure file

CRP Purchase Order etailed Production Plans

Production !ctivity Control

The MRP Computational Procedure

Inventory Status "ile

MRP Processing #ogic

Order release re$uirements % orders to &e released no'(

Order rescheduling % e)pedite* de+ e)pedite or cancel open order(

Planned order %future(

Manufacturing (Materials, Capacit !ro"uction #c$e"ules%

(oug$ cut capacit plan M(!

'etaile" capacit plan

#$op floor control, purc$ase control

!urc$asing (&en"or or"ers%

"here dix di# *i

x4coordinate of location i #4coordinate of location i *uantit# of goods moved to or from location i

6reater flexibilit# of resources.

Minimum umber of 0or&stations -equiredE

%um of Tas& Times C#cle Time

!ro"uction process "esign an" "e0elopment

!ro"uct 10aluation an" impro0ement

!ro"uct use an" support

+roduce and mar&et ne" productGservice

!ro"uct "e0elopment !ro"uct ,inal "esign 2e. 3ec$nolog

+roduct planning s#stem

5or/ station #election

5or/ flo. anal sis

Operation met$o" !lant planning s stems

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