Introduction to OM Business organisations: Classification A.

Private enterprises 1) sole proprietership2)Joint Hindu Family firm 3)Parternship firm4) Joint Stock Company5)Cooperative societies

B.State/Public enterprises 1)Departmental organisations2)Public corporations3)Government Company Business(B):

Engaged in economic activities B=Industry(I)+ Commerce( C)

B=Industry(I)+ Commerce( C) Industry(I)= 1)Growing(Genetic) (Organic),2)Extraction(Agri,Mining..),3)Manufacturing(Analytical:a=b+c+d..,;Sy nthetic,a+b+c=d;Processing,Raw Materials processed, eg:Shirt,fertilizer..;Assembling,eg:Car..(4)Construction(Dams..) Industry(I) classification by products: a)Primary products,eg: from natural resources ,wheat,ore.. b)Semi manufactured goods,eg:cotton yarn,pulp..c)Manufactured goods,ready for use Another classification:,a)Capital or Producers goods,eg:Mc tool,Boiler. .b)Consumers goods B=Industry(I)+ Commerce( C) (C):Buying,selling,exchanging,Distibuting.. C)=Trade(a)Internal(b)International:Imports,Exports,Entrepot) + Aides to Trade(eg:Advertising&Publicity,Banking,Insurance,Packaging,Transport,ware housing..) Production Function:O = F(I1,I2,In) Production, in a manuf orgn is making of a physical object (Using inputs) Production, in a Service orgn is discharging of a function ,which has a utility to consumer(Using inputs)

In short, Production Management is tranforming activity. It uses decision making processes for managing production system subject to Quality,Quantity at minimum cost,as per demand. Production Management can also be stated as use of principles, techniques to discharge production function. Operations Management is process of converting or using inputs(Input Resources) into useful Output/Product(Goods Or services) Importance:Gives competitive edge, improves standard of living Production system configuration: Inputs conversion Process output

Production/Operations management

It is a functional management. It involves Decision making in 3 tiers; Strategic,Operating(Shop Floor level) and Control decision. Production/Operations management

Production/Operations management is application of management principles to production function in terms of factory,Large corporation & scientific management Operations management is in thing and uses tactics of scheduling,Resorce utilisation,Quality & process planning Operations management produces tangibles (Goods) & Intangible Services(Banking,Airlines,Supbazar chains,Education,consultancy,Health.

Unit-1 Scope of production and operations management Due to the dynamic change in the business environment, the scope of production and operation management has increased. Production and operations management concern with the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities to the customer while meeting the other organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from other functions such as personnel, marketing, finance, etc., by its primary concern for conversion by using physical resources Following are the activities which are included under production and operations management functions:

Scope of production and operations management

1. Facility Location - Selecting appropriate location for the production 2. Plant layouts and material handling - Deciding upon the machines,

equipment and necessary devices which could lead to effectual and desired production in the most economic way. Preparation of plan layout for the establishment of machines in the required sequence. Storage of material and handling it in most effective way to avoid the wastage and delivery at the work centers as and when required. 3. Product design - Designing the product and conceive the idea about its production. 4. Process design - Determination of the production process which is most relevant and efficient in the given state of affairs.
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5. Production and planning control - Planning the production and its various

aspects how, when and where producing a particular product or its assembly will be done. 6. Quality control - Controlling the production and ensuring the quality by setting the check points and taking the periodic measurements of the current performance. 7. Materials management - Managing the inventories of raw material, semifinished and finished goods in a way that neither excessive money may block in this non-productive operation nor the required material. 8. Maintenance management - Analysis the deviations and formulating the corrective measures to stay in track with planned quality, time-schedule and predetermined cost schedules. Duties of Operations Manager: Plant Location,Plant layout Design production system Product design Work study application Capacity planning PPC Materials management,including supply chain management QM Maintenance management Productivity enhancement IR,Health,Safety& Staff selection& management Interaction with other functional management Budgetting..

Mile Stones:

1)Handicraft Era : James Watt,1764, : Steam Engine Adam Smith,1776,: Division of Labour American Constitution: 1789
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Eli whitney,1790, :Interchangeable parts 2)Industrial Revolution: Charles Babbage,1832: Economic analysis of work & pay based on skill requirements.

3)Scientific Management: Frederic Taylor,1890,: Father of Scientific Management,Training,Time study, Production standards Frank & Lilian Gilbreth,1910,:Motion Economy & Human Factors Henry Ford,1913, : Assembly - Line Mass production Henry Gantt,1913,:Scheduling systems W.Shewart,1913,;Statistical Quality Control(S.Q.C) F.W.Harris,1915,:Economic Ordering Quantity(E.O.Q) model, for Inventory management (Part of Materials Management) Elton Mayo,1933,: Attention to behavioural factors L.H.C.Tippett,1935 : Work Sampling 4)Automation & Computer Integrated Systems: Individual contributions : Dantzig, Buffa, Wight, Skinner, etc. Organisational contributions : AT&T,GM,DUPONT, IBM,VOLVO,GE, SIEMENS,TOYOTA, INTEL,PHILIPS, etc. Deming, Hertzberg, Juran,

A. Continuous Production- In this system the item are produced for the stocks and not for specific orders. In this system the inputs are standardized and a standard set of process and sequence of process can be adopted.

Features of Continuous Production

Continuity in demand Standardize production Appropriate plant and equipment Specific material Balanced process

MASS PRODUCTION Manufacture of discrete parts or assemblies using a continuous process are called mass production. This production system is justified by very large volume of production. The machines are arranged in a line or product layout. Product and process standardization exists and all outputs follow the same path.

Characteristics of Mass Production 1. Standardization of product and process. 3. Larger volume of products. 4. Shorter production cycle time. 6

5. Low process inventory. 6. Production lines are perfectly balanced. 7. Flow of materials, components and parts is continuous 8. Easy production planning and control Advantages of Mass Production 1. Higher rate of production 2. Reduced production cycle time. 2. line balancing lead to higher capacity utilization 3. Requirement of less skill operator 4. Lower process inventory. 5. Low manufacturing cost per unit Limitations of Mass Production 1. Breakdown of one machine will stop an entire production line. 2. Line layout needs major change with the changes in the product design. 3. High investment in production facilities. 4. The cycle time is determined by the slowest operation.

PROCESS PRODUCTION A production process, that runs for very long periods without the start-and-stop behavior associated with intermittent production such as those used by chemical plants or refineries. High capital investments are required for highly automated facilities that use specialpurpose equipment designed for high volumes of production and little or no variation in the type of outputs.

Characteristics of Process Production 1. Extended form of mass production system 2. More automatic machines 3. One basic raw material is transferred into several products at several stages. 4. Less highly skilled workers required 5. More human problems foreseen 6. Highly standardized system

B. Intermittent Production System - Production is performed on a start-and-stop basis, such as for the manufacture of made-to-order products. The goods are manufacture especially to full fill order by customer rather than for keeping stock.

Characteristics of Intermittent Production System

Production in smaller quantities Machine and equipment are aligned as requirement of process High skill labor required Larger in-process inventory Flexible

JOB SHOP PRODUCTION Job shop production are characterized by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and high variety of products. A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence.

Characteristics 1. High variety of products and low volume. 2. Highly skilled operators required. 3. Large inventory of materials, tools, parts. 4. High capital investment 5. High per unit cost of production 5. Detailed planning is for required of each product, capacities for each work center and order priorities.

Advantages 1. Because of general purpose machines and facilities variety of products can be produced. 2. Operators will become more skilled and competent, as each job gives them learning opportunities. 3. Full potential of operators can be utilized. 4. Opportunity exists for creative methods and innovative ideas.

Limitations 1. Higher cost because of

regular changes 2. Higher inventory cost due to higher level of inventory at all levels 3. Production planning is difficult 4. Larger space requirements.

BATCH PRODUCTION

It is a form of manufacturing in which the job passes through the functional departments in lots or batches and each batch may have a different routing. It is characterized by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales.

Mfg operations : These convert inputs into tangible items .Mfg processes may be categorized as Forming Processes, Casting, forging, stamping, embossing,.. (changeing shape without adding/removing material), Machining processes(Metal removal by turning, drilling,milling, grinding,shaping,boring..,& chipless methods such as Electro Discharge Machining,Electro Spark Erosion,Electro Chemical Machining,LASER DRILLING etc,,,) and Assembly processes(welding,brazing,soldering,riveting,fastening,use of adhesive),

SERVICES: Services are those economic activities, which produce generally intangible product such as health ,education,entertainment,hospitality,fovernment,finance,transportation ..services. similarly,repair and maintenance,restaurants,hotels,tourism,transportation,telecom,banking,insura nce,trade,financial,real estate, In many DEVELOPING COUNTRIES,50% OF GDP IS FROM SERVICE SECTOR. Any major economy that is not competitive in the service sector is not competitive internationally Primary characteristics of services: 1)Intangibility(Education,but tangible is college furniture..Purchasing does not give ownership), 2)Perishability(Service can not be inventoried eg., seat in air plane,

3)Inseperability,simultaneous production & consumption,Variability(different levels of service quality,due to human element) Difference between goods and services: Goods can be resold/inventoried/ some of the quality measurable/production & selling different/Location is important/easy to automate

Difference between Manufacturing and services: Exists in respect of ; customer contact (Less ,More) ,uniformity of input(Less ,More),%Labour content(Less ,More), variability in output quality (Less ,More),Location of facility (over all economics ,proximate to customer), Diffculty in Productivity Measurement (Less ,More), production and delivery(Not simultaneous, simultaneous), Quality assurance challenge(Less ,More)

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UNIT 2

Syllabus:PPC, stages in ppc, Aggregate Planning, Project management, Concept of Maintenance Management, Industrial Safety.

Planning: Devising future course of action in advance to realize organizational objectives. It is dynamic and continuous

USES:In Long Range Planning regarding type of products &services, facilities& Equipments required, where to locate plant etc In Short range & Intermediate Range Planning involving DECISIONS such as planning Inventory levels, work force levels, purchases planning, production planning, Works scheduling, budgeting etc.

Forecast: Statement about future. Forecasting: First step in Planning DEMAND FORECASTING: Estimate of the future demand for products or services are commonly referred to as Sales Forecasts/Demand Forecasts.

The sales forecasts or Demand Forecasts are the starting point for the entire planning in production and operations management .Foe eg, material planning, capacity planning, man power planning, financial planning and production scheduling, all depend on Sales/Demand Forecasting NEED FOR DEMAND FORECASTING:New facilities planning, Production planning,work force scheduling, Financial planning.

TYPES OF FORECASTS: Technological. Economic & Demand Forecasts

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FEATURES OF FORECASTS:

Cause & effect, Rarely perfect, accuracy proportional to number in the group &inversely proportional to time horizon ELEMENTS: Timely,accurate,reliable,meaningful, simple technique oriented, recordable STEPS IN FORECASTING: Purpose, select item, time horizon, model,gather data, prepare forecast, monitor forecast METHODS: QUALITATIVE: Jury method, Sales compositr method, Market Research method ,Other Judgemental method(DELPHI METHOD) QUANTITATIVE: TIME SERIES MODELS: Nave approach(2,4,5 , ? , 5), Moving Average method ( 2, 5, 6, 8, ? , ? , 4.33, 6.33 ,

Exponential smoothing methods Exponential smoothing method: It requires only 3 items of Data: this periods Forecast, The actual Demand for this period and Alpha. Next periods Forecast= This Periods Forecast + Alpha( This Periods Actual Demand - This Periods Forecast)

PRODUCTION PLANNING & CONTROL

Production System is sequence of operations. Output Quantity, Quality , at Required Time, Best Method & Cheapest Cost. PPC is nerve centre for Production System

Stages in PPC: 1.PLANNING: The Choice from SEVERAL ALTERNATIVES of the best means of utilizing the resources available to achieve the desired OBJECTIVES IN THE MOST EFFICIENT AND ECONOMIC MANNER.
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2.Operations: Performance in accordance with the details set out in the PRODUCTION PLAN. 3.Control: The monitoring of performance through a feed back by comparing results achieved with planned targets so as to improve prrformance through corrective actions . Hence, PPC may be defined as planning, direction and coordination of the firms materials and physical facilities to meet predetermined objectives in the most economical manner. PPC can also be referred as Operations planning& Control. CLASSIFICATION OF PPC FUNCTIONS: 1.Materials : Making available, Qty,Time 2.Methods: Methods & Sequencing By Work Study 3.Machines & Equipment: Selection & Using. 4.Routing: Prescribes the Flow of work in the plant considering Layout,Storage locations for RMs,WIP&FGs.Routing is a basic PPC Function. 5.Estimating: of Processing times( set up time & Operation Time) and Standard Times are established for monitoring performance standards.
6.Loading & scheduling: Mc Loading is inn accordance with ROUTING. Scheduling is determining starting and finishing time schedule for various jobs on various Eqipment for optimum machine utilization.

7.Dispatching: It authorizes the start of operations.Production orders and instructions are released according to schedule, sequences indicated in route sheets and machine loading schedules are adhered to and authorization is given for release of materials and tools to operators to carry out the work. 8.Expediting Or Progressing:This makes follow-up. This follows Dispatching Function.Dispatching initiates action on the shop floor and Expediting ensures that schedules are adhered to.It gives feed back to PPC Mnager and Productio/Operations Manager. 9.Inspection:Quality in production as well as that of processes. 10.Evaluating or Controlling: The objective is to improve perfoemance.Methods & Facilities are evaluated to improve their Performance.

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LEVELS PF PRODUCTION PLANNING :Strategic Tactical. Operational

PLANNING/ACTION/CONTROL

PLANNING (What, How): PRE PLANNING;

FORECASTING,PRODUCT DESIGN,AGGREGATE PLANNING,MASTER PRODN SCHEDULE(PRODUCT WISE),ORDER WRITING FOR AUTHORIZING,MRP FOR DEPENDENT ITEMS

ACTIVE PLANNING ;

PROCESS PLANNING,ROUTING,MATERIALS PLANNING,TOOLS PLANNING,LOADING(MC ASSIGNING) & SCHEDULING ( DIFFERENT O.R.TECHNIQUES, WHAT PRODUCTS&WHEN,WHAT QNTY&WHEN,WHAT RESOURCES&WHEN, CONSIDERING FEASIBILITY CONSTRAINTS OF RESOURCES & TECHNOLOGICAL FACTORS FOR DETERMINING SEQUENCE DETERMINATION & START AND FINISH TIME) ACTION(What, How):

Guide lines for plans implementation like Despatching(Worker ordered to start mfg, throjob order,stores order,tool order,time ticket,move order..) CONTROL (What, How) ; progress reporting

Control of prodn system,feed back & FOLLOW UP(Thro &corrective action & Expediting)

Aggregate planning

Aggregate Planning : It involves planning the best quantity to produce during time periods in the intermediate range horizon( Like, 3 months to 1 year) & planning the lowest cost method for the adjustable capacity to accommodate the production requirements. Aggregate Planning involves planning work force size, production rate ( in terms of necessary no., of work hours per week) and managing inventory levels.
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Operations Planning and Scheduling Systems are concerned with the volume and timing of outputs , the utilization of operations capacity and balancing outputs with capacity at desired levels of competitive effectiveness.

INPUTS TO AND OUTPUTS FROM AGGREGATE PRODUCTION PLANNING:,11

INPUTS
Strategic Objectives, Co., policies, Demand forecasts, Capacity constraints, Financial constraints

OUTPUTS
Size of work force, Production Rate (Units/month etc.,), Inventory levels, Units sub contracted, backorderd or lost

STEPS FOR AGGREGATE PLANNING: Determine the demand ( ie sales forecast) for each product for each time period(ie., weeks or months or quarters) over the planning horizon(6 to 12 months) Determine aggregate demand by summing up the demand for individual products. 3) Transform aggregate demand for each time period into workers,materials, machines required to satisfy aggregate demand. 4) identify pertinent co., policies( on safety stock, stable work force, over time, sub-contracting etc.,) Determine unit costs for regular time, over time, sub-contracting, holding inventories, back orders, lay-offs etc., Develop alternative resource plans for providing necessary production capacity to support the CUMULATIVE aggregate demand and compute the cost of each alternative plan. Select the resource plan from the alternatives considered that satisfies aggregate demand and best meets the objectives of the firm.

APPROACHES FOR AGGREGATE PLANNING:,

Top down approach

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Bottom up approach

MASTER PRODUCTION SCHEDULE(MPS) MPS sets the quantity of EACH END ITEM(FINISHED PRODUCT) to be completed in each time period(w or m or q) of the short range planning horizon. MPS s are developed by reviewing market forecastes, customer orders, inventory levels, facility loading and capacity information regularly. The MPS is a plan for future production of end items over a short-range planning horizon that usually spans from a few weeks to several months.It is an important link between marketing and production. OBJECTIVES OF MPS: To schedule end items to be completely promptly and when promised to customers 2)To avoid over loading or under loading the production facility so that production capacity is efficiently utilized and low production cost result.

TYPES OF CAPACITIES
1)Fixed capacity( not easily changeable)

2)Adjustable capacity (by no of workers, no., of shifts, sub-contracting) 3) Design capacity(Installed capacity) planned output rate under full-scale working 4)System capacity : Max output of a specified product or product mix(<= Design capacity), due to practicalities 5)Potential capacity: available within decision horizon of top management 6)Immediate capacity: available within the current budgeted period 7)Effective capacity: capacity used out of IMMEDIATE CAPACITY,reduction due to system delays 8)Normal/Rated capacity: as per work study 9)Actual or utilized capacity: Actuals realized.

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PROJECT MANAGEMENT: One time tasks with a purpose, which consumes resources, costs money, takes time & has use. Egs:Construction of hospital, ship, R&D for launching a missile, new project, Design&Development of new product, Chandrayan,preparation for UPSC Exam. PROJECT: Unique one-time operations designed to accomplish a specific set of objectives in a limited time frame. PROJECT LIFE CYCLE: The life cycle through which a project passes. Its various phases are 1. The concept phase, 2. Feasibility phase, 3. Detailed planning phase, 4. Organisation phase, 5. Execution phase and 6. Termination phase. PROJECT ORGANISATION: Organisation developed to ensure both continuity of the production system in its day to day activities and the successful completion of the project. VARIETIES: Functional/Project coordinator/Project matrix Key Decisions in Project Management Much of the success of projects depends on certain key managerial decisions. They are:

1. Deciding which project to implement 2. Selecting the project manager 3. Selecting the members of the project team 4. Managing and controlling project resources 5. Deciding whether to terminate a project and if so, when

The Role of a Project Manager

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Six basic functions that project management must address are

1. Manage the project's scope to define the goals and work to be done, in sufficient detail to facilitate understanding and correct performance by participants. 2. Manage the human resources involved in the project. 3. Manage communications to see that the appropriate parties are informed. 4. Manage time by planning and meeting a schedule. 5. Manage quality so that the project's results are satisfactory 6. Manage costs so that the project is performed at the minimum practical cost and within budget if possible Project Planning and Control Techniques

PROJECT PLANNING: All activities that result in a course of action for a project. PROJECT SCHEDULING: Establishes times and sequences of the various phases of the project. PROJECT CONTROL: Activities designed to measure the status of component activities of a project, transmit data to a control centre where it is compared with the performance standard and initiate corrective action when required.

Project Planning and Control Flow Chart

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Programme Evaluation & Review Technique (PERT) and Critical Path Method (CPM) PERT: (Programme Evaluation and Review technique): A networking approach to planning, monitoring, controlling and evaluation of complex projects. Critical Path Method (CPM): CPM (Critical Path Method): A quantitative technique which is used for planning and coordinating large projects. Activity,node, Farward pass, Backward pass, Network crashing, Statistical Approach, Computerised project management Steps in Network Crashing Step 1 : Determine the time-cost ratio for each activity in the network. This ratio represents the increase in cost for a unit decrease in time. Time-cost ratio =Increase in cost/Decrease in time; = (Crash cost-Normal cost)/(Normal time-Crash time)

Step 2 : Identify the activities on the critical path and select that activity on the critical path which has the smallest time-cost ratio and crash that activity to the extent possible.

Step 3 : Observe whether there is any change in the critical path i.e., any other path becomes critical. If so, calculate the time-cost ratio for the activities in the new critical path. Step 4 : Repeat step 2 and 3, till the activities are crashed to reduce the project duration to the desired time period.

MAINTENANCE MANAGEMENT The term maintenance means to keep the equipment in operational condition or repair it to its operational mode. Main objective of the maintenance is to have increased availability of production systems, with increased safety and optimized cost. Maintenance management involves
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managing the functions of maintenance. Maintaining equipment in the field has been a challenging task since the beginning of industrial revolution. Since then, a significant of progress has been made to maintain equipment effectively in the field. As the engineering equipment becomes sophisticated and expensive to produce and maintain, maintenance management has to face even more challenging situations to maintain effectively such equipments in industrial environment.
FUNTIONS OF A MAINTENANCE MANAGEMENT- T.BOOK pg.444 (T.B given by college)

Types of maintenance management- T.Book pg 447 (T.B given by college)

INDUSTRIAL SAFTEY

PLANT LOCATION Plant location refers to the choice of region and the selection of a particular site for setting up a business or factory. But the choice is made only after considering cost and benefits of different alternative sites. It is a strategic decision that cannot be changed once taken. If at all changed only at considerable loss, the location should be selected as per its own requirements and circumstances. Each individual plant is a case in itself. Businessman should try to make an attempt for optimum or ideal location. What is an ideal location? An ideal location is one where the cost of the product is kept to minimum, with a large market share, the least risk and the maximum social gain. It is the place of maximum net advantage or which gives lowest unit cost of production and distribution. For achieving this objective, small-scale entrepreneur can make use of locational analysis for this purpose. Factors responsible for location choices or (factors effecting plant location) The important considerations for selecting a suitable location are given as follows:

a) Natural or climatic conditions. b) Availability and nearness to the sources of raw material.
c) Transport costs-in obtaining raw material and also distribution or marketing finished products to the ultimate users.

d) Access to market:

small businesses in retail or wholesale or services

should be located within the vicinity of densely populated areas. e) Availability of Infrastructural facilities such as developed industrial sheds or
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sites, link roads, nearness to railway stations, airports or sea ports, availability of electricity, water, public utilities, civil amenities and means of communication are important, especially for small scale businesses.

f) Availability of skilled and non-skilled labour and technically qualified and trained managers. g) Banking and financial institutions are located nearby.
h) Locations with links: to develop industrial areas or business centers result in savings and cost reductions in transport overheads, miscellaneous expenses.

i) Strategic considerations of safety and security should be given due importance. j) Government influences: Both positive and negative incentives to motivate
an entrepreneur to choose a particular location are made available. Positive includes cheap overhead facilities like electricity, banking transport, tax relief, subsidies and liberalization. Negative incentives are in form of restrictions for setting up industries in urban areas for reasons of pollution control and decentralization of industries.

k) Residence of small business entrepreneurs want to set up nearby their homelands

PLANT LAYOUT It may be defined as a technique of locating machines, processes and plant services within the factory so as to achieve the right quantity and quality of output at the lowest possible cost of manufacturing. It involves a judicious arrangement of production facilities so that workflow is direct

A plant layout can be defined as follows: Plant layout refers to the arrangement of physical facilities such as machinery, equipment, furniture etc. with in the factory building in such a manner so as to have quickest flow of material at the lowest cost and with the least amount of handling in processing the product from the receipt of material to the shipment of the finished product.
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According to Riggs, the overall objective of plant layout is to design a physical arrangement that most economically meets the required output quantity and quality. According to J. L. Zundi, Plant layout ideally involves allocation of space and arrangement of equipment in such a manner that overall operating costs are minimized. SUPPLLY CHAIN MANAGEMENT PG 595 Ii.e T.B given in college TYPES OF LAYOUT (T.B pg no 146 ,T.B given in college) As discussed so far the plant layout facilitates the arrangement of machines, equipment and other physical facilities in a planned manner within the factory premises. An entrepreneur must possess an expertise to lay down a proper layout for new or existing plants. It differs from plant to plant, from location to location and from industry to industry. But the basic principles governing plant layout are more or less same. As far as small business is concerned, it requires a smaller area or space and can be located in any kind of building as long as the space is available and it is convenient. Plant layout for Small Scale business is closely linked with the factory building and built up area. From the point of view of plant layout, we can classify small business or unit into three categories: 1. Manufacturing units 2. Traders 3. Service Establishments

1. Manufacturing units In case of manufacturing unit, plant layout may be of four types:
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(a) Product or line layout (b) Process or functional layout (c) Fixed position or location layout (d) Combined or group layout (a) Product or line layout: Under this, machines and equipments are arranged in one line depending upon the sequence of operations required for the product. The materials move form one workstation to another sequentially without any backtracking or deviation. Under this, machines are grouped in one sequence. Therefore materials are fed into the first machine and finished goods travel automatically from machine to machine, the output of one machine becoming input of the next, e.g. in a paper mill, bamboos are fed into the machine at one end and paper comes out at the other end. The raw material moves very fast from one workstation to other stations with a minimum work in progress storage and material handling. The grouping of machines should be done keeping in mind the following general principles. a) All the machine tools or other items of equipments must be placed at the point demanded by the sequence of operations b) There should no points where one line crossed another line. c) Materials may be fed where they are required for assembly but not necessarily at one point. d) All the operations including assembly, testing packing must be included in the line Advantages: Product layout provides the following benefits: a) Low cost of material handling, due to straight and short route and absence of backtracking b) Smooth and uninterrupted operations
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c) Continuous flow of work d) Lesser investment in inventory and work in progress e) Optimum use of floor space f) Shorter processing time or quicker output g) Less congestion of work in the process h) Simple and effective inspection of work and simplified production control i) Lower cost of manufacturing per unit Disadvantages: Product layout suffers from following drawbacks: a. High initial capital investment in special purpose machine b. Heavy overhead charges c. Breakdown of one machine will hamper the whole production process d. Lesser flexibility as specially laid out for particular product.

(b) Process layout: In this type of layout machines of a similar type are arranged together at one place. E.g. Machines performing drilling operations are arranged in the drilling department, machines performing casting operations be grouped in the casting department. Therefore the machines are installed in the plants, which follow the process layout. Hence, such layouts typically have drilling department, milling department, welding department, heating department and painting department etc. The process or functional layout is followed from historical period. It evolved from the handicraft method of production. The work has to be allocated to each department in such a way that no machines are chosen to do as many different job as possible i.e. the emphasis is on general purpose machine.

Process layout showing movement of two products

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The grouping of machines according to the process has to be done keeping in mind the following principles a) The distance between departments should be as short as possible for avoiding long distance movement of materials b) The departments should be in sequence of operations c) The arrangement should be convenient for inspection and supervision Advantages: Process layout provides the following benefits a) Lower initial capital investment in machines and equipments. There is high degree of machine utilization, as a machine is not blocked for a single product b) The overhead costs are relatively low c) Change in output design and volume can be more easily adapted to the output of variety of products d) Breakdown of one machine does not result in complete work stoppage e) Supervision can be more effective and specialized f) There is a greater flexibility of scope for expansion. Disadvantages: Product layout suffers from following drawbacks a. Material handling costs are high due to backtracking b. More skilled labour is required resulting in higher cost. c. Time gap or lag in production is higher d. Work in progress inventory is high needing greater storage space e. More frequent inspection is needed which results in costly supervision

(c) Fixed Position or Location Layout In this type of layout, the major product being produced is fixed at one location. Equipment labour and components are moved to that location. All facilities are brought and arranged around one work center. This type of layout is not relevant for small scale entrepreneur. The following figure shows a fixed position layout
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regarding shipbuilding Advantages: Fixed position layout provides the following benefits a) It saves time and cost involved on the movement of work from one workstation to another. b) The layout is flexible as change in job design and operation sequence can be easily incorporated. c) It is more economical when several orders in different stages of progress are being executed simultaneously. d) Adjustments can be made to meet shortage of materials or absence of workers by changing the sequence of operations. Disadvantages: Fixed position layout has the following drawbacks a. Production period being very long, capital investment is very heavy b. Very large space is required for storage of material and equipment near the product. c. As several operations are often carried out simultaneously, there is possibility of confusion and conflicts among different workgroups.

(d) Combined layout Certain manufacturing units may require all three processes namely intermittent process (job shops), the continuous process (mass production shops) and the representative process combined process [i.e. miscellaneous shops]. In most of industries, only a product layout or process layout or fixed location layout does not exist. Thus, in manufacturing concerns where several products are produced in repeated numbers with no likelihood of continuous production, combined layout is followed. Generally, a combination of the product and process layout or other combination are found, in practice, e.g. for industries involving the fabrication of parts and assembly, fabrication tends to employ the
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process layout, while the assembly areas often employ the product layout. In soap, manufacturing plant, the machinery manufacturing soap is arranged on the product line principle, but ancillary services such as heating, the manufacturing of glycerin, the power house, the water treatment plant etc. are arranged on a functional basis.

2. Traders
When two outlets carry almost same merchandise, customers usually buy in the one that is more appealing to them. Thus, customers are attracted and kept by good layout i.e. good lighting, attractive colours, good ventilation, air conditioning, modern design and arrangement and even music. All of these things mean customer convenience, customer appeal and greater business volume. The customer is always impressed by service, efficiency and quality. Hence, the layout is essential for handling merchandise, which is arranged as per the space available and the type and magnitude of goods to be sold keeping in mind the convenience of customers. There are three kinds of layouts in retail operations today. 1. Self service or modified self service layout 2. Full service layout 3. Special layouts The self-service layouts, cuts down on sales clerks time and allow customers to select merchandise for themselves. Customers should be led through the store in a way that will expose them to as much display area as possible, e.g. Grocery Stores or department stores. In those stores, necessities or convenience goods should be placed at the rear of the store. The use of color and lighting is very important to direct attention to interior displays and to make the most of the stores layout.
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All operations are not self-service. Certain specialty enterprises sell to fewer numbers of customers or higher priced product, e.g. Apparel, office machines, sporting goods, fashion items, hardware, good quality shoes, jewelry, luggage and accessories, furniture and appliances are all examples of products that require time and personal attention to be sold. These full service layouts provide area and equipment necessary in such cases. Some layouts depend strictly on the type of special store to be set up, e.g. TV repair shop, soft ice cream store, and drive-in soft drink stores are all examples of business requiring special design. Thus, good retail layout should be the one, which saves rent, time and labour.

3. Services centers and establishment

Services establishments such as motels, hotels, restaurants, must give due attention to client convenience, quality of service, efficiency in delivering services and pleasing office ambience. In todays environment, the clients look for ease in approaching different departments of a service organization and hence the layout should be designed in a fashion, which allows clients quick and convenient access to the facilities offered by a service establishment.

UNIT-4 PRODUCTIVITY(collect from srinivas) WORK STUDY (T.B pg 172 i.e T.B given in college)
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METHOD STUDY (T.B pg 176 i.e T.B given in college) WORK MEASUREMENT (T.B pg 182 i.e T.B given in college)

UNIT -5 MATERIAL MANAGEMENT & QUALITY MANAGEMENT

MATERIAL MANAGEMENT( follow the below material orT.B pg i.e T.B given in college)

MEANING : it is a business function for planning, purchasing,moving ,storing material in a optimum way which help organization to minimizethe various costs like inventory cost,material handling cost and distribution cost.

Materials Management can be defined as that function of business that is responsible for the coordination of planning, sourcing, purchasing,moving, storing and controlling materials in anoptimum manner so as to provide service to thecustomer, at a pre-decided level at a minimum cost Importance of material management Lower prices for material &equipment Fasten inventory turnover Continuity of supply Reduce transportation cost Reduce material obsolesce Elimination of buck passing Better inter-departmental cooperation Reduce lead time Less duplication of efforts Improver supplier relationship and better records and information Personnel department

MERITS OF MATERIAL MANAGEMENT Helps to save cost Efficiency in work

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Best control over inventory Best utilization of resources Reduce fault and damages

DEMERITS OF MATERIAL MANAGEMENT Continuous observation is require It requires good infrastructure facility which may need huge investment Extra man power can require

Objectives Of Materials Management :

The objectives of integrated materials management can be classified in two categories ; Primary and Secondary. These are discussed below ;

1.3.1 Primary Objectives : Following may be identified as primary objectives which are to be achieved. (a) To purchase the required materials at minimum possible prices by following the prescribed purchase policies and encouraging healthy competition. (b) To achieve high inventory turnover i.e. to meet materials requirement of the organization by keeping low average stocks so that the capital locked up in materials is turned over a large no of times. (c) To incur minimum possible expenditure on administrative and other allied activities related to purchase of materials and also to keep the materials in stock till they are finally delivered to the users. (d) To ensure that continuity of supply of materials to the users is maintained by avoiding out of stock situation. (e) To supply materials of consistent quality i.e. of quality which meets user specification and is fit for service. (f) To keep the wage bill of the department low by ensuring proper distribution of work among staff and not employing surplus staff. (g) To maintain good relationship with the suppliers of materials and also develop new suppliers for the products for which reliable suppliers do not exist.
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(h) To ensure training and development of personnel employed in the department so that good industrial relations are maintained. (i) To maintain proper and up-to-date records of all stores transactions and purchases. 1.3.2 Secondary Objectives : (a) To assist technical/design department in developing new materials and products which may be more profitable to the organization. (b) To make economic 'make or buy' decisions. (c) To ensure standardization of materials (d) To contribute in the product improvement. (e) To contribute in the development of inter departmental harmony. (f) To follow scientific methods of forecasting prices and future consumption of materials.

COSTS ASSOCIATED WITH INVENTORY(T.B pg 532 i.e T.B given in college)

Economic order quantity Definition and Explanation:

(if u want reference search in T.B pg no 541 i.e T.B given in college) Economic order quantity (EOQ) EOQ is an important factor in controlling the inventory. It is a quantity of inventory which can reasonably be ordered economically at a time.
EOQ = Average Monthly Consumption X Lead Time [in months] + Buffer Stock Stock on hand

It is also known as Standard Order quantity', 'Economic Lot size' or Economical Ordering quantity'. In determining tis point ordering costs and carrying costs are taken into consideration. Ordering costs or basically the cost of getting an item of inventory and it includes cost of placing an order. Carrying cost includes costs of storage facilities, property insurance, loss of value thought physical deterioration, cost of obsolescence. Either of the costs affects the profits of the firm adversely and management tries to balance these two costs. The balancing or reconciliation point is known as Economic order quantity

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Assumptions of Economic Order Quantity:

1. 2. 3. 4. 5. The ordering cost is constant. The rate of demand is constant The lead time is fixed The purchase price of the item is constant i.e no discount is available The replenishment is made instantaneously, the whole batch is delivered at once.

A B C Analysis

Always Better Control is an analytical techniques for classification of inventory items was first introduced by an AMERICAN FIRM- GENERAL ELECTRIC COMPANY.

According to this analysis, there are three categories of inventory items A, B and C type . Depending upon their percentages of consumption. The significance of this analysis is that a very close ctrl is exercised over the items of A group which account for high percentage of costs. Less stringent ctrl is adequate for category B. Very little ctrl would be sufficient for Category C. A Category Small in number, but consume large amount of resources They should be ordered more frequently to reduce capital lock up at a time in inventories as 15 percent of items cost 65 percent of total value. The purchasing department should Make the maximum efforts to expedite and delivery of these items are to be stored as few in number as possible. The purchase of these items should be with top officials to ensure prompt services from the supplier. The stock report of A items should be sent more frequently, say at least once in 15 days Must have:

Tight control Rigid estimate of requirements Strict & closer watch Low safety stocks Managed by top management
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B Category This category is Intermediate .

These account for 20 percent of total quantity and 20percent of the total value. Order quantities, re-order stocks and safety stock should be fixed and revised for B items at least one in every 4 to 6 months. B items should be ordered less frequently than A items Must have: Moderate control Purchase based on rigid requirements Reasonably strict watch & control Moderate safety stocks Managed by middle level management C Category Larger in number, but consume lesser amount of resources C group of items account for 65 percent of quantity and hardly 15 percent of value. Large quantities can be brought at a time, as total investment will be least. Paper work can be reduced considerably if orders are placed once or twice a year. The source of supply can be one or two based on their reliability. Must have: Ordinary control measures Purchase based on usage estimates High safety stocks ABC analysis does not stress on items those are less costly but may be vital

TOTAL QUALITY MANAGEMENT-(T.B pg no- 413 i.e given in college)

Acceptence sampling- (T.B pg no- 395 i.e T.B given in college)

Control Charts
What Is a Control Chart?
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A statistical tool used to distinguish between process variation resulting from common causes and variation resulting from special causes. It presents a graphic display of process stability or instability over time. One goal of using a Control Chart is to achieve and maintain process stability. Control Charts differentiate between these two types of variation Control Charts are used to: Monitor process variation over time Differentiate between special cause and common cause variation Assess effectiveness of changes Communicate process performance

Common Types Control Charts

The types of charts are often classified according to the type of quality characteristic that they are supposed to monitor: there are quality control charts forvariables and control charts for attributes. Specifically, the following charts are commonly constructed for controlling variables:

X-bar chart. In this chart the sample means are plotted in order to control the mean value of a variable (e.g., size of piston rings, strength of materials, etc.). R chart. In this chart, the sample ranges are plotted in order to control the variability of a variable. S chart. In this chart, the sample standard deviations are plotted in order to control the variability of a variable. S**2 chart. In this chart, the sample variances are plotted in order to control the variability of a variable.

For controlling quality characteristics that represent attributes of the product, the following charts are commonly constructed:

C chart. In this chart (see example below), we plot the number of defectives (per batch, per day, per machine, per 100 feet of pipe, etc.). This chart assumes that defects of the quality attribute are rare, and the control limits in this chart are computed based on the Poisson distribution (distribution of rare events). U chart. In this chart we plot the rate of defectives, that is, the number of defectives divided by the number of units inspected (the n; e.g., feet of pipe, number of batches). Unlike the C chart, this chart does not require a constant number of units, and it can be used, for example, when the batches (samples) are of different sizes. Np chart. In this chart, we plot the number of defectives (per batch, per day, per machine) as in the C chart. However, the control limits in this chart are not
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based on the distribution of rare events, but rather on the binomial distribution. Therefore, this chart should be used if the occurrence of defectives is not rare (e.g., they occur in more than 5% of the units inspected). For example, we may use this chart to control the number of units produced with minor flaws. P chart. In this chart, we plot the percent of defectives (per batch, per day, per machine, etc.) as in the U chart. However, the control limits in this chart are not based on the distribution of rare events but rather on the binomial distribution (of proportions). Therefore, this chart is most applicable to situations where the occurrence of defectives is not rare (e.g., we expect the percent of defectives to be more than 5% of the total number of units produced).

JUST IN TIME PRODUCTION ( for reference search in T.B pg no 572) IN this we have to study concept from T.B pg no 572

Just in time is a pull system of production, so actual orders provide a signal for when a product should be manufactured. Demand-pull enables a firm to produce only what is required, in the correct quantity and at the correct time. This means that stock levels of raw materials, components, work in progress and finished goods can be kept to a minimum. This requires a carefully planned scheduling and flow of resources through the production process. Modern manufacturing firms use sophisticated production scheduling software to plan production for each period of time, which includes ordering the correct stock. Information is exchanged with suppliers and customers through EDI (Electronic Data Interchange) to help ensure that every detail is correct. Supplies are delivered right to the production line only when they are needed. For example, a car manufacturing plant might receive exactly the right number and type of tyres for one days production, and the supplier would be expected to deliver them to the correct loading bay on the production line within a very narrow time slot. Advantages of JIT

Lower stock holding means a reduction in storage space which saves rent and insurance costs As stock is only obtained when it is needed, less working capital is tied up in stock There is less likelihood of stock perishing, becoming obsolete or out of date Avoids the build-up of unsold finished product that can occur with sudden changes in demand
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Less time is spent on checking and re-working the product of others as the emphasis is on getting the work right first time

Disadvantages of JIT

There is little room for mistakes as minimal stock is kept for re-working faulty product Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed There is no spare finished product available to meet unexpected orders, because all product is made to meet actual orders however, JIT is a very responsive method of production

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