PRODUCTION AND OPERATION MANAGEMENT

BY

PROFESSOR DR NAWAR KHAN

PhD Engineering Management, MSc Production Engineering, MBA (HRM), BSc Mechanical Engineering Head Engg Management Dept College of Electrical & Mechanical Engineering (E&ME) Peshawar Road Rawalpindi, Pakistan

Tel # +92-051-9278043
+92-051-561-32627 Fax # +92-051-0278048 e-mail: nwr_khan@yahoo.com

National University of Sciences & Technology

School of Chemical and Material Engineering

Department of Chemical engineering Code: Che 01 Subject: MGT 301 Production & Operations Management Credit Hours: 3 hours per week

Pre-requisites:.
Course Outlines Introduction to Operations Management, Operation system inputs and outputs Generic model of Operation System, Operations Strategy for Competitive

Advantage, Operations in a global environment , Plant location and layout

Material handling and equipment , Demand forecasting and its modeling Types of Productions System , Material Requirement Planning (MRP) and Manufacturing Resources Planning (MRPII), Production planning and scheduling

Inventory Management, Just-in-Time System, Work study and its techniques

Managing Quality, Productivity and its concept, measurements and improvement techniques

Recommended Books

1. Production and Operation Management, 6Th Edition by Alan Muhlemann, John

Oakland and Keith Lockyer 1995 reprint Pitman Publishing London 2. Production and Operation Management, 8Th Edition by Norman Gaither and Greg Fazier, South-Western College Publishing

3. Modern Production and Operation Management by Elwood S. Buffn, 7th Edition

John Willey and Sons 4. Operation Management, Heizer, J and Barly, R. (1999). 7th Edition, PHIPE 5. Operation Management by Roger G. Schroeder 3rd edition McGraw Hill

Grading:
a. b. c. Quizzes / Homework Mid Term Exam Term Project 15% 20% 15%

d.

Final Exam

50%

PRODUCTION / OPERATION MANAGEMENT Production is the creation of goods and services

Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEM

BUSINESS FUNCTION (BF)

BUSINESS (STRATEGY, ECONOMICS & PRICING)

ENGINEERING FUNCTION (EF)

TECHNICAL (STRATEGY & COSTING)

A BUSINESS SYSTEM MODEL

RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEM

MARKETING FUNCTION (BF)

PRODUCTION FUNCTION (EF)

BUSINESS VISION & STRATEGY (BF)

PRODUCTION VISION & STRATEGY (EF)

MARKET SYSTEM DESIGN 1. R & D 2. FORECASTING

PRODUCTION SYSTEM DESIGN 1. R & D 2. FORECASTING

LINKING OF BUSINESS AND PRODUCTION SYSTEM DESIGN

MARKET SYSTEM

PRODUCTION SYSTEM

BF DRIVER

EF DRIVEN

RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEM DESIGN

2a. PRODUCT DESIGN (CAD/CAM)

1. MARKETING SYSTEM DESIGN

2. PRODUCTION SYSTEM DESIGN

LAYOUT DESIGN

PROCESS FLOW CHART

2b. PROCESS DESIGN

THE CUSTOMER NEEDS AND SATISFIERS

NEEDS CUSTOMER

ORGANISATION

SATISFIER

CUSTOMER

THE CLOSED LOOP OF CUSTOMER SATISFACTION

ORGANISATION

NEEDS

SATISFIER

CUSTOMER

A GENERIC MODEL OF PRODUCTION SYSTEM

TOTAL INPUTS 1. MEN 2. MATERAIL 3. MACHINES 4. MONEY TOTAL TRANSFORMATION PROCESS

TOTAL OUTPUTS 1. PRODUCTS 2. SERVICES

TOTAL TRANSFORMATION FROM INPUTS TO OUTPUTS

SOURCES OF VARIATION IN PRODUCTION PROCESSES

Operators Materials Inputs Process

Methods

Measurement Instruments Outputs Human Inspection Performance

Tools
Machines Environment

VARIATIONS

Production processes face variation in:

Strength, thickness or moisture content of materials Strength & composition of cutting tools Measurement gauges used Human inspection capabilities

 Variation occurs at random, but combined effect can be predicted statistically Common causes of variation factors present as natural parts of process Result from design of system

Special causes of variation (assignable causes) Arise from external sources not inherent in the process
Bad material batch from supplier Poorly trained operators Excessive tool wear Improper calibration of equipment

Unnatural variation easily detectable Economical to correct

 System governed only by common causes is stable Understanding of differences between common & special causes Less variation benefits: Producers (higher productivity due to less inspection, scrap & rework) Customers (products with similar quality characteristics)

INPUT - OUTPUT DIAGRAMS FOR CUSTOMER SATISFACTION

NEEDS CUSTOMER IDENTIFICATION AND FORECASTING FACILITY EXPLICIT FORECASTS RESOURCE PLANS

EXPLICIT FORECASTS
RESOURCE PLANS

ANALYSING AND INTEGRATING FACILITY

SUPPLYING FACILITY
PRODUCTION/ OPERATION INPUTS

PRODUCTION/ OPERATION INPUTS OUTPUTS

TRANSFORMATION FACILTIY DISTRIBUTING FACILITY SATISFIER

CUSTOMER

OUTPUTS

FROM CUSTOMER TO CUSTOMER A CLOSED LOOP

(ii) ANALYING AND
INTEGRATING FACILITY

(i) IDENTIFICATION AND FORECASTING FACILITY

(iii) SUPPLYING FACILITY

CUSTOMER

(v) DISTRIBUTION FACILITY

OUTPUTS

(iv) TRANSFORMATION FACILITY

THE MARKETING AND PRODUCTION/ OPERATIONS TASKS

(ii) Explicit forecasts (i) Identification and forecasting facility Needs Marketing (v) Consumer Satisfiers Distribution Facility (iv) Outputs Transformation Facility Production Operating Inputs (iii) Analysis and integrating Facility Resource Plans PRODUCTION/ OPERATIONS Supplying Facility

The Marketing and production/operations tasks

THE EFFECTS OF SEPARATING THE MARKETING AND PRODUCTION FUNCTIONS

MARKETING

PRODUCTION

INCREASING SUCCESS

DECREASING VIABILITY

MARKETING

PRODUCTION

MARKETING

PRODUCTION

THE PRODUCTIONS/ OPERATIONS MANAGERS TASK (5Ps)

1. PRODUCT

5. PEOPLE

2. PLANT

4. PROGRAMMES

3. PROCESSES

THE PRODUCTION MANAGERS RESPONSIBILITIES (5Ps)

1. THE PRODUCT
Performance Aesthetics Quality Reliability

Quantity
Selling cost or Production operating cost Delivery dates and/or times

2. THE PLANT

Future possible demands

Design and layout of buildings and offices Performance and reliability of equipment Maintenance of performance

Safety of installation and operation

Social responsibilities

3. THE PROCESS
Available capacity Available skill Type of production/ operation Layout of plant and equipment Safety Maintenance requirement Costs to be achieved

4. THE PROGRAMMES
Purchasing Transforming Maintenance Cash Storage Transport

5. THE PEOPLE
Wages /salaries safety Conditions of work Motivation Trade unions Education and training

Production Strategy

Make to order

Make to stock

Forecasting (Types)

Forecasting (Types)

Types of Production System

Job shop

Batch Production

Mass production

Group Technology

TYPES OF PRODUCTION SYSTEMS

JOB PRODUCTION BATCH PRODUCTION MASS PRODUCTION GROUP PRODUCTION

TYPES OF PRODUCTION SYSTEMS VERSES LAYOUTS

JOB PRODUCTION FIXED LAYOUT / PROCESS LAYOUT

BATCH PRODUCTION -

PROCESS LAYOUT / GROUP LAYOUT

MASS PRODUCTION -

PRODUCT LAYOUT

GROUP PRODUCTION -

GROUP LAYOUT / CELLULAR LAYOUT

JOB PRODUCTION
JOB, ONE-OFF, PROJECT, OR MAKE COMPLETE ARE

DESCRIPTIONS GIVEN TO THE ORGANIZATION WHEREBY THE COMPLETE TASK IS HANDED BY SIGNAL WORKER OR GROUP OF WORKERS. THE HAIRDRESSER WHO CUTS, WASHES AND

PERMS THE CUSTOMERS HAIR, THE TAILOR WHO MAKES THE

ENTIRE SUIT ARE ALL EXAMPLES OF TASKS WHICH ARE ORGANIZED USING THE JOB APPROACH .

BATCH PRODUCTION

SUCH METHODS REQUIRE THAT THE WORK FOR ANY TASK IS DIVIDED INTO PARTS OR OPERATIONS AND THAT EACH OPERATION IS COMPLETED THROUGHOUT THE WHOLE BATCH BEFORE THE NEXT OPERATION IS UNDERTAKEN. THIS

TECHNIQUE IS PROBABLY THE MOST COMMONLY USED

METHOD
EXAMPLES

FOR

ORGANIZING
THE

MANUFACTURE,
OF

TYPICAL

BEING

PRODUCTION

ELECTRONIC

INSTRUMENTS, TRANSFORMERS AND SO ON.

MASS PRODUCTION

MASS / FLOW HAS BEEN DEFINED AS A METHOD OF ORGANIZATION SUCH THAT THE TASK IS WORKED ON CONTINUOUSLY OR ALTERNATIVELY AS A SYSTEM WHEREBY THE PROCESSING OF MATERIAL IS CONTINUOUS AND

PROGRESSIVE.

GROUP PRODUCTION
THE GROUP APPROACH, SOMETIMES REFERRED TO AS GROUP TECHNOLOGY (GT) OR CELLULAR MANUFACTURING, CAN BE THOUGHTHT OF AS AN ATTEMPT TO CAPITALIZE ON THE BENEFITS OF BOTH BATCH AND FLOW. ESSENTIALLY, THIS

INVOLVES SEEKING SIMILARITIES, RATHER THAN LOOKING

FOR DIFFERENCES. SIMILAR TASKS / JOBS / PRODUCTS ARE IDENTIFIED AND FORMED INTO FAMILIES AND THE RESOURCES

REQUIRED FOR THESE ARE FORMED INTO GROUPS OR CELLS.

Operations Strategy for Competitive Advantage, Operations in a global environment

PLANT LOCATION AND LAYOUT

FACTORS TO BE CONSIDERED;
1. PROXIMITY TO THE MARKET 2. INTEGRTATION WITH THE ORGANIZATION

3. AVAILIBILITY OF LABOUR AND SKILLS

4. AVAILABILITY OF AMENITIES 5. AVAILABILITY OF TRANSPORT 6. VAILIBILITY OF INPUTS

7. AVAILIBILITY OF SERVICES
8. SUITABILTY OF LAND AND CLIMATE 9. REGIONAL REGULATION 10. ROOM FOR EXPANSION

11. SAFETY REQUIREMENTS

12. SITE COST 13. POLITICAL, CULTURAL AND ECONOMIC SITUATION 14. SPECIAL GRANTS, REGIONAL TAXES AND IMPORT / EXPORT BARRIERS

Bulk Material Handling and Equipment

Cost of Material Handling = 25 % of cost of product
Aids to material Handling 1. Correct identification of material and documentation 2. correct packing of material and documentation 3. Capacity of equipment 4. Size of load 5. Weight of container

Bulk Material Handling Equipment

1. Crane
2. Hoist / bucket 3. Conveyor 4. Chute / Channel 5. Dumper 6. Fork lifter

Cost Reduction in Material Handling

1. Use of manpower 2. Use of Gravity 3. Use of power 4. Use of package load

Demand forecasting and its modeling The estimation of demand for future to gain some lead time. Demand is done for: Raw material semi finished goods Finished goods service material

Demand Forecasting Techniques Nave Technique Fixed average Moving Average Weighted Moving Average (3 5 Points) Exponential Weighted Moving Average Associated Factors Trend Line Seasonal Effect

Error Estimation in Demand Forecasting To calculate error in forecasting and actual uses? Standard Deviation= 1.25 x Mean Absolute Deviation

Mean

Absolute

Deviation

Sum

of

difference between absolute forecast value

absolute actual use / number of periods

INVENTORY MANAGEMENT Task of material holding department: Determine the material requirement Receiving and storing material and its safety in good condition Issue material upon receipt of appropriate authority

Identify surplus stock

INVENTORY MANAGEMENT Types of material to be stored: Raw material and bought in items Work in Progress (WIP) - semi finished goods Finished goods service material Lead Time: It include ordering time, delivering time and receiving time etc

DEMAND SITUATIONS / APPROACHED TO MATERIAL S CONTROL

INDEPENDENT DEMAND SITUATION

Material requiring planning (MRP)

DEPENDENT DEMAND SITUATION

Manufacturing resource planning (MRP II)

THESE SITUATIONS CAN BE FURTHER DIVIDED INTO FIXED RE-ORDER QUANTITY FIXED RE-ORDER TIME

ECONOMIC ORDER QUANTITY (EOQ) / ECONOMIC BATCH SIZE (EBS) EOQ / EBS calculation is based on total cost of ordering, holding cost and ancillary cost Price break on EOQ/EBS

Two Methods are used for its calculations: Graphical method Analytical method

WORK STUDY
Work study is a management service based on those techniques, particularly method study and work

measurement which are used in the examination of

human work in all its context and which lead to the systematic investigation of all the resources and factors

which affect the efficiency and economy of the situation

being reviewed, in order to effect improvement

(productivity)

WORK STUDY TECHNIQUES

METHOD STUDY

WORK MEASUREMENT (TIME MEASUREMENT)