Operations Management

OPERATIONS OPERATIONS MANAGEMENT

1 Edition 2011

OPERATIONS MANAGEMENT-INDEX SNO

TOPICS

PAGE NOS

1

INTRODUCTION

4 to 18

2

KEY TERMS IN OPERATIONS MANAGEMENT

19 to 21

3

FIVE GUIDING PRINCIPLES IN TQM

4

THEORY OF CONSTRAINTS

23

5

OPERATIONS STRAGEGY

24 to 29

6

PRODUCT DESIGN AND PROCESS DESIGN

30 to 35

7

AGGREGATE/CAPACITY PLANNING

36 to 61

8

TYPES OF PRODUCTION

62 to 71

9

FACTORY LOCATION

72 to 82

10

FACTORY LAYOUT

22

83 to 97

2

OPERATIONS MANAGEMENT-INDEX SN O

TOPICS

PAGE NOS

11

MATERIAL HANDLING

98 to 109

12

PRODUCTIVITY

13

BASICS OF JOB SCHEDULING

14

BASICS OF ERP

15

BASICS OF PROJECT MANAGEMENT

16

METHOD STUDY

17

QUALITY CONTROL AND INSPECTION

18

BASICS OF ISO 9000

19

BASICS OF ISO 14000

19

JOB SEQUENCING

20

VALUE ENGINEERING AND ANALYSIS

110 to 112 113 to 116 117 to 120 121 122 to 125 126 to 134 135 to 138 139 140 to 143 144 to 145 3

OPERATIONS MANAGEMENT-INTRODUCTION Definition Production and Operations Management (³POM´) is about transformation of  production and operational inputs into ³outputs´ that when dis tributed, meets the needs of customers. Operations Management is the systematic direction and control of processes that transform inputs into finished goods and services.

INPUTS

TRANSFORMATION PROCESS

OUTPUTS

The process in the above diagram is often referred to as the ³Conversion Process´. There are different methods of handling the conversion or production process-Job, Batch, Flow. 4

OPERATIONS MANAGEMENT-INTRODUCTION POM incorporates many tasks that are interdependent, interdepend ent, but which can be grouped under five main headings: PRODUCT Marketers in a business must ensure that a business sells products that meets customers needs and wants. The role of Production P roduction and Operations is to ensure that the business actually makes required products in accordance with the plan. The role of Product in POM therefore concerns the area such as: Performance Aesthetics Quality Reliability Quantity Production cost Delivery dates 5

OPERATIONS MANAGEMENT-INTRODUCTION PLANT To make Product, Plant Pl ant of some kind k ind is needed. This will compromise the bulk of the fixed cost of the business. In determining the Plant to use, management must consider areas such as: Future demand (volume, timing) Design and layout of factory f actory,, equipment, offices offic es Productivity and reliability of equipment Need for maintenance Health and safety (particularly the operation of equipment) Environmental issues (e.g. disposal of waste products) PROCESSES There are many different ways of producing a product. Management must choose the best process or series of o f processes. They will consider:

6

OPERATIONS MANAGEMENT-INTRODUCTION Available capacity Available skills Type T ype of production Layout of plant and equipment Safety Production cost Maintenance requirements PROGRAMMES The production programme concerns the dates and times of the products that are to be produced and supplied to the customers. The decision made about programme will be influenced influenc ed by factors such as: Purchasing patterns (e.g. lead time) Cash flow Need for/availability of storage Transportation

7

OPERATIONS MANAGEMENT-INTRODUCTION PEOPLE Production depends on people, whose skills, skills , experience and motivation vary. vary. Key people peopl e related decisions will consider the following f ollowing areas: Wages and salaries Safety and training Leadership and motivation Unionization Communication

8

OPERATIONS MANAGEMENT-INTRODUCTION Definitions The terms production management and operations management are often interchanged. ³Production´ is directly related to the manufacturing manufac turing of  goods. In the world of services, services , production refers to the service delivery. ³Operations´ refers to the daily actions necessary necess ary for the system to work.  A ³Production System´ is a system whose whos e function is to transform transf orm an input into desired output by means of a process (the production process) and of  resources.

Resources Input

Production Process

Output 9

OPERATIONS MANAGEMENT-INTRODUCTION Examples of Production Systems  Automobile Factory Input

Output

Hospital

Raw Material

Complete cars

Process

Fabrication,  Assembly

Resources

Assembly line, Workers

Input

Patients

Output

Healthy Individuals

Process

Health care

Resources

Medical Do Doctors, Nurses,Medical supplies, Equipment

10

OPERATIONS MANAGEMENT-INTRODUCTION The Makeoffee production system Preparing coffee in the morning is a nice example of production system

Coffee machine Electricity Operator 

Water,filter,coffee

Prepare

Drinkable coffee

When somebody prepares coffee in the morning, she/he performs different operations and makes different decisions. Here we will review these operations and decisions and draw a parallel between the problems the coffee maker faces and those faced by a production manager in his/her company. 11

OPERATIONS MANAGEMENT-INTRODUCTION 0.When do you make coffee in the morning? ³Before washing´ is convenient because it is ready when you come back from the bathroom. You You must here schedule the production of coffee and t he other activities.

Scheduling/project Scheduling/project management In a company, you need to organize the different activities(sequence,priority,----)

1. Get water,coffee,filte water,coffee,filterr and coffee machine. machine. Where is the coffee machine? Usually, Usually, the t he coffee machine is in the t he kitchen where you get the water and drink the coffee. You locate the production system where you get the raw materials and where you use the finished products.

Location Where are the different ingredients? Usually, Usually, the coffee and the filters are together and close to the coffee machine. The coffee machine is close to the water filter. You You place the different elements to avoid useless trips and handling.

Layout In a company, where to locate your plant or your shop is a strategic question. The layout is also critical. It usually follows the material flow.

12

OPERATIONS MANAGEMENT-INTRODUCTION 2.Estimate how much coffee must be prepared. How many people will drink coffee today and what time? You take account your  experience, the day of the week and anything you know.

Forecasting Then, you must decide whether you prepare the coffee for the breakfast or for the whole day. Your aim is a compromise between work and quality.

Lot sizing You do not want to run out of coffee this morning but you do not want to waste coffee either.

Inventory control

13

OPERATIONS MANAGEMENT-INTRODUCTION 3.Prepare the coffee How do you really prepare coffee? Which operations are needed? In which order? If  it takes a long time to fill the can with water, water, you prepare the filter while the can is filling. Here, you want to minimize the time needed to prepare the coffee.

Process design You measure each operation in order to check whether your process is still optimal. If it takes much time, perhaps you should buy other filters or a new machine?

Productivity measurement In a company, company, the production process are specified with lot of details. They are permanently controlled and many redesigns take place.

4.Drink coffee You want to check the quality of the products and of the process. By drinking a single cup, you decide about the quality of the whole pot. You do not want to drink the whole pot before deciding it¶s a good coffee.

Quality control: Statistical process control

14

OPERATIONS MANAGEMENT-INTRODUCTION 5.Wash and descale the coffee machine If you do not want the machine to require one hour for one coffee can, you should descale it from time to time.

Maintenance You should keep your production system in good shape. Keeping a clean environment also prevents dirt from mixing with coffee c offee when you prepare it.

Quality control: Total Total Quality Quali ty Management Getting the opinion of the customers is another important quality control check.

6.Buy filters and coffee How much coffee and how many filters are required depends on the consumption of coffee.

Material requirement planning(MRP)

15

OPERATIONS MANAGEMENT-INTRODUCTION If you have a long way to buy the raw material, you will buy in big quantities. If the coffee is very expensive, you will buy quite often small quantities. A compromise compromise must be found

.

Lot sizing You do not want to run out of coffee or of filters. But if the shop is quite often closed, you could keep some safety stock of raw material.

Inventory control How to choose between different coffee qualities at different prices in different shops which are accessible at different times?

Purchasing

16

OPERATIONS MANAGEMENT-INTRODUCTION 7. Buy a new coffee machine? You must choose between different options here too. However, the size( or type) of the machine will first depend on the amount of coffee you drink everyday. If you foresee that the people you would invite in the near future are hard coffee drinkers, you could perhaps already buy higher capacity machine. Furthermore, this machine can be used f or  normal coffee in the morning and for ³expresso´ in the evening.

Forecasting  Aggregate/ Capacity planning If you need this higher capacity only in few months, delaying could perhaps be more profitable.

Investment analysis 17

OPERATIONS MANAGEMENT-INTRODUCTION Here is the list of problems/subjects encountered during the description of the makoffee production system. Scheduling/Project mngt. Facility Location

When do you schedule ³makoffee´? Where is the coffee machine?

Facility layout

Where are the components?

Forecasting

How much coffee for today?

Lot sizing Inventory control Process design Work measurement Quality control Maintenance and reliability Material req. planning

Do I prepare coffee for the whole day? What is the risk of running out of coffee? How do I make coffee? Can I improve the time it takes? Is the coffee good? How often do I clean the coffee machine? How many filters do I need and when?

Lot sizing

Do I buy them one by one?

Inventory control

What if the shop is closed?

Purchasing

What is the best shop?

Forecasting

Will I always drink as much coffee?

Aggregate planning

Shall I buy a bigger pot now?

Investment analysis

Or do I go on my small pot?

18

OPERATIONS MANAGEMENT-KEY TERMS

1.

Project Management ± Planning, directing and controlling resour source cess (pe peo ople ple, equ quiipme pment nt,, mate aterial) al) to meet the tec echn hniical cost ost and and time const onstra raiints of a pr proj ojec ect. t.

2.

Productivity ± is the ratio of the input facilities to the output of   goods goods and and serv servic ices es..

3.

Throughput time ± the average time that it takes a unit to move thrrough th ough an en enti tirre pr proc oces ess. s.

4.

Throughput rate ± the output rate that the process is expected to prod pr oduc ucee ove over a pe perriod of tim time.

5.

Total Quality Management ± managing the entire organization so that it excels on all dimensions of products and services that are impor importa tant nt to th thee cu cust stom omer er.. 19

OPERATIONS MANAGEMENT-KEY TERMS

6.

Six Sigma ± a statistical term to describe the quality goal of no more ore th than an four four de defe feccts out out of every very million un uniits. ts.

7.

PDCA Cycle ± also called ³ The Deming Cycle´ refers to the plando-che do-check ck-ac -actt cycle cycle of conti continuo nuous us impr improve oveme ment. nt.

8.

Continuous improvement ± the philosophy of continually seeking impr improv ovem emen ents ts in pr proc oces esse sess th thrrough ough th thee use use of team team effo effort rts. s.

9.

Kai Kaizen ± Japanese term for for cont ontinuous improvement.

10. Lean production ± integrated activities designed to achieve high vol volume ume, hig high qual uality pr prod oduc ucttion usi using minim nimal inve nvent ntor oriies of raw mater ateria ial, l, work work in pr proc oces esss and and fini finish shed ed good goods. s. 11. Kanban ± an inventory or production control system that uses a signa signali ling ng de devi vice ce to regul egulat atee flows flows.. 20

OPERATIONS MANAGEMENT-KEY TERMS

12. Throughput ± the rate at which money is generated by the system through thr ough sales sales (Goldr (Goldratt att¶¶s definit definition ion). ). 13. Inventory ± the money that the system has invested in purchasing thin th ings gs it inte intend ndss to sell sell (G (Gol oldr drat att¶ t¶ss de defi fini niti tion on). ). 14. Operating Expenses ± all the money that the system spends to turn invent inventory ory into into thr through oughput put (Goldr (Goldratt att¶¶s def defini initi tion) on).. 15. Value analysis / Value engineering ± analysis with purpose of   sim simpli plifyi fying pr prod oduc ucts ts & pr proc oces esse sess by achi achiev eviing equ quiv ival alen entt or be bett tter er perf pe rfor orm mance ance at a lowe lowerr cost cost..

21

OPERA OPERATIO TIONS NS MANAGE MANAGEMEN MENTT- FIVE FIVE GUIDING PRINCIPLES IN TQM 

esults R esults

through processes



Continuous improvement of processes



Managing with facts



Management establishing priorities



Involvement Involvement of everyone through teamwork 

When

things go wrong, first ask what w hat in the process broke broke down, not who did it.

22

OPERATIO OPERATIONS NS MANAGEMENT MANAGEMENT - THEORY THEORY OF OF CONSTRAINTS FIVE FOCUSSING 









STEPS OF TOC -

Identify the system constraints (No improvement is possible unless the constraint or weakest link is found) Decide how to exploit the system constraints cons traints (Make the constraints as effective as possible) Subordinate everything else to that decision (Align every other part of the system to support the constraints co nstraints even if this reduces the efficiency of non constraint resources). Elevate the system constraints (If output is still inadequate, acquire more of this resource so it no longer is a constraint). If in the previous steps the constraints have been broken, go back to Step 1, but do not let inertia become the system constraint. (After this constraint problem is solved, go back to the beginning and start over. over. This is a continuous process of improvement : identifying constraints, breaking them and then identifying the new ones that result) 23

OPERATIONS MANAGEMENT-OPERATIONS STRAGEGY Definition of Strategy Strategy is a deliberate search for a plan of action that will develop a business¶s distinctive competence and compound it.

Definition of Operations Strategy  An operations strategy consists of sequence of decisions dec isions that, over  time, enables a business unit to achieve a desired operations structure, infrastructure, and set of specific speci fic capabilities in support of  the competitive priorities.

24

OPERATIONS MANAGEMENTOPERATIONS STRAGEGY Levels of Strategy Corporate Corporate

Divisional (Business)

Fin

HR

Mkt

What business are we in?

How do we compete?

Prod Dev

Ops

Role of  each function 25

OPERATIONS MANAGEMENTOPERATIONS STRAGEGY Operations/manufacturing strategy has to be an integral part of the overall organizational strategy. Without deciding the mission and objectives of the organization, checking up on the external and internal environment, performing the SWOT analysis for the organization and then deciding on the basis for  competing and/or and/or key k ey factors for success, success , no operation strategy can be formulated. 26

OPERATIONS MANAGEMENTOPERATIONS STRAGEGY Population Characteristics

Opportunities?

Govt& Policy changes

Quality

Motivation New Markets

New Products

RBI intervention

Resource availability Manage ment systems

Capacity

Strengths?

Skills Limited access to world markets.

Weaknesses? Equipment age

New Technologies

Interest rates Cost Structure Technology Exchange rates

IR Employee age

Competitors plans

Threats? New Competitors 27

SWOT Analysis

OPERATIONS MANAGEMENTOPERATIONS STRAGEGY Components of Operations Strategy Structural decision categories:

Capacity Facilities Vertical Integration Technology

Infrastructural decision categories:

Workforce Organization Information/Control systems

Capabilities:

Unique to each firm

Competitive priorities:

Cost Quality  High performance design 

Consistent quality Time 

Fast delivery time



On-time delivery Development speed

Flexibility  Customization 

Volume Volume flexibility f lexibility

28

OPERATIONS MANAGEMENTOPERATIONS STRAGEGY Clients look to Operations Strategy for help with these critical business issues: Cost efficiency and performance improvement Focus on company¶s core business Increasing shareholders value Continuous process improvement Maintaining competitive edge Improving customer service quality Migration to new technology Product innovation management Merger synergy realization 29

OPERATIONS MANAGEMENT-PRODUCT AND PROCESS DESIGN Product Design can be defined as the idea generation, concept development, testing and manufacturing or implementation implem entation of a physical object or service. The development of a new product passes through seven distinct stages as shown in the figure below: Needs Identification

Advance Product Planning

 Advance Design

Detailed Engineering Design

Product Process Design and Development

Product Evaluation  And Improvement

Product use and support 30

OPERATIONS MANAGEMENT-PRODUCT AND PROCESS DESIGN Process Design is concerned with the overall sequences of operations required to achieve the product specification. specifi cation. It specifies the type of work stations that are to be used, the machines m achines and equipments necessary and the quantities in which each is required. The sequences of operations in the manufacturing manuf acturing process is determined by The nature of product The materials used. The quantities being produced and The existing physical layout of the plant. Major Factors affecting Process Design Decisions Dec isions Nature of product/service demand. Degree of vertical integration. Product/service and volume volum e flexibility. flexibility. Degree of automation. Level of product/service quality Degree of customer contact

31

OPERATIONS MANAGEMENT-PRODUCT AND PROCESS DESIGN Interrelationship of Product and Process Design Product Ideas

Feasibility Studies

Process Design

Product Design Advance Product Planning Advance Design Product Process Design and Development Product Evaluation and Improvement Improvement Product Use and Support

Organizing the process flows Relation of Process Design to Process Flow Evaluating the Process Design

Continuous interaction Produce and Market New Products

32

OPERATIONS MANAGEMENT-PRODUCT AND PROCESS DESIGN Machines A and B are both capable of manufacturing a product. They compare as follows: Data

Machine A

Machine B

Investment

Rs50000

Rs80000

Interest on Capital

15% per annum

15% per annum

Hourly Wages

Rs 10

Rs 8

No of pieces produced per hour 

5

8

Annual operating hours

2000

2000

Which machine will have the lowest cost per unit of output ,if run for the whole year? If only 4000 pieces are to be produced in a year, which machine would have the lowest cost per piece? Will your answer to above vary if you are informed that 12.5% of the output of  machine B gets rejected at the inspection stage. If so, w hat would be the new solution. 33

OPERATIONS MANAGEMENT-PRODUCT AND PROCESS DESIGN Methods P and Q are both capable of manufacturing a product.They compare as follows: follows: Data

Method P

Method Q

Fixture-cost

Rs 24000

Rs 16000

6 months

4 months

Rs 2560

Rs 4800

300 pieces

580 pieces

6minutes

4minutes

-life Tooling-cost - li f e Pressing time per piece

The annual requirement requirement is 1500 nos. Operating Operating cost per hour is Rs 128 128 for both the processes. Material cost is the same in each case. Which method would you choose for production during period of one year? 34

OPERATIONS MANAGEMENT-PRODUCT AND PROCESS DESIGN Production manager of a unit wants to know for what quantity he can use automatic machine as against semi-automatic machine.

Data

Automatic

Semi-automatic

Time for the job

2 minutes

5 minutes

Set up time

2 hours

1.5 hours

Cost per hour

Rs 20

Rs 12

35

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Aggregate planning involves planning : The      

best quantity to produce during time periods in the intermediaterange horizon (often 3 months to 1 year).

The      

lowest cost method of providing the adjustable capacity to accommodate the production requirements.

Workforce      

size, production rate (work hours per week) and inventory

levels. levels. Objectives of Aggregate Planning To      

develop plans that are:

Feasible: The plans should provide for the portion of demand that the firm intends to meet and should be within financial and physical capacity of the firm.



Optimal: The firm should aim for plans which will ensure that resources are used as wisely as possible and cost kept as low as possible. 

To      

increase the range of alternatives of capacity use, that can be considered by the management of the firm.

36

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Operations Planning and Scheduling System This system is concerned with the volume and timing of outputs, the utilization of operations capacity and balancing outputs w ith capacity at the desired levels of competitive c ompetitive effectiveness.

Aggregate Output Planning It is the process of determining output levels (units) of product groups over the next 6 to 18 months period on a weekly or  monthly basis. The plan indicates the overall level of output supporting the business plan.

Aggregate Capacity Planning It is the process of devising plan for providing a production capacity scheme to support the intermediate range sales forecast. 37

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Business plan

Output planning

Operations

Capacity planning

Aggregate output planning

Aggregate capacity planning

Master production scheduling

Rough-cut capacity planning

Material Requirement planning

Detailed capacity planning

Loading Shop floor control Sequencing

Short term capacity control

Detailed scheduling Expediting

Operations planning and scheduling system

38

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING In developing an intermediate aggregate capacity plan, the variables that may be manipulated to vary the production capacity from month to month are: The      

size of workforce.

The      

use of overtime or idle time

The      

use of inventories or back orders

The      

use of sub-contractors

The      

approval of design and drawings

Cost associated with w ith Aggregate Aggregate planning Pay      

roll cost

Cost      

of overtime, second shift and subcontracting.

Cost      

of hiring and laying off workers.

Cost      

of excess inventory and backlog.

Cost      

of production rate changes 39

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Types Types of Capacity Fixed capacity: The capital assets (buildings and equipments) at a particular  time are known as the fixed capacity. capacity. Adjustable capacity: It is on and the size of the workforce, the numbers of  hours per week they work, the number of shifts and extent of sub-contracting. Design capacity: it is the planned rate of output of goods and services under  normal operating conditions, condition s, It is also known as installed capacity. capacity. System capacity: it is the maximum output of a specific product or productmix that the system of workers and machines machi nes is capable of producing. Potential capacity: it is that capacity which can be made m ade available within the decision horizon of the top management. Effective capacity: It is the capacity which is used within the current budget period. It is also al so known as practical capacity capa city or operating capacity. capacity. Actual capacity: This is actual output achieved during duri ng a particular time period. 40

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING The figure given below illustrates the relationship between design capacity, system capacity and actual output. Design capacity

System capacity  Actual output 41

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Measurement of Capacity Capacity may be measured in terms of inputs i nputs or outputs of  the conversion process, Some of the examples of common measures of capacity are given below: Organization  

Measures of capacity

Automobile factory

Steel mill Power plant Brewery

 

No of vehicles Tons of steel

Output rate capacities

Megawatts of electricity generated Barrels of beer 

Airline

No of seats

Hospital

No of beds

University

No of students

Input rate capacities 42

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Capacity Decisions Major considerations in capacity decisions are: What      

size of plant? How much capacity to install?

When      

capacity is needed? When to phase-in capacity oe phase-out capacity?

At      

what cost? How much budget for the cost? cost ?

Determination of Capacity Capacity determination is a strategic decision in factory planning. Capacity decisions are important because: They      

have a long term impact

Capacity      

determines selection of appropriate technology, type of labor and equipments, etc.

Right      

capacity ensures commercial viability viability of the business venture. Capacity      

influences the competitiveness of a firm.

43

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Factors affecting determination of Plant Capacity Market       The      

demand for a product/service.

amount of capital that can be invested.

Degree      

of automation desired.

Level      

of integration (i.e. vertical integration).

Type      

of technology selected

Dynamic      

nature of factors affecting determination of plant capacity, viz; changes in product design, process technology, market conditions and product life cycle, etc.

Difficulty      

in forecasting future demand and future technology. technology.

Obsolescence       Present      

of product and technology over a period of time.

and future demand.

Flexibility      

for capacity additions.

44

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Capacity planning is the process of determining the production capacity needed by an organization to meet challenging demands for its products. In the context of capacity planning, ³capacity´ is the maximum amount of work that an organization is capable of completing in a given period of time.  A discrepancy between the capacity of an organization and demands of its customers results resul ts in an inefficiency i nefficiency,, either in under-utilized resources or unfulfilled customers. The goal of  capacity planning is to minimize this discrepancy. discrepancy. Demand Dem and for an organization¶s capacity varies based on changes in production output, such as decreasing the production quantity of an existing product, or producing new products. Capacity can be i ncreased through introducing new techniques, equipment and materials, increasing the number of shits, or acquiring additional production facilities. Capacity is calculated: calculated: (no of machines or workers) *(no of  shifts) *(utilization)* (efficiency). 45

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING The broad classes of capacity planning are lead lea d strategy, strategy, lag strategy, and match strategy. Lead      

Strategy is adding capacity in anticipation of an increase in demand. Lead strategy is an aggressive strategy with the goal of luring customers c ustomers away from the company¶s competitors. The possible disadvantage to this strategy is that it often results in excess inventory, inventory, which is costly costl y and often wasteful. Lag      

strategy refers to adding capacity only after organization is running at full capacity or beyond due to increase in demand. This is more conservative strategy. strategy. It decreases de creases the risk of  waste, but it may result in loss of possible customers. strategy (also known as the tracking strategy) is adding capacity in small amounts in response to changing demand in the market. This is a more moderate strategy. strategy.

Match      

46

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Capacity planning involves involves activities such as:  Assessing existing       Forecasting      

capacity. capacity.

future capacity needs.

Identifying      

alternate ways to modify modi fy capacity. capacity.

Evaluating      

financial, economical and technological capacity

alternatives. Selecting      

capacity alternative most suited to achieve the strategic mission of the firm. Figure given below illustrates the inputs to capacity dec isions. Market consideration

Resources available

Capacity decisions 47

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Illustrations:  A firm has 4 work centre a, b, c and d in series with individual capacities in units per day shown in i n the figure below. The actual output is also shown in the figure:   430

A 380

B

C 350

D 410

 Actual Output

310/day

2. A work centre operates 5 days a week on a 2 shifts per day basis, each shift of 8 hours duration. There are five machines of  the sme capacity in this work centre.If the machines are utilized 80% of the time at a system efficiency of 90%, what is the rated output in standard hours per week. 48

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING The following is tentative master schedule for four weeks:

Week

Product 1

2

3

4

A

3000

4000

1200

2500

B

2000

1500

3000

3500

C

1200

1800

2500

2000

The bill of labor i n key work centers for the company¶s three major products A,B A,B & C is as below:

Product

Dept. A X

0.20hr 

Y Z

B

C

0.08hr 

0.05hr  0.15hr 

0.10hr  0.20hr 

0.11hr 

0.08hr 

0.05hr 

Determine the load on department X,Y,Z X,Y,Z over the next 4 weeks.

49

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING  A firm produces two products P and Q on produce-to-order basis. The demand for the products come from several sources. The estimated demand for the two products over the next 5 weeks are given below:

Sources of  demand 1

2

Intra company orders

Week 3 4 20

Branch warehouse orders

10

5

1

2

10

Week 3 4 10

20

R&D orders Customer demand (forecast +on hand order)

Product Q

Product P

25

5 10

20

10

10

25

20

25

20

30

30

25

10

10

25

20

The safety stock for product P is 25 and for Q is 30.The lot size for P is 60 and for Q is 70.The beginning inventory for P is 50 and for Q is 60.Prepare a master production schedule schedule for these two products.

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OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING The following information is available regarding a product: Regular time production capacity= 2500 units per month. Overtime production cost=Rs 10 per unit. Inventory carrying cost=Rs 3 per unit per month Backlog cost=Rs 5 per unit per month. Beginning Inventory=400 units. Demand in units for four months mon ths is 4000,3500,2500 and 2800 respectively. respectively. Develop a level capacity plan that yields zero inventory at the end of 4th month. What is the total cost that will result from this plan? 51

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING  A firm developed the following demand forecast in units for a product. Month

Demand (units)

Month

Demand (units)

Jan

210

J ul y

400

Feb

100

Aug

220

March

200

Sept

200

A pr i l

400

Oct

120

May

600

Nov

100

June

700

Dec

250

(a)

Determine the production rate required to meet the average demand if the available working days are as below:

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OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Month

Working Days Available

Month

Working Days Available

Jan

22

July

21

Feb

18

August

22

March

21

Sept

20

A pr i l

22

Oct

23

May

22

Nov

19

June

20

Dec

20

(b) Determine the monthly inventory balance required to follow a plan of letting the inventory absorb all fluctuations in demand. assuming a constant workforce, no idle time or overtime, no back orders, no use of sub-contractors and no capacity adjustment, and no safety stock, determine the beginning inventory to avoid backlogging of order during any month (i.e. no negative inventory). 53

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING  XYZ Manufacturing Manufacturing company company produces produces a product which has 6 months months demand cycle as below:

Month

Forecast Demand(Units)

Work days/month

Jan

300

22

Feb

500

19

March

400

21

April

100

21

May

200

22

June

300

20 54

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING The company works on a single shift basis of 8 hours per shift. Each unit requires 10 labour-hours to be produced at labour cost of Rs 6 per  hour (regular rate) or Rs 9 per hour (overtime rate). Units can be subcontracted contracted at a cost of Rs 200/- per unit. There There are currently currently 20 workers employed. The hiring and training cost of additional additiona l workers is Rs 300/per person whereas whereas the lay off cost is Rs 400/- per person. person. Company's Company's policy is to retain safety stock of 20% of monthly forecast and each month¶s safety stock becomes the beginning inventory for the next month. The beginning inventory in January is 50 units uni ts and the inventory carrying cost is estimated as Rs 20 per unit per month. Three aggregate plans are proposed. Plan 1: Vary the workforce size to accommodate a ccommodate demand. Plan 2: Maintain a constant workforce of 20 and use overtime and allow idle time to meet demands. Plan 3: Maintain a constant workforce of 20 and build inventory or incur  stock-out cost. Compare the cost of these 3 plans and choose the best plan.

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OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING  The monthly monthly production production requirements requirements of an item for a six month period was arrived at, keeping in view the opening stock, forecast demand and safety stock etc. as below:

Month

Production Requirement(Units)

Working days

July

1850

22

August

1425

19

Sept

1000

21

Oct

850

21

Nov

1150

22

Dec

1850

20

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OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING The information relating to the cost is as follows: Manufacturing cost per unit= Rs 100/Shortage cost = 1.5 per unit per month Marginal cost of sub-contracting =Rs 2 per unit u nit Manhours required per unit =5 hours. The company wants to met the production produc tion requirements by adopting one of the two levels of manufacturing as follows: Strategy 1: Maintain a constant workforce level based bas ed on average production requirements during the 6 months, allow inventory to accumulate and fill shortages from next month¶s production. Strategy 2: Fix the constant workforce level at minimum necessary to meet the low Oct demand and an d sub-contract any monthly difference between requirements and production. Which strategy should the firm adopt?

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OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING  A company adopts a counter seasonal product strategy to smooth production requirements. It manufactures its product during the first four months of the year year and would like to employ a strategy that minimizes production cost while meeting the demand during these four months. The company presently has on its rolls 30 employees employees with with an average wage wage of Rs 100/- per month. Each Each unit of the product requires 8 manhours. The company works on a single shift basis(8 hours shift/day). Hiring an employee cost Rs 400 and discharging an employee cost Rs 500/-. Inventory carrying cost is Rs 5 per unit per month m onth and shortage cost is Rs 100 per unit per month. m onth. The company forecasts the demand for  the next four months as follows:

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OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING Month

Demand (Unit)

No of working days/month

Jan

500

22

Feb

600

19

March

800

21

April

400

21

The company is thinking of adopting one of the following strategies: Plan 1 : Vary workforce levels to meet the demand. Plan 2 : Maintain 30 employees and use inventory and stock outs to absorb demand fluctuations. Which strategy would you recommend? Assume nil inventory at the start. 59

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING  The order position (i.e. (i.e. requirements requirements of despatch) for the next 12 months in respect of a particular product is as under 

Month

Required Units

Month

Required Units

1

13000

7

11000

2

12000

8

7000

3

10000

9

15000

4

9000

10

13000

5

11000

11

12000

6

13000

12

10000 60

OPERATIONS MANAGEMENTAGGREGATE/CAPACITY PLANNING The production capacity of the shop is 10,000 units per month on regular  basis and 3000 units per month on o n overtime basis. Sub-contracting can be relied relied upon up to a capacity of 3000 units per month after giving a lead time of 3 months. Cost data reveal as under: Rs 5 per unit on regular basis Rs 9 per unit on overtime basis Rs 7 per unit on sub-contract basis Cost of carrying inventory is Rs 1 per unit per month. Assuming an initial inventory of 1000 units and that no back logging of order is permissible. Suggest an optimal production schedule. Also work out the total cost on the basis of the suggested schedule.

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OPERATIONS MANAGEMENT-TYPES OF PRODUCTION 



It is usually accepted that there are three main types of  production, namely: job, batch and flow production. It is important to realize at the outset that these types of production pro duction are not necessarily associated with any particular p articular volume of  production and that depending upon the circumstances the same task can be undertaken by any of the above methods. These three different types of production all exhibit distinct d istinct characteristics and require different conditions for their  effective inception and working. The circumstances in any factory at any time must be carefully considered before a decision is taken as to the method of production to be used. Frequently, the type of production employed depends on the development of the company compan y concerned. Many factories start on a job production prod uction basis, proceed as volume increases to batch production methods, in part at least, and finally manage to flow-produce all or some of the products concerned.

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OPERATIONS MANAGEMENT-TYPES OF PRODUCTION      JOB

PRODUCTION: PRODUCTION: Job or ³make complete´ production production is the manufacture of a single complete unit by an operator or group of  operators, and a number of identical units can proceed in parallel under job production conditions. Bridge-building, dam-construction and ship-building are common examples of the job production industries. Job production is characterized by the fact that the whole project is considered as one operation and w ork is completed on each product before passing on to the next. Labour tends to be versatile and highly skilled, capital investment is high, while w hile control is relatively simple, being largely exerted by the operator or group. In I n the case of  production of a single specialized equipment, it is inevitable that job production should be used, but in the case of quantity manufacture it is conceivable though unlikely that job production could also be used.

     BATCH

PRODUCTION: As As quantity increases, i ncreases, work may be carried on under batch production methods. Such methods require that the work on any product is divided into parts or operations, and that each operation is completed throughout the whole batch before the next operation is undertaken 63

OPERATIONS MANAGEMENT-TYPES OF PRODUCTION 



By its use some degree of specialization of labour is possible, and capital investment is kept low, although the organisation and planning required to ensure freedom from idle and waste time is considerable. It is in batch production that the production control department can produce most benefits, and these can often be spectacular, but it is also in batch production that it will be found most difficult to organize the effective working of a production control department. In order to clarify the difference between job and batch production, consider a small quantity of units, say five, being made by a number of operators. Under   job production conditions conditions the operators would be divided into five groups and each group would be responsible for the complete manufacture of one unit. Under batch conditions, however, the work content of each unit would be broken into a number of operations not necessarily of equal work content, and the operators would again divide into groups. The first group would then complete the first operation on all five units, passing the batch as a whole on to the next group and so on until the manufacture was complete. In general, the batch is not passed on from one operator or group to the next until all the work is completed on that operation. Transferring part batches can often lead to considerable organizational difficulties. difficulties. It should be noted that during the batch manufacture of the five five units mentioned above, four units are always at rest, no work being carried out on them. In fact, the rest periods of any

64

OPERATIONS MANAGEMENT-TYPES OF PRODUCTION one unit from a batch of a total = (n-1)/n x 100 percent, of the total batch production time. This is characteristic of batch production, where the work content of the material increases irregularly and results in a substantial workin-progress. In addition to the rest period indicated above, the organizational difficulties difficulties of batch production may well generate other rest times, where numbers of batches are passing through the same production stages, and competing for resources, it is usual to move a batch from an operator or  machine into a ³buffer´ or ³work-in-progress´ stores, to wait there for the next operator or machine to become available. The T he sequencing of batches from different jobs to reduce this source of ³rest´ is one of the most difficult problems encountered in the management of a production unit, and however  successfully it is solved, there will inevitably be some element of rest time brought about by this competition for resources. Thus in batch production, there is a rest period for each unit in the batch, whist work is proceeding on other members of the batch, and another rest period whilst the whole batch is in buffer store. This often results in the time between the origination of work on a batch and its eventual completion being much greater than the simple manufacturing time for the batch.

65

OPERATIONS MANAGEMENT-TYPES OF PRODUCTION The effect of the considerable time lag between an initial investment in material and its subsequent translation into cash upon the sale of the finished product can be very serious in terms of the investment in capital which is tied up in the work in progress. On the other hand, the presence of buffer stores permits the production unit to absorb shocks and changes, thus building in some element of flexibility, flexibility, and it assists in making more effective use of the various limited manufacturing resources. This balancing of investment in material against investment in resources is a continually recurring task, and one to which there is rarely a simple unique answer.       FLOW

PRODUCTION: Batch production is characterized by the irregularity in the increase of work added to the basic material. Batch production turns into flow production when the rest period mentioned above vanishes. In other  words, flow production can be defined as production during which work content of the product continually increases. Flow production then means that as the work on each operation is complete, the unit is passed to the next work stage without waiting for the work to be completed on the total batch. In order  that this can flow smoothly, the times of each operation must be of equal length, and there must be no movement off the production line. For example, inspection must be physically located within the flow production line and the inspection function must not occupy more than the unit operation time. Furthermore, since the whole system is balanced, any fault affects not 66

OPERATIONS MANAGEMENT-TYPES OF PRODUCTION only the stage at which the fault occurs, but also all the stages in the production line. Thus, a fault occurring at one stage of a flow production line which cannot be cleared within the time cycle of the line, will result in that stage being held up. This, in turn, causes all stages previous to it to be held up and all stages subsequently to run out of work. The line as a whole, therefore, must be considered as a single entity and not allowed to break down at any point at all. In order that flow production can function satisfactorily, the following requirements must be met: 1. There There must must be be cont contin inui uity ty of of dem deman and. d. Sho Shoul uld d dem deman and d be spasmodic, there will be a build-up of finished work which can give rise to storage difficulties. Alternatively, Alternatively, if production is caused ca used to fluctuate along with demand, then the setting up and balancing of the flow line will need to be carried out frequently, frequently, giving an excessively ex cessively high total cost. In industries with widely varying demands, a leveling out is achieved by making for stock during the ³flat´ periods, the stock supplementing the current production during ³peak´ periods.

67

OPERATIONS MANAGEMENT-TYPES OF PRODUCTION 2.

The produc productt must must be stan standar dardize dized. d. A low low line line is inhe inheren rently tly inflex inflexibl ible e and cannot accommodate variations in the product. 3. Material Material must must be be to to speci specific ficati ation on and delive delivered red on time. time. Due Due to the the inflexibility mentioned above, the flow line cannot accept the variations in material which can be incorporated in a batch or job production process. Furthermore, if material is not available when it is required the effect is very serious, since the whole line will be frozen. 4. All All stages stages must must be bala balance nced. d. If the requ requirem irement ent that that the the materi material al does does not ³rest´ is to be fulfilled, then the time taken at each stage must be the same. This can lead to inefficiency due to inability to balance stages. For example, assume a product with a work content of 10 hours has to be made at a rate of 400 a week, and the normal working week is 40 hours, then ± The total weekly work content = 400 x 10 hours. Hence the number of operations required = (400 x 10)/40 = 100 And the time for each operation = 6 minutes

68

OPERATIONS MANAGEMENT-TYPES OF PRODUCTION To meet the requ equired red production ion, then, a flow line ine with 100 stages needs to be set up, the wo worrk content of each stage being 6 minutes. It may be found, however, that one stage has a work content of only 3 minutes and that it cannot be compounded with any other stage. Under these circumsta stances, this stage must have an idle time content of 3 minutes. This is known as ³synchronizing loss´ and the only way of avoiding this would be to increase the rate of production so that, in fact, all stage times could be reduced to 3 minutes. In the situation where an element cannot be reduced to the required stage time ± for example, a machine-con contro rollled operat ration is 10 minutes ± then resources ces must be increased so that the effective operation time becomes less than the stag stage e tim time. This This can can lead lead to an unde underr-u utili tiliza zati tio on of reso resour urce ces. s. 5. All operatio operations ns must must be defined. defined. In order order that that the the line will mainta maintain in its balance, all operations must remain constant. This can only be done if the operations are recorded in detail. 69

OPERATIONS MANAGEMENT-TYPES OF PRODUCTION 6. Work must must conform conform to qualit quality y standards. standards. In In job or batch batch product production, ion, variat variation ion in quality at one stage can be compensated for by extra work elsewhere. In flow production this cannot happen, since each stage has a defined operation. 7. The correct correct Plant Plant and and Equipment Equipment must be be provided. provided. Lack Lack of correct correct apparat apparatus us will unbalance a line, causing weaknesses throughout the whole sequence. 8. Maintenance Maintenance must be be by antici anticipatio pation n not default default.. If equipment equipment breaks down at any one stage, the whole line is halted. To avoid this, a programme of  preventive preventive maintenance must be in force. 9. Inspectio Inspection n must be ³in line´ line´ with production. production. Unless Unless the inspecti inspection on stage is balanced with the rest of the production, a dislocation to the flow will inevitably take place. The achievement of the above requires considerable pre-production planning, part articularly rly in assu ssuring that the the correct mater ateriial is delive ivered on time, and that the oper operat atiions ons are are of equ equal lengt ength h of tim time.

70

OPERATIONS MANAGEMENT-TYPES OF PRODUCTION It must be noted that flow-production is not necessarily large-scale production. The following advantages can be derived from the effective institution of  flow production techniques ± a) The direct labour content will be reduced, since the the comprehensive preproduction planning which is necessary will often produce economies in time. (b) Assuming Assuming the product is initially designed correctly, then reproducibility, r eproducibility, and hence the accuracy, is high. (c) Since inspecti inspection on is ³in line´, line´, deviation deviations s from standard standard are rapidly rapidly picked picked up. (d) Since there is no rest period between operations, work in process is at a minimum. (e) Again, Again, since there there is no waiting waiting period, period, the the provision provision of work-in-pro work-in-process cess stores is unnecessary, and the total storage space required is minimized. 71

OPERATIONS MANAGEMENT-FACTORY LOCATION Introduction  The prime criterion for a preferred location is the least total cost, the minimum delivered-to-customer delivered-to-customer cost of the product or service. ser vice. The location of factory may well have a substantial effect upon the operation of the unit and on the factories within a geographical region. No set of rules can be laid down whereby the solution to the problem of location can be solved or programmed. There are, however, how ever, a number of factors, such as raw material availability, labour costs, and so on, which should be considered and these factors will be discussed in detail later.  A plant location problem is not encountered everyday, but the factors that can create a problem are constantly developing. Technological improvements make existing products non-competitive. New products replace established lines. A requirement for different materials or a change in the source of materials alters supply costs, power, water or  other resource needs are subject to production levels w hich in turn are a function of demand. Any or all of these factors can force a firm to question whether its plant should be altered at the present location or  moved to another locality. 72

OPERATIONS MANAGEMENT-FACTORY LOCATION 





It is worth differentiating between the problem of location and of site. The location is the general area and the site is the place chosen within the location. The decision on site thus probably proceeds in two stages: in the first stage the general area is chosen and then a detailed survey of that area is carried out to find possible site. Thus, a study to identify the best location typically starts with an evaluation of regional factors and progresses to particular  communities within the favored region. Information of a general nature suffices to rate regions. They are compared with w ith respect to market proximity, raw material, tax rates, and other characteristics of special interest to the organization seeking the site. The T he factors affecting the choice of a community and a particular site w ithin the community community involve specific details. The models given here for factory location can be used for both the selection of a location and also for the selection of a site in a particular location. The selection of a site decision is probably made by taking into account the more detailed factors than considered for  selection of a location (««. is the view pleasant? ««. is there a good restaurant nearby?«« near by?««.). .). 73

OPERATIONS MANAGEMENT-FACTORY LOCATION Factors affecting location The following are some of the factors which will influence the choice of location ± either for a new construction site or for an available building shed. 1. Integration with other group companies If the new factory is one of a number of factories owned or operated by a single group of companies, the new factory should be situated such that its work can be integrated with the work of associated ass ociated factories or warehouses. This will require that the group should be considered as an entity, not as a number of  independent units. units. (There is a high possibility of using the linear programming model for such factory locations.) 2. Availability of transport In some cases, where products or purchased parts are heavy and bulky, it is important that goods transport facilities shall be readily available. Goods intended largely for export indicate a location near a seaport or a large airfield.  Years ago industrial growth began in seaports because of reliance on inexpensive ocean traffic. As the railroad network grew, the relationship of raw materials to manufacturing to markets became more flexible. Air and trucking transportation encouraged further versatility versatility and industrial centers spread throughout the land. The distance in time between supply and demand is ever  diminishing.

74

OPERATIONS MANAGEMENT-FACTORY LOCATION 3. Availability of materials While it is true that good transport facilities will enable goods to be obtained and delivered readily, a location near main suppliers w ill help to reduce cost and permit staff to go readily to see suppliers to discuss technical or delivery problems. Any buyer who has tried to improve deliveries from an inaccessible supplier will bear witness w itness to the considerable difficulties involved. 4. Availability of services There are six main services that need to be considered, namely ± a) Gas d) Drainage b) Electricity e) Disposal of waste c) Water f) Telephone Certain industries use considerable quantities of water for food preparation, laundries, laundries, metal plating, plating, etc. Others use a great deal of  electricity for chemical processing and so on. An assessment must be made of the requirements of the factory for as far ahead as possible. Underestimating the needs of any of the services can prove to be extremely costly and inconvenient. 75

OPERATIONS MANAGEMENT-FACTORY LOCATION 5. Suitability of land and climate Here, not merely must the genealogy of the area be considered, that is, whether  the subsoil can support the loads likely to be placed on it, but also whether the climatic conditions (humidity, (humidity, temperature and atmosphere) will adversely affect the manufacture. Modern building techniques are such that almost all disadvantages of terrain and climate can be overcome, but the cost of so doing may be high and a different locality could avoid an inflated first cost. 6. Site cost As a first cost, the site cost is important, although a lthough it is important not to let immediate gain jeopardize long term plans. 7. Availability of amenities A location which provides provides good amenities outside outside the factory ± shore, theatres, cinemas, restaurants ± is often much more attractive to staff than one which is is more remote. This is particularly so where a large proportion of married women are employed who find it convenient to shop for the family during the lunchbreak and on the way home. One important amenity in this connection is good personnel transport buses and trains; and some companies find this so vital that they provide special company buses. Other amenities such as good canteen, co-operative stores, child-care are also important.

76

OPERATIONS MANAGEMENT-FACTORY LOCATION 8. Availability of labour  Labour may be more readily available in some cases than in others. The Department of Trade & Industry can provide information on this point. Certain areas, however, have traditional skills. For example, woollen products in Punjab and coir products in Kerala. It is very rate today that a location can be found which has appropriate skilled labour both readily available. (Big cities, however, could be excluded from this generalization.) The choice has to to be made between a location where skilled men exist but are not readily available and where there is a supply of unskilled labour. It must be remembered that new skills can be taught, processes simplified and made less exacting and key personnel moved. The importance of labour depends, of course, on the particular firm, its policies and its products. If the firm is science-oriented, it should anticipate going to an area where wher e engineers and scientists congregate because it is unlikely that many can be lured to remote sections.

77

OPERATIONS MANAGEMENT-FACTORY LOCATION 9. Labour stability Thorough precautions to assure low production costs are of no avail unless the proposed new labour laws and regulations can operate w ith continuity and tranquil labour-management relations. More than one company has been forced out of business because of unreasonable or  prohibitive labour demands. Wage increases and jurisdictional disputes continue to be important points of conflict. The question of labour stability must be approached from a positive standpoint. There are certain strong points of community attitude that should influence its selection. Perhaps, the most crucial question that can be asked about a community is ³What is its past history?´ 10. Availability of housing Where staff has to be recruited other than locally, housing will need to be available. It is general experience that the offer of good housing can be of greater assistance in attracting staff than almost any other  factor.

78

OPERATIONS MANAGEMENT-FACTORY LOCATION 11. Local building and planning regulations It is important to check at an early stage that the proposed location does not infringe any local regulations. A discussion w ith the surveyor¶s surveyor¶s department of the local authority is most desirable. Compliance with pollution standards is a recent location constraint for heavy users of  air and motor resources. Reliable fuel and raw material supplies may become critical factors in the future. 12. Room for expansion It is most unwise to build a factory to the limit of any site. Adequate room for genuine expansion should be allowed. It is dangerous to assume that at a later date the car park can be built on or that the canteen can be used as a productive area. 13. Safety requirements Some factories may present, or may be believed to present, prese nt, potential dangers to the surrounding neighbourhood; for example, nuclear  power stations and explosive factories are often considered dangerous. Location of such plants in remote areas may be desirable or locating at a safe distance from such factories would be advisable. 79

OPERATIONS MANAGEMENT-FACTORY LOCATION 14. Adequacy of circulation The movement of goods, visitors and staff to and from a factory presents a problem not only of easy access but also easy control. There is also a need for for emergency access ± fire fighting equipment equipment or ambulances ambulances  ± which if impeded impeded could endanger endanger life and seriously affect the company. 15. Political situation The political situation in potential locations should be considered. 16. Special grants Government and local authorities often offer special grants, low interest loans, low rentals and other inducements in the hope of attracting industry to particular locations. As these are often areas are as with large reservoirs of labour, these offers can be most attractive. Every State in India has got different bodies that advise on product selection and plant location. In Maharashtra, these are: SICOM, MIDC, MSSIDC MSS IDC and SISI. 80

OPERATIONS MANAGEMENT-FACTORY LOCATION 17. Taxation Few industries have relocated their plants solely because of  unfavourable State taxes. It is rather the cumulative effect of  this factor and other high cost factors that may prompt a manufacturer to consider relocation. 18. Availability Availability of o f car space There is no doubt do ubt that the use of cars as a means of transport to and from work will increase, whatever wh atever public transport facilities are provided. If open space is not n ot available for car parking, special car-park structures may be necessary. It is difficult to satisfy all the above factors for plant location. However, a compromise between what is wanted wan ted and what can obtained may be the only solution.

81

OPERATIONS MANAGEMENT-FACTORY LOCATION       1.       2.       3.       4.       5.       6.       7.       8.       9.       10.       11.       12.       13.       14.       15.       16.       17.       18.

Inte Integr grat atio ion n with with oth other er gro group up comp compan anie ies s Avail ailabil abiliity of tran transp spor ortt Avail ailabil abiliity of mate materi rial als. s. Avail ailabil abiliity of serv serviices. ces. Suit Suitab abil ilit ity y of of land land and and clim climat ate. e. Site cost. Avail ailabil abiliity of amen ameniities ties.. Avail ailability of of labo abour. Labour stability. Availability Availability of housing. Local building building and planning regulations. Room for expansion. Safety requirements. Adequacy of circulation. Political situation. Special grants. Taxation. Availability Availability of car space. 82

OPERATIONS MANAGEMENT-FACTORY LAYOUT       Introduction

The disposition of the various parts of a plant, along with all the equipment used therein, is known as the Plant Layout, which should be designed to enable the plant to function most effectively. Plant Layout is a companion problem to Plant Location. A decision to relocate provides an opportunity to improve total facilities and services. A decision not to relocate is often accompanied by plans to revise the current plant arrangement. The re-layout must be designed to reduce increasing production costs that gradually evolve from piecemeal expansion or to introduce an entirely new process. In either case, the re-layout strives to maximize production flow and labour effectiveness. In this section, we shall explore the relationship of production departments ± grouping of production activities activities ± rather than individual individual machines or  architectural features. A facility layout of a hospital would concern emergency rooms, operating theatres, patient rooms and even the parking lot, but it would not initially initially involve the location of an x-ray machine or a cash register. However, the detailed equipment or facilities layout would follow the same methodology as the overall departmental layout.

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OPERATIONS MANAGEMENT-FACTORY LAYOUT Objectives of Plant Layout The chief objectives are likely to be improved operations, increased output, reduced costs, better services to customers, c ustomers, and convenience and satisfaction for company personnel.

     

     



   

Types of Plant Layout There is a layout by fixed position or by fixed material location. This is a layout where the material or major component remains in a fixed place. All tools, machinery, men and other pieces of material are brought to the major  component. The complete job is done or the product is made with the major  component staying in one location. Ship-building and heavy construction of  dams, bridges and buildings are typical examples. Advantages are: Handling of major assembly unit is reduced. Highly skilled operators are allowed to complete their work at one point and responsibility for quality is fixed on one person or assembly crew. Frequent changes in products or product design and in sequence of  operations are possible. The arrangement is adapted to a variety of products and intermittent demands. It is more flexible in that it does not require highly organized or expensive layout engineering, production planning or provisions against breaks in work continuity.

The disadvantage disadvantage is that the required movement of materials and machines may be cumbersome and costly. costly. 84

OPERATIONS MANAGEMENT-FACTORY LAYOUT      





Product, Flow, Sequential or Line Layout Here the Plant is laid out according to the requirements of the product. This is typical typical of  flow production. One product or one type of product is produced in one area. But unlike layout by fixed position the material moves. This layout places one operation immediately adjacent to the next. It means that any equipment used to make the product, regardless of  the process it performs, is arranged according to the sequence operations. Diametrically, Diametrically, this is illustrated in Figure 1, where Product 1 goes first to machine-A, then to machine-B, then to machine-C, these machines being used exclusively.

for Product 1, Product 2 and Product 3 have their own line of machines (K,L,M, and R,S,T) and, even though machines A,K,R A,K,R are identical and interchangeable, work is not transferred from one product l ine to another. 85

OPERATIONS MANAGEMENT-FACTORY LAYOUT Advantages are: 1. Redu Reduce ced d han handl dlin ing g of mate materi rial al.. 2. Reduced amounts amounts of material-i material-in-pr n-process, ocess, allowi allowing ng reduced reduced production production time and lower investment in materials. 3. More effectiv effective e use of labour labour (a) through through greater greater job specializ specialization ation and (b) through ease of training. 4. Easier Easier contro controll of product production ion all allowi owing ng less less paperwor paperwork k and effec effecti tive ve supervision. 5. Reduced Reduced cong congest estion ion of floor floor space space other otherwis wise e allotte allotted d to aisles aisles and stora storage. ge. Disadvantages are: 1. Unless volume volume is very very high, high, machin machine e utili utilizati zation on may be low, low, with with a subsequent high capital investment. 2. On One e machine machine break breakdow down n may may immobi immobili lize ze a complete complete produ producti ction on line line.. 3. The syst system em is infl inflexi exible ble,, being being unabl unable e to accom accommod modate ate chan changes ges.. 4. Unless Unless the the produc productio tion n is true true flow flow produc productio tion n and all all operat operation ions s balanced, buffer stock (work-in-process) will be inevitable. 5. The pace pace of of the the line line is is set set by the slowest slowest operat operatio ion. n. 6. Any changes in product product design, design, volum volume, e, etc., etc., in the line line will will normal normally ly require a major investment.

86

OPERATIONS MANAGEMENT-FACTORY LAYOUT      

Process of Functional Layout

In this type of layout, plant is grouped according to its function. Thus, all drilling machines will be together, as will all milling machines, presses, lathes and so on. This is most commonly met with in jobbing product. This is illustrated in figure, where products 1, 2 and 3 all go to machine-A, then after processing, product 1 goes to machine-B and thence to machine-C, while products 2 and 3 go to machine-L. Product 2 then goes to machine-C, while product 3 goes to machine-T. To allow all machines to be fully loaded, work-in-progress w ork-in-progress stores stores are

.

necessary between each machine

87

OPERATIONS MANAGEMENT-FACTORY LAYOUT Advantages are: 1. Better machine machine utilization allows lower machine investment. investment. 2. It is adapted to a variety of products and to frequent changes in sequence sequence of operations. 3. It is adapted to intermittent intermittent demand (varying (varying production schedules). 4. The incentive for individual individual workers to raise the level level of their performance performance is greater. 5. It is easier to maintain maintain continuity of production in the event event of ± (a) machine machine or equipment equipment breakdown; breakdown; (b) shortages of material; (c) (c) abse absent nt work worker ers s Disadvantages are: 1. Substantial pre-production pre-production planning is required if machine machine loading is to be high. 2. Control Control is difficult difficult.. 3. Buffer stocks are essential; essential; hence, relatively high investment investment in raw materials and workin-progress. 4. It increases handling, handling, space requirements requirements and production time. 5. Close supervision is essential.

88

OPERATIONS MANAGEMENT-FACTORY LAYOUT Which type of layout to use? Use layout by fixed position or fixed material location when ± 1. Material forming or or treating operations require only hand tools or  simple machines. 2. Making only only one or a few few pieces of of an item. 3. The cost of moving moving the major piece of material material is high. 4. The skill of workmanship workmanship lies lies in the abilities abilities of the workers or it is desired to fix responsibility for product quality on one worker or crew. Use layout layout by product product when ± 1. There is a large quantity quantity of pieces or products to make. 2. The design of the product is more more or less standardized. 3. The demand demand for it is fairly fairly steady steady.. 4. Balanced operations and continuity of material flow c an be maintained without difficulty. 89

OPERATIONS MANAGEMENT-FACTORY LAYOUT Use layout layout by process process when ± 1. Machinery is highly expensive expensive and not easily moved. 2. Making a variety variety of products. products. 3. There are wise variations in times required for different operations. 4. There is a small or intermittent intermittent demand for the product. product.

In actual practice, most layouts are a combination of the basic layouts discussed above. They are made to utilize the advantage of all three types of layout. Criteria Criteria for for a good good layout layout While the techniques employed in making a layout are normal w ork-study techniques, the process is a creative one which cannot be set down with any finality, and one in which w hich experience plays plays a very great part. Furthermore, it is not possible to define a good layout with any precision. However, there are certain criteria which will be satisfied by a good layout, and these are discussed below:

90

OPERATIONS MANAGEMENT-FACTORY LAYOUT 1. Maximum Flexibility A good layout will be one which can be rapidly modified to meet changing circumstances. In this context, particular attention should be paid to supply points, which should be ample and of easy access. access . These can be simply and cheaply provided at the outset of a layout, and failure to do so can often present very necessary modifications to unsatisfactory, outdated or inadequate layouts. 2. Maximum Coordination Entry into, and disposal from, any department should s hould be in such a manner that it is most convenient convenient to the issuing issuing or receiving receiving departments. Layout requires to be considered as a whole and not parochially. 3. Maximum use of Volume A factory must be considered as a cubic device, as there is airspace above the floor area. Maximum use should be made of the volume available. Conveyors can be run above lead height and used as moving work-in-progress stores, or  tools and equipment can be suspended from the ceiling. This principle is particularly true in stores, where goods can be stacked at considerable heights he ights without inconvenience 91

OPERATIONS MANAGEMENT-FACTORY LAYOUT 4. Maximum Visibility All men and materials should be readily observable at all times; there should be no ³hiding places´ into which w hich goods can get mislaid. This criterion is sometimes difficult to fulfill, particularly when an existing plant is taken over. Every piece of partitioning or screening should be scrutinized most carefully while introducing undesirable segregation and reducing effective floor space. 5. Maximum Accessibility All servicing and maintenance points should be readily accessible. accessi ble. For  example, a machine should not be placed against a w all in such a manner that a grease-gun cannot reach the grease nipples. The maintenance under these circumstances is likely to be skimped at best and will occupy excessive time. Similarly, a piece of plant in front of a fuse box will w ill impede the work of the electricians and may cause unnecessary stoppage of the machine when the fuse box is opened. If  it is impossible to avoid obscuring a serviced point, then the equipment concerned should be capable of being moved. It should not be a permanent installation. 92

OPERATIONS MANAGEMENT-FACTORY LAYOUT 6. Minimum Distance All movements should be both necessary and direct. Handling material adds to the cost of the product but does not increase its value. Consequently, any unnecessary or circuitous movements should be avoided. It is a common failing for material to be moved off a work-bench to a temporary storage point. This intermediate rest place is often unnecessary and unplanned, being used only because an empty space appears convenient. The T he providing providing of µextra¶ shelves, benches and tables should be questioned very thoroughly and avoided if possible. 7. Minimum Handling The best handling is no handling, but where handling is unavoidable it should be reduced to a minimum by the use of conveyors, lifts, chutes, hoists and trucks. Material being worked on should be kept at working height and never placed on the floor if it is to be lifted later. 8. Minimum Discomfort Poor lighting, excessive sunlight, heat, noise, vibrations and odour should be minimized and if possible counteracted. Apparently, trivial discomforts often generate troubles greatly out of proportion to the discomfort itself. Attention paid to the lighting and general decoration and furniture can be rewarding without being costly. Recommendations on the the intensity of lighting lighting for various tasks are published and most manufacturers of lighting equipment will provide useful advise on the subject. 93

OPERATIONS MANAGEMENT-FACTORY LAYOUT 9.Inherent Safety All layouts should be inherently safe, and no person should be exposed to danger. Care must be taken not only of the persons operating the equipment but also of  the passers-by, who may be required to go behind a machine, the back of  which is unguarded. Adequate medical facilities and services must be provided, and these must satisfy the Chief Inspector of Factories. Experience shows that the factory inspector is not only most competent to advise on these matters, he is always ready to be of assistance. 10.Maximum Security Safeguards against fire, moisture, theft and a nd general deterioration should be provided, as far as possible, in the original layout. 11.Unidirectional Flow Work lanes and transport lanes must not cross. At every point in a factory, material must flow in one direction only, and a layout which does not conform to this will result in considerable difficulties, if not downright chaos, and should be avoided.

94

OPERATIONS MANAGEMENT-FACTORY LAYOUT 12.Visible Routes: Definite lines of travel should be provided and, if possible, clearly marked. No gangways should ever be used for storage purposes, even temporarily. The co-existence of a large number of criteria makes the definition of an ³optimum´ schedule virtually impossible. Furthermore, the writing of a computer programme for plant layout becomes a task of considerable difficulty unless some very drastic simplifications are made. `

1. Maximum Flexibility 3. Maximum Use of Volume 5. Maximum Accessibility 7. Minimum Handling 9. Inherent Safety 11. Unidirectional Flow

2. 4. 6. 8. 10. 12.

Maximum Coordination Maximum Visibility Minimum Distance Minimum Discomfort Maximum Security Visible Routes

95

OPERATIONS MANAGEMENT-FACTORY LAYOUT Advantages Advantages of a good Layout A layout satisfying the above conditions will wi ll have the following advantages over one which does not:

1. The overall overall process time time and cost will be minimized minimized by reducing unnecessary handling and by generally gen erally increasing the effectiveness of all work. 2. Labour supervision supervision and production control control will be simplified simplified by the elimination of hidden corners in which both men and materials can be misplaced. 3. Changes in in programme will will be most readily readily accommodated. accommodated. 4. Total output from a given given plant will be as high as possible possible by making the maximum effective use of available space. 5. A feeling of unity amongst employees employees will be encouraged encouraged by avoiding unnecessary segregation. 6. Quality of products will be sustained by safer and better  methods of production. 96

OPERATIONS MANAGEMENT-FACTORY LAYOUT

Symptoms Symptoms of a poor Layout The main symptoms of a poor poo r layout are: 1. Lack Lack of contr control. ol. 2. Congestion of men and materials. 3. Exces Excessiv sive e re-h re-handl andling. ing. 4. Long transpo transporta rtation tion lines. lines. 5. Fr Freq eque uent nt accide accident nts. s. 6. Low worker performance. 97

OPERATIONS MANAGEMENT-MATERIAL HANDLING Material handling may be broadly defined as the movements of materials from one place to another. It may be picking up or putting down, moving horizontally or  vertically vertically or in any inclined plans of materials, of any kind in their raw, semifinished or finished state.       OBJECTIVE  Material handling often does not add anything to the value of the product but only increases the cost. Handling costs constitute a substantial portion of the total cost of production. Besides, material handling is also found to be responsible for a large percentage of product damage. 80 to 90% of industrial accidents and other disadvantages. In spite of this, material handling is an essential feature of industrial activity. Materials have to be moved from one place to another without which all the activities would come to a standstill. Material handling often accounts for improved utilization of men and mac hines, and provides for specialization of skills and the related advantages.  Since material handling cannot be eliminated completely in any organisation, the objective of material handling may be stated as instituting an efficient system of handling. Eliminating unnecessary and a nd wasteful handling system saves money and time, reduces damage to materials and makes the work safer.

98

OPERATIONS MANAGEMENT-MATERIAL HANDLING       Some Principles

Some of the major principles in the design of an efficient system of material handling are: a) Reduce handling handling to to a minimum: As far as possible, materials should always move towards completion, over the shortest distance without w ithout back-tracking. A large amount of handling can be eliminated by planning the location of  operations so that one operation finishes right where the next begins. The flow of product should receive top priority in planning of layout. b) Avoid re-handling: IItt may not be possible to eliminate eliminate re-handling completely. Nevertheless, re-handling is a wasteful and costly operation. Re-handling can be reduced by (i) not keeping anything on floor, (ii) avoiding transfers from floor to container or vice versa or from container to container, and (iii) avoiding making of materials. c) Combine handling with other operations: Many times, times, handling may be made a productive activity activity by combining with other operations, such as production, inspection and storage. In process industries, materials undergo physical and chemical changes while in movement, handling devices may be used as live storage of materials may be sorted and inspected while they are being handled

99

OPERATIONS MANAGEMENT-MATERIAL HANDLING d) Ensure safety in handling: handling: Safety is a key word in handling. handling. A large large percentage of industrial of industrial accidents are attributed to poor handling practices. Even costlier  in terms of money is the damage to equipment and products due to improper  handling methods. A good handling system should ensure safety to workers and materials. Manual handling of heavy objects, materials scattered on the floor or projecting into aisles are but a few causes of accidents. Keeping gangways and aisles clear is one of the primary precautions against accidents in handling. e) Handle materials in unit unit loads: It is is easier and quicker to move a number of  materials at a unit rather than piece by piece. Modern material handling devices are designed to take advantage of unutilized loads. f) Use gravity gravity where possible and mechanical means, if necessary: The simplest simplest and cheapest way to handle materials is by using gravity. Often chutes and inclined boards can be conveniently used to transport materials quickly to the point of use without much investment on costly handling equipment. Where it is not possible to use gravity gravity for various practical reasons, some mechanical means should be considered. Lifting and carrying of heavy materials mechanically saves time and reduces fatigue of workers.

100

OPERATIOS MANAGEMENT-MATERIAL HANDLING g) Select proper handling handling equipment: There are as many types types of handling equipment equipment available today as the number of materials to be handled. And any single equipment may not solve all handling problems. It is therefore necessary to choose the equipment suitable for the job under consideration. The equipment selection needs to be done carefully so that there is an efficient coordination of all handling, resulting in overall economy. Use of standardized equipment facilitates facilitates maintenance and repair. Another important factor in the selection of equipment is flexibility. Industrial activity is subject subjec t to constant changes and handling equipment should provide for this change. In other words, the equipment selected se lected should be capable of a variety of uses and applications. h) Reduce terminal time time of equipment: The advantage of mechanical and power  equipment would be lost of they are made to wait during loading and unloading which may take considerable amount of time. By reducing this waiting time the handling equipment would be released for more productive work. There are various mechanical devices devices like trailers, tipping arrangements, cranes and hoist arrangements, to quicker loading and unloading operations

101

OPERATIONS MANAGEMENT-MATERIAL HANDLING i) Buy equipment for overall savings: s avings: In selecting equipment, savings in overall handling cost must be the guiding principle rather than the first cost of  equipment. Arriving Arriving at the handling cost is a difficult problem but a fairly accurate estimate can be obtained by determining the handling elements and applying work measurement. In India, labour is still comparatively less costly and a longer period may have to be allowed for amortizing the handling equipment. All direct and indirect savings are to be taken into consideration while deciding on handling equipment.  j) Use labour consistent with handling handling jobs: Manual handling could be done by unskilled unskilled labour, whereas mechanical handling may require semi-skilled or  skilled workers. Proper allocation of skills helps in overall economy. As far as possible, direct production operators should not be used for handling operations. It is preferable to have a separate gang of material handlers to ensure proper utilization utilization of production workers. k) Train workers and maintain equipment: Careful operation and proper upkeep are essential for getting the maximum out of the handling equipment. Careful selection and training of employees in principles, operation and safety rules and planned maintenance of equipment are worthwhile investments in the long run. 102

OPERATIONS MANAGEMENT-MATERIAL HANDLING       Material

Handling Equipment: A pre-requisite to the design of a material handling system is a knowledge of the different kinds and types of material handling equipment that are available. Although there are hundreds of different handling equipment, all can be placed in three major categories.  Conveyors: The first major class of material handling equipment consists of  conveyors. A conveyor is any device which moves material in either a vertical or horizontal directions between two fixed points, and this movement c an take place either continuously or intermittently. One of the distinct characteristics of conveyors is that they create a relatively fixed route. Consequently, they are employed primarily in continuous manufacturing in which materials leaving one work station s tation invariably invariably go to some other  specific work station in the production line. Therefore, it is possible to connect two such work stations by material handling equipment which is capable of  moving materials only between two fixed points. In intermittent manufacturing, however, materials leaving one work station may go to any number of other  work stations. Obviously, Obviously, it would not be feasible to set up a network of  conveyors which would provide provide all the possible route which materials may have to follow.

103

OPERATIONS MANAGEMENT-MATERIAL HANDLING A second characteristic of conveyors is that, unless they are of the portable type, they occupy space continuously. As a result, they must be installed in locations in which w hich they will not interfere with the flow of  other traffic. For example, if two work stations are located on opposite sides of an aisle which is used as a path of travel by men and trucks, a floor mounted conveyor conveyor could not be used to link these two work w ork stations. Therefore, unless cross traffic can be bypassed, no serious consideration would be given to the use of conveyors. In so far as listing of different types of conveyors is concerned, the ones most frequently encountered are the following:  Gravity Conveyor: Conveyor: As the name implies, gravity conveyors rely on nature for their driving force. Roller, wheel w heel and chute conveyors call in this category. They are used primarily to move materials and are a relatively inexpensive type of conveyor as a rule, although for some applications, such as in moving grain, they can be quite expensive. Compared with other types, types, gravity conveyors are highly flexible and transportable and are well suited to variable paths. Movement M ovement is restricted, however, to route that involves some degree of vertical fall.

104

OPERATIONS MANAGEMENT-MATERIAL HANDLING 



Endless chain conveyors: These conveyors are usually driven by an electric motor and, and, as a consequence, are usually more expensive than gravity conveyors. They have several important important advantages, however. however. These conveyors can move materials up as well as down, and the progress of the materials can be closely controlled. In In addition, special carrying devices and containers can be attached to the chain. Frequently, production tasks such as dip painting, cleaning and washing may be performed as the c onveyor moves. Finally, by varying the speed of the conveyor at different points, or by building loops into it, work-in-process inventory may be stored between operating stages. Belt conveyors: Belt conveyors are also driven by electric motors. These belts are usually made of some flexible material such as rubber. However, special belts are used in many industries. In the baking industry, for example, Tefloncoated metal is utilized to prevent sticking. The belt passes over rollers, which normally create a trough in the centre of the belt where the materials are concentrated. Conveyors of this sort are used mainly for transporting bulky material. Baggage is moved from the ground to the baggage compartments of  airplanes and shipped by conveyor belts. They are also used to move ores from the min face to work areas. Stock brokerage firms and insurance companies even use them to route papers to various parts of their buildings. When work is to be performed, however, the materials must be taken from the belt and later replaced when the work is completed. 105

OPERATIONS MANAGEMENT-MATERIAL HANDLING 

Other conveyor equipment: Pipelines are often employed for moving liquids and gases such as gasoline and natural gas. Pneumatic tubes are used in some s ome firms for rapid dissemination of internal communications. Screw conveyors have been successfully used to lift materials in both grain elevators and food-processing industry to move delicate foods in steady streams without damage.  Industrial trucks: Industrial trucks which represent the second category of  material handling equipment, are vehicles powered by hand, fuel or electricity, which are capable of transporting materials horizontally between any two points. As opposed to a conveyor, a truck is able to more from one location to any other location so long as suitable traveling traveling surface is available and its path of travel is not obstructed. For this reason, the prevalent method of handling material in a firm engaged in intermittent manufacturing is by means of trucks. The variable variable path of travel they are able to follow permits them to transport materials from one work station to any of a number of other work stations at which a subsequent operation is scheduled to be performed. A second desirable feature of trucks is that they occupy a given amount of space intermittently. intermittently. This T his means that a certain amount of space in a given location is required to house a truck for only as long as the truck is in that location. As soon as the vehicle is moved, the space is free for other uses.

106

OPERATIONS MANAGEMENT-MATERIAL HANDLING As in the case of conveyors, there are many types of trucks, and each of these can be equipped with with a variety of attachments. a ttachments. But the most important ones are as follows: Hand operated vehicles, vehicles, tractors, platform trucks, forklift trucks, straddle carriers. When the loads are not too heavy and the hauls are short, manual ma nual equipment may be used. However, when the load size and weight and the distances to be traveled are great, powered equipment is used. Today, most industrial trucks are powered. They are generally equipped with forks or platforms that can be raised or lowered to facilitate the movement and storage of materials, and for  this reason the loads are generally placed on pallets or skids.  Cranes and hoists: The third classification of material handling equipment consists of cranes and hoists. This equipment is able to move move materials vertically and laterally in any area of limited length, width and height. It is used primarily when material must be lifted prior to being moved from one point to another. These points may represent different work stations or different locations at a single work station. For example, if a part is large or heavy, the operator may find it nec essary to use a hoist to aid him in loading or unloading the machine. Subsequently, a crane may be used to move the part to another work-station.

107

OPERATIONS MANAGEMENT-MATERIAL HANDLING One of the advantages of cranes and hoists is that they are able to transport objects through the overhead overhead space in the plant. Consequently, Consequently, space is utilized, which would otherwise be unused, and floor space is freed for other uses. To illustrate, it might be possible to move a large heavy casting by means of a truck from one work-station to another. However, this would create a need for wide aisles at appropriate locations in the plant. If a floor space is at a premium, a more desirable alternative would be to transport the item through the air by means of a crane which would either eliminate the need for certain aisles or, at least, permit the use of aisles which may be required for the movement of smaller objects. But there are cases in which cranes and hoists are used, not because they free floor space but because they are the best available means of positioning material in a particular location. However, when considering cranes and hoists, it is important to keep in mind that any one unit of this equipment is capable of serving on a limited area.The size and shape of this area will vary with the kind of crane or hoist being used. Nevertheless, the equipment is somewhat more flexible in this respect than are conveyors, conveyors, but not a flexible as are industrial trucks. Also, Also, it will be found that cranes and hoists are as likely to be used intermittently intermittently as in continuous production. Again, there are many types of equipment which are placed in the crane and hoist category. However, the most common ones are the following: overhead bridge cranes, gantry cranes,  jib cranes, elevators, lifts, chain hoists, air hoists, electric hoists.

108

OPERATIONS MANAGEMENT-MATERIAL HANDLING Overhead bridge crane are commonly employed in factories where large, heavy pieces of equipment such as electrical transformers, generators and power regulators are manufactured. These cranes ride on parallel overhead rails and are usually designed so that they can service any place in the work area of the plant. Another common type of crane, which is designed for outside w ork, is the gantry crane. It moves in limited areas on w heels, providing providing its own ow n superstructure, and is chiefly used for such tasks on moving lumber  and loading and unloading in railroad freight yards. Large cranes of  this sort must be disassembled if they are to be moved from one location to another. This is their main limitation. Elevators and lifts are used to raise everything from materials to workers. Since moving materials on this type of equipment is quite costly, the modern trend is to construct one storey plants, thus eliminating the need to raise and lower material between floors.

109

OPERATIONS MANAGEMENT-PRODUCTIVITY Prod Produc ucti tiv vity ity is a measur asure e of how how much uch inpu inputt is requi equire red d to pro produc duce a giv given outpu utputt, i.e. i.e.,, it is the the rati ratio o of outp output ut to inpu input. t. Factors affecting productivity       Technology employed.       Tools and raw materials used.       Organization structure.       Planning and scheduling of work.       Plant layout.       Innovations.       Personnel policies.       Work environment.       Materials management.       Skills of the workforce. w orkers, staff.       Health, attitude towards workers,       Continuous training to the workers and staff.       Proper maintenance of machines.       Management Union relationship.       Morale of the employees.       Discipline.       Transport and canteen facilities.

110

OPERATIONS MANAGEMENT-PRODUCTIVITY      Techniques Techniques

         

to improve productivity

Better planning and training of employees. emplo yees. Use of time and motion studies to study and improve work performance. Better transportation and material handling system. Providing work incentives and other benefits to workers. wo rkers. Involvement of workers in decision-making. Improvement in technology of production process. Simplification, standardization and specialization techniques like PERT, CPM. Better and efficient utilization of resources. Use of linear programming and other quantitative techniques. ABC analysis to identify more important items and then apply app ly inventory control to reduce capital investments. 111

OPERATIONS MANAGEMENT-PRODUCTIVITY Measurement of productivity 1) Labour productivity = amount of output amount of labour  2) Capital productivity = sales turnover  capital employed 3) Profit productivity

= profit investment

112

OPERATIONS MANAGEMENT-BASICS OF JOB SCHEDULING Detailed day-to-day planning of operations is called job called job scheduling. It deals with questions such as:      Which

work centers will do which job?

     When

should an operation/job be started? W hen should it end?

     On

which equipment should it be done, and by whom?

     What

is the sequence in which jobs/operations jobs/operati ons need to be handled in a facility or on an equipment?

The job-shop type of production system is more concerned with day-to-day planning. There would be a variety of jobs. Each Eac h job has a variety of  operations to be performed. The variety of jobs and operati ons generate a multiplicity of semi-finished items which may have to wait for further  operations to be done on them. When hundreds or thousands of such variations in operations ±or-materials are to be handled, handle d, a systematic detailed daily plan is called for .

113

OPERATIONS MANAGEMENT-BASICS OF JOB SCHEDULING SCHEDULING Planning and scheduling in Industry Production planning/Master scheduling Capacity status

Orders, demand

Quantities, due dates Capacity planning/Material requirement planning

Scheduling constraints

Shoporders,release Shoporders,release dates Scheduling and rescheduling

Schedule performance

Schedule Dispatching

Shop status Shop floor management Job loading

Data collection Shop floor 

114

OPERATIONS MANAGEMENT-BENIFITS OF JOB SCHEDULING SCHEDULING  A production      

schedule can determine whether delivery promises c an be met and identify time periods available for f or preventive maintenance.

 A production      

schedule gives shop floor personnel an explicit ex plicit statement of  what should be done so that supervisors s upervisors and managers can measure the performance. Minimize W IP inventory. inventory.       Minimize      

average flow time through the system.

Maximize       Minimize      

machine and/or worker utilization.

setup times.

 A production      

schedule can identify resource conflicts, confli cts, control the release the jobs to the shop, and ensure that required raw materials are ordered on time. Better      

coordination to increase productivity and minimizing operating cost. 115

OPERATIONS MANAGEMENT-BASICS OF JOB SCHEDULING SCHEDULING Shop loading can be be done using simple charts as shown below: Facility /Work Centre

Time available (capacity

1

2

3

4

90

45

135

45

Job No:

Hours Required

9

14

4

10

10

Hours Available

81

31

131

35

11

Hours Required

11

9

19

7

Hours Available

70

22

112

28

Hours Required

8

5

11

7

Hours Available

62

17

101

21

Hours Required

4

3

5

5

Hours Available

58

14

96

16

Hours Required

10

7

6

9

Hours Available

48

7

90

7

Hours Required

2

2

5

2

Hours Available

46

5

85

5

12 13 14 15

116

OPERATIONS MANAGEMENT-BASICS OF ERP Enterprise Resource Planning systems (ERPs) integrate (or attempt to integrate) all data and processes of an organization into an unified system. ERP systems typically attempt to cover all basic basi c functions of an organization, regardless of the organization¶s business or charter. Businesses, Businesses, non- profit organizations, organizations, nongovernmental nongovernmental organizations, organizations, governments, and other large entities utilize ERP systems. Technically, echnically, a software package pac kage that provides both payroll and a nd accounting accou nting functions would be considered an ERP software package. However, However, the term is i s typically reserved for larger, larger, more broadly based ba sed applications. The introduction of an ERP system to replace two or more independent applications eliminates the need for external interfaces previously required between systems, and provides additional benefits that range from standardization and lower maintenance to eas ier and/or  greater reporting capabilities( as all data is typically kept in one database). 117

OPERATIONS MANAGEMENT-BASICS OF ERP Examples of modules in an ERP E RP which formerly would have been stand-alone applications include: Manufacturing, Supply Chain,Financials,Customer Relationship Management (CRM), Human Resources, Warehouse Management and Decision Support System. Today ERP systems typically handle the manufacturing, logistics,distribution,inventory,shipping,invoicing, logistics,distribution,inventory ,shipping,invoicing, and accounting for  a company com pany.. ERP software can aid in the control of many business activities, like sales,marketing,delivery,billing,production,invento sales,marketing,delivery ,billing,production,inventory ry management, quality management, and human resource management.

118

OPERATIONS MANAGEMENT-BASICS OF ERP Advantages In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Tasks Tasks that need to interface with one another may involve: Design       Order       The      

engineering (how to best make the product). produc t).

tracking from acceptance to fulfillment.

revenue cycle from invoice through cash receipt. recei pt.

Managing      

interdependencies of complex bill of materials.

Tracking      

the 3-way match between the purchase orders (what was ordered), Inventory receipts (what arrived), and Costing (what the vendor invoiced).

 Accounting      

for all these tasks, tracking tracki ng the revenue, cost and profit at regular intervals. 119

OPERATIONS MANAGEMENT-BASICS OF ERP Disadvantages ERP      

system system is often operated by personnel with inadequate inadequa te education in ERP in general. Customization      

of ERP software is limited.

Reengineering      

of business processes to fit the ³industry standard´ prescribed by the ERP system system may lead lea d to loss of competitive advantage. ERP      

systems systems can be very expensive to install.

ERPs      

are often so rigid and too difficult di fficult to adapt to the specific workflow and business processes of some companies.

Systems       Once      

can be difficult to use.

a system is established, switching cost are very hi gh.

Resistance      

in sharing sensitive internal information between departments can reduce the effectiveness of the software.

The      

system may be over-engineered relative to the actual needs of the customer. 120

OPERATIONS MANAGEMENT-BASICS OF PROJECT MANAGEMENT A Project may be defined as a series of related jobs usually directed towards some major  output and requiring a significant period of time to perform. Project management management can be defined as planning, directing and controlling resources (people, equipment, material) material) to meet the technical, cost and time constraints of the project. A project plan can be considered to have five key characteristics that have to be managed: Scope: defines what will be covered in a project. Resource: what can be used to meet the scope sc ope.. Time: what tasks are to be undertaken and when. Quality: the spread or deviation allowed from a desired standard. Risk: defines in advance what may happen to drive the plan off course, and what will be done to recover the situation. The sad thing about plans is you cannot have everything immediately. immediately. any people plan using planning software packages, without realizing the tradeoffs that must be made. They assume that if they write the plan down, reality will follow their wishes. Nothing is further from the truth. The point of plan is to balance: The scope, scope, and quality constraint against, The time and resource constraint, While minimizing the risks.

121

OPERATIONS MANAGEMENT-METHOD STUDY 



Method Study and Work Measurement are the two basic techniques of work study. While Method Study aims to improve the existing methods of operations and procedures, work measurement helps to assess the human effectiveness. Though these two are distinctly separate techniques, they are very much interdependent. The application of both these techniques in adequate proportions based on the nature and type of problems would result in maximum benefits to the organisation. Method Study is essentially concerned with finding better ways of doing work. It is a technique of cost reduction. The philosophy of Method Study is, ³there is always a better way´ and the tools of Method Study are designed to systematically arrive at this ³better way of doing a job´. Method Study can be applied to almost all types of work, whether it be a factory, electrical or any other type of activity. The scope of Method Study is not restricted to manufacturing industries alone, but extends to all other spheres. Methods improvement has been very successfully success fully adopted in banks, hospitals, offices and retailing, in addition to defence, agriculture and all types of industries. There are various techniques which are suitable for tackling Method Study problems on all scales and for all types of work. There is no limit limit to the types of work which can be profitably studied. Another important aspect of Method Study is that often, with limited capital ca pital expenditure, it would be possible to obtain considerable economies in the use of resources and ac hieve large monetary savings. 122

OPERATIONS MANAGEMENT-METHOD STUDY 

Method Study is the systematic recording and critical  examination of existing and proposed ways of doing do ing work, as a means of developing and applying easier and more effective methods and reducing costs. (Definition adopted in the B.S.Glossary of terms in Work Study.) OBJECTIVES      OBJECTIVES The objectives of Method Study Stud y are ± i) Impr Improv ove e basi basic c pr proc oces esse ses. s. ii) ii) Impr Improv ove e the the desi design gn of of plant plant and equipm equipment ent.. iii) Improve Improve factory, factory, office office and and work place layout layouts s and handling handling of  materials. iv) Improve Improve the use of materi material, al, plant, plant, equipment and power. v) Impr Improv ove e the work workin ing g proc proced edur ures es.. vi) Improv Improve e the the working working enviro environme nment. nt. vii) Improve quality 123

OPERATIONS MANAGEMENT-METHOD STUDY      METHOD METHOD

STUDY PROCEDURE The analysis of problems for Method Study consists of an ordered and systematic procedure. This procedure involves six basic steps as follows:  SE L E C T the work to be studied  RECORD all relevant facts  EXAMINE these facts critically  DEVELOP the most effective, economical and practical method  INSTALL the method as standard practice  MAINTAIN the standard practice by regular checks The above procedure is a logical one and is easy to follow in any type of work. Each of the steps is equally important and clearly defined. Faithful adherence to the basic procedure proced ure would result in achieving maximum results.

124

OPERATIONS MANAGEMENT-METHOD STUDY Selection of work for Method Study is the first step. The field of choice for Method Study is quite wide and every job is amenable to improvement. But the selection of the job should be based on scope and need for improvement, resul esulti tin ng eco economy nomy,, pr priior oriity, ty, objec bjecttive ive and and simi simillar oth other cons consiidera derati tio ons. ns. Once nce the job has been selected, the next step is to record all the pertinent facts relating to the present or proposed method. There are a variety of recording techniques suitable for different types of situations. A proper recording is necessary since it forms the basis for further investigation. Critical exam examiinati natio on is the the crux crux of Meth Method od Stud Study y. All these hese recor ecord ded fact acts are are subj subjec ecte ted d to a thorough examination. Nothing is taken for granted and each activity is challenged with a view to get as many alternatives and improved methods as possible. All the alternative proposals thus obtained are evaluated and the most practica ticall and econ conomical method is devel evelo oped. Con Consid siderab erablle planning and preparation is necessary before the proposed method is installed. Full coop cooper erat atio ion n and and part partic icip ipat atio ion n from from the the Mana Manage geme ment nt,, Supe Superv rvis isor ors s and and wo work rker ers s is essen sentia tial for the imple plementat tation of the new method. A number of diff diffiicultie ties may crop up when the proposed method is under operation. There is also a tendency on the people to get back to the old methods with the slightest of   excuses. Proper maintenance through routine and regular checks is an impo import rtan antt fact factor or in the the Meth Method od Stud Study y pr proc oced edur ure. e.

125

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION 







It is important that production process meets the quantity goals established in the production schedule, but it is of equal importance that the output meets the quality specifications specifications as well. To manufacture products products of desired quality, control over their quality must be exercised throughout the production and associated functions, including production planning, procurement and distribution. distribution. Quality considerations considerations are present in every every aspect of the production cycle ± from the purchase of raw material to the customer. Monitoring all the quality level is usually assigned to a staff group that reports re ports to the top management. Organizationally, this group is commonly referred to as Quality Control. The authority that quality control exercises varies according to the relative defect of controlling quality and to management assessment of the consequences of circulating the defective products. Since quality assurance enters into so many linkages within the production system, more support is needed from all levels of management than for most of  the functions. functions. No single department department or staff can assure quality by itself. itself. It takes cooperation of line workers, the supervisors and related staff  organization. Quality assurance is a skill. Like other skills, if it is not c ontinuously exercised, it will deteriorate. Also, it has been said that ³quality is everybody¶s concern.´ But a job that belongs to everybody can easily e asily become a job that nobody does.

126

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION The overall value of the quality organisation should be judged by the ratio of cost incurred to cost saved, and not by the glamour of its own advertisements.  Cost of vigilance versus cost of error: In most production situations, the cost of vigilance vigilance and error varies inversely. Greater vigilance may take the form of  extra time taken by individual individual worker, close supervision, additional test for  products and inspection of all or portion of the output. The cost of error  includes re-work, rejects and customer dissatisfaction. Somewhere between the extremes of no vigilance and extra vigilance is a point where control over  the magnitude of errors produces a minimum total cost.  Inspection versus quality control: Inspection is an act of comparing a product with with accepted specifications specifications or other recognized recognized standards. The purpose of  this inspection is to know where the product conforms to or does not conform to the specified specified quality limits limits expressed in the specifications. specifications. Units of the product found to conform are accepted; others are rejected. Inspection is essentially a post-mortem operation performed on the product after it has been completely completely processed. As a screen operation, operation, the purpose of  inspection is to separate products into two classes: accepted and not accepted. Inspection operation itself adds nothing to the value of the product. H ence, the inspection operation itself does not improve product quality and neither does it reduce rejections, since it involves no corrective action on the operation. 127

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION 





The problem is, how to guarantee a product of high quality to the customer and not burden the manufacturer with the loss of high percentage of rejections entailed by the the inspection screening operation. The answer to this lies in quality control. Quality control is a system of inspection, analysis and action applied to a manufacturing process so that by inspecting a small portion of the product currently produced, an analysis analysis of its quality can be made to determine what action is required on the operation to achieve and maintain the desired level of  quality. In its broader application, quality control is a preventive tool and is used to minimize rejections to the end that all products and processes will meet the specified quality limits. When and where and how to inspect: Where to inspect depends largely on when the inspection is scheduled. The location of most inspection stations is at the site of production ± the receiving receiving dock for incoming shipments, the assembly area, the construction site, distribution points, etc. In a fixed-position layout, inspectors must come to the product to check quality at various stages of development. In product layouts, particularly pa rticularly mechanized production lines, products come to the inspectors at special stations built into the line. Receiving ³floor inspectors´ examine output from the individual work stations associated with a process layout.

128

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION 





Deciding where to inspect during a production process is simply a matter of  common sense ± when it will do the most good. Logical choices are the beginning and end of the production process. Raw material and component inputs should be inspected to see whether they meet expected standards. Acceptance of substandard inputs obviously jeopardizes outgoing quality a nd may damage equipment or disturb process continuity. Outgoing products are examined to protect the producer from customer discontent or buyer rejection. During the production process, inspection is scheduled in front of operations that are costly, irreversible or masking. Considerable expense is avoided by eliminating defective defective units before they undergo a costly phase phas e of their  development or before they pass through a process that cannot be undone, such as welding, pouring concrete, or mixing. Chemical operations such as painting and encapsulating may hide defects easily detectable before the masking operation. From the foregoing, it may appear that products are continually under  inspection. Actually, Actually, workers continually check the quality of their own or a machine¶s output, but there are just a few distinct inspection stations. Constant formal surveillance surveillance would not only increase cost, it would also create an uncomfortable atmosphere for workers. The timing and location of inspection points are key features in the design of any testing programme.

129

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION 





How to inspect: The two basic types of inspection are called ³variables´ and ³attribute´. When precise measurements are made of dimensions, weight or  other critical characteristics capable of expression on a continuous scale, the products are being subjected to variables inspection. The alternative to exact measurements is to set limits within which the product is judged acceptable or  defective. A go-no-go rating results from an attribute inspection. inspection. Since a good or bad grading normally requires less time and skill to make and uses lowercost equipment than exact measurements, attribute inspection is usually less expensive than variables inspection. It is generally assumed that the variables measured have a normal distribution. distribution. Precise measurements require closely calibrated devices, rulers, micrometers, scales, meters, etc., capable of measuring the product¶s fineness standard. Devices to check attributes are designed to provide a quick verdict of  acceptability ± go-no-go gauges, snap gauges, templates, templates, etc. Statistical sampling techniques frequently reduce inspection cost. The use of  samples to replace 100% inspection is usually appropriate for machine output where units are not so likely to vary as are hand-crafted products. High production quantities quantities and expensive inspections also suggest sampling. T hen there is destructive testing (the performance test destroys the unit tested) which absolutely rules rules out 100% inspection.

130

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION 

   

Acceptance sampling: The purpose of acceptance sampling is to rec ommend a specific specific action; it is not an attempt to estimate quality or to control quality directly. The basic action recommended is to accept or reject the items represented by the sample. The sampling plan plan specifies the sample size and the associated number of defectives that cannot c annot be accepted without rejecting the lot from from which the sample was taken. In its simplest form, form, the quality of a certain number of products of the same type is measured by drawing a random sample from the lot. The sample is tested, on which basis the entire lot is either  accepted or rejected on the basis of the quality of the sample. The rejected lots may then be inspected 100%. In sampling, accepting a bad lot is termed as consumer¶s risk whereas rejecting a lot with fewer defectives than the standard, is termed as producer¶s risk. Limitations of acceptance sampling: Since the conclusion is based on a sample, there is always some likelihood / risk of making a wrong inference about the quality of the lot. The success of the scheme depends on the randomness of the samples, quality characteristics to be tested, lot size, acceptance criteria, etc.

131

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION      Various

sampling plans:  Single sampling plan.  Double sampling plan.  Sequential sampling plan.      Statistical Quality Control  Statistical Quality Control is applied by taking samples and draw ing conclusions by means of some mathematical analysis. It has already been explained in a previous section that variation in the quality of the product is an inherent characteristic of a manufacturing system. Irrespective of all possible precautions and quality measures there are always a large number of random disturbances responsible for  deviations in the quality of the product from the set standards. The sources of these disturbances are known as chance causes. For  example, movement movement of the machine due to passing traffic, sudden changes in temperature etc. The presence of these causes in the system is due to a multitude of reasons reas ons which are difficult to identify and uneconomical to eliminate. These can neither be discerned or  removed. There is very little that we can do about these. 132

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION 





There may be other sources of variations in a system which further cause the product to deviate from set standards. These individual individual causes ca uses can be identified and eliminated economically. The magnitude of variability due to these causes varies with the conditions of the production process, nature of  the raw material, material, behavior of operations etc. These causes are known as assignable causes. The reasons for the presence of assignable causes can be (i) differences among workers performance (ii) differences among machines (iii) variation in material and (iv) variation due to the interaction of any two or  all the three factors e.g. tool wear, errors in setting poor machine maintenance etc. The chance and assignable causes combine together to lower the quality of the product. Any item which is not in accordance acc ordance with the quality specifications is known as defective item and is liable to be rejected by producer and consumer. The object of quality control is to minimize the proportion of defectives in the given lot. Inspection is the method of locating defective items by examining these against specifications and statistical quality control is to ascertain whether the variation in the quality of the product is due to chance causes or due to assignable causes. If the process is found to be in statistical control then it indicates that the variation in the quality is due to chance causes only; otherwise presence of assignable

133

OPERATIONS MANAGEMENT-QUALITY CONTROL & INSPECTION       Benefits

of Statistical Quality Control:



The use of statistical quality control ensures e nsures rapid and efficient inspection at a minimum cost.  It minimizes waste by identifying the causes of excessive variability in the quality of product.  SQC exerts more effective pressure for quality improvement than 100% inspection.       Control Charts : 

  

A Control Chart is a graphical aid for depiction of quality variation in output from a production process. As opposed to the aim of acceptance sampling (to reject or accept products already produced), control charts aid in the production of a better product. The charts have three main applications: To determine the actual capability of production processes. To guide modification modification to improve the output of the processes. To monitor monitor the output ± wherein the current status of the output output quality provides an early warning of deviations from the quality goals.

134

OPERATIONS MANAGEMENT-BASICS OF ISO 9000 ISO is derived from the Greek work isos, meaning mean ing equal. ISO is a worldwide federation of national standard bo dies from 100 countries. ISO 9000 is a series of standards that help hel p organisations define and maintain a quality system. ISO is not a quality qu ality assurance system. ISO 9000 stands for systems standardization and registration rather  than product standardization and registration. The standards merely stipulate where organizations need documentation to validate processes and approaches but neve r  dictates how much they require. The ISO 9000 standards basically have three requirements: The company must document quality system and business b usiness process in detail 

The company must make sure each employee understands and follows the guidelines put forth by the documentation.



Documented quality system must be constantly monitored m onitored through internal and external audits, au dits, and changed or updated when necessary.



135

OPERATIONS MANAGEMENT-BASICS OF ISO 9000

Benefits of ISO9000 registration Higher perceived quality Improved customer satisfaction Reduced customer quality audits Better documentation Greater quality awareness Positive cultural change Increased efficiency and productivity Competitive edge

136

OPERATIONS MANAGEMENT-BASICS OF ISO 9000

Within the ISO 9000 family are specialized standards that include ISO9001,9002,9003. Below is a description of each: 9001      

applies to organizations doing design development, production, testing and servicing of product.

9002      

applies to organizations not having design responsibility responsibi lity.. 9003      

applies only to testing of a product. 137

OPERATIONS MANAGEMENT-BASICS OF ISO 9000 ISO Does not      

impose additional requirements on your work

processes. Does not      

require standardizing our work to confirm to another  quality standard.       Does

requires us to document how we do our work and then follow our own instructions.

 All processes will be managed in accordance with the following ISO principles: Does not             Say       Do

dictate how you should perform your work.

what you do;

what you say;

Prove      

it!

138

OPERATIONS MANAGEMENT-BASICS OF ISO 14001  ISO 14001 latest version is 2004.  It is a Environmental E nvironmental Management System System addressing environmental issues.  It is not mandatory and not customer driven.  Organization has to decide whether it wants w ants to self certify or get its system certified by an authorized body for authenticity.  The company having ISO 14001 should define objectives and targets which are measurable and which can be monitored.  The company will maintain manual as per ISO guidelines and should contain scope (dept or complete office), procedures (how to monitor, monitor, measures which will be take up), emergency plan, training to employees, roles and responsibilities r esponsibilities of HOD¶s, legal requirements, etc.  In the HSE policy the company should make commitment commitment towards preventing pollution, injury and ill-health in their  operations by proactively addressing HSE concerns in their  activities and services and make provision for continuous improvements..

139

OPERATIONS MANAGEMENT-JOB SEQUENCING Job sequencing is concerned with appropriate selection of jobs to be done on a finite number  of service facilities (like machines) in some well-defined technological order order so as to optimize total elapsed time or overall cost.

Task

A B C D E F G H

I

Machine 2 5 4 9 6 8 7 5 4 I Machine 6 8 7 4 3 9 3 8 11 11 2 Determine the optimum sequence that minimizes the total elapsed time required to complete the tasks on two machines. 140

OPERATIONS MANAGEMENT-JOB SEQUENCING In a machine shop 4 different products are being manufactured, each requiring time on the two machines A and B given below: Product

Time in minutes on

Time in minutes on

Machine A

Machine B

1

35

20

2

45

30

3

15

50

4

20

35

Determine the optimum sequence to minimize the total manufacturing time for all the products. Also find the idle time on both the machines. 141

OPERATIONS MANAGEMENT-JOB SEQUENCING 

We have five jobs each of which must go through three machines A, B and C in the order ABC. Processing time in hours is as given below: Job 1 2 3 4 5

A 16 20 12 14 22

B 10 12 4 6

8

C 8 18 16 12 10

Determine a sequence for the five jobs that will minimize the total elapsed time. Find also the idle time of the machines A, B and C. 142

OPERATIONS MANAGEMENT-JOB SEQUENCING



Find an optimum sequence for the following sequencing problem of four   jobs and five machines. The processing time in hours is given below: Job 1 2 3 4

A 7

B 5

6

6

5 8

4 3

C 2 4 5 3

D 3 5 6

E 9 10 8

2

6

Also find total elapsed time. 143

OPERATIONS MANAGEMENT-VALUE ENGINEERING AND ANALYSIS Value      

Engineering (VE), also known as a systematic and function based approach to improve the value of products, projects, or processes.

VE      

involves a team of people following a structured process. The process helps team members communicate across boundaries, understand different perspectives, innovate, and analyze. VE      

improves value by focusing focus ing on delivering the product or  service at the best price by incorporating those value characteristics deemed most important by the customer.

VE      

is a tool that will improve your ability to manage projects, solve problems, innovate, and communicate. Cost savings, risk reduction ,schedule improvements, improved designs and better  collaboration are some of the outcomes of VE studies. 144

OPERATIONS MANAGEMENT-VALUE ENGINEERING AND ANALYSIS How does VE work? VE follows a structured thought process to evaluate options. Every VE session goes through a number of steps: 1.Gather information . What is being done now? 2.Measure Performance .How will the alternatives be measured? 3.Analyze Functions .What must be done? .What does it cost? 4.Generate Ideas (Brainstorming) .What else will do the job? 5..Evaluate and Rank Ideas .Which ideas are the best? 6.Develop and Expand Ideas .What are the impacts? .What is the cost? .What is the performance? 7.Presernt Ideas .Sell Alternatives

145