Operations Management: Palivela PG College (Mba), Palivela, E.G.Dist

PALIVELA PG COLLEGE (MBA), PALIVELA,E.G.
DIST
OPERATIONS MANAGEMENT
Objective: to acquaint the students with decision making process and various
aspects of Production Management.
Unit –I : Introduction : Nature and Scope of Production and Operation Management-

Historical Evolution – Types of Manufacturing Systems – Differences Between
Manufacturing and Service Operations Role of Production and Operation Manager.
Q1. Explain the nature and scope of production and operation

management?***
Q2. Explain Historical evolution of Production and operation
management?*
Q3. Explain types of production systems?***
Q4. Explain difference between Production Management Vs. Operation
Management?**
Q5. Explain role of Production and operation manager?**
(*)
INTRODUCTION
Production/operations management is the process, which combines and

transforms various resources used in the production/operations subsystem of the
organization into value added product/services in a controlled manner as per the
policies of the organization. Therefore, it is that part of an organization, which is
concerned with the transformation of a range of inputs into the required
(products/services) having the requisite quality level.
The set of interrelated management activities, which are involved in
manufacturing certain products, is called as production management. If the same
concept is extended to services management, then the corresponding set of
management activities is called as operations management.
CONCEPT OF PRODUCTION
Production function is that part of an organization, which is concerned with

the transformation of a range of inputs into the required outputs (products) having
the requisite quality level.
Production is defined as “the step-by-step conversion of one form of
material into another form through chemical or mechanical process to create or
1|Page Prepare By K.NAGABHUSHANARAO M B A

PALIVELA PG COLLEGE (MBA), PALIVELA,E.G.DIST
enhance the utility of the product to the user.” Thus production is a value addition
process. At each stage of processing, there will be value addition.
Edwood Buffa defines production as “a process by which goods and services
are created”. Some examples of production are: manufacturing custom-made
products like, boilers with a specific capacity, constructing flats, some structural
fabrication works for selected customers, etc., and manufacturing standardized
products like, car, bus, motor cycle, radio, television, etc.
Nature and Importance of Production Management:
Production management has become an important now a day that it is treated to be

a separate, independent functional area of management.
Production management has assumed its importance because of the following

reason:
1. It is the foundation for earning profits – by producing goods or services and

selling them into the market.
2. It ensures that produced goods or services are of desired quality, in required

quantity and according to time-schedules.
3. It facilitates optimum inventory level.
4. It ensures proper co-ordination and necessary control, which are required for
adequate, time and cost-conscious production.

5. It ensures coping with the changes in demands in the market and maintains
stability in the production department.
SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT
Production and operations management concern with the conversion of inputs

into outputs, using physical resources, so as to provide the desired utilities to the
customer while meeting the other organizational objectives of effectiveness,
efficiency and adoptability. It distinguishes itself from other functions such as
personnel, marketing, finance, etc., by its primary concern for ‘conversion by using
physical resources.’ Following are the activities which are listed under production
and operations management functions:
1. Location of facilities
2. Plant layouts and material handling
3. Product design
4. Process design
5. Production and planning control
6. Quality control
7. Materials management
8. Maintenance management.

1. LOCATION OF FACILITIES
Location of facilities for operations is a long-term capacity decision which
involves a long term commitment about the geographically static factors that affect a
business organization. It is an important strategic level decision-making for an
organization. It deals with the questions such as ‘where our main operations should
be based?’
The selection of location is a key-decision as large investment is made in

building plant and machinery. An improper location of plant may lead to waste of all
the investments made in plant and machinery equipments. Hence, location of plant
should be based on the company’s expansion
2. PLANT LAYOUT AND MATERIAL HANDLING
Plant layout refers to the physical arrangement of facilities. It is the
configuration of departments, work centers and equipment in the conversion
process. The overall objective of the plant layout is to design a physical arrangement
that meets the required output quality and quantity most economically.
According to James Moore, “Plant layout is a plan of an optimum arrangement
of facilities including personnel, operating equipment, storage space, material

handling equipments and all other supporting services along with the design of best
structure to contain all these facilities”.
‘Material Handling’ refers to the ‘moving of materials from the store room to
the machine and from one machine to the next during the process of manufacture’.
It is also defined as the ‘art and science of moving, packing and storing of products
in any form’. It is a specialized activity for a modern manufacturing concern, with 50
to 75% of the cost of production. This cost can be reduced by proper section,
operation and maintenance of material handling devices.
Material handling devices increases the output, improves quality, speeds up
the deliveries and decreases the cost of production. Hence, material handling is a
prime consideration in the designing new plant and several existing plants.
3. PRODUCT DESIGN
Product design deals with conversion of ideas into reality. Every business
organization have to design, develop and introduce new products as a survival and
growth strategy. Developing the new products and launching them in the market is
the biggest challenge faced by the organizations.
The entire process of need identification to physical manufactures of product
involves three functions: marketing, product development, and manufacturing.
Product development translates the needs of customers given by marketing into
technical specifications and designing the various features into the product to these
specifications. Manufacturing has the responsibility of selecting the processes by
which the product can be manufactured. Product design and development provides
link between marketing, customer needs and expectations and the activities required
to manufacture the product.
4. PROCESS DESIGN
Process design is a macroscopic decision-making of an overall process route
for converting the raw material into finished goods. These decisions encompass the
selection of a process, choice of technology, process flow analysis and layout of the
facilities. Hence, the important decisions in process design are to analyzes the
workflow for converting raw material into finished product and to select the
workstation for each included in the workflow.
5. PRODUCTION PLANNING AND CONTROL

Production planning and control can be defined as the process of planning the
production in advance, setting the exact route of each item, fixing the starting and
finishing dates for each item, to give production orders to shops and to follow up the
progress of products according to orders.
According to James Moore, “Plant layout is a plan of an optimum arrangement of
facilities including personnel, operating equipment, storage space, material handling
equipments and all other supporting services along with the design of best structure
to contain all these facilities”
6. PRODUCT DESIGN
Product design deals with conversion of ideas into reality. Every business
organization have to design, develop and introduce new products as a survival and
growth strategy. Developing the new products and launching them in the market is
the biggest challenge faced by the organizations. The entire process of need
identification to physical manufactures of product involves three functions:
marketing, product development, manufacturing. Product development translates
the needs of customers given by marketing into technical specifications and
designing the various features into the product to these specifications.
Manufacturing has the responsibility of selecting the processes by which the product
can be manufactured. Product design and development provides link between
marketing, customer needs and expectations and the activities required to
manufacture the product.
7. PROCESS DESIGN
Process design is a macroscopic decision-making of an overall process route for
converting the raw material into finished goods. These decisions encompass the
selection of a process, choice of technology, process flow analysis and layout of the
facilities. Hence, the important decisions in process design are to analyses the
workflow for converting raw material into finished product and to select the
workstation for each included in the workflow.
8. QUALITY CONTROL
Quality Control (QC) may be defined as ‘a system that is used to maintain a desired
level of Quality in a product or service’. It is a systematic control of various factors
that affect the quality of the product. Quality control aims at prevention of defects at
the source, relies on effective feedback system and corrective action procedure.
9. MATERIALS MANAGEMENT
Materials management is that aspect of management function which is primarily
concerned with the acquisition, control and use of materials needed and flow of
goods and services connected with the production.
10. MAINTENANCE MANAGEMENT
In modern industry, equipment and machinery are a very important part of the total
productive effort. Therefore, their idleness or downtime becomes are very
expensive.
Q2. HISTORICAL EVOLUTION OF PRODUCTION AND OPERATIONS MANAGEMENT
For over two century’s operations and production management has been
recognized as an important factor in a country’s economic growth.
The traditional view of manufacturing management began in 18 th century
when Adam Smith recognized the economic benefits of specialization of labour. He
recommended breaking of jobs down into subtasks and recognizes workers to
specialized tasks in which they would become highly skilled and efficient. In the
early 20th century, F.W. Taylor implemented Smith’s theories and developed
scientific management. From then till 1930, many techniques were developed
prevailing the traditional view. Brief information about the contributions to
manufacturing management is shown in the Table 1.1

Production management becomes the acceptable term from 1930s to 1950s. As F.W.
Taylor’s works become more widely known, managers developed techniques that focused on
economic efficiency in manufacturing. Workers were studied in great detail to eliminate
wasteful efforts and achieve greater efficiency. At the same time, psychologists, socialists
and other social scientists began to study people and human behavior in the working
environment. In addition, economists, mathematicians, and computer socialists contributed
newer, more sophisticated analytical approaches.
With the 1970s emerges two distinct changes in our views. The most obvious of these,
reflected in the new name operations management was a shift in the service and
manufacturing sectors of the economy. As service sector became more prominent, the
change from ‘production’ to ‘operations’ emphasized the broadening of our field to service

organizations. The second, more suitable change was the beginning of an emphasis on
synthesis, rather than just analysis, in management practices.
Q3. PRODUCTION SYSTEM

The production system of an organization is that part, which produces products of
an organization. It is that activity whereby resources, flowing within a defined
system, are combined and transformed in a controlled manner to add value in
accordance with the policies communicated by management. A simplified production
system is shown above.
The production system has the following characteristics:
1. Production is an organized activity, so every production system has an objective.
2. The system transforms the various inputs to useful outputs.
3. It does not operate in isolation from the other organization system.
4. There exists a feedback about the activities, which is essential to control and
improve system performance
Classification of Production System:
The type of Operation System to be adopted should be known to the people, and
then only you may choose the system based on the nature of the product that you
are going to manufacture. The types of operation system are classified based on the
following criteria.
 Product flow pattern in conversion system

 Output of the product

 Specification of the output
Job Shop Production

Job shop production are characterized by manufacturing of one or few
quantity of products designed and produced as per the specification of customers
within prefixed time and cost. The distinguishing feature of this is low volume and
high variety of products.
A job shop comprises of general purpose machines arranged into different
departments. Each job demands unique technological requirements, demands
processing on machines in a certain sequence.
Batch Production
10 | P a g e Prepare By K.NAGABHUSHANARAO M B A
Batch production is defined by American Production and Inventory Control Society

(APICS) “as a form of manufacturing in which the job passes through the
functional departments in lots or batches and each lot may have a
different routing.” It is characterized by the manufacture of limited number of
products produced at regular intervals and stocked awaiting sales.
Mass Production
Manufacture of discrete parts or assemblies using a continuous process are called
mass production. This production system is justified by very large volume of
production. The machines are arranged in a line or product layout. Product and
process standardization exists and all outputs follow the same path.
Continuous Production
Production facilities are arranged as per the sequence of production operations from
the first
Operations to the finished product. The items are made to flow through the
sequence of operations through material handling devices such as conveyors,
transfer devices, etc.
Q4. Explain difference between Production Management Vs. Operation
Management?**
Production Management: the set of interrelated management activities which are

involved in manufacturing certain products is called production management.
Operation management: If the same concept is extended to service management
then the corresponding set of management activates is called as operation
management.
Difference between PM and OM:

Production Management Operation Management
1. Products are tangible 1. Services are intangible
2. There is inventory in production 2. There is no inventory
Management. 3. Service is customized
3. Product is standardized 4. Quality in process
4. Quality of control in productivity of 5. Services located in market
product. environment.
5. Products located in industrial
environment.
Q5. Explain role of Production and operation manager?**
The production manager’s functions and roles are:

1. Planning
2. Organizing,
3. Directing
4. Controlling
5. Appraisal
Organizing:
 Define the objectives of departments or organization
 Draw the organization chart

 Prepare the statement of department tasks
 Develop a policy manual for the productivity planning and controlling
Planning :
 Effective direction, control and appraisal of operation can’t be done
unless the activates are planned first. The production management’s
job is to prepare the flowing statements.
 Prepare a stamen of long-term and short-term planning requirements.
 Develop the operating plan which include master planning, scheduling
dispatching, process, order, preparation of material planning etc.,
Directing:
The production mangers must direct the activities of the subordinates
within frame work of the shop floor. The direction of the activates elements are:
 Effective decision making
 Effective communication
 Motivation
 Coordination
Controlling: The activates will be carried with the plans the job of the production
manager is to prepare standard section control charts.
Appraisal: This is primary to calculate the result of operating plans. In the s
appraisals analysis of variance perform evaluation,
 End of UNIT 1
1
Unit-II: Production Planning and Control: Stages in PPC – Gantt – PPC in

Mass, Batch, and Job Order Manufacturing-Aggregate Planning –
Maintenance Management – Industrial Safety.
Q1. Define the PPC and explain the stages in PPC? ****
Q1.1. Explain the function of PPC?
Q2. Explain the Gantt chart? (3 Marks)
Q3. Explain the PPC in Mass production? +
Q3. Explain the PPC in Batch production? +
Q3. Explain the PPC in job production?
Q4. Explain the Aggregate Planning?
Q5. Explain the Maintenance Management?
Q6. Briefly explain the Industrial safety?
INTRODUCATION:
Production planning and control can be defined as the process of planning
the production in advance, setting the exact route of each item, fixing the starting
and finishing dates for each item, to give production orders to shops and to follow
up the progress of products according to orders.
In modern organizations production is a complex system. We can take steps
that must be of production of goods in Right Quantity, quality in right time and place
by using most efficient methods. This is the task of the production, Planning and
controlling.
According to James Moore, “Plant layout is a plan of an optimum
arrangement of facilities including personnel, operating equipment, storage space,
material handling equipment and all other supporting services along with the design
of best structure to contain all these facilities”
Production Planning:
This is concerned by deciding in advance of action. In production system
there are four types of Question:
1. What is to be produced?
2. When is to be produced?
3. Where is to be produced?
4. How is to be produced?
If involves foreseeing every step in the process of production so as to avoid all
difficulties and inefficiency in the operation of production.
Production Control:
PC involves implementation of production planning or schedules by
coordinating different activates.
OBJECTIVES OF PPC:
1. To achieved the optimum utilization of resources
2. To achieve the predication of quality products
3. To maintain flexibility in manufacturing system
4. To achieve cost control
5. Better coordination between various job shops
6. To remove bottlenecks
7. To increase the productivity
8. The ultimate objective is to increase profitability
9. To minimize idle time, overtime and inventory cost.
PPC Stages:
In production Planning & Control there are 3 types of stages
PPC Stages
Planning Action Controlling

Stage Stage Stage
PLANNING STAGE:. This is an exercise of intelligent anticipation in order to

establish, how an object can be achieved in an uncertain environment. The
outcomes of planning are the formation of a plan which is the combination of
discipline, Coordination and measurement. The plans to effect and achieve the
object of modules of production planning are
1. Aggregate Planning
2. Master scheduling
3. Product designing
4. Material planning
5. Loading
Action Stage: it provides guidelines for implementation of plans into practice.

Action Stage has the major step of dispatching; It is nothing but giving authority to
undertake a particular job. It classified as
 Canalized Dispatching
 Decentralized dispatching
The action stage modules under dispatching
 Store issue order
 Tools order
 Jab order
 Time setter
 Inspection order.
CONTROL STAGE: If Provides necessary guidelines to control production system
through feedback mechanism. It has two modules
 Progressive reporting
 Corrective action
Progressive Reporting: if helps to make comparison with the present level of
performance. The various data presenting through.
1. Process verification
2. Equipment failure
3. Operator efficiency
4. Machine life
5. Operators absence
Corrective Action: this is the key role of PPC. It is corrective action the control
over manufacturing operations is maintained. Job may be shifted to other machines
or work stations. Re-planning may be a necessary to all modules
Requirements of effective PPC:
PPC system can be effective when the following requirements
1. Organizational setup
2. Information feedback system
3. Trained persons
4. Flexibility
5. Standardization
6. Periodic flow
Element of PPC or Functions of PPC:
Funcations of PPC
Producation Planning Producation control
1. Estimating
1. Dispatching
2. Routing
2. Progressing
3. Scheduling
3. Corrective actions
4. Loading
JOB SHOP PRODUCTION

Job shop production are characterized by manufacturing of one or few
quantity of products designed and produced as per the specification of customers
within prefixed time and cost. The distinguishing feature of this is low volume and
high variety of products.
A job shop comprises of general purpose machines arranged into different
departments. Each job demands unique technological requirements, demands
processing on machines in a certain sequence.
Characteristics
The Job-shop production system is followed when there is:
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge because
of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of each
product, capacities for each work centre and order priorities.
Advantages
Following are the advantages of job shop production:
1. Because of general purpose machines and facilities variety of products can
be produced.
2. Operators will become more skilled and competent, as each job gives them
learning opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for creative methods and innovative ideas.
Limitations
Following are the limitations of job shop production:
1. Higher cost due to frequent set up changes.
2. Higher level of inventory at all levels and hence higher inventory cost.
3. Production planning is complicated.
4. Larger space requirements.
***
BATCH PRODUCTION
Batch production is defined by American Production and Inventory Control Society
(APICS) “as a form of manufacturing in which the job passes through the functional
departments in lots or batches and each lot may have a different routing.” It is
characterized by the manufacture of limited number of products produced at regular
intervals and stocked awaiting sales.
Characteristics
Batch production system is used under the following circumstances:
1. When there is shorter production runs.
2. When plant and machinery are flexible.
3. When plant and machinery set up is used for the production of item in a
batch and change of set up is required for processing the next batch.
4. When manufacturing lead time and cost are lower as compared to job
order production.
Advantages
Following are the advantages of batch production:
1. Better utilization of plant and machinery.
2. Promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process number of products.
6. Job satisfaction exists for operators.
Limitations
Following are the limitations of batch production:
1. Material handling is complex because of irregular and longer flows.
2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production.
4. Higher set up costs due to frequent changes in set up.
***
MASS( or FLOW) PRODUCTION:
Manufacture of discrete parts or assemblies using a continuous process are called

mass production. This production system is justified by very large volume of
production. The machines are arranged in a line or product layout. Product and
process standardization exists and all outputs follow the same path.
INPUT OUTPUT
Final Assembling
Characteristics
Mass production is used under the following circumstances:
1. Standardization of product and process sequence.
2. Dedicated special purpose machines having higher production capacities and
output rates.
3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and without any back
tracking.
8. Production planning and control is easy.
9. Material handling can be completely automatic.
Advantages
Following are the advantages of mass production:
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.
Limitations
Following are the limitations of mass production:
1. Breakdown of one machine will stop an entire production line.
2. Line layout needs major change with the changes in the product design.
3. High investment in production facilities.
4. The cycle time is determined by the slowest operation.
Line of balancing Methods:
Balancing period is defined as the amount of idle time for the entire
assemble line as a fraction of the total working time result from unequal task
time assigned to the various stations.
Precedence diagrams:
Precedence diagram is a graphical tool for scheduling activities in a
project plan. It works by a network of connected arrows that represent the
dependencies and the nodes representing the activities. And calculate the
line efficiency, balance delay, smoothness Index.
Line efficiency: the ration between total station time to the product of the
cycle time and the no. of work stations
LE =
Smooth Index: This is an index to indicate the relative smoothness of given
assemble line balance. A smoothness index of zero indicates a
perfect balance .
SE =
Balance delay : This is a measure of total available working time of all
stations.
BD = (100- LE)
PROBLEM AREA
AGREGATE PLANNING :
Introduction: Demand forecast can be classified into long range, medium range
and short range forecasts. Long range forecast acts as the basis for capacity
planning. A company may be manufacturing several products using a set of
facilities.
Nature of Aggregate Planning Decisions: The different capacities which are

generally used to manufacture products are as listed below.
1. Regular time production capacity.

2. Subcontracting capacity.
3. Overtime capacity.
4. Hiring and firing capacity.
Generally the aggregate planning for next 3 to 6 months duration.
Cu Cumulative demand
mu
lati
ve
De Alterative 1
ma
nd
Alterative 2
Time
Alterative 1: the production rate is greater than expected demand forecast.

Inventory carrying cost is maximized
Alternative 2: produce as per demand so that inventory carrying cost is

minimized.
Aggregate planning strategies: One can use any one or a combination of the
following strategies for smoothing fluctuations in demand. Generally, a mixture of
strategies is preferred.
1. Building and utilizing inventory through constant work force

2. Varying the size of the work force
3. Overtime utilization
4. Subcontracting
If a single strategy is used to meet the demand, then it is called as a pure strategy
each of the above strategies is called as a pure strategy. Instead of this , if a
combination of the above pure strategies is used to meet the demand, then it is
called as a mixed strategy, several mixed strategies can be generated by taking two
at a time three at a time or four at a time or four at a time of the above pure
strategies.
Aggregate planning methods:
The aggregate planning problems can be classified as : graphical method,

heuristic rules, explicit mathematical solution, simulation and other sophisticated
search procedures.
Graphical Method: In this Method, cumulative demand values and

cumulative production capacity are plotted on the same graphs.
Heuristic method: in this method a list of pure strategies and mixed

strategies are generated and evaluated in terms of cost and finally a pure strategy or
a mixed strategy with the minimum total coast is selected for implementation.
MAINTENANCE MANAGEMENT:
All organizations are having some assets and hence the need for property
maintenance and physical asset management. A combination of actions carried out
to return on item restores it to an acceptance conditions.
TERO TECHNOLOGY: It is also called total maintenance Management. It takes

into account all aspects of plant machineries from design to describe that means
design, initialization, maintains, replacement and removal of the plant or equipment
plus the feedback of performance for the equipment or plant.
Objectives of Maintenance management:
 To extend the useful life of asset by minimizing the failures.

 To maximize the availability of all assets.
 The maximum possible return on investment.
 Failure analysis.
It is important to identify the nature and occurrence of failure with respect to

time. It is the science that the failure rate patterns can be defined as a bath-tub
curve.
Normal wear out

Early failures
failure
Rare failures
Number of failures
Time
This is called bath tub curve. In this bath tub curve
1. There will be large number of failures in the early period. This is mainly due
to non alignment while shipping the product or misfit while manufacturing or
very high initial friction between moving parts etc.,
2. The failure rate will drastically decrease in this period and it will be stabilized
in the next period where reliability calculations are normally done.
3. The next period the failure rate will follow a normal distribution which gives
the indication to follow group replacements etc.,
Type of maintenance systems:
1. Unplanned maintenance systems

In this maintains system to put any action immediately. For example loss
of production, damage of assets for safety reasons
2. Planned maintenance systems.
This is the preplanned maintains system. It is divided into two types
1. Preventive, 2. Corrective
1. Preventive maintenance system: in this system maintenance is
carried out in pre determined interval or to other prescribed criteria, to
reduce the failures of equipment. Preventive maintains system can be
divided into two types
a. Running maintenance system: Maintenance which can be
carried out when the item is in service.
b. Shutdown maintenance system: Maintenance which can be
carried out when the item is out of service. This can be divided
into
i. Time based maintenance system: this policy is
effective when the failure of any item of equipment is
time dependent that means the third stage of bath tub
failure curve.
ii. Condition based maintenance system: it is carried
out in response of significant particular unit as indicated
by the changes in condition or performance. In this
system we can use pre-detective maintains. This is also

called signature analysis. In the analysis it monitors the
health of equipments by regarding systematically signals
or information. Example Mechanical vibrations, smell,
noise signal.
2. Corrective maintenance system : this is carried out to restore an
item to meet an acceptable condition that means minor repairs and
replacement of machinery part etc.,
Industrial safety: the observance of safety at work is essential at all

times. The general rule is always “safety First”. Some of the main safety
consideration when carrying out a maintenance management task are the
following :
1. Guards: are supplied by plant manufacturers fitted by the company.

The security of easily accessible guard must always be included in job
specification as items for regular checks at planned preventive-
maintenance inspections.
2. Protective Clothing : such as helmets, gloves, goggles, gas masks
etc., must be given full consideration especially in chemical and allied
industries.
3. Power isolation: by the use of appropriate fuses might be necessary
while effecting certain type of maintenance task . Water and
compressed air supplies can usually be isolated and locked off where
necessary. Gas lines may have to be purged before any welding is
permitted.
4. Pressure vessels, Piped Power, Lifting Appliance should have
some type of a permit system to open and/or blank off.
5. Permit to work: for carrying out maintenance tasks should remain
valid for a specific appropriate period only.
Gantt Chart :
A Gantt chart, commonly used in Production management, is one of the most

popular and useful ways of showing activities (tasks or events) displayed against
time. Each activity is represented by a bar; the position and length of the bar
reflects the start date, duration and end date of the activity. This allows you to see
at a glance:
 What the various activities are

 When each activity begins and ends
 How long each activity is scheduled to last
 Where activities overlap with other activities, and by how much
 The start and end date of the whole project
THE END OF IIND UNIT
Unit-III: Plant Location: Facility Location and Layout Planning –Types of Layouts –
Material Handling Equipments – Material Handling Principles – Models Used in Lay
Out Designs.
Q1. Briefly explain the plant location and need?
Q1.1 Explain the factors facility location and types of layouts?
Q2. Explain the Different types of the Martial handling equipments?
Q3. Explain the different types of model used in lay out designs?
Plant location or the facilities location problem: is an important strategic level
decision making for an organization. One of the key features of a conversion process
is efficiency with which the products are transferred to the customers. This fact will
include the determination of where to place the plant or facility.
The selection of location is key-decision as large investment is made in

building plant and machinery. It is not advisable or not possible to change the
location very often. So an improper location of plant may lead to waste of all the
investments made in building and machinery, equipment.
NEED FOR SELECTING A SUITABLE LOCATION:
The need for selecting a suitable location arises because of two situations:
1. When starting a new organization

a. Identification of Region
b. Choice of site within region
c. Dimensional analysis
2. In case existing organization
a. Plant manufacturing distinct products.
b. Manufacturing plant supplying to specific market area.
c. Plant divided on the basis of process or stages in manufacturing
d. Plants emphasizing flexibility
Factors influencing plant location:
Factors influencing plant location can be categorized into controllable and

uncontrollable factors as
Plant Layout:
Plant layout refers to the physical arrangement of production facilities. It is the

configuration of departments, work carters and equipment in the conversion
process. It is a floor plan of the physical facilities, which are used in production.
According to Moore “ Plant layout is a plan of an optimum arraignment of

facilities including personnel, operating equipment, storage space, material handling
equipment and all other supporting services along with the design of best structure
to contain all these facilities”.
Objectives of plant layout:
The primary goal of the plant layout is to maximize the profit by arrangement
of all the plant facilities to the best advantage of total manufacturing of the product.
1. Streamline the flow of materials through the plant

2. Facilitate the manufacturing process.
3. Maintain high turnover of in process inventory.
4. Minimize materials handling and cost
5. Effective utilization of men, equipment and space
6. Make effective utilization of cubic space
7. Flexibility of manufacture operation and arraignments.
8. Provide for employee convenience safety and comfort
9. Minimize investment in equipment
10. Minimize flexibility of arrangement and operation
11.Facilitate the organization structure.
Principals of Plant layout:
1. Principal of Integration: A good layout is one that integrates Men,

Materials, Machines and supporting services and other in order to get the
optimum utilization of resources and maximum effectiveness.
2. Principal of Minimum Distance: This Principal is concerned with the
minimum travel of man and Materials. The facilities should be arranged such
that the total distances traveled by the men and materials should be
minimum and as far as possible straight line movement should be preferred.
3. Principal of cubic space utilization the good layout is one that utilizes
both horizontal and vertical space.
4. Principal of flow: a good layout is one that makes the materials to move in
forward direction towards the completion stage. There should not be any
backtracking.
5. Principle of Maximum flexibility : the good layout is one that can be
altered without much cost and time
6. Principle of safety and security and stratification: A good layout is one

that givers due consideration workers safety and satisfaction and safeguards
the plant and machinery against fire, theft.,
7. Principle of minimum Handling : A good layout is one that reduces the
material handling to the minimum.
Types of Layouts:
The plant layout design there is five basic or classical types of layouts.
1. Product or Line layout

2. Process or Functional Layout
3. Cellular or Group layout
4. Job shop layout
5. Project or fixed position layout
1. Product or Line layout: These types of layout are developed for product
focused systems. In this type of layout only one product, or one type of product,
is produced in a given area. In cast of product being assembled, this type of layout
FLOW LINE – PRODUCT – ‘A’

Raw Materials
Finished Goods
Cast Turn Mill Grind Paint Inspect Pack
FLOW LINE – PRODUCT – ‘B’
Forge Grind Heat treat Inspect Pack
is popularly known as an ‘assembly line’
The work centers are organized in the sequence of appearance. The Raw
Material enters at one end of the line basis is dependent upon a number of factor
and has many consequences which should be carefully weighed.
1. High volume of production for all equipment utilization

2. Standardization of product
3. Reasonably stable product demand
4. Uninterrupted supply of material
Advantages :
1. Reduction in material handling

2. Less work-in-process
3. Better utilization and specialization of labour
4. Reduced congestion and smooth flow
5. Effective supervision and control.
2. PROCESS OR FUNCTIONAL LAYOUT
This type of layout is developed for process focused systems. The processing
units are organized by function into departments on the assumption that certain
skills and facilities are available in each department. Similar equipments and
operations and grouped together.
Example : Milling, foundry, drilling, plating, heating etc
This type of process focused system is very wide both in manufacturing and
other service facilities such as Hospitals, Large Offices etc.
This type of layout system use low-volume of production (Batch Production

system).
Advantages : 1. Better machine utilization.
2. Higher flexibility
3. Greater incentive to individual worker
4. More continuity of production in unforeseen conditions like

breakdown, shortages, absenteeism etc.
3. Cellular or Group layout :
It is a special type of functional layout in which the facilities are clubbed

together into cells. This is suitable for systems designed to use the concepts,
principals and approached of group technology. This types of layout the advantages
of Mass production with high degree of flexibility.
Job-shop layout: It is layout for a very general flexible system that is processing
job production. The preparation of such a layout is dependent on the analysis of the
possible populations of order and is a relatively, complex affair.
Project or fixed position layout: This is the layout for project type systems in
which the major component is kept at a fixed position and all other materials,
components, tools, machines, workers etc. are brought and assembly or fabrication
is carried out. This type of layout is now not used very commonly as the machines
required for manufacturing work are big and complicated.
Advantages : 1. The handling requirements for major unit are minimized.
2. Flexible with reference to the changes in product design.

3. High adaptability to the variety of product and intermittent demand.

4. The Capital Investment is minimum.
Q2. Explain the Different types of the Martial handling equipments?
Introduction:
Material handling (MH) involves “short-distance movement that usually takes

place within the confines of a building such as a plant or warehouse and between a
building and a transportation agency.” It can be used to create “time and place
utility” through the handling, storage, and control of material, as distinct from
manufacturing (i.e., fabrication and assembly operations), which creates “form
utility” by changing the shape, form, and makeup of material.
Martial Handling Equipment :
The MHE method the selection of equipment is important with respect to the
different objective of speed, efficiency-cost etc. there are both the manual and
powered kind of MHE. They are classified the MHE into 4 types
1. Conveyers
2. Cranes and Hoists
3. Trucks
4. Auxiliary equipments
Conveyers : these are gravity or powered devices commonly used for moving
uniform loads from point to point over fixed paths. Commonly used category are
1. Belt conveyers
2. Roller conveyer
3. Chain conveyer
4. Bucket conveyer
5. Trolley conveyer
6. Screw conveyer
7. Pipeline conveyer
8. Chute conveyer
Carnes, Elevators and Hoists :
These are overhead devices used for

moving varying loads intermittently
between points within an area, fixed
by the supporting and binding rails, where the primary function is transferring or
elevating. Some common examples are:
1. Overhead travelling Crane, 2. Gantry Crane 3. Elevators 4. Monorail
Industrial Trucks and Vehicles: These are hand operated or powered vehicles
used for movement of uniform or mixed loads. The primary function is transporting.
1. Fork lifts truck 2. Platform truck 3. Industrial tractors and tailors 4. Hand
shakers
Auxiliary Equipments: These are devices or attachments used with MHE to

make the use more effective and multipurpose. Examples as:
1. Ramps, 2. Petitioners 3. Containers 4 lift truck attachments 5. Pallet loader&

un-loaders.
Principles of Material Handling
Although there are no definite “rules” that can be followed when designing an
effective MHS, the following “Ten Principles of Material Handling,” as compiled by
the College-Industry Council on Material Handling Education (CIC-MHE) in
cooperation with the Material Handling Institute (MHI), represent the distillation of
many years of accumulated experience and knowledge of many practitioners and
students of material handling:
1. Planning Principle: All MH should be the result of a deliberate plan where the
needs, performance objectives, and functional specification of the proposed
methods are completely defined at the outset.
2. Standardization Principle. MH methods, equipment, controls and software

should be standardized within the limits of achieving overall performance objectives
and without sacrificing needed flexibility, modularity, and throughput.
3. Work Principle. MH work (defined as material flow multiplied by the distance

moved) should be minimized without sacrificing productivity or the level of service
required of the operation.
4. Ergonomic Principle. Human capabilities and limitations must be recognized

and respected in the design of MH tasks and equipment to ensure safe and effective
operations.
5. Unit Load Principle. Unit loads shall be appropriately sized and configured in a
way that achieves the material flow and inventory objectives at each stage in the
supply chain.
6. Space Utilization Principle. Effective and efficient use must be made of all
available (cubic) space.
7. System Principle. Material movement and storage activities should be fully

integrated to form a coordinated, operational system which spans receiving,
inspection, storage, production, assembly, packaging, unitizing, order selection,
shipping, and transportation, and the handling of returns.
8. Automation Principle. MH operations should be mechanized and/or automated

where feasible to improve operational efficiency, increase responsiveness, improve
consistency and predictability, decrease operating costs, and to eliminate repetitive
or potentially unsafe manual labor.
9. Environmental Principle. Environmental impact and energy consumption

should be considered as criteria when designing or selecting alternative equipment
and MHS.
10. Life Cycle Cost Principle. A thorough economic analysis should account for
the entire life cycle of all MHE and resulting systems.
Q3. Explain the different types of model used in lay out designs?
Layout design procedures: this can be classified into 2 types :
1. Manual Methods: Under this Methods there are some conventional methods
like, travel chart and System Layout Planning (SLP).
2. Computerized Methods: Under this method, again the layout design
procedures can be classified into Constructive Type Algorithms and
Improvement Type Algorithms.
a. Constructive Algorithms:
i. Automated layout design program (ALDEP).
ii. Computerized Relationship layout Planning (CORELAP).
b. Improvement types of Algorithms :
i. Computerized Relative Allocation of Facilities Technique(CRAFT)
System layout Planning (SLP): An organized approach to layout planning has

been developed by Muther and has received considerable publicity due to the
success derived from its application in solving a large variety of layout problem.
This approach is referred to as systemic layout planning or simply SLP
CRAFT : this algorithm was originally developed by Armour and Buffa. CRAFT is
more widely used than ALDEP and CORELAP. It is an improvement algorithm. It
starts with an initial layout and improves the layout by interchanging the department
pair wise so that the transportation cost is minimized.
CRAFT Requirements:
1. Initial layout
2. Flow data
3. Cost per unit distance
4. Total Number of departments
5. Fixed department
a. Number of such departments
b. Location of those departments
6. Area of departments
ALDEP : this is a construction type algorithm uses basic data on facilities and builds
a design by successively placing the departments in the layout after placing all the
departments in the layout a score is computed. This is nothing but the sum of the
closeness rating values of different neighboring departments in the layout.
Requirements:
1. Total number of departments

2. Area of each department
3. Length and Width of layout
4. Closeness rating of various pairs of departments in the from of relationship
Chart.
5. MDP( Minimum department preference) value
6. Sweep width
7. Member of iterations to be performed
8. Location and size of each restricted are in the layout if present
CORELAP : This algorithm is based on Muther’s procedure given in systemic layout

planning. A Computer algorithm was developed by RC Lee. Interactive version was
developed by James Moore.
Input requirement:
1. Number of departments and their area.

2. Closeness relationship as given by REL-Chart.
3. Weighted rating for REL-chart entries.
Optional Input information
1. Scale of output
2. Building length to width ratio
3. Department pre-assignment
CORELAP algorithm: the following are the major stops of CORELAP algorithm.
1. Defining basic data

2. Determination of placement order.
3. Placement of departments in the layout
4. Finding the total score of the layout.
“END OF 3 UNITS”
Unit- IV: Productivity: Factors, Affecting Productivity – Job Design – Process Flow
Charts – Methods Study – Work Measurement – Engineering and Behavioral
Approaches.
PRODUCTIVITY:
Quantity of Production at Standard Price

Total productivity = -------------------------------------------------------
Cost of Labor, facilities, and raw materials
JOB DESIGN:
Job design may be defined as the function of specifying the work activities of
an individual or group in an organizational setting. Its objective is to develop job
structures that meet the requirements of the organization and its technology and
that satisfy the jobholder’s personal and individual requirements.
The objective of job design is to develop jobs that meet the requirements of the
organization and its technology and that satisfy the jobholder’s personal and
individual requirements.
Decisions in Job Design:

Who What Where When Organizational
Why How
Mental and Geographic
Time of day;rationale forMethod of
physical locale of the
Tasks to be time of the job; object-
performance
characteristics organization;
performed occurrence ives
in and mot- and
of the location of
the work flow
ivation of themotivation
work force work areas
worker
Ultimate
Job
Structure
Trends in Job Design :
1. Quality control as part of the worker's job
2. Cross-training workers to perform multi skilled jobs
3. Employee involvement and team approaches to designing and organizing work
4. "Informating" ordinary workers through telecommunication networks and
computers
5. Extensive use of temporary workers
6. Automation of heavy manual work
7. Organizational commitment to providing meaningful and rewarding jobs for all
employees
Work Study: it is deals with the techniques of method study and work
measurement, which are employed to ensure the best possible use of Human, and
material resources in carrying out a specified activity.
Objective of Work study:

Work study is concerned with finding better ways of doing work and avoiding waste
in all its forms. As such the objective of work study is to assist management to
obtain the optimum use of the Human, Machine and material resources available to
the organization for the accomplishment of the work upon which it is engaged.
They are 3 objectives:
1. The most effective use of plant and equipment
2. The most effective use of human effort
3. The evaluation of human work.
DEFINITION METHODS STUDY
Method Study is a technique which analyses each operation of a given piece
of work very closely in order to eliminate unnecessary operations and to approach
the quickest and easiest method of performing each necessary operation; it includes
the standardization of equipment, method and working conditions; and training of
the operator to follow the standard method.
Frank Gilbreth defines method study as “the science of eliminating
wastefulness resulting from ill-directed and inefficient motions”.
OBJECTIVES OF METHOD STUDY:
The following are the objectives of Method Study:

a) Improvement of manufacturing processes and methods. Better product
quality
b) Improvement of working conditions
c) Improvement to plant layout and work place layout
d) Reducing the human effort
e) Reduced health hazards
f) Reducing material handling.
g) Improvement of plant and equipment design
h) Improvement in the utility of materials, machines and man power
i) Ensuring safety
STEPS IN METHOD STUDY:

Methods improvement involves systematic, orderly and scientific approach to
problems.
The steps in method study are explained below
1. Select : select the work to be studied.
2. Record : record the relevant fact of present method by direct observation.
Record techniques are :
 Process Charts
 Diagrams
 Motion and Film Analysis and
 Models
3. Examine: this is the fact critically in sequence, using special critical

examination sheet.
4. Develop: the best methods.
5. Install: that Method as standard practice
6. Maintain: that standard practice by regular routine check.
PROCESS CHART
A chart representing a process is called as a process chart. A process chart
records graphically or diagrammatically, in sequence the movements connected with
a process. This chart portrays and process with the help of a set of symbols and aids
in better understanding and examining the process with a purpose to improve the
same.
The process charts are of three types:
1. Outline Process Chart
2. Flow Process Chart and
3. Two Handed Process Chart
OUTLINE PROCESS CHART
An outline process chart surveys and records an overall picture of the process
and sates only main events sequence wise. It considers only main operations and
inspections.
FLOW PROCESS CHART: a flow process chart is a process chart which shows the
sequence of flow of all activates which occur while producing a product of executing
procedure. The flow process chart 3 types as
1. Flow process chart with Material types

2. Flow process chart with men types
3. Flow process chart with Equipment types
OPERATION PROCESS CHARTS:

Event Symbol Description
Operation It represents an action
Storage It represents a stage when material

(raw or finished) awaits an action
Delay It represents a temporary of an item
Transport It represents movement of an item
Inspection It represents an act of checking
Combined Activities
Operation cum Transportation First activity represents outer part

and second security the inner part
Inspection cum Operation
Two Handled Process Chart: Two handed process chart records the activities of
the left hand and right hand of an operator as related to each other.
Work Measurement or Time Study:
These was originally proposed by FREDERICK TAYLOR and were later modified to
include a performance rating (PR) adjustment. The time study is considered to be
one of the most widely used mean of work- Measurement.
Time study or work measurements is also defined as follows “it is the application of
techniques designed to establish the time for a qualified worker to carry out a
specified job at a defined level of performance”.
OBJECTIVES OF TIME STUDY

Production cost of any commodity is made of three components
 Raw Material Cost
 Overheads
 Labour Cost.
PROCEDURE OF WORK MEASUREMENT
The general procedure followed in Work Measurement is as follows:

Step-1. First select the job to be studied. Breakdown the work content of the job
into smallest possible elements. Then inform the worker and define the best
methods.
Step -2: Observe the time for appropriate number of cycles
Step -3: Determine the average cycle time
Step-4 : Determine the normal time(NT)
Step-5: Determine the standard time .
Unit –V: Material Management –Cost Associated with Inventory – Economic Order
Quantity – ABC Analysis - Materials Requirement Planning – Just In – Time
Production - Total Quality Management – Acceptance Sampling – Control Charts –
Quality Circle – Zero Defects Programmes – ISO 9000 – Application of Computer in
Production and Operations.
MATERIALS MANAGEMENT
Definition:
We can define Materials Management as the function responsible for the

coordination of planning, sourcing, purchasing, moving, storing and controlling
materials in an optimum manner so as to provide a pre-decided service to the
customer at a minimum cost.
The main objectives of materials management are:
1. To minimise material cost.

2. To purchase, receive, transport and store materials efficiently and to reduce
the related cost.
3. To cut down costs through simplification, standardization, value analysis,
import substitution, etc.
4. To trace new sources of supply and to develop cordial relations with them in
order to ensure continuous supply at reasonable rates.
5. To reduce investment tied in the inventories for use in other productive
purposes and to develop high inventory turnover ratios.
COMPONENTS OF INTEGRATED MATERIALS MANAGEMENT:

The components of the integrated materials management can be classified
into the following modules:
Materials planning: sales forecasting and aggregate planning are the basic inputs
for materials planning. The different tasks under planning are listed below.
1. Estimating the individual requirements of parts.
2. Preparing materials budget.
3. Forecasting the levels of inventories
4. Scheduling the order and
5. Monitoring the performance in relation to production sales.
2. Inventory control : this includes the following

a. ABC analysis
b. Fixing economical order quantity
c. Lead time analysis
d. Setting safety stock and reorder level.
3. Purchase management : The task under purchasing are listed below:
a. Evaluating and rating suppliers
b. Selection of suppliers
c. Finalization of terms of purchases
d. Placement of purchase orders
e. Follow – up
f. Approval of payments to suppliers
4. Store management ; the different tasks under stores are listed below:
a. Physical control of materials
b. Preservation of stores
c. Minimization of obsolescence and damage through handling
d. Disposal and efficient handling
e. Maintenance of stores records
f. Proper location and stocking of materials
g. Reconciling the materials with book figures
MATERIAL REQUIREMENTS PLANNING (MRP):
For a manufacturing company to produce end items to meet demands, the
availability of sufficient production capacity must be co-ordinate with the availability
of all raw materials and purchased items from which, the end items are to be
produced. In other words, there is a need to manage the availability of dependent
demand items from which the products are made. Dependent-demand items are the
components i.e. materials or purchased items, fabricated parts or sub-assemblies
that make up the end product.
An alternative approach to managing dependent-demand items is to plan for

manufacture of the specific components that will be required to produce the
required quantities of end products as per the production schedule indicated by the
master production schedule (MPS). The technique is known as material requirements

planning (MRP) technique.
MRP is a computer-based system in which the given MPS is exploded into the
required amounts of raw materials, parts and sub-assemblies, needed to produce
the end items in each time period (week or month) of the planning horizon. The
gross requirement of these materials is reduced to net requirements by taking into
account the materials that are in inventory or on order.
A schedule of orders is developed for purchased materials and in-house
manufactured items over the planning horizon based on the knowledge of lead items
for procurements or in-house production.
OBJECTIVES OF MRP:
The objectives of material requirements planning in operations management are:
1. To improve customer service by meeting delivery schedules promised and

shortening delivery lead times.
2. To reduce inventory costs by reducing, inventory levels.
3. To improve plant operating efficiency by better use of productive resources.
Three facts of MRP technique are:

a) The MRP technique as a requirements calculator
b) MRP – A manufacturing, planning and control system
c) MRP – A manufacturing resourced planning system.
MRP SYSTEM INPUTS:
The basic inputs for MRP are as listed below:
1. MASTER PRODUCTION SCHEDULE (MPS)
The MPS specifies what end products are to be produced and when. The planning
horizon should be long enough to cover the cumulative lead times of all components
that must be purchased or manufactured to meet the end product requirements.
2. BILL OF MATERIAL FILE (BOM) OR PRODUCT STRUCTURE FILE
This file provides the information regarding all the materials, parts and sub-
assemblies that go into the end product. The Bill of Materials can be viewed as
having a series of levels, each of which represents a stage in the manufacture of the
end product. The highest level (or zero level) of the BOM represents the final
assembly or end product. The BOM file identifies each component by a unique part
number and facilities processing the end product requirements into component
requirements.
Production structure /bill of materials structure of Fire extingusisher
Fire
Extinguisher (Final Assembly)
Cylinder (1) Valve assembly(1) Handle bars(2)
valve (1) Valve housing(1)

3. INVENTORY STATUS FILE
The inventory status file gives complete and up-to-date information on the on-
hand quantities, gross requirements, scheduled receipts and planned order releases
for the item. It also includes other information such as lot sizes, lead times, safety
stock levels and scrap allowances, etc. The gross requirements are total needs from
all resources whereas the net requirements are ‘net’ after allowing for available
inventory and scheduled receipt.
INVENTORY CONTROL
5B. 1 INVENTORY
Inventory is a detailed list of movable goods such as raw materials, work-in-

progress, finished goods, spares tools, consumables, general supplies which are
necessary to manufacture product and to maintain the plant and machinery in good
working condition. The list includes the quantity and value of each and every item,
Inventory is defined as an idle resource of any kind having an economic value since
these resources are idle when kept in the stores.
TYPES OF INVENTORIES
The inventories most firms hold can be classified into one of the following
types:
(i) RAW MATERIALS AND PURCHASED PARTS: These include, the raw materials
directly used for production and the semi finished products – which are
produced and supplied by another firm and sold as a raw materials by the
firm under considerations.
(ii) IN – PROCESS INVENTORIES (or) partially completed goods (or) goods in

transit are the semi finished goods at various stages of the manufacturing
cycle.
(iii)FINISHED GOODS INVENTORIES (manufacturing firms) or merchandise (retail

stores) are the finished goods lying in the storage yards after the final
inspection clearance and waiting dispatch.
(iv)Indirect inventories include lubricants, spares, tools, Consumables,

component parts and general supplies needed for proper operation, repair
and maintenance during the manufacturing cycle.
TOOLS OF INVENTORY CONTROL
1. ABC ANALYSIS
This technique tries to analyze the distribution of an characteristic by money
value of importance in order to determine its priority. The annual materials
consumption analysis of an organisation would indicate that a handful of high value
items-less than 10 percent of the total number will account for a substantial portion
of about 70-75 percent of the total consumption value, and these few vital items are
called ‘A’ items which needs careful attention of the materials manager.
Similarly, large number of bottom’ items over 70 percent of the total number
called the trivial many – account for about 10 percent of the total consumption
value, and are known as the ‘C’ class. The items that lie between the top and bottom
are called the ‘B’ category items.
% CONSUMPTION VALUE
PROCEDURAL STEPS OF ‘ABC’ ANALYSIS

a) Identify all the items used by a company
b) List all the items as per their money value in the descending order. i.e.
The high valued items will be listed first followed by the next valued
item.
c) Count the number of high valued, medium valued and low valued
items % NUMBER OF ITEMS
d) Calculate the individual values of the high, medium and low valued
items. This is arrived at first by multiplying the number of items as in
step and
(a) Their values as in step (b) and adding all the items in different
categories high, medium and low.
e) Find the percentage of high, medium and low valued items. High
valued items normally contribute for 70 percent or so of the total
inventory cost and medium and low valued items 20 and 10 percent
respectively.
f) A graph can be plotted between percent of items and percent of total

inventory cost.
PURPOSE OF ABC ANALYSIS

The object of carrying out ABC analysis is to develop policy guidelines for
selective control. After the analysis, broad policy guidelines can be established.
A. Items High Consumption Value
B. Items : Moderate Value
C. Items : Low Consumption Value
PROBLEMS: the store of an oil engine repair shop has 10 items whose details are
show in the following table. And apply ABC analysis to the store.
Item Code Description Price/Unit Units/ Year

C01 packing Thread 100 100
C02 Tower bolt 200 300
C03 Hexagonal Nut 50 700
C04 Bush 300 400
C05 Coupling 500 1000
C06 Bearing [big] 3000 30
C07 Bearing [Small] 1000 100
C08 Fuel Pump 7000 500
C09 Fixture 5000 105
C10 Drill Bit 60 1000
Solution: The preliminary workings for ABC analysis with the annual consumption for
various items are summarized:
Annual Consumption RS.

Item Code Description Price/Unit Units/ Year
/Year
C01 packing Thread 100 100 10,000.00
C02 Tower bolt 200 300 60,000.00
C03 Hexagonal Nut 50 700 35,000.00
C04 Bush 300 400 120,000.00
C05 Coupling 500 1000 500,000.00
C06 Bearing [big] 3000 30 90,000.00
C07 Bearing [Small] 1000 100 100,000.00
C08 Fuel Pump 7000 500 3,500,000.00
C09 Fixture 5000 105 525,000.00
C10 Drill Bit 60 1000 60,000.00
Rearrange the Annual consumption in highest value to lowest value and cumulative value
of annual consumptions and classification as per 70%:20%:10% of the total Annual
consumption.
FINAL WORKINGS OF ABC ANALYSIS:
cumulative value
Annual
of annual
Item Code Price/Unit Units/ Year Consumption RS. class
consumption
/Year
Rs./Year
C08 7000 500 3,500,000.00 3,500,000.00

A (70%)
C09 5000 105 525,000.00 4,025,000.00
C05 500 1000 500,000.00 4,525,000.00 B (20%)
C04 300 400 120,000.00 4,645,000.00
C07 1000 100 100,000.00 4,745,000.00
C06 3000 30 90,000.00 4,835,000.00
C02
C10
200
60
300
1000
60,000.00
60,000.00
4,895,000.00
4,955,000.00
C (10%)
C03 50 700 35,000.00 4,990,000.00
C01 100 100 10,000.00 5,000,000.00
2. VED analysis
This analysis attempts to classify items into many categories depending upon
the consequences of materials stock out when demanded. The cost of storage may
vary depending upon the seriousness of such a situation. The items are classified
into V (Vital), E (Essential) and D (Desirable) categories.
3. FSN ANALYSIS
This FSN analysis groups then into three categories as fast moving. Slow-moving
and Non-moving items. Inventory policies and models for the three categories have
to be different.
4. ECONOMIC ORDER QUANTITY (EOQ):

The total cost curve represents the sum of ordering cost and carrying cost for
each order size. The order size at which the total cost is minimum is called EOQ or
Q* (Optimal order size).
Problems
Just in time production (JIT)

Just in time is a ‘pull’ system of production, so actual orders provide a signal for
when a product should be manufactured. Demand-pull enables a firm to produce
only what is required, in the correct quantity and at the correct time.
This means that stock levels of raw materials, components, work in progress and
finished goods can be kept to a minimum. This requires a carefully planned
scheduling and flow of resources through the production process. Modern
manufacturing firms use sophisticated production scheduling software to plan
production for each period of time, which includes ordering the correct stock.
Information is exchanged with suppliers and customers through EDI (Electronic
Data Interchange) to help ensure that every detail is correct.
Supplies are delivered right to the production line only when they are needed. For
example, a car manufacturing plant might receive exactly the right number and type
of tyres for one day’s production, and the supplier would be expected to deliver
them to the correct loading bay on the production line within a very narrow time
slot.
Advantages of JIT
 Lower stock holding means a reduction in storage space which saves rent and
insurance costs
 As stock is only obtained when it is needed, less working capital is tied up in
stock
 There is less likelihood of stock perishing, becoming obsolete or out of date
 Avoids the build-up of unsold finished product that can occur with sudden
changes in demand
 Less time is spent on checking and re-working the product of others as the
emphasis is on getting the work right first time
Disadvantages of JIT
 There is little room for mistakes as minimal stock is kept for re-working faulty
product
 Production is very reliant on suppliers and if stock is not delivered on time,
the whole production schedule can be delayed
 There is no spare finished product available to meet unexpected orders,
because all product is made to meet actual orders – however, JIT is a very
responsive method of production
Quality Control
Introduction : In any business organization profit is the ultimate Goal. To achieve
the several approach. In a competitive business world goods and services produced
by a organizations should have minimum required quality. Extra quality means
extra income.
Quality is a measure of how closely a good or service conforms to specified
standard.
Quality standards may be any one or a combination of attribute/variable of
the product being manufactured. The attributes will include performance, reliability
appearance, commitment to delivery time etc. Variable may some measurement
variable like, length, width, height, diameter, surface finish etc.,
Most of the above characteristic is related to products. Similarly some of the
quality characteristics of services are: meeting promised due dates, safety comfort,
security, less waiting time and so forth.
Need for Controlling Quality:
1. Comparing the quality of goods/ services
2. Difficulty in maintaining consistency in quality
3. Dissatisfied customers due to increased maintenance and operating
costs of product/ services.
4. Increased rework cost
5. Reduced the life time of the products/services
6. Reduced flexibility
Definition of Quality system :
“a quality system is a process that combines with manufacturing process to

censure that a manufacturing process produce quality- perfect products”.
Strategic areas of Quality control:

1. Supplier
2. Incoming Raw Materials
3. Process Quality
4. Final inspection
5. Customer Quality
CLASSIFICATION OF QUALITY CONTROL TECHNIQUES:
Quality control Techniques
Contorl Charts Acceptance Sampling
For Variables For For For Attributes

Attributes Variables
Doub Multi
singl
P Plan plan le ple
X R C samp
charts with with Samp Samp
charts charts charts ling
α β ling ling
plan
Plan Plan
Type of Data:
The measurement data in statistical quality control cab be classified into
variable data and attribute data :
1 variable Data: continuous in nature and are measurable on slidng scale. These
data can have a range of values and provide more information than the attribute
data. Example fo variable data re dimension voltage weight etc.,
2. Attribute data a: discrete in nature and can be binary. Example of attribute data
is an accept/reject test of shaft using go/NoGo gauges
Control Charts:
Control charts show the performance of process from tow points of view.
1. They show a snapshot of the process at the moment the data are collected/
2. They show the process trend as time progresses.
The process trends are important because
they help in indemnifying the out-of control
status in it actually exists.
Control charts for variables:

At the name indicates, these charts will use variable data of a process. Ẍ chart
gives an idea of the cereal tendency of the observations. These charts will
reveal the various between sample observations.
R chart gives an idea about the spread of the observation. This chart shows
the various within the samples.
Ẍ chart and R Chart :
Quality circle definition

 Quality Circle -is a small group of 6 to 12 employees doing similar work who
voluntarily meet together on a regular basis to identify improvements in their
respective work areas using proven techniques for analysing and solving work
related problems coming in the way of achieving and excellence leading to
mutual evalution of employees as well as the organisation
 Are a method of continuous quality improvement in an organisation by direct

involvement of employees in quality
 They operate on the basic principle that employee participation in decision
making and problem solving improves the quality of work
 They are:
o Voluntary group of persons
o Meet on regular basis
o Work on similar tasks
o Share area of responsibility
o Solve problems related to work
 Characteristics of Quality Circles
 Volunteers
 Set Rules and Priorities
 Decision made by consensus
 Organized approach to problem solving
 Members of a circle need to receive training
 Support of senior management required
 Members need to be empowered
ISO 9000:
ISO stands for international organization for standardization. It is an international

body which consists of representatives from more than 90 countries. the National
standards bodies of these countries are the members of these organisation. BIS
(bureau of Indian standards) is the Indian representative to ISO, ISO and
IEC(International electro Technical Commission) operate jointly as a single system.
These are non-Governmental organizations which exist to provide common
standards on Internationals trade of goods and services.
BENEFITS OF IMPLEMENTATION OF ISO 9000:
General
 To operate efficiently
 To achieve customer satisfaction

ISO
Assembly
Policy Techn
Technic
 To improve financial results
Organiz
Council ical
Development
Managemen
Committees Advis
ory
ation
 Satisfy all the stakeholders
Technical Com
Group
 To secure sustainability
s
Internal benefits
 Increased productivity
 Less scrap and rework
 Increased employee satisfaction
 Continual improvement
 Increased profits
EXTERNAL/MARKETING BENEFITS
 An internationally recognised QMS
 Increased opportunities in specific markets
 Increased customer satisfaction
ISO SERIES

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PALIVELA PG COLLEGE (MBA), PALIVELA,E.G.

Unit –I : Introduction : Nature and Scope of Production and Operation Management-

Q1. Explain the nature and scope of production and operation

Production/operations management is the process, which combines and

Production function is that part of an organization, which is concerned with

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Nature and Importance of Production Management:

Production management has become an important now a day that it is treated to be

Production management has assumed its importance because of the following

1. It is the foundation for earning profits – by producing goods or services and

2. It ensures that produced goods or services are of desired quality, in required

3. It facilitates optimum inventory level.

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SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT

Production and operations management concern with the conversion of inputs

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The selection of location is a key-decision as large investment is made in

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Q2. HISTORICAL EVOLUTION OF PRODUCTION AND OPERATIONS MANAGEMENT

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Q3. PRODUCTION SYSTEM

 Product flow pattern in conversion system

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 Specification of the output

Job Shop Production

Batch production is defined by American Production and Inventory Control Society

Production Management: the set of interrelated management activities which are

Difference between PM and OM:

Q5. Explain role of Production and operation manager?**

The production manager’s functions and roles are:

 Draw the organization chart

Unit-II: Production Planning and Control: Stages in PPC – Gantt – PPC in

Planning Action Controlling

PLANNING STAGE:. This is an exercise of intelligent anticipation in order to

Action Stage: it provides guidelines for implementation of plans into practice.

Element of PPC or Functions of PPC:

Producation Planning Producation control

JOB SHOP PRODUCTION

Manufacture of discrete parts or assemblies using a continuous process are called

Nature of Aggregate Planning Decisions: The different capacities which are

1. Regular time production capacity.

Generally the aggregate planning for next 3 to 6 months duration.

Alterative 1: the production rate is greater than expected demand forecast.

Alternative 2: produce as per demand so that inventory carrying cost is

1. Building and utilizing inventory through constant work force

Aggregate planning methods:

The aggregate planning problems can be classified as : graphical method,

Graphical Method: In this Method, cumulative demand values and

Heuristic method: in this method a list of pure strategies and mixed

TERO TECHNOLOGY: It is also called total maintenance Management. It takes

Objectives of Maintenance management:

 To extend the useful life of asset by minimizing the failures.

It is important to identify the nature and occurrence of failure with respect to

Normal wear out

This is called bath tub curve. In this bath tub curve

Type of maintenance systems:

1. Unplanned maintenance systems