 Production management:

Production management is a process of planning, organizing, directing and controlling the activities of the
production function. It combines and transforms various resources used in the production subsystem of
the organization into value added product in a controlled manner as per the policies of the organization.

 Operation management:
Operation management is defined as the design, operation and improvement of systems that creates the
firm’s primary product and services.

 Objectives of OM:
 Producing the right kind of goods that satisfy customer needs
 Maximizing outputs of goods with minimum inputs of goods
 Ensuring that the goods and services confirms the pre set quality specifications
 Minimizing throughput time
 Maximizing the uses of manpower and resources
 Minimizing the cost of producing goods or rendering services

 Difference between production planning and production control:

 Transformation process:
A transformation process is defined as a use of resources to transform inputs into desired outputs

In general transportation process can be categorized as follows-

Physical- manufacturing
Physiological-health care
Informational-telecommunications
Exchange -retailing
Storage-warehousing
Location –transportation

 Production planning and control:

Thus production planning and control can be defined as the “direction and coordination of firms’
resources towards attaining the prefixed goals.” Production planning and control helps to achieve
uninterrupted flow of materials through production line by making available the materials at right time
and required quantity.

 Objectives of production planning and control:

1. Systematic planning of production activities to achieve the highest efficiency in production of
goods/services.
2. To organize the production facilities like machines, men, etc., to achieve stated production objectives
with respect to quantity and quality time and cost.
3. Optimum scheduling of resources.
4. Coordinate with other departments relating to production to achieve regular balanced and uninterrupted
production flow.
5. To conform to delivery commitments.
6. Materials planning and control.
7. To be able to make adjustments due to changes in demand and rush orders

 Steps of ppc: Sir Sheet

  Production:
Production is a process where raw material is converted into semi finished or finished products and adds
value and creates utility.

 Objectives of production:
 Without production man can’t full fill their demand
 Without production product cant create utility
 Smooth production
 Continuous production
 Reduce wastage
 Reduce time
 Reduce cost of production
  Product design:
J G monks say product design is the structuring of component part of activities so that as a unit they can
provide a specified value.
Product design consists of two areas
Form of products:
The form designing includes decisions regarding its shape, size, color and appearance of the product.
Function of products:
The functional design involves the working conditions of the product. Once a product is designed, it
prevails for a long time therefore various factors are to be considered before designing it. These factors
are listed below: -
(a) Standardization
(b) Reliability
(c) Maintainability
(d) Servicing
(e) Reproducibility
(f) Sustainability
(g) Product simplification
(h) Quality Commensuration with cost
(i) Product value
(j) Consumer quality
(k) Needs and tastes of consumers.
  Product design and development sequence:
Book named fundamentals of OM

 Phases of product design:

Book named fundamentals of OM

 Process of product design:

1.Idea generation:
 Suppliers
 Marketing
 Research and development
 Competitors
 Customers
2. feasibility study:
a) marketing analysis:
 demand analysis
 targeted customer
b) financial analysis
 capital structure
@ own capital/equity capital
@debt capital
 Capital structure
 Cost of capital
c)technical analysis
 site selection
 m/c or technology analysis
 ecological analysis
d) performance analysis
3. form design
 Functional
 Revision
 Testing
4. final design
 Internal rate of return
 Net present value
 Pay back period
 Profitability index

 Lean system:
Lean systems (efficient and no wastage) are operations systems that maximize the value
added by each of a company’s activities by paring unnecessary resources and delays from
them.

 Characteristics of Lean Systems:

  Pull method of work flow
 Quality at the source
 Small lot sizes
 Uniform workstation loads
 Standardized components & work methods
 Close supplier ties
 Flexible workforce
 Line flows
 Automation
 Five S
 Preventive maintenance

 PLANT LOCATION
Plant location refers to the choice of region and the selection of a particular site for setting up a business
or factory. But the choice is made only after considering cost and benefits of different alternative sites. It
is a strategic decision that cannot be changed once taken.
Plant Location to locate a site we consider-
 Location Analysis
 Selection criteria
 Significance

 Factors of site analysis:

Location analysis is a dynamic process where entrepreneur analyses and compares the appropriateness or
otherwise of alternative sites with the aim of selecting the bestn site for a given enterprise. It consists the
following:
Demographic Analysis: It involves study of population in the area in terms of total population (in no.),
age composition, per capita income, educational level, occupational structure etc.

Trade Area Analysis: It is an analysis of the geographic area that provides continued clientele to the firm.
He would also see the feasibility of accessing the trade area from alternative sites.

Competitive Analysis: It helps to judge the nature, location, size and quality of competition in a given
trade area.

Traffic analysis: To have a rough idea about the number of potential customers passing by the proposed
site during the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms
of pedestrian and vehicular traffic passing a site.

Site economics: Alternative sites are evaluated in terms of establishment costs and operational costs under
this. Costs of establishment is basically cost incurred for permanent physical facilities but operational
costs are incurred for running business on day to day basis, they are also called as running costs.

 SELECTION CRITERIA

The important considerations for selecting a suitable location are given as follows:

 Natural or climatic conditions.

 Availability and nearness to the sources of raw material.
 Transport costs-in obtaining raw material and also distribution or marketing finished products to
the ultimate users.
  Access to market: small businesses in retail or wholesale or services should be located within the
vicinity of densely populated areas.
 Availability of Infrastructural facilities such as developed industrial sheds or sites, link roads,
nearness to railway stations, airports or sea ports, availability of electricity, water, public utilities,
civil amenities and means of communication are important, especially for small scale businesses.
 Availability of skilled and non-skilled labor and technically qualified and trained managers.
 Banking and financial institutions are located nearby.
 Locations with links: to develop industrial areas or business centers result in savings and cost
reductions in transport overheads, miscellaneous expenses.
 Strategic considerations of safety and security should be given due importance.
 Government influences: Both positive and negative incentives to motivate an entrepreneur to
choose a particular location are made available. Positive includes cheap overhead facilities like
electricity, banking transport, tax relief, subsidies and liberalization. Negative incentives are in
form of restrictions for setting up industries in urban areas for reasons of pollution control and
decentralization of industries.
 Residence of small business entrepreneurs want to set up nearby their homelands

 Industrial make or buy decisions:

Aims
1. develop a framework encapsulating the factors which affect the make or- buy decision
2. develop a decision-making process that can provide managers in manufacturing industry
with a way of addressing the make-or-buy decision more effectively and with greater
consistency and repeatability than existing method
understand better the challenges and barriers that companies face when deciding whether or not to
outsource a component or process

 Plant layout:
A plant layout can be defined as follows:

Plant layout refers to the arrangement of physical facilities such as machinery,

equipment, furniture etc. with in the factory building in such a manner so as to
have quickest flow of material at the lowest cost and with the least amount of handling in
processing the product from the receipt of material to the shipment of the finished product.

According to Riggs, “the overall objective of plant layout is to design a physical

arrangement that most economically meets the required output – quantity and quality.”
According to J. L. Zundi, “Plant layout ideally involves allocation of space and
arrangement of equipment in such a manner that overall operating costs are minimized.

OBJECTIVE OF GOOD FACILITY LAYOUT

 
The objectives of good facility layout are as follows:
[A] Objectives related to material
 Less material handling and minimum transportation cost
 Less waiting time for in-process inventory .
 Fast travel of material inside the factory without congestion or bottleneck.
[B] Objectives related to work place
 Suitable design of work-stations and their proper placement 
  Maintaining the sequence of operations of parts by adjacently locating the succeeding facilities
 Safe working conditions from the point of ventilation, lighting, etc.
 Minimum movement of workers 
 Least chances of accidents, fire, etc. 
 Proper space for machines, worker, tools, etc. 
 Utilization of vertical height available in the plant.
 
[C]          Performance related objectives 
 Simpler plant maintenance 
 Increased productivity, better product quality, and reduced cost 
 Least set-up cost and minimal change-over 
 Exploitation of buffer capacity, common workers for different machines, etc. 

[D]          Objective related to flexibility 

 Scope for future expansion
 Considerations for varied product mix
 Considerations for alternate routings

 Types of layout:
Process layout
Product layout
Group technology layout
Fixed position layout

 Process layout:
Process layout is recommended for batch production. All machines performing similar type of
operations are grouped at one location in the process layout e.g., all lathes, milling machines, etc.
are grouped in the shop will be clustered in like groups.
Advantages
1. In process layout machines are better utilized and fewer machines are required.
2. Flexibility of equipment and personnel is possible in process layout.
3. Lower investment on account of comparatively less number of machines and lower cost
of general purpose machines.
4. Higher utilisation of production facilities.
5. A high degree of flexibility with regards to work distribution to machineries and workers.
6. The diversity of tasks and variety of job makes the job challenging and interesting.
7. Supervisors will become highly knowledgeable about the functions under their department.
Limitations
1. Backtracking and long movements may occur in the handling of materials thus, reducing
material handling efficiency.
2. Material handling cannot be mechanised which adds to cost.
3. Process time is prolonged which reduce the inventory turnover and increases the in-
process inventory.
4. Lowered productivity due to number of set-ups.
5. Throughput (time gap between in and out in the process) time is longer.
6. Space and capital are tied up by work-in-process.

 Product layout:
In this type of layout, machines and auxiliary services are located according to the processing
sequence of the product. If the volume of production of one or more products is large, the
facilities can be arranged to achieve efficient flow of materials and lower cost per unit. Special
purpose machines are used which perform the required function quickly and reliably
Advantages
1. The flow of product will be smooth and logical in flow lines.
2. In-process inventory is less.
3. Throughput time is less.
4. Minimum material handling cost.
5. Simplified production, planning and control systems are possible.
6. Less space is occupied by work transit and for temporary storage.
7. Reduced material handling cost due to mechanised handling systems and straight flow.
8. Perfect line balancing which eliminates bottlenecks and idle capacity.
9. Manufacturing cycle is short due to uninterrupted flow of materials.
10. Small amount of work-in-process inventory.
11. Unskilled workers can learn and manage the production.
Limitations
1. A breakdown of one machine in a product line may cause stoppages of machines in the
downstream of the line.
2. A change in product design may require major alterations in the layout.
3. The line output is decided by the bottleneck machine.
4. Comparatively high investment in equipments is required.
5. Lack of flexibility. A change in product may require the facility modification.

 Group technology layout:

Thus group layout is a combination of the product layout and process layout. It combines
the advantages of both layout systems. If there are m-machines and n-components, in a group
layout (Group-Technology Layout), the m-machines and n-components will be divided into distinct
number of machine-component cells (group) such that all the components assigned to a cell are almost
processed within that cell itself. Here, the objective is to minimize the intercell movements.
Advantages of Group Technology Layout
Group Technology layout can increase—
1. Component standardization and rationalization.
2. Reliability of estimates.
3. Effective machine operation and productivity.
4. Customer service.
It can decrease the—
1. Paper work and overall production time.
2. Work-in-progress and work movement.
3. Overall cost.

 Fixed position layout:

This is also called the project type of layout. In this type of layout, the material, or major
components remain in a fixed location and tools, machinery, men and other materials are brought
to this location. This type of layout is suitable when one or a few pieces of identical heavy
products are to be manufactured and when the assembly consists of large number of heavy parts,
the cost of transportation of these parts is very high.
 Fig. 2.8 Fixed position layout
Advantages
The major advantages of this type of layout are:
1. Helps in job enlargement and upgrades the skills of the operators.
2. The workers identify themselves with a product in which they take interest and pride in
doing the job.
3. Greater flexibility with this type of layout.
4. Layout capital investment is lower

 The steps in balancing an assembly line are:

1. Specify the sequential relationships among tasks using a precedence diagram.
2. Determine the required workstation cycle time C, using the formula
C=Production time per day/Required output per day (in units)
3. Determine the theoretical minimum number of workstations (Nt) required to satisfy the
workstation cycle time constraint using the formula
Nt=Sum of task times (T)/Cycle time (C)
4. Select a primary rule by which tasks are to be assigned to workstations, and a secondary
rule to break ties.
5. Assign tasks, one at a time, to the first workstation until the sum of the task times is equal
to the workstation cycle time, or no other tasks are feasible because of time or sequence
restrictions. Repeat the process for workstation 2, workstation 3, and so on until all tasks
are assigned.
6. Evaluate the efficiency of the balance derived using the formula
Efficiency = Sum of task times (T)/Actual number of workstations (N ) × Workstations cycle time (C)
7. If efficiency is unsatisfactory, rebalance using a different decision rule.

ILLUSTRATION 7: The MS 800 car is to be assembled on a conveyor belt. Five

hundred cars are required per day. Production time per day is 420 minutes, and the
assembly steps and times for the wagon are given below. Find the balance that minimizes
the number of workstations, subject to cycle time and precedence constraints.
3. Determine the theoretical minimum number of workstations required (the actual number
may be greater)
Nt=T/ C= 195/ 50.4 seconds=3.87≈ 4 (rounded up)

 Capacity planning:
Capacity planning is the process of determining the production capacity needed by an organization to
meet changing demands for its products.[1] In the context of capacity planning, "capacity" is the maximum
amount of work that an organization is capable of completing in a given period of time. the phrase is also
used in business computing as a synonym for Capacity Management.

 Classification of capacity planning:

  Lead strategy is adding capacity in anticipation of an increase in demand. Lead strategy is an
aggressive strategy with the goal of luring customers away from the company's competitors. The
possible disadvantage to this strategy is that it often results in excess inventory, which is costly
and often wasteful.

 Lag strategy refers to adding capacity only after the organization is running at full
capacity or beyond due to increase in demand (North Carolina State University, 2006).
This is a more conservative strategy. It decreases the risk of waste, but it may result in the
loss of possible customers.
 Match strategy is adding capacity in small amounts in response to changing demand in
the market. This is a more moderate strategy.

 Determinants of effective capacity:

Facilities:
o Design
o Location
o Layout
o Environment
Product/service:
o Design
o Product or service mix
Process:
o Quality capabilities
o Quantity capabilities
Human factors:
job content, job design, training and experience, motivation, compensation, learning rates, absenteeism
and labor turnover
Policy operational:
Scheduling, material management, quality assurance, maintenance policies, equipments breakdowns
Supply chain external factors:
Product standards
Safety regualtions
Unions
Pollution control standards

 Steps in the Capacity Planning Process

1. Estimate future capacity requirements.

2. Evaluate existing capacity and facilities and identify gaps.

3. Identify alternatives for meeting requirements.

4. Conduct financial analyses of each alternative.

5. Assess key qualitative issues for each alternative.

6. Select the alternative to pursue that will be best in the long term.
 7. Implement the selected alternative.

8. Monitor results.

The goal of strategic capacity planning is to achieve a match between the long-term supply
capabilities of an organization and the predicted level of long-term demand.

Capacity Decisions are Strategic

1. Capacity decisions have a real impact on the ability of the organization to meet future
demands for products and services.
2. Capacity decisions affect operating costs.
3. Capacity is usually a major determinant of initial cost. Typically, the greater the
capacity of a productive unit, the greater its cost.
4. Capacity decisions often involve long-term commitment of resources and the fact that,
once they are implemented, those decisions may be difficult or impossible to modify
without incurring major costs.
5. Capacity decisions can affect competitiveness.
6. Capacity affects the ease of management.
7. Globalization has increased the importance and the complexity of capacity decisions.
8. Because capacity decisions often involve substantial financial and other resources, it
is necessary to plan for them far in advance.

 Definition of Supply Chain:

Supply chain is the network of services, material, and information flows that link a firm’s customer
relationship, order fulfillment, and supplier relationship processes to those of its supplier and customers.
Supply chain is the customer relationship, order fulfillment, supplier relationship processes and their
interconnected linkages among the suppliers of services, materials and information and the customers of
the firm’s services or products.
Supply chain management: Developing a strategy to organize, control, and motivate the resources
involved in the flow of services and materials within the supply chain.

Supply chain strategy: Designing a firm’s supply chain to meet the competitive priorities of the firm’s
operations strategy.

 Supply Chain for Services

Supply chain design for a service provider is driven by the need to provide support for the essential
elements of the various service packages it delivers.
A service package consists of
Supporting facilities: Retails stores, a delivery centre, computers, point-of sales, equipment and
employees.
Facilitating goods: Arrangement of goods, packaging materials. Required for facilitating goods.
Explicit services: Arrangement as specified by customer. State in detail. Required for explicit services
Implicit services: Unquestioning. Convenience. Required for implicit services
- Required for supporting facilities

 Supply Chain for Manufacturing

Raw materials (RM): The inventories needed for the production of services or goods.
Work-in-process (WIP): Items, such as components or assemblies, needed to produce a final product in
manufacturing.
Finished goods (FG): The items in manufacturing plants, warehouses, and retail outlets that are sold to the
firm’s customers.

 Supply Chain Process Measures

Three major processes related to supply chains are:

 Customer Relationship
 Order Fulfillment
 Supplier Relationship

 Customer Relationship:
The customer relationship process addresses the interface (where two things meet and interact) between
the firm and its customers downstream (direction/ flows) in the supply chain. Key nested processes
include:

1. Marketing process: The marketing processes on such issues are the customers to target, how to target
them, what services or products to offer and how to price them and how to manage promotional
campaigns. Percent of orders taken accurately.

2. Order placement process: The order placement process involves the activities required to execute a
sale, register the specifics of the order request, confirm the acceptances of the order and track the progress
of the order until it is completed. Time to complete the order placement process.

3. Customer satisfaction with the order placement process.

 Order Fulfillment:
There are eight steps in its order fulfillment process are as follows:
1. Customers communicate and buy: Web site, voice to voice, face-to-face.

2. Order information is transmitted to the inventory system.

3. Information is contained in the traveler, which is a sheet that travels with the system the customer has
ordered.

4. All internal parts and components required to make the system are picked and placed in a tote or kit
(need to assembly something).
5. Test the entire system.
6. Setup standard.
7. Completed the system.
8. Delivered to the customer

 Supplier Relations:

Percent of suppliers’ deliveries on time

Suppliers’ lead times
Percent defects in services and purchased materials
Cost of services and purchased materials