MBA

Semester II

MB207 - PRODUCTION AND OPERATIONS MANAGEMENT

UNIT 1 (09 Periods)

Introduction

Production and Production Systems

1. Production process for creation of useful Products & Services.

2. Production functions Men, material, machinery and process (conversion process) to

produce useful goods and services.

3. Manufacturing sector and Non-manufacturing sectors. Involves Value Addition.

4. Open and Close Systems, Feedback and controls.

5. Productivity concept; Productivity = Output/ Input; both should be in same units.

6. Operations Management- Concepts to optimize production and minimize cost of

production, efficiency, optimal use of labour and machinery, reduced waste and idle time.

7. Operations Management decisions Policy, periodic, design, operating and

controlling. Strategic, Tactical, market related.

8. Types of Production Systems Mass Production System (Also called Flow Line
Production System), Batch Production System (Also called Intermittent Production System),
Job Shop and Projects (Also called Unit Manufacture System for Projects). Characteristics,
traits, pros and cons, benefits and difficulties encountered during operations.

9. Monitoring and Feedback Control Sensing output/ measurement, comparison with

desired values and corrective actions. Establishing Standards of production, Industrial
Standards.

10. Broad concept of Materials Management in Production Systems, Integrated Approach.

11. Selection of Products for Production Product Life concept, market concept,
competition, Technical, Financial, Commercial, Legal, Environmental, Social and manpower
factors.

Production A Conversion Process

Production (a) Process of conversion; from Raw material to finished Products.
(b) Provision of Services.
(c) Input Material, Machines, Labour effort/Men, Capital.
(d) Output Useful Products and services.
Productivity- Efficiency of Production/ Conversion Process. (Output/Input).
Production Cost
A cost incurred by a business when manufacturing a good or producing a service. Production
costs combine raw material and labor. To figure out the cost of production per unit, the cost of
production is divided by the number of units produced. A company that knows how much it
will cost to produce an item, or produce a service, will have a clearer picture of how to better
price the item or service and what will be the total cost to the company.
Production Cost comprises of Fixed Costs and Variable Costs. The aspects would be
discussed in details later.
Product Life Cycle Stages

The product life cycle has 4 very clearly defined stages, each with its own characteristics that
mean different things for business that are trying to manage the life cycle of their particular
products.

Introduction Stage This stage of the cycle could be the most expensive for a company
launching a new product. The size of the market for the product is small, which means sales
are low, although they will be increasing. On the other hand, the cost of things like research
and development, consumer testing, and the marketing needed to launch the product can be
very high, especially if its a competitive sector.

Growth Stage The growth stage is typically characterized by a strong growth in sales and
profits, and because the company can start to benefit from economies of scale in production,
the profit margins, as well as the overall amount of profit, will increase. This makes it
possible for businesses to invest more money in the promotional activity to maximize the
potential of this growth stage.

Maturity Stage During the maturity stage, the product is established and the aim for the
manufacturer is now to maintain the market share they have built up. This is probably the
most competitive time for most products and businesses need to invest wisely in any
marketing they undertake. They also need to consider any product modifications or
improvements to the production process which might give them a competitive advantage.

Decline Stage Eventually, the market for a product will start to shrink, and this is whats
known as the decline stage. This shrinkage could be due to the market becoming saturated
(i.e. all the customers who will buy the product have already purchased it), or because the
consumers are switching to a different type of product. While this decline may be inevitable,
it may still be possible for companies to make some profit by switching to less-expensive
production methods and cheaper markets.

Operations
The act or process of operating or functioning, a process or series of acts involved in a
particular form of work: the operation of building a house, or an instance or method of
efficient, productive activity.

Objectives of Operations Management

1. Optimize Production.
2. Minimize Cost
Comprehensive Representation:
Operations
Management

Performance Cost
Objective Objective

Explicit Implicit
In Time Cost
Quantity Cost
Quality
(Efficiency, (Capacity,
Effectivenes Flexibility)
s) Inventory Carrying, Delays,
Inspection,Downtime,
Opportunity, Material
Labour, Handling
Material,Scrap,
Maintenance
 Operations Management Decisions

Decisions
(Periodic,
Continuous,
Strategic)

Tactical
Strategic
(Short Term/
(Long Term/ Operating)
Planning)
Upd ng
atin Controlli
g Operatin
g
Inven
tory/C
ost
Design
Selection Inventory
Planning/Qual
Product/System/ ity
Assurance//W
Material ork & Job
Handling Design

Product/ Facilities/Proces
Process/Locati s
on/Layout/Cap Replacement/M
acity Selection aintenance

Location of Facilities

1. Location Plans Long term, strategic, vital for long term existence, effective
operations, future expansion/ augmentation, non-repetitive and normally life time decisions.

2. Need to take Location Decisions- New Plant/ Facility, Additions to existing plants,
Shifting of units, Decentralization, Tax benefits, Terrorism/ disturbance in region, political
factors, infrastructural issues etc.

3. Factors affecting decision- Raw Material, Land Cost, infrastructure facilities,

Connectivity/ proximity to existing and Potential Markets, Availability of Manpower,
Incentives, Security, Power/ Water supply, environmental aspects etc.

Labor. Labor is often and increasingly the most important factor of production. Other things
equal, firms want productivity, in other words, labor output per dollar. Productivity can
decrease if certain types of labor are in short supply, which increases the costs by requiring
either more pay to acquire the labor that is available, the recruiting of labor from other areas,
or the use of the less productive labor that is available locally.
 Land. Demand for land depends on the type of firm. Manufacturing firms need more space
and tend to prefer suburban locations where land is relatively less expensive and less difficult
to develop. Warehousing and distribution firms need to locate close to interstate highways.
Local Infrastructure. An important role of government is to increase economic capacity by
improving quality and efficiency of infrastructure and facilities, such as roads, bridges, water
and sewer systems, airport and cargo facilities, energy systems, and telecommunications.
Access to Markets. Though part of infrastructure, transportation merits special attention.
Firms need to move their product, either goods or services, to the market, and they rely on
access to different modes of transportation to do this. While transportation has become
relatively inexpensive compared to other inputs, and transportation costs have become a less
important location factor, access to transportation is still critical. That long-run trend,
however, could shift because of decreasing funds to highway construction, increasing
congestion, and increasing energy prices.
Materials. Firms producing goods, and even firms producing services, need various
materials to develop products that they can sell. Some firms need natural resources: a
manufacturing sector like lumber needs trees. Or, farther down the line, firms may need
intermediate materials.

Entrepreneurship. This input to production may be thought of as good management, or even

more broadly as a spirit of innovation, optimism, and ambition that distinguishes one firm
from another even though most of their other factor inputs may be quite similar.
The supply, cost, and quality of any of these factors obviously depend on market factors: on
conditions of supply and demand locally, nationally, and even globally they also depend on
public policy. In general, public policy can affect them through:
Regulation. Regulations protect the health and safety of a
community, and help maintain the quality of life. However, simplified bureaucracies and
straightforward regulations can help firms react quickly in a competitive marketplace.

Taxes. Firms tend to seek locations where they can optimize their after-tax profits. But tax
rates are not a primary location factor, they matter only after corporations have made
decisions on labor, transportation, raw materials, and capital costs. Within a region,
production factors are likely to be similar, so differences in tax levels across communities are
more important in the location decision than are differences in tax levels between regions.
Financial incentives. Governments offer firms incentives to promote manufacture ofa
product or a backward region.

4. Analytical Techniques for Selection of Location from available or Short Listed Sites:

(a) Quantitative Techniques Allocating Points, Equal and Variable Weight

Method, Weight cum Rating Method.

(b) Subjective Technique- Factor Point Rating Method. Comparative Choice

Method.

(c) Locational Break Even Method, Median Load Method, Centre of Gravity
Method.
EVALUATING LOCATION ALTERNATIVES
There are three specific analytical techniques available to aid in evaluating location
alternatives:

1. Location Cost-Volume-Profit Analysis:

The Cost-Volume-Profit (CVP) Analysis can be represented either mathematically or

graphically. It involves three steps: 1) For each location alternative, determine the fixed and
variable costs, 2) For all locations, plot the total-cost lines on the same graph, and 3) Use the
lines to determine which alternatives will have the highest and lowest total costs for expected
levels of output. Additionally, there are four assumptions one must keep in mind when using
this method:

(a) Fixed costs are constant.

(b) Variable costs are linear.

(c) Required level of output can be closely estimated.

(d) There is only one product involved.

Total cost = FC + v (Q)

Where FC=Fixed Cost, v=Variable Cost per Unit, Q=Number of Units

2. Factor Rating

This method involves qualitative and quantitative inputs, and evaluates alternatives based on
comparison after establishing a composite value for each alternative. Factor Rating consists
of six steps:

(a) Determine relevant and important factors.

(b) Assign a weight to each factor, with all weights totaling 1.00.

(c) Determine common scale for all factors, usually 0 to 100.

(d) Score each alternative.

(e) Adjust score using weights (multiply factor weight by score factor);
add up scores for each alternative.

(f) The alternative with the highest score is considered the best option.

2. Minimum scores may be established to set a particular standard, though this is

not necessary.

3. Center of Gravity Method:

 This technique is used in determining the location of a facility which will either
reduce travel time or lower shipping costs. Distribution cost is seen as a linear function of the
distance and quantity shipped. The Center of Gravity Method involves the use of a visual
map and a coordinate system; the coordinate points being treated as the set of numerical
values when calculating averages. If the quantities shipped to each location are equal , the
center of gravity is found by taking the averages of the x and y coordinates; if the quantities
shipped to each location are different , a weighted average must be applied (the weights being
the quantities shipped).

4. Subjective Method:

It involves qualitative values like Poor, Fair, Good, Very Good, Indifferent, Helpful,
Desirable, Undesirable, Acceptable, Essential etc. (in respect of infrastructure, Community
attitude & Services, employability ease etc.) categorization of various alternative sites for
plant location. Comparative evaluation of the sites is undertaken according point rating for
selection.

Layout of Facilities and Flow Patterns

1. Layout once decided cannot be changed easily. It is more or less permanent.

2. Need for good layout Smooth flow of material/ inventory/ components for
Assembly etc.

Reduced material handling/ travel of material. Reduce wastage

of time in material transit.

Proper sequencing of Operations in the forward direction of

flow.

Save Floor Space.

Safety

Increased Production, improve working environment.

Reduce Cost.

Flexibility of operations, convenience and effective operations

management.

Better Supervision.

The following are some important factors, which influence the planning of effective layout to
a significant degree.

1. Nature of the product: The nature of the product to be manufactured will significantly
affect the layout of the plant. Stationary layout will be most suitable for heavy products while
line layout will be best for the manufacture for the light products because small and light
products can be moved from one machine to another very easily and, therefore, more
attention can be paid to machine locations can be paid to machine locations and handling of
materials.

2. Volume of production: Volume of production and the standardization of the product also
affect the type of layout. If standardized commodities are to be manufactured on large scale,
line type of layout may be adopted.

3. Basic managerial policies and decisions: The type of layout depends very much on the
decisions and policies of the management to be followed in producing the commodity with
regard to the size of plant, kind and quality of the product, scope for expansion to be provided
for, the extent to which the plant is to be integrated, amount of stocks to be carried at
anytime, the kind of employee facilities to be provided etc.

4. Nature of plant location: The size shape and topography of the site at which the plant is
located will naturally affect the type of layout to be followed in view of the maximum
utilization of the space available .For e.g., if a site is near the railway line the arrangement of
general layout for receiving and shipping and for the best flow of production in and out the
plant may be made by the side of the railway lines .If space is narrow and the production
process is lengthy, the layout of plant may be arranged on the land surface in the following
manner:

5. Type of industry process: This is one of the most important factors influencing the choice
of type of plant layout. Generally the types of layout particularly the arrangement of
machines and work centers and the location of workmen vary according to the nature of the
industry to which the plant belongs. For the purpose of lay out, industry may be classified
into two broad categories:

(i) Intermittent and (ii) continuous. Intermittent type of industries is those, which
manufacture different component or different machines.

Such industries may manufacture the parts, when required according to the market needs.
Examples of such industries are shipbuilding plants. In this type of industry functional layout
may be the best. The second type of industry in continuous industry. in this type of industry
raw material are fed at one end and the finished goods are received at another end. A
continuous industry may either be analytical or synthetic. An analytical industry breaks up
the raw material into several parts during the course of production process or changes its
form, e.g. oil and sugar refineries. A synthetic industry on the other hand mixes the two or
more materials to manufacture one product along with the process of production or assembles
several parts to get finished product. Cement and automobiles industries are the examples of
such industry. Line layout is more suitable in continuous process industries.
6. Types of methods of production: Layout plans may be different according to the method
of production proposed to be adopted. Any of the following three methods may be adopted
for production- (1) Job order production, (2) batch production, and (3) mass production.
Under job production goods are produced according to the orders of the customers and
therefore, specification vary from customer to customer and the production cannot be
standardized. The machines and equipment can be arranged in a manner to suit the need of all
types of customers. Batch production carries the production of goods in batches or group at
intervals. In this type of manufacturing the product is standardized and production is made
generally in anticipation of sales. In such cases functional or process layout may be adopted.
In case of mass production of standardized goods, line layout is most suitable form of plant
layout.

7. Nature of machines: Nature of machines and equipment also affects the layout of plants.
If machines are heavy in weight or create noisy atmosphere, stationery layout may reasonably
be adopted. Heavy machines are generally fixed on the ground floor. Ample space should be
provided for complicated machines to avoid accidents.

8. Climate: Sometimes, temperature, illumination and air are the deciding factors in the
location of machines and their establishments. For example, in lantern manufacturing
industry, the spray-painting room is built along the factory wall to ensure the required
temperature control and air expulsion and the process of spray painting may be undertaken.

9. Nature of material: Design and specification of materials, quantity and quality of

materials and combination of materials are probably the most important factors to be
considered in planning a layout. So, materials storage, space, volume and weight of raw
materials, floor load capacity, ceiling height, method of storing etc. should be given special
consideration. This will affect the space and the efficiency of the production process in the
plant. It will facilitate economic production of goods and prompt materials flow and soundly
conceived materials handling system.

10. Type of machine: Machines and equipment may be either general purpose or special
purpose. In addition certain tools are used. The requirements of each machine and equipment
are quite different in terms of their space; speed and material handling process and these
factors should be given proper consideration while choosing out a particular type of layout.
This should also be considered that each machine and equipment is used to its fullest capacity
because machines involve a huge investment. For instance, under product layout, certain
machines may not be used to their full capacity so care should be taken to make full use of
the capacity of the machines and equipment.

11. Human factor and working conditions: Men are the most important factor of
production and therefore special consideration for their safety and comforts should be given
while planning a layout, specific safety items like obstruction-free floor, workers not exposed
to hazards, exit etc. should be provided for. The layout should also provide for the comforts
to the workers such as provision of rest rooms, drinking water and other services etc.
sufficient space is also to be provided for free movement of workers.

12. Characteristics of the building: Shape of building, covered and open area, number of
floors, facilities of elevators, parking area and so on also influence the layout plan. In most of
the cases where building is hired, layout is to be adjusted within the spaces available in the
building. Although minor modification may be done to suit the needs of the plants and
equipment. But if any building is to be constructed, proper care should be given to construct
it according to the layout plan drawn by experts. Special type of construction is needed to
accommodate huge or technical or complex or sophisticated machines and equipment.

13. Important Considerations in Production Flow Design

(a) Need for Changing Layout Change in Product Design, Change in Production
Capacity, Modernization of Factory, Replacement of obsolete facilities and
equipment, cost reduction, new Plant, Safety considerations etc.

(b) Constraints in Equipment Layout Availability of space, Plot size, concerns for
environment.

(c) Production System Flow Pattern: I-Flow, L-Flow, S-Flow, U-Flow, O-Flow.

Basic Types of Plant Layout

1. Product Layout (Also called Line Layout): Used for Mass Production System and
Assembly Lines. Production of Cars, Assembling of TV Sets and various similar products are
some of the examples. The materials and inventories move in straight forward direction.
Product layouts are found in flow shops (repetitive assembly and process or continuous flow
industries). Flow shops produce high-volume, highly standardized products that require
highly standardized, repetitive processes. In a product layout, resources are arranged
sequentially, based on the routing of the products. In theory, this sequential layout allows the
entire process to be laid out in a straight line, which at times may be totally dedicated to the
production of only one product or product version. The flow of the line can then be
subdivided so that labor and equipment are utilized smoothly throughout the operation.

Two types of lines are used in product layouts: paced and unpaced. Paced lines can use some
sort of conveyor that moves output along at a continuous rate so that workers can perform
operations on the product as it goes by. For longer operating times, the worker may have to
walk alongside the work as it moves until he or she is finished and can walk back to the
workstation to begin working on another part (this essentially is how automobile
manufacturing works).
On un-paced line, workers build up queues between workstations to allow a variable work
pace. However, this type of line does not work well with large, bulky products because too
much storage space may be required. Also, it is difficult to balance an extreme variety of
output rates without significant idle time. A technique known as assembly-line balancing can
be used to group the individual tasks performed into workstations so that there will be a
reasonable balance of work among the workstations.

Product layout efficiency is often enhanced through the use of line balancing. Line balancing
is the assignment of tasks to workstations in such a way that workstations have approximately
equal time requirements. This minimizes the amount of time that some workstations are idle,
due to waiting on parts from an upstream process or to avoid building up an inventory queue
in front of a downstream process.

Advantages of product layouts include:

Output. Product layouts can generate a large volume of products in a short time.

Cost. Unit cost is low as a result of the high volume. Labor specialization results in
reduced training time and cost. A wider span of supervision also reduces labor costs.
Accounting, purchasing, and inventory control are routine. Because routing is fixed,
less attention is required.

Utilization. There is a high degree of labor and equipment utilization.

Disadvantages of product layouts include:

Motivation. The system's inherent division of labor can result in dull, repetitive jobs
that can prove to be quite stressful. Also, assembly-line layouts make it very hard to
administer individual incentive plans.

Flexibility. Product layouts are inflexible and cannot easily respond to required
system changesespecially changes in product or process design.

System protection. The system is at risk from equipment breakdown, absenteeism,

and downtime due to preventive maintenance.

The major difficulties faced are:-

(a) Balancing of load on each machine to ensure smooth and uninterrupted flow.

(b) Stoppage of work at any machine or work station will disrupt production.

(c) Duplication of machinery as per the requirement of the processes in the

direction of flow of materials.

2. Process Layout (Also called Functional Layout): In this similar processes and
equipment are grouped together to form a Section. Sections for Machining, Welding, Forging,
Fitting, Inspection, Painting and Packing etc. are examples. This is useful in case of Batch
Production Systems, where Batches are produced in low volumes. Process layouts are found
primarily in job shops, or firms that produce customized, low-volume products that may
require different processing requirements and sequences of operations. Process layouts are
facility configurations in which operations of a similar nature or function are grouped
together. As such, they occasionally are referred to as functional layouts. Their purpose is to
process goods or provide services that involve a variety of processing requirements. A
manufacturing example would be a machine shop. A machine shop generally has separate
departments where general-purpose machines are grouped together by function (e.g., milling,
grinding, drilling, hydraulic presses, and lathes). Therefore, facilities that are configured
according to individual functions or processes have a process layout. This type of layout
gives the firm the flexibility needed to handle a variety of routes and process requirements.
Services that utilize process layouts include hospitals, banks, auto repair, libraries, and
universities. The works inventory moves from one Department to other as necessary.

Improving process layouts involves the

minimization of
transportation cost, distance,
or time. To accomplish this some firms
use what is known as a Muther grid,
where subjective information is
summarized on a grid displaying various
combinations of department,
work group, or machine pairs. Each
combination (pair), represented by an
intersection on the grid, is assigned a letter indicating the importance of the closeness of the
two (A = absolutely necessary; E = very important; I = important; O = ordinary importance;
U = unimportant; X = undesirable). Importance generally is based on the shared use of
facilities, equipment, workers or records, work flow, communication requirements, or safety
requirements. The departments and other elements are then assigned to clusters in order of
importance.

Advantages of process layouts include:

Flexibility. The firm has the ability to handle a variety of processing requirements.

Cost. Sometimes, the general-purpose equipment utilized may be less costly to

purchase and less costly and easier to maintain than specialized equipment.

Motivation. Employees in this type of layout will probably be able to perform a

variety of tasks on multiple machines, as opposed to the boredom of performing a
repetitive task on an assembly line. A process layout also allows the employer to use
some type of individual incentive system.
 System protection. Since there are multiple machines available, process layouts are
not particularly vulnerable to equipment failures.

Disadvantages of process layouts include:

Utilization. Equipment utilization rates in process layout are frequently very low,
because machine usage is dependent upon a variety of output requirements.

Cost. If batch processing is used, in-process inventory costs could be high. Lower
volume means higher per-unit costs. More specialized attention is necessary for both
products and customers. Setups are more frequent, hence higher setup costs. Material
handling is slower and more inefficient. The span of supervision is small due to job
complexities (routing, setups, etc.), so supervisory costs are higher. Additionally, in
this type of layout accounting, inventory control, and purchasing usually are highly
involved.

Confusion. Constantly changing schedules and routings make juggling process

requirements more difficult.

3. Cellular Layout (Also called Group Layout): In this case a number of products are
produced simultaneously. Each of the products by and large has separate production or
assembly line. (Similar to Product Layout). Cellular manufacturing is a type of layout where
machines are grouped according to the process requirements for a set of similar items (part
families) that require similar processing. These groups are called cells. Therefore, a cellular
layout is an equipment layout configured to support cellular manufacturing.

Processes are grouped into cells using a technique known as group technology (GT). Group
technology involves identifying parts with similar design characteristics (size, shape, and
function) and similar process characteristics (type of processing required, available
machinery that performs this type of process, and processing sequence).

Workers in cellular layouts are cross-trained so that they can operate all the equipment within
the cell and take responsibility for its output. Sometimes the cells feed into an assembly line
that produces the final product. In some cases a cell is formed by dedicating certain
equipment to the production of a family of parts without actually moving the equipment into
a physical cell (these are called virtual or nominal cells). In this way, the firm avoids the
burden of rearranging its current layout. However, physical cells are more common.

An automated version of cellular manufacturing is the flexible manufacturing system (FMS).

With an FMS, a computer controls the transfer of parts to the various processes, enabling
manufacturers to achieve some of the benefits of product layouts while maintaining the
flexibility of small batch production. The cells become, in effect, miniature versions of
product layouts.

Cellular layout is based on the group technology (GT) principle. Therefore, it is also called as
group layout. This layout is suitable for a manufacturing environment in which large variety
of products are needed in small volumes (or batches). The group technology principle
suggests that parts, which are similar in design or manufacturing operations, are grouped into
one family, called part-family.

For each part-family a dedicated Cluster of machines (called machine cell) are identified.
Generally, all the processing requirements of a particular part-family are completed in its
corresponding machine ceil. In other words, the inter-cell transfer UT part should ideally be
zero."

Group technology or cellular layout

The cellular layout is thus a combination of process and product layout. Therefore, it
possesses the features of both. Cellular manufacturing system (CMS) involves decomposition
of manufacturing system into subsystems of similar parts/machines. CMS allows batch
production to give economic advantages similar to those of mass production with additional
advantages of flexibility, normally associated with job shop production systems Some of the
advantages of cellular manufacturing include:

Cost. Cellular manufacturing provides for faster processing time, less material
handling, less work-in-process inventory, and reduced setup time, all of which reduce
costs.

Flexibility. Cellular manufacturing allows for the production of small batches, which
provides some degree of increased flexibility. This aspect is greatly enhanced with
FMSs.

Motivation. Since workers are cross-trained to run every machine in the cell, boredom
is less of a factor. Also, since workers are responsible for their cells' output, more
autonomy and job ownership is present.

4. Job Shop Layout: It is general purpose and flexible layout; normally decided by
analyzing the types of jobs being undertaken in the shop. LAYOUT In the job shop, similar
equipment or functions are grouped together, such as all drill presses in one area and grinding
machines in another in a process layout. The layout is designed to minimize material
handling, cost, and work in process inventories. Job shops use general purpose equipment
rather than specialty, dedicated product-specific equipment. Digital numerically controlled
equipment is often used to give job shops the flexibility to change set-ups on the various
machines very quickly. Job shops compete on quality, speed of product delivery,
 customization, and new product introduction, but are unlikely to compete on price as few
scale economies exist.

5 Project Layout (Also called Fixed Position Layout): Here, the equipment and
machinery are brought to the Project or Work site and positioned around it appropriately.
Examples are, Construction of Power Plants, Dams, Buildings, Bridges, Ships, Aircrafts etc.

Major factors considered while designing Plant Layout:

(a) Type of Production.

(b) Machinery & Processing Factors.

Material Movement Factor.

(d) Waiting Factor.

(e) Service Factors: Facilities for workers, Parking area, Lockers, Toilets, Waste
Control, Maintenance of machinery etc.

(f) Building Factors

(g) Flexibility factors.

Fundamental characteristics of Project Type Layout are as below:-

Lack of storage space can present significant problems.

The span of control is narrow.

Special efforts are needed to coordinate activities.

Administrative burden is high.

Material handling resembles process-type, variable-length, general-purpose

equipment.

7. Understand the importance of Production Plant Layout in terms of Plant Productivity.

The Difference between Process and Product Layout Manufacturing

Manufacturing companies put a lot of thought into the way their facilities are laid out.
Strategic process selection and design are crucial to maximizing productivity and reducing
costs in manufacturing operations. Managers put different facilities design philosophies into
practice to reduce waste, increase output and decrease the time and manpower required for
each work task. Process layouts and product layouts are two popular facilities layout
philosophies best suited to different production situations. Understanding the difference
between process and product layout manufacturing can give you insight for structuring your
own manufacturing operation.
Product Layout

A product layout groups different workstations together according to the products they work
on. Workstations in a product layout can quickly transfer small batches of semi-finished
goods directly to the next station in a production line. Product layouts can be ideal for smaller
manufacturing businesses with lower volume than their large corporate competitors. As a
business's manufacturing output grows, however, it is wise to at least consider implementing
a process layout.

In a product layout for a garment manufacturer, for example, stations for sewing cloth,
sewing on buttons, inspecting seams, wrapping finished garments and boxing them up would
all be located within close proximity for an individual clothing item, allowing individual
garments to pass from one station to another quickly.

Process Layout

A process layout groups workstations together according to the activities being performed,
regardless of which products each workstation is working on. Workstations produce higher
volumes of output at a time before sending semi-finished goods in bulk to the next area,
which may be located as close as the other end of a building or as far as another facility on
the other side of the globe.

Continuing the garment manufacturing example, a process layout would group multiple
sewing stations together for different clothing items in one area, then locate inspection,
wrapping and packaging stations for different items together in different areas.

Advantages

Process layouts are designed to increase economies of scale, allowing individual processes to
function more efficiently by pooling resources. Because of this, process layouts can be ideal
for businesses that produce large volumes of product each day. Process layouts provide
additional cost advantages in human resources, as employees can more easily specialize in a
specific work process and learn from coworkers and supervisors performing the same jobs.

Product layouts have the advantage of keeping specific production jobs relatively contained.
This can be ideal when building manufactured homes and other high-dollar, low-volume
goods that require a good deal of communication between workers at different stations.

Disadvantages

Process layouts can be less effective when dealing with individual custom orders, as custom
information has to be sent along the production line along with the semi-finished materials.

Product layouts deployed on a large scale can require more space than process layouts, since
tools and equipment cannot be shared as easily between workers performing the same tasks
on different products. This lack of redundancy in production areas can also increase total
expenses for equipment, since each redundant station needs a full set of equipment and tools
to perform the work independently.

Below is the layout of modular or cell manufacturing system smooth flow of operations;
flexible system enables variations in product

Modular or cell production systems

These systems use a number of production cells or modules that are grouped together to
manufacture a component or sub-assembly of a larger product. The cells or modules usually
consist of production machines and include inspection and assembly units. Very often the
cells are operated by a small multi-skilled workforce but can be fully automated.

Some large manufacturing systems process large batches in sequence through several
dedicated process or manufacturing sections. This is often referred to as batch and queue
production. Sections usually have large, expensive machines designed to minimise unit costs
by mass-producing single identical components with minimal tool changes.

Below is the a layout of batch and queue manufacturing system lots of down time when
one particular process causes a delay in production.

In modular or cell manufacturing the workstations are arranged in a logical manner to

produce one complete item at a time, in a smooth and quick flow through the production
process. The rate of production is decided by consumer demand. Production planning for the
cells/modules must be accurately scheduled to ensure tha the correct number of
components/sub-assemblies is produced in time for the final assembly of the product. A hold
up in one module is not as catastrophic as a hold up in an in-line production system.

Modular/cell production systems require careful positioning of workstations to enable

minimal and quick movement of parts from one operation to another.
The workforce is often multi-skilled to offer maximum flexibility and enable rapid change of
production.

The machines are often fitted with multiple tools and generally operate a rapid tool changing
system. Powered clamping systems offering quick and easy location of the work-piece speed
up production times. A standard size of manual locking method, usually in the form of a
chuck key or spanner, is used to avoid operators wasting time searching for the correct tool.

Below is the layout of modular or cell manufacturing system smooth flow of operations;
flexible system enables variations in product

Modular or cell production systems

Functional layout of modules/cells

Flexible system offering rapid change in production reacting to consumer demand

High level of job satisfaction; operators work in flexible teams carrying out different
tasks, opportunities for training

All workforce responsible for quality contro

Lean Manufacturing
1. Lean Production: Production practice that considers the expenditure of resources for
any goal other than creation of value for the end customers to be wasteful and hence targets to
eliminate such wasteful expenditure or wastage.

2. Lean principles derived from Japanese manufacturing industry. Lean production is an

assembly-line methodology developed originally for Toyota and the manufacturing of
automobiles. It is also known as the Toyota Production System or just-in-time production.
Lean production principles are also referred to as lean management or lean thinking.

Engineer Taiichi Ohno is credited with developing the principles of lean production after
World War II. His philosophy, which focused on eliminating waste and empowering workers,
reduced inventory and improved productivity. Instead of maintaining resources in
anticipation of what might be required for future manufacturing, as Henry Ford did with his
production line, the management team at Toyota built partnerships with suppliers. In effect,
under the direction of Engineer Ohno, Toyota automobiles became made-to-order. By
maximizing the use of multi-skilled employees, the company was able to flatten their
management structure and focus resources in a flexible manner. Because the company was
able make changes quickly, they were often able to respond faster to market demands than
their competitors could.

Many industries, including software development, have adopted the principles of lean
production. The ten rules of lean production can be summarized:

1. Eliminate waste
2. Minimize inventory
3. Maximize flow
4. Pull production from customer demand
5. Meet customer requirements
6. Do it right the first time
7. Empower workers
8. Design for rapid changeover
9. Partner with suppliers
10. Create a culture of continuous improvement (Kaizen)

3. Principles involved are:

(a) Identification and steady elimination of waste.

(b) Waste elimination improves quality, reduces idle time and costs.

(c) Improve flow or smoothness of work. Balanced Pull and Push

production forms are used for optimal usage of machinery and reduce wait
time for the inventories and the machines appropriately.

(d) Use of Just in Time Principle.

 (e) Factors contributing to wastage in Production:

-Over Production.

-Waiting between production steps.

-Inventory Control.

-Transportation.

-Motion.

-Defects.

-Workforce.

4. Tools of Lean: Just in Time, Zero Defect, Fast changing tools,

5 S Philosophy Sort, Set in order, Shine (clean), Standardize, Sustain.

UNIT 2 (07 Periods)

Production System and Related Concepts

Production Planning & Control

1. Production management: Conforming to Management Principles Planning,

Organizing, Staffing and Control. (Phases of Production Planning & Control).

2. Sequence: Product Selection, Production System Plans, Plant Location, Plant

Building, Plant Layout design. Associated aspects- Selection of Machinery & Equipment,
R&D, Manufacturing and Quality Control.

3. Production- Design, Specifications, Strategies, Standardization, Product & Plant life,

Capacity design, Market Research, Manufacturing / Buying/ Sub Contracting.

4. Controls: Regulate production, Quality, Review of plans, Diversification, Expansion,

and Modernization.

5. Failure of Production Plans: Factors related to Product, Organizational/ Behavioral

issues, Market related aspects.

Production planning takes anticipated capacity requirements and translates them into needs
for specific production elements. It allows a company to fulfill sales projections in an
efficient manner while maintaining quality. Small businesses have to plan their production
carefully to make the best use of their limited resources. You can classify the principles of
production planning by their functions and by the production elements they affect. A sound
production plan uses reliable forecasts to assign resources and control the resulting output.

Forecasting

Before you can plan to assign resources, you have to know how much to produce. Companies
typically base capacity estimates on projected sales figures coming from sales and marketing.
The forecasts consist of a target and a possible variation. Production planning focuses on the
principle of meeting the target in the most efficient way possible while keeping open the
capability to respond to variations in demand.

Materials

To fulfill your production target, you must have the materials needed to produce the goods on
hand. The most efficient production planning keeps the minimum materials in inventory.
Production planners evaluate how much material the company needs, the lead times for
orders, the delivery times for suppliers and the reliability of the supply. While just-in-time
supply is a desirable principle, production planning has to balance this strategy against the
more damaging possibility that the production line might have to shut down because of a lack
of supplies.

Equipment

The production planner takes into account the capabilities of the equipment used to produce
the output. A basic production principle takes the historic output of the equipment, applies a
safety factor and uses that to predict actual capabilities. If a production planner foresees a
capacity requirement beyond the capabilities of the equipment, he investigates the acquisition
or leasing of additional equipment or capacity. After the influences of such additional
capacity on costs is established, the information is used in the decision whether to proceed or
reduce the forecasts.

Manpower

Manpower planning requires accurately estimating the number of employees required to do

the work. A basic principle plans for the number of workers required to fulfill the target and
uses overtime and layoffs to compensate for variations. The capacity of the workforce has to
match the capabilities of the equipment to plan for the highest efficiency. Manpower planning
also uses historical data to adequately project time lost due to sickness and employee
turnover.

Processes

Effective production planning makes sure that the processes used for the output continue to
operate efficiently and safely. Often the normal operation of a process requires occasional
testing and adjustments. Production planning principles require that such procedures are up to
date and, if required during the planned production run, the plan allocates the necessary time
and resources. If the company is bringing a new process on line, production planning ensures
that it is tested and ready for operation when the planned production run starts.

Controls

A final production planning principle puts in place controls that detect problems as soon as
they occur. Verification of inventory, use of qualified suppliers and personnel, standardization
where possible and frequent testing of intermediate and final outputs can prevent quality
problems and production delays. When controls are in place and production planners become
aware of a problem, their plans include possible corrective actions to minimize the effects and
return production to the required levels.

Productivity

1. Productivity = Measure of Output/ Measure of Input (Both should be in same Units)

2. Importance of Productivity Analysis.

3. Factors affecting Productivity.

4. How can Productivity be increased?

Mass Production System

1. Mass Production and Assembly Line notions of Production introduce in 1913 by

Henry Ford. Production quantities are large and Product varieties small.

2. Large Scale Production of the same product, continuous flow of inventories, Work
Stations / Assembly Line arranged as per sequence of operations

3. Movement of material is manual or mechanized; use of conveyers and other material

handling equipment as necessary from one work station to the other.

4. Rate of consumption and manufacture decides if the Production System should be

Mass or Batch Production System.

Mass Production: Rate of Consumption Rate of Production.

Batch Production: Rate of Consumption< Rate of Production.

5. Advantages & disadvantages of Mass Production/ Assembly Line System.

6. Design of Assembly line. Balancing of Assembly Line or Mass Manufacturing

System. Process time, Station Time, Production Cycle Time, Production Capacity of Plant
based on Cycle Time considering 8 hours shift and 80% efficiency; Production Line
Efficiency. Optimizing numbers of Work Stations considering preceding and succeeding
activities and the Process Time.

7. Must understand the purpose and techniques of balancing the Production Line.
 Balancing of Production Line- Mass Production Systems

Line-balancing strategy is to make production lines flexible enough to absorb external and
internal irregularities. There are two types of line balancing, which we have explained as

Static Balance Refers to long-term differences in capacity over a period of several

hours or longer. Static imbalance results in underutilization of workstations, machines
and people.

Dynamic Balance Refers to short-term differences in capacity, like, over a period of

minutes, hours at most. Dynamic imbalance arises from product mix changes and
variations in work time unrelated to product mix.

Labour Balancing
Strategy of production line stability is the tendency for labour assignments to be fixed.
Labour feasibility is an important feature in the strategy of production line flexibility linked
to individual skills and capabilities

When one worker is having problem in performing his assigned task and experiencing
delay due to technical problem(s), other worker(s) should move into help.

The management practice of deliberately pulling workers of the line when the line is
running smoothly.

The movement of whole crews from one dedicated line to another as the model mix
changes.

Group Technology In which one worker can handle variety of tasks (automation) in
a single work centre.

Equipment Balancing
While balancing equipment, attempt to ensure that each piece of equipment in the work cell
has the same amount of work. Now days every manufacturer is attempting to maximize the
utilization of all available equipment. Such high utilization is often counterproductive and
may be the wrong goal because; high utilization is usually accompanied by high inventory.

Equipment Failure
An equipment failure is a major serious matter, with the potential to shut down a production
line. To avoid such failures one should not overload the equipment, and workers should be
trained to perform a daily machine checking (preventive maintenance) and following
standard operating procedures. The advantage for Maintenance and Engineering Department
does not lie in running late shifts, hence calculate the preventive maintenance time and
schedule the activity.
Analysis
Analysis is generally performed by Competent Technical Staff. Begin the analysis with
division of production-line work into small tasks, determination of task time standards,
specification of required task sequencing and notation of constraints. If bottle neck task is in
the way of good balance, the Competent Technical Staff should analyze the task to reduce the
time it takes to perform. Problems in Balancing of Production Lines will be discussed in
Class.

Planning & Control in Batch Production

1. Batch Production - Varieties of Products to be produced in quantities that are not large
enough to justify separate line of Production for each Product. (This was given as Case Study
in last internal examination).

2. There is no fixed type of layout, general purpose machineries are used and located in
respective departments or sections. There is no streamlined flow of materials being processed
and machinery is used on as required basis for each Product. Sometimes separate Production
runs are done at a time or during a period for each Product. Production is done in batches.

3. Complex control, strategic planning of batches. Complex inspection system.

4. Study Batch Production traits in comparison to Mass Production Line

Types of Production System - Intermittent and Continuous

Types of production system

The types of production system are depicted in the following image.

The types of production system are grouped under two categories viz.,

1. Intermittent production system, and

2. Continuous production system.

Now let's discuss in detail each of the above-mentioned categories.

Intermittent production system

Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed)
intervals (time gaps).

In the intermittent production system, goods are produced based on customer's orders. These
goods are produced on a small scale. The flow of production is intermittent (irregular). In
other words, the flow of production is not continuous. In this system, large varieties of
products are produced. These products are of different sizes. The design of these products
goes on changing. It keeps changing according to the design and size of the product.
Therefore, this system is very flexible.

Following chart highlights the concept of an intermittent production system.

Following are examples on the intermittent production system. Please refer above chart while
reading examples given below.

1. The work of a goldsmith is purely based on the frequency of his customer's orders.
The goldsmith makes goods (ornaments) on a small-scale basis as per his customer's
requirements. Here, ornaments are not done on a continuous basis.

2. Similarly, the work of a tailor is also based on the number of orders he gets from his
customers. The clothes are stitched for every customer independently by the tailor as
per one's measurement and size. Goods (stitched clothes) are made on a limited scale
and is proportional to the number of orders received from customers. Here, stitching
is not done on a continuous basis.

The features of an intermittent production system are depicted below.

The characteristics of an intermittent production system are listed as follows:

1. The flow of production is not continuous. It is intermittent.

 2. Wide varieties of products are produced.

3. The volume of production is small.

4. General purpose machines are used. These machines can be used to produce different
types of products.

5. The sequence of operation goes on changing as per the design of the product.

6. The quantity, size, shape, design, etc. of the product depends on the customer's orders.

The types of intermittent production system include:

1. Project production flows,

2. Jobbing production flows, and

3. Batch production flows.

Continuous production system

Continuous means something that operates constantly without any irregularities or frequent
halts.

In the continuous production system, goods are produced constantly as per demand forecast.
Goods are produced on a large scale for stocking and selling. They are not produced on
customer's orders. Here, the inputs and outputs are standardized along with the production
process and sequence.

Following chart highlights the concept of a continuous production system.

Following are examples on the continuous production system. Please refer above chart while
reading examples given below.

1. The production system of a food industry is purely based on the demand forecast.
Here, a large-scale production of food takes place. It is also a continuous production.
 2. Similarly, the production and processing system of a fuel industry is also purely based
on, demand forecast. Crude oil and other raw sources are processed continuously on a
large scale to yield usable form of fuel and compensate global energy demand.

The features of a continuous production system are depicted below.

The characteristics of a continuous production system are listed as follows:

1. The flow of production is continuous. It is not intermittent.

2. The products are standardized.

3. The products are produced on predetermined quality standards.

4. The products are produced in anticipation of demand.

5. Standardized routing sheets and schedules are prepared.

The types of continuous production system include:

1. Mass production flows, and

2. Process production flows.

Planning & Control in Job Shops

1. Job Shops Handle varieties of jobs, each job is different from the other (Even if the
main equipment is same or similar).
2. No fixed layout. General purpose machinery are used. Separate section are normally
created to undertake different types of jobs.

3. Complex queuing system as job leaves one machine and joins the queue of another
machine where different types of Product parts or components are being processed.

4. In job shop, Order/ Priority and Delivery time promised to each customer are
considered while planning the work on different jobs.

5. Processing time, order of the process on a job, idle time, tardy jobs, lateness,
earliness, tardy jobs and queue time are of relevance for planning and executing th work in a
particular order.

6. Priorities of executing the order can be planned on basis of:

(a) First Come First Serve Basis.

(b) Shortest Processing Time (SPT).

(c) Weighted SPT. (Giving importance to jobs).

(d) Early Due Date Sequencing. (EDD).

(e) Minimum Tardy Jobs approach.

7. Situations: (a) n Jobs one Machine Cases. (b) n Jobs two machine cases. (c) n
Jobs three machine Cases.

8. Terms used- Idle time of machines, Mean Lateness, Mean Flow Time, Average In-
process inventory.

Job Shop Production usually refers to manufacturers that produce items that are "one of a
kind", for example, manufactures of automation systems and tooling. Manufacturers who
produce a wide variety of items in very low volumes also fall into the job shop category. For
example, very large mining trucks are produced in volumes typically less than 400 annually.
Each truck has thousands of components so you can imagine that there are significant
challenges in production scheduling, purchasing and inventory control with this type of
manufacturing company as with all job shops.

Job Production
Job production involves producing a one-off product for a specific customer. Job production
is most often associated with small firms (making railings for a specific house,
building/repairing a computer for a specific customer, making flower arrangements for a
specific wedding etc.) but large firms use job production too. Examples include: Designing
and implementing an advertising campaign, auditing the accounts of a large PUBLIC
COMPANY, building a new factory and installing machinery in a factory etc. In this system
products are made to satisfy a specific order. However that order may be produced-
 -only once
-at irregular time intervals as and when new order arrives
-at regular time intervals to satisfy a continuous demand
The following are the important Features of job shop type production system: Machines and
methods employed should be general purpose as product changes are quite frequent.
Planning and control system should be flexible enough to deal with the frequent changes in
product requirements. Man power should be skilled enough to deal with changing work
conditions. Schedules are actually nonexistent in this system as no definite data is available
on the product. In process inventory will usually be high as accurate plans and schedules do
not exist. Product cost is normally high because of high material and labor costs.

Material Handling Equipment

1. Materials to be handled: Solid, Liquid, Gases. Continuous, periodic, as required,

variable. Bulk handling, Unit handling. Accuracy requirements, Space for handling;
open/ closed within workshop/ warehouse. Distance to be travelled.

2. Desired traits of Material Handling Equipment: Easy to handle & maintain, simple,
capable, safety aspects, effective, range of materials to be handled, speed of operation,
versatile, low cost of operation, compact.

3. Types of Systems:

Conveyer type- Belt, Roller, Chain, Screw, Pipeline, vibrating, Bucket.

. Cranes Electrical, manual, overhead travelling, gantry, hoists, winches.

Trucks- Forklift, Platform, trailors, tractors, cars, hand stackers, trolley.

Attachments: Ramp, container, weighing equipment, pallets & skids.

Principles of Material Handling

Eliminate wasteful methods:

o Reducing to a minimum the number of handlings of materials.

o Eliminating unnecessary mixing and subsequent sorting.

o Using mechanical aids to eliminate the use of hand labor in movement of

materials.

o Avoiding the unnecessary transfer of materials from floor to workplace or

from container to container.

o Increasing the speed of handling.

o Utilizing containers and unit loads.

 o Utilizing gravity as a moving force wherever practicable.

o Introducing automatically into the materials handling plan.

In laying out the plant:

o Plan a system for materials flow and combine handling with processing
wherever possible.

o Provide for continuous or appropriate intermittent flow of materials.

o Provide for the optimal flow of materials between operations and with a
minimum of retrograde movement.

o Plant the layout of the work-station area for a minimum of handling of the
product.

o Maximize the quantity and size of weight handled.

o Coordinate the overall materials handling throughout the entire plant.

o Provide for safe handling and safe equipment and integrate with the
management information and control system.

o Plan for adequate receiving, storage and shipping facilities.

o Make optimum use of building cubage.

o Design adequate aisle and access areas.

In the selection and application of materials handling equipment:

o Plan activities and analyze equipment needs before considering the purchase
of new equipment.

o Ensure that the existing equipment is being used effectively.

o Use the simplest equipment that is adaptable to the problem: avoid the use of
complicated mechanisms and controls.

o Adopt standard equipment if possible; ensure that the purchase of special

equipment is economically justified.

o Select equipment that is flexible in its application.

o Select equipment that will minimize the ratio of mobile equipment

deadweights to pay loads.
 o Determine comparative costs of equipment before purchasing.

o Recognize the need for different equipment for different jobs.

o Recognize the need to provide suitable building conditions for the equipment.

o Provide for alternative methods for use in emergencies.

o Give consideration to the maintenance of the equipment.

o Replace obsolete methods and equipment with more efficient ones.

Material Handling Equipment

The general types of materials handling equipment include Conveyors, Monorails, hoists, and
cranes, Industrial trucks, Containers and supports, Auxiliary and other equipment. The factors
affecting the selection of materials handling equipment are:

Adaptability: the load carrying and movement characteristics of the equipment

should fit the materials handling problem.

Flexibility: Where possible the equipment should have flexibility to handle more than
one material, referring either to class or size.

Load capacity: Equipment selected should have great enough load-carrying

characteristics to do the job effectively, yet should not be too large and result in
excessive operating costs.

Power: Enough power should be available to do the job.

Speed: Rapidity of movement of material, within the limits of the production process
or plant safety, should be considered

Space requirements: The space required to install or operate materials handling

equipment is an important factor in its selection. Supervision required: As applied to
equipment selection, this refers to the degree of automaticity designed into the UNIT

Ease of maintenance: Equipment selected should be easily maintained at reasonable

cost.

Environment: Equipment selected must conform to any environment regulations.

Cost: The consideration of the cost of the equipment is an obvious factor in its
selection.

UNIT 3 (10 Periods)

Scheduling and Measuring Production Activities

Work Study

Work Study is the systematic examination of the methods of carrying out activities such as to
improve the effective use of resources and to set up standards of performance for the
activities carried out.
Another definition of Work Study could be:
A generic term for those techniques, particularly method study and work measurement, which
are used in the examination of human work in all its contexts, and which lead systematically
to the investigation of all the factors which affect the efficiency and economy of the situation
being reviewed, in order to effect improvement'. This has to do with Productivity
Improvement, but also improvement of Quality and safety.

Operations Management - Work Study

Managing people within operations involves actual design decisions about jobs, methods,
relationships between jobs and machines and systems of control and communication. Work
design involves complex "people" relationships between operative staff, supervisors and
specialists e.g. engineering managers and staff who commission new machines and systems
or monitor performance and plan maintenance maintain them. Other specialists may co-
ordinate health and safety

People are not mere extensions to machines or horsepower to be switched on and off. A
worker's performance may be better than a machine's capability - yet a machine may outstrip
the human being for many tasks. People can be hurt/injured physically by operating
environments or trapped socially and psychologically in them/by them. How operational
systems are designed and the jobs and performance relationships within them are of great
operational, economic and social importance. In this context then work study is a collection
of techniques used to examine work - what is done and how it is done - so that there is
systematic analysis of all the elements, factors, resources and relationships affecting the
efficiency and effectiveness of the work being studied. Considerable diplomacy and
sensitivity is needed by the industrial engineer or operations manager who becomes involved
in work study (or business process improvement) investigations.
As per F. W. Taylor; Method study and Work Measurement are two principal activities of
work study leading to "scientific management" of production and its imperatives are:
investigate the work situation and identify weaknesses - where and why is poor
performance happening? The "scientific" title for this approach to management means
placing emphasis on
Data gathering and rational analysis
Certain narrow assumptions about the objectivity of efficiency criteria
The existence of direct, deterministic relationships between worker performance and
incentive payments and
Consideration of the worker to some extent as a machine. Thus we can evaluate and
introduce improvements in operating methods. This includes type of equipment, its use,
layout of operations, supply and use of materials, materials handling, work organization,
effectiveness of planning procedures and so on. Productivity improvement is the aim.
We can select staff with characteristics that fit the job, train and reward them using payment
schemes the offer particular economic incentive by linking payment to measured
performance. Such propositions are commonly the stuff of managerial populists and "how-to"
texts on human resource management.
Methods study Approach
- is an analysis of ways of doing work. The study stages are:
 1. Select the tasks to study
2. Record the facts about it
3. Examine these
4. Develop a new method
5. Install/implement it
6. Maintain it
Work measurement
- involves assessing the time a job should take to do. Similar steps are involved as in
method study
1. Select the tasks
2. Record the facts
3. Analyze them
4. Calculate basic and standard times for the task
5. Agree the method and its related time
Work-study and methods study came within the scope of the industrial engineer. Today the
techniques of method study are inclusive within the tool-kits and applications of the business
systems analyst. The most modern application of some of the techniques of work study is the
early 1990's managerial recipe; "business process re-engineering" i.e. re-designing business
processes which have developed to the extent that they mismatch the needs of the situation
today.
Efficiency Indices
Using data on measured work, unmeasured work and idle time we can attempt to derive
effectiveness indices
(a). Efficiency while performing measured work (ratio of standard/measured hours of work
produced and the actual time taken)
(b). Effectiveness which includes accounting for work done for which no measured time
exists. Such work is typically paid for by an agreed hourly/day rate i.e. there is no direct,
measured relationship between pay and how much work is actually completed in that hour.
Of course a supervisor may pass a judgment or state that the amount of work and its quality
are inadequate.
Capacity Design & Capacity Planning

1 Production Function: Material, Labour, capital, machines, efficiency, management.

2. Capacity Planning- Strategic decision, internal factors, external factors and

considerations.

3. Factors that influence output - Finance, Machines and Labour (provisioned at design
stage) and:

(a) Overtime operations.

(b) No. of shifts.

(c) Jobs sub-contracted.

(d) Climatic and working conditions.

(e) Managerial efficacy.

4. Definition of Capacity: Production of units within a a stated or stipulated time. In case
of multiple sub processes involved, it is measured as the capacity of the weakest link.
In Power plants Megawatts, Oil wells- Barrels per day etc. Other forms are:-

(a) Rated Capacity.

(b) Installed Capacity.

(c) Licensed Capacity.

(d) Labour hrs. per month. (In Job Shops).

(e) Can also be expressed in terms of Limiting Resources / Time.

(f) In Service Units- No. of Services rendered/ Time.

(g) In hospitals- Bed Days per month.

5. Predicting future Capacity Historical data, statistical evaluation, Regression

Analysis, Delphi, Market Survey etc.

6. Alternative Sources of Capacity.

7. Process for Capacity Planning.

8. Cost-Volume Relationship Bath tub curve, under utilization and over utilization of
Capacity; impact on Production Planning.

Scheduling and Measuring Production Activities

1. Scheduling of Jobs- Zero date concept, First Come First Serve, Shortest Processing
Time & Early Delivery Schedule concepts. PERT and CPM use for scheduling the activities,
Crash Time considerations, Weightage and Priority concept.

2. Resource considerations in scheduling of work, allocation of

resources in multiple projects and work activities. (Pay Back Period, IRR,
and strategic choice concepts of resource allocation).

What is Job Design?

Job design means designing the contents of a job. It fixes the duties and responsibilities of
the job, the methods of doing the job and the relationships between the job holder (manager)
and his superiors, subordinates and colleagues. Job design also gives information about the
qualifications required for doing the job and the reward (financial and non-financial benefits)
for doing the job. Job design is mostly done for managers' jobs. While designing the job, the
needs of the organization and the needs of the individual manager must be balanced. Needs of
the organization include high productivity and quality of work and the needs of individual
managers include job satisfaction. That is, they want the job to be interesting and challenging.
Jobs must not be made highly specialized because they lead to boredom.
Importance of Job Design

Job design is a very important function of staffing. If the jobs are designed properly, then
highly efficient managers will join the organization. They will be motivated to improve the
productivity and profitability of the organization. However, if the jobs are designed badly,
then it will result in absenteeism, high labour turnover, conflicts, and other labour problems.

Factors Affecting Job Design

The guidelines influencing or factors affecting job design are depicted below.

1. Proper scope of job

The scope of the job should be proper. If the scope is narrow (less), then the job will not be
challenging. It will not give an opportunity for development. The manager will not get
satisfaction after completing an easy job. If the scope of the job is very wide, then the
manager will not be able to handle it properly. This will cause stress, frustration and loss of
control. Therefore, scope of the job must be balanced and proper.

2. Full-time challenge of the job

The job should be so challenging that it takes up the full-time and effort of the manager. So,
the service of the manager must be fully utilized. If not, the manager will have a lot of free
time. He will use this free time to interfere in the work of his subordinates. This will cause
problems and conflicts because subordinates do not like unnecessary interference from their
superiors.

3. Managerial skills

The skills of the manager should be considered before designing his job. All managers do not
have equal skills. So jobs should be designed after considering the skills of the manager. So, a
manager having a high level of skill should be given very challenging jobs while a manager
having a low level of skill should be given fewer challenging jobs. Jobs must be made
flexible so that it can be changed according to the skills of the manager.

4. Organizations requirements

Jobs must be designed according to the requirements of the organization. We cannot use the
same job design for all organizations.

5. Individual likes and dislikes

People have different likes and dislikes. Some people like to work alone while some people
prefer to work in groups. Some people want to do only planning and decision making while
other people like to implement these plans and decision. So, individual likes and dislikes
must be considered while designing the job.

6. Organizational structure

Organizational structure also affects the job design. Individual jobs must fit into the
organization's structure.

7. Technology

The level of technology used by the organisation also affects the job design. An organisation
having a high level of technology will have different job designs compared to an organisation
having a low level of technology.

3. Difference between Job and Work

Job vs Work

Work and job are two words that have similar yet different meanings. Although they are
used interchangeably, their meanings may differ according to how they are used.

The use of the word job to describe a piece of work was first recorded in the 1550s. It
comes from the Middle English word gobben which means lump or mass. It is a noun
that is used to refer to work that an individual does for a living.

Job is defined as an activity that an individual performs in exchange for a specific fee or
payment. It is also referred to as an occupation, profession, career, or trade. It is a
responsibility of an individual towards his employer that he must perform well because he is
paid for it. A job is a formal kind of work. When one is hired for a job, he has to get into a
contract with his employer, and he has to abide by the regulations of the company. In a job,
the goals and targets are more specific and well laid out for the employees to follow and
achieve.

It refers to a specific type of employment wherein the individuals role or position is clearly
defined. It involves working on a specific task with the expectation of being compensated for
the job done. The term job is also used in lieu of the word work, but work has separate
connotations.

The word work is used as a noun as well as a verb. The noun work first appeared in the
1650s to refer to an industrial place. It comes from the Old English word worc or weorc
which means something done, action, or business. Work is defined as a physical or
mental activity that is performed in order to accomplish or produce something. It is
something that an individual does in the performance of his job or of his responsibilities
towards his employers or other people.

It has a broader meaning and can refer to all kinds of activities that an individual does. It can
be something that one does in the performance of his responsibilities to his family such as
cooking their food and cleaning the house. It can also be something that one does because he
loves doing it like gardening or helping out in church. An individual does not always have to
be paid for his work unlike a job in which he is paid for accomplishing.

Summary:

1. A job is an activity that an individual performs in exchange for payment while work is an
activity that an individual performs in order to produce or accomplish something.
2. Individuals perform their jobs in order to get monetary compensation while people work
on something not only to earn but also as part of their responsibility towards others which
does not involve any compensation.
3. Work is a general term that refers to all activities that one does while job is more
specific.
4. The word work comes from the Old English word weorc or worc while the word
job comes from the Middle English word gobben.

Work Design- It concerns study and design of work system in any type of Organization. Work
Design combines and plan utilization of Work factors and resources (Men, machines,
materials, money, methods and management efficacy) to achieve the desired output and
outcome.

4. Most Work Systems are Open Systems.

5. Work Design incorporates the following studies:

 (a) Work Study.

(b) Method Study

(c) Work Measurement.

6. Productivity can be increased by Work Study Techniques; through improvement of

Workers efficiency.

7. Components of Work Study: Material flow, Operating conditions, methods of

manufacture, reduction in waste, reduction in paper work..

8. (a) Material Flow Charts use following symbols:

D Delay

Inspection

Operation

Storage

Movement

9. Two handed flow charts- Depict activities of Left & Right hand at the same time.

10 Charts for Men and Machine Activities One operator one machine, two machines
and multi machine scenario. (Man and Machine status- operating and idle depiction).

11. Relationship Charts- Relationship between various departments and sections to justify
their co-location or distant location. (Planning of Locations of sections).

12. Work Measurement- Direct Time Study and Indirect Time Study. Well defined
beginning and end for accurate measurements.

13. Types of Times: Standard Time, Normal Time and Actual Time.

Normal Time = Actual Time x Worker Rating. (Workers Performance Rating is in

comparison to the rate of output by expert worker under standard conditions of work).

If Worker Rating =1 (Expert worker); the Normal Time = Actual Time.

Performance Rating = (Standard Time Actual Time) x 100.

Standard Time= Normal Time+ Standard Allowance for personal time + Allowance
for Job delays + Workers fatigue allowance.

ST= NT x (1+ Allowances).

Fatigue Allowance = 4% for men and 6% for women.

Job Delay Allowance = 5%.

 Relaxation Allowance = 10% for men and 12.5 % for women.

14. Example: If NT = 10 minutes but worker performs in 14 minutes; Find Performance

Rating of Worker. Allowances for fatigue, relaxation and job delays are 5, 10 and 2 percent
respectively.

Solution: Total Allowances = 5+10+2 = 17 %. Hence ST = NT x (1+ Allowances).

ST = 10x (1+0.17) = 10 x 1.17 = 11.7 minutes.

Hence performance rating of worker is = (Standard Time Actual Time) x 100.

= (11.714) x 100 = 83.57%.

Process Flowchart (Process Flow Mapping)

Process Flowchart Diagram or PFD is also known as the system flow diagram or SFD. The
main reason of using process flowchart is to show the relation between major parts of the
system. Process Flowchart Diagram or PFD does not include minor parts or components of
the system like piping ratings or piping systems. In many organizations, users term process
flow diagrams as flow sheet.
Process flowcharts are used primarily in process engineering and chemical industry where
there is a requirement of depicting the relationship between major components only. These
process engineering and chemical industry are least concerned about the minor components
involved in the system. Process flow diagrams for single unit or multiple units differ in their
structure and implementation. Process flow diagrams for multiple units do not include
detailed information and are known as the schematic flow diagrams or block flow diagrams.
It involves creating a flow model that illustrates and analyzes the overall flow of activities in
producing a product or service. Sometimes called: Process diagram, process flowchart,
process flow map or process map, process flow document or process flow documentation,
process flow model or process design model, process flow analysis chart or process flow
analysis map model, process document or process documentation.

What's Process Flowchart?

Process flow diagrams should include the information regarding the connection between
various systems. It also consists of the process piping and details of major parts. Process flow
diagrams are usually drawn on a large sheet of paper. Nowadays with the advent of
computers and new technology, we tend to use computerized process flow diagrams. In old
computer era, we used to draw process flow diagrams with the help of supporting software
manually but now we have many process simulators that automatically create process flow
diagrams. We can also make use of the Computer Aided Design (CAD) technology or flow
chart software to enhance our process flow diagram skills.

Flowcharts are maps or graphical representations of a process. Steps in a process are shown
with symbolic shapes, and the flow of the process is indicated with arrows connecting the
symbols. Computer programmers popularized flowcharts in the 1960's, using them to map the
logic of programs. In quality improvement work, flowcharts are particularly useful for
displaying how a process currently functions or can ideally function. Flowcharts can help you
see whether the steps of a process are logical, uncover problems or miscommunications,
define the boundaries of a process, and develop a common base of knowledge about a
process. Flowcharting a process often brings to light redundancies, delays, dead ends, and
indirect paths that would otherwise remain unnoticed or ignored. But flowcharts don't work if
they aren't accurate, if team members are afraid to describe what actually happens, or if the
team is too far removed from the actual workings of the process.

The Services Process Flowchart displays the activities you may need to execute to achieve
successful implementation and in-service management of your services program. These
activities are intended as guides for consideration as you plan your services program. They
are structured for a services program in which the prime services contractor will provide all
human resources, ancillary equipment, and all space and facility modifications. Services
programs which are intending to establish new or replace capabilities now provided by FAA
owned and operated equipment with some form of leased services/equipment capability
should use the Systems Process Flowchart to the extent applicable to ensure adequate
planning for such program elements as logistics support and configuration management. This
is to ensure leased capabilities are supported adequately and can achieve specified availability
requirements.

Standard Symbols for Drawing Process Flowchart

Flowcharts use special shapes to represent different types of actions or steps in a process.
Lines and arrows show the sequence of the steps and the relationships among them. There are
many symbols used to construct a flow chart. The more common symbols are shown below:
 Work Measurement

1. Time Study- Using Clock or Chronometer etc. Examine time required to accomplish
various activities.

2. Predetermined Motion Time Study.

3. Work Sampling Techniques. (Discussed under Job Design heading).

4. Synthesis and Analysis of data.

Job Design (Behavioral Aspects)

1. Job Design Consciously planning and structuring of work effort performed by an

individual or a group.

Work Element Examined as part of Work Design.

Human Element Mental, physical, behavioral considerations.

The aim of Job Design is to minimize human effort and increase/ optimize productivity.
 -What is to be done, by whom, where and when considerations.

2. Two or more activities are called Task. A set of Tasks is called Job.

3. Job Design involves- Degree of Labour specialization, Ergonomics or Human

Engineering.

4. Job Design Factors: (Considerations of effectiveness, ease and convenience)

Layout of equipment and workers seating arrangement.

Instrument display design- Accuracy, ease, warning systems

Compatibility with workers position- Knob, Rotary, On/off type, left

hand/right hand turning, Toggle switch, Joystick, Hand wheel type, lever type.

5. Environmental factors to be considered to increase efficiency and effectiveness of the

workers:

Temperature, humidity levels, comfort zone of working, Vibration levels, noise levels,
use of ear mufflers, Visual environment- Illumination, direction, brightness, colour, flickers.
Physical considerations not more than 3200 K. Calories per day.

6. Organizational Factors- Management sensitivity, culture and considerations.

7. Behavioral Dimensions of Job Design: (Considerations to overcome monotony and

lose interest in work thereby affecting productivity and increasing job rejection rates).

(a) Job Enlargement: Introducing Variety, Autonomy, Task identity and

responsibility of the whole job makes the worker confident and take pride in
his work; would reduce job rejection and increase productivity.

(b) Job Enrichment: Making the job more meaningful and enjoyable,
visualizing end results, involvement in planning & execution, realization and
appreciation of end results (meaningful).

(c) Job Rotation: Changing job, shift timing and place of work
periodically to overcome monotony and boredom at work place. Example;
changes from back office job to field job and vice versa.

8. Socio-technical Approach to Job Design:-

(a) Technological aspects of production.

(b) Social aspects of work environment (Esteem).

(c) Socio-economic aspects of job.

(d) Contribution of individual in the Jobs; e.g. responsibility for generator

operation, locking/ unlocking of rooms, cleaning duties etc.
Work Sampling

1. Work Sampling: Method of randomly observing work, noting down state or condition
of the object/ objects being studied, and drawing inference on the whole work from the
sampling data.

2. Accuracy of Work Sampling and the Confidence levels in respect of the drawn
conclusions are vital for taking any corrective action.

3. Accuracy depends upon the number of observations or the Sample size. The
confidence level depends on the levels of variations within the observations. The sampling
should be random and unbiased.

Mathematically; A= K x[P x (100 p)/n]1/2

A= Accuracy. K= Confidence level factor; K= 1,2 & 3 for 68, 95 and 99.7%
confidence levels respectively. p= proportion of time a particular activity is observed.

n= Sample Size.

If 15 observations are made in a sample size of 50, then p = (15/50) x100 percent.

Work Environment and Safety

1. Safety concerns in Men, Material and Machinery. Working environment should be

safe, conducive to work, healthy and follow stipulated norms.

2. Health and safety considerations- Fire, material failure, machine failure, human error,
wrong work practices, heat/ cold, humidity, noise, vibrations, poor illumination, poor air
circulation, neglecting personal needs, relaxation etc.

3. Personnel aspects- Stamina, skill level, mental attitude, knowledge, information,

motivation levels, monotony, age factor etc.

4. Learning and Experience Curves concept, significance and uses.

Maintenance Management

1. Maintenance required to prolong service life, avoid catastrophic failures and

accidents, Safety considerations and increase in reliability of the equipment.

2. Types of Maintenance: Routine, emergency, planned, preventive, running, shut down,

corrective and condition based.

3. Planning- Periodic, period based, hour based, condition based,

4. Equipment failure analysis- Bath Tub Curve. Three stages are Teething problems
phase (normally warranty phase during running in period), useful operations phase, Ageing
phase causing problems due to wear & tear in operational phase.
5. Terms- Maintainability, availability, reliability, mean time between failures (MTBF).

Availability = Up time/ (Up time + Down time).

6. Maintenance Department- Keeps record, apprises operators regarding various

maintenance routines due on a machine.

7. Maintenance and servicing of equipment can be undertaken by:

Central maintenance staff of the industry.

The operators themselves (User- maintainer concept)

Manufacturer of the equipment (Under warranty or as paid service).

Any other authorized Agency (Under Annual Maintenance Contract).

8. Maintenance initiation by respective departments or by the central maintenance

department as per their records.

9. Maintenance Schedules based on manufacturer recommendations, planning and

scheduling records, history of machines.

10 Important Indexes:

Maintenance Productivity Index = (Output of Product x100) / Cost of maintenance effort.

Maintenance Cost Index = (Maintenance Cost x100) /Capital Cost

Downtime Index= (Downtime hours x100) / Production hrs.

Breakdown Index = (Hours in breakdown x100) / Total man hours available

Level of maintenance = (Hours in maintenance x100) / Total man-hours.

11. Maintenance cost- provisions in Budget and Life time costing of the Equipment.

UNIT 4 (07 Periods)

Material and Inventory Management

Production Material

1. Raw Material, Bought out/ Spare parts, consumables (Oils, Greases, Coolants, sand
papers, jute, cotton etc.), paints, varnishes, bubble sheets, packing boxes etc.

2. Purchasing process indents, tenders, quotations, vendors, ordering, receiving,

accounting, distributing, waste and obsolescence management.
3. Financial aspects Purchase on Credit, Letter of Credit, Basis of ordering (FOB, CIF
or special instructions).

4. Store management, handling, location, re-ordering levels etc.

Materials Management

1. Types of Materials Solid, Liquid, Gases.

Heavy, Medium weight, Light weight.

Large size, medium size, small size, minuscule (Very small-

like watch components)

High cost, precious, low cost.

2. Management Requirement- Demand, purchase, transport, handle, storing, accounting,

distribution, replenishment. Continuous/ regular need, periodic requirement, seasonal need,
rarely needed. Lot size and quantity needed. Disposal on obsolescence and after usage.

3. Demand- Indent, requisition, authorization, corporate policy of procurement,

procedure. Indicate specification, part number, pattern number, manufacturer reference,
sample, sketch/ photograph, conformity standards as necessary. General item, Proprietary
item, standard item.

4. Procurement decision- Purchase Organization, Procedures- Tendering, Cash & Carry,

Manufacture, buy, Subcontract.

5. Placement of order FOB, CIF or other terms of delivery. Payment terms- Advance,
Cash, Cheque, rebates considerations, Letter of Credit etc.

6. Restraints to Purchasing / Control: Alternatives before purchase department-

Buy, manufacture, order, subcontract, hire, buy new or second hand etc.

Legal aspects and authorization to procure.

Management policies- restrictions, centralized/Deptt., resource limitation.

Market conditions- availability, prices and future trends in short/ long term.

Demand factor- urgency, quantity, standard/ nonstandard items. Speculative

demand, forward buying, Hedging, Budgeting aspects.

Indigenous/ imported.

7. Vendor Rating (VR): Efficacy of Vendor- reliability, punctuality, dependability, lead

time of delivery, payment terms-credit, rebates etc. Examples are:-

VR (Quantity)= (Q1* x1+ Q2* x2+ Q3* x3--------)(Q1+Q2+Q3+----)X 100.

 Q1, Q2, Q3 etc.= Quantity lot supplied.

X1, x2, x3 etc. = weightage for timely delivery. (1, if on time).

VR (Delivery) = Promised delivery time/ Actual delivery time X 100.

8. Computerized purchasing and accounting system.

9. Government Purchases- Director General of Supplies & Disposal (DGS&D),

Kendriya Bhandar. DGS&D Rate list. No Agents allowed.

10 Inspection on receipt, payments.

Inventory Management

1. Inventory It is useable but idle resource. In Stock, in process, spares for use in
industry or stocked for customers.

2. Inventory Management aims at achieving high rates of inventory turnover and

reduction in inventory holding costs.

Inventory Turn Over Ratio = Annual Demand/ Average Inventory Holding.

3. Inventory related Costs: Inventory Carrying or Holding Cost (Warehousing Costs).

Cost of Shortages- Business loss due to inventory shortages.

Cost of Replenishing. (Ordering Cost).

4. Demands for inventory can be- Fixed order, uniform/ regular order, periodic, seasonal,
to build up reserve, foreseeing shortages or rise in prices.

Single order (normally in Projects), Just in Time or combination of above.

5. Inventory Management decisions: Maximum Stock Levels.

Buffer Stock or permitted shortages..

Lot size of ordering replenishment.

Reorder Point; these are reviewed periodically.

6. Selective Inventory Control (a) ABC Analysis- Based on Peretos Law- 20% of
inventories account for 80% capital used for inventories. (There are Significant few
and insignificants many).

Normally 10% inventories account for 75% cost. (Category A).

Another 15% inventories account for another 15% cost. (Category B).

Remaining 75% inventories are placed in Category C.

 (b) VED Analysis- Vital, Essential and Desirable classification of inventories.

VED classification is sometimes combined with A, B and C categories to

evolve effective inventory system.

(c) FSN Analysis- Fast moving, Slow moving and Nonmoving inventories. The
classification is based on the utility/ usage of inventory over a period.

7. Policy is based on Value, Criticality and usage rate of the inventory.

8. Concept of Economic Order Quantity (EOQ).

- Minimizing inventory holding cost. Mathematical concept.

Total Inventory Carrying Cos (TC) = Ordering Costs + Inventory Carrying Costs.

TC= Ax (D/Q) + C x Q/2 (D/Q is number of orders and Q/2 is average inventory)

A= Ordering Cos per unit order. (Cost incurred in placing one order).

D= Annual Demand of inventory (No. of units of inventory required per year)

C= Annual warehouse cost per unit inventory.

For minimum TC, d (TC)/ d Q= 0 or AxD/Q2 + C/2 = 0

Q= (2AD/C); This would be the EOQ.

9. Inventory Costing: FIFO, LIFO, LILO, FILO and Average costing concepts.

Stores Management

1. Role of Storage System: Receipt, stowage, retrieval, issue, handling,

transporting, recording, accounting, housekeeping, control, preservation, safety, auditing,
replenishing in time, coordination with indenting Agencies and departments, disposal of
surpluses and obsolete/ expired stocks, safeguard against pilferage.

2. Stores Organization.

3. Storage Heavy, medium weight and light weight, Solids, liquids and Gases.
Perishables and high value stores, Explosives, inflammable, Toxic and dangerous stores.

4. Systems Open store, Closed Store. Bin System of socking and retrieval- basis of
weight, volume and nature/ physical attributes, expensive store lockers, Equipment wise
storage, Random Access System.

5. Identification of Stores Part Number, Pattern number, manufacturer code, symbols,

engineering drawing numbers etc.

6. Stock verification Continuous/ perpetual, periodic, random, low point inventory

system.
7. Stores Location and Layout.

8. Store Equipment- Computing system, fork lift trucks, hand carts, mobile cranes, lister
trucks, tackles and pulleys, ramps etc.

Waste Management

1. Types of Waste Solid, liquids and gaseous, iron filings, used oils, garbage, used
consumables, Recyclable, to be dumped (nuclear and toxic wastes).

2. Waste disposal: Recycle, Treatment before release, discharge in atmosphere, power

generation from waste, composting, dumping, landfill etc.

3. Waste collection Systems.

4. Environmental considerations in waste disposal.

UNIT 5 (07 Periods)

Quality in Production and Operation Management

Quality Assurance

1. Concept of Quality in Production: Meeting stipulated specifications.

Standardization

Meeting acceptance/ operating standards.

Fitness for use and performance conformity.

Requirements in view of Globalization.

2. Cost of Quality: Cost to firm for lack of Quality, rejection in market, unsuitability of
replacement substitution, working & processing problems, impact on brand name, failures in
usage,

3. Quality Standards- High would result in higher processing costs, Low would result in
poor performance and hence sales. A balance needs to be arrived at in terms of acceptable
quality standards. In components; limits and tolerances are assigned to processing,
simultaneously appropriate material testing techniques are adopted to ensure conformity with
the product design, specifications and performance requirement. The quality checks are
conducted during production, post production and random sampling in stationary and
dynamic modes. Performance testing is done on test beds.

4. Quality Management- aims at reduction of rejects, improve productivity, improve

brand name. Cost of product and the component of cost of quality to the firm needs to be
balanced. Quality testing pace should be fast to reduce overall production time and cost
without compromising on the product specification and design requirement.
5. The definition of quality depends on the role of the people defining it.
Today, there is no single universal definition of quality. Some people view quality as
Performance to standards. Others view it as meeting the customers needs or satisfying
the customer. Lets look at some of the more common definitions of quality.

-Conformance to specifications measures how well the product or service meets the
targets and tolerances determined by its designers. For example, the dimensions of a
machine part may be specified by its design engineers as 3.05 inches. This would
mean that the target dimension is 3 inches but the dimensions can vary between 2.95
and 3.05 inches. Similarly, the wait for hotel room service may be specified as 20
minutes, but there may be an acceptable delay of an additional 10 minutes. Also,
consider the amount of light delivered by a 60 watt light bulb. If the bulb delivers 50
watts it does not conform to specifications. As these examples illustrate, conformance
to specification is directly measurable, though it may not be directly related to the
consumers idea of quality.
-Fitness for use focuses on how well the product performs its intended function or
use.

-Value for price paid is a definition of quality that consumers often use for product or
service usefulness. This is the only definition that combines economics with consumer
criteria; it assumes that the definition of quality is price sensitive.
-Support services provided are often how the quality of a product or service is judged.

Quality does not apply only to the product or service itself; it also applies to the
people, processes, and organizational environment associated with it. For example, the
quality of a university is judged not only by the quality of staff and course offerings, but also
by the efficiency and accuracy of processing paperwork.

6. Important Principles of Total Quality Management

Total Quality Management (TQM) is an approach that organizations use to improve their
internal processes and increase customer satisfaction. When it is properly implemented, this
style of management can lead to decreased costs related to corrective or preventative
maintenance, better overall performance, and an increased number of happy and loyal
customers.

However, TQM is not something that happens overnight. While there are a number of
software solutions that will help organizations quickly start to implement a quality
management system, there are some underlying philosophies that the company must integrate
throughout every department of the company and at every level of management. Whatever
other resources you use, you should adopt these seven important principles of Total Quality
Management as a foundation for all your activities.

What Is Total Quality Management?

Total quality management is a management system for a customer focused
organization that involves all employee in continual improvement of all aspects of the
organization. TQM uses strategy, data, and effective communication to integrate the quality
principles into the culture and activities of the organization.

Principles Of TQM
1- Be Customer focused: Whatever you do for quality improvement, remember that ONLY

customers determine the level of quality. Whatever you do to foster quality improvement,

training employees, integrating quality into processes management, ONLY customers

determine whether your efforts were worthwhile.

2-Insure Total Employee Involvement: You must remove fear from work place, then

empower employee... you provide the proper environment.

3- Process Centered: Fundamental part of TQM is to focus on process thinking.

4- Integrated system: All employee must know the business mission and vision.

5- Strategic and systematic approach: Strategic plan must integrate quality as core
component.
6- Continual Improvement: Using analytical, quality tools, and creative thinking to become
more efficient and effective.
7- Fact Based Decision Making: Decision making must be ONLY on data, not personal or
situational thinking.
8- Communication: Communication strategy, method and timeliness must be well defined.

TQM Implementation Approaches

1- Train top management on TQM principles.

2- Assess the current: Culture, customer satisfaction, and quality management system.
3- Top management determines the core values and principles and communicates them.

4- Develop a TQM master plan based on steps 1, 2,3.

5- Identify and prioritize customer needs and determine products/service to meet those needs.

6- Determine the critical processes that produces those products or services.

7- Create process improvement teams.

8- Managers supports the efforts by planning, training, and providing resources to the team.

9- Management integrates changes for improvement in daily process management. After

improvements standardization takes place.

10- Evaluate progress against plan and adjust as needed.

11- Provide constant employee awareness and feedback. Establish an employee reward/

recognition process.

1. Quality can and must be managed

Many companies have wallowed in a repetitive cycle of chaos and customer complaints.
They believe that their operations are simply too large to effectively manage the level of
quality. The first step in the TQM process, then, is to realize there is a problem and that it can
be controlled.

2. Processes, not people, are the problem

If your process is causing problems, it wont matter how many times you hire new employees
or how many training sessions you put them through. Correct the process and then train your
people on these new procedures.

3. Dont treat symptoms, look for the cure

If you just patch over the underlying problems in the process, you will never be able to fully
reach your potential. If, for example, your shipping department is falling behind, you may
find that it is because of holdups in manufacturing. Go for the source to correct the problem.

4. Every employee is responsible for quality

Everyone in the company, from the workers on the line to the upper management, must
realize that they have an important part to play in ensuring high levels of quality in their
products and services. Everyone has a customer to delight, and they must all step up and take
responsibility for them.

5. Quality must be measurable

A quality management system is only effective when you can quantify the results. You need
to see how the process is implemented and if it is having the desired effect. This will help you
set your goals for the future and ensure that every department is working toward the same
result.

6. Quality improvements must be continuous

Total Quality Management is not something that can be done once and then forgotten. Its not
a management phase that will end after a problem has been corrected. Real improvements
must occur frequently and continually in order to increase customer satisfaction and loyalty.

7. Quality is a long-term investment

Quality management is not a quick fix. You can purchase QMS software that will help you
get things started, but you should understand that real results wont occur immediately. TQM
is a long-term investment, and it is designed to help you find long-term success.

7. Statistica1 quality control (SQC): is the term used to describe the set of statistical
tools used by quality professionals. Statistical quality control can be divided into three broad
categories:
1. Descriptive statistics are used to describe quality characteristics and relationships.
Included are statistics such as the mean, standard deviation, the range, and a measure
of the distribution of data.
2. Statistical process control (SPC) involves inspecting a random sample of the output
from a process and deciding whether the process is producing products with
characteristics that fall within a predetermined range. SPC answers the question of
whether the process is functioning properly or not.
3. Acceptance sampling is the process of randomly inspecting a sample of goods and
deciding whether to accept the entire lot based on the results. Acceptance sampling
determines whether a batch of goods should be accepted or rejected.

8. ISO Standards (International Standards): Benefits of International Standards

International Standards bring technological, economic and societal benefits. They help to
harmonize technical specifications of products and services making industry more efficient
and breaking down barriers to international trade. Conformity to International Standards
helps reassure consumers that products are safe, efficient and good for the environment.

Benefits of standards: the ISO Materials: ISO has developed materials describing the
economic and social benefits of standards, the ISO Materials. They are intended to be shared
with decision makers and stakeholders as concrete examples of the value of standards.

For business: International Standards are strategic tools and guidelines to

help companies tackle some of the most demanding challenges of modern
business. They ensure that business operations are as efficient as
possible, increase productivity and help companies access new markets.

Benefits include:
 Cost savings - International Standards help optimize operations and therefore
improve the bottom line

Enhanced customer satisfaction - International Standards help improve quality,

enhance customer satisfaction and increase sales

Access to new markets - International Standards help prevent trade barriers and open
up global markets

Increased market share - International Standards help increase productivity and

competitive advantage

Environmental benefits - International Standards help reduce negative impacts on

the environment

What is Quality Control and Quality Control Charts?

In all production processes, we need to monitor the extent to which our products meet
specifications. In the most general terms, there are two "enemies" of product quality:

deviations from target specifications

excessive variability around target specifications

During the earlier stages of developing the production process, designed experiments are
often used to optimize these two quality characteristics methods provided in Quality Control
are on-line or in-process quality control procedures to monitor an on-going production
process. General Approach. The attributes of QC are:

Establishing Control Limits

Common Types of Charts

Short Run Control Charts

o Short Run Charts for Variables

o Short Run Charts for Attributes

Unequal Sample Sizes

Control Charts for Variables vs. Charts for Attributes

Control Charts for Individual Observations

Out-of-Control Process: Runs Tests

Operating Characteristic (OC) Curves

 Process Capability Indices

Other Specialized Control Charts

Cost of Quality (COQ)

The "cost of quality" isn't the price of creating a quality product or service. It's the cost of
NOT creating a quality product or service.
Every time work is redone, the cost of quality increases. Obvious examples include:

The reworking of a manufactured item.

The retesting of an assembly.

The rebuilding of a tool.

The correction of a bank statement.

The reworking of a service, such as the reprocessing of a loan operation or the

replacement of a food order in a restaurant.

In short, any cost that would not have been expended if quality were perfect contributes to the
cost of quality.

Quality Costsgeneral description

Prevention Costs
The costs of all activities specifically designed to prevent poor quality in products or services.
Examples are the costs of:

New product review

Quality planning

Supplier capability surveys

Process capability evaluations

Quality improvement team meetings

Quality improvement projects

Quality education and training

Appraisal Costs

The costs associated with measuring, evaluating or auditing products or services to assure
conformance to quality standards and performance requirements.
These include the costs of:

Incoming and source inspection/test of purchased material

In-process and final inspection/test

Product, process or service audits

Calibration of measuring and test equipment

Associated supplies and materials

Failure Costs

The costs resulting from products or services not conforming to requirements or

customer/user needs. Failure costs are divided into internal and external failure categories.
Internal Failure Costs
Failure costs occurring prior to delivery or shipment of the product, or the furnishing of a
service, to the customer.
Examples are the costs of:

Scrap

Rework

Re-inspection

Re-testing

Material review

Downgrading

External Failure Costs

Failure costs occurring after delivery or shipment of the product and during or after
furnishing of a service to the customer.
Examples are the costs of:

Processing customer complaints

Customer returns

Warranty claims

Product recalls

Total Quality Costs:

The sum of the above costs. This represents the difference between the actual cost of a
product or service and what the reduced cost would be if there were no possibility of
substandard service, failure of products or defects in their manufacture.

General Approach

The general approach to on-line quality control is straightforward: We simply extract samples
of a certain size from the ongoing production process. We then produce line charts of the
variability in those samples and consider their closeness to target specifications. If a trend
emerges in those lines, or if samples fall outside pre-specified limits, we declare the process
to be out of control and take action to find the cause of the problem.

Interpreting the chart. The most standard display actually contains two charts (and two
histograms); one is called an X-bar chart, the other is called an R chart. In both line charts,
the horizontal axis represents the different samples; the vertical axis for the X-bar chart
represents the means for the characteristic of interest; the vertical axis for the R chart
represents the ranges. For example, suppose we want to control the diameter of piston rings
that we are producing. The center line in the X-bar chart would represent the desired standard
size (e.g., diameter in millimeters) of the rings, while the center line in the R chart would
represent the acceptable (within-specification) range of the rings within samples; thus, this
latter chart is a chart of the variability of the process (the larger the variability, the larger the
range). In addition to the center line, a typical chart includes two additional horizontal lines to
represent the upper and lower control limits (UCL, LCL, respectively). Typically, the
individual points in the chart, representing the samples, are connected by a line. If this line
moves outside the upper or lower control limits or exhibits systematic patterns across
consecutive samples (see Runs Tests), a quality problem may potentially exist.

Establishing Control Limits

Even though we could arbitrarily determine when to declare a process out of control (that is,
outside the UCL-LCL range), it is common practice to apply statistical principles to do so.

Example. Suppose we want to control the mean of a variable, such as the size of piston rings.
Under the assumption that the mean (and variance) of the process does not change, the
successive sample means will be distributed normally around the actual mean.

General case. The general principle for establishing control limits just described applies to
all control charts. After deciding on the characteristic we want to control, for example, the
standard deviation, we estimate the expected variability of the respective characteristic in
samples of the size we are about to take. Those estimates are then used to establish the
control limits on the chart.

Common Types of Charts

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

X-bar chart. In this chart, the sample means are plotted in order to control the mean
value of a variable (e.g., size of piston rings, strength of materials, etc.).

R chart. In this chart, the sample ranges are plotted in order to control the variability
of a variable.

S chart. In this chart, the sample standard deviations are plotted in order to control
the variability of a variable.

S2 chart. In this chart, the sample variances are plotted in order to control the
variability of a variable.

All of these charts can be adapted for short production runs (short run charts), and for
multiple process streams.

Unequal Sample Sizes

When the samples plotted in the control chart are not of equal size, then the control limits
around the center line (target specification) cannot be represented by a straight line. There are
three ways of dealing with this situation.

Average sample size. If you want to maintain the straight-line control limits (e.g., to make
the chart easier to read and easier to use in presentations), then you can compute the average
n per sample across all samples, and establish the control limits based on the average sample
size. This procedure is not "exact," however, as long as the sample sizes are reasonably
similar to each other, this procedure is quite adequate.

Variable control limits. Alternatively, you may compute different control limits for each
sample, based on the respective sample sizes. This procedure will lead to variable control
limits, and result in step-chart like control lines in the plot. This procedure ensures that the
correct control limits are computed for each sample. However, you lose the simplicity of
straight-line control limits.

Stabilized (normalized) chart. The best of two worlds (straight line control limits that are
accurate) can be accomplished by standardizing the quantity to be controlled (mean,
proportion, etc.) according to units of sigma. The control limits can then be expressed in
straight lines, while the location of the sample points in the plot depend not only on the
characteristic to be controlled, but also on the respective sample n's. The disadvantage of this
procedure is that the values on the vertical (Y) axis in the control chart are in terms of sigma
rather than the original units of measurement, and therefore, those numbers cannot be taken at
face value (e.g., a sample with a value of 3 is 3 times sigma away from specifications; in
order to express the value of this sample in terms of the original units of measurement, we
need to perform some computations to convert this number back).
What's the Difference Between Variable and Attribute Control Charts?
One uses measured data; the other uses counts.
Variable (e.g., measured time, weight, length, money, etc.)

Variable control charts use measurements (time, money, length, width, depth, weight, etc.).
When looking at data, variable measurements often have one or more decimal places (e.g.,
74.05).

The most common type of variable control charts are X charts:

XmR - Individuals and Moving Range Control Chart (especially useful in service
industries)

X bar R - Average and Range Control Chart

X bar S - Average and Standard Deviation Control Chart

X Median R - Median and Range Control Chart

I-MR-R - Individuals, Moving Range (between) and Range (within) Control Chart

Attribute (e.g., counted defects, mistakes, errors, etc.)

Attribute type control charts use counted data (number of defects, mistakes, errors, injuries,
etc.)
When looking at your data, attribute data is always an integer (e.g., 1, 3, 5).
Common attribute type control charts include:
c Control Chart
np Control Chart
p Control Chart (fraction defective) and q control chart
u Control Chart (number defective)
Quality Circles (QC) or Quality Control Circles (QCC)

Pioneered by Japanese.

Japanese nomenclature: Quality Control Circles (QCC), generally now known as

Quality Circles (QC) or some call it as Small Group Activity (SGA).

1962: First QC Circle was registered with QC Circle Head Quarters in Japan.

1974: Lockheed Company, USA started Quality Circle movement.

1977: International Association of Quality Circles (IACC) was formed in USA.

1980: BHEL, Hyderabad first in India to start Quality Circles.

1982: Quality Circle Forum of India (QCFI) was founded.

Formal and Informal Groups
Formal Groups

Family.

Organization.

Departments.

Informal Groups

Employees meet near water cooler and gossip.

Five salesmen from marketing department meet once a month for lunch to discuss
mutual concerns and to seek relief from tedious aspects of their job.

Four computer programmers form a jogging club that meets three days per week at
lunch time to run two miles.

All employees of a section meet and discuss how to improve and beautify office
layouts.

Seven workers of a production shop floor meet once a week to solve their technical
problems.

Maintenance department staff meet regularly to maintain machines in a better way.

What is Quality Circle (QC)?

Quality Circles are (informal) groups of employees who voluntarily meet together on a
regular basis to identify, define, analyze and solve work related problems.
Usually the members of a particular team (quality circle) should be from the same work area
or who do similar work so that the problems they select will be familiar to all of them. In
addition, interdepartmental or cross functional quality circles may also be formed.
An ideal size of quality circle is seven to eight members. But the number of members in a
quality circle can vary.
Other Names of Quality Circles

Small Groups

Action Circles

Excellence Circles

Human Resources Circles

Productivity Circles
Objectives of Quality Circles

Promote job involvement

Create problem solving capability

Improve communication

Promote leadership qualities

Promote personal development

Develop a greater awareness for cleanliness

Develop greater awareness for safety

Improve morale through closer identity of employee objectives with organization's

objectives

Reduce errors.

Enhance quality

Inspire more effective team work

Build an attitude of problem prevention

Promote cost reduction

Develop harmonious manager, supervisor and worker relationship

Improve productivity

Reduce downtime of machines and equipment

Increase employee motivation

Quality Circle Meetings

Meetings are important part of quality circle's working.

Meetings are attended by all the members of the quality circle.

In general, meetings take place once a week or once in a fortnight.

Each meeting lasts for approximately one hour, though variations are possible.
 Apart from the frequency of the meetings, what is important is the regularity of the
meetings.

What Takes Place During Quality Circle Meetings?

Any of the several activities may occur during a meeting such as:

Identifying a theme or a problem to work on.

Getting training as required to enable members to analyze problems.

Analyzing problem(s).

Preparing recommendations for implementing solution(s).

Follow up of implementation of suggestions.

Prepare for a presentation to the management.

What Quality Circles are Not? (Misconcepts)

Quality Circles do not tackle just quality problems.

Quality Circle is not a substitute or replacement for task forces, product committees,
joint plant councils or works committees, quality assurance department, suggestion
schemes.

Quality Circles do not change the existing organizational structure or the chain of
command.

Quality Circles are not a forum for grievances or a spring board for demands.

Quality Circles are not a means for the management to unload all their problems.

Quality Circles are not just another technique.

Quality Circles are not a panacea for all ills.

Pitfalls and Problems

Lack of faith in and support to Quality Circle activities among management personnel

Lack of interest or incompetence of leaders/facilitator

Apathy, fear and misunderstanding among middle level executives

Delay or non-implementation of Circle recommendations

 Irregularity of Quality Circle activities

Non-application of simple techniques for problem solving

Lack of or non-participation by some members in the Circle activities

Circles running out of problems

Inadequate visibility of management support

Non-maintenance of Quality Circle records

Too much facilitation or too little

Language difficulty in communication

Communication gap between Circles and departmental head

Change of management

Confusing Quality Circle for another technique

Resistance from trade unions

Structure of Quality Circles Program

Six Basic Elements

Circle participants or members.

Circle leaders/deputy leaders.

Program facilitator.

Steering/advisory committee.

Top management.

Potential members and non-participating management/members.

Roles and Responsibilities of Various Elements

Roles of Members

Focus on organizational objectives through the theme(s) selected for one's quality
circle

Theme/problem should be related to work.

 Do not bring in the personal issues or problems as the themes of quality circles.

Demonstrate mutual respect.

Take training in all the aspects of quality circles.

Acquire the necessary skills in various quality circle tools and techniques.

Participate wholeheartedly in problem-solving process by giving ideas and views

voluntarily and suggesting the solutions.

Attend all the meetings of quality circle. When unavoidable to attend the meeting,
seek prior permission of the quality circle leader.

Participate in implementing the finalized solutions.

What is Value Engineering?

Value Engineering is a function oriented, systematic team approach and study to

provide value in a product, system or service. Often, this improvement is focused on
cost reduction; however other important areas such as customer perceived quality
and performance are also of paramount importance in the value equation.

Value Engineering techniques can be applied to any product process procedure

system or service in any kind of business or economic activity including health care,
governance, construction industry and in the service sector.

Value Engineering focuses on those value characteristics which are deemed most
important from the customer point of view.

Value Engineering is a powerful methodology for solving problems and/or reducing

costs while maintaining or improving performance and quality requirements.

Value Engineering can achieve impressive savings, much greater than what is
possible through conventional cost reduction exercise even when cost reduction is
the objective of the task.

What are the benefits of Value Engineering ?

Value Engineering helps the organization in :

Lowering Operations & Maintenance costs

Improving quality management
Improving resource efficiency
Simplifying procedures
Minimizing paperwork
 Lowering staff costs
Increasing procedural efficiency
Optimizing construction expenditures
Developing value attitudes in staff
Competing more successfully in marketplace

------------------------------------------------------------------------------