Production and Operations Management: Lesson Plan for 8th Semester, Study notes of Management Theory

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Lectures notes

On

Production and Operation

Management

Prepared by

Dr. Sarojrani Pattnaik Dr. Swagatika Mishra

Assistant Professor

Department of Mechanical Engineering

VSSUT Burla

PRODUCTION AND OPERATION MANAGEMENT(3-0-0)

1. Productivity : Importance, productivity ratio, productivity measurement, productivity index, awareness — improvement — maintenance (A.I.M) proceSs.
2. Production System Models of production system, Product Vs. Services, Process-focused & product focused systems, product strategies, product life cycle, production function.
3. Forecasting : Methods — moving average, exponential smoothing, Regression analysis, coefficient of co-relation, Delphi, Market survey.
4. Facilities Planning : Site location, facilities layout and various types, planning using CRAFT work place design, working conditions — noise illumination etc.
5. Motion study — principles of motion — economy, Time study-standard time.
6. Production Planning & Control : Aggregate planning. Sequencing, Line balancing, Flow control, Dispatching, expediting, Gantt chart, line of balance, learing curve.
7. Project Management — Network scheduling, PERT. Critical path, Most likely time estimate , Resource leveling.
8. 38 .Modern Trends in Manufacturing :Basic concepts of CAD,CAM,FMS, CIM, ISO 9000, Quality circle, Kaizen, Kanbans, Poke Yoke' supply chain management. Text Books
9. Production Systems : Planning, Analysis & Control : By — Riggs, J.L.(4th Edn.) John Wiley & Sons
10. Modern Production/Operation management : By — Buffa, E.S. & Sarin, =,.K.(8`" Edn.) John Wiley & Sons.
11. Production & Operations Management : By Panneer saivem, R.(2'^1 Edn.) PHI
12. Production & Operations Managem ent : By Chary, S.N.(TMH)

Lecture 19 Performance rating and^ different types of allowances

Lecture 20 Production planning and control-^ Aggregate planning

Lecture 21 Sequencing and line balancing

Lecture 22 Flow control

Lecture 23 Dispatching, centralized and decentralized dispatching

Lecture 24 Expediting^ and Gantt chart

Lecture 25 Line of balance and learning curve

Lecture 26 Project management, network scheduling

Lecture 27 PERT with problems

Lecture 28 Problems

Lecture 29 Critical path method with problems

Lecture 30 Problems

Lecture 31 Resource levelling

Lecture 32 Basic^ concepts of CAD, CAM, FMS

Lecture 33 CIM, JIT, ISO 9000

Lecture 34 Quality circle, Kaizen, Kanbans

Lecture 35 Poke Yoke, Supply chain management

Lecture 36 Revision of problems

Lecture 37 Revision of problems

Lecture 38 Revision of problems

Lecture 39 Revision of problems

Lecture 40 Revision of problems

CHAPTER-I

PRODUCTIVITY

1.1 Introduction Production/Operation management is the process which combines and transforms various resources used in the production/operation subsystem of the organization into value added

products/services in a controlled manner as per the policies of the organization.

Transform

(In controlled manner as

per the policies of the organization)

Production/Operation function:

The set of interrelated management activities which are involved in manufacturing certain products is called production management and for service management, then corresponding set of management activities is called as operation management.

Examples: (Products/goods ) Boiler with a specific capacity, Constructing flats, Car, bus, radio, television.

Examples: (Services ) Medical facilities, Travel booking services.

In the process of managing various subsystems of the organization executives at

different levels of the organization need to track several management decisions.

The management decisions are Strategic, tactical and operational.

Defining goals Plant location effective and Making policies new product establishment efficient utilization Monitoring of budgets of resources

Resources used in production/ operation subsystem

Value added products/services

Range of inputs (^) Required output (product/service) (Having the requisite quality level)

Strategic (Top level) (^) Tactical (Middle level) (^) Operational (Bottom level)

Labour productivity Index/Measure = Output in unit Man hours worked Management productivity Index/Measure = Output Total cost of management

Machine productivity Index/Measure = Total output Machine hours worked

Land productivity Index/Measure = Total output Area of Land used

Partial Measure = Output or Output or Output or Output Labour Capital Materials Energy

PROBLEMS: Example- The input and output data for an industry given in the table. Find out various productivity measures like total, multifactor and partial measure.

Output and Input production data in dollar ($)

Output

1. Finished units 10,
2. Work in progress 2,
3. Dividends 1,
4. Bonds -------
5. Other income --------

Input

1. Human 3,
2. Material 153
3. Capital 10,
4. Energy 540
5. Other Expenses 1, Solution: Total measure = Total Output = 13,500 = 0. Total Input 15, Multi factor measure = Total Output = 13,500 = 4. Human+Material 3, Multi factor measure = Finished units = 10,000 = 3. Human+Material 3, Partial Measure 1 = Total Output = 13,500 = 25 Energy 540 Partial Measure 2 = Finished units = 10,000 = 18. Energy 540

Note: For multifactor and partial measures it is not necessary to use total output as numerator. Often, it is describe to create measures that represent productivity as it relates to some particular output of interest.

Other fields for the measurement of partial measures of productivity are:

Business Productivity Measure Restaurant Customers (Meals) per labour hour Retail Store Sales per square foot Utility plant Kilowatts per ton of coal Paper mill Tons of paper per cord of wood

Example- A furniture manufacturing company has provided the following data. Compare the labour, raw materials and supplies and total productivity of 1996 and 1997.

Output: Sales value of production in dollar ($) 22,000 (in 1996) and 35,000 (in 1997) 1996 1997 Inputs: Labour 10,000 15, Raw materials and Supplies 8,000 12, Capital equipment depreciation 700 1, Other 2,200 4,

Solution: 1996 1997 a. Partial productivities Labour 2.20 2. Raw materials and Supplies 2.75 2. b. Total Productivity 1.05 1.

1.5 Productivity measurement approaches at the enterprises level:

As stated above total productivity is expressed as the ratio of aggregate output to the aggregate input. That the total overall performance is captured in this ratio, becomes apparent, if we examine the relationship between this ratio and the age-old performance measure of profit.

If the outputs and input for the period for which productivity is measured, are expressed in rupees, then under such restrictive assumptions one can write:

Aggregate output =Gross Sales=G (Say)

Aggregate input=Cost =C (Say)

Work content means the amount of work “contained in” a given product or process measured in man-hour or machine-hour. Except in some cases like in processing industries, actual operation times are far in excess of the theoretical minimum.

Ineffective time is the time for which the worker or machine or both are idle due to the shortcomings of the management or the worker.

CHAPTER-II

PRODUCTION SYSTEM

2.1 Introduction A “Production System” is a system whose function is to transform an input into a desired output by means of a process (the production process) and of resources. The definition of a production system is thus based on four main elements: the input, the resources, the production process and the output.

Most of the organizations (including non-profit organization) can be described as production systems.These organizations transform (or convert) a set of inputs (such as materials, labour, equipment, energy etc.) in to one or useful outputs. The outputs of a production system are normally called products. These products may be: (a)Tangible goods (b)Intangible services (c)combination of (a) and (b) (Steels,chemicals etc.) (Teaching,health care etc.) (fast food,tailoring etc.)

Fig 2.1 A simple block diagram of a production system

Production system refers to manufacturing subsystem that includes all functions required to design, produce, distribute and service a manufactured product. So this system produces goods and/or services on a continuous and/or batch basis with or without profit as a primary objective.

INPUT

• Material
• Machines
• Labor
• Management
• Capital

TRANSFORMATION PROCESS

OUTPUT

• Goods
• Services

Feedback & Requirements

Resources

Input-Production Process-Output

2.3 Product vs. services

Product

1 - tangible, durable products. 2 - Output can be inventoried. 3 - consumption/use takes more time. 4 - low costumer’s involvement. 5 - long response time. 6 - available at regional, national and international market. 7 - Reqire large facilities. 8 - Capital intensive. 9 - Quality easily measured. 10 - Demand variable on weekly, monthly, seasonally.

Services

1 - Intangible, perishable products. 2 - Output can’t be inventoried. 3 - Immidiate consumption. 4 - High costumer’s involvement. 5 - Short response time. 6 - local market.

7 - Require small facilities. 8 - Labour intensive. 9 - Quality not easily measured. 10 - Demand variable on hourly, daily, weekly basis.

Explanations

Manufacturing organization generally transfer tangible inputs or raw materials into some tangible output (ex: steel, refrigerator, toothpaste, soap etc.) Other inputs such as labour skills, management skills, capitals are used as well. Manufacturing organizations perform some chemical /physical processes (such as blending refining, welding, grinding.etc) to transfer their raw material into tangible products. Service providing organization though transform a set of input into set of output, they don’t produce a tangible output.(ex: mail service, library service, restaurant etc.).or provide service(ex: health care, hair care, watch and automobile repair etc.). The service of service providing organization is intangible.

A 2nd^ distinction is based on inventories .durable goods can be kept for longer time these goods can be stored for longer time and can be transported in anticipation in future demand .Thus with durable goods ,operation manager can co up with the peaks and valleys in demand by creating inventories and smoothing out output levels. Whereas service can’t be pre produced. For example: getting fast food from a fast food center, getting treatment from hospital etc.

A 3rd^ distinction is based on consumption/use of output. The products (goods) generally take longer period for its use, for ex refrigerator, T.V. automobile etc. can be used at least for 10 years. On the other hand, the output produced from a service operation (i.e. service) is consumed within a small time. Ex. consumption of fastfood,taking hair care, enjoying journey by a bus/train/aero plane enjoying entertainment program.

A 4th^ distinction is based on customer contact. Most of the consumers/customers have little or no contact with production system/organization. Whereas, in many service providing organization

consumers/customers are directly involved. For example: students in an educational institution, patients in hospital.

The 5th^ distinction is based on lead time/response time to customers demand. Manufacturers take generally some lead time (i.e. time period from placing the order to get the product) in terms of days/week. Whereas the services are offered within few minutes of customers arrival. For ex: ATM Service, getting postal stamps, getting grocery from a retail shop and getting examined by a doctor etc.

The 6th^ distinction is on availability. Products can be available from regional, national or international markets due to availability of transportations and distribution facilities whereas, service can’t shipped to distant locations. Thus service organization requiring direct customer contact must locate very near to the customers.

The 7th^ distinction is based on liabilities/facilities. Manufacturing unit/organization producing products generally require larger facilities, more automation and greater capital investment than service providing organization.

The 8th^ distinction is based on capital/labour priority. Generally manufacturing firm producing goods/products require more capital than a service provider. Ex. An automobile firm requires more capital than a post office/Nursing home. The 9th^ and 10th^ distinction is based on quality and demand variation.

2.4 Various types of Layout:

Plant layout means the disposition of the various facilities (equipment, material, manpower etc.) and services of the plant within the area of site located.

Objectives

 Material handling and transportation is minimized and effectively controlled.  Bottlenecks and points of congestions are eliminated (by line balancing) so that the raw- material and semi-finished goods move fast from one workstation to other.  Workstations are designed suitable and properly.  Suitable spaces are allocated to production centers and service centers.  The movements made by the workers minimized.

Layout can be classified into the following four categories:

a. process layout b. product layout c. Group layout(combination layout) d. Fixed position layout

c. Group layout:

• It is the combination of both process and product layout.
• In this type of layout a set of machinery or equipment is grouped together in a section so that each group of machines or equipment is used to perform similar operations to produce a family of components. These machines grouped in to cells.
• It minimizes the sum of cost of transport and the cost of equipment.

Milling shaping

Drilling Welding

Grinding Slotting

Boring Fitting

Turning Welding

Fig 2.4 Group layout

d. Fixed position layout  It is also called static product layoutin which the physical characterstics of the product dictate as to which type of machine and men are brought to the product.  This type layout is inherent in ship building,aircraft manufacture and big pressure vessels fabrication.  In other type layout the product moves past stationary production equipment where as in this case men and equipment are moved to the material at one place and the product is completed at the place where the material lies.

Fig 2.5 Fixed position layout

2.5 Process-focused and product-focused system:

In process-focused system the arrangement of facilities is made according to the process layout and in product-focused system the arrangement of facilities is made according to the product layout.

Comparison of process oriented layout and product oriented layout

Sl No. Different Aspects

Process oriented Product oriented

1 Product Diversified products using operations, varying rate of output or small batches of many different products

Standardized product, large volume,stable rate of output

2 Workflow Variable flow depending on nature of job

Identical flow and same sequence of operations for each unit. 3 Human skills Semiskilled craftsman and able to do various/different categories of work

Highly specialized and able to perform repetitive tasks at fixed place 4 Supporting staffs

Less;scheduling,material handeling,production and inventory control

Large; schedule materials and people, monitor and maintain works 5 Material handling

Material handling cost high,handeling sometimes duplicated

Less dectble , flow systematized and often automated. 6 Inventory In process inventory less In process inventory high 7 Space utilization

Space and capital are tied up by work in process

Less space is occupied by work in transit and for temporary storage. 8 Capital requirement

Comparatively low investment in machines required

Large investment in specialized equipment and processes 9 Production cost Relatively low fixed cost, high variable cost(for direct labour,material and material handling)

Relatively high fixed cost, low variable cost (for labour and materials)

10 Production time Through time is larger. Throughput time is lesser. 11 Flexibility of design change

high low

12 Effect of breakdown

Break down of any machine doesn’t effect much on the final output

Seriously affected; as all are interrelated system.

Fig 2.6. product life cycle 2.7 Production function (a) Functions of industrial enterprise (b) Functions of process

(a)Functions of industrial enterprise

The major functions of a relatively large industrial firm is represented by the following figure

Fig 2.6 of production function a enterprise

POLICY

MANUFACTURING

PERSONNEL

PRODUCT

DEVELOPMENT

MATERIALS

FINANCE

AND ACCOUNTING

PURCHASING

The core area of the diagram represents the organization’s policy making group. In a hierarchic triangle, this group would occupy the apex. The overlapping portions of the circle denote the co- operation needed from the two groups in order to establish overall policy. The slope of each function and its relationship to the production process are briefly discussed in the following.

(i)Manufacturing A fundamental function of much production system is to produce a physical output. Manufacturing includes the operations and direct support services for making the product operation management is concerned with production scheduling, performance standards, method improvement, quality control, plant layout and material handling. A plant service section handles shipping receiving, storing and transporting raw material parts and tools. The plant engineering group is usually responsible for in-plant construction, maintenance, design of tools and equipment and other problems of mechanical, hydraulic or electrical nature.

(ii) personnel

The recruitment and training of the personnel needed to operate the production system are the traditional responsibilities of the personnel function. Along with it, this department takes care health, safety, wage administration of the employees. Labour relation and employee services and benefits are increasingly important.

(iii) Product development

Many organizations give major emphasis on product development because the ultimate profit of any organization depends primarily on the nature/quality of product. The product must be customized. A separate section is responsible for this task.

(iv)Marketing

Many ideas of product development comes through the marketing function. Selling is the primary interest of marketing. Sales forecasts and estimate of the nature of future demands is also performed by this department. Contact with customers provide feedback about the quality expected from the firm and opinion on how well the products meet quality standard.

(v) Finance and accounting

Internal financing includes reviewing the budgets for operating sections, evaluating of proposed investments for production facilities and preparing balance sheet. Besides these the other responsibilities is to see how well the firm is scoring in the business competition game.

In this business game analogy the accounting functions are collection of cost data for materials direct labour and overhead. Special reports are prepared regarding scarp, parts and finished goods inventories, pattern of labour hours and similar data applicable to production activities.