PRODUCTION AND OPERATIONS MANAGEMENT SHARDA UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH [email protected] 4/18/20151SHARDA

PRODUCTION AND OPERATIONS MANAGEMENT

SHARDA UNIVERSITYSHARDA UNIVERSITY•Program : MBA

•Term: II

•Credits: 3

PREM NATH PANDAY

[email protected]@gmail.com04/18/23 1SHARDA

Module Title:

PRODUCTION AND OPERATIONS MANAGEMENT -

Program : MBATerm: IICredits: 3

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Learning Hours

Contact 40

Guided Study 25

Assessment 10

Total 75

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OBJECTIVE OF THE PAPER: The objective of this paper is to help the students to become effective managers in the competitive global environment. After studying it the students placed in various organizations whether manufacturing or service are supposed to take care of the very basic unit of the work that is process. They need to accept the challenge of both managing and understanding the interrelatedness of the enterprise wide activities. Summing up the aim of this course is to prepare the truly global operation manager equipped with all type of weapons to take care of the limited resources of an enterprise and transform them to the revenue and profit. PREREQUISITE: The basic knowledge of elementary math and statistics at least up to class XII level

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Topics Cover Lectures

UNIT 1

1.Introduction Meaning and function of Production Management, Production system Production Organization Chart, Decision Making in Production Operation, Production Departments with various other departments and their importance.2. StrategiesResponsibility of Production Manger. Interdependencies of Operation strategies and decision making produce to stock and produce to order strategies, concept of using mixed strategies, advantages of having mixed strategies.

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UNIT 2

3. Long term planning/strategy Facility location and facility layout. Factors affecting the location of facility,different types of layouts, product focused, processFocused, cellular and mixed layouts. Introduction to the methods for determining the location and layout of a facility.4. Intermediate term planning/ strategy Capacities Planning, aggregate planning, hire and fire strategy etc.3. Long term planning/strategy Facility location and facility layout. Factors affecting the location of facility,different types of layouts, product focused, processFocused, cellular and mixed layouts. Introduction to the methods for determining the location and layout of a facility.4. Intermediate term planning/ strategy Capacities Planning, aggregate planning, hire and fire strategy etc.Identification and segregation of the operations based on the strategy selected

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UNIT3

5. Shop floor control Resource planning, sequencing and scheduling, concept of JIT, manufacturing and assembly line balancing, preparation of Gantt Chart.6. Project ManagementCPM, PERT forward pass and backward pass computations, resource leveling, resource allocation, and crashing of the project.

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UNIT4

7. Inventory Management Inventory definition, types and models, managing the inventory, classification of inventories, MPS, MRP, ERP.8. Work Study & ProductivityProductivity improving techniques, Cost reduction approach, Work and Method study, Work Order, Production Control and its importance

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UNIT 5

9. Quality Concepts Production Quality Concepts and Internal Customer Approach, Introduction to the tools of quality management.10. Safety Management Evolution of safety concepts, Electrical & Chemical hazards, ionizing and non ionizing Radiation, Personal protection, Material handling and shop floor design concepts, Environmental safety, fire prevention, introduction to OHSAS standards.

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PRODUCTION AND OPERATIONS MANAGEMENT

• 5. Shop floor control: Resource planning, sequencing and scheduling, concept of JIT, manufacturing and assembly line balancing, preparation of Gantt Chart.

• 6. Project Management• CPM, PERT forward pass and backward

pass computations, resource leveling, resource allocation, and crashing of the project.

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Shop Floor Control• Operations Management - Shop Floor Control• The control of work in progress is one of the most

complex day-to-day tasks facing the operations manager. Planning capacity, ensuring that bottlenecks are avoided and generating high levels of shop floor productivity are all part of the challenge. In today's fast moving environment knowing the current status of jobs out there on the factory floor is essential. To achieve excellence in all these tasks requires very good systems and their effective operation.

• A system of computers and controllers used to schedule, dispatch and track the progress of work orders through manufacturing based on defined routings.

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Resource Planning

• Unparalleled Visibility into Manufacturing Operations:

• One can’t improve what one can’t see. If obsolete inventory blocks a doorway, there’s an obvious problem. The key is to make waste “visible” long before that happens. Likewise, if the most up-to-date release requirements from the customer are not easily available, there’s no way to meet shipping deadlines. An innovative Resource Planning system provides that crucial real-time insight, making the outdated, overnight batch processing once common with legacy Resource Planning solutions a thing of the past.

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Resource Planning

Full visibility means tracking key events as they happen and then putting the right information into the hands of the right people at the right time— whether it’s the machine operators tracking part numbers on a touch screen on the shop floor, or the accounting manager viewing global account receivables in a custom dashboard. Capturing and validating data at the point of origination makes for timely, accurate and, therefore, actionable information for all other users in the enterprise.

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© Oxford University Press 2007. All rights reserved. 10

Reasons for demand forecasting

Reasons for Demand Forecasting

To maximize gains from events external to the organization (from the external environment)

To minimize losses associated with uncontrollable events external to the organization

To develop policies that apply to people who are not part of the organization

To offset the actions of competitor organizations

To develop administrative plans and policy internal to an organization (e.g. personnel or budget)

In decision making for Facility Capacity Planning and for Capital Budgeting

As an input to Aggregate Production Planning and / or Material Requirements Planning (MRP)

To maximize gains from events, which are the results of actions taken by the organization

In order to perform adequate staffing to support production requirements

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Methods of demand forecasting

Demand Forecasting

Qualitative Analysis Quantitative Analysis

Time Series Analysis Causal AnalysisCustomer Survey Sales Force Composite

Executive Opinion

Delphi Method

Past Analogy

Simple Moving Average

Trend AnalysisSimple Exponential Smoothing

Holt’s Double Exponential Smoothing

Winters’s Triple Exponential Smoothing

Forecast by Linear

Regression Analysis

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No growth or decline trend; no seasonal variation – simple (or weighted) moving average; simple exponential smoothing

TimeTime

Time Time

Actual Demand

Actual Demand

Actual Demand

Actual Demand

No growth or decline trend; seasonal variation present – simple moving average

Linear growth (or decline) trend; no seasonal variation –Holt’s double exponential smoothing

Linear growth (or decline) trend; seasonal variation present – Winters’s triple exponential smoothing; linear regression analysis

Different Types of Demand Patterns and Suitable Time Series Forecasting Methods04/18/23 SHARDA


Forecasting by Linear Regression Analysis

Time

Actual Demand / Forecast

0

Best fit line with slope b y = a + b. x (Least squares method) using the past demand data

Scatter Diagram and Best Fit Line (Forecasting by Linear Regression Analysis)

Best fit line is extrapolated to find the forecast for the future

Forecast

y intercept = a

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Measurement of Forecasting Errors

• Running Sum of Forecast Errors (RSFE)

• Mean Forecast Error (MFE)

• Mean Absolute Deviation (MAD)

• Mean Squared Error (MSE)

• Mean Absolute Percentage Error (MAPE)

• Tracking Signal (TS)

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Forecast Control Limits

Central Line (CL)

Upper Control Limit (UCL)

Lower Control Limit (LCL)

Forecast Control Limits

0 - 3. s

0 + 3. s

Targeted or Aimed-at Mean Forecast Error = 0 Time

Forecast Error

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PRODUCTION PLANNING AND CONTROL

• Manufacturing planning and control entails the acquisition and allocation of limited resources to production activities so as to satisfy customer demand over a specified time horizon. As such, planning and control problems are inherently optimization problems where the objective is to develop a plan that meets demand at minimum cost or that fills the demand that maximizes profit.

• Manufacturing planning and control address decisions on the acquisition, utilization and allocation of production resources to satisfy customer requirements in the most efficient and effective way. Typical decisions include work force level, production lot sizes, assignment of overtime and sequencing of production runs.

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Planning Decisions• Any planning problem starts with a specification of

customer demand that is to be met by the production plan. In most contexts, future demand is at best only partially known, and often is not known at all. Consequently, one relies on a forecast for the future demand. To the extent that any forecast is inevitably inaccurate, one must decide how to account for or react to this demand uncertainty.

• A key choice is what planning decisions to include in the model. By definition, production-planning models include decisions on production and inventory quantities. But in addition, there might be resource acquisition and allocation decision, such as adding to the work force and upgrading the training of the current work force.

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AGREGATE PLANNING

• Aggregate planning is an operational activity which does an aggregate plan for the production process, in advance of 2 to 18 months, to give an idea to management as to what quantity of materials and other resources are to be procured and when, so that the total of the organization is kept to the minimum over that period.

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http://en.wikipedia.org/wiki/Operations_management

http://en.wikipedia.org/wiki/Production,_costs,_and_pricing

http://en.wikipedia.org/wiki/Management

http://en.wikipedia.org/wiki/Resource_(project_management)

AGREGATE PLANNING

• The quantity of outsourcing, subcontracting of items, overtime of labor, numbers to be hired and fired in each period and the amount of inventory to be held in stock and to be backlogged for each period are decided. All of these activities are done within the framework of the company ethics, policies, and long term commitment to the society, community and the country of operation.

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http://en.wikipedia.org/wiki/Outsourcing

http://en.wikipedia.org/wiki/Subcontracting

http://en.wikipedia.org/wiki/Overtime

http://en.wikipedia.org/wiki/Inventory

http://en.wikipedia.org/wiki/Ethics

AGREGATE PLANNING• Aggregate planning has certain pre-required

inputs which are inevitable. They include:• Information about the resources and the facilities

available. • Demand forecast for the period for which the

planning has to be done. • Cost of various alternatives and resources. This

includes cost of holding inventory, ordering cost, cost of production through various production alternatives like subcontracting, backordering and overtime.

• Organizational policies regarding the usage of above alternatives.

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http://en.wikipedia.org/wiki/Supply_and_demand

http://en.wikipedia.org/wiki/Backorder

AGREGATE PLANNING

• "Aggregate Planning is concerned with matching supply and demand of output over the medium time range, up to approximately 12 months into the future. Term aggregate implies that the planning is done for a single overall measure of output or, at the most, a few aggregated product categories. The aim of aggregate planning is to set overall output levels in the near to medium future in the face of fluctuating or uncertain demands. Aggregate planning might seek to influence demand as well as supply."

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22

Definition

Aggregate Production Planning is planning about how many units of the product are to be produced on a weekly or monthly basis for the coming six to eighteen months. This plan should be in line with the overall business plan of the company.

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Demand Forecasts provided by the Marketing Department

Business Plan provided by the Top Management

Strategies for Pure Aggregate Planning considered by the Production Manager

Level Output Rate Plan Chase Plan Varying Utilization Rate Plan

A combination of the pure planning strategies called the Intermediate Plan is prepared by the

Production Manager

Disaggregating of the Aggregate Production Plan (Intermediate Plan) is done in order to arrive at a

Master Schedule

Master Scheduling Process Beginning Inventory Status Customer orders committed

Tentative Master Production Schedule (MPS) Available-to-promise Inventory Projected on-hand Inventory

Tentative MPS is run through the Material Requirements Planning (MRP) Processing

Logic to test for feasibilityRough-cut capacity planning

Revised Master Production Schedule is fixed by using Time Fences

Steps in Effective Aggregate Planning Process

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Production Planning Strategies

• Level Output Rate Plan (we vary the inventory size and keep workforce size and utilization of workers constant)

• Chase Plan (we vary the workforce size according to demand and keep the utilization of workers and inventory size constant)

• Varying Utilization Plan (we vary the utilization of workers and keep workforce size and inventory size constant)

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Material Requirements Planning (MRP) Just-in-Time (JIT)

Supply Chain Management (SCM)

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Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is a system for planning the future

requirements of dependent demand items.

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Inputs & Outputs in MRPBill of

Materials (BOM)

Master Production Schedule

(MPS)

Inventory Status

MRP Processing Logic (Computer-based/ Manual)

Order Changes Report

Planned Orders Report

Order Release Report

INPUTS

OUTPUTS

Inputs and Outputs in Material Requirements Planning

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Calculation of Order Size in MRP

There are four methods of calculating the order size in MRP. These are:

• Lot-for-lot Method

• EOQ Method

• Least Total Cost Method

• Least Unit Cost Method

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Just-In-Time (JIT)

Schonberger defines the JIT system as to :

”Produce and deliver finished goods just in time to be sold, sub-assemblies just in

time to be assembled into finished goods, and purchased materials just in time to be

transformed into fabricated parts”.

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The Concept of JIT Manufacturing

• Revise factory layouts

• Reduce set-up times

• Implement a pull system of production

• Better coordination with suppliers

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Kanban Visual System

Workstation 1 (WS 1)



Car 1

Car 3

Car 2

Racks containing bins of components

required at WS 1

Conveyor

The Assembly Line

Manufacturing Cell 1 (MC 1)



Racks containing bins of components manufactured at MC

1


2


3


required at WS 2


required at WS 3

Store

Work-In-Process Inventory

Step 1 Step 1Step 1

Mizosomashi or supply worker

(Step 2)

Step 3

Step 4Step 4Step 4

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Delivery to Customers

Warehousing Products

Assembly Processes

Intermediate Processes

Initial Process

Warehousing Materials

Material Supplier

Customer’s Kanban

Assembly Kanban

Parts Processing

Kanban

Set-up signal

Kanban

Kanban for ordering materials

Sub-contractor Kanban

Delivery Schedule

Sheet

Definite warehousing schedule

sheet

Order sheet for sub-

contractor manufactured

parts

Order sheet for in-house

manufactured parts

Material forwarding

notice

Material order sheet

Reception & Delivery

Suppliers

Kanban Flow Products Flow

Use of Kanban across the Supply Chain

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Benefits of JIT

Heightened awareness of problems &

causes

Reduced buffer stocks and/or

operators

Fast feedback on defects

Ideas for cutting lot sizes

Ideas for improving JIT delivery performance

Ideas for controlling defects

Lot size reductions

JIT production

Scrap/ quality control

Smoother output rates

Less material waste

Less stock in the system

Less indirect cost

Fewer rework hours

Less material, labor, and indirect inputs for the same or higher output = higher productivity

Less inventory in the system = faster market response, better forecasting, less administration

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Product forecasting and control

Business forecasting

Resource planning

Customer order entry

Inventory status (end

items)

Master production schedule

Capacity planning

Materials requirement

planning

Capacity requirement

planning

Components

forecasting

Inventory status

(components)

Bill of materials

Shop schedulin

g

Capacity control

Kanban

system

Group technology

Shop-floor control

JIT productionJIT distribution

Vendor capacity control

Purchase order

scheduling

Purchasing

JIT deliveries

Hybrid MRP- JIT Production

SystemDemand Manageme

nt

Inventory Management

Capacity Manageme

nt

Quality Manageme

nt

PLANNING

EXECUTION

TPM

TPC

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Japanese Supply Chain Management in

Practice: The KeiretsuGeneral Motors

HondaNissan

Ford Chrysler

B

BBB

BB

MS 1 MS 2

MS 1MS 1MS 1 MS 2MS 2 MS 2

S1 S2

S1

S1

S1S1

S1

S2S2S2

S2 S2Sn

SCn

SnSnSn

SnSn

SCnSCn

SC1SC1SC1

S SS

The Japanese Keiretsu (Oligopoly Competition)

The U. S. Traditional Supply Network

SSn SCn

MS BTrading Firm - Shosna

Minor Supplier

Subcontractor Major Supplier

Bank

Codes used:-

Toyota

Supply Chain Management (SCM)

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A comparison of the Japanese JIT Supply Chain

Management and the Traditional US purchasing

• Purchase lot size• Supplier selection• Evaluating the

supplier• Receiving inspection• Negotiating and

bidding process

• Mode of transportation

• Product specifications• Paperwork• Packaging

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Purchasing, Procurement, and Supply Chain Management

• Purchasing refers to the actual buying of materials and those

activities associated with the buying process.

• Procurement, on the other hand, has a broader meaning and

includes purchasing, transportation, warehousing, and inbound

receiving. Procurement is a closed-loop process that begins with the

requisition and ends with payment.

• Supply Chain Management is a transition from purchasing and

procurement towards a more strategic focus, which involves

suppliers as strategic partners in warding off the competition.

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Tactical Focus

Purchasing Activities

Procurement Activities

Supply Management

Activities

Strategic Focus

1. Identification of purchasing needs

2. Interaction with sales persons

3. Identification of suppliers

4. Analysis of purchase tenders

5. Negotiations

6. Supplier selection & issuance of P.O.

7. Purchase contract administration

8. Maintaining purchase records

1. Participationin generation ofspecifications ofrequired materials

2.Conducting extensive material market research

3.Management of supplier quality

4. Purchase of inbound transportation

5.Management of investment recovery (Salvage of surplus and scrap)

6. Management of value analysis

2. Early Supplier Involvement (ESI) in product design through concurrent engineering approach

1. Use of cross- functional teams in supplier qualification & selection

3. Strategic alliances with suppliers to control quality & costs

4. Monitoring of supply environment for opportunities & threats

6. Strategic acquisition plans for all important materials

5. Participation in Corporate Strategic Planning and look for continuous improvements in the supply chain

Activities in Supply Chain Management

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Tendering & Vendor Rating

Tendering is the process of various suppliers (vendors) submitting quotations of prices and other information (called tenders) to a buyer in response to the invitation of such details from the buyer in the form of advertising etc.

After receiving all such tenders, the buyer firm has to perform the rating of various vendors on the basis of information supplied by them and the criteria decided upon by the buyers. This process is called vendor rating.

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Criteria for vendor rating

Criteria for Vendor rating

The reputation of vendor in terms of quality of products/ services supplied by him

After-sales service of the vendor in terms of repair of equipment and replacement of spare parts (if an equipment supplier) or replacement of defective items supplied

Price quoted by the vendor along with any discounts offered

Location of the vendor in close vicinity of the firm helps in emergencies of processing rush orders. It becomes very important in JIT settings.

Inventory policy of the vendor – in JIT settings, the buyers prefer that their vendors should also have JIT practices with negligible inventory. For equipment suppliers, the buyers prefer vendors with sufficient spare parts inventory (useful in case of equipment breakdown)

Sole dependence upon the buyer (vendor supplies to only one buyer and no one else) – the buyer has better control over the supplier in terms of quality, pricing, supply schedules, etc.

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E-procurement and Operating Resource Management

EmployeeInternet Supplier

2. The employee browses the suppliers list on MS Market (on intranet) and chooses a supplier

3. The employee finds the desired product on the supplier’s catalog on MS Market

1. The supplier regularly updates information in its catalog on MS Market (on company’s intranet) through the internet

4. The employee checks the availability status of the product on the supplier’s catalog on MS Market and fills-in the order form5. A dialog box appears on the screen asking the employee to confirm the order. The employee confirms the order by clicking “Yes”.

6. MS Market sends email to the employee’s manager for approval of the order

7. On receiving the approval of the manager, MS Market sends the purchase order email to the supplier and a copy to the accounts department

8. The supplier sends the order acknowledgement to the employee

9. The supplier ships the product to the employee

10. The employee receives the product and the accounts department sends the payment to suppliers

E-procurement through MS Market

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Just-in-time

• Just-in-time (acronym: JIT) production is a (acronym: JIT) production is a concept to reduce work in process with respect concept to reduce work in process with respect to a continuous configuration of product. to a continuous configuration of product. Just In Sequence (acronym: JIS) is a similar (acronym: JIS) is a similar concept with respect to a scheduled variety in concept with respect to a scheduled variety in sequence of configurations for products. sequence of configurations for products.

• Just-in-timeJust-in-time ( (JITJIT) is an inventory strategy that ) is an inventory strategy that strives to improve a strives to improve a business's 's return on investment by reducing in-process by reducing in-process inventory and associated and associated carrying costs. To . To meet JIT objectives, the process relies on meet JIT objectives, the process relies on signals between different points in the process. signals between different points in the process.

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http://en.wikipedia.org/wiki/Just_In_Time_(business)

http://en.wikipedia.org/wiki/Just_In_Time_(business)

http://en.wikipedia.org/wiki/Just_In_Sequence

http://en.wikipedia.org/wiki/Business

http://en.wikipedia.org/wiki/Return_on_investment

http://en.wikipedia.org/wiki/Inventory

http://en.wikipedia.org/wiki/Carrying_cost

APPLICATION OF JIT• The philosophy of JIT is simple: inventory is waste. JIT inventory systems

expose hidden causes of inventory keeping, and are therefore not a simple solution for a company to adopt. The company must follow an array of new methods to manage the consequences of the change. The ideas in this way of working come from many different disciplines including statistics, industrial engineering, production management, and behavioral science. The JIT inventory philosophy defines how inventory is viewed and how it relates to management.

• Inventory is seen as incurring costs, or waste, instead of adding and storing value, contrary to traditional accounting. This does not mean to say JIT is implemented without an awareness that removing inventory exposes pre-existing manufacturing issues. This way of working encourages businesses to eliminate inventory that does not compensate for manufacturing process issues, and to constantly improve those processes to require less inventory. Secondly, allowing any stock habituates management to stock keeping. Management may be tempted to keep stock to hide production problems. These problems include backups at work centers, machine reliability, process variability, lack of flexibility of employees and equipment, and inadequate capacity.

• In short, the just-in-time inventory system focus is having “the right material, at the right time, at the right place, and in the exact amount”, without the safety net of inventory. The JIT system has broad implications for implementers.

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J I T

• Transaction cost approach• JIT reduces inventory in a firm. However,

a firm may simply be outsourcing their input inventory to suppliers, if those suppliers don't use JIT (Naj 1993). Newman (1993) investigated this effect and found that suppliers in Japan charged JIT customers, on average, a 5% price premium.

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J I T• Environmental concerns• During the birth of JIT, multiple daily deliveries

were often made by bicycle. Increased scale has required a move to vans and lorries (trucks). Cusumano (1994) highlighted the potential and actual problems this causes with regard to gridlock and burning of fossil fuels. This violates three JIT waste guidelines:

• Time—wasted in traffic jams • Inventory—specifically pipeline (in transport)

inventory • Scrap—fuel burned while not physically moving 04/18/23 45SHARDA

http://en.wikipedia.org/wiki/Gridlock

http://en.wikipedia.org/wiki/Fossil_fuels

J I T

• Price volatility

• JIT implicitly assumes a level of input price stability that obviates the need to buy parts in advance of price rises. Where input prices are expected to rise, storing inventory may be desirable.

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J I T

• Quality volatility

• JIT implicitly assumes that input parts quality remains constant over time. If not, firms may benefit from hoarding high quality inputs.

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J I T

• Demand stability• Karmarker (1989) highlights the importance of

relatively stable demand, which helps ensure efficient capital utilization rates. Karmarker argues that without significantly stable demand, JIT becomes untenable in high capital cost production.

• In the U.S., the 1992 railway strikes caused General Motors to idle a 75,000-worker plant because they had no supplies coming in.

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JIT Implementation Design

• Based on a diagram modeled after the one used by Hewlett-Packard’s Boise plant to accomplish its JIT program.

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1) F Design Flow Process

• - F Redesign / relay out for flow

• – L Reduce lot sizes

• – O Link operations

• – W Balance workstation capacity

• – M Preventative maintenance • – S Reduce Setup Times

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2) Q Total quality control

- C worker compliance

• - I Automatic inspection

• - M quality measures

• – M fail-safe methods • - W Worker participation

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3) S Stabilize Schedule

• - S Level Schedule

• - W establish freeze windows • - UC Underutilize Capacity

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4) K Kanban Pull System

• - D Demand pull

• - B Backflush • - L Reduce lot sizes

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5) V Work with vendors

• - L Reduce lead time

• - D Frequent deliveries

• - U Project usage requirements • - Q Quality Expectations

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6) I Further reduce inventory in other areas

• - S Stores

• - T Transit

• - C Implement Carroussel to reduce motion waste

• - C Implement Conveyor belts to reduce motion waste

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7) P Improve Product Design

• - P Standard Production Configuration

• - P Standardize and reduce the number of parts

• - P Process design with product design • - Q Quality Expectations

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Benefits• Set up times are significantly reduced in the

factory. Cutting set up time allows the company to improve their bottom line, be more efficient, and focus on other areas that may need improvement. This allows the company to reduce or eliminate inventory for "changeover" time.

• Employees who possess multiple skills are used more efficiently. Having employees trained to work on different parts of the inventory cycle allows companies to move workers where they are needed.

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Benefits• JIT provides better scheduling and work

hour consistency. If there is no demand for a product at the time, workers don’t have to work. This saves the company money, either by not having to pay workers or by having them focus on other work.

• There is an increased emphasis on supplier relationships. A company without inventory does not want an inventory system brake that creates a supply shortage. This makes supplier relationships extremely important.

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Benefits• Supplies come in around the clock, which

keeps workers productive and businesses focused on turnover. Focusing management on deadlines makes employees work hard to meet company goals, in pursuit of job satisfaction, promotion, or even higher pay.

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Problems

• just-in-time operation leaves suppliers and downstream consumers open to supply shocks and large supply or demand changes. For internal reasons, Just-in-time is a means to improving performance of the system, not an end.

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http://en.wikipedia.org/wiki/Supply_shock

KanbanKanban

• Kanban (in kanji also in katakana , where kan, means "visual," and ban, means "card" or "board") is a concept related to lean and just-in-time (JIT) production. The Japanese word kanban is a common term meaning "signboard" or "billboard".

• According to Taiichi Ohno, the man credited with developing JIT, kanban is a means through which JIT is achieved.

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http://en.wikipedia.org/wiki/Kanji

KanbanKanban• Kanban is a signaling system to trigger

action. As its name suggests, kanban historically uses cards to signal the need for an item. However, other devices such as plastic markers (kanban squares) or balls (often golf balls) or an empty part-transport trolley or floor location can also be used to trigger the movement, production, or supply of a unit in a factory.

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Questions?

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Demand for products &

services

Cu

sto

mers

&

C

on

su

mers

Supply of products &

services

Resou

rces &

su

pp

liers

Meet demand instantaneously: products and services are delivered (both to production & to the customer) only as and when they are needed...

...With the best appropriate quality, and no waste!

Production, processing &

assembly

Just-in-time planning and control

JIT Philosophy:

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JIT as a total management commitment: a philosophy for all operations

A methodology for planning & control• “Pull” scheduling

• Kanban control

• Levelled scheduling: Heijunka

• Mixed production runs

• Synchronisation across all production lines

• Reduction of inventories

• Shortening the cash cycle

Eliminate waste

A set of techniques...• Basic transferable standards of

work & quality

• Design for manufacture

• Supplier inclusion

• Focus on operations & processes

• Small single-stage machines

• Attention to layout & flow

• Total preventive maintenance

• Set-up time reduction

• Total people involvement

• Visibility

Involve everyone

Continuous improvement

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JIT implementation benefitsMain benefits: Short cycle times Work in progress

reduced Manufacturing facilities

designed to reduced production set-up times

Quality problems quickly made visible

Short lead-times increase responsiveness to customer-demand

«Pull» systems require fast and clear lines of communication

Waste and delay eliminated: Focus on simplifying production process Total preventive maintenance Efficient flow layout Reduced set-up times Data visibility Partnership-based supply relationships Inventory control systems - rapid

response Continuous improvementTQM - Total Quality Management: Senior Management committed Focus on defect prevention Quality of supplies ensured at the source

People involvement: JIT managers empower their staff All personnel, particularly operators and clerical staff help to

develop creative solutions JIT emphasises team goals and cross-functional working A multi-skilled work force

ITC M11:U3:3.3-34

04/18/23 66SHARDA

The JIT implementation wheel

JIT

Standardise manufacturing

design Increase preventive

maintenanceImplement Total Quality Control

Work on reducing set-up

timesReview & change

plant layout

Change to smaller machines

Train workforce to be more

flexible

Implement Pull scheduling

Steadily reduce lot sizes

High visibility brings

improvement

Adopt JIT purchasing &

SCM

Implementation starts

here

04/18/23 67SHARDA

JIT implementation challenges

1. Changing workforce and management attitudes (e.g., regarding teamwork and empowerment)

2.Responding to their education and training needs

3.Suppliers or logistics links cannot support JIT

4. Managing & synchronising IT support in the company, its suppliers and customers

5.Total inventory reduction is often not achieved

6. Catastrophic shutdowns and inability to meet customer delivery expectations

04/18/23 68SHARDA

Management focuses on producing only

what is needed, when it is needed

Lower capacity utilisation - focus on quality &

involvement

Production rate driven by demand of next

stage, no build-up of WIP inventory

Low inventory, so problems surface and are solved -

focus on delivery

Fewer stoppages, higher order

fulfilment and less stress

The JIT approach to production and control

04/18/23 69SHARDA

Best of JIT and MRP systems

Human &organisational

elements

Productdesign for

manufacture

Processdesign

Manufacturingplanning &

controlsystem

JIT

04/18/23 70SHARDA

Combining JIT and MRP systems in practice

Product & service delivery

Final assembl

y

Production Cell3

Production Cell2

Production Cell1

Continuous

Process 1

Goods inwards

preparation

Purchasing

Orders managem

ent system

Master Productio

n Schedule

Factory assembly schedule

Materials Requireme

nts Planning

Top-level BOM

Continuous &

ready-use

stockResou

rces &

su

pp

liers

MRP is used to provide materials planning and the final assembly schedule. Kanbans [ ] are used to control internal production flow.

04/18/23 71SHARDA

J I T • Transaction cost approach• JIT reduces inventory in a firm. However,

a firm may simply be outsourcing their input inventory to suppliers, if those suppliers don't use JIT (Naj 1993). Newman (1993) investigated this effect and found that suppliers in Japan charged JIT customers, on average, a 5% price premium.

04/18/23 SHARDA 72

04/18/23 SHARDA 73

• Inventory requirements in an organization are closely related to the production or consumption systems. JIT (Just-in-Time) is a production technique which helps in reducing inventory. The technique developed by Toyota Company in Japan has now spread all over the world. JIT system is an integrated manufacturing and supply system aimed at producing the highest quality and, at the same time, the lowest cost products through the elimination of waste.

• JIT integrates and controls the entire process. It specifies what should be stored, moved, operated on or inspected and precisely when it should be done. Just-in-Time production continuously strives to improve production processes and methods. It attempts to reduce, and ultimately to eliminate inventories because high inventories tend to cover up production problems. Various components of a JIT production system are given in figure

04/18/23 SHARDA 74

• Components of JIT Production System• FILL-UP: A PULL Type Ordering System• Contrary to the conventional system where a central controller co-ordinates

material flow from the first to the last stage of manufacturing, a pull system triggers action from the market demand. As soon as an order is received from the market, the dispatch section places an. order on final assembly section who in turn to sub-assembly section and so on to the stage of withdrawal of materials from stores for manufacturing. A chain reaction starts where-in each user is responsible to withdraw materials from the preceding operation eliminating the need for the central controller. A concept chart showing the conventional push type ordering system and the new pull type ordering system is given in Fig. The production stages, storage stages, information and material flow channels have been shown explain in both the systems. The system is flexible and is adaptable to quick changes in demand. Only the required quantity of materials for use during a ~ay or a part thereof is drawn from the previous operation, thereby leaving almost nil inventory at work stations at the end of the day. The chances of accumulation of process inventory in a Push System are more since total output of a work station is pushed to next work station whether required or not.

04/18/23 SHARDA 75

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• Production Smoothing• A system of forecasting demand for next 3

months, preparation of master production schedule and monthly production planning with a provision to adopt monthly demand changes. Simultaneously, a system of 10 day advance booking of firm orders from dealers, co-ordinating with sub-contractors, balancing shop production, preparation of daily dispatch schedules and provision to incorporate last minute changes in daily demand should be well prepared.

04/18/23 SHARDA 79

• KANBAN System

• A Kanban is a hand sized signboard contained in polypack that is the key control tool for JIT production. Kanbans are of two types i.e. "Production Instruction Kanban" and "Pick-Up or Withdrawal Kanban". Production Instruction Kanban indicates how many and what kind of parts have been passed from one place on the production line to the next place. It is a green signal to begin processing exactly th same type and number of items that were passed along. Pick-up Kanban is of two types. One called 'Interprocess Kanban' used within the plant for picking up needed parts from earlier process jobsite to the next process jobsite. Other type is 'supplier Kanban' used for picking up needed items from outsid suppliers and is used the same way as inter-process pick up Kanbans. Steps involved in using the two Kanbans and their flows as well as the flow of physical units of product are explained in figure. It may be seen that the number of withdrawal· Kanbans lying in post at "1" indicate the units consumed in subsequent process assembly line and therefore creation of the demand for equal number of units to be provided by preceding process machinery line. These Kanbans authorise picking up units from the machinery line store and are returned to assembly line along with physical units . Depending upon the shortfall in the machinery line store, production ordering Kanbans in desired quantity are placed in the post , carried to production ordering Kanban post. Production ordering Kanban authorize production in the machinery line and are sent to store again alongwith machined parts. Kanbans are the pre-printed forms containing product specifications, quantities and frequency of issue during a day. Kanbans are normally replaced every month depending upon next month production schedule. There is no need w give written instructions every time and hence it eliminates lot of paper work. At the same time it coordinates activities of whole plant as well as with the suppliers and establish a close circuit.

04/18/23 SHARDA 80

• Visual Control

• This is a method by which managers and supervisors can tell at a glance if production activities are proceeding normally or not. Light signals (Red & Yellow) are placed on various machines and storage points. If any problem arises, the operator switches on light signal. 'Yellow' means there is a problem which operator himself is trying to solve. 'Red' means he needs help of the supervisor. Seeing red light, supervisor rush to the workplace. Similarly, a system of replenishment of stocks is used. A material calling ANDON for the later replenishment system is illustrated in Figure 3.6. When an empty box is found in the production shop, the worker pushes a switch thereby putting on main light in the- central store and a glow lamp in the control pannel indicating the kind of material required-Seeking the lamps, material carrier transports filled boxes to the line (see '5') and submits Supplier Kanban (detached from material box) to the Post Office of material Kanbans (see '6'). During th evening, all supplier Kanbans are classified supplier wise and handed over to respective truck drivers along with empty boxes. The drivers draw the materials from supplier as per the number of Kanbans and deliver to the factory during night .The materials are therefore replenished to the central stores every day morning before production

• starts. From the system it may be observed that inventory is kept only for 1-2 days stocks, with almost no paper work, no noice and chaos and no congestion.

04/18/23 SHARDA 81

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Total quality management• Deep analysis of QA practices and premises

used about them is the most necessary inspection control of all in cases, where, despite statistical quality control techniques or quality improvements implemented, sales decrease.

• The major problem which leads to a decrease in sales was that the specifications did not include the most important factor, “What the specifications have to state in order to satisfy the customer requirements?”.

04/18/23 SHARDA 85

Total quality management• The major characteristics, ignored during

the search to improve manufacture and overall business performance were:

• Reliability

• Maintainability

• Safety

• Strength

04/18/23 SHARDA 86

sequencing and Operations Scheduling

04/18/23 87SHARDA

• Work Center Defined• Typical Scheduling and Control Functions• Job-shop Scheduling • Examples of Scheduling Rules• Shop-floor Control• Principles of Work Center Scheduling • Issues in Scheduling Service Personnel

OBJECTIVES

04/18/23 88SHARDA

Work Center

• A work center is an area in a business in which productive resources are organized and work is completed

• Can be a single machine, a group of machines, or an area where a particular type of work is done

04/18/23 89SHARDA

Capacity and Scheduling

• Infinite loading (Example: MRP)

• Finite loading

• Forward scheduling

• Backward scheduling (Example: MRP)

04/18/23 90SHARDA

Types of Manufacturing Scheduling Processes and Scheduling Approaches

Continuous process

Type of Process Typical Scheduling Approach

High-volume manufacturing

Med-volume manufacturing

Low-volume manufacturing

Finite forward of process, machine limited

Finite forward of line, machined limited

Infinite forward of process, labor and machined limited

Infinite forward of jobs, labor and some machine limited

04/18/23 91SHARDA

Typical Scheduling and Control Functions

• Allocating orders, equipment, and personnel

• Determining the sequence of order performance

• Initiating performance of the scheduled work

• Shop-floor control

04/18/23 92SHARDA

Work-Center Scheduling Objectives

• Meet due dates

• Minimize lead time

• Minimize setup time or cost

• Minimize work-in-process inventory

• Maximize machine utilization 04/18/23 93SHARDA

Priority Rules for Job Sequencing

1. First-come, first-served (FCFS)

2. Shortest operating time (SOT)

3. Earliest due date first (D Date)

4. Slack time remaining (STR) first

5. Slack time remaining per operation (STR/OP)

04/18/23 94SHARDA

Priority Rules for Job Sequencing (Continued)

6. Critical ratio (CR)

7. Last come, first served (LCFS)

8. Random order or whim

remaining days of Number

date) Current-date (DueCR

04/18/23 95SHARDA

Example of Job Sequencing: First-Come First-Served

Jobs (in order Processing Due Date Flow Timeof arrival) Time (days) (days hence) (days)

A 4 5 4B 7 10 11C 3 6 14D 1 4 15

Answer: FCFS Schedule

Jobs (in order Processing Due Dateof arrival) Time (days) (days hence)

A 4 5B 7 10C 3 6D 1 4

Suppose you have the four jobs to the right arrive for processing on one machine


What is the FCFS schedule?What is the FCFS schedule?

No, Jobs B, C, and D are going to be late

No, Jobs B, C, and D are going to be late

Do all the jobs get done on time?Do all the jobs get done on time?

04/18/23 96SHARDA

Example of Job Sequencing: Shortest Operating Time


A 4 5B 7 10C 3 6D 1 4

Answer: Shortest Operating Time Schedule


D 1 4 1C 3 6 4A 4 5 8B 7 10 15



What is the SOT schedule?What is the SOT schedule?

No, Jobs A and B are going to be late

No, Jobs A and B are going to be late


04/18/23 97SHARDA

Example of Job Sequencing: Earliest Due Date First


A 4 5B 7 10C 3 6D 1 4

Answer: Earliest Due Date First


D 1 4 1A 4 5 5C 3 6 8B 7 10 15



What is the earliest due date first schedule?

What is the earliest due date first schedule?

No, Jobs C and B are going to be late

No, Jobs C and B are going to be late


04/18/23 98SHARDA

Example of Job Sequencing: Critical Ratio Method


A 4 5B 7 10C 3 6D 1 4



What is the CR schedule?What is the CR schedule?

No, but since there is three-way tie, only the first job or two will be on time

No, but since there is three-way tie, only the first job or two will be on time

In order to do this schedule the CR’s have be calculated for each job. If we let today be Day 1 and allow a total of 15 days to do the work. The resulting CR’s and order schedule are:CR(A)=(5-4)/15=0.06 (Do this job last)CR(B)=(10-7)/15=0.20 (Do this job first, tied with C and D)CR(C)=(6-3)/15=0.20 (Do this job first, tied with B and D)CR(D)=(4-1)/15=0.20 (Do this job first, tied with B and C)


04/18/23 99SHARDA

Example of Job Sequencing:Last-Come First-Served


A 4 5B 7 10C 3 6D 1 4

Answer: Last-Come First-Served ScheduleJobs (in order Processing Due Date Flow Time

of arrival) Time (days) (days hence) (days)D 1 4 1C 3 6 4B 7 10 11A 4 5 15

No, Jobs B and A are going to be late

No, Jobs B and A are going to be late



What is the LCFS schedule?What is the LCFS schedule?Do all the jobs get done on time?Do all the jobs get done on time?

04/18/23 100SHARDA

Example of Job Sequencing: Johnson’s Rule (Part 1)

Suppose you have the following five jobs with time requirements in two stages of production. What is the job sequence using Johnson’s Rule?

Suppose you have the following five jobs with time requirements in two stages of production. What is the job sequence using Johnson’s Rule?

Time in HoursJobs Stage 1 Stage 2 A 1.50 1.25 B 2.00 3.00 C 2.50 2.00 D 1.00 2.00

04/18/23 101SHARDA

Example of Job Sequencing: Johnson’s Rule (Part 2)

First, select the job with the smallest time in either stage.

That is Job D with the smallest time in the first stage. Place that job as early as possible in the unfilled job sequence below.

Drop D out, select the next smallest time (Job A), and place it 4th in the job sequence.

Drop A out, select the next smallest time. There is a tie in two stages for two different jobs. In this case, place the job with the smallest time in the first stage as early as possible in the unfilled job sequence.

Then place the job with the smallest time in the second stage as late as possible in the unfilled sequence.

Job Sequence 1 2 3 4

Job Assigned D A B C

Time in HoursJobs Stage 1 Stage 2 A 1.50 1.25 B 2.00 3.00 C 2.50 2.00 D 1.00 2.00

04/18/23 102SHARDA

Shop-Floor Control: Major Functions

1. Assigning priority of each shop order

2. Maintaining work-in-process quantity information

3. Conveying shop-order status information to the office

04/18/23 103SHARDA

Shop-Floor Control:Major Functions (Continued)

4. Providing actual output data for capacity control purposes

5. Providing quantity by location by shop order for WIP inventory and accounting purposes

6. Providing measurement of efficiency, utilization, and productivity of manpower and machines

04/18/23 104SHARDA

Input/Output Control

Input Output

• Planned input should never exceed planned output

• Focuses attention on bottleneck work centers

WorkCenter

04/18/23 105SHARDA

Principles of Work Center Scheduling

1. There is a direct equivalence between work flow and cash flow

2. The effectiveness of any job shop should be measured by speed of flow through the shop

3. Schedule jobs as a string, with process steps back-to-back

4. A job once started should not be interrupted

04/18/23 106SHARDA

Principles of Job Shop Scheduling (Continued)

5. Speed of flow is most efficiently achieved by focusing on bottleneck work centers and jobs

6. Reschedule every day

7. Obtain feedback each day on jobs that are not completed at each work center

8. Match work center input information to what the worker can actually do

04/18/23 107SHARDA

Principles of Job Shop Scheduling (Continued)

9. When seeking improvement in output, look for incompatibility between engineering design and process execution

10. Certainty of standards, routings, and so forth is not possible in a job shop, but always work towards achieving it

04/18/23 108SHARDA

Personnel Scheduling in Services

• Scheduling consecutive days off

• Scheduling daily work times

• Scheduling hourly work times

04/18/23 109SHARDA

110

Components of Scheduling

Scheduling in job shops involves:

• Assigning tasks to different machines (or work centers)

• Deciding about the sequence of processing of the job on different machines on the basis of some priority rule (called sequencing or prioritization)

• Planning the route of movement of the material from one department to the other during processing (called routing)

• Issuing dispatch lists to the various work centers (called dispatching)

• Tracking the progress of various jobs scheduled and in case of delays in the implementation of schedules, revising the schedules and expediting the completion of certain jobs (called expediting)

04/18/23 SHARDA

111

Problems in the absence of proper scheduling

Delays in meeting the due dates of

customer orders High work-in-

process inventory

High average completion time of jobs

Low utilization of workers and

machines (high idle time)

No accurate information available for the current status of a

job

Higher cost of production/ operations

Higher set-up time (overall) of machines

ABSENCE OF PROPER

SCHEDULING

04/18/23 SHARDA

112

Forward & Backward Scheduling

• Forward scheduling means assigning customer orders or jobs to various work centers based on the approach “as early as possible”.

• Backward scheduling is a way of scheduling which is based on the approach “as late as possible” with the condition that the jobs are finished by their due dates of delivery to the customer.

04/18/23 SHARDA

113

Loading

• Loading means assigning tasks to work centers or machines.

• When loading of jobs on machines or work centers is done keeping in view their maximum capacity, it is called finite loading.

• Infinite loading means while assigning tasks to a machine or work center, its maximum capacity is overlooked.

04/18/23 SHARDA

114

Different Methods of Sequencing/ Assignment of Jobs on Machines

Scheduling

Sequencing n jobs Sequencing two jobs on n machines in different machine

sequences (Akers method)

Assigning n jobs on m machines

First come, first served (FCFS)

method

Last come, first served

(FCFS) method

Due date method

Random method

Shortest processing time (SPT)) method

Assignment Model

On one machine

On two machines

On three machines

On m machines

Johnson’s method

In the same job sequence

04/18/23 SHARDA

Goldratt’s Goal of the Firm

The goal of a firm is to make money

04/18/23 115SHARDA

Concept of JIT, Manufacturing and Assembly line Balancing

04/18/23 116SHARDA

Assembly Line Balancing

• Cycle time– The time required to produce one part is

called the cycle time, or the maximum time allowed at any one work station

• Assembly Line Balancing– Given a cycle time, find the minimum number

of work stations or minimize the cycle time for a given number of work stations

04/18/23 117SHARDA

What is Line Balancing?

Line Balancing is the process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements.OR

Line Balancing is an analysis process that tries to equally divide the work to be done among workstations so that the number of worker or workstations requires on a production line is minimized04/18/23 118SHARDA

Line Balancing Procedure

• 1. Determine the tasks involved in completing• 2. Determine the order in which tasks must be

done3. Draw a precedence diagram4. Estimate task times5. Calculate the cycle time6. Calculate the minimum number of

workstations• 7. Use a heuristic(intuitive) to assign tasks to

workstation

04/18/23 119SHARDA

Scheduling High-Volume-Low-Variety Operations

• The mass consumption patterns of modern industrialized nations depend on assembly line technology.

• The classic example is Henry Ford’s auto chassis line.• Before the “moving assembly line” was introduced in• 1913, each chassis was assembled by one worker and required 12.5

hours.• Once the new technology was installed, this time was reduced to 93

minutes.• Favorable Conditions• Volume adequate for reasonable equipment utilization.

Reasonably stable product demand.Product standardizationPart interchange-ability.Continuous supply of materialNot all of the above must be met in every case.

04/18/23 120SHARDA

Assembly Line Balancing - Example

Task Time (min) Immediate Predecessors

A 0.2 -----

B 0.3 A

C 0.2 A

D 0.25 A

E 0.15 B,C

F 0.3 D,E

Total 1.404/18/23 121SHARDA


04/18/23 122SHARDA


CYCLE TIME

.30 C 1.40

C = productive time/output rate

C = (8hr x 60min) =.5 min

960

Number of work stations, N = total time/C

N = 140 = 2.8 =3

.5

04/18/23 123SHARDA

Solution to Assembly Line Balancing Problem

Station Tasks Assigned Total Task Time Idle Time1 A, B 0.5 02 C, D 0.45 0.053 E, F 0.45 0.05

TOTAL 1.4 0.1

04/18/23 124SHARDA

• Assign tasks in order of most following tasks.– Count the number of tasks that follow

• Assign tasks in order of greatest positional weight. – Positional weight is the sum of each task’s

time and the times of all following tasks.

Some Heuristic (intuitive) Rules:

Line Balancing Rules

04/18/23 125SHARDA

Assembly Line Balancing Solution

• Line Efficiency = Total Work Content

C x N

• Efficiency = 1.40 = .93 or 93%

.5 x 3

• Balance Delay = 1 – efficiency = 1-.93 = 7%

04/18/23 126SHARDA

c d

a b e

f g h

0.2 0.2 0.3

0.8 0.6

1.0 0.4 0.3

Example 2

04/18/23 127SHARDA

Station 1 Station 2 Station 3 Station 4

a b ef

d

g h

c

Solution to Example 2

04/18/23 128SHARDA

Questions?

04/18/23 129SHARDA

1 min.2 min.1 min.1 min. 30/hr. 30/hr. 30/hr. 30/hr.

Bottleneck

Bottleneck Workstation

04/18/23 130SHARDA

Parallel Workstations

1 min.

2 min.

1 min.1 min. 60/hr.

30/hr. 30/hr.

60/hr.

2 min.

30/hr.30/hr.

Parallel Workstations

04/18/23 131SHARDA

Information Requirements:

1. List of departments

2. Projection of work flows

3. Distance between locations

4. Amount of money to be invested

5. List of special considerations

6. Location of key utilities

Designing Process Layouts

04/18/23 132SHARDA

1 3 2

30

170 100

A B C

Example 3: Interdepartmental Work Flows

for Assigned Departments

04/18/23 133SHARDA

Process Layout - work travels to dedicated process centers

Milling

Assembly& Test Grinding

Drilling Plating

Process Layout

04/18/23 134SHARDA

Gearcutting

Mill Drill

Lathes

Grind

Heattreat

Assembly

111

333

222

444

222111444

111 3331111 2222

222

3333

111

444111

333333333

44444

3333

3322

222

Functional Layout

04/18/23 135SHARDA

-1111 -1111

222222222 - 2222

Ass

emb

ly

3333333333 - 3333

44444444444444 - 4444

Lathe

Lathe

Mill

Mill

Mill

Mill

Drill

Drill

Drill

Heat treat

Heat treat

Heat treat

Gear cut

Gear cut

Grind

Grind

Cellular Manufacturing Layout

04/18/23 136SHARDA

What is Line Balancing?• Line Balancing is the process of assigning

tasks to workstations in such a way that the workstations have approximately equal time requirements.

OR

• Line Balancing is an analysis process that tries to equally divide the work to be done among workstations so that the number of worker or workstations requires on a production line is minimized

04/18/23 137SHARDA

Line Balancing Procedure1. Determine the tasks involved in completing 1 unit

2. Determine the order in which tasks must be done

3. Draw a precedence diagram

4. Estimate task times

5. Calculate the cycle time

6. Calculate the minimum number of workstations

7. Use a heuristic(intuitive) to assign tasks to workstations04/18/23 138SHARDA

Scheduling High-Volume- Low-Variety Operations• The mass consumption patterns of modern industrialized

nations depend on assembly line technology.• The classic example is Henry Ford’s auto chassis line.• Before the “moving assembly line” was introduced in 1913,

each chassis was assembled by one worker and required 12.5 hours.

• Once the new technology was installed, this time was reduced to 93 minutes.

• Favorable Conditions• Volume adequate for reasonable equipment utilization.

Reasonably stable product demand.Product standardizationPart interchange-ability.Continuous supply of materialNot all of the above must be met in every case

04/18/23 139SHARDA

Concepts (1/2)• Minimum rational work element• Smallest feasible division of work.• Flow time = time to complete all stations• Cycle time• Maximum time spent at any one workstation.

Largest workstation time.How often a product is completed.Inverse of the desired hourly output rate = the amount of

time available at each work station to complete all assigned work.

• 1 / 2 / 3 - 4 min / 5 min / 4 min• Flow time = 4 + 5 + 4 = 13 - • Cycle time = max (4, 5, 4) = 5

04/18/23 140SHARDA

Concepts (2/2)• Total work content: Sum of the task times for all the assembly tasks for the product.

• Precedence diagram: network showing order of tasks and restrictions on their performance

• Measure of efficiency Line Balancing Rules Line Balancing Heuristics

• Heuristic methods, based on simple rules, have been developed to provide good (not optimal) solutions to line balancing problems

• Heuristic methods include:

• Incremental utilization (IU) methodLongest-task-time (LTT) method … and many others

Incremental Utilization Method:-

• Add tasks to a workstation in order of task precedence one at a time until utilization is 100% or is observed to fall

• Then the above procedure is repeated at the next workstation for the remaining tasks

• Pro – Appropriate when one or more task times is equal to or greater than the cycle time

• Con – Might create the need for extra equipment

04/18/23 141SHARDA

Line Balancing Rules• Line Balancing Heuristics

• Heuristic methods, based on simple rules, have been developed to provide good (not optimal) solutions to line balancing problems

• Heuristic methods include:

• Incremental utilization (IU) methodLongest-task-time (LTT) method… and many others

04/18/23 142SHARDA

Incremental Utilization Method:-

• Add tasks to a workstation in order of task precedence one at a time until utilization is 100% or is observed to fall

• Then the above procedure is repeated at the next workstation for the remaining tasks

• Pro – Appropriate when one or more task times is equal to or greater than the cycle time

• Con – Might create the need for extra equipment

04/18/23 143SHARDA

Longest-Task-Time Method:-• Adds tasks to a workstation one at a time in

the order of task precedence.

• If two or more tasks tie for order of precedence, the one with the longest task time is added

• Conditions for its use:

• No task time can be greater than the cycle time

• There can be no duplicate workstations04/18/23 144SHARDA

The Problem• Assign tasks to work stations

observing balancing restrictions so as to minimize balance delay while keeping station work content for every station cycle time.

• Restrictions:• Technological: precedence

requirement.• Position restrictions04/18/23 145SHARDA

Finding a Solution• Heuristic procedures generally allow for a broader

problem definition, but do not guarantee optimal solution.

• Optimizing procedures generally have used more narrowly defined problems, but guarantee optimal solution.

• Examples of optimizing procedures• Dynamic programming

0-1 Integer programmingBranch and bound techniques.

• Trend in research has been toward optimizing procedures due to availability of large-scale computers.04/18/23 146SHARDA

A Simple Algorithm• Identify tasks whose predecessors have been assigned

to a workstation (available tasks).

• Determine from available tasks, those that fit, i.e., those whose tasks times time remaining to be filled at this work station.

• Choose a task that fits by some decision rule

• task with largest timetask with most successorstask with greatest sum of task times of it predecessors.

• Continue steps 1 to 3 until no task fits, then go on to next workstation.

• Continue steps 1 to 4 until all tasks are assigned.04/18/23 147SHARDA

Complications• Behavioral options

• Job enlargement and rotation.Wages related to task.Distribution of slack time.Inventory buffers.Involving work group in decisions.Arranging stations to facilitate interaction.Personnel selection.

• Time to move an item between stationsMachine-dominated work stations.Task times which exceed the cycle time.Stochastic task times.Mixed model assembly lines04/18/23 148SHARDA

Cybernetic control • Cybernetic or steering control is by far the most

common type of control system. • The key feature of cybernetic control is its

automatic operation. Consider the diagrammatic model of a cybernetic control system shown in figure 1. As Figure shows, a system is operating with inputs being subjected to a process that transforms them into outputs. It is this system that we wish to control. In order to do so, we must monitor the system output.

04/18/23 149SHARDA

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• A cybernetic control system that acts to reduce deviations from standard is called a negative feedback loop. If the system output moves away from the standard in one direction, the control mechanism acts to move it in the opposite direction. The speed or force with which the control operates is, in general, proportional to the size of the deviation from the standard.

04/18/23 151SHARDA

Types of cybernetic control systems

• Cybernetic controls come in three varieties, or orders, differing in the sophistication with which standards are set. Figure show a simple, first order control system, a goal seeking device. The standard is set and there is no provision made for altering it except by intervention from the outside. The common thermostat is a time-worn example of a first order controller. One sets the standard temperature and the heating and air-conditioning systems operate to maintain it.

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04/18/23 154SHARDA

Questions?Questions?

04/18/23 155SHARDA

STATISTICAL QUALITY CONTROL, QUALITY ASSURANCE,

Many organizations use statistical process control to bring the organization to Six Sigma levels of quality, in other words, so that the likelihood of an unexpected failure is confined to six standard deviations on the normal distribution. This probability is less than four one-millionths. Items controlled often include clerical tasks such as order-entry as well as conventional manufacturing tasks.04/18/23 156SHARDA

STATISTICAL QUALITY CONTROL, QUALITY ASSURANCE,

Traditional statistical process controls in manufacturing operations usually proceed by randomly sampling and testing a fraction of the output. Variances in critical tolerances are continuously tracked and where necessary corrected before bad parts are produced.

04/18/23 157SHARDA

Product Design and its Characteristics;

• The different issues in a phase of a product life cycle:

• Development Phase • Production Phase • Utilization Phase

• Disposal Phase • Each phase is explained with two categories of

tangible products in order to show differences in prioritizing design issues in certain product life cycle phases:

• Consumer durables

• Capital goods 04/18/23 158SHARDA


Development phase • Design rules

– Basic Rules of Embodiment Design: Clarity, Simplicity, Safety

• Organizational Process – Design for Short Time to market

• System Design, Testing & Validation – Design for reliability , Synonyms: Reliability Engineering – Design For Test – Design for safety, Synonyms: Safety engineering – Design for quality, Synonyms: Quality engineering – Design Against Corrosion Damage – Design for Minimum Risk

04/18/23 159SHARDA


Production / operations phase • Design Rules: Target costing, Value engineering • Design to standards: Interchangeable parts, , , • Design Guidelines • Design for assembly • Design for manufacturability • Design for logistics, Design for postponement • Specific situations

04/18/23 160SHARDA

Product Design and its Characteristics; Design rules

• Design to standards serves in production operations, or respectively supply chain operations. Except for "luxury goods" or "luxury brands", most goods - even upper-class goods - are reliant on, if these are mass produced (Note: The same is valid for the functional production strategy "Mass customization").

04/18/23 161SHARDA

Product Design and its Characteristics; Design rules

Through Engineering design physical interfaces between

• a) parts or components or assemblies of the product and

• b) the manufacturing equipment as well as the logistical material flow systems can be changed, and thus cost reducing effects in operating the latter may be achieved.

04/18/23 162SHARDA

Product Design and its Characteristics; Design guidelines

• Design for manufacturability ensures the fabrication of single parts or components that are based on an in mechanical engineering terms. It must be noted that every production technology has its own specific design guideline that needs to be consulted depending on the situation.

04/18/23 163SHARDA


• Design for assembly addresses the combination of single parts or components to subassemblies, assemblies, modules, systems, etc., that are based on a in mechanical engineering terms. An important issue is how the embodied interfaces within a product are designed (mechanical engineering, electrical engineering).

04/18/23 164SHARDA


• Design for logistics covers issues along supply chain partners (i.e. legally independent firms) but is by its means closely related to the Design for assembly guidelines. In academic research, Design for logistics is tangent to the Strategic alliances, SCM, and the Engg. part of New product development.

04/18/23 165SHARDA

Total quality management

• Deep analysis of QA practices and premises used about them is the most necessary inspection control of all in cases, where, despite statistical quality control techniques or quality improvements implemented, sales decrease.

• The major problem which leads to a decrease in sales was that the specifications did not include the most important factor, “What the specifications have to state in order to satisfy the customer requirements?”.

04/18/23 166SHARDA

Total quality management

• The major characteristics, ignored during the search to improve manufacture and overall business performance were:

• Reliability

• Maintainability

• Safety

• Strength

04/18/23 167SHARDA

Total Quality Management• As the most important factor had been ignored, a

few refinements had to be introduced:• Marketing had to carry out their work properly and

define the customer’s specifications. • Specifications had to be defined to conform to

these requirements. • Conformance to specifications i.e. drawings,

standards and other relevant documents, were introduced during manufacturing, planning and control.

• Management had to confirm all operators are equal to the work imposed on them and holidays, celebrations and disputes did not affect any of the quality levels.

04/18/23 168SHARDA

Total Quality Management• Inspections and were carried out, and all

components and materials, bought in or otherwise, conformed to the specifications, and the was accurate, this is the responsibility of the QA/QC department.

• Any complaints received from the customers were satisfactorily dealt with in a timely manner.

• Feedback from the user/customer is used to review designs.

• Consistent data recording and assessment and documentation integrity.

• Product and/or process change management and notification. 04/18/23 169SHARDA

Procurement Quality Management

• Executive authorities are responsible for the technical integrity of land materiel they procure, manage or maintain. Effective procurement quality management assists in achieving technical integrity by establishing confidence that procured goods and services conform to quality requirements. Quality management is dependent upon an effective quality management system and comprises:

04/18/23 170SHARDA

Procurement Quality Management

• Quality planning – the part of quality management focused on setting quality objectives and specifying necessary operational processes and related resources to fulfil the quality objectives.

• Quality assurance – the part of quality management focused on providing confidence that quality requirements will be fulfilled.

• Quality control – the part of quality management focused on fulfilling quality requirements.

• Quality improvement – the part of quality management focused on increasing the ability to fulfil quality requirements.

04/18/23 171SHARDA

Measuring Procurement Quality

• Baseline measures• Timeliness: Percent of Procurement systems

reports received on time (when promised / scheduled), from total number of reports produced.

• Accuracy: Percent of procurement system reports received without any observed errors (data entry or calculation errors), from total number of reports produced.

• Flexibility: Ordinal measure ("Low to high") of the level of effort required to reconfigure information displayed in procurement system reports.

04/18/23 172SHARDA

Measuring Procurement Quality• Baseline measures

• Routine-sation: Percent of procurement systems reports generated to handle "exceptional conditions" from total number of reports produced.

• Routine workflows: A map showing the flow of procurement systems reports under (a) routine conditions, (b) "low frequency" exceptional conditions, and (c) during critical or problematic situations.

04/18/23 173SHARDA


• Baseline measures• Interactive report generation: Percent of

procurement system reports generated by procurement system users

• (a) from total number of reports produced, (b) from each procurement system module, (c) across which users.

• Recurring cycle times: Ratio of forecast versus actual time spent performing recurring procurement processes, such as "procurement closings."

04/18/23 174SHARDA


• Baseline measures

• System utilization: Percent of user time spent

• (a) preparing procurement system inputs, and

• (b) handling procurement system outputs, from total hours at work (e.g., per week)

04/18/23 175SHARDA

Measuring procurement quality• Baseline measures• Open staff diaries: Each user of the procurement

system or its outputs should be asked to keep a diary regarding their experiences with and impressions of the efficiency and effectiveness of the new financial system. they should be asked to daily record

• (a) what worked best today, and • (b) what was biggest problem of the day. Then, on

a weekly basis, record • (c) what changes should be made to make their

work situation more efficient and more effective, and

• (d) how has the work situation changed from some time ago. 04/18/23 176SHARDA

Quality standards

• ISO 10012 • AS9003 • SAE AS9100 • AS / NZS ISO 9001:2000 – Quality Management

Systems - Requirements • Nadcap • – Guidelines for Auditing Quality Systems • AS/NZS 4360:1999 – Risk Management • DI(G) LOG 02-1 – Quality Assurance of Procured Goods

and Services • DI(G)LOG 02-3 – Quality Assurance Arrangements with

Foreign Governments • IPC/EIA J-STD-xxx • IPC-9191

04/18/23 177SHARDA


04/18/23 178SHARDA

• 6. Project Management

• CPM, PERT forward pass and backward pass computations, resource leveling, resource allocation, and crashing of the project.

04/18/23 179SHARDA

• Definition of Project Management

• Work Breakdown Structure

• Project Control Charts

• Structuring Projects

• Critical Path Scheduling

OBJECTIVES

04/18/23 180SHARDA

• Project is a series of related jobs usually directed toward some major output and requiring a significant period of time to perform

• Project Management are the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project

Project Management Defined

04/18/23 181SHARDA

Preparation of Gantt Chart.

04/18/23 182SHARDA


04/18/23 183SHARDA

Here is a general approach for developing a Gantt chart

List the project phases. • In each project phase, list the tasks in their

chronological order, taking into account which tasks cannot be started until a preceding task (or tasks) is completed. In doing this, also take into account the resources required and how they will be used by each task. Do not attach start or end dates to the tasks at this point.

• Along side of each task, identify its product or deliverable.

• Enter the estimated calendar time required to complete each task and the resources required to do the work in that amount of calendar time. 04/18/23 184SHARDA


List the project phases. • Now note the date when the project must be

finished and enter it as the end date for the last task and the phase it is in.

• Work backward from the project end date to schedule the tasks. Take into account tasks dependencies. Also, consider whether certain tasks can be performed in parallel. Adjust calendar lengths of tasks and resources as needed to fit within the project time frame. This can require many tradeoffs to arrive at the best schedule within the time and resources constraints.

• Identify all of the milestones, such as the end of a phase or the completion and expected acceptance of a key deliverable.04/18/23 185SHARDA


List the project phases. • Now note the date when the project must be

finished and enter it as the end date for the last task and the phase it is in.

• Work backward from the project end date to schedule the tasks. Take into account tasks dependencies. Also, consider whether certain tasks can be performed in parallel. Adjust calendar lengths of tasks and resources as needed to fit within the project time frame. This can require many tradeoffs to arrive at the best schedule within the time and resources constraints.

• Identify all of the milestones, such as the end of a phase or the completion and expected acceptance of a key deliverable.04/18/23 186SHARDA


Keep in mind that the Gantt chart is a tool for planning and managing the project. It focuses on the phases and tasks of the project and not on pre-project planning

activities .

04/18/23 187SHARDA

Activity 1Activity 2Activity 3Activity 4Activity 5Activity 6

Time

Vertical Axis: Always Activities or Jobs

Vertical Axis: Always Activities or Jobs

Horizontal Axis: Always TimeHorizontal Axis: Always Time

Horizontal bars used to denote length of time for each activity or job.

Horizontal bars used to denote length of time for each activity or job.

04/18/23 188SHARDA

• The project manager has full authority over the project

• Team members report to one boss• Shortened communication lines• Team pride, motivation, and commitment

are high

Pure ProjectA pure project is where a self-contained team works full-time on the project

04/18/23 189SHARDA

• Duplication of resources• Organizational goals and policies are

ignored• Lack of technology transfer• Team members have no functional

area "home"

04/18/23 190SHARDA

President

Research andDevelopment

Engineering Manufacturing

ProjectA

ProjectB

ProjectC

ProjectD

ProjectE

ProjectF

ProjectG

ProjectH

ProjectI

A functional project is housed within a functional division

Example, Project “B” is in the functional area of Research and Development.

Example, Project “B” is in the functional area of Research and Development.

04/18/23 191SHARDA

• A team member can work on several projects

• Technical expertise is maintained within the functional area

• The functional area is a “home” after the project is completed

• Critical mass of specialized knowledge

04/18/23 192SHARDA

• Aspects of the project that are not directly related to the functional area get short-changed

• Motivation of team members is often weak

• Needs of the client are secondary and are responded to slowly

04/18/23 193SHARDA

President

Research andDevelopment

Engineering Manufacturing Marketing

ManagerProject A

ManagerProject B

ManagerProject C

04/18/23 194SHARDA

• Enhanced communications between functional areas

• Pinpointed responsibility

• Duplication of resources is minimized

• Functional “home” for team members

• Policies of the parent organization are followed

04/18/23 195SHARDA

• Too many bosses

• Depends on project manager’s negotiating skills

• Potential for sub-optimization

04/18/23 196SHARDA

Program

Project 1 Project 2

Task 1.1

Subtask 1.1.1

Work Package 1.1.1.1

Level

1

2

3

4

Task 1.2

Subtask 1.1.2

Work Package 1.1.1.2

A work breakdown structure defines the hierarchy of project tasks, subtasks, and work packages

04/18/23 197SHARDA

• A project is made up of a sequence of activities that form a network representing a project

• The path taking longest time through this network of activities is called the “critical path”

• The critical path provides a wide range of scheduling information useful in managing a project

• Critical Path Method (CPM) helps to identify the critical path(s) in the project networks

04/18/23 198SHARDA

A project must have:

well-defined jobs or tasks whose completion marks the end of the project;

independent jobs or tasks;

and tasks that follow a given sequence.

04/18/23 199SHARDA

• CPM with a Single Time Estimate– Used when activity times are known with certainty– Used to determine timing estimates for the project,

each activity in the project, and slack time for activities

• CPM with Three Activity Time Estimates– Used when activity times are uncertain – Used to obtain the same information as the Single Time

Estimate model and probability information

• Time-Cost Models– Used when cost trade-off information is a major

consideration in planning– Used to determine the least cost in reducing total

project time 04/18/23 200SHARDA

• 1. Activity Identification

• 2. Activity Sequencing and Network Construction

• 3. Determine the critical path–From the critical path all of the project and

activity timing information can be obtained

04/18/23 201SHARDA

Consider the following consulting project:Activity DesignationImmed. Pred.Time (Weeks)

Assess customer's needs A None 2Write and submit proposal B A 1Obtain approval C B 1

Develop service vision and goals D C 2Train employees E C 5

Quality improvement pilot groups F D, E 5Write assessment report G F 1

Develop a critical path diagram and determine the duration of the critical path and slack times for all activities. 04/18/23 202SHARDA

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

A None 2

B A 1

C B 1

D C 2

E C 5

F D,E 5

G F 1

Act. Imed. Pred. Time

04/18/23 203SHARDA

ES=9EF=14

ES=14EF=15

ES=0EF=2

ES=2EF=3

ES=3EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

Hint: Start with ES=0 and go forward in the network from A to G.

Hint: Start with ES=0 and go forward in the network from A to G.

04/18/23 204SHARDA

ES=9EF=14

ES=14EF=15

ES=0EF=2

ES=2EF=3

ES=3EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

LS=14LF=15

LS=9LF=14

LS=4LF=9

LS=7LF=9

LS=3LF=4

LS=2LF=3

LS=0LF=2

Hint: Start with LF=15 or the total time of the project and go backward in the network from G to A.

Hint: Start with LF=15 or the total time of the project and go backward in the network from G to A.

04/18/23 205SHARDA

ES=9EF=14

ES=14EF=15

ES=0EF=2

ES=2EF=3

ES=3EF=4

ES=4EF=9

ES=4EF=6

A(2) B(1) C(1)

D(2)

E(5)

F(5) G(1)

LS=14LF=15

LS=9LF=14

LS=4LF=9

LS=7LF=9

LS=3LF=4

LS=2LF=3

LS=0LF=2

Duration=15 weeks

Slack=(7-4)=(9-6)= 3 Wks

04/18/23 206SHARDA

TaskImmediate

Predecesors Optimistic Most Likely PessimisticA None 3 6 15B None 2 4 14C A 6 12 30D A 2 5 8E C 5 11 17F D 3 6 15G B 3 9 27H E,F 1 4 7I G,H 4 19 28

04/18/23 207SHARDA

ET(A)= 3+4(6)+15

6

ET(A)= 3+4(6)+15

6

ET(A)=42/6=7ET(A)=42/6=7Task

Immediate Predecesors

Expected Time

A None 7B None 5.333C A 14D A 5E C 11F D 7G B 11H E,F 4I G,H 18

TaskImmediate


Expected Time = Opt. Time + 4(Most Likely Time) + Pess. Time

6Expected Time =

Opt. Time + 4(Most Likely Time) + Pess. Time

604/18/23 208SHARDA

TaskImmediate

PredecesorsExpected

TimeA None 7B None 5.333C A 14D A 5E C 11F D 7G B 11H E,F 4I G,H 18

ET(B)=32/6=5.333ET(B)=32/6=5.333

ET(B)= 2+4(4)+14

6

ET(B)= 2+4(4)+14

6

TaskImmediate



6Expected Time =


604/18/23 209SHARDA

TaskImmediate

PredecesorsExpected

TimeA None 7B None 5.333C A 14D A 5E C 11F D 7G B 11H E,F 4I G,H 18

ET(C)= 6+4(12)+30

6

ET(C)= 6+4(12)+30

6

ET(C)=84/6=14ET(C)=84/6=14

TaskImmediate



6Expected Time =


604/18/23 210SHARDA

Example 2. Network

A(7)

B(5.333)

C(14)

D(5)

E(11)

F(7)

H(4)

G(11)

I(18)

Duration = 54 Days

04/18/23 211SHARDA

Example 2. Probability Exercise

What is the probability of finishing this project in less than 53 days?What is the probability of finishing this project in less than 53 days?

p(t < D)

TE = 54

Z = D - TE

cp2

Z = D - TE

cp2

tD=53

04/18/23 212SHARDA

Activity variance, = (Pessim. - Optim.

6)2 2Activity variance, = (

Pessim. - Optim.

6)2 2

Task Optimistic Most Likely Pessimistic VarianceA 3 6 15 4B 2 4 14C 6 12 30 16D 2 5 8E 5 11 17 4F 3 6 15G 3 9 27H 1 4 7 1I 4 19 28 16

(Sum the variance along the critical path.)

2 = 41 2 = 4104/18/23 213SHARDA

There is a 43.8% probability that this project will be completed in less than 53 weeks.

There is a 43.8% probability that this project will be completed in less than 53 weeks.

p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)

Z = D - T

=53- 54

41= -.156E

cp2

Z = D - T

=53- 54

41= -.156E

cp2

TE = 54

p(t < D)

tD=53

04/18/23 214SHARDA

• What is the probability that the project duration will exceed 56 weeks?

• What is the probability that the project duration will exceed 56 weeks?

04/18/23 215SHARDA

tTE = 54

p(t < D)

D=56

Z = D - T

=56 - 54

41= .312E

cp2

Z = D - T

=56 - 54

41= .312E

cp2

p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312)) p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312)) 04/18/23 216SHARDA

• Basic Assumption: Relationship between activity completion time and project cost

• Time Cost Models: Determine the optimum point in time-cost tradeoffs– Activity direct costs– Project indirect costs– Activity completion times

04/18/23 217SHARDA

• Project activities can be identified as entities (There is a clear beginning and ending point for each activity.)

• Project activity sequence relationships can be specified and networked

• Project control should focus on the critical path• The activity times follow the beta distribution, with

the variance of the project assumed to equal the sum of the variances along the critical path

• Project control should focus on the critical path

04/18/23 218SHARDA

Questions?

04/18/23 219SHARDA

• resource leveling, resource allocation, and crashing of the project

04/18/23 220SHARDA

Introduction

• This chapter addresses:– Trade-offs involved to crash cost– Relationship between resource loading and

leveling– Some approaches used to solve allocation

problem

04/18/23 221SHARDA

Critical Path Method – Crashing a Project

• One important difference between CPM & PERT:– CPM included a way of relating the project

schedule to the level of physical resources • trade time for cost, or vice versa• Can specify 2 activity times and 2 costs• 1st time / cost combination- called normal• 2nd combination called crash• Normal – usual ‘average’ time, resources• Crash – expedite by applying additional

resources04/18/23 222SHARDA

• Allocation problem requires more careful consideration-additional resources?

• Many things make crashing a way of life on some projects (i.e last minutes changes in client specification, without permission to extend the project deadline by an appropriate increment)

• Careful planning is critical when crashing project – need to consider feasibility of expediting work (e.g equipment availability)


04/18/23 223SHARDA

Slope = crash cost – normal cost crash time – normal time


Where: slope = cost per day of crashing a project When slope is negative : indicate the time

required for a project is decreased, the cost is increased

04/18/23 224SHARDA


• The Rupees per day slope of activities is relevant only if the whole crash increment is useful

• Crashing may involve a relatively simple decision to increase groups of resources

• If do changes in technology tend to produce discontinuities in outcomes and also in cost.

04/18/23 225SHARDA

Principles to crash a project

1. Focus on the critical path when trying to shorten the duration [resource ready]

1. Select the least expensive way to do it

04/18/23 226SHARDA

Crashing a Project (E.g Two-Time CPM)

Activity Precedence Duration, Days (normal,crash)

Cost, Rs. (normal,crash)

Slope (Rs/day)

a - 3,2 40, 80 40/-1 = -40

b a 2,1 20, 80 60/-1 = -60

c a 2,2 20, 20 Cannot be expedited

d* a 4,1 30, 120 90/-3 = -30

e** b 3,1 10, 80 -70 (2 days)

*Partial crashing allowed **Partial crashing not allowed04/18/23 227SHARDA

A CPM Example

1 2 3 4 5 6 7 8

a c

b

d

e

Normal Schedule, 8 days, Rs12004/18/23 228SHARDA

A CPM Example

1 2 3 4 5 6 7 8

ac

b

d

e

1 2 3 4 5 6 7 8

a c

b

d

e

1 2 3 4 5 6 7 8

a cb

d

e

7-day schedule, Rs160 6-day schedule. Rs220

5-day schedule, Rs2601 2 3 4 5 6 7 8

a cb

d

e

4-day schedule, Rs35004/18/23 229SHARDA

• Network critical path is a-b-e, project duration is 8 days, normal total cost is Rs.120

• The decision about which activities to crash depends on how much to reduce the duration

• On the benefit side, some projects have penalty clauses that make the parent organization liable for late delivery- sometimes bonuses for early delivery

04/18/23 230SHARDA

• On the cost side, figure below shows the time/cost relationship of crashing the project

0

50

100

150

200

250

300

350

400

0 1 2 3 4 5 6 7 8 9

Total duration (days)

Co

st (

$)

All crasha + b + 2d + 2e

a + d + 2e - ba + b

a

All normal

04/18/23 231SHARDA

Fast Tracking

• Another way to expedite a project• Term used for construction projects• Refers to overlapping design and build phases• Design completed before construction starts,so

overlapping will result shortening the project duration

• Build before design completed-more design changes

• Loss productivity, increased cost, loss time

04/18/23 232SHARDA

• Studies revealed that:– more design changes in fast tracking – the number of

project change orders not significantly different than not fast-tracked project

• Dependent on effective feed-back and feed-forward communication

Fast Tracking (cont.)

04/18/23 233SHARDA

SOLVED PROBLEM

Activity Crash Time,

Cost

Normal Time,

Cost

Partial crashing

a 3,Rs.60

3,Rs.60

No

b 6,80 7,30 Yes

c 2,90 5,50 No

d 5,50 6,30 No

e 2,100 4,40 Yes

1

2

3

4

a

be

c

d

Find the lowest cost to complete the project in 10 days04/18/23 234SHARDA

Answer

Current time and cost: 12 days and Rs.210

3

1

2

3

4

a

be

cd0

3

74

5

6

8

12

Since the critical path is a-c-e, we only initially need consider these 3 activities:

a: cannot be crashed

c: can cut 3 days at an extra cost of Rs.40 but only results in project completion by day 11, due to b. To reach 10 days, cut b by 1 day, total extra cost Rs.90

e: can cut e by 2 days for an extra cost of Rs.60 and results in project completion by day 10.

Thus, cut e 2 days at a cost of Rs.60.

04/18/23 235SHARDA

RESOURCE ALLOCATION PROBLEM

• A fundamental measure of the PM’s success in project mgmt is the skill with which the trade-offs among performance, time and cost are managed

• The extreme points of the relationship between time use and resource are:– Time limited– Resource limited

04/18/23 236SHARDA

RESOURCE LOADING

• The amount of individuals resources an existing schedule requires during specific time periods

• Resource loading can be illustrated by:– Resource usage calendar– Modified PERT/CPM AOA diagram (similar with

Gantt Chart)• PM responsibility:

– Demand for resources does not exceed resource capacities

– Ensure that the required resources, in the required amounts

04/18/23 237SHARDA

Resource Usage Calendar

04/18/23 238SHARDA

Modified PERT/CPM AOA Diagram(Refer Ch 08 Slide ? )

0 5 10 15 20 25 30 35 40 45

4

1

1 2

3

3

3

5

6 7

1 4

a

(4,0)

b

(2,1)c

(3,1)

dummy

h

(0,2)

d

(0,2)

j

(0,6)

e

(2,1)f

(1,1)

i

(6,3)

g

(1,0)

04/18/23 239SHARDA

RESOURCE LEVELING

• Aims to minimize the period-by-period variations in resource loading by shifting tasks within their slack allowances

• Purpose to create a smoother distribution of resource usage

• Advantages;– Much less hands on management – Be able to use ‘just in time’ inventory policy with right

quantity delivered• If the resource being leveled is people, it improves morale

and results in fewer problems in the personnel and payroll offices

04/18/23 240SHARDA

E.g: Network

1

2

3

4

a, 2[2]

c, 5

[4]b, 3

[2]

The activity time is shown above the arc, and resource usage (one resource, workers) is in brackets below the arc.

04/18/23 241SHARDA

Before Resource Leveling

1 2 3 4 5

10

8

6

4

2

b b

c c

a

c

Days1 2 3 4 5

c

b

a

Days

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After Resource Leveling

1 2 3 4 5

10

8

6

4

2

a

c

b

Days1 2 3 4 5

c

b

a

Days

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• How to Use the Tool:• As with Gantt Charts, the essential concept behind

Critical Path Analysis is that you cannot start some activities until others are finished. These activities need to be completed in a sequence, with each stage being more-or-less completed before the next stage can begin. These are 'sequential' activities.

• Other activities are not dependent on completion of any other tasks. You can do these at any time before or after a particular stage is reached. These are non-dependent or 'parallel' tasks.

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'Crash Action'You may find that you need to complete a project earlier than your Critical Path Analysis says is possible. In this case you need to re-plan your project.You have a number of options and would need to assess the impact of each on the project’s cost, quality and time required to complete it. For example, you could increase resource available for each project activity to bring down time spent on each but the impact of some of this would be insignificant and a more efficient way of doing this would be to look only at activities on the critical path.As an example, it may be necessary to complete the computer project in Figure 5 in 8 weeks rather than 10 weeks. In this case you could look at using two analysts in activities 2 to 3 and 3 to 4. This would shorten the project by two weeks, but may raise the project cost – doubling resources at any stage may only improve productivity by, say, 50% as additional time may need to be spent getting the team members up to speed on what is required, coordinating tasks split between them, integrating their contributions etc. In some situations, shortening the original critical path of a project can lead to a different series of activities becoming the critical path. For example, if activity 4 to 5 were reduced to 1 week, activities 4 to 8 and 8 to 6 would come onto the critical path.

'Crash Action'You may find that you need to complete a project earlier than your Critical Path Analysis says is possible. In this case you need to re-plan your project.You have a number of options and would need to assess the impact of each on the project’s cost, quality and time required to complete it. For example, you could increase resource available for each project activity to bring down time spent on each but the impact of some of this would be insignificant and a more efficient way of doing this would be to look only at activities on the critical path.As an example, it may be necessary to complete the computer project in Figure 5 in 8 weeks rather than 10 weeks. In this case you could look at using two analysts in activities 2 to 3 and 3 to 4. This would shorten the project by two weeks, but may raise the project cost – doubling resources at any stage may only improve productivity by, say, 50% as additional time may need to be spent getting the team members up to speed on what is required, coordinating tasks split between them, integrating their contributions etc. In some situations, shortening the original critical path of a project can lead to a different series of activities becoming the critical path. For example, if activity 4 to 5 were reduced to 1 week, activities 4 to 8 and 8 to 6 would come onto the critical path.

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• Critical Path Analysis and PERT are powerful tools that help you to schedule and manage complex projects. They were developed in the 1950s to control large defense projects, and have been used routinely since then.

• As with Gantt Charts, Critical Path Analysis (CPA) or the Critical Path Method (CPM) helps you to plan all tasks that must be completed as part of a project. They act as the basis both for preparation of a schedule, and of resource planning. During management of a project, they allow you to monitor achievement of project goals. They help you to see where remedial action needs to be taken to get a project back on course.

• Within a project it is likely that you will display your final project plan as a Gantt Chart (using Microsoft Project or other software for projects of medium complexity or an excel spreadsheet for projects of low complexity).The benefit of using CPA within the planning process is to help you develop and test your plan to ensure that it is robust. Critical Path Analysis formally identifies tasks which must be completed on time for the whole project to be completed on time. It also identifies which tasks can be delayed if resource needs to be reallocated to catch up on missed or overrunning tasks. The disadvantage of CPA, if you use it as the technique by which your project plans are communicated and managed against, is that the relation of tasks to time is not as immediately obvious as with Gantt Charts. This can make them more difficult to understand.

• A further benefit of Critical Path Analysis is that it helps you to identify the minimum length of time needed to complete a project. Where you need to run an accelerated project, it helps you to identify which project steps you should accelerate to complete the project within the available time.

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PERT (Program Evaluation and Review Technique)PERT is a variation on Critical Path Analysis that takes a slightly more skeptical view of time estimates made for each project stage. To use it, estimate the shortest possible time each activity will take, the most likely length of time, and the longest time that might be taken if the activity takes longer than expected.Use the formula below to calculate the time to use for each project stage:

shortest time + 4 x likely time + longest time-----------------------------------------------------------

6This helps to bias time estimates away from the unrealistically short time-scales normally assumed.

PERT (Program Evaluation and Review Technique)PERT is a variation on Critical Path Analysis that takes a slightly more skeptical view of time estimates made for each project stage. To use it, estimate the shortest possible time each activity will take, the most likely length of time, and the longest time that might be taken if the activity takes longer than expected.Use the formula below to calculate the time to use for each project stage:

shortest time + 4 x likely time + longest time-----------------------------------------------------------

6This helps to bias time estimates away from the unrealistically short time-scales normally assumed.

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Key Points:Critical Path Analysis is an effective and powerful method of assessing:•What tasks must be carried out. •Where parallel activity can be performed. •The shortest time in which you can complete a project. •Resources needed to execute a project. •The sequence of activities, scheduling and timings involved. •Task priorities. •The most efficient way of shortening time on urgent projects. An effective Critical Path Analysis can make the difference between success and failure on complex projects. It can be very useful for assessing the importance of problems faced during the implementation of the plan.PERT is a variant of Critical Path Analysis that takes a more skeptical view of the time needed to complete each project stage.

Key Points:Critical Path Analysis is an effective and powerful method of assessing:•What tasks must be carried out. •Where parallel activity can be performed. •The shortest time in which you can complete a project. •Resources needed to execute a project. •The sequence of activities, scheduling and timings involved. •Task priorities. •The most efficient way of shortening time on urgent projects. An effective Critical Path Analysis can make the difference between success and failure on complex projects. It can be very useful for assessing the importance of problems faced during the implementation of the plan.PERT is a variant of Critical Path Analysis that takes a more skeptical view of the time needed to complete each project stage.

RESOURCE LOADING/LEVELING AND UNCERTAINTY

• If happens excess capacity,the alternative that we can consider: – Try to level the demand, moving some of it forward and some backward– Try to alter the supply of working hours-trade off time between periods of over capacity and

periods of under capacity– Might expend additional resources-contract worker for overload period, subcontract the

workload

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Assignment -3• Q1. Attempt any THREE questions out of the following

I. What are the principles of Forecasting?

II. What are the objectives of inventory management?

III. What is meant by materials budget?

IV. What are the various types of stores?

• Q2. Write short notes on any four of the following

I. Economic Order Quantity

II. Material Requirement Planning

III. Safety and security of stores

IV. Explain the various forecasting techniques

V. Explain the P and Q system of inventory replenishment

VI. Explain the steps involved in supplier self certification.

VII.Explain the FIFO and LIFO system of stores valuation.

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Assignment -4• PERT / CPM

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Documents

PRODUCTION AND OPERATIONS MANAGEMENT SHARDA UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH [email protected] 4/18/20151SHARDA