UNIT-IIIUNIT-III

Operations Operations ManagementManagement

Plant LocationPlant LocationPlant location is a strategic decision. Several Plant location is a strategic decision. Several

factors influence this decisionfactors influence this decisionFactors affecting Plant Location: Factors affecting Plant Location: • Nearness to marketNearness to market

• Nearness to supply of raw materialNearness to supply of raw material

• Availability of LabourAvailability of Labour

• Transport and communication facilitiesTransport and communication facilities

• Availability of power and fuelAvailability of power and fuel

• Climatic conditionsClimatic conditions

• Availability of waterAvailability of water

• Ancillary industriesAncillary industries

• Financial and other aidsFinancial and other aids

Plant LayoutPlant Layout

A technique of locating machines, processes A technique of locating machines, processes and plant services within the factory in and plant services within the factory in order to secure the greatest possible with order to secure the greatest possible with economic utilization of resourceseconomic utilization of resources

Types of Plant layout:Types of Plant layout:

1.1.Product or line layoutProduct or line layout

2.2.Process or functional layoutProcess or functional layout

3.3.Project or fixed position layoutProject or fixed position layout

Product layout:-Product layout:-

• This layout is followed by only by This layout is followed by only by such industries where the product such industries where the product decisions are finalized and may not decisions are finalized and may not change at least in the near future. It change at least in the near future. It is because a change in the product is because a change in the product will call for a change in the plant will call for a change in the plant layout.layout.

Advantages:-Advantages:-

• Faster and cheaper production.Faster and cheaper production.

• Lower cost of material handling.Lower cost of material handling.

• Effective utilization of floor space.Effective utilization of floor space.

• Easy monitoring.Easy monitoring.

• Team work benefits.Team work benefits.

Disadvantages:-Disadvantages:-

• Threat of duplication.Threat of duplication.

• Huge capital outlay.Huge capital outlay.

• Little flexibility.Little flexibility.

• Discontinuity in production likely.Discontinuity in production likely.

• Monitoring each worker made Monitoring each worker made difficult.difficult.

Process or functional Process or functional layout:-layout:-

• The equipment is arranged as per The equipment is arranged as per the nature or types of the given set the nature or types of the given set of products operations major it is of products operations major it is called process layout.called process layout.

Advantages:-Advantages:-

• Optimum utilization of resources.Optimum utilization of resources.

• Flexibility.Flexibility.

• Continuity.Continuity.

• Interesting to workers.Interesting to workers.

• Monitoring.Monitoring.

Disadvantages:-Disadvantages:-

• Higher material handling costs.Higher material handling costs.

• Larger production cycle.Larger production cycle.

• Monitoring may be complex.Monitoring may be complex.

• Higher inspection costs.Higher inspection costs.

• Higher wage bill.Higher wage bill.

Fixed layout:-Fixed layout:-

• The manufacturing facilities are fixed The manufacturing facilities are fixed in their position. They cannot be in their position. They cannot be shifted from one place to another shifted from one place to another place. This type of layout is used in place. This type of layout is used in case of large projects.case of large projects.

Advantages:-Advantages:-

• Does not involve large investments.Does not involve large investments.

• High degree of flexibility.High degree of flexibility.

• Job enlargement.Job enlargement.

DisadvantagesDisadvantages:-:-

• Material handling costs will be very Material handling costs will be very high.high.

• Resources may be under utilized.Resources may be under utilized.

Factors influencing plant Factors influencing plant layoutlayout• Management policyManagement policy

• Manufacturing ProcessManufacturing Process

• Nature of productNature of product

• Type of equipmentType of equipment

• Types of buildingsTypes of buildings

• Availability of total floor areaAvailability of total floor area

• Arrangement of materials handling Arrangement of materials handling equipmentequipment

• Service facilitiesService facilities

• Possibility of future expansionPossibility of future expansion

Principles of plant layoutPrinciples of plant layout

• Principle of integrationPrinciple of integration

• Principle of minimum movementPrinciple of minimum movement

• Principle of smooth and continue flowPrinciple of smooth and continue flow

• Principle of cubic spacePrinciple of cubic space

• Principle of satisfaction of safetyPrinciple of satisfaction of safety

• Principle of flexibilityPrinciple of flexibility

Advantages of good layoutAdvantages of good layout

• Economies in handling.Economies in handling.• Effective use of available area.Effective use of available area.• Minimizes production delays.Minimizes production delays.• Improves quality control.Improves quality control.• Avoids bottlenecks.Avoids bottlenecks.• Controls production in a better way.Controls production in a better way.• Better supervision.Better supervision.• Improved utilization of labourImproved utilization of labour• Improves employee morale.Improves employee morale.• Avoids unnecessary and costly changes.Avoids unnecessary and costly changes.

Production and ProductivityProduction and Productivity

Production is an act of transformation Production is an act of transformation

i.e inputs are processed and i.e inputs are processed and transformed into some output.transformed into some output.

Productivity is defined as the rate at Productivity is defined as the rate at which the goods and services are which the goods and services are producedproduced

Productivity = Productivity = OutputOutput

Input Input

Methods of production:-Methods of production:-

Methods of production:-2 typesMethods of production:-2 types

1.1. Intermittent or interrupted Intermittent or interrupted productionproduction

2.2. Continuous productionContinuous production

Intermittent or interrupted Intermittent or interrupted production:-production:-

• The goods are manufactured The goods are manufactured specially to fulfill the order made by specially to fulfill the order made by the customers rather than for stock.the customers rather than for stock.

• This is of two typesThis is of two types

1.1. Job production Job production

2.2. Batch productionBatch production

Job production:-Job production:-

• This is the production of single complete This is the production of single complete unit by one operator or group of operators.unit by one operator or group of operators.

Ex:-Construction of a bridge, construction of Ex:-Construction of a bridge, construction of dam, ship building etcdam, ship building etc

• In this process goods are produced to In this process goods are produced to definite customers orders.definite customers orders.

• Each production is a class by itself and Each production is a class by itself and requires a distinct and separate job for requires a distinct and separate job for production purposes.production purposes.

Characteristics of job Characteristics of job production:-production:-

• Whole project is taken as a single operation Whole project is taken as a single operation

• Work is to be completed on each product Work is to be completed on each product before processing the next itembefore processing the next item

• Skilled labor are requiredSkilled labor are required

• High capital investment is requiredHigh capital investment is required

• Control of operations is simpleControl of operations is simple

• Cost of production per unit is high.Cost of production per unit is high.

• Sometimes special machinery & special Sometimes special machinery & special training is required.training is required.

Job Production - AdvantagesJob Production - Advantages

11. It is the only method, which can . It is the only method, which can meet the individual requirement.meet the individual requirement.

2. There is no managerial problem, 2. There is no managerial problem, because of very less number of because of very less number of workers, and small size of concern.workers, and small size of concern.

3. Such type of production requires 3. Such type of production requires less money and is easy to start.less money and is easy to start.

Job Production – Job Production – DisadvantagesDisadvantages1.There is no scope for continuous 1.There is no scope for continuous

production and demandproduction and demand

2. As the purchase of raw materials is 2. As the purchase of raw materials is less, hence cost of raw materials per less, hence cost of raw materials per unit will be slightly more.unit will be slightly more.

3. For handling different type of jobs, 3. For handling different type of jobs, only skilled and intelligent workers only skilled and intelligent workers are needed, thus labour cost are needed, thus labour cost increases.increases.

Batch production:-Batch production:-

• The production schedule can be chalked out The production schedule can be chalked out according to specific orders or on the basis according to specific orders or on the basis of demand forecasts.of demand forecasts.

• In batch system new batch is undertaken In batch system new batch is undertaken for production only when the work on all for production only when the work on all items of a batch is complete.items of a batch is complete.

Ex:-Pharmaceuticals, ready made garments, Ex:-Pharmaceuticals, ready made garments,

Paints, mineral water bottles.Paints, mineral water bottles.

Characteristics of batch Characteristics of batch production:production:• Products are manufactured in batches as per Products are manufactured in batches as per

the specific order producedthe specific order produced• Division of labor is possibleDivision of labor is possible• Flow of material is continuousFlow of material is continuous• Process layout is usedProcess layout is used• Automation of processes and mechanization Automation of processes and mechanization

of materials handling can be doneof materials handling can be done• Maintenance of equipment and machinery is Maintenance of equipment and machinery is

essentialessential• Process and product planning is done for Process and product planning is done for

each batch.each batch.

Batch Production - Batch Production - AdvantagesAdvantages1. While comparing with mass 1. While comparing with mass

production it requires less capitalproduction it requires less capital

2. Comparing with job production, it is 2. Comparing with job production, it is more advantageous commercially.more advantageous commercially.

3. If demand for one product decrease 3. If demand for one product decrease then production, for another product then production, for another product may be increased, thus the risk of may be increased, thus the risk of loss is very less.loss is very less.

Batch Production – Batch Production – DisadvantagesDisadvantages

1. Comparing with mass production 1. Comparing with mass production cost of scales and advertisement per cost of scales and advertisement per unit is moreunit is more

2. Raw materials to be purchased are 2. Raw materials to be purchased are in less quantity than that in mass in less quantity than that in mass production; therefore it is slightly production; therefore it is slightly costlier than that of mass production costlier than that of mass production because less quantity discount is because less quantity discount is available.available.

Continuous production:-Continuous production:-

• In this system items are produced for the In this system items are produced for the stocks and specific orders.stocks and specific orders.

• In continuous manufacturing systems In continuous manufacturing systems each production run manufacturers in each production run manufacturers in large lot sizes and the production process large lot sizes and the production process is carried on in a definite sequence of is carried on in a definite sequence of operation in a pre-determined order.operation in a pre-determined order.

• This is of one typeThis is of one type

1.Mass production1.Mass production

Mass production:-Mass production:-

• Also called as flow productionAlso called as flow production• The production can be undertaken on large The production can be undertaken on large

and specialized machines and processes.and specialized machines and processes.CharacteristicsCharacteristics:-:-• Mechanization and division of laborMechanization and division of labor• Large-scale economiesLarge-scale economies• Sophisticated material handling systems to Sophisticated material handling systems to

minimize the costminimize the cost• Work study techniquesWork study techniques• ISO 9000 like sophisticated quality control ISO 9000 like sophisticated quality control

techniques.techniques.

Mass Production - Mass Production - AdvantagesAdvantages1. A smooth flow of materials from one work 1. A smooth flow of materials from one work

station to the next in logical order.station to the next in logical order.

2. Since the work from one process is fed 2. Since the work from one process is fed directly into the next, small in process directly into the next, small in process inventories resultinventories result

3. Total production time per unit short3. Total production time per unit short

4. Simple production planning control 4. Simple production planning control system are possiblesystem are possible

5. Little skill is usually required by 5. Little skill is usually required by operations at the production line, hence operations at the production line, hence training is simple, short and inexpensive.training is simple, short and inexpensive.

Mass Production – Mass Production – DisadvantagesDisadvantages

1. A breakdown of one machine may lead to 1. A breakdown of one machine may lead to a complete stoppage of the line that a complete stoppage of the line that follows the machine. Hence maintenance follows the machine. Hence maintenance and repair is a challenging job.and repair is a challenging job.

2. Since the product dictates the layout, 2. Since the product dictates the layout, changes in product design may require changes in product design may require major changes in the layout.major changes in the layout.

3. Generally high investment are required 3. Generally high investment are required owing to the specialized nature of the owing to the specialized nature of the machines and their possible duplication in machines and their possible duplication in the linethe line

Work study:-Work study:-

• According to British Standard (BS According to British Standard (BS 3138), work study refers to the method 3138), work study refers to the method study and work measurement which study and work measurement which are used to examine human work in all are used to examine human work in all its contexts by systematically its contexts by systematically investigating into all factors affecting investigating into all factors affecting its efficiency and economy to bring its efficiency and economy to bring forth the desired improvement. forth the desired improvement.

Benefits:-Benefits:-

• Directly leads to standardization of the job Directly leads to standardization of the job processesprocesses

• Determines cost of the work performedDetermines cost of the work performed• It saves the timeIt saves the time• Contributes to cost savingsContributes to cost savings• Enhances the employee moraleEnhances the employee morale• Facilitates the organization to plan and achieve Facilitates the organization to plan and achieve

work targetswork targets• Enhances the productivity of all workers and Enhances the productivity of all workers and

machinesmachines• Helps to evaluate the department performanceHelps to evaluate the department performance

Components of work study:-Components of work study:-

• Method studyMethod study

• Work measurementWork measurement

Method study:-Method study:-

Is also called as Motion study.Is also called as Motion study.

Method study is the systematic Method study is the systematic recording and critical examination of recording and critical examination of the existing and proposed ways of the existing and proposed ways of doing work.doing work.

Basic procedure of method Basic procedure of method study:-study:-• Aim: to develop better working methodsAim: to develop better working methods• Select: the task to be studiedSelect: the task to be studied• Record: all related factsRecord: all related facts• Examine: the critical facts should be Examine: the critical facts should be

examinedexamined• Develop: the best possible methodDevelop: the best possible method• Define: the best method so developedDefine: the best method so developed• Install: the new methodInstall: the new method• Maintain: the installed methodMaintain: the installed method• Result: increased efficiency, cost Result: increased efficiency, cost

effectiveness and good productivityeffectiveness and good productivity

Work measurement:-Work measurement:-• Establishes the time taken by a Establishes the time taken by a

qualified worker to complete a qualified worker to complete a specified job at a defined level of specified job at a defined level of performance.performance.

Procedure for work measurement:Procedure for work measurement:• SelectSelect• RecordRecord• ExamineExamine• MeasureMeasure• CompileCompile

Procedure for work Procedure for work measurementmeasurement1) 1) Select:Select: The work to be studied and determine the objectives The work to be studied and determine the objectives

of the studyof the study

2) 2) Record:Record: All the relevant data relating to circumstances in All the relevant data relating to circumstances in which the work is being done, the methods to be used to which the work is being done, the methods to be used to breakdown the job into its elementsbreakdown the job into its elements

3) 3) Examine: Examine: The recorded data and the detailed breakdown The recorded data and the detailed breakdown critically to ensure the most effective method and motions are critically to ensure the most effective method and motions are being used and that unproductive elements are separated being used and that unproductive elements are separated from productive elements.from productive elements.

4) 4) Measure:Measure: The time required to complete each element using The time required to complete each element using the appropriate work measurement techniques and calculate the appropriate work measurement techniques and calculate the time required to compete the work cycle which is known as the time required to compete the work cycle which is known as basic time.basic time.

5) 5) Compile:Compile: The standard time for the operation or work place, The standard time for the operation or work place, in case of stop watch time study the various allowances to in case of stop watch time study the various allowances to cover relation, personal needs etc. are added to the basic time cover relation, personal needs etc. are added to the basic time to estimate the standard time.to estimate the standard time.

Statistical Quality Control:- Statistical Quality Control:- • Quality is some prescribed or desired Quality is some prescribed or desired

characteristics present in raw material, characteristics present in raw material, semi-finished or finished goods.semi-finished or finished goods.

• Control is the process of verification or Control is the process of verification or correction of the product when the correction of the product when the deviations in the quality are found to be deviations in the quality are found to be more than expected.more than expected.

• Quality control is of great value to both Quality control is of great value to both producer and customerproducer and customer

• SQC is applied by taking samples and SQC is applied by taking samples and drawing conclusions by means of some drawing conclusions by means of some mathematical analysis.mathematical analysis.

Quality ElementsQuality Elements

a) Quality design: Quality of design a) Quality design: Quality of design refers to product feature such as refers to product feature such as performance, reliability durability, performance, reliability durability, ease of use, serviceabilityease of use, serviceability

b) Quality conformance: Quality b) Quality conformance: Quality conformance means whether the conformance means whether the product meets the given quality product meets the given quality specification or notspecification or not

InspectionInspection• The process of measuring the out put and The process of measuring the out put and

comparing it to check whether it meets comparing it to check whether it meets the given specified requirements or not, the given specified requirements or not, is called inspection.is called inspection.

• Inspection Methods: Inspection Methods: The following are The following are the methods of inspection based on the methods of inspection based on meritsmerits

• Incoming inspectionIncoming inspection

• Critical point inspectionCritical point inspection

• Process inspectionProcess inspection

• Fixed inspectionFixed inspection

• Final InspectionFinal Inspection

Elements of SQCElements of SQC

• The technique under SQC can be The technique under SQC can be divided in to two parts divided in to two parts

a)a)Process control Process control

b)b)Acceptance samplingAcceptance sampling

Process control: Process control: Process control is a technique of Process control is a technique of ensuring the quality of the products during the ensuring the quality of the products during the manufacturing process itself. If a process manufacturing process itself. If a process consistently produces items with acceptable or consistently produces items with acceptable or tolerable range of specification. It is said to be tolerable range of specification. It is said to be statically under control. Process control is achieved statically under control. Process control is achieved through control charts. Process control aims to through control charts. Process control aims to control and maintain the quality of the products in control and maintain the quality of the products in the manufacturing process.the manufacturing process.

Process ControlProcess ControlStatistical control charts: Statistical control charts: A control chart A control chart

compares graphically the process compares graphically the process performance data to computed statistical performance data to computed statistical control limits. These control limits act as limit control limits. These control limits act as limit lines on the chart control chats are the tools lines on the chart control chats are the tools to determine whether the process is under to determine whether the process is under control or not. The quality of the production control or not. The quality of the production process may be affected by chance cause or process may be affected by chance cause or assignable cause.assignable cause.

Chance cause: Chance cause: such causes, which may or such causes, which may or may not affect the manufacturing process are may not affect the manufacturing process are called chance cause, chance cause cannot called chance cause, chance cause cannot even be identified. It is not possible to always even be identified. It is not possible to always maintain the given specification.maintain the given specification.

Process Control - Cont.Process Control - Cont.Assignable Cause: Assignable Cause: Assignable causes affect the Assignable causes affect the

quality of the production process. These causes quality of the production process. These causes can be identified and specified. Causes such as can be identified and specified. Causes such as change in the labour shift, power fluctuations, or change in the labour shift, power fluctuations, or excessive tool wear are said to be assignable excessive tool wear are said to be assignable causes as they affect the quality of causes as they affect the quality of manufacturing process in different ways.manufacturing process in different ways.

Process capability:Process capability: Process capability refers to Process capability refers to the ability to achieve measurable results from a the ability to achieve measurable results from a combination of machines, tools, methods, combination of machines, tools, methods, materials and people engaged in production.materials and people engaged in production.

Confidence limits and control Confidence limits and control limitlimit

Confidence limit:Confidence limit: It indicate the range of confidence It indicate the range of confidence level. A confidence level refers to the probability that level. A confidence level refers to the probability that the value of measurement or parameter, such as the value of measurement or parameter, such as length of screw, is correct.length of screw, is correct.

Ex: If a component is required with measurement of 50 Ex: If a component is required with measurement of 50 mm. across, then the buyer accepts all components mm. across, then the buyer accepts all components measuring between 48 mm and 52 mm across, measuring between 48 mm and 52 mm across, considering a five percent confidence level.considering a five percent confidence level.

Control limit: Control limit: Control limits are found in the control Control limits are found in the control charts. There are two control limits charts. There are two control limits

1)1)Upper control limit (UCL) Upper control limit (UCL)

2)2)Lower control limit (LCL). Lower control limit (LCL).

These are determined based on the principles of normal These are determined based on the principles of normal distributiondistribution

Acceptance SamplingAcceptance SamplingAcceptance sampling is a technique of deciding Acceptance sampling is a technique of deciding

whether to accept the whole lot or not based whether to accept the whole lot or not based on the number of defectives from a random on the number of defectives from a random drawn sample.drawn sample.

It is widely use in buying food products, such as It is widely use in buying food products, such as rice, wheat etc. Before buying the random rice, wheat etc. Before buying the random samples drawn from the bags of say rice are samples drawn from the bags of say rice are tested. tested.

If the quality of sample drawn looks good or If the quality of sample drawn looks good or free from defects then according to the free from defects then according to the requirement the entire bag or part of it can requirement the entire bag or part of it can be brought.be brought.

The process of acceptance sampling through The process of acceptance sampling through operating characteristic curve (OCC)operating characteristic curve (OCC)

Operating Characteristic Curve Operating Characteristic Curve (OCC)(OCC)The graphical relationship between percentage The graphical relationship between percentage

defective in the lots being submitted for defective in the lots being submitted for inspection and the probability acceptance is inspection and the probability acceptance is termed as “operating characteristic of a termed as “operating characteristic of a particular sampling plan”particular sampling plan”

It gives a clear picture about the probability of It gives a clear picture about the probability of acceptance of lot for various values of acceptance of lot for various values of percent defectives in the lot. The probability percent defectives in the lot. The probability of acceptance of a lot is high for low values of acceptance of a lot is high for low values of actual percentage decrease and it is low of actual percentage decrease and it is low for high values of actual percentage for high values of actual percentage defectives.defectives.

Construction of OC CurveConstruction of OC CurveTo develop a sampling plan for acceptance To develop a sampling plan for acceptance

sampling, an appropriate O.C curve must be sampling, an appropriate O.C curve must be selected to construct an OC curve an selected to construct an OC curve an agreement has to be reached between the agreement has to be reached between the producer and the consumer on the following producer and the consumer on the following four point.four point.

1) 1) Acceptable quality level (AQL): Acceptable quality level (AQL): This is This is the maximum proportion of defectives that the maximum proportion of defectives that will make the lot definitely acceptable.will make the lot definitely acceptable.

22) Lot tolerance percentage defective ) Lot tolerance percentage defective (LTPD): (LTPD): This is the maximum proportion of This is the maximum proportion of defectives that will make the lot definitely defectives that will make the lot definitely unacceptable.unacceptable.

Construction of OC Curve – Construction of OC Curve – Cont.Cont.

3) 3) Producers risk (α): Producers risk (α): This is the risk, This is the risk, the producer is willing to take that lots the producer is willing to take that lots of the quality level AQL will be of the quality level AQL will be rejected, even though, they are rejected, even though, they are acceptable usually acceptable usually α = 5%α = 5%

4) 4) Consumer risk (β): Consumer risk (β): This is the risk, This is the risk, the consumer is willing to take that the consumer is willing to take that lots of the quality level LTPD will be lots of the quality level LTPD will be accepted, event though, they are accepted, event though, they are actually unacceptable usually actually unacceptable usually β = β = 10%.10%.

Sampling PlansSampling Plans

• Single sampling planSingle sampling plan

• Double sampling planDouble sampling plan

• Multiple sampling planMultiple sampling plan

• Sequential sampling planSequential sampling planSequential sampling involves increasing the Sequential sampling involves increasing the

sample size by one part at a time till the sample size by one part at a time till the sample becomes large enough and contains sample becomes large enough and contains sufficient number of defectives to decide sufficient number of defectives to decide intelligently whether to accept or reject the lot.intelligently whether to accept or reject the lot.

Deming’s 14 Points on Total Deming’s 14 Points on Total Quality ManagementQuality Management1.1. Create constancy of purpose for improving products Create constancy of purpose for improving products

and services.and services.

2.2. Adopt the new philosophy.Adopt the new philosophy.

3.3. Cease dependence on inspection to achieve quality.Cease dependence on inspection to achieve quality.

4.4. End the practice of awarding business on price alone; End the practice of awarding business on price alone; instead, minimize total cost by working with a single instead, minimize total cost by working with a single supplier.supplier.

5.5. Improve constantly and forever every process for Improve constantly and forever every process for planning, production and service.planning, production and service.

6.6. Institute training on the job.Institute training on the job.

7.7. Adopt and institute leadership.Adopt and institute leadership.

8.8. Drive out fear.Drive out fear.

9.9. Break down barriers between staff areas.Break down barriers between staff areas.

Deming’s 14 Points on Total Deming’s 14 Points on Total Quality Management – Cont.Quality Management – Cont.10. Eliminate slogans, exhortations and targets 10. Eliminate slogans, exhortations and targets

for the workforce.for the workforce.

11. Eliminate numerical quotas for the workforce 11. Eliminate numerical quotas for the workforce and numerical goals for management.and numerical goals for management.

12. Remove barriers that rob people of pride of 12. Remove barriers that rob people of pride of workmanship, and eliminate the annual rating workmanship, and eliminate the annual rating or merit system.or merit system.

13. Institute a vigorous program of education 13. Institute a vigorous program of education and self-improvement for everyone.and self-improvement for everyone.

14. Put everybody in the company to work 14. Put everybody in the company to work accomplishing the transformation.accomplishing the transformation.