INTRODUCTION TO PRODUCTION MANAGEMENT

BRANCH - E.T.

BATCH C-9

MEANING AND CHARACTERISTICS

Production and Operations Management (POM) is about the transformation of production inputs into outputs that, when distributed, meet the needs of customer.

It is the Conversion Process.

Characteristics of Production Management are: -

Product Performance, Aesthetics, Quality, Reliability, Quantity, Production Cost, Delivery dates

PlantFuture Demand, Design and layout out of factory & equipment & offices, productivity and reliability of equipment, need for maintenance, Health and safety, Environmental issues

ProcessesAvailable capacity, Available skills, Type of production, Safety, Production cost, Maintenance requirement

ProgrammersPurchasing Patterns, Cash Flow, Need for/availability of storages, Transportation

PeopleWages and salaries, Safety and training, Work conditions, Leadership and

motivation, Unionization, Communication

PLANT LOCATION

• Plant location is an important decision which decides the fate of the business.

• In past, decision of the location of the plant.

• Governmental steps in the selection of the location of the plant.

• Location of the small scale industry.

• Location of the large scale industry.

IMPORTANCE OF PLANT LOCATION• 1) A good location may reduce the cost of production and

distribution.

• 2 ) Government sometimes plays an important role in the choice of the location keeping in view the national benefits.

• 3) Location fixes some of the physical factors of the overall plants design.

-heating -ventilation -storage -water , fuel -transportation . . . . . . . .

4) Plant consist of large investment if the site selection is wrong the company can face great loss.

5)”Probably no location is so perfect as to guarantee success. But bad location can be so bad as to bankrupt a company”.

FACTORS AFFECTING SELECTION OF FACTORY

1. Selection of region:

Generally the geographical area is divided on the basis of natural regions or political boundaries, e.g.: GUJARAT, MAHARASHTRA. The suitability of various regions is considered on the basis of comparative cost, advantages available.

2. Selection of locality,

After selection of region, the specific locality within the region is considered such as: URBAN, RURAL AND SUBURBAN AREA.

SELECTING LOCATION OF FACTORY

• Availability of raw materials

• Proximity to markets

• Availability of labour

• Transport and communication facilities

• Availability of power and fuel

• Climatic condition

• Availability of water

• Ancillary industries

• Financial and other aids

• Business and Commercial facilities

STATE REGULATIONS ON LOCATION

• There is unbalanced distribution of industries in India.

• The concentration of industries in few selected regions or cities due to favorable locational factors has created uneven distribution of population and wealth.

• The concentration of industries in there areas has also created problems of pollution.

• Like Mumbai, Calcutta

DISADVANTAGES• Problems of pollution : air, water and food

pollution.

•Unbalanced industrial growth and problems of poverty and unemployment in industrially backward area.

• Increasing fixed, operating and living cost due to concentration of industries.

•Congestion, bad sanitation, traffic jam etc.

• Inequitable distribution of wealth and income

BACKWARD AREAS AND INDUSTRIAL POLICY

• Incentives for industries units in backward areas

• Measures taken to minimize regional imbalance

GOVT. POLICIES FOR DECENTRALIZATION

• Measures to achieve decentralization

• Objectives of Govt. intervention and control

• Balance regional development

• Strategic defence policy

• Concentration of industries

• Narrow gap of ineuqality

INDUSTRIAL ESTATES

• Industrial estates is a piece of vast land sub-divided into different industrial plots systematically developed, wherein factory shades are constructed. Govt. Of India has planned a national policy for the development of industrial estates to State Government. In each state Development Corporations are established. Industrial estates have commerce. Industrial estates provides all amenities and facilities as well as public utility services to a number of small business units.

• The plots of land in industrial estates are sold to the prospective promoters. Thus industrial estates has group of small factories, workshop or business units with suitable sites and facilities to run the business smoothly. The number of units can enjoy common amenities and benefits of site, sheds, water supply, power supply , roads , transport , drainage, etc. at reasonable charges.

Advantages of Industrial Estates

• Industrial development helps in promotion of small and medium sized industries in the under developed areas.

• The entrepreneur is not required to carry out survey for finding suitable location for his plant.

• The member units can enjoy the common facilities like water supply ,power supply, roads ,transport , drainage ,etc. at reasonable charges. 

INDUSTRIAL ESTATE

PLANT LAYOUT

A plant layout is an arrangement of facilities and services in the plant, it outlines the relationship between production centres and departments.

It is the optimum arrangement of industrial facilities including personnel, equipment , storage space, material handling equipment and all other supporting services.

It involves tactically locating machines processes and plant services within the factory to get the greatest possible output and lowest production cost.

Plant layout has an important bearing on utilization of facilities or manufacturing methods.

OBJECTIVES OF GOOD PLANT LAYOUTA good layout is one which allows materials rapidly and directly for processing, one which helps improve industrial productivity.

• Integrate the production centres

• Reduce material handling

• Effective utilization of available space

• Worker convenience and job satisfaction

• Flexibility

• Removal of bottlenecks

• Quick disposal of work

• Avoids industrial accidents

• Eliminates physical efforts

• Maintenance of decency

IMPORTANCE OF PLANT LAYOUT

• Determines arrangement of facilities and services-Product canters + Service department

• Flow in the plant

• Type of handling system

• Specifies location accessibilities, size, space

• Amount of supervision, degree of specialization

• Span of activity, working time, fatigue and efficiency

FACTORS INFLUENCING PLANT LAYOUT

• Management policy

Decisions made by the management on many matters-Nature and Quality of Products, Size of the Plant, Employee Facility, Plans for Expansion.

• Manufacturing Process

The type of manufacturing Process-Synthetic/Analytical, continuous/intermittent and repetitive/non repetitive.

• Nature of Product: The product to be manufactured one of the major

factor for example light and small objects may be moved easily to machines while for heavier objects we need to move the moved and requires assembly bays. Quality and fragility of the product influences the plant layout.

• Volume of Production: The plant layout and equipments in large

scale organisation will be different compared small scale organisation.

• Type Of Equipment: Single and multi-purpose machine affects the

plant layout. Similarly, noisy and vibrating machines require special attention.

• Type of building: The covered area, parking, storage etc will affect

the plant layout.

• Availability of floor area: The allocation of space for machines, storage, work

benches etc will be on the basis of area available.

• Arrangement of material handling equipment: The plant layout

and material handling service affect arrangement of production process and needs adequate space for free movement of various objects.

• Service facilities: The layout of factory must include various facilities for welfare

of workers like canteen, lockers, drinking water, first aid etc.

• Possibility of future expansion: Plant layout is made in the light of future

requirements and installations of additional facilities .

TYPES OF PLANT LAYOUT

•Process Layout

•Product Layout

•Mixed Layout

•Static Layout

•Process / Functional Layout :

In this layout, all machines performing similar type of operations are grouped together at one location.

This layout is more suitable for job order industries like steel fabrication, hosiery, printing etc.

Merits :

• Eliminates the duplication of machines.

• Specialized supervision is possible.

• The firm has the ability to handle a variety of processing requirement.

Demerits :

• Material handling cost increases.

• Inspection & Supervision cost increases.

• Constantly changing schedules and routings make juggling process requirements more difficult.

Product / Line Layout :

In this type of layout, machines and auxiliary are arranged in line according to the sequence of operations to be performed on the work.

Merits :

• Speedier movements of materials.

• Supervision costs and material handling reduces.

• Maximum utilization of machine.

Demerits :

• Duplication of machines and equipment.

• Specialized supervision is not possible.

• Breakdown in any machine in the line interrupts entire process.

Mixed or combined layout

• Combination of product and process layout.

• Production Shops may be arranged by process layout, while the assembly is

done in line.

Static or fixed position layout

• Adopted when work piece is too heavy to transfer and layout is generally

made fixed in one place.

Advantages of Static Layout

Least movement of workers , maximum flexibility , etc.

Disadvantages of Static Layout

Low utilisation of labours , Highly skilled labours are required , etc.

BREAK-EVEN ANALYSIS

• Factors of profit

• Minimize Cost of production

• Increase in output

• Using cheaper material

• Maintaining inventory levels

• Standardization and mass production

• Developing human resources

• Improving efficiency

• Ways of break even analysis

ASSUMPTION IN BREAK-EVEN ANALYSIS

• Fixed and variable cost

• Fixed cost ?

• Variable cost

• Selling price

• Only one product

• Perfect synchronization

• Productivity and effeciency

PLOTTING THE BREAK-EVEN CHART• Cost and revenue on vertical axis.

• Quantity on horizontal axis.

• Fixed cost shown as straight line parallel to horizontal axis.

• Variable costs superimposed upon the horizontal line of cost and top line is total cost line.

• Sales income line passes through the origin.

• Intersection point of total cost line and sales income line is BREAK EVEN POINT.

• Region on the left of B.E.P. is loss and on the right is the profit.

MARGIN OF SAFETY

• Distance between BEP and O/P

• Implications on Profit

• Measures (during unsatisfactory conditions): Quantitative Increase SP, O/P OR Decrease FC, VC

Qualitative Pay more attention to the Profitable goods

PROFIT VOLUME

• Measures profitability wrt sales (Use: Compare profitability of different products)

• Implications of P/V ratio

• P/V ratio = (Contribution/Sales) x 100 = [(S – V)/S] x 100

• Uses:

• BEP determination

• Increasing SP, reducing VC

• Know P for given S volume.