MB13205 - POM
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Transcript of MB13205 - POM
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SRM RAMAPURAM B-SCHOOL
SRM UNIVERSITY
Study Material
MB13205 - Production and Operations Management
UNIT - 1
TOPIC1
INTRODUCTION TO PRODUCTION & OPERATIONS
MANAGEMENT
Synopsis
Meaning and Definition of Production
Meaning of Production & Operation Management
Production as a system
Scope of POM
Objectives of POM
Functions of POM
POM relationship with other functional areas
MEANING AND DEFINITION OF PRODUCTION
Production is the process by which raw materials and other inputs are
converted into finished products.
Production is defined as the step-by-step conversion of one form ofmaterial into another form through chemical or mechanical process to
create or enhance the utility of the product to the user. Thus
production is a value addition process. At each stage of processing,
there will be value addition.
Edwood Buffa defines production as a process by which goods and
services are created
MEANING AND DEFINTION OF POM
Production management refers to the application of management
principles to the production function in a factory. In other words,
production management involves application of planning, organizing,
directing and controlling to the production process
The set of interrelated management activities, which are involved in
manufacturing certain products, is called as production management.
If the same concept is extended to services management, then the
corresponding set of management activities is called as operations
management.
The following figure shows the process of production
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PRODUCTION AS A SYSTEM
This view is also known as "systems concept of production". A system
is defined as the collection of interrelated entities. The systems
approach views any organisation or entity as an arrangement of
interrelated parts that interact in ways that can be specified and to
some extent predicted. Production is viewed as a system which
converts a set of inputs into a set of desired outputs.
A production system has the following elements or parts: (i) Inputs, (ii)
Conversion process or transformation process, (iii) Outputs(iv)
Transportation subsystem, (v) Communication subsystem and (vi)
Control or decision making Subsystem.
The following diagram indicates production as a system
SCOPE OF PRODUCTION MANAGEMENT
Specifying and accumulating the input resources, i.e.,
management, men, information, materials, machine and capital.
Designing and installing the assembling or conversion processto transform the inputs into output, and
Coordinating and operating the production process so that the
desired goods and services may be produced efficiently and at a
minimum cost.
OBJECTIVES OF POM
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1. Right Quality: The quality of product is established based upon the
customers need. The right quality is not necessarily being the best
quality. It is determined by the cost of the product and the technical
characteristics as suited to the specific requirements.
2. Right Quantity: The manufacturing organisation should produce
the products in right number. If they are produced in excess of demand
the capital will block up in the form of inventory and if the quantity is
produced in short of demand, leads to shortage of products.
3. Right Time: Timeliness of delivery is one of the important
parameter to judge the effectiveness of production department. So, the
production department has to make the optimal utilization of input
resources to achieve its objective.
4. Right Manufacturing Cost: Manufacturing costs are established
before the product is actually manufactured. Hence, all attempts should
be made to produce the products at pre-established cost, so as to reduce
the variation between actual and the standard (pre-established) cost.
FUNCTIONS OF PRODUCTION MANAGEMENT
a) Product selection and design: the product mix marks the
production system either efficient or inefficient. Choosing the right
products keeping the mission and overall objective of the organization
in mind is the key to success. It is the design of the product, which
makes the organization competitive or noncompetitive.
b) Activities relating to production system designing: decision
related to the production system design is one of the most important
activities of the production management. This activity is related to
production engineering and includes problems regarding design of
tools and jigs, the design, development and installation of equipment
and the selection of the optimum size of the firm. All these areas
require the technical expertise on the part of the production manager
and his staff.
c) Facilities location:the selection of an optimum plant location very
much depends upon the decision taken regarding production
engineering. A wrong decision may prove disastrous. Location should
as far as possible cut down the production and distribution cost. There
are diverse factors to be considered for selecting the location of a plant.
d) Facilities layout and materials handling: plant layout deals with
the arrangements of machines and plant facilities. The machine should
be so arranged that the flow of production remains smooth. There
should not be overlapping, duplication or interruption in production
flow. Product layout where machines are arranged in a sequence
required for the processing of a particular product, and process layout,
where machines performing the similar processes are grouped together
are two popular methods of layout. The departments are layout in such
a way that the cost of material handling is reduced. There should be
proper choice of material handling equipment.
e) Capacity planning:This deals with the procurement of productive
resources. Capacity refers to a level of output of the conversion
process over a period of time. Full capacity indicates maximum level
of output. Capacity is planned for short-term as well as for long term.
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Process industries pose challenging problems in capacity planning,
requiring in the long run, expansion and contraction of major facilities
in the conversion process.
f) Production planning: the decision in production planning includepreparation of short-term production schedules, plan for maintaining
the records of raw materials, finished and semi-finished stock,
specifying how the production resources of the concern are to be
employed over some future time in response to the predicted demand
for products and services
g) Production control:after planning, the next managerial production
function is to control the production according to the production plans
because production plans cannot be activated unless they are properly
guided and controlled.
h) Method study: the next decision regarding production system
design concerns the use of those techniques, which are concerned withwork environment and work measurement. Standard method should be
devised for performing the repetitive functions efficiently.
Unnecessary movements should be eliminated and suitable positioning
of the workers for different processes should be developed. Such
methods should be devised with the help of time study and motion
study. The workers should be trained accordingly.
i) Inventory Control: inventory control deals with the control over
raw-materials, work-in-progress, finished products, stores, supplies,
tools, and so is included in production management. The raw materials,
supplies etc should be purchased at right time, right quality, in right
quantity, from right source and at right price.
j) Quality control (QC)Quality Control may be defined as a system that is used to maintain a
desired level of quality in a product or service. It is a systematic
control of various factors that affect the quality of the product. Quality
Control aims at prevention of defects at the source, relies on effective
feedback system and corrective action procedure.
k) Materials Management
Materials Management is that aspect of management function, which is
primarily concerned with the acquisition, control, and use of materials
needed and flow of goods and services connected with the production
process having some predetermined objectives in view. Its including
Purchasing and storekeeping of materials / goods.
l) Maintenance management
In modern industry, equipment and machinery are a very important
part of the total productive effort. Therefore their idleness or downtime
becomes are very expensive. Hence, it is very important that the plant
machinery should be properly maintained.
POM RELATION WITH OTHER FUNCTIONAL AREAS
Marketing:This generates the demand or takes customers orders for
a product or service.
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(ii) Production/Operations: this creates the product (goods or
services).
(iii) Finance/Accounting: which keeps track of how well the
organisation is performing, and takes care of cash inflow and cashoutflow.
Production/operations managers need to build and maintain strong
relationships both intra organisationally and inter-organisationally.
Inter-organisational relationship exists between production/ operations
department and suppliers, whereas intra-organisational relationship
calls for cross-functional coordination.
Cross functional coordination is essential for effective
production/operations management. For example, Marketing function
determines the need for new products and services and the demand for
existing ones and operations managers must bring together human and
capital resources to meet these demands effectively.
Also, operations managers must consider facility location andrelocations to serve new markets and the design of layouts for service
organisations must match the image that marketing seeks to project to
the customers. Operations managers must plan output rates and
capacities to match the demand forecasts and delivery promises made
to the customers
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UNITI
TOPIC2
PRODUCTION SYSTEM
Synopsis:
Meaning of production system
Types of production system
MEANING OF PRODUCTION SYSTEM
Production system is the framework within which the production
activities of an organization are carried out. At one end of a system are
inputs and at the other output. Input and output are linked by certain
process or operations or activities imparting value to the inputs. These
processes, operations or activities may be called production system.
DEFINITION OF PRODUCTION SYSTEM
According to Webster, System is a regular interacting inter-dependent
group of items forming a unified whole. A system may have many
components and variation in one component is likely to affect the other
components of the system e. g. change in rate of production will affectinventory, overtime hours etc.
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TYPES OF PRODUCTION SYSTEMS
There are two main types of production systems
I.
Continuous system
II.
Intermittent system
I. CONTINUOUS OR FLOW SYSTEM: According to Buffa,
Continuous flow production situations are those where the facilities
are standardised as to routing and flow since inputs are standardised.
Therefore a standard set of processes and sequences of process can be
adopted. Thus continuous or flow production refers to the
manufacturing of large quantities of a single or at most a very few
varieties of products with a standard of processes and sequences. The
mass production is carried continuously for stock in anticipation of
demand.
CHARATERISTICS OF CONTINUOUS OR FLOW SYSTEM:
The volume of output is generally large (mass production) and
goods are produced in anticipation of demand.
The product design and the operations sequence are
standardised i.e. identical products are produced.
Special purpose automatic machines are used to perform
standardized operations.
Machine capacities are balanced so that materials are fed at one
end of the process and finished product is received at the other
end.
Fixed path materials handling equipment is used due to the
predetermined sequence of operations.
Product layout designed according to a separate line for each
product is considered.
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MERITS OF CONTINUOUS OR FLOW SYSTEM:
The main advantage of continuous system is that work in
progress inventory is minimum.
The quality of output is kept uniform because each stage
develops skill through repetition of work.
Any delay at any stage is automatically detected.
Handling of materials is reduced due to the set pattern of
production line. Mostly the materials are handled through
conveyer belts, roller conveyers, pipe lines, overhead cranesetc.
Control over materials, cost and output is simplified.
The work can be done by semi- skilled workers because of their
specialisation.
DEMERITS OF CONTINUOUS OR FLOW SYSTEM :
Continuous system, however, is very rigid and if there is a fault
in one operation the entire process is disturbed.
Due to continuous flow, it becomes necessary to avoid pilling
up of work or any blockage on the line.
Unless the fault is cleared immediately, it will force the
preceding as well as the subsequent stages to be stopped.
Moreover it is essential to maintain stand-by equipments to
meet any breakdowns resulting in production stoppages.
Thus investments in machines are fairly high.
TYPES OF CONTINUOUS PRODUCTION SYSTEM
(A) Mass production : Mass production refers to the
manufacturing of standardized parts or components on a large scale.
Mass production system offers economies of scale as the volume of
output is large. Quality of products tend be uniform and high due to
standardized and mechanization. In a properly designed and equipped
process, individual expertise plays less prominent role.
(B) Process production: Production is carried on continuously
through a uniform and standardized sequence of operations highly
sophisticated and automatic machines are used. Process production is
employed in bulk processing of certain materials. The typical
processing industries are fertilizers plants, petrochemical plants and
milk diaries which have highly automated systems and sophisticated
controls. They are not labourintensive and the worker is just an
operator to monitor the system and take corrective steps if called for.
On the basis of the nature of production process, flow production may
be classified in Analytical and Synthetic Production.
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In Analytical Process production, a raw material is broken into
different products e. g. crude oil is analyzed into gas, naptha, petrol
etc. Similarly, coal is processed to obtain coke, coal gas , coal tar etc..
Synthetic process of production involves the mixing of two ormore materials to manufacture a product for instance, lauric acid,
myristic acid, stearic acid are synthesised to manufature soap.
(C) Assembly lines: Assembly lines a type of flow production
which is developed in the automobiles industry in the U.S.A. A
manufacturing unit prefers to develop and employ assembly line
because it helps to the efficiency of production. In an assembly line,
each machine must directly receive materials from the previous
machine and pass it directly to the next machine. Machine and
equipment should be arranged in such a manner that every operator has
a free and safe access to each machine. Space should be provided for
free movement of forklifts trucks etc. which deliver materials and
collect finished products.
II.INTERMITTENT PRODUCTION SYSTEM
ACCORDING TO BUFFA, Intermittent situations are those where
the facilities must be flexible enough to enough to handle a variety of
products and sizes or where the basic nature of the activity imposes
change of important characteristics of the input (e.g. change in the
product design). In instances such as these, no single sequence pattern
of operation is appropriate, so the relative location of the operation
must be a compromise that is best for all inputs considered together.
In the industries following the intermittent production system, some
components may be made for inventory but they are combined
differently for different customers. The finished product is
heterogeneous but within a range of standardized options assembled by
the producers. Since production is partly for stock and partly for
consumer demand, there are problems to be met in scheduling,
forecasting control and coordination.
TYPES OF INTERMITTENT PRODUCTION.
(A) Job production: job production involves the manufacturing of
single complete unit with the use of a group of operator and process as
per the customers this is a special order type of production. Each
job production or product is different from the other and no repetition
is involved. The product is usually costly and non- standardized.
Customers do not make demand for exactly the same product on a
continuing basis and therefore production become intermittent. Each
product is a class by itself and constitutes a separate job for production
process. Shipbuilding, electric power plant dam construction etc. are
common examples of job production
(B) Batch production : it is defined as, The manufacture of a
product in small or large bathes or lots at intervals by a series of
operations, each operation being carried out on the whole batch before
any subsequent operation is performed the batch production is
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mixture of mass production and job production and job production
under it machines turn out different product at intervals, each product
being produced for comparatively short tome using mass production
methods.
CHARACTERISTICS OF INTERMITTENT PRODUCTION
SYSTEM:
The product manufacture is custom-made or nonstandardized.
Volume of output is generally small.
Variable path materials handling equipment are used.
A wide range of general purpose machines like grinders,
drilling, press, shaper etc is used .
MERITS OF INTERMITTENT PRODUCTION SYSTEM:
It is flexible and can be adopted easily to change in product
design. A fault in one operation does not result into complete
stoppages of the process.
It is cost effective and time- effective since the nature of the
operation in a group are similar there is reduced materials
handling since machines are close in a cell.
The waiting period between operations is also reduced. This
also results in a work- in- progress inventory.
DEMERITS OF INTERMITTENT PRODUCTION SYSTEM:
Job shop manufacturing is just most complex system of
production e. g. in building a ship thousand of individual parts
must be fabricated and assembles.
A complex schedule of activity is required to ensure smooth
flow of work without any bottleneck.
Raw materials and work-in-progress inventories are high due to
uneven and irregular flow of work.
Workloads are unbalanced, speed of work is slow and unitcosts are high
Work-in-progress inventory is high and large storage space is
required.
The main problem in batch production is ideal time between
one operation and other the work has to wait to until a
particular operation is carried out on the whole batch of the
product.
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UNITI
TOPIC3
PRODUCT DESIGN
Synopsis
Meaning of product design
Objectives of product design
Characteristics of product design
Steps involved in product design
Factors influencing product design
Types of product design
Some important term related to product design
MEANING OF PRODUCT DESIGN
Product design is the process of creating a new product to be sold by a
business to its customers. Product design refers to the development of
the concept or idea of a product in terms of specifications which are
required for transforming the idea into that product. These
specifications are created keeping in mind the constraints of the
production process, feasibility to produce and meeting the customer
expectations without sacrificing the quality.
OBJECTIVES OF PRODUCT DESIGN:
The overall objective is profit generation in the long run.
To achieve the desired product quality
To reduce the development time and cost to the minimum
To reduce the cost of the product.
To ensure produce ability or manufacturability to design for
manufacturing and assembly
CHARACTERISTICS OF GOOD DESIGN:-
The characteristics of a well-designed product are:-
1. Functionality:-While designing the most important consideration is
the function that the product is expected to perform. Products are
designed to with a core objective and for meeting a specific customer
need. If the product is unable to meet that very need, the whole
purpose of introducing a new product is defeated e.g. mobile - verbal
communication.
2. Reliability:- It means the dependability on the performance of a
product for a designated period of time, without deterioration in the
quality or performance of the product. While designing a product, the
life of the product which it should last is an important consideration. A
consumer expects a certain life span in the product
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3. Producibility: -it can be defined as the possibility of producing the
product in the required quantity at a feasible cost. A product may be
very well designed in terms of functionality and appearance but if it is
not produced in the required quantity and at a favourable cost, it will
not be successful in the market. Producibility includes number of
operations that form the manufacturing process, availability of the
necessary materials technology requirements etc.
4.Quality:- It means conformance to specifications. A good design
ensures the required quality in a product. The materials and their
specifications ascertained while designing play an important role in
making the product durable and reliable. Tolerances in the dimensions
of individual parts affect the final quality of the assembled product.
5. Standardization and Simplification:- Standardization means use
of minimum number of parts to serve the maximum number of
purpose, in order to achieve economy in manufacture and to ensure
operational efficiency and efficiency and effectiveness Simplification
is the process of making design simple. Complicating things which canbe made simple is only going to add to costs.
6. Maintainability:- The product design should be such that
maintaining it is simple and cost effective in terms of repair or
replacement of the defective part e.g. new automobile tubeless tyres
maintenance free inverter battery.
7. Cost effective:- A products production cost gets determined at the
designing stage. At the designing stage, effective measures like
standardization of parts and manufacturing process and choice of input
materials influence the cost of product
STEPS INVOLVED IN PRODUCT DESIGN
To obtain a flow of new-products ideas, the company can tap many
sources. Major sources of product ideas include internal sources like
customers, competitors, distributors and suppliers. It has been found
that more than 55 percent of all product ideas come from internal
sources. The steps are:
1. Idea screening: The purpose of idea generation is to create a large
number of ideas. The purpose of the succeeding stages is to reduce that
number. The first reducing stage is idea screening. The purpose of
screening is to spot good ideas and drop poor ones. Most companies
require their executive to write up the new product ideas on a standard
format that can be reviewed by a new product committee. The write up
describes the product, the target market, the competition and makes
some rough estimate of market size, product development time and
costs, manufacturing costs and rate of return. The committee thenevaluates the idea against a set of general criteria.
2. Concept Development and testing: Customers do not buy product
ideas, they buy the product concepts. The concept testing calls for
testing new product concepts with a group of target consumers. After
being exposed to the concept, consumers then may be asked to react to
it by asking a few questions.
3. Market strategy development: The next step is market strategy
development, designing an initial marketing strategy for introducing
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the concept to the market. The market strategy statement consists of
three parts:
The first part describes the target market; the planned product
positioning, market share and profit goals for the first few
years.
The second part of the marketing strategy statement outlines
the product planned price, distribution and marketing budget
for the first year.
The third part of the marketing strategy statement describes the
planned long-run sales, profit goals, and marketing mix
strategy.4. Business Analysis: Once management has decided on its product
concept and marketing strategy, it can evaluate the business
attractiveness of the proposal. Business analysis involves a review of
its sales, cost, and profit projections for a new product to find out
whether they satisfy the companys objectives.
5. Product development: If the product concept passes the business
test, it moves into product development. Here, R&D or engineering
develops the concept into a physical product. The R&D department
will develop one or more physical versions of the product concept,
R&D hopes to design a prototype that will satisfy and excite
consumers and that can be produced quickly and at budgeted cost.
When the prototype is ready it must be tested. Functional tests are then
conducted to make sure that the product performs safely and
effectively.
6. Test Marketing: If the product passes functional and consumer
tests, the next step is test marketing, the stage at which the product and
marketing program are introduced into more realist marketing setting.
This allows the marketer to find potential problems so that these could
be addressed.
7. Commercialization: is introducing the new product into the market.
FACTORS INFLUENCING PRODUCT DESIGN
1. Customers requirement and psychological effects: The designer
must, first of all, ascertain the basic requirements and the psychology
of the customers. For this purpose, he or she must prepare a
comprehensive questionnaire keeping in mind the marketing and
economic aspects to analyse the psychology and needs of the
customers.
2. Facility to operator: the second factor is the designer must consider
carefully, is the facilities available to the operator at the shop floor.
3. Functionality: the designer should not merely be stylish but shouldcover the utility aspects also. There must be a proper balance between
beauty and utility.
4. Materials: next factor to be considered by the designer is the
materials to be used on the proposed product and the development of
improvements in this field as materials have profound influence over
the product.
5. Work method and equipment: another important factor affecting
the product design is the work method and the equipment to be used in
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the manufacture of proposed product. A designer must be aware of the
latest developments in the work method and equipment.
6. Cost /price ratio: cost is the one of the major factors which
influences the design of the product. Contract- based cost plus a
margin profit arrangement allows the designer the latitude for over
designing particularly if the margin is expressed as a percentage of
total cost.
7. Quality policy: quality of design ultimately reflects on a product
quality. The quality of a design must be fixed at the corporate level to
provide the designer with suitable guidelines.
8. Process capability: Product is governed by quality policy of the
firm on one side and availability on the plant and machinery to meet
specifications on the other side. Machines should also be capable of
meeting the needs of the designer with regard to the design quality.
9.Effects on the other products: The designer should also consider
the effects of the new product on the existing ones. If the new product
is to replace the existing one, it should
a.
Fit into manufacturing and distribution plans of theoriginal product
b. Use the same standard parts and components, and
c. Accept the same manufacturing technology
10. Packaging: Good packaging is as important as a good design of
the product. Packaging is required for:
Protection of the product when in shelf or in transit and
Promotion of the product
Packaging, particularly in a consumer product is a design
activity.
TYPES OF PRODUCT DESIGN
Product design may be of four types: (a) Functional Design (b)
Aesthetic Design (c) Production Design and (d) Packing Design.
(a)Functional Design: Functional design involves developing
an idea into a rough model of the proposed product. Firstly
make a rough sketch of the proposed products then design a
mix draft room sketches of the proposed products, finally
experimental models are prepared which are thoroughly
tested for a certain period of time.
(b)Aesthetic design: Before production on a commercial scale
is undertaken another type of design must be integrated
with a functional design and its aesthetic design(style) for
market acceptability.
(c)Production Design: Product design pertains to a design
which may result in affecting the economics without
affecting its functional efficiency.
(d)Packing design: Different packing materials can be used
to suit the customers tastes and to maintain the chemical
properties of the products
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SOME IMPORTANT TERMS RELATED TO PRODUCT
DESIGN
Design for Manufacturing (DFM): The designers consideration of
the organizations manufacturing capabilities when designing a
product. The more general term design for operations encompasses
services as well as manufacturing. Manufacturability is the ease of
fabrication and/or assembly which is important for: Cost, Productivity
and Quality.
Design for Assembly (DFA):Design focuses on reducing the number
of parts in a product and on assembly methods and sequence.
Design for Disassembly (DFD): Design focuses on facilitating the
disassembly in a logical and an exact reverse sequential manner to the
assembly methods and sequence.
Design for Recycling (DFR): Design allows and facilitates therecovery of material of materials and components from used products
for reuse. The designers consideration of the organizations
manufacturing capabilities when designing a product. The more
general term design for operations encompasses services as well as
manufacturing.
Design for Remanufacturing:Using some of the components of the
old products in the manufacture of new products. Remanufactured
products are sold at 30 to 50% of the price of new product .e.g.
Printers, copiers, cameras, PCs and Cell/Telephones.
Modular design: Modular design is a form of standardization in
which component parts are subdivided into modules that are easily
replaced or interchanged. It allows:
Easier diagnosis and remedy of failures
Easier repair and replacement
Simplification of manufacturing and assembly
A concept idolized in the IT industry for software development
Reverse engineering: Reverse Engineering is the process of
disassembling the competitors product to analyze its designfeatures.
Preliminary Design and Testing: Once a product idea has passed the
screening stage, it is time to begin preliminary design and testing. At
this stage, design engineers translate general performance
specifications into technical specifications. Prototypes are built and
tested.
Final Design
Following extensive design testing the product moves to the final
design stage. This is where final product specifications are drawn up.
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UNIT1
TOPIC4
PROCESS PLANNING
Synopsis
Meaning of process planning
Factors affecting process planning
Steps/process involved in process planning
INTRODUCTION
Any group of actions instrumental to the achievement of output
of an operational system in accordance with the specified measure of
effectiveness.
MEANING OF PROCESS PLANNING
Process planning is concerned with the designing and
implementing work system that will produce the desired product in the
required quantities.
PROCEDURE OF DESIGNING A PROCESS
1. Product design: the consideration or a careful review of the
product design and specifications to ensure that economical
manufacturing is feasible
2. Material list: All the material and the parts that will be used
are listed
3. Sequence of operations:the labour operations to be performed
on each components and their sequence are decided.
4. Tool design: The machines, equipment and tools most
appropriate for product and volume of output are then
designed.
5. Layout: The layout of the production, installation of
manufacturing facilities and auxiliary service is decided
6. Control system: Material, machines and man power is
established to ensure effective utilisation of the manufacturing
facilities and most economical production of the product.
FACTORS INFLUENCING PROCESS DESIGN
1. Volume of output: The quantity and rate of production affect
the method of production. In multi-product organizations
standardization of components parts and product are very
important in process designing.
2.
Volume v/s Variety: One extreme is high variety but low
volume and other extreme is low variety but high volume.
Variety requires skilled technicians, general purpose machines.
High volumes require automation, mass production machines.
3. Quality of the product: Product quality determines the quality
of component parts and material which in turn determines the
methods and equipments to be used. Therefore, drawings,
specifications, bills of materials, parts list, etc. should be read
by the process engineer to determine process engineering.
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4. Type of equipment: The process engineer should attempt to
design manufacturing process that are adaptable to and will
balance the productive.
5. Environmental Effect: Process selection response to
environmental changes , especially changes in technology.
6. Forms of transformation processes: Process selection also
refers to selection of sub processes, and the sub- process of
sub- processes also. It decides the sequence of operations,
process storage and transport from one work centre to another.
7. Produce to stock V/S produce to order:
Produce to stock: The system here is to anticipate the demand.
Standardization and variety reduction lead to batch production
which forms the inventory from which stocks to sell are drawn.
Produce to order: It is customerized producing where themanufacturing process follows the respect of customers order.
8. Output characteristics V/S process selection: The selection
of process form-project-type, intermittent-type, and continuous-
type depends upon the characteristics of the output.
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UNIT - I
TOPIC5
MAKE OR BUY DECISIONS
Synopsis
Concept of make or buy decisions
Factors for making and buying decisions
CONCEPT OF MAKE OR BUY DECIONS
The make-or-buy decision is the act of making a strategic choice
between producing an item internally (in-house) or buying it externally
(from an outside supplier). The buy side of the decision also is referred
to as outsourcing. Make-or-buy decisions usually arise when a firm
that has developed a product or partor significantly modified a
product or partis having trouble with current suppliers, or has
diminishing capacity or changing demand.
Make-or-buy analysis is conducted at the strategic and operational
level. Obviously, the strategic level is the more long-range of the two.
Variables considered at the strategic level include analysis of the
future, as well as the current environment. Issues like government
regulation, competing firms, and market trends all have a strategic
impact on the make-or-buy decision.
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FACTORS CONSIDERATIONS THAT FAVOR MAKING A
PART IN-HOUSE:
Cost considerations (less expensive to make the part)
Desire to integrate plant operations
Productive use of excess plant capacity to help absorb fixed
overhead (using existing idle capacity)
Need to exert direct control over production and/or quality
Better quality control
Design secrecy is required to protect proprietary technology
Unreliable suppliers
No competent suppliers
Desire to maintain a stable workforce (in periods of declining
sales)
Quantity too small to interest a supplier
Control of lead time, transportation, and warehousing costs
Greater assurance of continual supply
Provision of a second source
Political, social or environmental reasons (union pressure)
Emotion (e.g., pride)
FACTORS THAT MAY INFLUENCE FIRMS TO BUY A PART
EXTERNALLY INCLUDE:
Lack of expertise
Suppliers' research and specialized know-how exceeds that of
the buyer
cost considerations (less expensive to buy the item)
Small-volume requirements
Limited production facilities or insufficient capacity
Desire to maintain a multiple-source policy
Indirect managerial control considerations
Procurement and inventory considerations
Brand preference
Item not essential to the firm's strategy
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UNIT - I
TOPIC6
PRODUCTIVITY
Synopsis
Meaning of productivity
Definition of productivity
Importance of productivity
Factors affecting productivity
Measuring productivity
MEANING OF PRODUCTIVITY
Productivity is some relationship between inputs and outputs of an
enterprise. It is quantitative relationship between what we produce and
the resources used.
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Productivity is defined in terms of utilization of resources, like
material and labour. In simple terms, productivity is the ratio of output
to input. For example, productivity of labour can be measured as units
Produced per labour hour worked. Productivity is closely linked with
quality, technology and profitability.
DEFINITION OF PRODUCTIVITY
According to Peter Drucker, productivity means a balance between all
factors of Production that will give the maximum output with the
smallest efforts.
IMPORTANCE OF PRODUCTIVITY:
The concept of productivity is of great significance for
undeveloped and developing countries. In both the cases there
are limited resources which should be used to get the maximum
output i.e. there should be tendency to perform a job cheaper,
safer, and in quicker ways. The aim should be optimum use of
resources so as to provide maximum satisfaction withminimum efforts and expenditure.
Productivity analyses and measures indicate the stages and
situations where improvement in the working of inputs is
possible to increase the output.
The productivity indicators can be used for different purposes
viz. comparison of performance for various organizations,
contribution of different input factors, bargaining with trade
unions etc.
FACTORS AFFECTING PRODUCTIVITY
Economists site a variety of reasons for changes in productivity.
However some of the principle factors influencing productivity rate
are:
1.
The technological factors can increase the output per unit of
input substantially. They can be defined in terms of technology
employed, tools and raw material used.
2. The labor factors are characterized by the degree of skills of
the works force, health, and attitude towards management,
training and discipline
3. Managerial factors can be located in organizational structure,
scheduling of work, financial management, layout innovation,
personnel policies and practice work environment, material
management etc.
4. External factors or innumerable and identifiable in the
environment which an organization has to interact e.g., the
power and transport facilities, tariffs and taxes etc have
important bearing on the levels of productivity. Some of thesefactors are controllable and some are uncontrollable and
demarcation should be made between the two.
MEASUREMENT OF PRODUCTIVITY
There are a number of ways to measure productivity. The main
criterion of measuring productivity is:
In term of input performance by calculating changes in output
per unit of input.
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On the basis of output performance by calculating changes in
input per unit in output.
Following are some of the measures in common use
Where output can be measured in total quantity produced and labor can
be measured in total manpower required to produce that output. Output
and labor can also be measured in terms of their value in money units.
Each kind of measure needs some specific kind of information. The
appropriate measure can be selected on the basis of information
available and the objective of investigation. In fact the measure of
productivity indicates the performance of inputs namely labor and
capital in an enterprise. Increase in output is not an indication of
increase in productivity. Production is an absolute measure and
productivity is a relative measure.
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UNITII
TOPIC1
PLANT LOCATION
Synopsis
Introduction
Factors affecting plant location
Selection of sites and its merits and demerits
Recent trends in plant location
INTRODUCTION
Every organisation has to face location problem one or the other day .
Before finding out those reasons for location decision and the factors
affecting thereof one would like to know the following:-
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FACTORS AFFECTING THE PLANT LOCATION
1. Supply of raw material: It is necessary to consider the adequate
supply of raw materials and the nature of raw materials. The cost of
raw materials is an important element of the total cost of production.
2. Nearness to market: Nearness to market is important from the
point of view of control over the market. In those industries where the
raw materials are obtained from different source, nearness to source of
raw materials is not as important as nearness to the market.
3. Transport Facilities:Speedy transport facilities are needed for the
regular and timely supply of raw materials at low.
4. Availability of labour: The supply of labour at low cost is
important .It should also be regular. Nearness to source of labour
supply is very important. Therefore, producers should have regular
labour supply by reducing absenteeism and strikes due to
unsatisfactory working conditions.
5. Power: power may be electrical, diesel and atomic energy. All
types of power required must be in abundance in order to ensure
smooth flow of production.
6. Supply of capital: Industries require huge capital hence capital
market must be developed at industrial centres. Not only this,
industrial development banks and other financial services must also be
encouraged.
7. Natural factors--affect the location of those industries which
require a particular climate or weather conditions
8. Political factors-States with stable government attract more
industries
9. Government Subsidies and Facilities- Government gives subsidies
and good industrial development facilities in backward areas.
Industries reach these places to reap the benefits of such facilities.
10. Miscellaneous factors-
a) Sufficient water supply
b) Disposal of waste
c) Dangers of air-attacks
d) Community attitude
e) Ecological and environment considerations etc.
SELECTION OF SITE (URBAN, RURAL OR SUBURBAN
AREA)
There are broadly three possible alternatives open for the selection
of the locality of the industrial unit:
1. urban or city area
2.
rural area
3. suburban area
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The relative advantages and disadvantages of each area are discussed
as under:
URBAN AREA
Due to certain typical advantages available only in the city
area, promoters show preference for the city area as the location of the
industrial unit.
ADVANTAGES OF CITY AREA
1. Availability of good transportation facilities
2. Good and prompt postal and communication services
3. Banking and credit facilities.
4. Services of insurance companies.
5. Sufficient storing facilities.
6. Ample availability of skilled and unskilled workers.
7. Vicinity of the market.
8. Facility of the ancillary and service units.
9.
Transport facilities by road and railways.10.Development of the training institutes.
11.Educational, medical and recreational institutes increase the
amenities of lives.
DISADVANTAGES OF URBAN OR CITY AREA
1.
The cost of land is very high.
2. Sufficient land is not available.
3. The cost of labour is relatively high.
4. The rate of labour turnover is very high.
5. Trade union movement is very strong.
6. The rates of taxes are also relatively high.
7. The industrialization in the city area gives birth to slums and
dirty residences which creates the typical problems of
sanitation and health.
RURAL AREA
Advantages of Rural Area
1. The land is available at cheaper rates.
2. Large plots of the land available.
3. The rates of labour are relatively lower.
4. The rate of labour turnover is low.
5. The industrial relations between labour and management are
relatively amicable.
6. The municipal restrictions, which are found in city areas, do
not exist in rural areas, e.g., height of building, constructed area
in total land etc.
7.
Slums and dirty residence are not found in rural areas.8. No danger of bombardment in wartime.
LIMITATIONS OF RURAL AREA
1. Transportation facilities are not available
2.
Sometimes the services of post and telegraph and means of
communication are not available
3. Banking and credit facilities are also not available
4. Absence of insurance facilities
5. Storing and warehouse facilities
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6. Passenger facilities are not available
7. The advantage of ancillary units and service unit is not
available
8. Such units are very far from the market place and this increases
the cost of distribution of finished goods
9. Skilled workers are not available
10.Municipal facilities like water supply, drainage, fire fighting
are not available in rural areas
11.
There is absence of recreation facilities, good educational
institutes, good and sufficient medical facilities etc.
SUBURBAN AREA
The city area as a location of industrial unit has got many
negative aspects. The other extreme is a rural area, which again is not
free from many limitations. The better compromise in the decision is in
the selection of suburban area as the location of the industrial unit.
Suburban area is the area located on the outskirts of the city area.
Suburban area matches the advantages of the rural area with those of
city area which is located at a short distance, e.g. Odhav, narol,
kathawada, naroda, and vatva are the suburban areas of the ahmedabad
city.
Advantages of suburban area
1. Land is available at a cheaper rate
2. Adequate land is available
3. Infrastructure facilities like road, water supply, drainage etc.
4. Skilled and unskilled both type of labourers are available
5. It is possible to tap the advantage of industrial training
institutes, management development programmes etc, which
are available in nearby city area
6. The nearby city area provides a substantial market for the
products of the unit
7. Educational institutes, medical facilities and other recreational
facilities are available in the suburban area itself as well as in
the nearby city area
The limitation of suburban area as a site for industry is that in the
development process, it may be converted into a part of the urban area
with all its merits and demerits.
RECENT TRENDS IN THE LOCATION OF INDUSTRIES
The traditional factors like nearness of sources of materials,
motive power, nearness of markets, labour supply etc. have no longer
remained the effective pulling forces for location of industries. The
location trends have changed substantially due to the development of
substitute raw materials, network of electrification and transportationby roads and railway, mobility of the labour and persuasive and
compulsive policies of the government for balanced regional
development.
The recent trends in the selection of industrial locations can be
described as under.
1. Priority for the sub urban areas: the industrialist shows their
preference of the sub urban area as the sight for establishment of a new
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unit or relocation of the existing one. The industrial policy of the
government does not permit the establishment of a new unit or
expansion of an existing one in city areas.
2.Industrial development in the notified backward areas: in orderto have balanced regional development, the central government as well
as the state government has notified certain backward areas; example
punch mahals, bharuch and sunder nagar are the centrally notified
backward district of gujarat state. Similarly, gujarat state government
has also notified certain backward talukas. Different types of
incentives like cash subsidy, tax relieves, concessional financial
assistance, cheaper land and power supply etc. are provided. So, many
such areas have been developed substantially in recent times. An
illustration can be cited for the industrial development of dhabol in
punch mahals, ankleshwar in bharuch and sunder nagar.
3. Establishment of industrial estate: industrial estate is a piece of
vast land divided into different plots wherein factory shades are
constructed. The government of India has planned a national policy forthe development of industrial estate. It has assigned a responsibility of
the development of the industrial estate to state governments. In each
state, the state development corporation (sdc) has developed many
industrial estates practically in all the districts of the state. Industrial
estates have also been developed by private entrepreneurs and
chambers of commerce. The plots of land along with factory shades
and infrastructure facilities are developed in the industrial estates and
are sold to the prospective promoters. The establishment of industrial
states has greatly affected the location of industry.
4. Decentralization of industries: under the conscious industrial
policy of the government, concentration of industrial units is preventedthrough licensing policy. New units are not permitted to be started and
certain industrially congested areas. Similarly, existing units are
established in additional plants in a less developed areas or sometimes
relocate the whole unit in such areas.
5. Increased role of the government in the decision of location of
industries: government through persuasive and compulsive methods
greatly affects the location decisions in recent times. It provides certain
attractive incentives to the promoters to establish their units in less
developed areas, at the same time it does not permit excessive
industrialization in certain developed areas.
6. Competition between government and institutions: as industry
provides job opportunities to the local population, many local
organizations attempt to tempt the prospective promoters to establish
the units in their areas. They provide different types of incentives like
cheap land, relief in local taxes etc. Sometimes the objective of local
organizations and the government comes in conflict on the issue of the
location of the industries. Thus, the whole pattern of decision about the
location of industries has undergone substantial changes in recent
times.
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UNITII
TOPIC2
PLANT LAYOUT
Synopsis
Meaning of Plant layout
Objectives of plant layout
Principles of plant layout
Types of plant layout
Factors influencing plant layout
Tools/techniques of plant layout
MEANING OF PLANT LAYOUT
Plant layout means the disposition of the various facilities
(equipments, material, manpower etc.) within the areas of the site
selected. Plant layout begins with the design of the factory building
and goes up to the location and movement of work. All the facilities
like equipment, raw material, machinery, tools, fixtures, workers etc.
are given a proper place. In the words of James Lundy, It identi cally
involves the allocation of space and the arrangement of equipment in
such a manner that overall cost is minimized. According to
MoNaughton Waynel, A good layout results in comforts,
convenience, appearance, safety and profit. A poor layout results in
congestion, waste, frustration and inefficiency.
According to James Moore, Plant layout is a plan of an optimum
arrangement of facilities including personnel, operating equipment,
storage space, material handling equipments and all other supporting
services along with the design of best structure to contain all these
facilities.
In the words of James Lundy, It identically involves the
allocation of space and the arrangement of equipment in such a manner
that overall costs are minimized.
OBJECTIVES OF A GOOD PLANT LAYOUT
There is the proper utilization of space
Waiting time of the semi-finished products is minimized.
Working conditions are safer, better (well ventilated rooms etc.)
and improved
Material handling and transportation is minimized and efficiently
controlled.
The movements made by the worker are minimized.
Suitable spaces are allocated to production centers.
Plant maintenance is simpler.
There is increased flexibility for changes in product
design and for future expansion.
A good layout permits material to move through the plant
at the desired speed with the lowest cost
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There is increased productivity and better product quality
with reduced capital cost.
PRINCIPLES OF FACILITY LAYOUT
(i). Principle of integration:A good layout is one that integrates men,
materials, machines and supporting services and others in order to get
the optimum utilisation of resources and maximum effectiveness.
(ii). Principle of minimum distance: This principle is concerned with
the minimum travel (or movement) of man and materials. The facilities
should be arranged such that, the total distance travelled by the men
and materials should be minimum and as far as possible straight linemovement should be preferred.
(iii). Principle of cubic space utilization: The good layout is one that
utilise both horizontal and vertical space. It is not only enough if only
the floor space is utilised optimally but the third dimension, i.e., the
height is also to be utilised effectively.
(iv). Principle of flow: A good layout is one that makes the materials
to move in forward direction towards the completion stage, i.e., there
should not be any backtracking.
(v). Principle of maximum flexibility: The good layout is one that
can be altered without much cost and time, i.e., future requirements
should be taken into account while designing the present layout.
(vi). Principle of safety, security and satisfaction: A good layout is
one that gives due consideration to workers safety and satisfaction and
safeguards the plant and machinery against fire, theft, etc.
(vii). Principle of minimum handling: A good layout is one that
reduces the material handling to the minimum.
TYPES OR CLASSIFICATION OF PLANT LAYOUT
1. Process or Functional Layout
It is also known as functional layout and is characterized by keeping
similar machines or similar operation at one location (place). In other
words, separate departments are established for each specialized
operation of production and machines relating to that function are
assembled there. For example, all lathe machines will be at one place,
all milling machines at another and so on. This type of layout is
generally employed for industries engaged in job-order production and
non-standardized products.
Advantages of process layout
In process layout machines are better utilized and fewer
machines are required.
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Flexibility of equipment and personnel is possible in
process layout.
Lower investment on account of comparatively less
number of machines and lower cost of general purpose
machines.
Higher utilisation of production facilities.
A high degree of flexibility with regards to work
distribution to machineries and workers.
The diversity of tasks and variety of job makes the job
challenging and interesting.
Supervisors will become highly knowledgeable aboutthe functions under their department
Limitations of process layout
Backtracking and long movements may occur in the handling
of materials thus, reducingmaterial handling efficiency.
Material handling cannot be mechanised which adds to cost.
Process time is prolonged which reduce the inventory turnover
and increases the in-process inventory.
Lowered productivity due to number of set-ups.
Throughput (time gap between in and out in the process) time
is longer.
Space and capital are tied up by work-in-process.
2. Product or line Layout
It is also known as line (type) layout. It implies that various operations
on a product are performed in a sequence and the machine are placed
along the product flow line i.e. machines are arranged in the sequence
in which a given product will be operated upon. This type of layout is
preferred for continuous production i.e. involving a continuous flow
in-process material towards the finished product stage.
Advantages of Product layout
The flow of product will be smooth and logical in flow
lines. In-process inventory is less.
Throughput time is less.
Minimum material handling cost.
Simplified production, planning and control systems are
possible.
Less space is occupied by work transit and for
temporary storage.
Reduced material handling cost due to mechanised
handling systems and straight flow.
Perfect line balancing which eliminates bottlenecks and
idle capacity.
Manufacturing cycle is short due to uninterrupted flow
of materials.
Small amount of work-in-process inventory.
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Unskilled workers can learn and manage the
production.
Limitations
A breakdown of one machine in a product line
may cause stoppages of machines in the
downstream of the line.
A change in product design may require major
alterations in the layout.
The line output is decided by the bottleneck
machine.
Comparatively high investment in equipments is
required.
Lack of flexibility. A change in product may
require the facility modification.
3 Combination Layout
A combination of process and product layouts combines the
advantages of both types of layouts. A combination layout is possible
where an item is being made in different types and sizes. Here
machinery is arranged in a process layout but the process grouping is
then arranged in a sequence to manufacture various types and sizes of
products. It is to be noted that the sequence of operations remains same
with the variety of products and sizes. The following figure shows a
combination type of layout for manufacturing different sized gears.
4. Fixed or static Layout
In this type of layout, the material, or major components remain in a
fixed location and tools, machinery, men and other materials are
brought to this location. This type of layout is suitable when one or a
few pieces of identical heavy products are to be manufactured and
when the assembly consists of large number of heavy parts, the cost of
transportation of these parts is very high.
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Advantages of fixed Layout:
Flexible: This layout is fully flexible and is capable of
absorbing any sort of change in product and process. The
project can be completed according to the needs of thecustomers and as per their specifications.
Lower labour cost: People are drawn from functional
departments. They move back to their respective departments
as soon as the work is over. This is economical, if a number of
orders are at hand and each one is in the different stage of
progress. Besides, one or two workers can be assigned to a
project from start to finish. Thus it reduces labour cost.
Saving in time:The sequence of operations can be changed if
some materials do not arrive or if some people are absent.
Since the job assignment is so long, different sets of people
operate simultaneously on the same assignment doing different
operations
Disadvantages of fixed Layout:
Higher capital investment: As compared to product or
process layout, capital investment is higher in this type of
layout. Since a number of assignments are taken, investments
in materials, men and machines are made at higher cost.
Unsuitability: This type of layout is not suitable for
manufacturing or assembling small products in large quantities.
It is suitable only in case where the product is big or the
assembling process is complex.
4. Group layout or cellular layout/ Technology
There is a trend now to bring an element of flexibility into
manufacturing system as regards to variation in batch sizes and
sequence of operations. A grouping of equipment for performing a
sequence of operations on family of similar components or products
has become all the important.
Group technology (GT) is the analysis and comparisons of
items to group them into families with similar characteristics. GT can
be used to develop a hybrid between pure process layout and pure flow
line (product) layout. This technique is very useful for companies that
produce variety of parts in small batches to enable them to take
advantage and economics of flow line layout.
The application of group technology involves two basic steps;
first step is to determine component families or groups. The second
step in applying group technology is to arrange the plants equipment
used to process a particular family of components. This represents
small plants within the plants. The group technology reduces
production planning time for jobs. It reduces the set-up time.
Thus group layout is a combination of the product layout and process
layout. It combines the advantages of both layout systems. If there are
m-machines and n-components, in a group layout (Group-Technology
Layout), the m-machines and n-components will be divided into
distinct number of machine-component cells (group) such that all the
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components assigned to a cell are almost processed within that cell
itself. Here, the objective is to minimize the inter cell movements.
Advantages of Group Technology Layout
Group Technology layout can increase
Component standardization and rationalization.
Reliability of estimates.
Effective machine operation and productivity.
Customer service.
It can decrease the
Paper work and overall production time.
Work-in-progress and work movement.
Overall cost
Limitations of Group Technology Layout
This type of layout may not be feasible for all situations.
If the product mix is completely dissimilar, then we may not
have meaningful cell formation
FACTORS INFLUENCING PLANT LAYOUT
The following are some important factors, which influence the
planning of effective layout to a significant degree.
a) Nature of the product: The nature of the product to be
manufactured will significantly affect the layout of the plant.
Stationary layout will be most suitable for heavy products while
line layout will be best for the manufacture for the light productsbecause small and light products can be moved from one machine
to another very easily and, therefore, more attention can be paid to
machine locations can be paid to machine locations and handling
of materials.
b) Volume of production: Volume of production and the
standardization of the product also affect the type of layout. If
standardized commodities are to be manufactured on large scale,
line type of layout may be adopted.
c) Basic managerial policies and decisions: The type of layout
depends very much on the decisions and policies of the
management to be followed in producing the commodity with
regard to the size of plant, kind and quality of the product, scope
for expansion to be provided for, the extent to which the plant is to
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be integrated, amount of stocks to be carried at anytime, the kind of
employee facilities to be provided etc.
d) Nature of plant location: The size shape and topography of the
site at which the plant is located will naturally affect the type of
layout to be followed in view of the maximum utilization of the
space available .For e.g., if a site is near the railway line the
arrangement of general layout for receiving and shipping and for
the best flow of production in and out the plant may be made by
the side of the railway lines .If space is narrow and the production
process is lengthy, the layout of plant may be arranged on the land
surface in the following manner:
e) Type of industry process:This is one of the most important
factors influencing the choice of type of plant layout. Generally the
types of layout particularly the arrangement of machines and work
centers and the location of workmen vary according to the nature
of the industry to which the plant belongs. For the purpose of lay
out, industry may be classified into two broad categories: (i)
Intermittent and (ii) continuous. Intermittent type of industries is
those, which manufacture different component or different
machines.
f) Types of methods of production: -
Layout plans may be different according to the method of production
proposed to be adopted. Any of the following three methods may be
adopted for production- (1) Job order production, (2) batch production,
and (3) mass production. Under job production goods are produced
according to the orders of the customers and therefore, specification
vary from customer to customer and the production cannot be
standardized. The machines and equipment can be arranged in a
manner to suit the need of all types of customers. Batch production
carries the production of goods in batches or group at intervals. In this
type of manufacturing the product is standardized and production is
made generally in anticipation of sales. In such cases functional or
process layout may be adopted. In case of mass production of
standardized goods, line layout is most suitable form of plant layout.
g) Nature of machines:-
Nature of machines and equipment also affects the layout of plants. If
machines are heavy in weight or create noisy atmosphere, stationery
layout may reasonably be adopted. Heavy machines are generally fixed
on the ground floor. Ample space should be provided for complicated
machines to avoid accidents.
h) Climate:-
Sometimes, temperature, illumination and air are the deciding factors
in the location of machines and their establishments. For example, in
lantern manufacturing industry, the spray-painting room is built along
the factory wall to ensure the required temperature control and air
expulsion and the process of spray painting may be undertaken.
i) Nature of material: -
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Design and specification of materials, quantity and quality of materials
and combination of materials are probably the most important factors
to be considered in planning a layout. So, materials storage, space,
volume and weight of raw materials, floor load capacity, ceiling height
,method of storing etc. should be given special consideration. This will
affect the space and the efficiency of the production process in the
plant. It will facilitate economic production of goods and prompt
materials flow and soundly conceived materials handling system.
j) Type of machine: -
Machines and equipment may be either general purpose or special
purpose. In addition certain tools are used. The requirements of each
machine and equipment are quite different in terms of their space;
speed and material handling process and these factors should be given
proper consideration while choosing out a particular type of layout.
This should also be considered that each machine and equipment is
used to its fullest capacity because machines involve a huge
investment. For instance, under product layout, certain machines may
not be used to their full capacity so care should be taken to make full
use of the capacity of the machines and equipment.
k) Human factor and working conditions:-
Men are the most important factor of production and therefore special
consideration for their safety and comforts should be given while
planning a layout, specific safety items like obstruction-free floor,
workers not exposed to hazards, exit etc. should be provided for. The
layout should also provide for the comforts to the workers such as
provision of rest rooms, drinking water and other services etc.
sufficient space is also to be provided for free movement of workers.
l) Characteristics of the building: -
Shape of building, covered and open area, number of storeys,
facilities of elevators, parking area and so on also influence the layout
plan. In most of the cases where building is hired, layout is to be
adjusted within the spaces available in the building. Although minor
modification may be done to suit the needs of the plants and
equipment. But if any building is to be constructed, proper care should
be given to construct it according to the layout plan drawn by experts.
Special type of construction is needed to accommodate huge or
technical or complex or sophisticated machines and equipment.
TOOLS AND TECHNIQUES OF PLANT LAYOUT
1)Charts and diagrams:
In order to achieve work simplification, production engineers make useof several charts and diagrams for summarizing and analyzing
production process and procedure. These include
a)Operation process chart:
It subdivides the process into separate operations and inspection. When
a variety of parts and products are manufactured which follow a
different path across several floor areas, an operation process chart
may be necessary for the important material items or products. The
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flow lines of the charts indicate the sequence of all operation in the
manufacturing cycle.
b) Flow process chart:
This chart is the graphic summary of all the activities taking place on
the production floor of an existing plant. By preparing this type of
chart, it can be found out as to where operations can be eliminated ,
rearranged, combined, simplified or subdivided for greater economy.
3. Process flow diagram:
The diagram is both supplement and substitute of process flow chart. It
helps in tracing the movement of material on a floor plan or layout
drawing. A diagram may be drawn to scale on the original floor plan to
show the movement of work. It is a good technique to show long
materials hauls and backtracking of present layouts, thereby indicating
how the present layout may be improved. Colored lines can show the
flow of several standards products. Layouts, thereby indicating how
the present layout may be improved. Colored lines can show the flow
of several standard products.
(2) Machines data card: This card provides full information
necessary for the placement and layout of equipment. The cards are
prepared separately for each machine. The information generally given
on these cards include facts about the machine such as capacity of the
machines, scape occupied, power requirements, handling devices
required and dimensions.
(3) Templates: Template is the drawing of a machine or tool cut out
from the sheet of paper. Cutting to scale shows the area occupied by a
machine. The plant layout engineer prepares a floor plan on the basis
of reel vent information made available to him. The template technique
is an important technique because (i) it eliminates unnecessary
handlings, (ii) minimize backtracking of materials, (iii) it makes the
mechanical handling possible, (iv) it provides a visual picture of
proposed or existing plan of layout at one place, (v) it offers flexibility
to meet future changes in the production requirements.
(4) Scale models: Though the two-dimensional templates are now in
extensive use in the fields of layout engineering but it is not much use
to executives who cannot understand and manipulate them .One
important drawback of template technique is that it leaves the volume,
depth, height and clearance of the machines to the imaginations of the
reader of the drawing. These drawbacks of the template technique have
been removed through the development of miniature scale models of
machinery and equipment cast in metal.
(5) Layout drawings:Completed layouts are generally represented by
drawings of the plant showing wall, columns, stairways, machines and
other equipments, storage areas and office areas.
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UNITII
TOPIC - 3
CAPACITY PLANNING
Synopsis
Meaning of capacity
Importance of Capacity
Types of capacity
Factors influencing capacity
Capacity planning strategies
MEANING OF CAPACITY
Capacity is the limiting capability of a productive unit to
produce within a stated time period, normally expressed in terms of
output units per unit of time.
IMPORTANCE OF CAPACITY PLANNING
a) Impacts ability to meet future demands: Capacity essentially
limits the rate of possible output. Having capacity to satisfy demand
can allow a company of taking advantage of tremendous opportunities.
An international automobile manufacturer of good repute increased its
production by working on its capacity decision after its quality product
received a lot more demand than it was originally anticipated.
b) Affects operating costs: We already know that estimated or
forecasted demand differs from actual demand, so the ideal concept of
capacity matching demand is untrue. Organizations should be willing
to take a critical decision to balance the cost of over and under
capacity. Overcapacity reflects overkill of resources and under
capacity shows a weak management philosophy to make best use of an
available market.
c) Acts as a major determinant of initial costs : It is typical to see
that greater the capacity of a productive unit, greater would be the cost.
This does not mean I am advocating a one to one relationship for
higher capacity for production to costs; in fact larger units tend to cost
proportionately less than smaller units. E.g. Pakistan Steel Mill at
Karachi is one good example, where higher costs are misunderstood as
the mills capacity is not being fully utilized
d) Involves long-term commitment: Once long term commitments of
resources have been taken, the difficulty of reversing would cost more.
Indicating a capacity increase or decrease for an organization set up
would mean additional costs.
e) Affects competitiveness: This is very critical, if a firm has an
excessive capacity or can quickly add capacity, which fact may serve
as a barrier against entry by other firms.
f) Affects ease of management: Capacity increase or decrease
decisions involves management to answer the question of operating the
organization as well as an increase or decrease in the plant capacity
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g) Globalization adds complexity: Capacity decision often involves
making a decision in a foreign country which requires the management
to know about the political, economic and cultural issues.
h) Impacts long range planning: Capacity decisions extend beyond
18 months and thus get classified as long term in nature
TYPES OF CAPACITY
1. Design capacity: Designed capacity of a facility is the planned or
engineered rate of output of goods or services under normal or full
scale operating conditions. For example, the designed capacity of the
cement plant is 100 TPD (Tonnes per day). Capacity of the sugar
factory is 150 tons of sugarcane crushing per day.
2. System capacity: System capacity is the maximum output of the
specific product or product mix the system of workers and machines is
capable of producing as an integrated whole. System capacity is less
than design capacity or at the most equal, because of the limitation of
product mix, quality specification, breakdowns. The actual is even less
because of many factors affecting the output such as actual demand,
downtime due to machine/equipment failure, unauthorized
absenteeism.
The system capacity is less than design capacity because of long range
uncontrollable factors. The actual output is still reduced because ofshort-term effects such as, breakdown of equipment, inefficiency of
labour. The system efficiency is expressed as ratio of actual measured
output to the system capacity.
System Efficiency (SE) = Actual output
System capacity
3. Licensed capacity: Capacity licensed by the various regulatory
agencies or government authorities. This is the limitation on the output
exercised by the government.
4. Installed capacity: The capacity provided at the time of installation
of the plant is called installed capacity.
5. Rated capacity: Capacity based on the highest production rate
established by actual trials is referred to as rated capacity.
FACTORS AFFECTING CAPACITY DECISION
1. Facilities.The design of facilities includes the size as well as the
provision of expansion. Other important factors that are necessary
include transportation costs, distance to market, labor supply, energy
supply sources and the ease and smoothness with which work can be
performed. We should also include environmental factors such as
heating, lighting and ventilation which not only increase the
performance of the workforce but also act as source of motivation and
worker loyalty. A failure to comply with this would indicate poor
design which in reality translates to lack of managerial acumen.
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2. Product and service factors can have a tremendous influence on
capacity. E.g. when items are similar, the ability of the system to
produce those items is generally much greater than when successive
items are different and unique. The idea is more uniformity in the final
product service output the greater capacity. I am making a reference to
a PC manufacturer in USA which decided that it would standardize its
products and split its assembly lines only at the point where the a small
differential product feature was required.
3. Process factors refer to the quantity and quality requirements of a
process. Quantity always refers to capacity. Another added feature is
quality of output. If quality of output does not match the standardrequirements it would generate inspection and possible reworks.
4. Human factors include skill, craftsmanship, training and
qualification to handle any job it also includes the motivational factors.
5. Operational factorswith respect to effective capacity always refer
to scheduling, late deliveries, acceptability of purchased materials,
parts, quality inspection, control procedures and inventory problems.
Scheduling issues arise when an organization has a difference in
equipment capabilities for development of alternative capacities.
Inventory problems have a negative impact on capacity
6. Supply chain factors relate to any short coming to suppliers,
warehouse processing, operational hick up or distribution issues.
7. External factors include product standards, safety regulations,
unions and pollution control standards. At times organizations have
experienced shutting down of their facility if they could not provide
support to government regulations of pollution control.
CAPACITY PLANNING DECISIONS AND STRATEGIES
Capacity planning is concerned with defining the long-term and the
short-term capacity needs of an organization and determining how
those needs will be satisfied. Capacity planning decisions are taken
based upon the consumer demand and this is merged with the human,
material and financial resources of the organization.
Capacity requirements can be evaluated from two perspectiveslong-
term capacity strategies and short-term capacity strategies.
1. Long-term capacity strategies
Long-term capacity requirements are more difficult to determine
because the future demand and technology are uncertain. Forecasting
for five or ten years into the future is more risky and difficult. Even
sometimes companys todays products may not be existing in the
future. Long range capacity requirements are dependent on marketing
plans, product development and lifecycle of the product. Long-term
capacity planning is concerned with accommodating major changes
that affect overall level of the output in long-term.
1. Multiple products: Companys produce more than one product
using the same facilities in order to increase the profit. The
manufacturing of multiple products will reduce the risk of failure.Having more than one product helps the capacity planners to do a
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better job. Because products are in different stages of their life-cycles,
it is easy to schedule them to get maximum capacity utilisation.
2. Phasing in capacity: In high technology industries, and in
industries where technology developments are very fast, the rate of
obsolescence is high. The products should be brought into the market
quickly. The time to construct the facilities will be long and there is no
much time as the products should be introduced into the market
quickly. Here the solution is ph
