OPERATIONS MANAGEMENT

ASSIGNMENT A

(Q 1) Plant location decisions are important because of the following

reasons
The location of the facility will fix the production technology and cost
structure. E.g. a manufacturing facility which is located in an under
developed country will choose a labour intensive process to utilize
the availability of low cost labour and in the same way a
manufacturing facility which is located in a developed country will
choose capital intensive manufacturing processes since the cost of
labour is high in that region
The location of the facility depends also on the size and nature of the
business. A small scale business firm will select the location near to
the market. But for the big firm, the amount of investment required
largely depends on the location selection selected. Since these
investments are irreversible in nature at least in the short run the
management of the firm should be careful in selecting a site. For
instance an automobile manufacturing unit cannot be shifted from
one place to other.
The location of the facility affects the companys ability to serve its
customers quickly and conveniently. For example in nationwide
commercial trucking business, wants to locate a truck terminal. Since
the trucking business is highly dependent on interstate highway, the
truck terminal s must be located along the highways or close as close
to highways as possible.
The factors which need to be considered to arrive at the ideal location of a
plant are as follows.

Market proximity: This factor is very important because when the

facilities are located close to the market helps firms not to only reduce
transport costs but also serve their customers better. The firms can
provide just in time delivery, respond to changes in demand and react
quickly to field or service problems
Integration with Other Parts of the Organization: An organization/group
that already has some plants and wants to start or establish a new plant
would like to locate it near to the existing plants so that its work can be
integrated with that of other plants. This helps firms view the entire
group as a single entity rather than as a number of independent units.
. Availability of Labour and Skills: The availability of labour and skills is
one of the important factors in production. Labour may be readily
available in some areas than in other areas. Availability of skilled as well
as unskilled labour in the required proportion in one area is usually not
possible. Firms that emphasize more on technology require skilled
people and so prefer a location where the skilled people are available.
On the other hand, firms with more labour intensive processes prefer the
area where the cost of labour is cheap and the labour is available plenty
in number.
. Site Cost: The management of the firm should ensure that the cost
of the site is reasonable for the benefits that it is going to provide.
. Availability of Amenities: Locations with good external amenities such
as housing, shops, community services, communications systems, etc.
are more attractive than those located in the remote areas. For instance,
personal and transport system like bus and train service is considered
very important by many companies.
. Availability of Transportation Facilities: The five basic modes of physical
transportation are air, road, rail, water and pipeline. Firms consider the
relative cost, convenience and suitability of ach mode and then select
the transportation method. For instance, the firms that produce goods
that are to be exported may choose a location near seaport or large
airport.
. Availability of Inputs: Though goods transportation helps in obtaining
and delivering goods and services readily, a location near to the
suppliers helps the firms reduce costs. It also enables the management

of the firm to meet the suppliers easily and discuss aspects like quality,
technical or delivery problems.
. Availability of Services: Electricity, water, gas, drainage, and disposal of
waste are some of the important services that need to be considered
while selecting a location. For example, the food and textile units require
considerable quantities of water and power. Rapid communication
network is required for financial services, and effective drainage and
disposal system is required for process industry as it produces lot of
waste.
. Suitability of Land and Climate: Climatic conditions such as humidity,
temperature and atmosphere, and the geology of the area should be
considered while selecting a location. If geographic conditions are not
favorable, firms have to use modem building techniques (and incur high
costs) to overcome these disadvantages. For instance, a hilly, rough and
rocky terrain is not suitable for a plant location, since leveling the area
needs a lot of expenditure.
. Regional Regulations: Firms should ascertain that the proposed
locations not violate any local regulation and laws. The laws and
regulations concerning the recruitment of employees and the disposal of
affluent have to be carefully studied while selecting the location.
. Room for Expansion: While selecting a location, firms should ensure
that there is adequate room for expansion of the firm's operations in the
future.
. Safety Requirements: Some units such as nuclear power stations and
other chemical and explosive factories may present potential threat to
the surrounding neighborhood. So firms should ensure that such units
are located in remote areas where the damage will be minimal in case of
an accident.
. Political, Cultural and Economic Situation: Firms should be aware of
political, cultural and economic environment of proposed location as
these factors might affect the smooth running of the plant. For
instance, firm suffer losses if their plants are located in politically and
socially sensitive places.
. Regional Taxes, Special Grants and Import I Export Barriers: For
developing production facilities in locations such as export promotion

zones, technology parks and industrial estates, governments offer some

special grants like tax holidays, infrastructure support, low-interest loans,
etc. Firms can prefer to locate their units in these places. For instance,
Andhra Pradesh government is offering special incentives for export
oriented firms willing to establish in special export zones.

(Q2)
It is true that effective planning and control guarantees better utilization
of machines and labour. Before going into details of how can effective
planning and control guarantees better utilization of machines and labor
we need to know what is planning and controlling.
PLANNING
Planning involves collection and maintenance of data regarding time
standards, materials, and their specifications, machines and their
quantities, tools and their process capabilities, drawings and operational
layouts. Planning is seeing that requirements, tools, machines, men,
instructions authorizations and the like will be available at right time and
in the right quantities and are of proper quality. It also involves
preparation of load charts and fitting various work orders into
uncommitted time available on the companys facilities (men and
machines). Planning includes preparations of all necessary forms and
paper work and designing suitable feedback as to what may happen. It
also involves forward thinking regarding the remedial action to be taken
if the job falls behind schedule.

CONTROL
Control involves dissemination of data, preparation of reports regarding
output, machines and labour efficiency, percentage of defectives etc.
Control is seeing that the requirements are actually made available at
right place and in the right quantities. It involves seeing that jobs are
started and completed as schedule prepared by the scheduling cell of
the production planning and control, and it goes up to the actual issue of
forms and paper work. Control involves keeping track of what is
happening and collecting information as to what has happened, it also
gives suggestions remedial action when the job is falling behind
schedule.
So planning without control is like a bank without a manager. What has
been planned need to be followed by a control so that things should be
achieved as planned? After explaining the meaning of planning and
control above then we are able to know that effective planning and
control guarantees better utilization of machines and labour because the
planning of machine will be in line with the specifications of job to be
carried out e.g. quantity of output and quality of output which will make
sure that there is no idle time for the machine and no loss of usage and
repairs due to using required machine capacity as per requirement of
output. This is the same with labour if there is effective planning and
control there will be no waste of labour hours, paying of idol time and
producing more than required. This will assist utilization of labour
accordingly by not using more than necessary manpower to produce the
required output which will result to lower cost of output. Effective
planning and control will make sure that when job is behind schedule
due to labour or machine problems then suggestion remedial action is
taken to rectify the problem before much of the labour and machine is
used for nothing which can make the output so expensive for nothing.
This also will avoid paying of overtime if machine and labour are
effectively planned and controlled. Therefore taking into account the
facts mentioned above, it is true that effective planning and control
guarantees better utilization of machines and labour

(Q3)
The physical disposition of the facilities of a plant and its various parts for
the purpose of achieving quickest and smoothest production is referred to
as the layout of the plant.
TOOLS AND TECHNIQUES FOR LAYOUT ANALYSIS
The development of good layout is dependent upon the quality and quantity
of data on various factors influencing the layout. Data needs to be collected
regarding various materials, processes, routing, material flow, space
requirements, different activities and their relationships etc. Important tools
and techniques helpful in the layout analysis are as follows:
(A). Process Charts
(B). Diagrams
(C). Travel Chart
(D). REL Chart
(E). Templates
(F). Scale Models
(A). Process Chart
Two well known process charts are: Operation Process Chart, and Flow
Process Chart.

Operation Process Chart is the graphic representation of the major

activities and entry point of materials. The chart depicts the major
operations and inspections performed on the materials.
Flow Process Chart sets out the flow and activities of a component/man
through a series of operations, inspections, transportations; delays and
storages. The chart also provides information on distance and time.
(B). Diagrams
Diagrams are useful to:
Study different layout alternatives and thereby select the most optimum
layout.
Study the extent of traffic over the different routes of the plant.
Identify extent of backtracking, cross traffic and obstacles encountered
during movement of materials.
Study the activity relationships between departments/ work centres.
Diagrams are of two types: flow diagrams and string diagrams.

Flow diagrams are the scale plans on which the movements of an object
(men/material) are traced by lines.
String diagrams are the scale plans on which the movements of an object
(men/material) are indicated by a string.
,
(C). Travel Chart
Travel chart presents the quantitative data on material flow by recording
distance and frequency of movements between different pairs of
departments. Travel charts are prepared in process type of layouts and are
useful to determine the degree of closeness desired between different
departments in terms of material interaction. Efforts are made in layout
design to place those departments close to each other which have high
degree of material interaction and thereby minimize the materials handling.
(D). REL Chart
REL chart is known as "Relationship Chart" and it exhibits the relationship
between pairs of departments in terms of degree of closeness desired.
(E). Templates
Templates are the two dimensional cutouts of card board (or coloured
paper). They are to scale and are placed on the scaled plan of the building
drawn on a board, or on a cross hatched surface or on a graph paper.
Templates show the plan of the various activities machine tools, work
benches, storage racks, fitting etc.
Templates offer number of advantages:
The congestion, bottlenecks and backtrackings can be better visualized
with templates.
They can be conveniently moved on the graph paper providing the flexibility
to evaluate various feasible arrangements of facilities.
They are less laborious and save lot of time which otherwise is spent
making drawings for each alternate plant layout arrangement.
Templates, however, have few limitations
Overhead facilities cannot be visualized.
Non-technical person find it difficult to comprehend the arrangement.

(F). Scale Models

Three dimensional models are the scale models of the facilities resembling
the actual in length, width and height. They are usually made of wood or
plastic. Typical examples of the uses of three dimensional models are
layout plans of chemical factories, refineries etc.
Three dimensional models have numerous advantages:
Non-technical persons find it easy to comprehend.
Overhead facilities can be shown.
Services such as lighting, ventilation, safety features can be easily
incorporated. Like templates, models too can be shifted easily and quickly.

ASSIGNMENT B
(Q1)
Aspects which a manager should consider before making a decision to
make or buy are:
(a) If it cost less to buy rather than to manufacture the component
internally.
(b)If the return on the necessary investment to be made to manufacture the
component is not attractive enough.

If the company does not have the requisite skilled manpower to make the
component. (d) If it feels that manufacturing internally will mean additional
labour problem.
(e) If adequate managerial manpower is not available to take charge of this
extra work of manufacture.
(f) If the component to be manufactured shows much seasonal demand or
upswings and downswings of demand resulting in a considerable risk of
maintaining inventories of it; also if the raw material for the component
faces much seasonal fluctuations, which makes the manufacture of the
product more risky for the buying company.
(g) If there is no difficulty in transporting the component from the supplier to
the buying company.
(h) If the process of making the product is confidential or is patented.
(i) If the same component is not needed year in and year out and there is
much risk of technological obsolescence discouraging investment in capital
equipment to manufacture the component internally

(Q2)
Two basic aspects of function of plant maintenance are preventive and
corrective
Preventive maintenance
Preventive maintenance is the maintenance system wherein certain
maintenance activities are carried out in a planned manner with an explicit
objective of detecting weak spots and the perfect functioning of the plant is
ensured by suitable preventive measures including replacement of plants
which could still be used.
Preventive maintenance works because almost no equipment fails without
showing the sign of malfunctioning. If a fault is detected when it is still in a
pre matured minor stage, eventual breakdown of the equipment can be
protected. Preventive maintenance advocates maintenance procedure
whereby the condition of the plant is constantly watched through systematic
inspection to unearth unhealthy conditions and prevent action.

Corrective maintenance
It is the process of keeping the plant or restoring the plant back to its
original performance without waiting for the plant to completely becomes
inefficient
Preventive maintenance differs with corrective maintenance in such way
that preventive maintenance is based o the idea of prevention is better than
cure. It is mainly for making the plant not to break down while corrective
maintenance is a maintenance which restores the plant back to its original
performance
Activities considered under preventive maintenance are:
1) Preventive Inspection.
2) Planned Lubrication.
3) Cleaning & Upkeep.
4) Minor adjustments and repair.
5) Equipment Records.
6) Spare controls
7) Condition Monitoring.

1) Preventive Inspection
Preventive Inspection is an integral part of preventive maintenance
program. Inspection is carried out systematically, at periodical intervals, by
the staff specially trained, to determine the condition of the equipment.
Preventive inspection identifies:
Parts which are might have worn out or deteriorate.
Surfaces which might have been corroded.
Bolts and nuts which might have been loose due to vibration.
Elements (e.g. lead screw and nuts) which might have developed
excessive play (or backlash).
Alignment which might have gone out of order.
Defects which might have been caused due to over gearing.
Other hoist of defects.
2) Planned Lubrication
Planned lubrication is said to be nervous system of equipment .regular
lubrication with carefully selected lubricants is an essential factor in the
maintenance of high grade machine tools working under continuous loads.
Lubricants help to Retard the rate of wear and tear of moving parts by converting solid
frictions into liquid frictions.
Keep the temperature of bearings within the allowable limits.
Protect parts from moisture and dust.
Keep power consumption within allowable limits.

Planned lubrication involves the following activities:

Proper identification of lubrication points.
Periodical cleaning of oil sumps
Cleaning of plunger pumps
Lubrication of bearing in motors.
Replacement of wicks
Replacement of damaged oil nipples
Replacement of gaskets
Table lubrication

3) Cleaning and upkeep

Cleaning and upkeep of the new machine is another important activity of
preventive maintenance. Periodical cleaning of the machine is required to
prevent ingression of the duct into components. Dust gets mixed with the
lubricants, forms an abrasive substance and causes premature failure of
machinery. The collection of dust on machinery also leads to destruction of
protective coating which further accelerates the rate of wear and tear of the
equipment. Besides periodic cleaning of machines and surrounding areas
provides tidy and clean working environment which itself improves
maintenance efficiency.

The activity of periodic cleaning of machines is usually assigned to

workmen. However, machine elements and accessories which require
dismantling are attended to by the maintenance department. A well
designed preventive maintenance system incorporates periodic cleaning of
plant and equipment schedules as a part of its preventive maintenance
activity.
4) Minor adjustments and replacements
Preventive inspection may identify certain points which require minor
adjustments or replacements. Typical examples are:
Tightening of loose parts
Replacement of oil filter and oil seals
Replacement of damaged oil nipples
Depending upon the urgency of work these preventive maintenance jobs
are required to be scheduled.
5) Equipment records
Good record keeping is the essence of good preventive maintenance.
The following documents and records must be maintained for smooth
working of the department.
Instruction manual
Spare parts catalog
Electrical and hydraulic diagram
Equipment cards
Equipment history cards
6) Spares control
Spare parts must be available as per need otherwise the down time
unnecessarily increases. A suitable system of inventory control of spares,
therefore, should be evolved to ensure availability of spares with minimum
capital lock up.
7) Condition monitoring
It is the maintenance work initiated on a result on knowledge of the
condition of an item from routine or continuous checking. Corrective
maintenance initiated by the maintenance engineer to replace a bearing of

a motor based on observation of his maintenance management during a

preventive maintenance check up by touching the outer casing of motor is
nothing but condition monitoring.
Activities considered under corrective maintenance are:
1. Servicing & Overhauling.
2. Rebuilding/reconditioning.
3. Modifications and Improvements.
4. Planned replacement of worn & torn out Parts.
5. Emergency Repair.
6. Breakdown maintenance.
1) Servicing & Overhauling
To get trouble free service from equipment, it is always necessary to carry
out certain periodic activities such as servicing and overhauls. The
frequency of such maintenance activities should be predetermined so that
work can be scheduled in advance to fit into the idle period of the
equipment.
2) Rebuilding/Reconditioning
Reconditioning is the process of withdrawing the equipment from the
production line, dismantling it unit wise, visualizing defects ,effecting
adjustments ,replacing worn-out parts and finally building it to get desires
accuracies. Reconditioning helps the firm to:
Eliminate Problem, frequent breakdown.
Increase the lift of the components.
Plan the requirement of the replacement spares.
3) Design Modifications and Improvements
Design Modifications and Improvements in equipment are carried out either
with a view to eliminate the need for maintenance and to reduce
breakdown frequency (called design-out maintenance) or reduce time and
efforts required in carrying out maintenance work (called design-inmaintenance)

4) Planned Maintenance of worn-out Parts

Replacement of worn-out parts (e.g. gears, shafts) is an important activity
of corrective maintenance. Replacement activity of corrective maintenance.
Replacement of worn-out parts should be planned in a manner that
reduces the down time of the machine. This can be done by synchronizing
the activity of the machines due to non-availability
of work etc.
5) Emergency repairs
Emergency repairs are the maintenance necessary to be undertaken
immediately to avoid serious consequences of loss of production, extensive
damage to equipment or to correct unsafe conditions.
6) Breakdown Maintenance
Breakdown Maintenance is the Maintenance work carried out after the
equipment has failed which may include replacement of worn-out parts
also.

(Q3)
Total Quality Management It is a philosophy that seeks organization-wide
improvement through the involvement of every individual in the
organization. It differs from the traditional quality control methods in the fact
that in TQM maintaining quality standards is the responsibility of everyone
in the organization. The traditional systems restricted quality only to quality
personnel and manufacturing departments. Ensuring quality was narrowly
focused on products meeting the set specifications. Thus any quality
related problem could be attributed to the manufacturing department. This
narrow view did not take into consideration the fact that the performance of
the manufacturing department is dependent upon the services rendered to
it by other departments. For example, if the purchasing department did not
properly evaluate the raw material supplier, the final quality of the product
would be affected adversely. Moreover, delays in processing documents
within the company often results in delayed delivery to the consumers. This
has a negative impact on the company's image. The TQM philosophy
seeks to remove these discrepancies by making quality control the

responsibility of everyone in the organization. The entire organization is

directed toward serving the customer most effectively. TQM divides
customers into two categories external customers, who consume final
goods and services offered by the company, and internal customers, the
employees of the organization. The TQM philosophy believes that each
department should treat other departments as its customers. A number of
tools and techniques are used to give shape to TQM philosophy. The main
focus of these tools is on team building and empowering employees. Some
of these tools are:
Kaizen or continuous improvement in process, skill sets, systems and
operations
Participation of shop floor employees through initiatives like quality circles
Improvement in interdepartmental coordination and functioning through
initiatives like QITs (Quality Improvement Teams)
Proper maintenance of machinery and other capital equipment through
initiatives like Total Productivity Management.

CASE STUDY
ASSIGNMENT
(1)The major factors that should be considered in choosing one of the
three location are
(A)Availability of skilled or unskilled labour
(B)Availability of Transportation Facilities

( C) Availability of Services:
(D)Room for Expansion
(E)Total cost
(F) Safety Requirements
(G)Availability of Inputs
For the Blue Powder plant, the factors developed in NO 1 only
(A)Availability of skilled or unskilled labour
(B)Availability of Transportation Facilities:
(C) Availability of Services:
(D)Room for Expansion:
(G)Availability of Inputs:
should be weighted heavily because of the following reasons
Since the production processes at Blue Powder require about 300
production workers and 200 engineering and management personnel
then Availability of labour and skills cannot be taken as less important
because if the work force is less than the required then what is
supposed to be produced per day will not be achieve hence the
company can be operating on loss
(a)Blue powder plant require large amount of water and other utilities
therefore, availability of resources is also more important because
without much of water and other utilities the production processes
cannot go well
(b)Blue powder production processes require large expanses of land
because of that then large land for expansion is very important for
the production processes otherwise any location with a small land
is not ideal for this plant
(c) The production processes at Blue Powder require large volumes of
materials in and out of the plant because of that then availability of
inputs and transport should be weighted heavily otherwise without
these two factors the production processes can be in a total mess

For the other factors like Total cost and Fire and Explosion tolerant
areas should not be weighted heavily because the total cost can be
reduced if all the operation are being managed properly regardless of
wherever the plant has been located which is the same with fire and
explosion tolerant areas of which do not happen every day so that
cannot be weighted heavily because even if the plant is located in the
areas of low fire and explosion tolerant it may happen that years can
pass without any occurrence of fire and explosion.
(3)
The factors listed above can be analyzed as follows
. Availability of Labour and Skills: The availability of labour and skills is
one of the important factors in production. Labour may be readily
available in some areas than in other areas. Availability of skilled as well
as unskilled labour in the required proportion in one area is usually not
possible. For the Blue Powder Company it requires 300 unskilled people
and 200 skilled people so the plant should be located where the
unskilled people are available.

. Availability of Transportation Facilities: The five basic modes of physical

transportation are air, road, rail, water and pipeline. For the Blue Powder
Company, require large volumes of materials to be shipped in and out of
the plant therefore the plant should be located to a site which is close to
a seaport or large airport.

. Availability of Inputs: Though goods transportation helps in obtaining

and delivering goods and services readily, a location near to the
suppliers helps the firms reduce costs. It also enables the management
of the firm to meet the suppliers easily and discuss aspects like quality,
technical or delivery problems .For the Blue Powder Company, the plant

should be located near for the reasons pointed out above to the
suppliers

. Availability of Services: Electricity, water, gas, drainage, and disposal of

waste are some of the important services that need to be considered
while selecting a location. Since the Blue Powder Company requires
large amount of water and other utilities then the best site for location of
the plant should be where availability of the water and other utilities is
not a problem

. Suitability of Land and Climate: Climatic conditions such as humidity,

temperature and atmosphere, and the geology of the area should be
considered while selecting a location. If geographic conditions are not
favorable, firms have to use modem building techniques (and incur high
costs) to overcome these disadvantages. For instance, a hilly, rough and
rocky terrain is not suitable for a plant location, since leveling the area
needs a lot of expenditure

. Room for Expansion: While selecting a location, firms should ensure

that there is adequate room for expansion of the firm's operations in the
future. For the Blue Powder Company which requires large expenses of
land then the site area where the plant will be located should have a
large area of land to carte for the production processes

.. Safety Requirements: Some units such as nuclear power stations and

other chemical and explosive factories may present potential threat to the
surrounding neighborhood which is the same with the Blue Powder
Company of which its plant should be located in areas which is fire and
explosion tolerant where the damage will be minimal in case of any fire and
explosion occurrence

Total cost: The total cost of operations of a company is very important to

be taken into account when one wants to know which location the company
should choose for its plant. Any site with less total cost is good for the
location of a plant. For the Blue Powder Company the best location of the
plant is the location with less total cost but also with all the important
factors developed in NO 1.
For the Blue Powder the best area where the plant should be located is Las
Vegas since it has less total cost as compared with Santa Fe and Yuma
that is if it has also all the factors or all the most important factors listed in
NO 1 or SANTA Fe should be chosen that is if Les Vegas has less of the
most important factors developed in NO 1thus if it has also all the factors
or all the most important factors listed in NO 1 because the total cost can
be reduced by better utilization of resources or Yuma should be the better
location if it has also all the factors or all the most important factors listed in
NO 1 that is if Santa Fe and Les Vegas have failed to qualify for location of
the plant. The high total cost can be reduced by better utilization of
resource at Yuma.
WORKINGS
TOTAL COST FOR EACH LOCATION
FIXED COST
LAS VEGAS
SANTA FE
YUMA

3,000,000
2,700,000
2,200,000

VARIABLE
COST
5,000,000
7,000,000
11,000,000

LAS VEGAS
VC/POUN=.0500
POUND PRODUCED=100,000,000
TOTAL VARIABLE COST=.0500*100,000,000=5,000,000
SANTA FE
VC/POUND=.0700
POUND PRODUCED=100,000,000
TOTAL VARIABLE COST=.0700*100,000,000=7,000,000

TOTAL COST
8,000,000
9,700,000
13,200,000

YUMA
VC/POUND=.1100
POUND PRODUCED=100,000,000
TOTAL VARIALE COST=.1100*100,000,000=11,000,000
ASSIGNMENT C
1
2
3
4
5
6
7
8
9
10

A
A
C
B
B
D
D
B
B
A

11
12
13
14
15
16
17
18
19
20

A
B
B
C
A
D
A
A
A
D

21
22
23
24
25
26
27
28
29
30

C
D
C
D
A
C
B
D
C
D

31
32
33
34
35
36
37
38
39
40

C
C
D
B
B
D
B
A
A
A