Subject: Production & Operation

Management

Q.1 (a) Narrate the objectives and elements of Production & operation management

(b) Describe the basic stages of planning for any production operation. Also give out the
objects of planning?

Ans 1(a) Production and Operations Management ("POM") is about the transformation of production
and operational inputs into "outputs" that, when distributed, meet the needs of customers.

The process in the above diagram is often referred to as the "Conversion Process". There are
several different methods of handling the conversion or production process - Job, Batch,
Flow and Group

POM incorporates many tasks that are interdependent, but which can be grouped under five
main headings:

• PRODUCT
• PLANT
• PROCESSES
• PROGRAMMES
• PEOPLE

Objectives of Production and Operations Management:

The main objectives may be one of more of the following:

a. Efficiency to maximize the output for given input

b. Productivity to maximize the production in relation to specified resources
whether computed singly or in combination of such resources. For example, Labour
 Productivity may be maximized either by increasing production with the same
labour or maintaining the same level of production with reduced labour
c. Economy: production is more economical (done at reduced cost)
d. Quality to be a distinctive feature of a product for its uniqueness or general purpose
utilisation with added reliability.
e. Reduction in Processing Time to reduce the throughput time for processing or the
lead time between placement of order by a customer and actual delivery of goods or
services.
The objectives of Production and Operations Management can generally be boiled down into
three main categories: cost, service and quality. The cost objective would generally be to
minimize the total money expended in producing and delivering the company's products to its
customers. Quality objectives would typically be around meeting an established tolerance for
the performance of the company's products, and maintaining a low level of rejected products.
Service objectives would typically center on delivering the products to customers within some
predetermined timeframe from the order date, or on a pre-determined date, and with some level
of accuracy with respect to the original order. Often these are viewed as tradeoffs (e.g., higher
quality and higher service costs more), but looking at total system costs, including expedited
freight, cost of quality, etc. they can also be complimentary.

Elements of Production and Operations Management

A business involves three joint processes: planning, organizing, and controlling. These three
phases are depicted in the diagram below:

Furthermore, these items can be grouped and listed differently by different authors. There are
concepts like planning and organizing, and the involved conversion process. Inputs include
land, labor, technology, etc., and outputs include products and services. Then, there is the
conversion process involved that converts inputs to outputs.

Additionally, there is another process called planning. Planning involves seeing ahead and
making optimal usage of available resources. With proper planning, the controlling and
organizing aspects of production and operations management become more efficient to
manage.

PLANNING
Activities that establishes a course of action and guide future decision-making is planning.
The operations manager defines the objectives for the operations subsystem of the
organization, and the policies, and procedures for achieving the objectives. This stage
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 includes clarifying the role and focus of operations in the organization’s overall strategy. It
also involves product planning, facility designing and using the conversion process.

ORGANIZING
Activities that establishes a structure of tasks and authority. Operation managers establish a
structure of roles and the flow of information within the operations subsystem. They
determine the activities required to achieve the goals and assign authority and responsibility
for carrying them out.

CONTROLLING
Activities that assure the actual performance in accordance with planned performance. To
ensure that the plans for the operations subsystems are accomplished, the operations manager
must exercise control by measuring actual outputs and comparing them to planned operations
management. Controlling costs, quality, and schedules are the important functions here.

Operation managers are concerned with how their efforts to plan, organize, and control affect
human behavior. They also want to know how the behavior of subordinates can affect
management’s planning, organizing, and controlling actions. Their interest lies in decision-
making behavior. As operation managers plan, organize, and control the conversion process,
they encounter many problems and must make many decisions. They can simplify their
difficulties using models like aggregate planning models for examining how best to use
existing capacity in short-term, break even analysis to identify break even volumes, linear
programming and computer simulation for capacity utilization, decision tree analysis for
long-term capacity problem of facility expansion, simple median model for determining best
locations of facilities etc.

Ans 1(b) Production planning is the function of establishing an overall level of output, called the
production plan. The process also includes any other activities needed to satisfy current
planned levels of sales, while meeting the firm's general objectives regarding profit,
productivity, lead times, and customer satisfaction, as expressed in the overall business plan.
The managerial objective of production planning is to develop an integrated game plan where
the operations portion is the production plan. This production plan, then, should link the
firm's strategic goals to operations (the production function) as well as coordinating
operations with sales objectives, resource availability, and financial budgets.

The production-planning process requires the comparison of sales requirements and

production capabilities and the inclusion of budgets, pro forma financial statements, and
supporting plans for materials and workforce requirements, as well as the production plan
itself. A primary purpose of the production plan is to establish production rates that will
achieve management's objective of satisfying customer demand. Demand satisfaction could
be accomplished through the maintaining, raising, or lowering of inventories or backlogs,
while keeping the workforce relatively stable. If the firm has implemented a just-in-time
philosophy, the firm would utilize a chase strategy, which would mean satisfying customer
demand while keeping inventories at a minimum level.

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The term production planning is really too limiting since the intent is not to purely produce a
plan for the operations function. Because the plan affects many firm functions, it is normally
prepared with information from marketing and coordinated with the functions of
manufacturing, engineering, finance, materials, and so on. Another term, sales and operations
planning, has recently come into use, more accurately representing the concern with
coordinating several critical activities within the firm.

Production planning establishes the basic objectives for work in each of the major functions.
It should be based on the best tradeoffs for the firm as a whole, weighing sales and marketing
objectives, manufacturing's cost, scheduling and inventory objectives, and the firm's financial
objectives. All these must be integrated with the strategic view of where the company wants
to go.

The production-planning process typically begins with an updated sales forecast covering the
next 6 to 18 months. Any desired increase or decrease in inventory or backlog levels can be
added or subtracted, resulting in the production plan. However, the production plan is not a
forecast of demand. It is planned production, stated on an aggregate basis. An effective
production-planning process will typically utilize explicit time fences for when the aggregate
plan can be changed (increased or decreased). Also, there may be constraints on the degree of
change (amount of increase or decrease).

The production plan also provides direct communication and consistent dialogue between the
operations function and upper management, as well as between operations and the firm's
other functions. As such, the production plan must necessarily be stated in terms that are
meaningful to all within the firm, not just the operations executive.

Strategic planning: identifies the purpose of business, products, design of processes, and
manufacturing plant design. In other words, strategic planning involves analyzing all the
available organizational and environmental conditions, and planning ahead using these
resources. Once all the information is gathered, a critical analysis is carried out followed by
detailed planning. Strategic planning helps create a business infrastructure from available
products, technology, capacity, and output of the manufacturing plant.

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Detailed planning:

Detailed planning is carried out during operations planning. Detailed planning involves
business forecasting, matching supply with demand, analyzing production capacity and
ensuring that it runs at optimal level. Detailed planning analyzes the available natural
resources or raw materials, then schedules and sequences activities which will result in
production of the final product.

Objectives of Planning:

Good planning gives rise to:

a.Product identification: product is identified from other similar products.

b. Process and technology selection: better production.

c. Location and layout of plant and Facilities: where good and services should
be produced

d. Material Handling Equipment (MHE) to be used.

d. Plant capacity.

e. Forecasting of demand and supply.

f. Production planning to provide procurement of material, sequencing of

machine operations, scheduling of activities and outline organization/control
systems.

g. Logistic details along with warehousing and distribution system.

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Q.2 (a) Explain the relationship between the process of planning with other agencies/activities.

(b) As a production and planning in charge of an organization, what basic factors you will
consider while selecting a site for a proposed new plant.

Ans 2 (a) Detailed planning is important in production and operations management. After the
product and the relevant technology have been acquired, detailed planning is carried out. This
type of planning may involve other agencies and/or other departments within the
manufacturing company. The following diagram displays the important steps:

Facility Design and Layout:

Optimal manufacturing and production plant design offers a wide range of benefits to
enhance processes throughout the entire life cycle of a facility. Facilities are expensive. Their
lifetime is in decades. They take years to commission. By their nature, they are one of the
most important strategic elements of a business enterprise. This is why facility design and the
strategic thinking that should precede it are so important.
A properly designed plant layout is an important source of competitive advantage. It can:

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 • Operate At Low Cost
• Provide Fast Delivery
• Accommodate Frequent New Products
• Produce Many Varied Products
• Produce High or Low Volume Products
• Produce At The Highest Quality Level
• Provide Unique Services Or Features

Capacity of facility

Plant capacity is that output which is attained within normal operating schedule of shifts per
day and days per week, per month or per year for which capacity is being assessed at a laid
down operating efficiency of machinery and of operatives.

Forecasting sales & production:

Prediction of the future sales of a particular product over a specific period of time based on
past performance of the product, inflation rates, unemployment, consumer spending patterns,
market trends, and interest rates. In the preparation of a comprehensive marketing plan, sales
forecasts help the marketer develop a marketing budget, allocate marketing resources, and
monitor the competition and the product environment. Process of judging how much
production is required to meet estimated sales in a particular forecasting period.
Considerations include previous sales, the general state of the economy, consumer
preferences, and competitive products. Production forecasting decisions affect budgetary and
scheduling decisions.

Control of product quality:

Quality control is a process by which entities review the quality of all factors involved in
production. Elements such as controls, job management, defined and well managed processes
performance and integrity criteria, and identification of records etc are looked into. Proper co
ordination of all the procees variables ensures quality.

Human resources:
The term, 'human resources' by organizations to describe the workforce capacity available to
devote to the achievement of its strategies. An organization's human resource management
strategy should maximize return on investment in the organization's human capital and
minimize financial risk. Human Resources seeks to achieve this by aligning the supply of
skilled and qualified individuals and the capabilities of the current workforce, with the
organization's ongoing and future business plans and requirements to maximise return on
investment and secure future survival and success. In ensuring such objectives are achieved,
the human resource function purpose in this context is to implement the organisation's human
resource requirements effectively but also pragmatically, taking account of legal, ethical and
as far as is practical in a manner that retains the support and respect of the workforce.

Resource allocation:
Resource allocation is used to assign the available resources in an economic way.
The adjoining of all agencies in achieving the organization target output is achieved with
proper planning and right coordination.
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Ans 2(b) PLANT LOCATION AND SITE SELECTION

The geographical location of the final plant can have strong influence on the success of
the industrial venture. Considerable care must be exercised in selecting the plant site, and
many different factors must be considered. Primarily the plant must be located where the
minimum cost of production and distribution can be obtained but, other factors such as
room for expansion and safe living conditions for plant operation as well as the
surrounding community are also important. The location of the plant can also have a
crucial effect on the profitability of a project.

The choice of the final site should first be based on a complete survey of the advantages
and disadvantages of various geographical areas and ultimately, on the advantages and
disadvantages of the available real estate. The various principal factors that must be
considered while selecting a suitable plant site, are briefly discussed in this section. The
factors to be considered are:

1. Raw material availability.

2. Location (with respect to the marketing area.)

3. Availability of suitable land.

4. Transport facilities.

5. Availability of labors.

6. Availability of utilities (Water, Electricity).

7. Environmental impact and effluent disposal.

8. Local community considerations.

9. Climate.

10. Political strategic considerations.

11. Taxations and legal restrictions

Raw material Availability:The source of raw materials is one of the most important factors
influencing the selection of a plant site .This is particularly true if large number of raw

materials source permits considerable reduction in transport and storage charges. Attention
should be given to the purchased price of the raw materials, distance from the source of the
supply, freight or transportation expenses, availability and reliability of supply ,purity of the
raw materials, and storage requirements.

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Availability of Labour:
The type and supply of labor available in the vicinity of a proposed plant site must be
examined .Consideration should be given to prevailing pay scales ,restrictions on number of
hours worked per week, competing industries that can cause dissatisfaction or high turnover
rates among the workers, and variations in the skill and productivity of the workers.

Site characteristics:
The characteristics of the land at a proposed plant site should be examined carefully. The
topography of land and the soil structure must be considered, since either or both may have a
pronounced effect on construction costs. The cost of the land is important, as well as local
building costs and living conditions. Future changes may make it desirable or necessary to
expand the plant facilities. Therefore, even though no immediate expansion is planned, a new
plant should be constructed at a location where additional space is available

Transport facilities:
Water, railroads, and highways are common means of transportation used by major industrial
concerns. The kind and quantity of products and raw materials determine the most suitable
type of transportation facilities. Careful attention should be given to local freight rates and
existing railroad lines. The proximity to railroad centers and the possibility of canal, river,
lake or ocean transport must be considered. Motor trucking facilities are widely used and can
serve as a useful supplement to rail and water facilities. If possible, the plant site should have
access to all three types of transportation and, certainly, at least two types should be
available. There is usually a need for convenient air and rail transportation facilities between
the plant and the company head quarters, and effective transportation facilities for the plant
personnel are necessary.

Environmental impact and effluent disposal:

In recent years, many legal restrictions have been placed on the methods for disposing of
waste materials from the process industries. The site selected for a plant should have
adequate capacity and facilities for correct waste disposal. In choosing a plant site, the
permissible tolerance levels for various methods of waste disposal should be considered
carefully, and attention should be given to potential requirements for additional waste-
treatment facilities.

Taxation and legal consideration:

State and local tax rates on property income, unemployment insurance, and similar items vary
from one location to another. Similarly, local regulations on zoning, building codes, nuisance
aspects, and transportation facilities can have a major influence on the final choice of a plant
site. In fact, zoning difficulties and obtaining the many required permits can often be much
more important in terms of cost and time delays than many of the factors discussed in the
preceding sections.

Local community consideration:

The nature and facilities of a community can have an effect on the location of the plant. If
minimum number of facilities for satisfactory living of plant personnel does not exist, it
becomes a burden for the plant to subsidize such facilities. Cultural facilities of the
community are important to sound growth. Facilities such as religious centers, libraries,
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schools, civic theatres, concert associations, and other similar groups do much to make a
community progressive. The efficiency, character, and history of both state and local
governments should be evaluated.

Availability of utilities (water, electricity):

Power and steam requirements are high in most of the chemical plants, and fuel is ordinarily
required to supply these utilities .Power and fuel can be combined as one major factor in the
choice of a plant site. If the plant requires large quantities of coal or oil, location near a
source of fuel supply may be essential for economic operation. The local cost of power can
help determine whether power should be purchased or self generated.
The process industries use large quantities of water for cooling, washing, steam generation,
and as a raw material in process. Hence, the plant must be located where a dependable supply
of water is available. A large river or lake is preferable, although deep wells or artesian wells
may be satisfactory if the amount of water required is not too great. The level of the existing
water table can be checked by consulting the state geological survey ,and information on the
constancy of the water table and the year round capacity of local rivers or lakes should be
obtained .If the water supply shows seasonal fluctuations, it may be desirable to construct a
reservoir or to drill several standby wells. The temperature, mineral content, silt or sand
content, bacteriological content, and cost for supply and purification must also be considered
when choosing the water supply.

Climate:
If the plant is located in a cold climate, costs may be increased by the necessity for
construction of protective shelters around the process equipment, and special cooling towers
or air-conditioning equipment may be required if the prevailing temperatures are high.
Excessive humidity or extremes of hot or cold weather can have serious effect on the
economic operation of the plant, and these factors should be examined when selecting a site.

An ideal location is one where the cost of the product is kept to minimum, with a large
market share, the least risk and the maximum social gain. It is the place of maximum net
advantage or which gives lowest unit cost of production and distribution. For achieving this
objective, a detailed evaluation has to be done to achieve the desired goal.

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Q.3 (a) Define controlling and explain the Total Quality Control (TQM) including Deming’s 14
Points.

(b) What do you understand by Quality and Cost Economics? Mention categories of Quality Cost
as identifies by American society for Quality Control (ASQC).

Ans 3(a) Controlling is defined as a process by which some aspects of a system are modified to
achieve a desired change in system performance. Elements of control system are shown in the
model below. The input ingredients as per design and specification are process through the
conversion system and come out as output products. At the outlet is installed a sensor which
measures the specification of the output. These measurements are sent to a comparator which
compares the actual output specification with the desired specification or output goals. The
output goals and tolerances within which output may be accepted is stored in a database in
Memory and are controlled by the comparator as required. The comparator identifies the
discrepancies and sends them to initiator of corrective action which is backed by another
database of corrective actions and decision support system. When the correction is applied to
the input ingredients, the new output should be closer to the desired specification which is
again measured by the sensor. This is how control is exercised.

Conversio
Inputs n of Inputs Output
s

Sensor
(Measure Output)

Initiator Discrepancy between actual

(Activates and goal
Corrective Comparator(Compare
Action) actual output to
output goal

Memory (Stores
rules for
corrective
action, Decision Memory(Stores
support system) output goal and
tolerable range
of output,
database)

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 Total Quality Management (or TQM) is a management concept coined by W. Edwards
Deming. The basis of TQM is to reduce the errors produced during the manufacturing or
service process, increase customer satisfaction, streamline supply chain management, aim for
modernization of equipment and ensure workers have the highest level of training. One of the
principal aims of TQM is to limit errors to 1 per 1 million units produced. Total Quality
Management is often associated with the development, deployment, and maintenance of
organizational systems that are required for various business processes.

Total quality management is a management system for a customer focused organization that
involves all employee in continual improvement of all aspects of the organization.

Total quality management concepts is an integrative system that use strategy , data , and
effective communication to integrate the quality principles into the culture and activities of
the organization.

Demings 14 Points:

W.Edward Deming (Father 0f quality control in Japan) emphasized that high quality means
lower cost and professed the following points.
The 14 points apply anywhere, to small organisations as well as to large ones, to the service
industry as well as to manufacturing. They apply to a division within a company.

1. Create constancy of purpose toward improvement of product and service, with the aim to
become competitive and to stay in business, and to provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western management must
awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a
mass basis by building quality into the product in the first place.
4. End the practice of awarding business on the basis of price tag. Instead, minimise total cost.
Move towards a single supplier for any one item, on a long-term relationship of loyalty and
trust.
5. Improve constantly and forever the system of production and service, to improve quality and
productivity, and thus constantly decrease costs.
6. Institute training on the job.
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 7. Institute leadership. The aim of supervision should be to help people and machines and
gadgets to do a better job. Supervision of management is in need of an overhaul, as well as
supervision of production workers.
8. Drive out fear, so that everyone may work effectively for the company.
9. Break down barriers between departments. People in research, design, sales, and production
must work as a team, to foresee problems of production and in use that may be encountered
with the product or service.
10. Eliminate slogans, exhortations, and targets for the workforce asking for zero defects and
new levels of productivity. Such exhortations only create adversarial relationships, as the
bulk of the causes of low quality and low productivity belong to the system and thus lie
beyond the power of the work force.
11. Eliminate work standards (quotas) on the factory floor. Substitute leadership.
Eliminate management by objective. Eliminate management by numbers, numerical
Goals. Substitute leadership.
12. Remove barriers that rob the hourly paid worker of his right to pride in workmanship.
The responsibility of supervisors must be changed from sheer numbers to quality.
Remove barriers that rob people in management and engineering of their right to pride in
workmanship. This means, inter alia , abolishment of the annual or merit rating and
management by objective.
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation
is everybody's job.

Ans 3(b) A good way of producing high-grade products is sturdy product design and effective
processing technology. Nevertheless, this involves a higher cost of production. However,
with a sturdy product design and effective processing technology, the cost of implementing
quality control features decreases. Therefore, the sum of cost of sturdy product design and
cost of effective processing technology add to total incremental cost.

Quality Costs as identified by the American Society of Quality Control (ASQC):

The "cost of quality" isn't the price of creating a quality product or service. It's the cost of
NOT creating a quality product or service.

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 Every time work is redone, the cost of quality increases. Obvious examples include:

• The reworking of a manufactured item.

• The retesting of an assembly.
• The rebuilding of a tool.
• The correction of a bank statement.
• The reworking of a service, such as the reprocessing of a loan operation or the replacement of
a food order in a restaurant.

In short, any cost that would not have been expended if quality were perfect contributes to the
cost of quality.

Total Quality Costs

As the figure below shows, quality costs are the total of the cost incurred by:

• Investing in the prevention of nonconformance to requirements.

• Appraising a product or service for conformance to requirements.
• Failing to meet requirements.

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a. Cost of internal failures: these costs are used to repair defective products before they get
into the hands of the consumer. If defective products are no longer manufactured, the cost of
internal failures would be zero.

Examples of Internal Failure Costs :

Scrap: The labor, material, and (usually) overhead on defective product that cannot
economically be repaired. The titles are numerous—scrap, spoilage, defectives, etc.

Rework: Correcting defectives in physical products or errors in service products.

Lost or missing information: Retrieving information that should have been supplied.

Failure analysis: Analyzing nonconforming goods or services to determine causes.

b. Cost of external failures: these costs are used to repair defective products after they get
into the hands of the consumer. If defective products are no longer manufactured, the cost of
external failures would be zero. Examples would include changes in product warranty,
adjustment of compliant, returned products, and product allowances.

Failure to Meet Customer Requirements and Needs :

Warranty charges: The costs involved in replacing or making repairs to products that are still
within the warranty period.
Complaint adjustment: The costs of investigation and adjustment of justified complaints
attributable to defective product or installation.
Returned material: The costs associated with receipt and replacement of defective product
received from the field.
Allowances: The costs of concessions made to customers due to substandard products
accepted by the customer as is or to conforming product that does not meet customer needs.
Lost Opportunities for Sales Revenue , Examples are:
Customer defections: Profit margin on current revenue lost due to customers who switch for
reasons of quality. An important example of this category is current contracts that are
canceled due to quality.
New customers lost because of quality: Profit on potential customers lost because of poor
quality.

c. Cost of appraisal: This is the cost of ensuring high-quality product development. This
includes cost of inspection and testing, maintenance of quality control equipment, etc.
Determining the quality of purchased product, whether by inspection on receipt, by
inspection at the source, or by surveillance.
In-process inspection and test: In-process evaluation of conformance to requirements.
Final inspection and test: Evaluation of conformance to requirements for product acceptance.
Document review: Examination of paperwork to be sent to customer.
Balancing: Examination of various accounts to assure internal consistency.
Product quality audits: Performing quality audits on in-process or finished products.
Maintaining accuracy of test equipment: Keeping measuring instruments and equipment in
calibration.
Inspection and test materials and services: Materials and supplies in inspection and test work
(e.g., x-ray film) and services (e.g., electric power) where significant.
Evaluation of stocks: Testing products in field storage or in stock to evaluate degradation.
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In collecting appraisal costs, what is decisive is the kind of work done and not the department
name (the work may be done by chemists in the laboratory, by sorters in Operations, by
testers in Inspection, or by an external firm engaged for the purpose of testing).
Also note that industries use a variety of terms for “appraisal,” e.g., checking, balancing,
reconciliation, review.
d. Cost of prevention: This is the cost of minimizing appraisal and failure costs to a
minimum. This can be achieved by quality planning and testing, stringent review of new
products, process control, training and quality evaluation.

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Q.4(a) Illustrate multiple activity chart with the help of a diagram. Also explain techniques of work
measurement.

(b) Explain and give out the comparative study of western and Japanese organization as related
to production and operation management.

Ans 4 (a) Multiple activity chart are the ones on which the activities of more than one object i.e.
(worker, machines or items of equipments) are recorded on a common time scale to show
their interrelationship. Multiple Activity Charts' illustrate parallel activities and time
relationships between two or more 'resources' i.e. workers, plant/equipment or materials.
They are useful where the interactions between workers, plant/equipment and materials
repeat in periodic cycles, e.g. Inspection of catalyst in a converter. The charts can help
identify the bottlenecks and idling resources by showing the utilization profile of each
resource in parallel bars.

Inspection of a catalyst in a converter:

The multi-activity diagram is an ideal tool to portrayal and analyse interactions between
Various trade skilled persons during a set-up of multi-stage work lines; so it will be used in
two different forms:

 One for portraying the different activities that needs to be performed on the different
trades men. This way the total duration of the downtime can be determined as well as the
bottleneck of the set-up. This diagram will also be used to optimize the activities while
minimizing the machine downtime
 Secondly, one for balancing the workload among the different people that are
involved

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 Techniques of Work Measurement:

Work measurement is a technique to measure wasted or ineffective time during a process.

Work measurement may be used to evaluate the performance of employees, compare work
methods, etc. the following chart shows techniques of work measurements.

Work Measurement is a term which covers several different ways of finding out how long a
job or part of a job should take to complete. It can be defined as the systematic determination,
through the use of various techniques, of the amount of effective physical and mental work in
terms of work units in a specified task. The work units usually are given in standard
minutes or standard hours.
The method chosen for each individual situation to be measured depends on several factors
which include:
a. the length on the job to be measured in time units
b. the precision which is appropriate for the type of work in terms of time units (i.e. should
it be in minutes, hundredths or thousandths of a minute)
c. the general cycle-time of the work, i.e. does it take seconds, minutes or days to complete

The length of time necessary for the completion of the range of jobs can vary from a few
seconds in highly repetitive factory work to several weeks or months for large projects such
as major shutdown maintenance work on an oil refinery. It is quite clear that using a stop-
watch, for example, on the latter work would take several man-years to time to measure!
Thus, more "overall" large-scale methods of timing must be employed.

The precision is an important factor, too. This can vary from setting times of the order of "to
the nearest thousandth of a minute" (e.g. short cycle factory work) to the other end of the
scale of "to the nearest week" (e.g. for large project work).
These are the dominant factors that affect the choice of method of measurement.

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 Methods used in Time measurement:
PMTS: At the "precision" end of the scale is a group of methods known as predetermined
motion time systems that use measurement units in ten thousandths (0.0001) of a minute or
hundred-thousandths of an hour (0.00001 hour).

The resulting standard times can be used directly, for very short-cycle work of around one
minute total duration such as small assembly work. However, they often are used to generate
regularly used basic tasks such using assembling or disassembling nuts and bolts, using a
screwdriver and similar. Tasks of this type are filed as standard or synthetic data-banks.

Estimating:
At the other end of the scale (long-cycle and project work) we need something which is quick
to use. Such a method is estimating. This can exist in three main forms.

a. Analytical estimating relies on the experience and judgement of the estimator. It is just of
case of weighing up the work content and, using this experience, stating a probable time for
completion, such as "this job will take about eight days to complete".

b. Category estimating. This is a form of range estimating and requires a knowledge of the
work. Estimators may not feel comfortable with overall, analytical estimates upon which may
depend the outlay of a great deal of money. They often prefer giving a range estimate such as
"this job should take between 12 weeks and 14 weeks to complete", which provides a safety
net should things go wrong. Such ranges are not just picked upon at random but are
statistically calculated and based on probability theory.

c. Comparative estimating. This is another example of range estimating. Again, estimators rely
on experience of the work in order to produce estimates. This experience can be augmented
by the provision of each time-range with a few typical, descriptive, jobs that would guide
estimators to the most appropriate range. The estimator would compare the work to be
estimated with those in the various ranges until the most appropriate fit is found.

Timing:
The intermediate method between the two groups above, is timing the work in some way,
usually with a stop-watch or computerized electronic study board. This method is
retrospective in that the job must be seen in action in order to be timed whereas the other
methods are prospective and can be used for timing jobs before they start.
The observer times each element of the work and obtains times that the observed operator
takes to do the elements. Each timing is adjusted (rated) by the pace at which the operator
was working as assessed by the observer. This produces basic times for the elements and
hence the whole job, which are independent of the operator and can be used as the time for a
trained, experienced worker to carry out the same elements.

Work Sampling :
Another method of assessing the work is using activity sampling and rated activity sampling.
This is a method based on the observer making snap observations at random or systematic
sample times, observing what the operator is (or operators are) doing at the times of those
observations

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 Models:
A most useful method for standard or synthetic data-banks of job or element times is using
computer models of the jobs. These are generated as mathematical formulae in which the
observed data are inserted to compile a time for completion of the task or project. It is a
useful method for recycling time standards for elements of basic work over and over again,
only changing the values of the variables to suit each project.

Ans 4(b) Management in all business areas and organizational activities are the acts of getting people
together to accomplish desired goals and objectives. Management
comprises planning, organizing, staffing, leading or directing and controlling
an organization (a group of one or more people or entities) or effort for the purpose of
accomplishing a goal. Resourcing encompasses the deployment and manipulation of human
resources, financial resources, technological resources, and natural resources.

Because organizations can be viewed as systems, management can also be defined as human
action, including design, to facilitate the production of useful outcomes from a system. This
view opens the opportunity to 'manage' oneself, a pre-requisite to attempting to manage
others.
Inputs to Production system
 External : Legal, Technological, social, Economic
 Market: Competition, customer desire, Product info
 Primary resources: Materials, Personnel, Utilities, Capital
Conversion subsystem:
 Physical(Manufacturing)
 Locational service (Transportation)
 Exchange service( Retailing)
 Storage service(Warehousing)
 Other service: Government & Insurance

Output:
 Direct: Product, Services
 Indirect : Waste, Pollution, Technological advancement
Japanese organization as related to production and operation management:

Japanese management is shop floor-oriented management. Specifically, it has eight

underlying principles. They are as follows

1) Customer oriented
The management of Japanese companies believes that customers are royalty, and keeps in
mind that companies serve customers

2) Top management commitment

Work improvement through various activities such as TQC, JIT and any new working system
developed in Japan require total participation by all management and employees in the
company. Top management cannot leave the activity to his/her subordinates. Management
should take the initiative in leading the activity
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3) Total approach
Considering the above, any activities for work improvement require total participation. If
there is a problem, it must be analysed from all angles by all people concerned with the
problem. Thinking about the situation by all concerned personnel is another key for
successful work improvement

4) Shop floor (work front) oriented

Japanese management thinks that the shop floors themselves are the source of work
improvement. All management in Japanese companies believe that the shop floor is a rich
source for work improvement

5) Ideal target
For work improvement, setting a target is crucial. We are apt to seek a breakthrough in work
improvement. However, if the target is a very ambitious one, it will be difficult to reach this
goal. We need to set our target to be more readily achieved.

6) PDCA cycle
For successful work improvement and good maintenance to continue the result of this work
improvement, we need to follow work improvement techniques systematically. The cycle
consists of four stages: (1) plan, (2) do, (3) check, and (4) action.

7) Making use of simple tools

Since any work improvement requires total participation by all employees in the company, all
employees should understand the basic idea of work improvement. This is why we need a
work improvement project. Once employees understand the philosophy of work
improvement, they can implement work improvement by themselves. To carry out a work
improvement project, they need to use statistical methods. The methods should be simple and
easy to apply to the actual work. The Japanese invented seven QC tools, which are easily
understood and can be applied for practical work improvement. These seven simple QC tools
can solve more than 95% of the problems that exist in workplaces.

8) Human aspects
One of the characteristics of Japanese management is human oriented management. Japanese
top management believes that human resources are the most important asset for the company.

Western Organization as related to production and operation management:

The western methodology dedicated more towards mass production, minimal cost,
authoritarian decision making in contrast to Japanese method. The managers dictated terms
rather than discussions; Loyalty was not considered at all, Employees benefits cut to bare
minimum. The management sets target as per demand which in turn put pressure on
employees. Huge Profit making becomes the goal in all senses.

Management can also refer to the person or people who perform the act(s) of management.
The below given table shows the characteristics of two methods in brief.

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Characteristics Japanese Western Organizations
Organizations

Duration of Life long Short term employment (No Upper age

Employment employment (55 limit).
years of age).

Evolution and Slow and steady Rapid jumps or retrenchment.

Promotion

Career Paths Non-specialized. Specialized.

Control Mechanism Implicit, by peers. Explicit, by superiors.

Decision Making Collective (Ringi), Individualistic, formalized and prompt

and slow decision decisions. Slow implementation.
Implementation making but speedy
implementation

Responsibility and Collective, saving Individualistic, fixing blame.

Accountability face.

Concern for Holistic. Segmented.

employees

Governments Supportive Regulatory.

Approach towards
industry.

Family Loyalty to Predominantly Rarely exists.

Business exists.

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Q .6 Write any five short notes

a) Concept of appropriate technology

b)”Just in time” concept
c) Process chart symbols
d)Preventive maintenance
e) TQM & ISO 9000
f) Classification of material
g) Inventory control

Ans 6(a) Concept of appropriate technology:

Appropriate technology (AT) is technology that is designed with special consideration to the
environmental, ethical, cultural, social, political, and economical aspects of the community it
is intended for. With these goals in mind, AT proponents claim their methods require fewer
resources, are easier to maintain, and have less of an impact on the environment compared to
techniques from mainstream technology, which they contend is wasteful and environmentally
polluting.
The term is usually used to describe simple technologies proponents consider suitable for use
in developing nations or less developed rural areas of industrialized nations. This form of
"appropriate technology" usually prefers labor-intensive solutions over capital-intensive ones,
although labor-saving devices are also used where this does not mean high capital or
maintenance cost. In practice, appropriate technology is often something described as using
the simplest level of technology that can effectively achieve the intended purpose in a
particular location. In industrialized nations, the term appropriate technology takes a different
meaning, often referring to engineering that takes special consideration of its social and
environmental ramifications.

In developing countries, high-tech innovation may not be possible. Furthermore, continuous

usage of old, outdated technology is very harmful. Keeping this in mind comes the concept of
appropriate technology. According to this concept:

a. New technology must be used for the welfare of people.

b. Technology must be affordable to all.

c. Technology must be reliable.

d. Technology deals must include all accessories and upgradation.

e. Time must be allotted for technology upgradation.

f. Technology deal must be free of any type of unforeseen issues, affliction, and beguilement.

Appropriate technology is being mindful of what we're doing and aware of the consequences.
Appropriate technology works from the bottom up; it is not an overlay to the situation; it is a
genuine grassroots solution to economic needs.

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 "In the Industrial World small businesses account for more technological advances in their
areas of expertise than government supported researchers or research departments in massive
corporations.”The definition of 'Appropriate Technology' changes with each situation... One
quality that remains the same, however, is taking care of things. In each situation, the essence
of AT remains appreciating, helping, caring. Planned obsolescence, throw-away products,
poor quality all go against intelligent decision-making and the true spirit of appropriate
technology."

It "changes with each situation" -- as it must in a natural world where people matter. Mother
Nature never heard of "standardization", that's a concept from an economic world where
people don't matter, except perhaps as workers and consumers. Appropriate technology has to
fit the infinite variety of life on Earth, rather than forcing life to fit the technology.

Appropriate technology is technology that fits.

It's a very broad-ranging subject -- a philosophy as much as a technology, a way of seeing

things. But some aspects of it are definite and clear-cut: for instance, waste is not appropriate.
Our societies have started to "Reduce, Reuse, Recycle",

We're also going to have to clean up the mess we've made -- and any technology that helps us
do that will definitely be appropriate.

Ans 6(b) “Just in time” Concept:

'Just in Time' manufacturing is a mindset aimed at customer service orientation, and revolves
around the concepts of high motivation and concern for the human wellbeing. Further results
of this philosophy are the 'Just in Time' inventory and production systems. In this system,
items are produced in terms of ordered units, ie., individual parts are not manufactured,
instead, the entire unit is created. Furthermore, vendors also eliminate defective products
from their stock. Employees involved in the manufacturing process have the power to pause
of the production line, without senior supervision, if any defective product is discovered

JIT is a philosophy embodying various concepts that result in a different way of doing
business for most organizations. The basic tenets of this philosophy include:

A. All waste, anything that does not add value to the product or service, should be eliminated
Value is anything that increases the usefulness of the product or service to the customer or
reduces the cost to the customer.

B. JIT is a never ending journey, but with rewarding steps and milestones.

C. Inventory is a waste. It covers up problems that should be solved rather than concealed.
Waste can gradually be eliminated by removing small amounts of inventory from the system,
correcting the problems that ensue, and then removing more inventory.

D. The customers' definitions of quality, their criteria for evaluating the product, should drive
product design and the manufacturing system. This implies a trend toward increasingly
customized products.

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 E. Manufacturing flexibility, including quick response to delivery requests, design changes,
and quantity changes, is essential to maintain high quality and low cost with an increasingly
differentiated product line.

F. Mutual respect and support based on openness and trust should exist among an
organization, its employees, its suppliers, and its customers.

G. A team effort is required to achieve world class manufacturing capability. Management,

staff, and labor must participate. This implies increasing the flexibility, responsibility, and
authority provided to the hourly worker.

H. The employee who performs a task often is the best source of suggested improvements in
the operation. It is important to employ the workers' brains, not merely their hands.

JIT is a very eclectic approach. It includes many old ideas and some new ones and relies on
basic concepts from many disciplines, including statistics, industrial engineering, production
management, and the behavioral sciences. But first and foremost, it is pragmatic and, thus,
empirical. Discovering "what works" and why it works requires that plant operations be
studied thoroughly. This requires the collection and analysis of relevant data concerning the
plant's operation and its performance. This pragmatism causes the manufacturing pro cess
and its environment to be viewed as a research laboratory, similar to a university hospital, in
that the primary task may be to produce quality output but another important goal is to learn
how to do it better the next time.

Traditionally, inventory has been viewed as an asset, one that can be converted to cash. The
Just-in-Time view is that inventory does not add value but instead incurs costs, and thus is a
waste. Holding inventory is analogous to not receiving any interest for a deposit in a bank
and, furthermore, paying to keep it there. Traditionally, holding inventory was seen as being
less costly than correcting the production and distribution efficiencies that inventory
overcame. For example, large lot sizes spread the cost of expensive setups across many parts.
JIT takes a different view.

JIT views inventory as a symptom of inadequate management, a method of hiding

inefficiencies and problems, Inefficiencies that cause inventory include: long and costly
setups, scrap, lengthy and widely varying manufacturing lead times, long queues at work
centers, inadequate capacity, machine failure, lack of worker and equipment flexibility,
variations in employee output rate, long supplier lead times, and erratic supplier quality. JIT
emphasizes that solving each of these problems will reduce the need for inventory and
improve productivity. It strives to have the right material, at the right time, at the right place,
and in the exact amount. Thus, the name "Just-in-Time" is used by many to designate an
organized and continuing program to improve operations productivity.

Ans 6(d) Preventive maintenance:

Preventive maintenance is based on the idea of 'prevention is better than cure.' For example, in
a factory, this process may involve shutting down all the manufacturing processes in order to
service, lubricate, and realign the machines involved. It follows the theory that regular
maintenance of machines is better than repairing a machine after it has completely broken
down.
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 Preventive maintenance (PM) has the following meanings:
1. The care and servicing by personnel for the purpose of maintaining equipment and facilities
in satisfactory operating condition by providing for systematic inspection, detection, and
correction of incipient failures either before they occur or before they develop into major
defects.
2. Maintenance, including tests, measurements, adjustments, and parts replacement, performed
specifically to prevent faults from occurring.

The main difference of subgroups is determination of maintenance time, or determination of

moment when maintenance should be performed.
While preventive maintenance is generally considered to be worthwhile, there are risks such
as equipment failure or human error involved when performing preventive maintenance, just
as in any maintenance operation. Preventive maintenance as scheduled overhaul or scheduled
replacement provides two of the three proactive failure management policies available to the
maintenance engineer. Common methods of determining what Preventive (or other) failure
management policies should be applied are; OEM recommendations, requirements of codes
and legislation within a jurisdiction, what an "expert" thinks ought to be done, or the
maintenance that's already done to similar equipment, and most important measured values
and performance indications.
To make it simple:
 Preventive maintenance is conducted to keep equipment working and/or extend the life of the
equipment.

The primary goal of maintenance is to avoid or mitigate the consequences of failure of

equipment. This may be by preventing the failure before it actually occurs which Planned
Maintenance and Condition Based Maintenance help to achieve. It is designed to preserve
and restore equipment reliability by replacing worn components before they actually fail.
Preventive maintenance activities include partial or complete overhauls at specified periods,
oil changes, lubrication and so on. In addition, workers can record equipment deterioration so
they know to replace or repair worn parts before they cause system failure. The ideal
preventive maintenance program would prevent all equipment failure before it occurs.

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Ans 6(e) TQM and ISO 9000:
Total Quality Management (TQM) is a philosophy that says that uniform commitment to
quality in all areas of an organization promotes an organizational culture that meets
consumers' perceptions of quality.
The concept of TQM rests largely on five principles:

1. Produce quality work the first time.

2. Focus on the customer.
3. Have a strategic approach to improvement.
4. Improve continuously.
5. Encourage mutual respect and teamwork.

To be effective in improving quality, TQM must be supported at all levels of a firm, from the
highest executive to the lowest-level hourly employee. TQM extends the definition of quality
to all functional areas of the organization, including production, marketing, finance, and
information systems. The process begins by listening to customers' wants and needs and then
delivering goods and services that fulfill these desires. TQM even expands the definition of
customer to include any person inside or outside the company to whom an employee passes
his or her work. The TQM philosophy focuses on teamwork, increasing customer
satisfaction, and lowering costs..
An effective TQM program has numerous benefits. Financial benefits include lower costs,
higher returns on sales and investment, and the ability to charge higher rather than
competitive prices. Other benefits include improved access to global markets, higher
customer retention levels, less time required to develop new innovations, and a reputation as
a quality firm.
ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained
by ISO, the International Organization for Standardization and is administered by
accreditation and certification bodies. The rules are updated, as the requirements motivate
changes over time. Some of the requirements in ISO 9001:2008 (which is one of the
standards in the ISO 9000 family) include
 a set of procedures that cover all key processes in the business;
 monitoring processes to ensure they are effective;
 keeping adequate records;
 checking output for defects, with appropriate and corrective action where
Necessary;
 regularly reviewing individual processes and the quality system itself for
Effectiveness; and
 facilitating continual improvement
A company or organization that has been independently audited and certified to be in
conformance with ISO 9001 may publicly state that it is "ISO 9001 certified" or "ISO 9001
registered". Certification to an ISO 9001 standard does not guarantee any quality of end
products and services; rather, it certifies that formalized business processes are being applied.
Although the standards originated in manufacturing, they are now employed across several
types of organizations. A "product", in ISO vocabulary, can mean a physical object, services,
or software.

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 The following table shows the relationship and differences between total quality management
(TQM) and ISO-9000:

Total Quality
Standards ISO-9000
Management
May not be customer
Focus on Customer Customer focused
focused
May not be integrated with Integrated with corporate
Corporate Strategy
corporate strategy strategy
Based on philosophy and
Basis Based on technology
concepts
Employee Motivated employee & less More employee
Participation participation participation
Improvement No focus on improvement Focus on improvement
Quality of Products Quality is responsibility of Quality is everyone's
& Services Quality Department responsibility
Three maxims: document
your actions, perform Distinguished by costumer
Features documented actions, and satisfaction & distinguishing
have documented proof of features
performed actions
Human involvement &
Focus Focused specification
focused commitment

Ans 6(g) Inventory Control:

Inventory control is the supervision of the supply and storage and accessibility of items in
order to insure an adequate supply without excessive oversupply.

Some objectives of inventory control are:

a. Ensuring availability of raw materials.
b. Ensuring minimal wastage.
c. Ensuring better customer service.
d. Ensuring manufacturing efficiency.
e. Control production level.
f. Ensuring economical purchasing power.
g. Optimization of investment and efficient capital usage.

Inventory control means keeping the overall costs associated with having inventory as low as
possible without creating problems. This is also sometimes called stock control. It is an
important part of any business that must have a stock of products or items on hand. Correctly
managing inventory control is a delicate balance at all times between having too much and
too little in order to maximize profits. The costs associated with holding stock, running out of

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 stock, and placing orders must all be looked at and compared in order to find the right
formula for a particular business.

The three main factors in inventory control decision making process are:

• The cost of holding the stock (e.g., based on the interest rate).
• The cost of placing an order (e.g., for row material stocks) or the set-up cost of
production.
• The cost of shortage, i.e., what is lost if the stock is insufficient to meet all demand.

The third element is the most difficult to measure and is often handled by establishing a
"service level" policy, e. g, certain percentage of demand will be met from stock without
delay.

The ABC Classification the ABC classification system is to grouping items according to
annual sales volume, in an attempt to identify the small number of items that will account for
most of the sales volume and that are the most important ones to control for effective
inventory management.

Reorder Point: The inventory level R in which an order is placed where R = D.L,
D = demand rate (demand rate period (day, week, etc), and L = lead time.

Safety Stock: Remaining inventory between the times that an order is placed and when new
stock is received. If there are not enough inventories then a shortage may occur.

Safety stock is a hedge against running out of inventory. It is an extra inventory to take care
on unexpected events. It is often called buffer stock. The absence of inventory is called a
shortage.
Inventory control is an ongoing process that is rarely, if ever, executed perfectly. Experience,
expertise, and practice help people to make the best decisions regarding stock, but there are
always unknown circumstances and variables. Stores can make good estimates about how
many of a specific product they will sell, but they get things wrong from time to time. This is
unavoidable. Inventory control can break a business if it is executed poorly, because either
expenses will be too high or customers will get tired of dealing with shortages and find
another place to spend their money.

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