Production Planning and Control Course Outlines

Nikhil R. Dhar, Ph.
D
Professor, IPE Department
BUET
AEAS 409: PRODUCTION
PLANNING AND CONTROL
Department of Industrial & Production Engineering
Course Outlines
Elements of Production Planning and Control
Types of Production System
Functions of Production, Planning and Control with an overview of different types
of manufacturing systems
Factors affiliated with different fields of production including product characteristics
and economic analysis
Forecasting Methods and their Application
Aggregate planning
Master Production Scheduling (MPS)
Material Requirement Planning (MRP)
Coding and standardization
Capacity planning
Inventory Management-ABC analysis
Production Scheduling Techniques-CPM and PERT and Line balancing
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Methods of Sales Forecasting
Plant location and layout
Work study and method study
Plant performance measurement
Introduction to product development and design
Procedure for evaluation of materials and processes
Advantages due to different types of scheduling of jobs on processors and methods
employed
Types of information systems and its benefits at different management levels
Computers in production planning and control
MRPII and
JIT
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Suggested Reading
Operations Management-Strategy and Analysis-Lee, J. Krajewski and Larry, P. Ritzman
Production and Operations Management-A Life Cycle Approach - Richard B. Chose and
Nicholas J. Aquilano
Element of Production Planning and Control - Eilon Samuel
Industrial Engineering and Production ManagementM. Telsang
Engineering Management A. K. Gupta
Production and Operations Management - S.N. Chary.
Production Management-K. Aswathappa,
Production and Operations Management-R. Panneerselvam,
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Nikhil R. Dhar, Ph.D.
Department of IPE
BUET
LECTURE-01: PRODUCTION
PLANNING & CONTROL
Production Management
Production management is defined as management function which plans, organizes,
coordinates, directs and controls the material supply and Processing activities of an
enterprise, so that specified products are produced by specified methods to meet an
approved sales program. These activities are being carried out in such a manner that
Labor, Plant and Capital available are used to the best advantage of the organization.
The objectives of production management is stated as To produce goods or services of
right quality and quantity at the predetermined time and pre-established cost. Thus
the objective of production management are reflected in
Right Quality
Right Quantity
Predetermined Time and
Pre-established Cost (Manufacturing Cost)
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The objectives of production Management are:
To produce goods and services as per the estimated manufacturing cost and
minimum inputs of resources.
To produce right quality goods and services as per the established standards and
specifications.
To produce goods and services as per the decided time schedule.
Minimize the use of resources to the optimum level. These are 4 Ms like
Machinery, Materials, Manpower and Money. These inputs are to be used to full
extent to result minimum cost and time.
Maximize the utilization of manpower.
Minimizing the total cost of production with continuous elimination of non-value
added activities and improving labor productivity on the production shop floor.
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5 P`s of Production Management
Product: Product is the link between production and marketing. It is not enough that
a customer requires product but the organization must be capable of producing the
product.
Plant: The plant accounts for major investment (fixed asset). The plant should
match the needs of the product, market, the worker and the organization.
Processes: There are always number of alternatives methods of creating a product.
But it is required to select the one of the best method which attains the objectives.
Programs: The program here refers to the time-table of production. Thus the
program prepares schedules for purchasing, transforming, maintenance, cash and
storage and transport.
People: Production depends upon people. The people vary in their attitudes, skill
and expectations from the work. Thus, to make best use of available human
resource, it is required to have a good match between people and jobs which may
lead to job satisfaction.
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Scope of Production Management: There are two types of scope of Production
Management:
Strategic Level:
Design and Development of New Product
Process Design and Planning
Facilities Location and Layout Planning
Design of Material Handling
Capacity Planning
Operational Level:
Production Planning
Production Control
Inventory Control
Product maintenance & replacement
Cost Control & Cost Reduction
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Production Planning & Control
Production planning and control (PPC) can be defined as the process of planning or
deciding on the resources the firm will require for its future manufacturing operations
and of allocating and time scheduling these resources to produce the desired products on
time at the least total cost.
Production planning and control is most essential for any organization. Planning process
within an organization is dynamic and continuous. PPC involves:
the planning of production
a decision on the sequence of operations to achieve what has been planned
the setting of starting and finishing time for production
proper dispatching of the material and
follow up action to check the progress of operations.
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Production Planning and Control
Material
Requirement
Planning
Inventory
Management
Demand
Forecasting
Sales and
Order Entry
Customer
Production
Inventory
Vendors
Aggregate
Planning
Shipping
and
Receiving
Shop-floor
scheduling
and control
Production Control System
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Production Objectives
High
Profitability
Low
Costs
Low Unit
Costs
High
Throughput
Less
Variability
High
Utilization
Low
Inventory
Quality
Product
High
Sales
Many
products
Fast
Response
More
Variability
High
Inventory
Low
Utilization
Short
Cycle Times
High Customer
Service
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Need for Production Planning & Control
Production system can be compared to the nervous system with PPC as a brain.
Production Planning and Control is needed to achieve:
Effective utilization of firms resources
To achieve the production objectives with respect to quality, quantity, cost and
timeliness of delivery
To obtain the uninterrupted production flow in order to meet customers varied
demand with respect to quality and committed delivery schedule.
To help the company to supply a good quality products to the customer on the
continuous basis at competitive rates.
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Objectives of PPC
Systematic planning of production activities to achieve the highest efficiency in
production of goods/services
To organize the production facilities like machines, men etc., to achieve stated
production objectives with respect to quantity and quality, time and cost.
Optimum Scheduling of resources
Coordinate with other departments relating to production to achieve regular
balanced and uninterrupted production flow
To conform to delivery commitments
To be able to make adjustments due to changes in demand and rush orders.
Functions of PPC
Forecasting to predict customer demand on various products over a given horizon.
Aggregate Planning to determine overall resources needed.
Materials Requirement Planning to determine all required components and timing.
Inventory Management to decide production or purchase quantities and timing.
Scheduling to determine shop-floor schedule of various components.
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Elements of PPC
Planning: It is the first element of production planning and control. Planning is deciding
in advance what is to be done in future. An organizational set up is created to prepare
plans and policies. Various charts, manuals and production budgets are also prepared.
Planning provides a sound base for control. A separate department is set up for this
work.
Routing: Routing is determining the exact path which will be followed in production. It
is the selection of the path from where each unit have to pass before reaching the final
stage. The stages from which goods are to pass are decided in this process. The
following steps are taken for completing a routing procedure:
Deciding what part to be made or purchased
Determining Materials required
Determining Manufacturing Operations and Sequences
Determining of Lot Sizes
Determining of Scrap Factors
Analysis of Cost of the Product
Preparation of Production Control Forms
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Scheduling: Scheduling is the determining of time and date when each operation is to be
commenced or completed. The time and date of manufacturing each component is fixed
in such a way that assembling for final product is not delayed in any way. Different
types of scheduling is given below:
Master Scheduling: It is the breakup of production requirements. It is the start of
scheduling. It is prepared by keeping in view the order or likely sales order in near
future.
Manufacturing Scheduling: It is used where production process is continuous. The
order of preference for manufacture is also mentioned in the schedule for a
systematic production planning.
Detail Operation Scheduling: It indicates the time required to perform each and
every detailed operations of a given process

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Dispatching: Dispatching is the transition from planning phase to action phase. In this
phase, the worker is ordered to start manufacturing the product. Dispatching involves the
actual granting of permission to proceed according to plans already laid down. In
dispatching, orders are issued in terms of their priority. The dispatch section of the PPC
is responsible for the following task:
Checking the availability of material and then taking appropriate action to have it
transferred from the main stores to the point at which it is needed.
Ensuring that all production aid is ready when needed and then having them issued
to manufacturing departments.
Obtaining specific drawings from the drawing office.
Informing the process section that production is commencing.
At the conclusion of the manufacturing, ensure that all the drawings, layout and
tools are withdrawn and returned to their correct location.
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Following two procedures may be used for dispatching:
Centralized Dispatching: Under this, orders are directly issued to workmen and
machines. It helps in exercising effective control.
Decentralized Dispatching: Under this procedure all work orders are issued to the
foreman or dispatch clerk of the department or section. It suffers from difficulties in
achieving co-ordination among different departments.
Follow Up & Expediting: Follow up or expediting is that branch of production control
procedure which regulates the progress of materials and part through the production
process. Progress may be assessed with the help of routine reports or communication
with operating departments. The follow up procedure is used for expediting and
checking the progress.
Inspection: Inspection is the process of ensuring whether the products manufactured are
of requisite quality or not. Inspection is undertaken both of products and inputs. It is
carried on at various levels of production process so that pre-determined standards of
quality are achieved. Inspection ensures the maintenance of pre-determined quality of
products.
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Areas of Production Planning
Preparation of production budget
Devising manufacturing methods and sequence of operations
Deciding type of machines and equipments
Preparation of operation sheets and instruction cards
Estimating men, machine and material requirements
Undertaking time and motion studies
Preparing master schedules
Need or Importance of PPC
Production planning and control is important for the following reasons:
For Increasing Production: Main purpose of production planning is to arrange
inputs. Production control programme minimizes idleness of men and machines. It
thus helps in raising industrial output.
For coordinating plant activity: In planning production is carried out in a number of
processes and thus activities are synchronized for smooth working.
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Limitations of PPC
Following are the limitations faced by production planning and control:
Based on Assumptions: Production planning and control is based on certain
assumptions. In case the assumptions prove correct, the planning and control will go
smoothly. But if they go wrong, process of planning and control will go weak.
Rigidity: Under production planning and control, there is rigidity in the behavior of
employees and it may not help in smoothening flow of work.
Difficult for small firms: This process is time consuming and therefore not
affordable for small firms
Costly: It is a costly device as its implementation requires separate persons to
perform functions of planning, expediting, dispatching etc.
Dependence on External Factors: External factors like natural calamities, change in
technology, government controls etc reduce effectiveness of production planning.
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Benefits of Production Planning and Control
Higher quality
Better resource utilization and reduced inventory
Reduced manufacturing cycle time
Faster delivery
Better customer services
Lower production costs and Lower capital investment
Higher customer service
Improved sales turnover
Improved market share
Improved profitability
Flexibility
Dependability
Lower prices
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Nikhil R. Dhar, Ph. D
BUET
LECTURE 02:FORECASTING
METHODS
Forecasting
Forecasting plays a crucial role in the development of plans for the future. It is essential
for the organizations to know for what level of activities one is planning before
investments in input, i.e. men, machines and materials be made. Before making an
investment decision, many questions will arise like:

What should be the size or amount of capital required?
How large should be the size of the work force?
What should be the size of the order and safety stock?
What should be the capacity of the plant?

The answers to the above questions depends upon the forecast for the future level of
operations.
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Need for Forecasting:
Majority of the activity of the industries depend upon the future sales
Projected demand for the future assists in decision-making with respect to
investment in plant and machinery, market planning and programs
To schedule the production activity to ensure optimum utilization of plants capacity
To prepare material planning to take up replenishment action to make the materials
available at right quantity and right time
To provide an information about the relationship between demand for different
products in order to obtain a balanced production in terms of quantity required of
different products as a function of time
Forecasting is going to provide a future trend which is very much essential for
product design and development
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Forecasting in Action: Forecasts are made to guide decisions in a variety of fields.
Operations planning and Control: Firms use forecasts to decide what to produce,
when to produce and where to produce.
Marketing: Pricing decisions, distribution path decisions, and advertising
expenditure decisions all rely heavily on forecasts of responses of sales to different
marketing schemes.
Economics: The forecast of the major economic variables, such as unemployment,
consumption, investment, the price level, and interest rates are used for governments
to guide monetary and fiscal policy. Private firms use them for strategic planning,
because economy-wide economic fluctuations typically have industry-level and
firm-level effects.
Financial speculation: Speculators in asset markets have an interest in forecasting
asset returns (stock returns, interest rates, exchange rates, ...). Such forecasts are
made routinely. Are these forecasts successful???
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Financial risk management: Volatility forecasts are crucial for evaluating and
insuring risks associated with asset portfolios. Volatility forecasts are also crucial for
firms and investors who need to price assets such options and other derivatives.
Capacity planning: Capacity planning decisions rely heavily on a variety of
forecasts related both to product demand and supply.
Business and government planning: Business and governments of all sorts must
constantly plan and justify their expenditures. A major component of the budgeting
process is the revenue forecast.
Demography: Population forecasts are crucial for planning government expenditure
on health care, infrastructure, social insurance, antipoverty programs, and so forth.
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Time Horizons for Strategic Decisions
Long Term Decisions
Locating and Sizing New Facilities
Finding New Markets for Products
Mission Statement: meeting quality objectives
Intermediate Term Decisions
Forecasting Product Demand
Determining Manpower Needs
Setting Channels of Distribution
Equipment Purchases and Maintenance
Short Term Decisions
Purchasing
Shift Scheduling
Inventory Control
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Aggregate Planning
Aggregate Planning may be defined as Intermediate Planning, which is normally done for a
period of up to one years time. The word Aggregate symbolizes that the planning is done
at the broadest level.
Aggregate Planning Process
Sales forecast for each product: the quantities to be sold in each time period (weeks,
months, or quarters) over the planning horizon (6 -18 months)
Total all the individual product or service forecasts into one aggregate demand
Transform the aggregate demand for each time period into production resource
requirements (workers, materials, machines, etc.)
Develop alternative resource plans to support the cumulative aggregate demand and
compute the cost for each.
Select the best alternative which satisfies aggregate demand and best meets the
organizations objectives
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Goals for Aggregate Planning: There are number of goals to be satisfied
It has to provide the overall levels of output, inventory and backlogs
Proper utilization of the plant capacity.
The aggregate plan should be consistent with the companys goals and policies
regarding its employee
Make sure enough capacity available to satisfy expected demand
Aggregate Planning Strategies
Use inventories to absorb changes in demand
Accommodate changes by varying workforce size
Use part-timers, overtime, or idle time to absorb changes
Use subcontractors and maintain a stable workforce
Change prices or other factors to influence demand
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Aggregate Planning Options
Capacity based Options:
Changing inventory levels
Increase inventory in low demand periods to meet high demand in the future
Increases costs associated with storage, insurance, handling, obsolescence,
Shortages can mean lost sales due to long lead times and poor customer service
Varying workforce size by hiring or layoffs
Match production rate to demand
Training and separation costs for hiring and laying off workers
New workers may have lower productivity
Laying off workers may lower morale and productivity
Varying production rate through overtime or idle time
Allows constant workforce
May be difficult to meet large increases in demand
Overtime can be costly and may drive down productivity
Absorbing idle time may be difficult
Using part-time workers
Useful for filling unskilled or low skilled positions, especially in services
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Subcontracting
Temporary measure during periods of peak demand
Assuring quality and timely delivery may be difficult
Exposes your customers to a possible competitor
Demand based Options:
Influencing demand
Use advertising or promotion to increase demand in low periods
Attempt to shift demand to slow periods
May not be sufficient to balance demand and capacity
Back ordering during high- demand periods
Requires customers to wait for an order without loss of goodwill or the order
Most effective when there are few if any substitutes for the product or service
Often results in lost sales
Counterseasonal product and service mixing
Develop a product mix of counterseasonal items
May lead to products or services outside the companys areas of expertise
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Aggregate Planning Options
Option Advantages Disadvantages Some Comments
Changing inventory
levels
Changes in human
resources are gradual
or none; no abrupt
production changes
Inventory holding
cost may increase.
Shortages may
result in lost sales.
Applies mainly to
production, not
service, operations
Varying workforce
size by hiring or
layoffs
Avoids the costs of
other alternatives
Hiring, layoff, and
training costs may
be significant
Used where size of
labor pool is large
Varying production
rates through
overtime or idle
time
Matches seasonal
fluctuations without
hiring/ training costs
Overtime
premiums; tired
workers; may not
meet demand
Allows flexibility
within the aggregate
plan
Sub-contracting Permits flexibility and
smoothing of the
firms output
Loss of quality
control; reduced
profits; loss of
future business
Applies mainly in
production settings
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Option Advantages Disadvantages Some Comments
Using part-time
workers
Is less costly and
more flexible than
full-time workers
High turnover/
training costs; quality
suffers; scheduling
difficult
Good for unskilled
jobs in areas with
large temporary labor
pools
Influencing
demand
Tries to use excess
capacity. Discounts
draw new customers.
Uncertainty in
demand. Hard to
match demand to
supply exactly.
Creates marketing
ideas. Overbooking
used in some
businesses.
Back ordering
during high-
demand periods
May avoid overtime.
Keeps capacity
constant.
Customer must be
willing to wait, but
goodwill is lost.
Allows flexibility
within the aggregate
plan
Counter-
seasonal
product and
service mixing
Fully utilizes
resources; allows
stable workforce
May require skills or
equipment outside
the firms areas of
expertise
Risky finding
products or services
with opposite demand
patterns
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Aggregate Planning
Master production
schedule and
MRP
systems
Detailed work
schedules
Process
planning and
capacity
decisions
Aggregate
plan for
production
Product
decisions
Demand
forecasts,
orders
Marketplace
and
demand
Research
and
technology
Raw
materials
available
External
capacity
(subcontractors)
Workforce
I nventory
on
hand
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Master Production Schedule (MPS)
Master Production Schedule (MPS)States the requirements for individual end items by
date and quantity. It represents what the company plans to produce expressed in specific
configurations, quantities and dates. The MPS is not a sales forecast that represents a
statement of demand. The MPS must take into account the forecast, the production plan,
and other important considerations such as backlog, availability of material, availability of
capacity and management policies and goals. The main functions of PMS are:
To translate aggregate plans into specific end items
Evaluate alternative schedule
Generate material requirement
Generate capacity requirements
Facilitate information processing
Effective utilization of capacity
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Scope of Master Production Schedule
Breaks down, or disaggregates, the production plan into product families:
The production plan is broken into product families for the MPS and
production is planned based on demand forecasts provided by marketing.
Promotes valid order promises: Order promises can be made against planned
production. This job falls to marketing and is referred to as consuming the
Inventory.
Provides a communication medium between Marketing/Sales and
Operations: When more product has been promised than will be produced,
marketing and operations must work together to develop a strategy to meet
customer requirements. This can take the form of many options including;
subcontract, allow overtime, increase capacity through equipment
acquisition, expand facilities, increasing staffing, etc
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Proactively control ability to deliver goods to customers: The MPS allows
for better understanding of capacity and gives visibility to capacity
shortfalls. This allows action to be taken to meet demand or prioritize
customer orders ahead of time.
Resource availability control: Understanding future capacity shortfalls
creates the ability to plan the best uses of resources or increase resources if
needed.
Proactively control inventory levels: MPS gives a firm the ability to not rely
on safety stock or reactive Economic Order Quantity (EOQ) models.
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Aggregate Planning and Master Scheduling
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Materials Requirements Planning
Materials Requirements Planning (MRP) is a system that controls inventory levels,
plans production, helps supply management with important information and helps with
the manufacturing control system with respect to the production of assembled parts.
Materials Requirement Planning (MRP) is a technique for determining the
quantity and timing for the acquisition of dependent demand items needed to
satisfy master production schedule requirements.
There are certain environments or situations in which it is better and more efficient to
use MRP. These environments and situations are as follows.
Job Shop Production
Complex Products
Assemble-to-Order Environments
Discrete and Dependent Demand Items
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MRP Objectives:
Inventory reduction: MRP determines how many components are required, when
they are required in order to meet the master schedule. It helps to produce the
materials/components as and when needed and thus avoid excessive build up of
inventory.
Reduction in the manufacturing and delivery lead times: MRP identifies materials
and component quantities, timings when they are needed, availabilities and
procurements and actions required to meet delivery deadlines. MRP helps to avoid
delays in production and priorities production activities by putting due dates on
customer job order.
Realistic delivery commitments: by using MRP, production can give marketing
timely information about likely delivery times to prospective customers.
Increased efficiency: MRP provides a close coordination among various work
centers and hence helps to achieve uninterrupted flow of materials through the
production line. This increases the efficiency of production system.
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Steps of MRP
Step-1: Identifying Requirements
Quantity on Hand
Quantity on Open Purchase Order
Quantity in/or Planned for Manufacturing
Quantity Committed to Existing Orders and Quantity Forecasted
Company Sensitive, Location Sensitive and Date Sensitive
Step-2: Running MRP Creating the Suggestions
Critical Items: Critical items are items of immediate importance that should be taken care
of right away.
Expedite Items: Expedite items are items that need to be sped up so that it is completed in
less than the normal lead time.
Delay Items: Delay items are item that are not of vital importance and can be delayed for
the benefit of other items.
Step-3: Firming the Suggestions
Manufacturing Orders
Purchasing Orders
Various Reports
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Overview of the MRP System
Product Structure
File
Master Production
Schedule
Material
Requirements
Planning
Manufacturing Orders Purchase Orders Various Reports
The Orange boxes indicate the inputs into the MRP system. The MRP system then processes the information
and delivers outputs as indicated by the yellow boxes.
Inventory Master
File
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MRP Inputs:
Product Structure File: The product structure file contains a bill of material (BOM) for
every item produced. In other words, this file contains all the component parts for a larger
item. For example if you are producing a car, the component parts for the car would be the
screws, steel, rubber, and so on. Not only does the product structure contain all the
component parts, it also supplies information for in which order the product is to be
assembled. The MRP system accesses the product structure file to determine which
component items need to be scheduled.
Master Production Schedule: The master production schedule specifies which end items or
finished products the company is to produce, how many are needed, and when they are
needed. The numbers that are on the master production schedule represent production, not
demand, may be a combination of customer orders and demand forecasts, and gives what
needs to be produced.
Inventory Master File: This file includes all the numbers from inventory. The MRP system
keeps track of your inventory and when more items need to be ordered. It is important that
you inventory numbers are accurate from the beginning in order for the MRP system to work
properly. It includes (i) On-Hand Quantities, (ii) On-Order Quantities, (iii) Lot Sizes, (iv)
Safety Stock, (v) Lead Time and (vi) Past-Usage Figures
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MRP Process:
During the process, the system uses an MRP matrix to record the calculations that
are made. From the inputs discussed earlier in the presentation, the system
calculates the gross requirements, scheduled receipts, projected on hand, net
requirements, planned order receipts, and planned order releases.
MRP Outputs:
Manufacturing Orders
Purchasing Orders
Various Reports
The MRP system delivers two main outputs along with various other reports. The two
main outputs are manufacturing orders which can be released to shop floors for in-
house production and purchasing orders which are sent to outside suppliers. The
various reports offer suggested changes in previous plans or existing schedules.
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Just-In-Time (JIT)
If you think about someone's journey to work, they could leave the house just-in-time to
cycle to the train station, just-in-time to catch their train, which would get them to their
place of work just-in-time, allowing them to be at their desk just-in-time to start work.
In engineering, using the just-in-time theory would allow the components that are
needed to produce a product to be delivered to the worker, just-in-time.
The products can then be made available for the customers just-in-time.
This process allows for all types of stock, including materials and finished products, to
be eliminated.
Implementing a just-in-time structure can mean a company is adopting a lean production
system.
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Seven Wastes
Shigeo Shingo, a Japanese JIT authority, identifies seven wastes as being the targets of
continuous improvement in production processes.
Waste of overproduction: Eliminate by reducing set-up times, synchronizing quantities and
timing between processes, layout problems. Make only what is needed now.
Waste of waiting: Eliminate bottle necks and balance uneven loads by flexible workforce and
equipment.
Waste of transportation: Establish layouts and locations to make handling and transport
unnecessary if possible. Minimize transportation and handling if not possible to eliminate.
Waste of processing itself: Question regarding the reasons of existing of the product and then
why each process is necessary.
Waste of stock: Reducing all other waste reduce stocks.
Waste of motion: Study motion for economic and consistency. Economic improves
productivity and consistency improves quality. First improve the motions, then mechanize or
automate. Otherwise, there is a danger of automating the waste.
Waste of making defects products: Develop the production process to be prevent defects from
being produced, so as to eliminate inspection. At each process, do not accept defects and
make no defects. A quality process always yields quality product.
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When is JIT a suitable system to use?
JIT is a suitable production system when:
The engineering manufacturer has a standard product that is steadily produced in
practical amounts.
The product is of high value.
The workforce producing the product is a disciplined one.
Flexible working practices are maintained.
Machinery does not demand lengthy set up times.
Quality can be guaranteed through either a cost penalty for defects or good working
practices.
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A Just-In-Time Illustration

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Characteristics of JIT operations
The JIT concept is most applicable to manufacturing operations that produce a relatively
small number of different products.
Product demand must be reasonably predictable, and requirements must be generated
accurately. A closed loop MRP system can be used to do this, but typically the master
production schedule must be smoothed on a daily basis.
Statistical process control typically is used in both the buyer's and suppliers'
organizations to ensure tight control of material and production quality. This is vital to
the functioning of the low-float, small-volume, relatively smooth-flowing operation.
Production operation setup requirements must be able to be reduced to relatively short
times. Most firms target for tool changes and equipment setups of less than ten minutes.
Without this capability, small-batch and smooth-flow production of different models or
different products cannot be accomplished efficiently.
Purchasing must be able to reduce materials replenishment lead times. This usually is
accomplished by reducing the four major elements of lead time-internal paperwork and
ordering time, supplier queue and manufacturing time, transportation time requirements,
and incoming receiving and inspection requirements.
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Advantages of using a JIT system
The most significant benefit of JIT is to improve the responsiveness of the firm to the
changes in the marketplace thus providing an advantages in competition. The advantages
are:
Products are of a better standard.
Less waste and, in turn, less rework.
Set up times are reduced.
Production flow is improved.
Less stock.
Overall savings.
Efficiency is increased.
Relations with suppliers are enhanced.
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BUET
LECTURE 03: PLANT
LOCATION & PLANT LAYOUT
Plant Location
Site selection is an important activity as it decides the fate of the business. A good
location will reduce the cost of production &distribution to a large extent. The reduction
of cost of distribution helps in elevating either the competitive strength or the profit
margin of business.
Locating of business involves large & relatively permanent investment. If the site
selection is not done properly, all the money spent on factory building, machinery &
their installation will go in waste & the owner has to suffer great loss.
Therefore the site for factory should be selected very carefully. While selecting a site it
is necessary to consider technical, commercial, &financial aspects & then select a site
that may provide maximum profit.
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Steps in Choosing Location:
National Decision
Regional Decision
Community Decision
Site Decision
Political, social, economic stability;
Currency exchange rates; . . . . .
Climate; Customer concentrations;
Degree of unionization; . . . . .
Transportation system availability;
Preference of management; . . . . .
Site size/cost; Environmental
impact; Zoning restrictions; . . . . .
126/53
Plant Location Problems:
Selection of a General Territory (or Region): This refers to the selection of a particular
geographical zone or state taking into consideration such factors as nearness to market
and sources of raw materials, basic infrastructure facilities available, climate conditions
and taxation and laws.
Selection of a Community: This refers to the selection of the specific locality within the
selected region. The factors that influence the selection of community are, availability of
labor, community attitude, social structure and service facilities. Generally the following
alternatives are available:
Urban area
Rural area and
Semi-urban area
Selection of Specific Site: This refers to the selection of specific site within the
community. The factors that influence the site selection are the cost of the land,
availability and suitability of the land. The type of the manufacturing process may
dictate the site selection. The conditions that govern the particular types of community
are as follows:
126/54
Condition that demand Urban location:
Highly skilled labor requirements
Manufacturing depends on urban utilities
Excellent communication and transportation facility
Concentrated suppliers
Conditions that demand Sub-urban location
Semi-skilled or female workforce required
Large space availability for future expansion
Community close to large population center
Conditions demanding rural location
Large site required for future expansion
Requirement of unskilled labor
Manufacturing process is dangerous and objectionable
Low wage structure
Lower property tax rates and Lower cost of land.
126/55
Advantages and Disadvantages of Urban, Suburban and Rural Locations:
Suburban Area
Advantages:
Land available at cheaper rate compared to urban location
Infrastructure facilities are developed by promotional agencies
Because of nearness to city availability of the skilled manpower
Educational, medical facilities are available because of nearness to city
Disadvantages:
Due to concentration the suburban area will become crowdy and will become urban
in turn within short period
High mobility of workers and hence higher labor turnover
Government incentive and subsides to promote industries.
126/56
Urban Area
Advantages:
Excellent communication network
Good transportation facilities for material and people
Availability of skilled and trained manpower
Factory in the vicinity of the market hence high local demand
Excellent sourcing (subcontracting) facilities
Good educational, recreational and medical facilities
Availability of service of consultants, training institute and trainers
Disadvantages:
High cost of land compare to rural area
Sufficient land is not available for expansion
Labor cost is high due to high cost of living
Industrial unrest due to trade union activities
Management labor relations are much influenced by union activities
Municipal and other authority restrictions on building etc. and high labor turnover
126/57
Rural Area
Advantages:
Cheaper and ample availability of site
Cheaper labor rates
Less turnover of labors because of limited mobility
No municipal restrictions
Good industrial relations
Scope for expansion and diversification
No slums and environmental pollution
Disadvantages:
Poor transportation network
No good communication facilities
Sourcing of components and materials should be from outside
Far away from market
High absenteeism during harvest season
No educational, medical and recreational facilities.
126/58
Factors Affecting Plant Location :
Availability of raw material
Nearness to the potential market
Near to the source of operating requirements like electricity, disposal of waste,
drainage facilities.
Supply of labor
Transport & communication facilities
Integration with other group of companies
Suitability of land & climate
Availability of housing, other amenities & services
Local building & planning regulations
Safety requirements
Others like low interest on loans, special grants, living standards
126/59
Selection of the Site for the Factory: There are many analytical techniques that can be
used in facility location decision. Some of these are:
Methods of Factor Rating: In factor rating method, first we must identify the most
important factors in evaluating alternative sites for the new facility. Then we should
assign a weight between 0 and 100 to each of these factors. Each alternative location
will then be rated based on these factor weights. The most weighted alternative is
selected as the best alternative.
Cost-Profit-Volume Analysis: When the fixed and variable costs for each site differ,
Cost-profit-volume analysis can be used to identify the location with the lowest cost.
Center of Gravity Method: The center of gravity method is used to find a location that
minimizes the sum of transportation cost in between new facility and old facilities.
Transportation cost is assumed to be a linear function of the number of units shipped and
the traveling distance.
Transportation and Simulation Models: A special form of linear programming, that is
Transportation Model, can be used to compare the total transportation cost associated
with each alternative site.
126/60
Recent Trends in Plant Location:
Priority for sub-urban areas
Industrial development in notified backward areas
Establishment of Industrial estate
Decentralization of industries
Increased role of government in the decision of location of industries
Competition between Government & Industries
Backward Area and Industrial Policy: In the facilities location problems, the
industrial policies of the governments are very important inputs in the overall
consideration. In India, the industrial development of backward areas for balanced
regional development of the country has always been emphasized. This has been
attempted mainly through:
Licensing policy and investment subsidy
Location of public sector projects
Concessional finance and concession on income tax import duty etc and
Setting up of industrial estates (property consisting of much land )
126/61
Global Locations: World-wide locations are called global locations. Multinational
Company (MNC) are setting up their branches in India & Indian companies are extending
their operations in other countries like - USA, EUROPE, CHINA.
Virtual proximity: Social networking at a distance with the advances in
telecommunications technology , a firm can be in virtual proximity to its customers.
Virtual Factory: Many firms based in USA and UK - in the service sector and in the
manufacturing sector - often outsource part of their business processes to foreign
locations such as India. Thus, instead of one's own operations, a firm could use its
business associates' operations facilities. In a way, the Indian BPO firm is that
foreign-based company's 'virtual service factory'. So, one's business associate's
operations facilities is called virtual factory.
Reasons for a Foreign Location:
Reaching the Customer
One obvious reason for locating a facility abroad is that of capturing a share of
the market expanding worldwide.
126/62
Tangible Reasons
The host country may have/offer substantial tax advantages compared to the home
country.
The costs of manufacturing and/or running operations may be substantially less in that
foreign country. This may be due to (i) low labor cost, (ii) low raw material cost and (iii)
better availability of inputs
The company may overcome the tariff (table of fixed charges) barriers by setting up a
manufacturing plant in foreign country rather than exporting the items to that country.
Customer-related reasons
firms customer may feel secure that firm is more accessible.
Firm may be able to give a personal touch.
Firm may understand customers requirements better.
It may discover other potential customers in abroad.
Organizational learning related reasons
Firm can learn advanced technology
Firm can learn from its customers abroad
It can also learn from its competitors operating in abroad.
It may also learn from its suppliers abroad.
126/63
Plant layout
Plant layout is the physical arrangement of industrial facilities. It involves the allocation of
space & the arrangement of equipment in such a manner that overall operating costs are
minimized.
D D
D D
G G
G G
G G
M M
M M
M M
A A
A A
L
L L
L L
L L
L
126/64
Objectives of Plant Layout
Economies in materials, facilitate manufacturing process & handling of semi-
finished & finished goods.
Proper & efficient utilization of available floor space.
To avoid congestion & bottlenecks.
Provision of better supervision & control of operations.
Careful planning to avoid frequent changes in layout which may result in undue
increase in cost of production.
To provide adequate safety to the workers from accidents.
To meet the quality & capacity requirements in the most economical manner.
Provision of medical facilities & cafeteria at suitable & convenient places.
To provide efficient material handling system.
To suggest the improvements in production process & work methods.
126/65
Principles of Plant Layout
Principle of integration (of 5Ms)
Principle of minimum distance
Principle of cubic space utilization( both horizontal & vertical space).
Principle of flow( must be forward no backtracking)
Principle of maximum flexibility
Principle of safety, security & satisfaction
Principle of minimum handling.
Types of plant layout
Product layout
Process layout
Group layout
Fixed Product layout
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Product layout: Layout that uses standardized processing operations to achieve
smooth, rapid, high-volume flow. Here machines are arranged according to the
needs of product & in the same sequence as the operations are necessary for
manufacture
Drill Grind Drill
Lathe
Drill
Drill
S
t
o
r
a
g
e
W
a
r
e
h
o
u
s
e
A
s
s
e
m
b
l
y
Lathe
Bend
Lathe
Mill
Press
Drill
126/67
Advantages of Product Layout
High rate of output
Low unit cost
Labor specialization
Low material handling cost
High utilization of labor and equipment
Established routing and scheduling
Short processing time
Disadvantages of Product Layout
Creates dull, repetitive jobs
Poorly skilled workers may not maintain equipment or quality of output
Fairly inflexible to changes in volume
Highly susceptible to shutdowns
Needs preventive maintenance
Require large capital investment
126/68
Process layout: Layout that can handle varied processing requirements. Here all machines
performing similar type of operations are grouped together at one location in the process
layout. Thus here facilities are grouped together according to their functions. E.g. all
drilling machines are located at one place known as drilling section.
Lathe Drill Weld
Mill
Drill
Grind
S
t
o
r
a
g
e
W
a
r
e
h
o
u
s
e
Lathe
Lathe
Mill
Mill
Lathe
Mill
Paint
Grind
Assembly
Assembly
Paint
Weld
126/69
Advantages of Process Layouts
Can handle a variety of processing requirements
Machines breakdown doesnt result in shutdown.
Equipment used is less costly
Wide flexibility in production facilities.
Each production unit of system works independently.
High utilization of facilities
Variety makes the job interesting.
Disadvantages of Process Layouts
In-process inventory costs can be high
Challenging routing and scheduling
Equipment utilization rates are low
Material handling is slow and inefficient & is more.
More space is required and longer processing time
Back tracking may occur.
126/70
Comparison of Product and Process Layout
Factors Product layout Process layout
Nature Sequence of facilities Similar are group together
Machines utilization Not to full capacity Better utilization
Product standardized diversified
Processing time less more
Material handling less more
Inventory High work-in-process inventory Low work-in-process inventory
Breakdown Cant tolerate Can tolerate
Production centre simple complex
Flexibility low high
Floor space Requires less more
Investment high low
126/71
Group layout: There is a trend now to bring an element of flexibility into manufacturing
system as regards to variation in batch sizes and sequence of operations. A group of
equipment for performing a sequence of operations on family of similar components or
products has become all the important. The application of group technology involves two
basic steps, first step is to determine component families or group. The second step in
applying group technology is to arrange the plants equipment used to process a particular
family of components. This represents small plants within the plants.
Drill Grind Assembly
Drill
Weld
Assembly
S
t
o
r
a
g
e
W
a
r
e
h
o
u
s
e
Lathe
Assembly
Grind
Press
Mill
Lathe
Paint
Drill
Drill
Press
Grind
Assembly
126/72
Advantages of Group Layouts
By grouping, higher machine utilizations
Smoother flow lines and shorter travel distances
Team spirit and job enlargement
Disadvantages of Group Layouts
Greater labor skills for team
Balancing individual cells
Unbalanced flow may result in work-in-process
126/73
Fixed Product layout: This is also called the project type of layout. In this type of
layout, the material, or major components remain in a fixed location and tools,
machinery, men and other materials are brought to this location. This type of layout is
suitable when one or few pieces of identical heavy products are to be manufactured and
when the assembly consists of large number of heavy parts, the cost of transportation of
these part is very high.
Lathe Press Grind
Weld Assembly Paint
S
t
o
r
a
g
e
W
a
r
e
h
o
u
s
e
126/74
Advantages of Fixed Product Layouts
Reduced material moves
Highly flexible
Job enrichment
Promotes pride & quality
Responsibility
Disadvantages of Fixed Product Layouts
Personel-equipment moves
Equipment duplicates
Greater skill
Close control& coordination
Increased space & greater work-in-process
126/75
High

Medium

Low
Low Medium High
Product Planning
Department
Fixed Materials Location
Planning Department
Process Planning
Department
Product Family
Planning Department
Product Layout
Fixed Layout
Group Layout
Process Layout
Volume
Variety
126/76
Material Flow Pattern
The pattern of material flow is an important consideration in the plant layout decision
because good layout aims at minimizing the flow of materials. The flow pattern of materials
helps in eliminating bottle-necks, rushing and backtracking and ensures good supervision
and control. The material flow systems can be classified on the basis of the availability of
floor space as
Horizontal flow system: Usually devised for a single story building when the flat floor
area is available
Vertical flow system: This system is used in case of multi-storey buildings and limited
area is available.
126/77
Different Flow Pattern
Straight line:
Shortest route and must have roads on both sides
Plant area has long length and narrow width
Unsuitable for longer production lines
U-type:
Less difficulty in returning empty containers'
Suitable for longer production lines
Requires square like floor area
One side road link will be required
Straight
Simplest. Separate
receiving/shipping crews
U flow
Very popular. Combine receiving
/shipping. Simple to administer
126/78
Serpentine (inverted S-shaped):
Requires roads on both sides
Suitable for longer production lines
Difficulty in returning empty containers
Requires square like floor area.
Serpentine
When line is too long
126/79
Plant Layout Procedure
Analyze the product or products to be produced.
Determine the process required to manufacture the product.
Prepare layout planning charts.
Flow process, including operations, transportation, storage, and inspections.
Standard times for each operation.
Machine selection and balance.
Manpower selection and balance.
Material handling requirements.
Determine workstations.
Analyze storage area requirements.
Establish minimum aisle widths.
Establish office requirements.
Consider personnel facilities and services.
Survey plant services.
Provide for future expansion.
126/80
Factors Affecting Plant Layout
Nature of product- e.g. some products need air-conditioned plants.
Size of output-
For bulk-product/line layout
For small-functional layout
Nature of manufacturing system-
For intermittent-functional layout
For continuous-product/line layout
Localization of plant- e.g. there will be different transportation arrangement if site is
located near railway line.
Machines or equipment- e.g. heavy machines need stationary layout
Climatic conditions, need of light, temperature also affect design of layout.
126/81
BUET
LECTURE 04: PROJECT
SHEDULING & CONTROL
TECHNIQUES
Project
A project is a temporary endeavor involving a connected sequence of activities and a range
of resources, which is designed to achieve a specific and unique outcome and which
operates within time, cost and quality constraints and which is often used to introduce
change.
Characteristic of a project
A unique, one-time operational activity or effort
Requires the completion of a large number of interrelated activities
Established to achieve specific objective
Resources, such as time and/or money, are limited
Typically has its own management structure
Need leadership
126/83
Scheduling the Project
Planning, budgeting and scheduling are all part of the same process
Planning a project, developing a budget for it, and scheduling all the of the many tasks
involved are not easily separable
Budget must include both the amounts and timing of the resources received or expanded
One cannot prepare a budget without knowing the specifics of each task and the time
periods during which the task must be undertaken.
Similarly, a project action implies a schedule just as a schedule implies a plan.
CPM (Critical Path Method), PERT (Program Evaluation and Review Technique)
and Gantt Chart
126/84
Language of Scheduling
Activity
task or set of tasks
use resources
Event
state resulting from completion of one or more activities
consume no resources or time
predecessor activities must be completed
Network
diagram of nodes and arcs
used to illustrate technological relationships
Path
series of connected activities between two events
Critical Path
set of activities on a path that if delayed will delay completion of project
126/85
Building the Network
Building the Network
Activity-on-Node (AON) Network
Usually associated with CPM
Activity-on-Arrow (AOA) Network
Usually associated with PERT
126/86
Situations in Network Diagram
A
B
C
A must finish before either B or C can start
A
B
C
both A and B must finish before C can start
D
B
C
A
both A and C must finish before either of B or D can start
A
C
B
D
Dummy
A must finish before B can start
both A and C must finish before D can start
126/87
Building the Network: AON
Task Predecessor
a -
b -
c a
d b
e b
f c, d
g e
126/88
Building the Network: AOA
Task Predecessor
a -
b -
c a
d b
e b
f c, d
g e
Dummy Activity
126/89
Critical Path Method (CPM)
Path: A connected sequence of activities leading from the starting event to the ending
event
Critical Path: The longest path (time); determines the project duration
Critical Activities: All of the activities that make up the critical path

Forward Pass
Earliest Start Time (ES): earliest time an activity can start, ES = maximum EF of
immediate predecessors
Earliest finish time (EF): earliest time an activity can finish, EF= ES + t
Backward Pass
Latest Start Time (LS): Latest time an activity can start without delaying critical path
time , LS= LF - t
Latest finish time (LF): latest time an activity can be completed without delaying
critical path time, LS = minimum LS of immediate predecessors
126/90
Example: Consider the list of four activities for making a simple product:
Activity Description Immediate Predecessor Expected Time (min)
A Buy Plastic Body - 180
B Design Component - 30
C Make Component B 20
D Assemble product A,C 60
1 3 4
2
A
B
C
D
Arcs indicate
project activities
Nodes correspond to the
beginning and ending of
activities
Solution :
126/91
Example: Develop the network for a project with following activities and immediate
predecessors
Activity A B C D E F G
Immediate Predecessors - - B A, C C C D, E,F
Solution :
1 3 4
2
A
B
C
D
5
E
7
6
F
G
dummy
Note how the network correctly identifies D, E, and F as the immediate predecessors for activity G.
Dummy activities is used to identify precedence relationships correctly and to eliminate possible
confusion of two or more activities having the same starting and ending nodes
Dummy activities have no resources (time, labor, machinery, etc)purpose is to PRESERVE
LOGIC of the network
We need to introduce a
dummy activity
126/92
Examples of the use of dummy activity
1

1

2

Activity c not required for e

a

b

c

d

e

a

b

c

d

e

WRONG!!!

RIGHT
Dummy

RIGHT

Network concurrent activities

1

2

1

2

3

a

WRONG !!!
a

b

b

WRONG !
RIGHT
126/93
Example: Draw the network for the following relationships:
Activity C can be performed at the same time as E; but D cannot be started unless both C
and A are completed; A and B can be performed simultaneously, B has also constraint on
activity C and E both D and E should be completed before the objective is achieved.
Example: In a program consisting of five activities, the constraints determined are
as under. Draw the network.
E D E B
D C B C D A B A

Solution :
dummy
activity
Solution :
A
B
C
D
E
A
B
C
D
E
126/94
predecessors. Construct the network and find the critical path.
Solution:
Activity a b c d e f g h i j
Immediate Predecessors - - - b c a a f g d, e
Completion Time 6 8 5 13 9 15 17 9 6 12
a, 6
f, 15
b, 8
c, 5
e, 9
d, 13
g, 17
h, 9
i, 6
j, 12
126/95
ES and EF Times
a, 6
f, 15
b, 8
c, 5
e, 9
d, 13
g, 17
h, 9
i, 6
j, 12
0 6
0 8
0 5

126/96
ES and EF Times
a, 6
f, 15
b, 8
c, 5
e, 9
d, 13
g, 17
h, 9
i, 6
j, 12
0 6
0 8
0 5
5 14
8 21

6 23

6 21
126/97
ES and EF Times
a, 6
f, 15
b, 8
c, 5
e, 9
d, 13
g, 17
h, 9
i, 6
j, 12
0 6
0 8
0 5
5 14
8 21
21 33
6 23
21 30
23 29
6 21
Projects EF = 33
126/98
LS and LF Times
a, 6
f, 15
b, 8
c, 5
e, 9
d, 13
g, 17
h, 9
i, 6
j, 12
0 6
0 8
0 5
5 14
8 21
21 33
6 23
21 30
23 29
6 21

21 33
27 33

24 33

126/99
LS and LF Times
a, 6
f, 15
b, 8
c, 5
e, 9
d, 13
g, 17
h, 9
i, 6
j, 12
0 6
0 8
0 5
5 14
8 21
21 33
6 23
21 30
23 29
6 21
3 9
0 8
7 12
12 21
21 33
27 33
8 21
10 27
24 33
9 24
126/100
a, 6
f, 15
b, 8
c, 5
e, 9
d, 13
g, 17
h, 9
i, 6
j, 12
0 6
0 8
0 5
5 14
8 21
21 33
6 23
21 30
23 29
6 21
3 9
0 8
7 12
12 21
21 33
27 33
8 21
10 27
24 33
9 24
3
4
3
3
4
0
0
7
7
0
Float
126/101
Critical Path
a, 6
f, 15
b, 8
c, 5
e, 9
d, 13
g, 17
h, 9
i, 6
j, 12
126/102
Activity A B C D E F G H I J
Immediate Predecessors - A B G D A C,F D A D,I
Duration 90 15 05 20 21 25 14 28 30 45
Solution:
B
F
C
A
I
E
D G H
J
B, 15
F, 25
C, 05
A, 90
I, 30
E, 21
D, 20 G, 14 H, 28
J, 45
90,105
95,110
0, 90
0, 90
90,115
90,115
90,120
119,149
105,110
110,115
115,129
115,129
129,149
129,149
149,170
173,194
149,177
166,194
149,194
149,194
90,105
95,110
0, 90
0, 90
90,115
90,115
90,120
119,149
105,110
110,115
115,129
115,129
129,149
129,149
149,170
173,194
149,177
166,194
149,194
149,194
126/103
Example: Task. A project has been defined to contain the following list of activities along
with their required times for completion. Construct the network and find the critical path.
Activity 1 2 3 4 5 6 7 8
Immediate Predecessors -- 1 1 2,3 4 4 6 5,7
Duration 5 6 7 2 6 5 3 1
1
2
3
4
5
6
8
7
5
6
7
2
6
5
3
1
0,5
0,5
05,11
06,12
05,12
05,12
12,14
12,14
14,20
16,22
14,19
14,19
19,22
19,22
22,23
22,23
126/104
Solution:
Activity A B C D E F G H I
Immediate Predecessors - - A A A E D,F B, C G,H
Completion Time 5 6 4 3 1 4 14 12 2
126/105
Activity a b c d e f g h i j
Immediate Predecessors - - a a a b, c d d, e f g, h
Duration 5 4 3 4 6 4 5 6 6 4
Solution:
126/106
Gantt Chart
Gantt charts are used as a tool to monitor and control the project progress.
A Gantt Chart is a graphical presentation that displays activities as follows:
Time is measured on the horizontal axis. A horizontal bar is drawn proportionately
to an activity s expected completion time.
Each activity is listed on the vertical axis.
In an earliest time Gantt chart each bar begins and ends at the earliest start/finish the
activity can take place which is shown below:
Gantt Chart Format
126/107
Example: Draw a Gantt chart for the work of decorating the drawing room of a house. The
list of activities involved in this project are as follows:
Activity A B C D E F G H I J
Immediate Predecessors - A B G D A C,F D A D,I
Duration 90 15 05 20 21 25 14 28 30 45
Solution:
Activity Immediate
Predecessor
Estimated
Completion Time
A None 90
B A 15
C B 05
D G 20
E D 21
F A 25
G C,F 14
H D 28
I A 30
J D,I 45
A
B
F
I
C
G
D
H
J
90 105 115 129 149 194
126/108
Example: A Gantt Chart of a Sample Project
126/109
Example: Draw a Gantt chart for the work of decorating the drawing room of a house. The
list of activities involved in this project are as follows:
ID Task Name Predecessors Duration
1 Start - 0 days
2 A 1 5 days
3 B 1 4 days
4 C 2 6 days
5 D 3 2 days
6 E 3 5 days
7 F 4,5 8 days
8 Finish 6,7 0 days
126/110
BUET
LECTURE 05: WORK STUDY &
WORK MEASUREMENT
Work Study
Work Study is the systematic examination of the methods of carrying on activities so as
to improve the effective use of resources and to set up standards of performance for the
activities being carried out. Work study succeeds because it is systematic both in the
investigation of the problem being considered and in the development of its solution.
Work study is encompassed by two techniques such as
Method Study (MS) is the systematic recording and critical examination of ways of
doing things in order to make improvements.
Work Measurement (WM) is the application of techniques designed to establish the
time for a qualified worker to carry out a task at a defined rate of working.
126/112
Components of Work Study
126/113
Steps Involved in Work Study
Select : Job or Process to be studied
Record : All the details concerning job using various recording techniques
Examine : Recorded facts critically by asking questions like who, what, when, why
Develop : Most economic method of taking into account all the circumstances
Measure : The amount of work involved and set standard time to do that job
Define : New method and the related time so that it can always be identified
Install : New method as agreed standard practice with the time allowed
Maintain : The new standard by proper control procedure
126/114
Importance of Work Study
Work study is a means of enhancing the production efficiency of the firm by elimination of
waste and unnecessary operations
It is used to identify non-value adding operations by investigation of all the factors affecting
the job
It is a accurate and systematic procedure oriented technique to establish time standards.
It is going to contribute to the profit as the savings will start immediately and continue
throughout the life of the product.
It has got universal application.
Advantages of Work Study
It helps to achieve the smooth production flow with minimum interruptions
It helps to reduce the cost of the product by eliminating waste and unnecessary operations
Better worker-management relations and meets the delivery commitment
Reduction in rejections and scrap and higher utilization of resources of the organization.
Helps to achieve better working conditions
Improves upon the existing process and helps in standardization and simplification
Helps to establish the standard time for an operation which has got application in manpower
planning, production planning
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Method Study
Method study is the process of subjecting work to systematic, critical scrutiny to make it
more effective and/or more efficient. It is one of the keys to achieving productivity
improvement. It was originally designed for the analysis and improvement of repetitive
manual work but it can be used for all types of activity at all levels of an organization. The
steps in method study is given below:
Select (the work to be studied)
Record (all relevant information about that work)
Examine (the recorded information)
Develop (an improved way of doing things)
Install (the new method as standard practice)
Maintain (the new standard proactive)
Select: Work selected for method study may be an identified problem area or an
identified opportunity. It may be identified through a systematic review of available
data, normal monitoring or control processes, high levels of dissatisfaction and
complaint or as part of a change in management policy, practice, technology or location,
and usually because it meets certain conditions of urgency and/or priority.

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Record: The Record stage of method study involves gathering sufficient data (in terms
of both quality and quantity) to act as the basis of evaluation and examination. A wide
range of techniques are available for recording; the choice depends on the nature of the
investigation; the work being studied; and on the level of detail required. Many of the
techniques are simple charts and diagrams, but these may be supplemented by
photographic and video recording, and by computer based techniques.
Examine: The recorded data are subjected to examination and analysis; formalized
versions of this process are critical examination and systems analysis. The aim is to
identify, often through a structured, questioning process, those points of the overall
system of work that require improvements or offer opportunity for beneficial change.
Develop: The Examine stage merges into the Develop stage of the investigation as more
thorough analysis leads automatically to identified areas of change. The aim here is to
identify possible actions for improvement and to subject these to evaluation in order to
develop a preferred solution. Sometimes it is necessary to identify short-term and long-
term solutions so that improvements can be made (relatively) immediately, while longer-
term changes are implemented and come to fruition.
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Install: The success of any method study project is realized when actual change is made
on the ground-change that meets the originally specified terms of reference for the
project. Thus, the install phase is very important. Making theoretical change is easy;
making real change demands careful planning and handling of the people involved in the
situation under review. They may need reassuring, retraining and supporting through the
acquisition of new skills. Install, in some cases ,will require a parallel running of old and
new systems, in others, it may need the build-up of buffer stocks, and other planning to
manage the change.
Maintain: Some time after the introduction of new working methods, it is necessary to
check that the new method is working, that it is being properly followed, and that it has
brought about the desired results.
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Work Measurement
Work measurement is the application of techniques designed to establish the time for a
qualified worker to carry out specified jobs at a defined level of performance. Work
measurement is concerned with investigating, reducing and eliminating ineffective time,
whatever may be the cause. Work measurement is also used to set standard times to carry
out the work, so that any ineffective time is not included later. Major reason for that has
been the initial focus of the work measurement methods, which essentially targeted only the
worker controllable ineffective times.
Purpose of Work Measurement
To find ineffective time in a process
To set standard for output level
To evaluate worker's performance
To plan work force needs.
To determine available capacity
To compare work methods
To facilitate operations scheduling
To establish wage incentive schemes
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Uses of Work Measurement
Measure and monitor performance: Work measurement provides a common 'currency' of
'standard hours' or 'standard minutes' which allows:
the outputs of different units and departments to be compared
the outputs of the same unit or department to be compared over time
actual output to be compared with planned output.
Determine workforce levels: Since work measurement provides a reliable figure for the
amount of work, it allows managers to estimate the workforce requirements of a given
scheduled output and to plan for overtime working, additional labor requirements and so on.
Compare working methods: If we can measure, or reliably estimate, the time taken to
complete an activity using a variety of working methods, we can use this data as one of the
key factors in comparing those methods.
Assist in preparing budgets: Time standards can be used to convert planned output levels into
working hours and then into labor costs.
Provide a basis for incentive payment schemes: Actual hours taken to complete a fixed
amount of work can be compared to the planned hours and this ratio used as the basis of a
performance calculation. The calculated performance can be compared to a target
performance level and bonus payments made where the actual performance exceeds planned.
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Techniques of Work Measurement: There is a variety of work measurement techniques,
each suited to different types of work or to different forms of measurement. The commonest are:
Time study
Activity sampling
Predetermined motion time systems
Synthesis from standard data
Estimating
Analytical estimating
Comparative estimating
However the basic methodology of work measurement remains common to all of these
techniques. This is to:
Analyze the work being measured into its constituent parts.
Measure the time taken to complete each of these elements, using some process that converts
any observed or recorded times to a time at a defined level of performance
Synthesize the time for the whole job of work by combining these element times according to
the specific frequency with which they should occur in the work when carried out as properly
specified, and making due allowance for such factors as the need for workers to recover from
stresses and fatigue brought about by doing this work.
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Time Study: Time Study consists of recording times and rates of work for elements of
a specified job carried out under specified conditions to obtain the time necessary to
carry out a job at a defined level of performance. In this technique the job to be studied
is timed with a stopwatch, rated, and the basic time calculated.
Requirements for Effective Time Study: The requirements for effective time study are:
Co-operation and goodwill
Defined job
Defined method
Correct normal equipment
Quality standard and checks
Experienced qualified motivated worker
Method of timing
Method of assessing relative performance
Elemental breakdown
Definition of break points
Recording media
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Performance Rating: Time Study is based on a record of observed times for doing a
job together with an assessment by the observer of the speed and effectiveness of the
worker in relation to the observer's concept of Standard Rating. The numerical value
or symbol used to denote a rate of working.
Standard Time: Standard time is the total time in which a job should be completed at
standard performance i.e. work content, contingency allowance for delay,
unoccupied time and interference allowance, where applicable.
Contingency allowance: A contingency allowance is a small allowance of time
which may be included in a standard time to meet legitimate and expected items
of work or delays, the precise measurement of which is uneconomical because
of their infrequent or irregular occurrence.
Relaxation allowance: A relaxation allowance is an addition to the basic time to
provide the worker with the opportunity to recover from physiological and
psychological effects of carrying out specified work under specified conditions
and to allow attention to personal needs. The amount of the allowance will
depend on the nature of the job.
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Types of Elements for Time Study:
A repetitive element is an element which occurs in every work cycle of the job.
An occasional element does not occur in each work cycle of the job, but which may
occur at regular or irregular intervals. e.g. machine setting.
For a constant element, the basic time remains constant whenever it is performed.
e.g. switch the machine on.
A variable element is an element for which the basic time varies in relation to some
characteristics of the product, equipment or process, e.g. dimensions, weight, quality
etc. e.g. push trolley of parts to next shop.
A manual element is an element performed by a worker.
A machine element is automatically performed by a power-driven machine
A governing element occupies a longer time than any of the other elements which
are being performed concurrently. e.g. boil kettle of water, while setting out teapot
and cups.
A foreign element is observed during a study which, after analysis, is not found to be
necessary part of the job. e.g. degreasing a part that has still to be machined further.
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Activity Sampling: Activity sampling is a technique in which a large number of
instantaneous observations are made over a period of time of a group of machines, processes
or workers. Each observation records what is happening at that instant and the percentage of
observations recorded for a particular activity or delay is a measure of the percentage of time
during which the activity or delay occurs.
Predetermined Motion Time Systems: A predetermined motion time system is a work
measurement technique whereby times established for basic human motions are used to build
up the time for a job at a defined level of performance. The systems are based on the
assumption that all manual tasks can be analyzed into basic motions of the body or body
members. They were compiled as a result of a very large number of studies of each
movement, generally by a frame-by-frame analysis of films of a wide range of subjects, men
and women, performing a wide variety of tasks.
Synthesis: Synthesis is a work measurement technique for building up the time for a job at a
defined level of performance by totaling element times obtained previously from time studies
on other jobs containing the elements concerned, or from synthetic data. Synthetic data is the
name given to tables and formulae derived from the analysis of accumulated work
measurement data, arranged in a form suitable for building up standard times, machine
process times, etc by synthesis.
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Estimating: The technique of estimating is the least refined of all those available to the work
measurement practitioner. It consists of an estimate of total job duration (or in common practice,
the job price or cost). This estimate is made by a craftsman or person familiar with the craft. It
normally embraces the total components of the job, including work content, preparation and
disposal time, any contingencies etc, all estimated in one gross amount.
Analytical Estimating: This technique introduces work measurement concepts into estimating.
In analytical estimating the estimator is trained in elemental breakdown, and in the concept of
standard performance. The estimate is prepared by first breaking the work content of the job into
elements, and then utilizing the experience of the estimator (normally a craftsman) the time for
each element of work is estimated - at standard performance. These estimated basic minutes are
totaled to give a total job time, in basic minutes. An allowance for relaxation and any necessary
contingency is then made, as in conventional time study, to give the standard time.
Comparative Estimating: This technique has been developed to permit speedy and reliable
assessment of the duration of variable and infrequent jobs, by estimating them within chosen time
bands. Limits are set within which the job under consideration will fall, rather than in terms of
precise capital standard or capital allowed minute values. It is applied by comparing the job to be
estimated with jobs of similar work content, and using these similar jobs as "bench marks" to
locate the new job in its relevant time band - known as Work Group.
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