Production & Operation Management

Prof. G.Purandaran B.E. (Mechanical), M.Tech ( Maintenance Engineering & Management)- I.I.T-Madras: P.G.D.M ( Marketing & International Business) -I.I.M-Bangalore

Production & Operation Management

Production & Operations Management Objectives To familiarize the concepts of production & operations management systems And to appraise customer expectations of quality and relationships And update and technologies to meet global competition And to understand functions of interrelations departments And decisions involved therein for effective operations management

POM
1.Operations Management Plant Location Criteria, Plant Layout Types: Product, Process, Cell layout, Fixed station, Merit & Demerits: Volume Variety relationship, Modern practices of Production management, Line Balancing, Desired Output, Limited Resources, Product Design Criteria, Work Study, Method Study, Work Measurement, Various Techniques of Method Study and work measurement + Problems.

 2.Quality Management Inspection Vs Quality, Seven Stages of Quality, ISO 9000 & ISO 14000, Seven Tools of Quality Circles, Pareto Chart, Causes and Effect Diagram, Histogram, Stratification, Scatter Diagram, Control Charts, Check Sheets, Concept of Total Quality Management + Problems, Excellence in all sub-system Leading to Organizational Excellence, Introduction to Six Sigma, QFD and FMEA & POKAYOKE, Vender Development and Vendor Quality Rating CasesHow to improve Quality

POM
3.Maintenance Management Different Types of maintenance: Breakdown, Preventive, Predictive, Condition maintaining, Total Productive Maintenance ( TPM), Concept of OEE ( Overall Equipment Effectiveness) + Problem, Concept of 5S House Keeping

POM
4.Planning Material Requirement Planning ( MRP), Enterprise Resource Planning ( ERP), Production planning & Control, Master Production Schedule, Yearly Planning- to Quarterly to Monthly to weekly-to daily, Capacity planning and Assessment, Line Balance, Cost Control Vs Cost Reduction, Concept of value Engineering

POM
5.Material management Inventory management; RMC Inventory, ABC Analysis, JIT, Lead-time management, Pareto Principles,, WIP: Lean manufacturing, Line balancing, SPC,FGS: Push Vs Pull System, Advantages of Pull System, Spares: EOQ & Breakeven analysis to reduce total inventory cost, supply chain management & Logistics management- Introduction

POM
6.Manufacturing Technology CIM/CAD Introduction, Automation, concept of special purpose m/c, (SPMs), Designing Production Systems at Shop Floor, Work Instructions, Standard Operating Procedure, Monitoring Productivity Measurement, Productivity, Quality, Breakdowns & etc., Books: POM: SN Chary/ Upendra Kachru / Chunawalla & Patel / Martin K Starr/ Mahadevan/ Kansikha Bedi/ : OM: William Stevenson/ Norman Gaither & Greg Fraizer

POM-Overview
Producing Products demanded by Customers is a Challenging Job today Production managers are involved in:
Planning Organizing Coordinating Executing Controlling

Production Vs Manufacturing
Production implies the creation of Goods and services to satisfy Human needs A process of creating goods ( Tangibles) as well as services ( Intangibles) Manufacturing is the process of producing only tangible goods

Distinction between products and services

Manufactured Products Tangible outputs Products can be inventoried Little customer contact Long lead times Capital intensive Product quality easily determined

Services Intangible outputs Outputs cannot be inventoried Extensive customer contact Short lead times Labour intensive Service quality determined with difficulty

Difference between Goods and Services

Value-Added-Process
The difference between the cost of inputs and the value or price of outputs.
Value added Inputs Land Labor Capital Transformation/ Conversion process
Feedback

Outputs Goods Services

Control
Feedback Feedback

Conversion Process Used in Production System

Production System Steel Plant Inputs Conversion Process Outputs Steel sections, Sheets Iron Ore, Smelting, Coal/Coke, Rolling limestone, labor, M/c

Restaurants

Hungry Cooking & Customers, serving foods Chefs, Services, Equipments

Raw materials & Fabrication of components, parts & machinery, labor assembly of automobiles

Satisfied Customer

Automobile

Automobiles

Conversion Process Used in Production System

Production System Oil Refinery Inputs Crude Oil, Equipments, labor Customer with needs, sales person Conversion Process Chemical processes (Fractional distillation) Selling / Retailing Outputs Petroleum Products

Supermarkets

Satisfied Customers

College or university

High School / Students, Teacher

Teaching ( Imparting Knowledge + Skills)

Graduated Person

Different brands of cars

Acura Aston martin Audi Bentley BMW Bugatti Buick Cadillac Chevrolet Chrysler Dodge Ferrari Ford GMC Honda Hummer Hyundai Infiniti Jaguar Jeep Kia Lamborghini Land Rover Lexus Lincoln Lotus Mazda Mercedes'-Benz Mercury Mitsubishi Nissan Porsche Rolls-Royce Saab Saturn Scion Smart Subaru Suzuki Tesla Toyota Volvo

Acura
.

Aston Martin
.

Audi
.

Model with Hyundai car

.

Toyota car with Models

Honda car
.

Nissan Car
.

Lamborghini

Automobile Assembly line

.

Toyota plant location

Nuclear Power plant in France

78.8% power
Selective screening Land/water availability Seismotectonic areas Hydrology, geology Land use, meteorology Transmission lines Demography topography ecology

Underground Storage of LPG

Channel Tunnel: London to Paris

Plant Location
Possible Factory Location
Criterion PROXIMITY TO: Skilled labour A pool of unskilled labour A motorway An airport The sea / a river Housing Amenities Potential for expansion Availability of grants/incentives Safety Planning constraints Environmental impact Weighting 7 8 7 4 0 5 5 7 8 2 5 4 TOTAL 2 5 3 1 2 4 3 2 1 3 2 3 A 14 40 21 4 0 20 15 14 8 6 10 12 164 3 2 2 3 5 3 2 1 2 2 3 2 B 21 16 14 12 0 15 10 7 16 4 15 8 138 0 0 1 4 5 0 0 5 5 5 5 4 C 0 0 7 16 0 0 0 35 40 10 25 16 149 1 4 3 2 2 3 2 3 1 2 4 1 D 7 32 21 8 0 15 10 21 8 4 20 4 150 4 2 4 2 1 4 3 2 3 2 2 2 E 28 16 28 8 0 20 15 14 24 4 10 8 175

Facility Location

Facility Layout

Layout Goals
Use space efficiently Efficient personnel movement Maximum equipment utilization Convenient / safe work environment Simplify repair / maintenance Smooth flow of work

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Products, Processes, and Layouts

PRODUCTS
Make-to-stock standardized commodities

PROCESSES
Continuous process industries repetitive mfg
high volume, low variety

LAYOUTS
Product Layout

Assemble-to-order modular

Hybrid, FMS, CAM, CIM

low volume, medium variety

Cellular Layout

Make-to-order custom

Job-Shop(intermittent)

low volume,

Process Layout

high variety

Engineer-to-order one-of-kind

low volume,

Special Project
low variety

Fixed Position
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Fixed Position Layout

The product or project remains stationary, and workers, materials, and equipment are moved as needed.

Examples: Home building, ship and aircraft buiding, drilling for oil

35

Manufacturing Method-project form

.

Building a Hospital :project

Process Layout

Similar processes (or processes with similar needs) are located together By grouping similar processes utilization of resources is improved Customers, products, patients move through the processes according to their needs Different products = different needs = different routes Complex flow pattern in the operation Examples:
Supermarkets, job-shops, hospitals
38

Process Layouts
Milling Assembly & Test

Grinding

Drilling

Plating

Process Layout products travel to dedicated process centers

6-39

Product Layout

Sometimes called line layout, flow line or assembly line Parts follow a specified route the sequence of workstations matches with the sequence of required operations Work Flow is clear, predictable, easy to control Examples:
Car assembly, paper manufacture, self-service canteen

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Product Layout

Raw materials or customer

Material and/or labor

Station 1 Material and/or labor

Station 2
Material and/or labor

Station 3
Material and/or labor

Station 4

Finished item

Used for Repetitive or Continuous Processing

6-41

Cellular Layouts

machines are grouped into a cell that can process items that have similar processing requirements Based on Group technology which involves grouping items with similar design or manufacturing characteristics into part families

Could be considered as mini product layouts Can improve and simplify a functional/process layout Flexible Duplicates some resources

6-42

Comparison of Product and Process Layouts

Product
Workers Inventory Storage space Material handling Aisles Scheduling Layout decision Goal Advantage

Process

Limited skills Low in-process, high finished goods Small Fixed path (conveyor) Narrow Line balancing (Easier) In-line, U-type Equalize work at each station Efficiency

High skills High in-process, low finished goods Large Variable path (forklift) Wide Dynamic (More difficult) Functional Minimize material handling cost Flexibility

Product Volume and Variety

Cellular

Quantity

Product Layouts Fixed Position Layouts

Mixed Layouts

Process Layouts

Number of Different Products

44

Product Flow Control

Batch Processing (Process Layout)

From a couple to several thousands identical parts A batch for each different part type Move together through the production system May split for material handling or to reduce processing time Examples are clothing, furniture production

Repetitive or Flow processing (Product Layout)

Continuous chemicals, foods, pharmaceuticals Discrete car, refrigerator production

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Setup Costs Affect The Batch Size

Cost and time to set up production facilities to manufacture a specific product affect the batch size. When changeover time (setup time) and cost are large, the size of batch is kept large. Large batch sizes result in high inventory cost.
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Production Choices

Make-to-stock
Number of units of each product are kept on hand at all times Quick delivery to customers upon receipt of an order When delivery response time is a key competitive factor Limited number of products manufactured repeatedly An idea what customers will want Allows to schedule production in advance Make-to-order Only produce items after they have been ordered Production system must respond quickly Products have high degree of customization Shelf life of products is short Assemble-to-order Customers have influence on the design They can select various options from predesigned subassemblies
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Modern Practices of Production Operations Management

MNCs are financially sound and they spend money on R & D to gain competitive advantage. MNCs take advantage of location economies.

Strategic Issues
In operations management, an MNC needs to made decisions on several strategic issues. The following are the important issues: 1. Sourcing and vertical integration. 2. Facilities location 3. Standardization of production facilities 4. Contract manufacturing 5. Supply chain management 6. Managing service operations 7. International quality standards 8. Internationalisation of R&D, and 9. Managing technology transfers.

Outsourcing
Outsourcing is the act of moving some of a firms internal activities and decision responsibility to external providers. Country, technology, product, government policies and Organisational factors need to consider facility locations in global market. Resource availability infrastructure, and host community are the country factors. Value to weight ratio and universal need are the two product-factors. Incentives, subsidies, trade barriers, local product standard are the prime government factors.

Modern Trends
Growth in Service Sector: 70 to 80% in the near future Managing service quality and productivity offers is a great challenge Productivity Changes Output/input ? Material cost/labor cost/energy cost increasing Utilization of resources like machinery/material/improving quality of output and reduce wastages

Modern trend
Global competition : The worldwide customers evaluate quality of products on: Performance Features Reliability Serviceability Durability Appearance Customer Service safety

Modern trend
Competition based on Quality, Time and Technology Conformance to quality Product Reliability Delivery Dependability Performance Quality Low Price Speedy New Product Introduction JIT/TQM/Factory Automation Advances in Computer technology/Robotics/Automated Manufacturing System (CAD,CAM,CIM,FMS System)

Modern trend
Environmental, Ethical, Work force Diversity Responsibility that go beyond producing goods and services for profits Help solve social problems Respond to the needs of the customers, society and public rather than shareholders alone Have impact beyond simple marketplace transaction Serve a range of human values

Line Balancing
Line Balancing:
Arranging a production line so that there is an even flow of production from one work station to the next, so that there are no delays at any work station that will leave the next work station with idle time.

Line balancing

Product Design

Product Design

Two different movement Three dial shape Two dial size Three diff colors =36 variety

Product Design, Process Design and Production Design

Product Design: Concerned with form and function of a product. It refers to the arrangement of elements or parts that collectively form a product. Process Design: Concerned with the overall sequence of operations required to achieve the design specification of the product. Production Design: Concept of designing products from the point of view of producibility.

Importance of Product Design

A good product design can improve the marketability of a product by making it easier to operate or use, upgrading its quality, improving its appearance, and/or reducing manufacturing costs. An excellent design provides competitive advantage to the manufacturer, by ensuring appropriate quality, reasonable cost and the expected product features.

Objectives of Product Design

(i) The overall objective is profit generation in the long run.

(ii) To achieve the desired product quality. (iii) To reduce the development time and cost to the minimum. (iv) To reduce the cost of the product. (v) To ensure producibility or manufacturability (design for manufacturing and assembly).

What does product design do?

Translating customer needs and wants into product and services requirements ( marketing) Refining existing products ( marketing) Developing new products ( marketing, product design, production ) Formulating quality goals ( quality assurance, production ) Formulating cost structures (Accounting ) Constructing and testing prototype ( marketing, production )

Steps Involved in Work Study

Work Study
.

Work Measurement and Productivity

Presented by: Prof.G.Purandaran M.Tech (I.I.T-M), PGDM (I.I.M-Bangalore)

Work Measurement
Work Measurement: establish a measurable work standard upon which to evaluate, compare and improve labor productivity. Work (labor) Standard: Determine on average-how many labor-hour are required to produce one unit of desired output for a well-trained worker under normal operating conditions

Work Measurement Continue

Level of standard: * Operations/Department/Plant standards * Element/Operations/Product standards Use of work standard: * Work and personnel planning * Cost estimation for labor and machine Techniques to set work standard: * Time study * Work sampling * Elemental timing * Predetermined motion-time study

Three Levels of Standards

Production and operations standards: individuals job standards Department standards: sum of performance of the individual and team in a department Plant standards: quantity and labor standards of the plant are the goals management strives to meet

Evaluation Performance
Evaluating individual performance: subsequent compensation Evaluating department performance: subsequent supervisor compensation Evaluating process design, layout, and work methods Estimating expense and revenue streams in equipment evaluation as alternative are compared Formulating standards costs

How to Determine Average Worker Standard ?

Example from Distribution of 100 Workers Sample

Number of Workers Sampled

Performance in Units Per Hour Mean 12 *5% =0.6

10-14

20 45
25 5

15-19 20-24
25-29 30-34

17 22
27 32

*20% *45%
*25% *5%

=3.4 =9.9
=6.75 =1.6

100

Total =

22.5

Work Measurement Time Study

Normal time

Standards time=

(1-allowance)

Normal time= (average cycle time)* (rating factor)

Time recorded to perform an element

Average cycle time=

Number of cycles observed

Allowance fraction= fraction of time for personal needs, unavoidable work delays, fatigue

Work Measurement- Work Sampling

Purpose:
To estimate what proportion of a workers time is devoted to work activities

Main Issues:
What level of statistical confidence is desired in the results? How many observations are necessary

Primary Applications:
Time standards: to obtain the standards time for a task

Work Measurement- Work Sampling Formulas

Proportion of Time Employee Performance Total Study Time * Observed Working * Rating Factor
Normal Time= Number of Units Produced

Proportional of = Time Employee Observed Working Or

Number of observations in which working occurred

Number of Observations
x

P=

Work Measurement- Work Sampling Formulas

Example: N= 100 (observations) X= 83 (sampled worker is working)
P= 83/100 = 0.83 Given: (hours) Total Study Time = 37.5 Rating Factor = 1.05 Number of Units Produced = 100 Normal Time: = (37.5*0.83*1.05)/100 = 1/3 (hours) = 20 (min)

Productivity Calculation
Labour Productivity
Productivity = Units produced Labour-hours used = 1,000 250 = 4 units/labour-hour

One resource input single-factor productivity

Example