Plant Location

• Plant location is the function of determining

location for a plant for maximum operating
economy and effectiveness
• The selection of a place for locating a plant is
one of the important issues faced by an
entrepreneur while launching a new enterprise.
• An ideal location may not , by itself , guarantee
success, but it certainly contributes to the
smooth and efficient working of an organization.
• Once a mistake is made in location , it becomes
extremely difficult and costly to correct the same.
 Plant Location Criteria
Following factors influence selection of right
Location:

1. Availability of raw materials – nearness to raw materials

sources have the following benefits:
b. Reduced cost of transportation
c. Uninterrupted supply of raw materials
d. Savings in storage cost
Examples: steel industries located close to iron
ore mines, paper mills located near bamboo plantations ,
sugar industries located near sugarcane plantations.
 Plant Location Criteria
2. Nearness to the market – the advantages:
a. Reduction in the transportation cost of
finished goods.
b. Flexibility to adjust production schedule to
suit the likes and dislikes of customers.
c. Execution of replacement orders without
delay.
Examples: perishable products , bulky
products
 Plant Location Criteria
3. Availability of power – electricity is required for
all industries. For some industries such as
aluminum extraction plants , it is a raw material
and required in plenty. Hence they should be
located in places where electric power is
available regularly and at cheap rates.
4. Transport facilities – essential for bringing raw
materials, dispatch of finished products and
also for bringing the people to work in the units.
 Plant Location Criteria
5. Suitability of climate – certain industries require
particular climatic conditions. For example ,
humid climate for cotton textiles and jute, non-
humid climate for plastic moulding industries.
6. Government policy – encouragement of
development of backward regions through tax
concessions.
7. Availability of the labor – adequate supply of
labor at reasonable wages.
 Plant Location Criteria
8. Existence of complementary and competing industries
– helps in raw material procurement, improves the
labor market, easy loans from banks.
9. Availability of finance – a place where facilities for
raising capital are available attracts new industries.
10. Availability of water and fire fighting facilities
11. Topography of the place
12. Provision for waste disposal
Some Common Errors in Selection
1. Lack of thorough investigation and
consideration of factors involved.
2. Personal likes / prejudices of owners /
key executives.
3. Preference for acquiring an existing
structure at a bargain which is improperly
located.
4. Moving to congested areas already or
about to be over industrialized.
 Plant Layout
• Plant layout refers to the arrangement of
equipments and other industrial facilities to achieve
Quick, Smooth and Efficient production.
• It is basically the placement of machinery, the
location of Stores, Inspection cabins, Tool Room,
Maintenance stations, Cranes and other handling
equipments as well as welfare facilities such as
Water coolers, Canteen and Rest Rooms.
• A good layout ensures movement of materials in a
forward direction, no criss cross and backward
forward movements.
 Objectives of a good layout
1. Reduction in handling costs
2. Reduce congestion at various stages
3. No safety hazards to personnel
4. Optimum utilization of space
5. Optimum utilization of labor
6. Optimum utilization of machines
7. Improvement in productivity
8. Improvement in quality
9. Reduction in workplace accidents
10. Provide ease of maintenance
Factors that influence plant layout
1. Materials
2. Product
3. Workmen
4. Machinery
5. Type of industry
6. Location of plant
7. Management policies
 Types of Layout
1. Process layout
2. Product layout
3. Fixed position layout
4. Cellular layout
5. Hybrid layout
 Process Layout

• Also called functional layout or job shop layout.

• It is grouping together like machines in one department.
• Raw material issued to the machine which performs first
operation. For the next operation, the material is
transported to another machine situated in another part of
the factory.
• Materials would move long distances and along criss-
cross paths.
• Partly finished goods will wait for further operations in
every department.
• Suited for batch production or intermittent type of
production.
 Principles to be kept in mind –
Process Layout
1. Distance between departments as short
as possible.
2. Departments to be located in accordance
with the principle of sequence of
operations.
3. Convenience for inspection.
4. Convenience for supervision.
 Process Layout – An example

Inward Planers Automatics Grinders Packing

Goods And
Stores Shipping
Heat
Truck unloading dock

Milling Central Treatment

Inspection

Truck loading dock

Machines Shop
Raw
Area
Material
Holding
Drilling Electro
stores Finished
Shop plating shop
Assembly Goods
Storage
Turning shop Painting shop
(Lathes)

Path of flow of materials for part A

 Process layout – Merits and
Demerits
Merits
1. Mostly GPMs and hence less investment
2. Greater flexibility in production
3. Due to specialization , better supervision
4. In case of breakdowns, work can be
transferred to another machine
5. Better utilization of men and machines
6. Greater incentive for individual performance
 Process layout – Merits and
Demerits
Demerits
1. Inventory cost more due to accumulation
of WIP at different stages
2. Difficulty in movement of materials
3. Difficulty in PPC
4. More floor space may be required
 Product Layout
• Also called line processing layout or flow line layout
or straight line layout or layout for serialized
manufacture.
• Involves arrangement of machines in one line
depending on the sequence of operations
• Raw material fed into the first machine and finished
products come out of the last machine
• The output of one machine becomes the input for
the next machine
 Principles to be kept in mind –
Product Layout
1. All the machines and tools must be placed at
the point demanded by the sequence of
operations
2. There should be no point where one line
crosses another line
3. Materials to be fed where they are required
and provision to be made for storage of those
materials
4. All operations including assembly , testing and
packing should be included in the layout
 Product layout – an example

Fabrication line for part C Packing

Finished Goods
Raw materials

Receiving

And
Material
Stores

Fabrication Shipping
Raw

line for
part B Finished
Goods
RM Store
Fabrication
line for
part A
WC1 WC 2 WC 3 Test

** Assembly line for product X

RM = Raw Materials WC = Work Centre
 Product layout – Merits and
Demerits
Merits
1. Reduction in handling costs
2. Facilitates better PPC
3. Less floor area per unit of production
4. Reduced WIP
5. Greater incentive for group performance
6. Early detection of defectives
 Product layout – Merits and
Demerits
Demerits
1. Mostly SPMs & hence more investment
2. Breakdown of one equipment can disrupt
the whole system
3. Difficulty of supervision
4. Lesser flexibility in production
 Fixed Position Layout
• Also called static layout or fixed location layout
• Involves the movement of men and machines to
the product which remains stationary
• The product being bulky , the cost of moving the
same more than the cost of moving men and
machines to the product
• Some examples: ship building, locomotives,
aircrafts, boilers, building constructions,
hospitals.
Fixed Position Layout – an example

Raw material

Finished
Product
Ship building (ship)
Machines

Labor
 Fixed Position Layout– Merits and
Demerits
Merits
1. High cost & difficulty in transporting bulky product
avoided
2. Sense of pride for worker as they identify
themselves with the product
3. Lesser investment in layout
Demerits
1. Delays likely as everything to move to one place
2. Supervision difficult
 Cellular Layout
• Also called group technology layout.
• Machines are grouped into cells and the cells
function somewhat like a product layout within a
larger shop or process layout.
• Each cell in the layout produce a single parts
family --- a few parts , all with common
characteristics, which usually means that they
require the same machines and have similar
machine settings.
Cellular Layout – an example
 Cellular Layout– Merits and
Demerits
Merits
1. Lower WIP
2. Reduced handling costs
3. Simplified PPC
4. Shorter production flow times
Demerits
1. Reduced manufacturing flexibility
2. More investment in machinery since the parts
not transported between cells
 Volume – Variety Relationship
• Functional conflict between production manager
and marketing manager. Less variety and more
volume vs more variety and less volume.
• Trade off between efficiency of operations and
customer responsiveness.
• More volume – lesser unit cost of production , risk
of obsolescence, loss of customer goodwill.
• More variety – customer responsiveness better,
more inventory to be carried.
 Volume – Variety Relationship
• Manufacturing flexibility in terms of volume and
product variety is the ability to maintain or
improve market share of a firm by the
following:
1. Shifting the production quickly from one
product to another to match the customers’
product – mix requirements in small batch
quantities.
2. Delivering customer orders soon after receipt
of the orders, even if there is an extraordinary
request from customer for a quick delivery.
 Volume – Variety Relationship
3. Increasing the production capacity to
respond to the peak market demand at
any time period.
4. Developing new products quickly and
introducing the same into production
quickly and economically to respond to
the changing market needs.
 Volume – Variety Relationship
Two types of manufacturing flexibility:
1. Volume flexibility – provided by the use of overtime ,
finished goods inventory , designing production
processes having variable production rates.
2. Product variety flexibility – provided by having a
process focused production system even though at a
relatively higher production cost per unit. Recent
advancements in production technology have made
this flexibility possible with low production cost per
unit.
 Modern Practices of Production
Management
1. Specialization – it means the division of work or effort both at
the worker level and the management level, Individual
workers specialize in skills such as machinist, tool & die
maker, welder etc. The result of such specialization is low
cost of production and improved Quality.
2. Mechanization or Automation – human skill transferred to
machine tools.
3. Use of Industrial Engineering – Industrial engineers have
been able to devise improvement and to increase productivity
by elimination of waste and inefficiency, thereby increasing
production and reducing costs.
 Modern Practices of Production
Management
4. Increasing use of computers and data processing equipments – the
range of application of computers include product design, process
control, inventory control, quality control, maintenance etc.
5. Quality drives the productivity machine – the traditional view of
quality control was that it costs more to get higher product quality. It
is no longer true. If production does it right the first time and
produces defect free products/services, waste is eliminated and
costs are reduced. When operations managers work to eliminate
defects, the quality of products and services is improved and at the
same time productivity also improves. Costs are reduced as product
quality improves because there are fewer products lost to scrap,
fewer warranty returns and fewer work interruptions.
 Modern Practices of Production
Management
6. JIT & Lean Concepts – material received
only when required. In-process inventories
are reduced. Because only a few parts are
there as in-process inventory, if a quality
problem does occur, fewer defectives are
produced before they are discovered. Not
only for material, wastes in all forms are
minimized or eliminated.
 Modern Practices of Production
Management
7. Product standardization – by producing the
same standardized products everyday,
workers understand their assignments,
become more familiar with their tasks, make
less mistakes thereby improving productivity
and quality.
8. Use of robotics – the consistency of robot
ensures that the quality that is designed into
the product will be built into it. Lot of repetitive
tasks such as assembly operations and
monotonous fatigue oriented tasks such as
welding are better done by robots.
 Modern Practices of Production
Management
9. Preventive maintenance – these
programs minimize machine breakdowns
and unplanned work stoppages.
 Line Balancing
• Line balancing is the phase of assembly line
study that nearly equally divides the works to be
done among the workers so that the total
number of workers required on the assembly line
is minimized.
• Line balancing is 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
• Line balancing is defined as the apportionment of
sequential work activities into work stations in order
to gain best utilization of men and machines and
hence minimize idle time.
• Line balancing may be achieved by rearrangement
of the work stations or by adding machines and / or
workers at some of the stations so that all
operations take almost the same amount of time.
• Linear programming and other operations research
tools are used to study line balancing problems.
• Line balancing is known as ‘Heijunka’ in Japanese.
 Product Design
• One way for manufacturers to satisfy customers and gain
a differential advantage is through product design which
refers to the arrangement of elements that collectively form
a product or service.
• Product design consists of functional design and form
design.
• Functional design is concerned with the foremost
requirement of a good product i.e. the product should
effectively perform the function for which it is developed.
• Form design is concerned with the appearance and
aesthetic considerations and also the size, weight and
volume of the product.
 Product Design Criteria
1. Function or performance
2. Appearance or aesthetics
3. Reliability
4. Maintainability
5. Producibility
6. Simplification
7. Standardization
8. Safety
 Approaches to Product Design
1. Designing for the customer – QFD model
2. Designing for Manufacture and Assembly (DFMA)
3. Designing for ease of production –
Manufacturability or Producibility
4. Designing for quality – product quality to be built in
at design stage
5. Designing for robustness
6. Designing for ergonomics – comfort, safety and
ease of use for the customers
7. Designing for environmental production – Green
design
8. Designing for recycling
9. Designing for disassembly
10. Designing for mass customization
 Work study
• Work study is a management tool to achieve
higher productivity in any organization whether
manufacturing products or offering services.
• Work study is a systematic, objective and critical
examination of the factors affecting productivity
for the purpose of improvement.
• Work study is defined as that body of knowledge
concerned with the analysis of the work methods
and the equipment used in performing a job, the
design of an optimum work method and the
standardization of proposed work methods.
 Work study
• It is the generic term used for those
techniques, particularly method study and
work measurement, which are used in the
examination of human work in all its
contexts and which lead systematically to
the investigation of the facts which affect
efficiency and economy of the situation
being reviewed, in order to effect
improvements.
 Objectives of work study
1. Systematic analysis of the present methods to
develop a better method
2. Measure work content of a job
3. Increase in productivity
4. Reduced manufacturing costs
5. Improved layout
6. Reduced material handling costs
7. Provide a standard of performance to measure
labor efficiency
8. Serve as a base for sound incentive scheme.
 Method study
• Method study is a technique of observing, recording
and critically examining the existing method of
performing a job with the aim of improving the same
and developing a new and economical method.
• Method study can be defined as the systematic
recording and critical examination of existing and
proposed ways of doing work with a view to develop
easier and more effective method and also reduce
costs.
• It encompasses the study of work processes,
working conditions and equipments and tools used to
carry out the job.
 Objectives of Method study
1. Study existing and proposed method
2. Develop improved method
3. Reduce excessive material handling
4. Improve utilization of resources
5. Eliminate wasteful and inefficient motions
6. Standardize work methods or processes,
working conditions, equipments and tools.
 Factors that indicate need for
Method Study
1. High operating cost
2. High wastage and scrap
3. Excessive movement of men & materials
4. Excessive production bottlenecks
5. Excessive rejections & rework
6. Complaints about quality
7. Complaints about poor working conditions
8. Increase in the number of accidents
9. Excessive use of overtime.
 Method Study – Steps
1. Select – the work or job to be studied
2. Record – all relevant data pertaining to
the existing method
3. Examine – the recorded data critically
and seek alternatives
4. Develop – the best alternative
5. Install – the improved method
6. Maintain – the new method
 Select – Criteria
• Job selected to have maximum economic
advantage
• Vast scope for reduction of material handling
• Scope for improvement in working conditions
• Excessive fatigue experienced by workmen
 Recording Techniques
1. Process charts
b. Outline process chart
c. Operation process chart
d. Flow process chart
e. Man-Machine chart
f. Two handed process chart
g. Multiple activity chart
2. Diagrams
a. Flow diagram
b. String diagram
 Recording Techniques
1. Outline process chart – records overall picture
of the process and records only operations and
inspections.
2. Operation process chart – records sequence of
all operations and inspections and does not
include materials transportation, storage etc. It
includes information considered desirable for
analysis such as time required to carry out the
operation and location.
 Recording Techniques
3. Flow process chart – graphically represents the
sequence of all operations, transportation,
inspections, delays and storages occurring during a
process or a procedure and include information
considered desirable for analysis such as time
required and distance moved.

The flow process chart could be of three types, viz.,

a. Flow process chart - material or product type
b. Flow process chart - man type
c. Flow process chart - machine type or equipment
type
 Recording Techniques
4. Two handed process chart – in this chart the
activities of a worker’s or operator's both hands or
limbs are recorded chronographically.
5. Multiple activity chart – in this chart the activities of
more than one subject (worker, machine or
equipment) are recorded on a common time scale
to show their interrelationship.
6. Man-Machine chart – one worker may operate two
or more machines simultaneously . The operation
and delays of the operator and the machines
operated by the operator can be recorded in this
chart.
 Recording Techniques
7. Flow diagram – the flow diagram is a drawing
or diagram drawn to a scale to show the
relative position of a machine or equipment,
jigs and fixtures, gangways or aisles and
shows the path followed by materials or
machines.
8. String diagram – it is a scale plan or model on
which a string or a thread is used to trace and
measure the path of workers, materials or
equipments during a specified sequence of
events.
 Symbols used in Process Charting
Standard Name of Activity Definition of Activity
Symbol
Operation Modification of an object at one work place
Object may be changed in any of its physical or chemical
characteristics, assembled or disassembled or arranged for
another operation, transportation, inspection or storage.

Change in location of an object from one place to another.

Transportation or
movement

Inspection Examination of an object to check on quality or quantity

characteristics.
Delay/temporary
storage Retention of an object in a location awaiting next activity.

Storage Retention of an object in location in storage which is

protected against unauthorized removal

A combined activity occurs when two activities occur

simultaneously. Various combinations of simultaneous
Combine occurrence of two activities could be possible.
 Work Measurement
• Work measurement establishes the work content
of a job and it can be accurately established only
after method study i.e. after the method of doing
the job is standardized.
• Work measurement is defined as the application
of techniques designed to establish the work
content of a specified task by determining the
time required for carrying out the task at a
defined standard of performance by a qualified
worker.
 Work Measurement
• A qualified worker is one who is accepted as having the
necessary physical attributes, possessing the required
intelligence and education and having acquired the
necessary skill and knowledge to carry out the work in
hand to satisfactory standards of safety, quantity and
quality.
• The standard time is the amount of time a qualified
worker, working at a normal rate of speed, will require to
perform the specified task. It may be expressed as
minutes per unit of output or units of output per hour (i.e.
standard output)
Work Measurement – Objectives &
Benefits
1. Basis for sound incentive schemes
2. Basis for comparing alternative methods
developed in method study
3. Basis for labor cost control
4. To prepare realistic work schedule by accurate
assessment of human work
5. Better utilization of manpower
6. To assist in labor cost estimation
Work Measurement – Techniques
1. Direct time study
2. Synthesis method
3. Analytical estimating
4. Pre determined Motion Time System
(PMTS)
5. Work sampling or activity sampling or
ratio delay method
 Work Measurement – Steps
Break the job into elements

Record observed time for each element

Rating Factor
Calculate normal time

Assess & Add

Relaxation Allowance
Calculate time with R.A

Add time for all elements in the job

Add contingency
& other allowances
Standard time
 Time Study
• Time study is concerned with the
determination of the amount of time
required to perform a unit of work. It
consists of the process of observing and
recording the time required to perform
each element of an operation so as to
determine the reasonable time in which
the work should be completed.
 Time Study
• Time study is a work measurement
technique for recording the times and
rates of working for the elements of a
specified job carried out under specified
conditions and for analyzing the data so
as to obtain the time necessary for
carrying out the job at a defined level of
performance.
 Objectives of Time Study
• Determine the quantum of human work in a
specified task
• Establish the standard time for each job
• Determine cycle time for completion of a job
• Base for piece rate incentive schemes
• Help in balancing the work of operators in an
assembly time
• Preparation of standard costing
• Comparison of alternative methods in method
study
 Steps in Time Study
1. Select the job to be studied
2. Select the worker be studied
3. Conduct time study using stop watch
4. Apply rating factor

Rating factor = Rating of the observed worker

Rating of the qualified worker
 Steps in Time Study
5. Determine normal time
Normal time = Observed time x Rating factor
= Observed time x Observed Rating
Standard rating
6. Determine the relevant allowances
7. Determine the standard time
Standard time = normal time + all relevant allowances
 Synthesis Method
• Synthesis is a technique of work measurement
for building up the time required to do a job at a
defined level of performance by synthesizing or
totaling elemental time values obtained from
previous time studies on other jobs containing
similar job elements or from standard data or
synthetic data or built up time standards.
• Synthesis method is useful for estimating
standard time for new jobs which have elements
common with previously timed jobs.
 Synthesis Method
• Advantages of synthesis method
a. Faster for preparing cost estimates for new
jobs for which quotation to be sent to the
customers.
b. Economical as less time required compared to
“stop watch” time study.
c. Reliable as the built up time values of the
“standard data” catalogue are based on data
derived from a large number of time studies.
 Analytical Estimating
• Analytical estimating technique is used to
determine the time values for jobs having long
cycle times and non – repetitive operations.
• The time values are determined by using
synthetic data or on the basis of the past
experience of the work study engineer. The
estimator must have adequate experience of
estimating , time study , motion study and the
use of standard data.
• This technique has same advantages as the
synthesis method but one disadvantage is too
much reliance on the judgment of the estimator.
 Predetermined Motion Time
System (PMTS)
• Predetermined motion time system is defined as a
work measurement technique by which normal or
basic times are established for basic human motions
and these time values are used to build up the time
for a job at a defined level of performance.
• Predetermined time standards are standard data for
wide variety of basic body motions which are
common in many industrial operations. For e.g.
some of the basic or elementary human body
motions are “move”, “reach” , “position” etc.
Predetermined time standards contain table of
standard time values for such basic motions.
 Predetermined Motion Time
System (PMTS)
• Advantages
a. Computation of standard time for a job or an
operation is faster and more economical.
b. Offers a precise means of recording time,
avoiding subjective judgment or bias of the rater.
c. Involves no interference in the normal work
routine and hence faces little resistance from
workers.
 Predetermined Motion Time
System (PMTS)
• Disadvantages
a. Such standards are not available for
each and every human activity.
b. Fairly long period of intensive training
under expert guidance is necessary to
use this technique.
 Work Sampling
• Work sampling is a work measurement
technique that randomly samples the work of
one or more employees at periodic intervals to
determine the proportion of total operations that
is accounted for in one particular activity.
• In work sampling study , the work study engineer
takes a great number of observations of a
worker or machine random times throughout the
working shift or day. No stop watch is used. The
objective is to find the frequency of occurrence
of every work element.
 Work Sampling
• The technique is based on the laws of
probability. It is based on the statistical
premise that the occurrences in an
adequate random sample observations of
an activity will follow the same distribution
pattern that might be found in a lengthy ,
continuous study of the same activity.