Control Activities

Control Activities
Work control Inventory Control Cost Control Quality Control

Maintenance Engineering

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Contents
ACKNOWLEDGEMENT .............................................................................. 3 INTRODUCTION .......................................................................................... 4 Control Activates ..................................................................................................... 5 Work Control .................................................................................................. 5 Inventory Control ............................................................................................ 5 The Classical Lot Size Model ..................................................................... 7 Quality Control ............................................................................................... 9 Cost Control .................................................................................................. 11 Standard cost accounting .......................................................................... 12 Activity-based costing .............................................................................. 13 Lean accounting ........................................................................................ 14 REFERENCES.............................................................................................. 16

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ACKNOWLEDGEMENT
We dedicate our effort to our teacher (Sir Nasrullah Babar), who guided us and helped us in the preparation of this manual. Because we think that without his guidance it was almost impossible to create this. Secondly we dedicate this effort to our parents as they pray for our success and we did not able to do that without their prayers.

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INTRODUCTION
The actions taken to preserve the operation of devices, particularly of electromechanical equipment, to ensure that the devices can perform their intended functions when needed. The field of maintenance science is an interdisciplinary research area that employs techniques from physics, engineering, and decision analysis. Traditionally, the focus of maintenance has been on equipment availabilitythe ratio of operating time less downtime to total available time. Modern maintenance practices focus on increasing equipment effectiveness that is, making sure that the equipment is both available and capable of producing superior-quality products. Maintenance activities can be classified into several broad categories, depending on whether they respond to failures that have occurred or whether they attempt to prevent failures. The simplest and least sophisticated maintenance strategy still used by many companies is reactive maintenance or breakdown maintenance. Equipment is operated until it fails, then repaired or replaced. No effort is expended on activities that monitor the ongoing health of the equipment, and maintenance is focused on quick repairs that return the equipment to production as soon as possible. A slightly more sophisticated maintenance strategy is preventive maintenance, also known as calendar-based maintenance. This system involves detailed, planned maintenance activities on a periodic basis, usually monthly, quarterly, semiannually, or annually. As in reactive maintenance, preventive maintenance does not monitor information on equipment status. Rather, it attempts to avoid unplanned failures through planned repairs or replacements. Predictive maintenance is based on an ongoing (continuous or periodic) assessment of the actual operating condition of equipment. The equipment is monitored while in operation, and repair or replacement is scheduled only when measurements indicate that it is required. Predictive maintenance programs seek to control maintenance activities to 4 Maintenance Engineering

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avoid both unplanned equipment outages and unnecessary maintenance and overhauls.

Control Activates
control is an essential part of scientific management. control, as applied to a maintenance system, includes the following; Work Control. Inventory Control. Cost Control. Quality Control.

Work Control
The maintenance system is driven by the demand for maintenance work. the maintenance work load is greatly influenced by the maintenance philosophy. the management and control of maintenance work are essential for achieving set plans. the work order system is the tool used for controlling maintenance work. a well design work order with a sound reporting system is a heart of maintenance system.

Inventory Control
Inventory Control is the volitional break of the operative material flow; and thus deliberately composed stocks develop. Inventory Control needs a storage, that means a room, building or area to store the item. The in-pouring items are called storage input, the outpouring items storage output.

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Therefore inventory control contains all activities and considers all consequences, which are connected with the storage of items. On the one hand there is the mere technical and logistical aspect of inventory control, for example the storage layout. On the other hand there are general questions, which are related to the total stock of a company. One of the most important decisions is about the quantity of inventories. Therefore a lot of mathematical models have been developed, which are summarized under the concept of Inventory Control within the scope of Operations Research. One of the most important decisions is about the quantity of inventories. Therefore a lot of mathematical models have been developed, which are summarized under the concept of Inventory Control within the scope of Operations Research. For the stock of a retail market the outflow is induced through customer demand and the replenishment is secured through orders. The stock disposal therefore consists of ordering the right quantity (lot size) at the right time. Less order produce less order costs; but for a higher level of order quantity the storage costs rise. The advantage of a great inventory is that there is a high level of service and most customer requirements can be full filled. Real (short term) inventory problems are those, who deal with order costs, storage costs and the service level. Problems of long term inventory control do not belong to this issue, because the order costs are considered global and not for each order. 6 Maintenance Engineering

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The situation is similar with intermediate storages. This storages are strongly bound to production and we cannot speak of a proper inventory problem. But the results of inventory control theory can be used for the disposal of intermediate storages. The areas of application are all inventories of the retail market. But also the inventories of industrial purchasing and selling are pliable to the models of inventory control. Subsequent to the inventory of finished items from industrial selling there is a system of distribution. The disposal of such hierarchical systems is in the domain of multi-echelon inventory control; that is an extension of real inventory control theory. The problems of inventory control are characterized through the following: 1- Several items are managed in one stock; this means that order handling and storage occur collaborative. Every item is singular disposed. 2- Demand and delivery time (of the order to the stock) are often stochastic or not known. 3- Not only the disposal of costs has to be considered, but also non-monetary and non-quantitative aspects.

The Classical Lot Size Model

Instead of the classical lot size model one speaks of the Andler-, Harris- or Wilson model. Precondition is the assumption that demand is constant and continuous. Moreover there is no delivery time and no shortage. The typical development of inventory looks like the following:

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Inventory process in the classical lot size model The problem of the lot size is to determine the right size q and the length of the order interval T so, that the sum of order and storage costs are minimal. The relevant order costs B(q) are fixed costs, which arise through ordering.

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Quality Control
Quality control is a process that is used to ensure a certain level of quality in a product or service. It might include whatever actions a business deems necessary to provide for the control and verification of certain characteristics of a product or service. Most often, it involves thoroughly examining and testing the quality of products or the results of services. The basic goal of this process is to ensure that the products or services that are provided meet specific requirements and characteristics, such as being dependable, satisfactory, safe and fiscally sound. Companies that engage in quality control typically have a team of workers who focus on testing a certain number of products or observing services being done. The products or services that are examined usually are chosen at random. The 9 Maintenance Engineering

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goal of the quality control team is to identify products or services that do not meet a company's specified standards of quality. If a problem is identified, the job of a quality control team or professional might involve stopping production or service until the problem has been corrected. Depending on the particular service or product as well as the type of problem identified, production or services might not cease entirely. In all production processes, we need to monitor the extent to which our products meet specifications. In the most general terms, there are two "enemies" of product quality: deviations from target specifications. excessive variability around target specifications Controls include product inspection, where every product is examined visually, and often using a stereo microscope for fine detail before the product is sold into the external market. Inspectors will be provided with lists and descriptions of unacceptable product defects such as cracks or surface blemishes for example. The quality of the outputs is at risk if any of these three aspects is deficient in any way. Quality control emphasizes testing of products to uncover defects and reporting to management who make the decision to allow or deny product release, whereas quality assurance attempts to improve and stabilize production (and associated processes) to avoid, or at least minimize, issues which led to the defect(s) in the first place. For contract work, particularly work awarded by government agencies, quality control issues are among the top reasons for not renewing a contract. "Total quality control", also called total quality management, is an approach that extends beyond ordinary statistical quality control techniques and quality improvement methods. It implies a complete overview and re-evaluation of the 10 Maintenance Engineering

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specification of a product, rather than just considering a more limited set of changeable features within an existing product. If the original specification does not reflect the correct quality requirements, quality cannot be inspected or manufactured into the product. For instance, the design of a pressure vessel should include not only the material and dimensions, but also operating, environmental, safety, reliability and maintainability requirements, and documentation of findings about these requirement.

Cost Control
The practice of managing and/or reducing business expenses. Cost controls starts by the businesses identifying what their costs are and evaluate whether those costs are reasonable and affordable. Then, if necessary, they can look for ways to cut costs through methods such as cutting back, moving to a less expensive plan or changing service providers. The cost-control process seeks to manage expenses ranging from phone, internet and utility bills to employee payroll and outside professional services. Cost accounting information is designed for managers. Since managers are taking decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations. Instead, the important criterion is that the information must be relevant for decisions that managers operating in a particular environment of business including strategy make. Cost accounting information is commonly used in financial accounting information, but first we are concentrating in its use by managers to take decisions. The accountants who handle the cost accounting information add value by providing good information to managers who are taking decisions. Among the better decisions, the better performance of one's organization, regardless if it is a manufacturing company, a bank, a non-profit organization, a government agency, a school club or even a business school. 11 Maintenance Engineering

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The cost-accounting system is the result of decisions made by managers of an organization and the environment in which they make them. Cost accounting is regarded as the process of collecting, analysing, summarising and evaluating various alternative courses of action involving costs and advising the management on the most appropriate course of action based on the cost efficiency and capability of the management. The organizations and managers are most of the times interested in and worried for the costs. The control of the costs of the past, present and future is part of the job of all the managers in a company. In the companies that try to have profits, the control of costs affects directly to them. Knowing the costs of the products is essential for decision-making regarding price and mix assignation of products and services. The cost accounting systems can be important sources of information for the managers of a company. For this reason, the managers understand the forces and weaknesses of the cost accounting systems, and participate in the evaluation and evolution of the cost measurement and administration systems. Unlike the accounting systems that help in the preparation of financial reports periodically, the cost accounting systems and reports are not subject to rules and standards like the Generally Accepted Accounting Principles. As a result, there is a wide variety in the cost accounting systems of the different companies and sometimes even in different parts of the same company or organization. The following are different cost accounting approaches:

Standard cost accounting

In modern cost accounting, the concept of recording historical costs was taken further, by allocating the company's fixed costs over a given period of time to the items produced during that period, and recording the result as the total cost 12 Maintenance Engineering

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of production. This allowed the full cost of products that were not sold in the period they were produced to be recorded in inventory using a variety of complex accounting methods, which was consistent with the principles of GAAP (Generally Accepted Accounting Principles). It also essentially enabled managers to ignore the fixed costs, and look at the results of each period in relation to the "standard cost" for any given product.

Activity-based costing
Activity-based costing (ABC) is a system for assigning costs to products based on the activities they require. In this case, activities are those regular actions performed inside a company. "Talking with customer regarding invoice questions" is an example of an activity inside most companies. Accountants assign 100% of each employee's time to the different activities performed inside a company (many will use surveys to have the workers themselves assign their time to the different activities). The accountant then can determine the total cost spent on each activity by summing up the percentage of each worker's salary spent on that activity. A company can use the resulting activity cost data to determine where to focus their operational improvements. For example, a job-based manufacturer may find that a high percentage of its workers are spending their time trying to figure out a hastily written customer order. Via ABC, the accountants now have a currency amount pegged to the activity of "Researching Customer Work Order Specifications". Senior management can now decide how much focus or money to budget for resolving this process deficiency. Activity-based management includes (but is not restricted to) the use of activity-based costing to manage a business. While ABC may be able to pinpoint the cost of each activity and resources into the ultimate product, the process could be tedious, costly and subject to errors. 13 Maintenance Engineering

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As it is a tool for a more accurate way of allocating fixed costs into product, these fixed costs do not vary according to each month's production volume. For example, an elimination of one product would not eliminate the overhead or even direct labor cost assigned to it. ABC better identifies product costing in the long run, but may not be too helpful in day-to-day decision-making.

Lean accounting
Lean accounting has developed in recent years to provide the accounting, control, and measurement methods supporting lean manufacturing and other applications of lean thinking such as healthcare, construction, insurance, banking, education, government, and other industries. There are two main thrusts for Lean Accounting. The first is the application of lean methods to the company's accounting, control, and measurement processes. This is not different from applying lean methods to any other processes. The objective is to eliminate waste, free up capacity, speed up the process, eliminate errors & defects, and make the process clear and understandable. The second (and more important) thrust of Lean Accounting is to fundamentally change the accounting, control, and measurement processes so they motivate lean change & improvement, provide information that is suitable for control and decision-making, provide an understanding of customer value, correctly assess the financial impact of lean improvement, and are themselves simple, visual, and low-waste. Lean Accounting does not require the traditional management accounting methods like standard costing, activitybased costing, variance reporting, cost-plus pricing, complex transactional control systems, and untimely & confusing financial reports. These are replaced by:

lean-focused performance measurements simple summary direct costing of the value streams

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decision-making and reporting using a box score financial reports that are timely and presented in "plain English" that everyone can understand

radical simplification and elimination of transactional control systems by eliminating the need for them

driving lean changes from a deep understanding of the value created for the customers

eliminating traditional budgeting through monthly sales, operations, and financial planning processes (SOFP)

value-based pricing correct understanding of the financial impact of lean change

As an organization becomes more mature with lean thinking and methods, they recognize that the combined methods of lean accounting in fact creates a lean management system (LMS) designed to provide the planning, the operational and financial reporting, and the motivation for change required to prosper the company's on-going lean transformation.

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REFERENCES
1. D.Bartmann, M.J. Beckmann: Lagerhaltung, Springer Verlag, Berlin Heidelberg New York, 1989 2. J. Biethahn, A.Lackner, M.Range: Optimierung und Simulation, Oldenbourg Verlag Munchen Wien, 2004 3. Maher, Lanen and Rahan, Fundamentals of Cost Accounting, 1st Edition (McGraw-Hill 2005). 4. Planning and controlling of Maintenance systems/ John Dixon Campbell.

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