Production management is the process of Objectives of Production

planning, organising, directing and controlling Management

the activities of the production function The objective is to produce goods or
Production Management mainly deals with: services of right quality and quantity at the
Decision making related to production predetermined time and pre established
cost
process
So the objectives are:
Producing goods or service according to
standard specification Right quality
Producing good at minimum cost Right quantity
Producing goods at scheduled time Predetermined time
Pre established cost (Manufacturing
Cost)

Functions
The functions of production
The intermediate objectives are: department are grouped into two:
Machinery and Equipments The activity which convert the
Materials available capital into physical
Manpower resource required for
Supporting Service production
The activities which convert the
physical resources to saleable
goods

The functions of production personnel are:

While carrying out the functions the
production department has to take care
of following things
Production of goods at right quantity
and quality
Production of goods at right time
Production of goods at minimum
possible cost
Forecasting of demand
Use the forecast to determine the factors
of production
Arranging procurement of required
factors of production
Arranging services such as maintenance,
material handling, inspection quality
control etc
Effective and optimum utilization of
facilities available for production
 SCOPE OF PRODUCTION MANAGEMENT
The objective of production
management is aimed at satisfying
the need of customer
The scope of production
management can be considered
from the point of view of both
Strategic level decision
Operation level decision
1. New product identification and
2. Process Design and Planning
design
The product should have good
market acceptability so that
demand should be high
The product design should meet
customer expectation
The tools like value analysis should
be done to avoid unexpected cost
build up
3. Facilities Location and Layout
4. Design of material handling system
Planning
Due consideration should be
given in location selection
Once located will not be altered
in near future
Strategic level decision
The strategic level decision are mainly
involved with the design of product and
production system.
These decisions have long term implications.
The strategic level decisions are:
1. New product identification and design
2. Process Design and Planning
3. Facilities Location and Layout Planning
4. Design of material handling system
5. Capacity planning
It involves appropriate
technology to convert raw
material to products
The technology depends on
demand, investment capability,
labour availability, degree of
automation etc.
Material handling should be kept at
minimum.
The material flow and handling
equipment should be based on factors
such as:
Distance between work stations
Intensity of flow traffic and size
Shape and nature of material to be
handled
 5. Capacity planning
It mainly deals with
procurement of fixed asset
like plant and machineries
It decides the size of plant,
output etc.
It is a function of demand
Production planning
It determines future course of
action regarding production to
achieve organisation objectives
The other activities
The other activities include:
Inventory control
Maintenance and replacement .
Cost reduction and Cost control
etc.
Operational level decision
Are short term decisions
Mainly concerned with planning and
controlling of production activities
It includes:
Production planning
Production control
The other activities
Production control
It aims to ensure that activities
are carried out as per plan
It take corrective action if there is
deviation between actual and
standard
TYPES OF PRODUCTION
The production system is mainly
classified into three:
Make to Stock Production System
Make to Order Production System
Assemble to Order Production
System
Make to Stock Production System
In this system, the manufacturer stocks the
finished goods in inventory for immediate
shipment
This ensures the immediate delivery of good
quality, reasonably priced, standard
products
Here the customer will not accept the delay
in delivery and the management is required
to maintain adequate stock
E.g. Ready to wear garments, nuts and bolts,
motors, television
Information needed
Forecasted demand
Opening inventory level
Desired ending inventory level
Any previous orders (Back Orders)
Total Production = Forecasted Demand +
Back Orders + Ending Inventory
Opening Inventory
Situation for make to order production
Products are manufactured according to
customer specification
Customer can wait still the order is being
processed
Product is non standard and expensive to
store
When there are several product options
Situation for make to stock production
Fairly constant and predictable
demand
Products are few and are
standardized
Shorter delivery time expected by
the customer
Products having higher shelf life
Make to Order Production
In this case the firm will manufacture
product only after the receipt of order from
customer
The production activities is initiated only
after confirmation of order from customer
Hence the lead time is long
There is always direct interaction with
customer during all stages
The production schedules changes with
changes in customer needs
Assemble to Order Production
Here the manufacturer will produce and stock all
the standard component parts required to
produce goods or products.
Here the products are manufactured from
available components/parts according to the
needs and specification of customer
i.e. the customer can choose the components for
the product
Here the products are customized and variety of
product can be produced
The only the time to assemble is needed before
delivering products
E.g. Computers, automobiles
CLASSIFICATION OF PRODUCTION Job Shop Production
SYSTEM This type is characterized by one or few
According to volume of production and quantity of products
product standardization
INTERMITTENT PRODUCTION It is designed and produced as per the
Job shop production specification of customer within prefixed
Batch production time and cost
Project industries It consist of general purpose machines
CONTINUOUS PRODUCTION arranged into departments.
Mass or flow production
The main feature is low volume and high
Process industries
variety of production
ASSEMBLY LINES
CELLULAR PRODUCTION It includes manufacturing of space craft,
aircraft special purpose machine tool etc.

Characteristics
Advantages
High variety of products and low volume
Use of general purpose machines and
facilities
Highly skilled operators due to uniqueness
in job
Process type layout for arrangement of
facilities
Movement of material is long and
interrupted
Relative imbalance in workloads at various
departments
Variety of products can be
produced
Operator becomes skilled and
competent that each job gives
them learning opportunity
Utilization of full potential of
operator
Opportunity to use innovative
ideas and creative methods

Disadvantages Project Industries

Higher setup and tooling up cost
due to frequent set up changes
High inventory level of raw
material and hence high cost
Production planning is
complicated
Skilled manpower is required
Product cost comes high
In this type the materials, tools,
equipment's and personnel's are brought
to the location where the product is to be
fabricated
The aim is to achieve specific objective
within prescribed time and cost limitations
Project is of ONE-OFF JOB which may
not repeat exactly in the same manner
It has a definite start and finish. It is
executed in a time bound schedule
 Batch Production
It is characterized by the manufacture
of limited number of products
produced at regular intervals in batches
or lots and stocked awaiting sales
Different batches can be produced
simultaneously through different
routing
The system can also be used for
producing different products
Advantages
Better utilization of plant and
machinery
Promote functional specialization
Cost per unit is lower
Lower investment in plant and
machinery
Flexibility to accommodate and
process number of products
Mass Production
Manufacturing of discrete parts or
assemblies using a continuous
process are called mass production
or repetitive production.
Products are standardized
Large volume can be produced
The plant produces a batch of
product and kept in stock for sale
Then it changes to another
product
When first product get depleted,
the production of first batch is
repeated.
So alternately or intermittently
the products can be changed
Disadvantages
Material handling is complex because
of longer and irregular flows
Production planning and control is
complex
Work in progress inventory is higher
compared to continuous production
Longer production times
Higher setup cost due to frequent
changes in setup.
Characteristics
Standardization of product and process
sequence and hence line layout is
recommended
Dedicated, special purpose machines
having higher production capabilities
and output rates
Larger volumes of production
Shorter cycle time of production
Lower in process inventory
Perfectly balanced production lines
 Advantages
Higher rate of production with reduced cycle time Process Industry
Higher capability balancing due to line balancing
Less skilled operators can make the process
Low in process inventory
It is the production process that includes
Production cost per unit is less mixing, separating and or performing chemical
reaction.
Disadvantages It is usually carried out in continuous mode
Break down of one machine will stop entire
production line It usually produces non discrete products in
Line layout needs adjustments with the changes in large volume
product design
High investment in production facilities
Supervision is general rather than specific
The cycle time is determined by the slowest
operation

CELLULAR PRODUCTION ASSEMBLY LINES

In this case the parts having similar processing
requirement are classified into part families.
Then a cell is created which includes all
equipment's, facilities and human skills
required to produce a part family
Here the parts are added to a product in a
sequential manner to produce finished
product.
It is first developed for the assembly of
automobiles

PRODUCT DESIGN PROCESS

It includes
Conception
Acceptance
Execution
Translation
Pre-production
Acceptance Execution

FRAME WORK OF PRODUCTION

It mainly includes five s
The Product
The Plant
The Process
The Programme
The People

The Product The Plant

Product is the link between production and
marketing
The main aspects to be considered about a
product are:
Performance
Quality and Reliability
Aesthetics and Ergonomics
Quantity and Selling price
Delivery schedule
The plant should match the needs of
products, the market, the people and the
organisation.
It includes:
Design and layout of buildings
Reliability, perfection and maintenance of
equipments
Safety of operations
The financial constraint
 Growth Maturity (Saturation)
Sales start increasing during this stage due to Sales rate reaches a point above which it will
acceptability of product not grow
Growth rate will be high if there is limited or The sale will be maintained for some period
no competition

Decline Production Procedure

New product will come to the market with Sales forecast phase
better product features, advanced technology
and reduced price. Production planning activity phase
It create threat to the product and sales start Production Phase
declining
If proper care such as design changes, new
Dispatching Phase
features etc. are not incorporated, the
products are to be taken back from the
market

Sales forecast phase Production planning activity phase

Sales forcast is made by sales department Production budget- finance department
Manufacturing cycle triggered by Prepare drawing , specifications or
Customer orders check and modify existing ones- Engineering
Forecast of customer demand Product availability Dept.
good ware house
The marketing or sales department Management reviews the sales forecast and the
Thorough analysis budget to fix the quantities to be produced
Market research Production planning activity-schedule of
To know acceptability of the product by production
customers Inventory level procurement of material
Consumers reaction to new modifications Make or buy decision
and designs
 INTRODUCTION
Schedule converts action plan into
operating time table
PERT &CPM Basis for monitoring and controlling
project
Scheduling more important in projects
than in production, because unique
nature
A project is any task which has
definable beginning and definable end 68

Importance of PERT/CPM
By using PERT and CPM analysis you will be able to answer questions such as:
1. When will the entire project be completed? NETWORK TECHNIQUES
2. What are the critical activities or tasks in the project, that is, the
ones that will delay the entire project if they are late? PERT CPM
3. Which are the noncritical activities, that is, the ones that can run
-Program Evaluation and Critical Path Method
late without delaying the whole completion time? Review Technique Developed by El Dupont
4. What is the probability that the project will be completed by a - developed by the US for Chemical Plant
specific date? Navy with Booz Shutdown Project- about
Hamilton Lockheed same time as PERT
5. At any particular date, is the project on schedule, behind schedule, - on the Polaris
or a head of the schedule? Missile/Submarine
6. On any given date, is the money spent equal to, less than, or greater program 1958
than the budgeted amount?
7. Are there enough resources available to finish the project on time? Both use same calculations, almost similar
Main difference is probabilistic and deterministic in time estimation
8. If the project is to be finished in a shorter amount of time, what is Gantt Chart also used in scheduling
the best way to accomplish this at the least cost? (crash analysis) 70

NETWORK Example of Simple Network

Survey
Graphical portrayal of activities and event
Shows dependency relationships between
tasks/activities in a project
Clearly shows tasks that must precede
(precedence) or follow (succeeding) other
tasks in a logical manner
Clear representation of plan a powerful tool
for planning and controlling project

71
72
 Example of Network DEFINITION OF TERMS IN A NETWORK
More Complex Activity : any portions of project (tasks) which required
by project, uses up resource and consumes
time may involve labor, paper work,
contractual negotiations, machinery operations
Activity on Arrow (AOA) showed as arrow, AON
Activity on Node
Event : beginning or ending points of one or more
activities, instantaneous point in time, also

Network : Combination of all project activities and the events

PRECEEDING SUCCESSOR
ACTIVITY

EVENT
74

73

PERT/CPM
Emphasis on Logic in Network Construction
Two conventions
Construction of network should be based on logical or technical
nodes for events and arcs for activities (our convention) dependencies among activities
Example -

i j Common error build network on the basis of time logic (a

feeling for proper sequence ) see example below

arcs for events and nodes for activities

WRONG !!!
CORRECT
75
76

Example 1- A simple network Sequence of activities

Consider the list of four activities for making a
simple product:
Immediate predecessors for a particular activity are the
activities that, when completed, enable the start of the
activity in question.
Can start work on activities A and B anytime,
since neither of these activities depends upon the
completion of prior activities.
Activity C cannot be started until activity B has
been completed
Activity D cannot be started until both activities
A and C have been completed.
The graphical representation (next slide) is
referred to as the PERT/CPM network
77 78
 Network of Four Activities
Example 2
Develop the network for a project with following activities
and immediate predecessors:
Activity Immediate
predecessors
A -
B -
C B
D A, C
E C
F C
G D,E,F

Try to do for the first five (A,B,C,D,E) activities

79 80

Network of first five activities Network of Seven Activities

1 A 3 D 4 G
7
dummy E
B
C 5
F
2 6

Activity Immediate
Activity Immediate predecessors
predecessors A -
A -
B -
B -
C B
C B
D A, C
D A, C
E C
E C
F C
F C
81 G D,E,F 82
G D,E,F

EXAMPLES OF THE USE OF DUMMYACTIVITY

Network concurrent activities
a
a 2
Note how the network correctly identifies D, E, and F as 1 2 1 Dummy
the immediate predecessors for activity G. b
b 3
WRONG!!! RIGHT
Dummy activities is used to identify precedence
relationships correctly and to eliminate possible confusion
of two or more activities having the same starting and Activity c not WRONG !
required for e
ending nodes a
a e
d
Dummy activities have no resources (time, labor, b 1 b
1
e
machinery, etc) purpose is to PRESERVE LOGIC of the c
d
network c
2

WRONG
RIGHT
!!!
RIGHT

83 84
 Network with LS & LF time
Latest start & latest finish time
D[5,8] 5
2 3[7,10]
To find the critical path we need a backward pass
calculation.
7
4
Starting at the completion point (node 7) and using a latest 1 6
finish time (LF) of 26 for activity I, we trace back through
the network computing a latest start (LS) and latest finish
time for each activity
3

The expression LS = LF t can be used to calculate latest

start time for each activity. For example, for activity I, LF =
26 and t= 2, thus the latest start time for activity I is Latest finish time rule:
LS = 26 2 = 24 The latest finish time for an activity entering a
particular node is equal to the smallest of the latest
91 start times for all activities leaving the node. 92

Slack or Free Time or Float Activity schedule for our example

Activity Earliest Latest Earliest Latest Slack Critical
Slack is the length of time an activity can be delayed without affecting the start (ES) start (LS) finish (EF) finish (LF) (LS-ES) path
completion date for the entire project.
For example, slack for C = 3 weeks, i.e Activity C can be delayed up to 3
A 0 0 5 5 0 Yes
weeks B 0 6 6 12 6
3
(start anywhere between weeks 5 and 8).
2
C 5 8 9 12 3
ES LS EF EF D 5 7 8 10 2
5 8 9 12
E 5 5 6 6 0 Yes
LF-EF = 12 9 =3
F 6 6 10 10 0 Yes
LS-ES = 8 5=3
G 10 10 24 24 0 Yes
H 9 12 21 24 3
LF-ES-t = 12-5-4 = 3
I 24 24 26 26 0 Yes
93
94

IMPORTANT QUESTIONS
Importance of Float (Slack) and Critical Path
What is the total time to complete the project?
1. Slack or Float shows how much allowance each activity has,
26 weeks if the individual activities are completed on schedule.
i.e how long it can be delayed without affecting completion
date of project
What are the scheduled start and completion times for each activity?
ES, EF, LS, LF are given for each activity.
2. Critical path is a sequence of activities from start to finish
with zero slack. Critical activities are activities on the
What activities are critical and must be completed as scheduled in order to critical path.
keep the project on time?
Critical path activities: A, E, F, G, and I.
3. Critical path identifies the minimum time to complete
project
How long can non-critical activities be delayed before they cause a delay in

Slack time available for all activities are given. 4. If any activity on the critical path is shortened or extended,
project time will be shortened or extended accordingly
95 96
 Importance of Float (Slack) and Critical Path
5. So, a lot of effort should be put in trying to control
activities along this path, so that project can meet due date.
If any activity is lengthened, be aware that project will not
meet deadline and some action needs to be taken.
PERT For Dealing With Uncertainty
So far, times can be estimated with relative certainty,
confidence
For many situations this is not possible, e.g Research,
development, new products and projects etc.

6. If can spend resources to speed up some activity, do so

Use 3 time estimates
only for critical activities.
tm= most likely time estimate, mode.
to = optimistic time estimate,
7. waste resources on non-critical activity, it will not
shorten the project time. tp = pessimistic time estimate, and

8. If resources can be saved by lengthening some activities, do Expected Value (te) = (to+4tm +tp) /6
so for non-critical activities, up to limit of float. Variance (V) = ( (tp-to)/ 6 ) 2
Std Deviation (S) = SQRT (V) ie (tp-to)/ 6
9. Total Float belongs to the path 97 98

99 100

Precedences And Project Activity Times

Immediate Optimistic Most Likely Pessimistic Var S.Dev
Activity Predecessor Time Time Time te V

a - 10 22 22 20 4 2
b - 20 20 20 20 0 0
c - 4 10 16 10 4 2
d a 2 14 32 15 25 5
e b,c 8 8 20 10 4 2
f b,c 8 14 20 14 4 2
g b,c 4 4 4 4 0 0
h c 2 12 16 11 5.4 2.32
I g,h 6 16 38 18 28.4 5.33
j d,e 2 8 14 8 4 2

101 102
 Figure 8-13 The complete Network
The complete network

EF=20 35
d d
2 6 2 6
(15,25) a (15,25) j
j (20,4) (8,4)
(8,4) b e
a 20 43
(20,0) (10,4)
(20,4) e CRIT. TIME = 43
f 7
(10,4)
1 3
(14,4)
1 f 7
3 g
b (14,4)
c (4,0)
(20,0) i
(10,4)
g (18,28.4)
c h
(4,0) 4 5
(10,4) i (11,5.4)
(18,28.4) 10 24
h 5
4
(11,5.4)

103 104

Critical Path Analysis (PERT) Assume, PM promised to complete the project in the fifty days.
What are the chances of meeting that deadline?
Activity LS ES Slacks Critical ? Calculate Z, where
a 0 0 0 Yes
Z = (D-S) / V
b 1 0 1
Example,
c 4 0 4 D = 50; S(Scheduled date) = 20+15+8 =43; V = (4+25+4) =33
Z = (50 43) / 5.745
d 20 20 0 Yes
= 1.22 standard deviations.
e 25 20 5
The probability value of Z = 1.22, is 0.888
f 29 20 9

g 21 20 1

h 14 10 4

i 25 24 1 1.22
j 35 35 0 Yes

106
105

What deadline are you 95% sure of meeting

Comparison Between CPM and PERT
Z value associated with 0.95 is 1.645 CPM PERT
1 Uses network, calculate float or slack,
identify critical path and activities, Same as CPM
D = S + 5.745 (1.645) guides to monitor and controlling
= 43 + 9.45 project
= 52.45 days 2 Uses one value of activity time Requires 3 estimates of activity time
Calculates mean and variance of time

Thus, there is a 95 percent chance of finishing the project by 52.45 days. 3 Used where times can be estimated Used where times cannot be estimated
with confidence, familiar activities with confidence.
Unfamiliar or new activities

4 Minimizing cost is more important Meeting time target or estimating

percent completion is more important

5 Example: construction projects, Example: Involving new activities or

building one off machines, ships, etc products, research and development
etc

107
108
 BENEFITS OF CPM / PERT NETWORK BENEFITS OFCPM / PERT NETWORK (cont.)
Consistent framework for planning, scheduling, Identified activities with slacks that can be delayed for specified
monitoring, and controlling project. periods without penalty, or from which resources may be
temporarily borrowed
Shows interdependence of all tasks, work packages,
and work units. Determines the dates on which tasks may be started or must be
started if the project is to stay in schedule.
Helps proper communications between
departments and functions. Shows which tasks must be coordinated to avoid resource or
timing conflicts.

Determines expected project completion date. Shows which tasks may run in parallel to meet project
completion date
Identifies so-called critical activities, which can
delay the project completion time.
109 110
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