Course Details:-

• Unit 1: Introduction to Operation Management

• Unit 2: Operations Strategy:- corporate, business
and operations strategy
• Unit 3: Product and Service Design
• Unit 4: Locations decision and Facilities layout
• Unit 5: Linear programming
• Unit 6: Aggregate planning
• Unit 7: Inventory Management
• Unit 8: The Quality System
 Unit- One

Introduction of Operratiion
Management
 Meaning Of Operation Management
• Operation is a key subsystem of an organization, that is concerned with
the transformation of number of inputs into desired level of output.
• Operation management refers to the direction and control of the
process that transform inputs into product and service.
• Operations management refers to the activities, decisions and
responsibilities of managing the resources which are dedicated to the
production and delivery of products and services.
• The part of an organization that is responsible for this activity is called
the operations function and every organization has one as delivery of a
product and/or service is the reason for existence.
• Operations managers are the people who are responsible for
overseeing and managing the resources that make up the operations
function. The operations function is also responsible for fulfilling
customer requests through the production and delivery of products
and services.
• An operation may be defined as the process of
changing inputs into outputs thereby adding
value to some entity.
• Right quality, right quantity, right time and
right price are the four basic requirements of
the customers and as such they determine the
extent of customer satisfaction.
 Objectives:-
• The objectives of Operation management are “to produce
goods and services of the right quality, in the right
quantities, according to the time schedule and a minimum
cost”.
• Objectives of Operations Management can be categorized
into Customer Service and Resource Utilization.
• CUSTOMER SERVICE
• The first objective of operating systems is to utilize
resources for the satisfaction of customer wants.
• Therefore, customer service is a key objective of operations
management.
• The operating system must provide something to a
specification, which can satisfy the customer in terms of
cost and timing.
• Thus, providing the ‘right thing at a right price at the
right time’ can satisfy primary objective.
 Resource Utilization
• Another major objective of operating systems is to
utilize resources for the satisfaction of customer
wants effectively. Customer service must be
provided with the achievement of effective
operations through efficient use of resources.
• Inefficient use of resources or inadequate
customer service leads to commercial failure of an
operating system.
• Operations management is concerned essentially
with the utilization of resources, i.e. obtaining
maximum effect from resources or minimizing
their loss, under utilization or waste
The transformation process
• The three main types of transformed resources include:
• Materials: involves transforming either physically (e.g. manufacturing), by
location (e.g. transportation), by ownership (e.g. retail) or by storage (e.g.
warehousing).
• Information: This can be transformed by property (e.g. accountants), by
possession (e.g. market research), by storage (e.g. libraries), or by
location (e.g. telecommunications).
• Customers: They can be transformed either physically (e.g. hairdressers),
by storage (e.g. hotels), by location (e.g. airlines)
• The other set of inputs to any operations process are transforming
resources. These are the resources which act on or carry out the
transformation process. There are two main types of transforming
resources:
• Facilities - the buildings, equipment, plant and process technology of the
operation.
• Staff - includes all the people involved in the operations process.
• Output:- Goods or Service
 Difference between Production and Service Operation
• As mentioned earlier, operations is an organization can be
categorized into production (manufacturing) and service
operation.
Bases Production Operation Service Operation
Output Output is tangible in nature Intangible in nature
Customer contact Low, consumer often are only Participation of consumer
needed once the output is is frequent and high
produced.
Inventory Extensive use of inventory LESS
Quality assurance Tangible so easy to measure Challenging one due to
intangibility
Uniformity of It have standardized way of Very less, depends upon
output producing goods customer need.
 Scope of Operation Management
• Operations Management concern with the conversion of inputs into
outputs, using physical resources so as to provide the desired utilities to
the customer while meeting the other organizational objectives of
effectiveness, efficiency and adoptability.
• Following are the activities, which are listed under Operations
Management functions:
1. Location of facilities.
2. Plant layouts and Material Handling.
3. Product Design.
4. Process Design.
5. Production and Planning Control.
6. Quality Control.
7. Materials Management.
8. Maintenance Management.
• Location Facility:-It deals with the questions such as where
our main operations should be based?’ The selection of
location is a key-decision as large investment is made in
building plant and machinery.
• Plant layout and material handling:- Plant layout is a plan
of an optimum arrangement of facilities including
personnel, operating equipment, storage space, material
handling equipments and all other supporting services
along with the design of best structure to contain all
these facilities’.
• ‘Material Handling’ refers to the ‘moving of materials
from the store room to the machine and from one
machine to the next during the process of manufacture’.
It is also defined as the ‘art and science of moving,
packing and storing of products in any form’
• PRODUCT DESIGN:- Product design deals with conversion of ideas into
reality. Every business organization have to design, develop and
introduce new products as a survival and growth strategy. Developing the
new products and launching them in the market is the biggest challenge
faced by the organizations. The entire process of need identification to
physical manufactures of product involves three functions— Design and
Marketing, Product, Development, and manufacturing.
• PROCESS DESIGN:- Process Design is primarily concerned with decision
making of an overall process route for converting input into output.
These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities.
• PRODUCTION PLANNING AND CONTROL:- Production planning and
control can be defined as the process of planning the production in
advance, setting the exact route of each item, fixing the starting and
finishing dates for each item, to give production orders to shops and to
follow up the progress of products according to orders.
• QUALITY CONTROL:- Quality Control (QC) may be defined as ‘a
system that is used to maintain a desired level of quality in a
product or service’. It is a systematic control of various factors
that affect the quality of the product. Quality control aims at
prevention of defects at the source, relies on effective feed
back system and corrective action procedure.
• MATERIALS MANAGEMENT:- Materials management is that
aspect of management function which is primarily concerned
with the acquisition, control and use of materials needed and
flow of goods and services.
• Maintenance Management:- In today’s industry, equipment
and machineries firm a crucial components of majority of
productive area.
• Analysis the deviations and formulating the corrective
measures to stay in track with planned quality, time-schedule
and predetermined cost schedules.
Operations and Supporting functions
• The function carried out in majority of organization can be
divided into two major, core function and supporting function.
• Core Function:- Core function refers to the business function.
Majority of organization have three core function.
• Marketing and Sales:- Marketing and sales function generates
customer requests for product and service of the organization
via communication in markets.
• Product/ Service Development function:- It create new and
modified products to generate future customer requests and
• Operations function:- Operation function fulfill the customer
request
 Supporting Function
• These are those set of function that enables the core function to
operate effectively. The major supporting function are:-
• Account and Finance function:- Accounting and finance provides
the evidences to help organization in economic decision making
and manage the financial resources efficiently and effectively to
meet the organizational goals and objectives.
• Human resource Function:- It recruits and develop the workforce
level along with their welfare and quality of work life.
• Information technology:- It helps the organization to record the
information and disseminate in order to provide provision of
systems for design , planning and control and improvement.
Role of the Operations Manager
• Operation manager have to play a significant role for effective
production of good and services. The roles are
• Direct Role:-
• Developing an Operation Strategy:- It balance conflict
between pressure of market requirements and operations
resource capabilities.
• Designing products, services and processes which determine
the physical form, shape and composition of products,
services and process.
• Planning and Controlling the operation
• Improving the performance
Indirect Role
• In the indirect role the operation manager
should have good coordination with other
departments.
• Since other department can have impact on
Operation department.
• Eg:- Advertising campaign can increase
demand of product and hence affect the
product planning process.
Production system: Intermittent and continuous
• Based on the volume and variety of the input of the
output the production system can be categorized
broadly into two.
• Continuous Production System:-
• It is used for producing highly demanded products.
• In this system, similar types of products are produced
in large volume to meet sales forecast.
• In this system, all raw materials, process and
technology are standardized.
 Intermittent Production System
• In this system, goods and services are
produced to fulfill the orders if customer
rather than for stock.
• There is no continuity inflow of material and
resources.
• In this system, raw materials, process and
design should be continuously adjusted and
changed with the change in design, shape,
size, quality, orders of customers.
 Key issues (Challenges) for operations managers
• Global perspective:- Due to globalization today the product and
service is competing in a global level. In such scenario
operation manager should reduce operation cost,
improvement in productivity.
• Innovation:- Operation manager must try to innovate (process,
design, customer service) in every aspect so that they can
sustain and succeed in dynamic market.
• Quality Problem:- Quality problems is an increasing use for
operation managers. Numerous operation failure have forced
the managers to improve the way operation are managed.
• Risk Management:- Risk Management is another key issues for
operation managers. The up and down in the economy, crisis
related factor of production provide operation managers risk in
every aspects of their operation.
Historical evolution of operations management
• Present operation management is developed from the
following series name i.e Manufacturing, Production and
Operation Management.
• Manufacturing Management:-
• In 1776 Adam Smith in the book “ Wealth of the Nation”
gave the concept of traditional manufacturing
management.
• He recommended for division and reassigning of work to
workers in order to make them skilled and efficient in
their jobs.
• Similarly, Charles Babbage accepted the concept of
division of work. He implemented the concept and
theories of Adam Smith and contributed the Scientific
Management. It become the milestone in the
development of Modern Operation Management.
 Production Management
• The termed Production Management was
widely used during 1930 – 1950.
• In this period managers developed many
technique for elimination of waste and
increasing efficiency in manufacturing activity.
• Many approach like mathematics, economics,
statics, computer science have been
contributed to manufacturing organization.
 Operation Management
• Since 1970, service sector became a
prominent sector for economic and social
development of the country.
• Therefore the whole organization are classified
into manufacturing and service sectors.
• Then new term operation management
emerged in the place of Production
Management.
Meaning of Productivity
• Productivity refers the relationship between
inputs and outputs. If by using fewer resources
more goods and services are produced, it
ensures higher productivity and Vice versa.
• Production refers with conversion of inputs
into outputs. All organization produce goods
and services according to the demand of
customer.
• There is another definition used in economics that is
important to know. In simple economic terms,
productivity means the output you get per input
given. For example, if I give you 5 apples and you give
me 1 liter of apple juice, your productivity is 1 liter per
5 apples. However, if someone else can get 1 liter of
apple juice with 4 apples, then that person is more
productive. It takes that person fewer apples to create
the same amount of apple juice.
• For the first person in the apples example above, P =
1/5 = 0.2 but the other person has P = 1/4 = 0.25. The
larger the P, the greater the productivity. In this case,
bigger = better.
• PRODUCTIVITY = OUTPUT / INPUT
• Productivity is an overall measure of the ability to produce a good or
service. More specifically, productivity is the measure of how
specified resources are managed to accomplish timely objectives as
stated in terms of quantity and quality. Productivity may also be
defined as an index that measures output (goods and services)
relative to the input (labor, materials, energy, etc., used to produce
the output).
• Hence, there are two major ways to increase productivity: increase
the numerator (output) or decrease the denominator (input). Of
course, a similar effect would be seen if both input and output
increased, but output increased faster than input; or if input and
output decreased, but input decreased faster than output.
• Organizations have many options for use of this formula, labor
productivity, machine productivity, capital productivity, energy
productivity, and so on. A productivity ratio may be computed for a
single operation, a department, a facility, an organization, or even an
entire country.
Example two
• If your work is very repetitive, you can apply
the same productivity definition at the
beginning of this article in terms of money and
output. If your hourly wage is $25 per hour
and you completed 10 reports this week
(P=0.4), you can compare your productivity to
the week before, when you only completed 8
reports (P=0.32). It’s obvious that this week,
your week was more productive.
 Types of Productivity
• The following are the basics three types of
productivity:-

• Partial Productivity
• Total factor productivity
• Total productivity
 Partial Productivity
• Partial productivity is the ratio of output to partial input.
• It measures productivity of each input
• It determines the contribution of each factor in producing and
generating output.
• The most common partial inputs can be labour, capital, energy,
machinery, materials, etc.
• PP- Output/ Partial Input
• Partial Productivity may be as follows:-
• Material Productivity:- It is ratio of output to material input.
• Labour Productivity:- It is ratio of output to labour input.
• Capital productivity:- It is ratio output to capital input.
• Energy Productivity:- It is ratio of output to the input energy
• Total Factor Productivity
• In this productivity measures total output is
divided by total factor of labour and capital input.
• TFP:- Total output/ (labour and capital inputs).

• Total Productivity:-
• Total Productivity is the ratio of total output to the
sum of all inputs.
• In this there is joint impact of all the inputs in
producing and generating of outputs.
Factors affecting Productivity
• The eight main factors that affect productivity are:
• Technical factors,
• Production factors,
• Organizational factor,
• Personnel factors,
• Finance factors,
• Management factors,
• Government factors, and
• Location factors.
• Technical factors : Productivity largely depends on technology.
Technical factors are the most important ones. These include
proper location, layout and size of the plant and machinery, correct
design of machines and equipment, research and development,
automation and computerization, etc. If the organization uses the
latest technology, then its productiveness will be high.
• Production factors : Productivity is related to the
production-factors. The production of all departments should be
properly planned, coordinated and controlled. The right quality of
raw-materials should be used for production. The production
process should be simplified and standardized. If everything is well
it will increase the productiveness.
• Organizational factor : Productivity is directly proportional to the
organizational factors. A simple type of organization should be
used. Authority and Responsibility of every individual and
department should be defined properly. The line and staff
relationships should also be clearly defined. So, conflicts between
line and staff should be avoided. There should be a division of labor
and specialization as far as possible. This will increase
organization's productiveness.
• Personnel factors : Productivity of organization is directly related to
personnel factors. The right individual should be selected for suitable posts.
After selection, they should be given proper training and development.
They should be given better working conditions and work-environment.
They should be properly motivated; financially, non-financially and with
positive incentives. Incentive wage policies should be introduced. Job
security should also be given. Opinion or suggestions of workers should be
given importance. There should be proper transfer, promotion and other
personnel policies. All this will increase the productiveness of the
organization.
• Finance factors : Productivity relies on the finance factors. Finance is the
life-blood of modem business. There should be a better control over both
fixed capital and working capital. There should be proper Financial
Planning. Capital expenditure should be properly controlled. Both over and
under utilization of capital should be avoided. The management should see
that they get proper returns on the capital which is invested in the
business. If the finance is managed properly the productiveness of the
organization will increase.
• Government factors : Productivity depends on government factors. The
management should have a proper knowledge about the government rules
and regulations. They should also maintain good relations with the
government.
• Location factors : Productivity also depends on location factors such as Law
and order situation, infrastructure facilities, nearness to market, nearness to
sources of raw-materials, skilled workforce, etc.
• Management factors : Productivity of organization rests on the
management factors. The management of organization should be scientific,
professional, future-oriented, sincere and competent. Managers should
possess imagination, judgement skills and willingness to take risks. They
should make optimum use of the available resources to get maximum
output at the lowest cost. They should use the recent techniques of
production. They should develop better relations with employees and trade
unions. They should encourage the employees to give suggestions. They
should provide a good working environment, and should motivate
employees to increase their output. Efficient management is the most
significant factor for increasing productiveness and decreasing cost.
 Measurement of Productivity
• The various level in which productivity are measured
are:-
• Productivity at International level:- It is a general
measure to compare productivity of two or more
country in similar aspects.
• Productive at National level:- It is measured by
economists in order to formulate plans and policies
at national level
• National Productivity= Real GDP / Active Population
• Productivity at Industrial level:- Productivity
measurement at industrial level are important to know
economic indicators, manpower analysis, company
performance analysis, forecast of industrial growth
and further condition.
• Industrial Productivity :-
(real value added contribution by industry group)
Economically active population of the industry group

• Productivity at Company / firm level:- It can be

measured to know productivity of the firm itself. It can
measured as Partial Productivity, Total factor
productivity and total productivity
Supply Chain Management
• Supply Chain definition:
• The movement of materials as they flow from their
source to the end customer.
• Supply Chain includes purchasing, manufacturing,
warehousing, transportation, customer service,
demand planning , supply planning and Supply Chain
management.
• It is made up of the people, activities, information
and resources involved in moving a product from its
supplier to customer.
• LESSON TWO
 Operation Strategy
• Operation Strategy is concerned with setting broad policies
and plans for using the resources of a firm to best support
its long term competitive advantages.
• An operation strategy involves decisions that relates to the
design of a process and the infrastructure needed to
support the process.
• Process design includes selection of appropriate
technology, inventory, time of process.
• Infrastructure decisions involves the planning and control
system, quality assurance and control approach.
• Since the goal of organization change over time, the
operation strategy must be designed to anticipate future
needs.
Operations strategy as a competitive weapon
• The main goal of operation strategy via operation management is
to make strong competitive position in the market producing
superior quality products and services in lower price.
• A company competitiveness is defined as its relative position in
comparison to other firms in the local or global market.
• Some of the dimension are cost, quality, speed, depedability,
flexibility.
• Cost or price:- company must be able to make produ t or deliver
service cheap.
• Quality:- company should able to product in accordance
specification and without error.
• Speed:- ability of doing thing quickly in response to customer
demand.
• Dependability:- Ability of firm in supplying product or services in
accordance with promise made to customer.
• Flexibility:- To change operation as well as wide variety of product
to its customer.
 Components of Operation Strategy
• The primary components of operation strategy are as follows:-
• Designing of the production system:- selection of product design,
processing system, inventory plan for finished product.
• Product Design Involves:- Custom product (when a product is designed
according to needs of individuals customers).
• Standard:- When a product is produced in large number adopting the mass
production system.
• Facilities for production and services:-
• It is generally desirable for factories and service facilities to be specialized
in some way , so that , they will not be vulnerable to smaller or more
specialized competitors , that can provide customers with a better set of
lower costs , faster product or service delivery, on-time delivery, high
product and service quality and flexibility .
• Product/Service Design and Development:- After the product is designed
and developed it goes through various stages such as introduction, growth,
maturity and decline .During the development of new products such
activities like operations, marketing, and engineering functions are
considered. The product design has a tremendous impact on product
quality, production cost, numbers of suppliers and levels of inventories.
• Technology Selection and Process Development
• An essential part of operations strategy is the determination of how
products will be produced. This involves deciding and planning every detail
of production processes and facilities. Combining high-technology
equipments like robots, automated warehouse, with conventional
equipments and devising overall production schemes are the challenges
faced by operations manager today.
•
• Allocation of Resources to Strategic Alternatives:-
Most companies have limited resources available for the
production. Cash and Capital funds, capacity, workers,
engineering talent, machines, materials, and other
resources are available in varying degrees to each firm
.These resources must be allocated in ways that maximize
the achievement of the objectives of operations.

• Facility Planning , Capacity, Location and Layout:-

The long range capacity to produce the products /services
for a firm is a part of setting operations strategy .Capital is
required for production capacity. The decisions involved
Regarding the acquisition of land and production
equipments, specialized production technologies to be
develop, and location of new factories have long lasting
effects and are subject to heavy risk.
 Various strategies and their Linkage
• Corporate Strategy:- It is the highest level of strategy. It sets and
describe the long term direction and scope for the whole
organisation.
• Business Strategy:- The strategy concerned with how a particular
business should compete within its industry is defined as business
strategy. Based on corporate strategy, business strategy is shaped.

• Operation strategy:- Organization translate its corporate strategy to

operation strategy via business strategy considering their core
competency. Hence, operation strategy focuses on organizational
performance objectives: cost, quality, flexibility, dependability or
speed.
• In order to maintain the performance objectives organization do
take operation decision regarding process, infrastructure and
capabilities.
 Manufacturing Strategy:-
• A manufacturing strategy refers to set of well- coordinated objectives
action programs that are designed at securing a long term, sustainable
advantages over the firms competitors.

• Manufacturing is the coversion of raw materials are transformed

into finished goods on a large scale. Such finished goods may be used for
manufacturing other, more complex products, such as aircraft, household
appliances or automobiles, or sold towholesalers, who in turn sell them
to retailers, who then sell them to end users and consumers.

• For a manufacturing company to produce goods end items to meet

demand, the availability of sufficient production capacity must be
co-ordinated with the availability of all raw materials and purchased
items from which the end items are to be produced.

• Manufacturing strategy cannot be developed in vacuum as it is affected

by different components inside and outside the firm like other functional
unit, suppliers, market, competitors, etc so there should be
interrelationship among them.
 Service Strategies
• For every service based organization the most critical
components is the overall service delivery system in the
business.
• For eg:- for a hospital, defining factor is how well it provides
the medical services to its clients. For courier based
organisation the key factor is how fast and correctly it delivers
parcel to customer.
• In this regard service strategy ,must be developed keeping in
mind customer as centre, service strategy, systems and
employees
 Unit-Three

Product and Service Design

Concept on product and service design
• Every time an organisation plans to produce a new
product/ service, the key factor is the product and
service design.
• Product and service design plays a vital role in the
success of organisation, hence the design process is
integrated with the organisation strategy.
• When planning a product and service design one
must be aware of customer want and needs,
technology changes, competitive market, quality,
cost process, etc.
 New Product and Design Process
• New product does not mean entirely a new product. In this
reference, the organisation must identify if intends to design
an entirely new product or modify the existing one.
• The differentiation between these two design are very
important to organisation because the risk associated with
making products outside the current product line are
generally greater than those associated with incorporating
new products into existing lines.
• The process of designing new products are as follows:-
 New Product Development Process:-
• Need Identification:- One idea of new product are created(idea Generation
(Internal sources like brain of employee and External sources), the first step of
new product development is to identify the consumer’s needs that should be
satisfied designing and producing the product. For this various research is done
by organisation
• Advance product planning/ Feasibility Analysis:- It is concerned with preliminary
market analysis, creating, alternatives concept of products, clarifying operational
requirement, design criteria and estimating the logistic requirement for
producing, distributing and maintaining the product in market.
• Advance Design:- In this stage, product concept or design concept obtained from
feasibility study are examined technically. It is concerned with developing and
evaluating the design alternative is necessary. Eg Prototype testing
• Product development and Engineering:- In this stage, the design pattern, system
and components required for producing product would be determined. Material,
size, shape, quantity, labour, and so on required for each product would be
determined. In other words, process should be designed in such a manner that
product will be of superior quality at minimum cost.
• Process Design and Development:- In this step, product design
engineers and manufacturing specialist design and develop
system like material acquisition, storing, transportation,
distribution, warehousing, etc. Similarly, they plan and design
system for human resource, control, information , etc.
• Production evaluation and improvement:- Generally, each
product should be evaluated continuously throughout its
lifecycle so that it can be improved in time for the satisfaction
of customers. Data failure refers the process of analyzing
failure product data on the basis of good ones.
• Product use and support:- The ultimate stage of product
design is to consider the supports system for consumers. It
may be:
• Educate the people on the application of products, provide
warranty, repair and after sales service.
Basic concept of Service Design
• Inseparability/Simultaneity of production and
consumption: This refers to the fact that services
are generated and consumed within the same
time frame. Eg: a haircut is delivered to and
consumed by a customer simultaneously unlike,
say, a takeaway burger which the customer may
consume even after a few hours of purchase.
Moreover, it is very difficult to separate a service
from the service provider. Eg: the barber is
necessarily a part of the service of a haircut that
he is delivering to his customer.
 Types of Services

• Core Services: A service that is the primary

purpose of the transaction. Eg: a haircut, the
services of lawyer or teacher.
• Supplementary Services: Services that are
rendered as a corollary to the sale of a
tangible product. Eg: Home delivery options
offered by restaurants above a minimum bill
value.
 Service Design Concept
• Service has a distinct characteristics differing from product.
• Designing of service is not easy like product because service
cannot be stored.
• The designing of service involves following sequences:-
• Identification of customer requirement
• Development of Service Concept:-
• Detail design:- Design of service strategy
• Process technology:- (delivery system/ human resource and
other resources)
• Redesign of process technology
 Difference between Product and Service Design
Bases Product Design Service Design

Tangibility Products are tangible in nature. This tangibility Service are intangible in nature.
makes the whole process of product design a More ever, participation of
specific system. customer is high in the service
design.

Storability Product are not necessarily consumed instantly Service cannot be stored so it
after the production. More over, they need to be involves participants of customer
distributed and stored for later consumption. throughout the process.
Quality In product design, quality can be defined and Quality can be defined and
controlled in terms of data controlled through experienced of
the concerned human resource.
Repeatable The whole product design is easy to repeat as it Service design is very difficult to
follows a standardized process. repeat and varies with customers
and concerned authorities.
Investment More on equipment and inventory are high More on human resource.

Customer It is very much low High customer contact is there.

Contact
Emerging Issues in Product and Service Design

• Value Analysis
• Concurrent Engineering
• Quality Function Deployment
Value Analysis:-
• One of the emerging issues in product and service design
is value analysis or Value engineering.
• Value is a perception hence every customer will have their
own perceptions on how they define value.
• However, overall at the highest level, value is quality,
performance, style, design relative to product cost.
• Value analysis is defined as “an organized creative
approach which has its objective, the efficient
identification of unnecessary cost-cost which provides
neither quality nor use nor life nor appearance nor
customer features.”
• Value analysis focuses engineering, manufacturing and
purchasing attention to one objective-equivalent
performance at a lower cost.
• Value analysis is concerned with the costs added due to inefficient
or unnecessary specifications and features.
• It makes its contribution in the last stage of product cycle, namely,
the maturity stage.
• At this stage, research and development no longer make positive
contributions in terms of improving the efficiency of the functions
of the product or adding new functions to it.
• It can be measured only by comparison with other products which
perform the same function.
• Value is the relationship between what someone wants and what
he is willing to pay for it.
• Value = Function / Cost

• “Value analysis is the study of the relationship of design, function

and cost of any material or service with an object of reducing its
cost through modification of design or material specifications,
manufacture by more efficient process, changes in sources of
supply, elimination or incorporation into another item.”
• The basic framework for value analysis
approach is formed by the following
questions, as given by Lawrence D. Miles:
1. What is the item?
2. What does it do?
3. What does it cost?
4. What else would do the job?
5. What would the alternative cost be?
 Objectives of Value Analysis
• To create better value of product/ service
• To improve the overall competitive position of
a company.
• To identify and eliminate unnecessary cost.
 Concurrent Engineering:-
• Concurrent engineering, also known as simultaneous
engineering, is a method of designing and developing
products, in which the different stages run
simultaneously, rather than consecutively.
• It decreases product development time and also the
time to market, leading to improved productivity and
reduced costs.
• Concurrent Engineering is a long term business strategy,
with long term benefits to business.
• Though initial implementation can be challenging, the
competitive advantage means it is beneficial in the long
term. It removes the need to have multiple design
reworks, by creating an environment for designing a
product right the first time round.
 Quality Function Deployment
• Quality Function deployment is a systematic and
organized approach of taking customer needs and
demand into consideration in the product and
service design.
• QFD is basically a system that translate customer
requirement into appropriate company requirement
at each stage of product design and development.
 Waiting line theory
• It deals with the study of queues or waiting lines, is one of
the most important areas of operation management.
• In organisation or in personal life while travelling by airlines
we have seen people waiting in lines (queues)., to buy ticket
we have to stand line at counter and so on.
• A queue is formed under two conditions:-
• First Conditions is “ Customer waits for getting Service”:- This
means customer have to wait or stand in queue for getting
service.
• Second Condition is : Service facility wait for customer”:-
This means the service facility are having excessive capacity
and are staying idle due to lack of customers. “Service rate of
facility are higher than the customer arrival rate”.
• Therefore the ultimate goal is to achieve the
economic balance between cost of service
capacity and waiting line cost.
• Queuing theory contributes vital information
required for such a decision by predicting
various characteristics of waiting line such as
the average number of customer in queue or
system, time spent by customer in queue or
system, etc.
 Single Channel System
• Under single channel system arrangement of
queuing system, there is one queue for one
service station.
• This arrangement is done where the size of
queue is expected to be small and the service
centre is not able to afford for more than one
counter.
 Unit-Four
Locations decision and Facilities layout
• Location Decisions:-
• Plant location may be understood as the function of
determining where the plant should be located for
maximum operating economy and effectiveness.
• The selection of a place for locating a plant is one of
the problem, perhaps the most important, which is
faced by an entrepreneurs while launching new
enterprise.
• Facility location refers to establishment of physical
unit of production process. The physical unit means
“plant” where man, materials, money, equipment,
machinery are brought together.
 Reasons and Importance of location decisions

• Reasons:-
• The availability and cost of resources like labour, raw materials
and other supporting resources may change.
• The geography of demand may shift. It may be desirable to
change facility location to provide before service to customer.
• When company thinks that there is a possibility of reducing
manufacturing cost by shifting from one location to another
location.
• The volume of business or the extent of market necessities
the establishment of branches
 Importance
• The success of organisation depends upon the location
decision.
• Wrong location decision may doom the business and its
existence forever.
• But it is very much difficult to find perfect location.
• The plant location involves three major activities.
• First to select a proper geographical region.
• Select a specific site with this region.
• Find the actual site.
• Eg:- If one may decide to establish in eastern reason. He may
than select Biratnagar for specific site. The actual site with in
Biratnagar decided plot No 12456 , Ranibari, Ward no 9.
 Factor Affecting Location Decision
(Service and Manufacturing Organisation)
• Nature of the Input (Raw material):- It is beneficiary to locate
factory(plant) near to raw material. If the cost of transportation of
raw material is very high comparison to the transportation of
finished goods, it is suitable to establish the factory near to input
resources. Eg:- sugar factory is established near to sugar cane farm.
• Nature of Products:- It is beneficial to locate the facility nearer to
market or potential customer. Service provided by hotels, schools,
hospitals are usually near the market or the recipients because it is
easy for customer to get (reach ) to get this.
• Nature of technology employed:- Those process who are unfriendly
condition to the people and environment should be located in
remote area eg airport, plastic factory. And which are friendly can
open in public place.
• Availability of labour and their Skill:- Stable labour forces of right kind,
adequate size (number), and reasonable rate with proper attitude towards
works are a few factors which govern the plant location to a major extent.
The purpose of management is to face less strikes or lockouts and to
achieve lower costs per unit of production.
• Transport Facilities:- Basic mode of transportation like road, air, railway,
ship, are based on the nature and size of products. Lot of money is spend
in transportation of raw material and finished goods
• Special grants, regional tax and import barriers:- Government provide
some kinds of tax reduction, low interest loan, special grants to attract
industry in location. Eg In india .
• Opportunity for expansion:- The long range prospective of expansion
opportunity may be considered while making location decision. The
location should be flexible enough to cover the expansion program.
• Availability of Service:- Service like gas, electricity, water, drainage, waste
disposal, communication etc also determine factor affecting location
decision.
 Techniques of location analysis
• The factory location includes the determination of
alternatives site of various geographical regions.
• These alternative size are subjected to various
qualitative and quantitative analysis to find out
adequate alternatives among them. The procedures
in facility location include:-
• Preliminary screening
• Detailed Analysis
 Preliminary Screening
• The importance of various factor affecting the location
depends on the types of products and services.
• The factor like labour, transport facility, availability of
resources, climatic condition, regional regulation,
economic situation has the various degree of effect on the
plant location decision depending upon the types of
products and service.
• Hence the preliminary screening is done to alternative
sites, with regards to these factors affecting the location
decisions.
• The detailed information regarding these factors could be
obtained from local chamber of commerce, local
communities, trade publication, sites visit, etc.
 Detailed Analysis
• After preliminary screening, more detailed
analysis is done. The detail analysis involves
either qualitative technique or quantitative
techniques or both.
• Qualitative techniques:-:- These qualitative
techniques which we not measure in terms of
money.
a. Simple Comparative Chart Analysis
b. Factor Rating Method
 Simple Comparative Chart Analysis
• This method is widely used for analyzing intangible factor affecting the
location decision. The following steps should be followed:
• Identify Critical intangible factors affecting the location decision
• Compare all the alternative location on the basis of these factor
• Select the best location.

Intangible Factors Location A Location B Location C

Labour supply Suitable More suitable Suitable
Attitude of Good Very good Not good
community
Business Climate Unfavorable Favorable More Favorable

• Decision:- Intangible factor B should be selected because it is better

than A and C.
 Point/ Factor Rating Method
• Factor rating is a technique that can be applied to a wide range of
decision ranging from personal (buying car, deciding where to live) to
professional (choosing a career, choosing among job offers). Here it is
used for location analysis.
• A typical location decision involves both qualitative and quantitative
inputs, which tend to vary from situation to situation depending on the
needs of each organisation.
• The following are the steps:-
• Determine which factor are relevant (location of market, water supply,
parking facility, etc)
• Assign a weight. Typically the sum of weight should be 100.
• Decide a common scale
• Score each location alternatives
• Multiple the factor weight by the score of each factor
• Choose the alternative that has highest composite score.
 Example
Factor Wight Alt 1 Alt 2 Alt 1 Weight Alt 2 Wight
score score
Transportati 0.10 100 60 0.10*100=1 6
on 0
Labour cost 0.40 70 90 28 36
Power 0.10 86 92 8.6 9.2
Supply
Gov Rules 0.40 40 70 16 28
Total 1.00 62.6 79.2
composite
score

Alternative 2 Is better because it has higher composite score.

 Quantitative Techniques
• The quantitative models analysis those factors
which can be measured in terms of money.
• Some techniques are:-
• Center Gravity Method
• Location Break Even Analysis Method
• Transportation Method
 Centre of Gravity Method:-
• It is a technique used for analyzing alternative location
on the basis of distance.
• The Center of Gravity Method is an approach that
seeks to compute geographic coordinates for a
potential single new facility that will minimize costs.
• Centre of gravity methods consider geographical
coordinates i.e distance and loads i.e depending upon
industry it can be shipments from suppliers, between
plant or to customer or may be customer or
employees to or from facility.
• The objectives behind centre of gravity method is to
locate the plant where majority of customers find
optimal distance i.e to search the vicinity for the
optimal locations.
 Cost- Volume Profit Analysis
• This can be done numerically or graphically..
• In this at first the fixed cost (long term investment in
sixed assets like purchase of land, construction of
building, machine, etc) and variables cost are calculated.
• The revenue if found (which comes into a firm when it
sells its product at sales price)
• When TC= TR it is called as Break Even.
• An organisation always prefers to have low break even
volume so that its investment can be completely
recovered soon.
 Simulation Method
• In this computer software is used.
• Simulation is a quantitative procedure which
describes a process by developing a model of
that process and then conduct a series of
organized trial ad error experiments to predict
the behaviour of the process over time.
 Transportation Method
• It is a quantitative techniques which helps to solve multiple facility
location..
• This helps to find the best shipping pattern between plants and
warehouse for a particular set of location, each with given capacity.
• The transportation problem involves determining a minimum-cost plan
for shipping from multiple sources to multiple destinations. A
transportation model is used to determine how to distribute supplies to
various destinations while minimizing total shipping cost. In this case, a
shipping plan is produced and is not changed unless factors such as
supply, demand, or unit shipping costs change.
• Transportation costs play an important role in location decision. The
transportation problem involves finding the lowest-cost plan for
distributing stocks of goods or supplies from multiple origins to multiple
destinations that demand the goods. The transportation model can be
used to compare location alternatives in terms of their impact on the
total distribution costs for a system.
• Transportation concerns the movement of products from a source—such
as a plant, factory, or workshop—to a destination—such as a warehouse,
customer, or retail store. Transportation may take place by air, water, rail,
road, pipeline, or cable routes, using planes, boats, trains, trucks, and
telecommunications equipment as the means of transportation. The goal
for any business owner is to minimize transportation costs while also
meeting demand for products. Transportation costs generally depend
upon the distance between the source and the destination, the means of
transportation chosen, and the size and quantity of the product to be
shipped. In many cases, there are several sources and many destinations
for the same product, which adds a significant level of complexity to the
problem of minimizing transportation costs.
 Meaning of Layout
• A plant layout refers to the arrangement of machinery, equipments
and other industrial facilities- such as receiving and shipping
department, tools rooms, maintenance rooms and employee
amenities- for the purpose of achieving the quickest and
smoothest production at least cost.
• The subject of plant layout not only covers the initial layout of
machines and other facilities but encompasses improvement in, or
revision of , the existing layouts in the light of subsequent
developing in the methods of production.
• According to Knowles and Thomson, plat layout involves:-
• A. “ Planning and arranging manufacturing machinery, equipment
and services for the first time completely new plants;
• B. The improvements in layouts already in use in order to introduce
new methods and improvement in manufacturing procedures”.
 Types of Layout
• Product layout or line processing layout
• process layout or functional layout
• cellular layout or Group Technology layout
• fixed position layout
 Product Layout
• Also called as the straight layout or layout for
serialized manufacturers.
• The product layout involves the arrangement of
machines in one line depending upon the sequence
of operation.
• Material are fed into the first machine and finished
product come out of the last machine.
• In between, partly finished goods travels
automatically, from machines to machines, the
output of one machines becoming the input for
next.
• Eg:- Paper mill, sugar mill, noodles, textiles mills.
 Process Layout
• Also called the functional layout batch production layout.
• The process layout involves a grouping together of like
machines in one department. For example, machine
performing drilling operations are fixed in the drilling
department; machines performing casting operations are
grouped in the casting department, and so on.
• In this way there would be a heating department a painting
department , a machinery department .
• A quantity if raw materials is issued to a machine which
perform first operation. This machine may be situated
anywhere in the factory. To next department, the material is
transported.
 Designing process layout
• The distance between department needs to
be short as possible with a view to avoiding a
long- distance movement of materials.
• Though like machines are grouped in one
department, the department themselves
should be located in accordance with the
principle of sequence of operation. Eg:- in a
steel plant, melting casting and twisting.
• Convenience for inspection and Convenience
for supervision
 Fixed Position Layout
• As the term itself implies, the fixed position layout
involves the movement of men and machines to the
product which remain stationary.
• In this type of layout, the material or major
components remain in fixed location, and tools,
machinery and men as well as other pieces of
material are brought to this location.
• Eg Air craft abd generators, ships .
 Cellular Layouts/ Group Technology
• Thus group layout is a combination of the product layout and
process layout.
• Group technology (GT) is the analysis and comparisons of
items to group them into families with similar characteristics.
GT can be used to develop a hybrid between pure process
layout and pure flow line (product) layout.
• This technique is very useful for companies that produce
variety of parts in small batches to enable them to take
advantage and economics of flow line layout.
• The application of group technology involves two basic steps;
first step is to determine component families or groups.
• 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.
• Capacity:- It is viewed as the amount of output
a system is capable of achieving over a specific
period of time.
• Capacity Represents the maximum rate of
output.
 Unit - 6
Aggregate planning
 Aggregate planning
• Attempts to match the supply of and demand for a product or
service by determining the appropriate quantities and timing of
inputs, transformation, and outputs.
• Aggregate planning is an intermediate term planning decision. It is
the process of planning the quantity and timing of output over the
intermediate time horizon (3 months to one year).
• Aggregate planning Is essentially a “big picture” approach of
planning. We can use the term aggregate plan because the plans
are developed for produce lines or product families rather than
individual ones.
• Eg:- Aggregate plan in a firm producing television sets specifies
how many television sets are to be produced without identifying
them by size or model.
• Within the intermediate time horizon (6 to 12 month) of the
production plan, it is usually not feasible to increase capacity by
buidling new facilities or purchasing new equipment. However, it is
feasible to hire or lay off workers, increase or reduce the working
hours, sub contract, etc
 Aggregate Planning Strategies
• The variables of the production system are labour, materials and capital. More
labour effort is required to generate higher volume of output. Hence, the
employment and use of overtime (OT) are the two relevant variables. Materials help
to regulate output. The alternatives available to the company are inventories, back
ordering or subcontracting of items.
• These controllable variables constitute pure strategies by which fluctuations in
demand and uncertainties in production activities can be accommodated by using
the following steps:
1. Vary the size or the workforce: Output is controlled by hiring or laying off
workers in proportion to changes in demand.
2. Vary the hours worked: Maintain the stable workforce, but permit idle time
when there is a slack and permit overtime (OT) when demand is peak.
3. Subcontract: Upward shift in demand from low level. Constant production
rates can be met by using subcontractors to provide extra capacity.
4. Vary inventory levels: Demand fluctuations can be met by large amount
of inventory.
Aggregate Planning Options
• There are two aggregate planning option to
achieve the objectives of aggregate planning:-

• Demand Option
• Capacity Option
 Demand Option:-
• In this the operation manager should know about all the demand option
explained as follows:-
• Pricing:- Pricing is a primary option that helps to manage or manipulate the
fluctuation of demand. For eg:- Bakery offers 50% off in the sale of bakery items
in the night too.
• Promotion:- Different promotional activities like advertising, personal selling,
publicity, public relation etc should be used to push demand of product and
services.
• New Demand:- Product and service firms now a days use innovative ideas to
tackle the demand fluctuations for their product and service. Eg:- Airlines offer
family trip package, Sasto ticket of Buddha airlines.
• Complementary product/ services:- Product and service often add
complementary product and service along with regular product/ service to
manage the fluctuations of demand and keep the customers intact. For Eg:- Hotel
service provides noodles and chips as complementary with beverages items.
• Reservations: Many product and service provide use reservation to match future
product/ service capacity with future product/ service demand. Eg:- Tata Nano
have takes pre order in advances.
 Capacity Option:-
• Capacity option includes option that are used in
increasing or decreasing capacity of the firm to
match the fluctuation of demand. The capacity
option related to aggregate planning are explained :-
• Hiring and layoff of employee:- Employee are hired
and layoff as per the fluctuation in demand.
• Overtime and under time:-The capacity option
involves overtime and under timing the workforce as
per the demand.
• Use of part time or temporary labour if demand is
peak.
• Subcontracting
 Aggregate Planning in Services
• The aggregate planning process is different for services in the following ways:
• Most services cannot be inventoried. It is impossible to store an airline seat, hotel room, or hair
appointment for use later when demand may be higher. When the goods that accompany a service
can be inventoried, they typically have a very short life. Newspapers are good for only a day;
flowers, at most a week; and cooked hamburgers, only ten minutes.
• Demand for services is difficult to predict. Demand variations occur frequently and are often
severe. The exponential distribution is commonly used to simulate the erratic demand for
services--high-demand peaks over short periods of time with long periods of low demand in
between. Customer service levels established by management express the percentage of demand
that must be met and, sometimes, how quickly demand must be met. This is an important input to
aggregate planning for services.
• Capacity is also difficult to predict. The variety of services offered and the individualized nature of
services make capacity difficult to predict. The "capacity" of a bank teller depends on the number
and type of transactions requested by the customer. Units of capacity can also vary. Should a
hospital define capacity in terms of number of beds, number of patients, size of the nursing or
medical staff, or number of patient hours?
• Service capacity must be provided at the appropriate place and time. Many services have branches
or outlets widely dispersed over a geographic region. Determining the range of services and staff
levels at each location is part of aggregate planning.
• Labor is usually the most constraining resource for services. This is an advantage in aggregate
planning because labor is very flexible. Variations in demand can be handled by hiring temporary
workers, using part-time workers, or using overtime.
Unit - 8

The Quality System

• Meaning of Quality:-
• Traditional strategies of business organisation have tended to
emphasize cost minimization or product differentiation. But
most company today focus on superior quality which form the
business strategy.
• Quality may be defined as the sum total of features of a
product which influences its ability to satisfy a given demand.
• Quality of product and services is not determined by
producing firms, it is determined by customers.
• The quality of product or service is a customer perception of
the degree to which the product or service meets his or her
expectation.
 Dimension of Product Quality:-
• Performance:- How will the product or service perform and meet the
customer intended use. Example:- the speed of sports car.
• Features:- The special characteristics that appeal to customers. Eg:-
the power steering of an automobile.
• Reliability:- The possibility of break down or need for repairs. Higher
reliability lesser be the breakdown.
• Serviceability:- The speed, cost and convenience of repairs and
maintenance. Higher the serviceability better will be the quality of
product.
• Appearance:- The effect of human sense, the look, taste, smell or
sound.
• Customer Service:- The treatment received by customers before,
during and after the sale.
• Safety:- How well the product protects users before, during and after
use.
 Cost of Quality
• Cost of quality are those cost incurred by an organisation in
preventing non conforming product and services, in evaluating
process of products and services and cost associated with
failure to confirm with requirement.
• Cost of quality is a methodology that allows an organization to
determine the extent to which its resources are used for
activities that prevent poor quality, that appraise the quality of
the organization’s products or services, and that result from
internal and external failures. Having such information allows
an organization to determine the potential savings to be
gained by implementing process improvements.
• Quality-related activities that incur costs may be divided into
prevention costs, appraisal costs, and internal and external
failure costs.
 Types of Quality cost:-
• Cost of Prevention:- Cost of any activity which is needed to be
carried out for preventing faults in the product/ service is called
prevention cost. Eg:- Quality training, Inspection and test planning,
Pre production quality control.

• Cost Of Appraisal:- Cost associated with appraisal activities in an

organisation is deemed as cost of appraisal. Those include such
activity as tests, inspections, verifications and checks to identify
failure or errors.

• Cost of failure:- During the process of transformation there arrises

many situation where failure occurs. Cost associated with these
failure activities is termed as cost of failure. Loss of production due
to to defective supplied ,aterials, product re call, product returns,
marketing errors.
 TOTAL QUALITY MANAGEMENT
• TQM is a comprehensive and structured approach to
organizational management that seeks to improve the
quality of products and services through ongoing
refinements in response to continuous feedback.
• There are three key Philosophy in this approach:-
• First is never ending push to improvement which is
referred to as a continuous improvement.
• Second:- It is the involvement of everyone in the
organisation
• Third:- Goal of customer satisfaction, which means
meeting or exceeding customer expectations.
Historical Evolution of Total Quality Management
• It can be explained as follows:-
• Quality Inspection:- Quality has been an Integral component of human
civilization for as long as can remember. However, the first stage on this
development is relation to operation management can be seen in 1910.
• This is the time period which Ford Motors company rolled out its production
line and employed number of inspectors to inspect the quality of cars.
• The inspectors were ordered to compare and test the product with the project
standard at all stages of operators management.

• Quality Control:- Quality control defines the second stage of evolution. With
industrial advancement, quality began to be controlled through written
specification, measurement and standardization.
• As manufacturing system turned more complex, quality began to be verified
by inspections rather than workers.
• Development of quality chart and acceptance sampling helped to prosper this
stage.
• Quality Assurance:- The third stage of evolution, i.e quality
assurance incorporated all the previous stage to make sure
that a product or service will satisfy customer needs.
• Comprehensive quality manuals, use of cost of quality,
process control, auditing of quality system, etc. where
developed in this stage.
• All these development progressed quality control to the
quality assurance.

• Total Quality Management (TQM):-

• TQM or the present and fourth stage of development focuses
on proper under standing and implementation of quality
concepts in every aspects of business activities.
• As per the quality management must be incorporated in every
level, stage of an organisation.
 Principles Of TQM
• Be Customer focused: Whatever you do for quality improvement, remember that
ONLY customers determine the level of quality. Whatever you do to foster
quality improvement, training employees, integrating quality into processes
management, ONLY customers determine whether your efforts were worthwhile.
• Employee Involvement – Ensuring total employee involvement in achieving goals
and business objectives will lead to employee empowerment and active
participation from the employees in decision making and addressing quality related
problems. Employee empowerment and involvement can be increased by making
the workspace more open and devoid of fear.
• Continual Improvement – A major component of TQM is continual improvement.
Continual improvement will lead to improved and higher quality processes.
Continual improvement will ensure companies will find new ways and techniques in
producing better quality products, production, be more competitive, as well as
exceed customer expectations.
• Strategic Approach to Improvement – Businesses must adopt a strategic approach
towards quality improvement to achieve their goals, vision, and mission. A strategic
plan is very necessary to ensure quality becomes the core aspect of all business
processes.
• Integrated System – Businesses comprise of various departments with
different functionality purposes. These functionalities are interconnected
with various horizontal processes TQM focuses on. Everyone in the
company should have a thorough understanding of the quality policies,
standards, objectives, and important processes. It is very important to
promote a quality work culture as it helps to achieve excellence and
surpass customer expectations. An integrated system ensures continual
improvement and helps companies achieve a competitive edge.
• Decision Making – Data from the performance measurement of processes
indicates the current health of the company. For efficient TQM, companies
must collect and analyze data to improve quality, decision making
accuracy, and forecasts. The decision making must be statistically and
situational based in order to avoid any room for emotional based
decisions.
• Communications – Communication plays a crucial role in TQM as it helps
to motivate employees and improve their morale during routine daily
operations. Employees need to be involved as much as possible in the day
to day operations and decision making process to really give them a sense
of empowerment. This creates the environment of success and unity and
helps drive the results the TQM process can achieve.
 Quality Control:-
• Quality control is the process of control where
the management tries to conform the quality
of product accordance with the
predetermined standard and specification.
• According to Alferd and Betty:- “Quality
Control may be defined as the industrial
management technique or group of technique
by means of which products of uniform
acceptance quality are manufactured”.
 Objectives:-
• To see whether the products conforms to the
predetermined standard and specification and
satisfies the needs of customers.
• To develop quality consciousness in the
various section of the manufacturing units.
• To reduce the wastages of raw materials, men
and machine during production process.
 Advantages of Quality Control:-
• Reduction in operating cost and losses.
• Quality consciousness.
• Greater customer satisfaction.
• Improvement in product quality and design.
• Reduction in inspection.
 JIT (Just in Time)
• JIT is a production system whereby inputs are delivered to the
production process just as they are needed.
• The benefits is that it eliminates costly inventory activities.
• Just-in-time manufacturing (colloquially referred to as JIT production
systems), actual orders dictate what should be manufactured, so that
the exact quantity is produced at the exact time that is required.
• Just-in-time (JIT) manufacturing is a production model in which items
are created to meet demand, not created in surplus or in advance of
need.
• The JIT concept was described by Henry Ford in his 1923 book, My Life and Work: According to
Him “We have found in buying materials that it is not worthwhile to buy for other than
immediate needs. We buy only enough to fit into the plan of production, taking into
consideration the state of transportation at the time. If transportation were perfect and an
even flow of materials could be assured, it would not be necessary to carry any stock
whatsoever. The carloads of raw materials would arrive on schedule and in the planned order
and amounts, and go from the railway cars into production. That would save a great deal of
money, for it would give a very rapid turnover and thus decrease the amount of money tied up
in materials.”
 Six Sigma
• The statistical representation of Six Sigma
describes quantitatively how a process is
performing.
• To achieve Six Sigma, a process must not produce
more than 3.4 defects per million opportunities.
• The fundamental objective of the Six Sigma
methodology is the implementation of a
measurement-based strategy that focuses on
process improvement and variation reduction
through the application of Six Sigma
improvement projects.
 ISO 9000:-
• The ISO 9000 series of quality - related documents was
created by the International Organization for
Standardization (ISO) as international requirements for
quality management systems.
• Now that ISO 9000 is in more than 178 countries with over
one million registrations it is common in the business world.
• The ISO 9000 standards are a set of international quality
management system standards and guidelines. The term
ISO9000 refers to a group of quality management standards
which are process standards (not product standards). They
were originally introduced as ISO 9000:1987.
 7 tools for the Quality
• Flow chart
• Check sheets
• Histograms
• Fishbone Diagram
• Pareto Analysis
• Scatter Diagram
• Control Chart
• If you need details explanation See this link :-
http://www.tutorialspoint.com/management_con
cepts/basic_quality_tools.htm
 7 tools for the quality
• Flowcharts. A flowchart can help you see the relationship
between the process steps. You can use this information to
optimize the process and to see where problems and defects
can occur. Flowcharts are useful in process improvement
projects or to document any process.
▪Check sheet
It is form used to record the frequency of occurrence of certain
product or service characteristics related to quality.
Histogram: It is a graphical representation of a given
sets and are used to visualize the data generated in
check sheet.
Scatter Diagram:- A scatter diagram is a plot of two
variables showing whether they are related or not.
Eg:- No of defective produced versus speed.
•Pareto Analysis:-
"20% of the people cause 80% of the problems",
The Pareto Chart is a simple to use and powerful graphic to identify where the
majority of problems in a process are originating.
The value of the Pareto Principle for a project manager is that it reminds you to focus
on the 20% of things that matter. Of the things you do for your project, only 20% are
crucial. That 20% produces 80% of your results. Identify, and focus on those things
first, but don't entirely ignore the remaining 80% of the causes.
Fish bone diagram:- It is based on the philosophy that “ for every problem there
must be the reason”. After identifying the problem (effect) the root cause
should identified for its permanent solution.
A fishbone diagram is useful in brainstorming sessions to focus conversation. After the
group has brainstormed all the possible causes for a problem, the facilitator helps the
group to rate the potential causes according to their level of importance and diagram a
hierarchy.
Control Chart:- Control chart is the best tool for monitoring the performance
of a process. These types of charts can be used for monitoring any processes
related to function of the organization.