Operation management

Module one
1.1 Functional systems of an organization
An organization is construct of four subsystems viz. marketing, production, finance and
personnel.

• Marketing
• Finance
• Personnel

1.2 Operation management

Production/operation management is the process which combines and transforms the
various resources used in the production of operation subsystems of the organization
into value added products/services in a controlled manner as per the policies of the
organization.

The set of Interrelated activities which are involved in production of certain products is,
if the same concept is extended to service management then the corresponding set of
management activities is called as operations management.

The management decisions are classified into strategic decisions, tactical decisions and
operational decisions.

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 Strategic
decisions
(top level)

Tactical decisions
(middle level)

Operational
decisions
(bottom level)

1.3 System concept of production

System is a collection of interrelated entities-

Input Operation management Output

Materials

Laborer TRANSFORMATION goods/services

Equipment

Capital

The techniques and procedures used in the production/operation subsystems are as follows:
a. Forecasting
b. Location and layout techniques
c. Product design and analysis
d. Production control techniques
i) Aggregate planning

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 ii) Master production schedule
iii) Material requirement planning
iv) Capacity planning
v) Scheduling and control
• Line balancing
• Line of balance
• Single mk schedule
• Flow shop schedule
• Johshop schedule
e. Maintenance management
f. Feedback and control techniques
i) Quality control
ii) Inventory control

1.4 Types of production system

Line of balance- the same sequence of operation using specialized equipment usually
positioned along a production line,
Example- auto assembly, assembly of TV sets etc.
A flow shop can be classified into continuous flow shop and intermittent flow shops.

Job shop-
This is a conversion process in conversion units of different types of products follow different
sequences different shops. if subsystem has more flexibility but this system results into more
setup time, more in process inventory, complex scheduling, varying quality etc.

Batch Manufacturing
This produces some intermediate varities of products with intermediate volumes. The volume
of any single product may not be sufficient to justify the use of a dedicated set of equipment for
its production. The range of possible Operations is much narrower than in a job shop.

The Branist-
With a set of well-defined tasks in terms of resources are required and time phase. E.g. Dam
construction, starting new industries etc.

Strategic Management-
The process of making decisions about their future in this Complex and changing environment
is called strategic management.

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This management has two phases:
i) Formulation of strategy
ii) Implementation of strategy

Strategy formulation is concerned with-

i) Defining the organization's mission
ii) Establishing long- and short-range objectives to achieve the organization's mission
iii) Selecting the strategy to the used in achieving the organization's objective

Strategy implementation institutes of organization structure, system and processes with

chosen strategy.

Corporate Strategies
1. Stable growth strategy
a. Concentric diversification
b. Vertical diversification
c. Horizontal diversification
d. Conglomerate diversification
2. Endgame strategy
3. Retrenchment strategies
a. Turnaround strategy
b. Desire Investment strategy
c. Liquidation strategy
4. Combination strategy
a. Simultaneous strategy
b. Sequential strategy

Generic Competitive Strategies

A list of generic competitive strategies is as follows-
a. Overall cost leadership strategy
b. Differentiation strategy
c. Focus strategy

Functional Strategies
The following form of strategies are under this-
a. Marketing strategies
b. Financial strategies
c. Personnel strategies

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Gross Domestic Product (GDP)
GDP of a nation to the sum of values of goods and services produced in that nation in
year.
India has very low per capita GDP. after liberalization many multinational companies are
coming to India to set up their business units here to avail the raw material and cheap
labor. this gives increased opportunities to India and hence improve the GDP of India.

World Class Manufacturing

World class manufacturing concept is a recent origin the following attributes of world
class manufacturing are aim to fulfill the customer demand-
a. Product with high quality
b. Product with competitive price
c. Product with enhanced features
d. Product with wider variety
e. Products delivered with short time period
f. Products delivered in time
g. Substitute and Complimentary fulfilling products

Time Balancing
The main objective of flow-controlled inflow shop is to balance the Assembly time. The
Assembly time is represented in the form of a residence diagram, a sample is given-

10 5
2 5

5 6

1 4 7

3 6
8

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 The precedence diagram specifies the order or sequence in which the activities must be
performed. Each circle is a node and the number inside each circle identifies particular
operation. The number outside the circle represents the duration of operation. Arrow
indicates the direction of flow of operation.
Cycle time= production time/demand per period

Objectives of Assembly Line Balancing

The objectives of assembly line balancing are to subdivide the network into several sub
networks without violating the precedence relationship and allocating operations to
each station without exceeding the cycle time.

This type of problem comes under combinational category. Hence, we have to use some
heuristic for this purpose-
a. Ranked Position Weight (RPW) Method
b. COMSOAL.

Rank Positional Weight Method-

This method assigns those jobs first whose followers have the longest total time. The
positional weight of the work element is its own processing time plus the processing
time of all the following work element. In this the work element with the highest
positional weight is detected and assigned to the current station. The generalized
algorithm started earlier can be used using the maximum rank positional weight as the
selection criterion.

The COMSOAL Algorithm-

Computer operations for assembly line (COMSOAL) was developed by Arcus. Hence
simulation method is used. We can choose the solution that satisfies are need the most.

The following conditions must be satisfied-

a. All its immediate processions are already assigned
b. Its processing time is less than or equal to the unassigned cycle time

Unlike RPW method COMSOAL is interactive method. This is demonstrated using the
Assembly network which is given in RPW method.

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Modes for Assembly Line Balancing
The object assembly line balancing is to minimize the number of workstations to
improvise the balancing efficiency.

Integer Programming Model to Minimize Number of Workstations

Here, an integer programming model to minimize the number of workstations is
presented.
The notations used there as follows-
Ai- a non-negative integer numeral which is the work station number in which task is
assigned (Ai indicates that the task is not assigned any station)
C- cycle time
N- number of tasks to be assigned
H- highest station number (equal to N)
Z- Task number (1≤ Z≤ N)
J- Station number (1≤ j≤ N)
Tj- time required to perform tasks
Wj- the set of all tasks which can be assigned to station by mixture of the precedence
constraints
Pi- the set of tasks over which must immediately proceed task Z
Minimize Z=An
Subject to ….
In the above model-
a. The objective function minimizes the number of workstations on equivalently,
AN, which is the station to which the unique terminal task N is assigned.
b. Constraints, set 1, ensures that the sum of the tasks time assigned to each
station is less than or equal to the cycle time c.
c. Constraints, set 2, ensures that all precedences of a given task are assigned to
same preceding station on to the current station before it is obtained.

Model to minimize balancing delay

Hence a model is developed to minimize the balancing delays.

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 Module 3
Maintenance Planning and Control
Objective- If a firm wants to be in business competivity, it has to take decision on
whether to replace the equipped on to retain old equipment by taking the cost of
maintenance and operation into account

Maintenance Activities Can Be Classified As

1) Preservative maintenance (PM)
2) Break down maintenance

Basic Reasons for Replacement

There are two reasons-
a. Physical impairment
Physical impairment refers only to changes to Physical condition of the machine
itself.
b. Obsolescence
Obsolescence is mainly due to impairment of the tool of production, mainly
improvement in technology.

It is not economical to produce products with the same machine under any of the case
of wear and tear.
So, machines are to be replaced periodically.

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 The replacement study can be classified in two categories-
a. Deterministic type of items that that deteriorate with time.
b. Simple probabilistic model for items which fail completely.

Determination of Maintenance Crew Size

In breakdown maintenance breakdown are to be attended immediately by maintenance
mechanics otherwise it will lead to stoppage of production. So, determination of
maintenance screw size is an important decision.
The crew size can be achieved by using mathematical models or simulation.

Crew Size Determination Using Analytical Queuing Model

In this case of determination of number of maintenance mechanics using analytical
queuing model is demonstrated through an example.

Total Productive Maintenance (Tpm)

TPM is a management system for optimizing the productivity of manufacturing
equipment store through systematic equipment maintenance involving employees at all
levels. This is a maintenance program equipment maintenance involving employs at all
levels. The goal of TPM is to mainly increased production while at the same time
increasing employees moral and job satisfaction.

Objectives of Tpm
1. Creating collective culture relating attainment of maximum efficiency.
2. Using the system so as to prevent losses and to reach zero defects and zero
breakdown in the manufacturing process.
3. Involving the entire work force from bottom to top.
4. To obtain zero losses by integrating the activities of teams with the production
system.

Wastes Eliminated In TPM

TPM Eliminates 6 big losses which are as follows-
1. Breakdown which can result in long expensive repair.
2. Setups and change overs which can take much longer time than needed
3. Idling and minor stoppages which are hard to quantify and add up to big losses
4. Reduce equipment speed which results in gradual determination of equipment
cycle times
5. Startup losses which can take much time to steady state after a change

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Equipment Maintenance Techniques
TPM uses for equipment maintenance and techniques, these are-
1. Preventive maintenance
2. Corrective maintenance
3. Maintenance prevention

Benefits of Tpm
The following benefits can be achieved by TPM-
1. Increased equipment productivity
2. Reduced equipment downtime
3. Increased plant capacity
4. Lower maintenance and production cost
5. Improved return on investment
6. Rectified customer complaint
7. Reduce accidents
8. Improved team work and a less adversarial approach between production and
maintenance
9. General increased involvement of the workforce etc.

Pillars of Tpm
TPM has 5 pillars which will enhance its success. these are-
1. 5 S
2. Jishu Hozen (autonomous maintenance)
3. Kaizen
4. Plant maintenance
5. Quality maintenance

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 Module 4

Modern Production Management Tools

1. Just in time manufacturing
The primary objective of JIT is to achieve zero inventory within an organization
as well as throughout the entire supply chain.

Basic Principles of JIT -

The key theme of JIT is to work without buffer stock to achieve this objective,
identity every point where buffer stock normally occurs. Then critically examine
the reason for such stock.
The following reasons are there for maintaining high stock-
a. unpredictable deliveries
b. poor quality from suppliers
c. increased variety of materials
d. M/C breakdown
e. labor absentism
f. frequent M/C settings
g. variation of operations capabilities
h. schedule changes

To avoid high stock system- cause-remedy may be taken into consideration.

Another way of achieving JIT is the combo system may be adopted.

2. Computer integrated manufacturing

Integrating all the manufacturing activities using computer is called computer
integrated manufacturing. there are two aspects of CIM. They are organized
part and operational part.
1. Organized part-
a. corporate services
b. finance
c. business planning
d. manufacturing
2. Operational part-
These consists of the following-
i) Computer aided engineering (CAE)
a. Computer aided process planning (CAPP)
b. Computer aided planning (CAP)

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 c. Computer aided quality control (CAQC)
d. Computer aided design (CAD)
e. Material resource planning (MRP)

ii) Computer aided manufacturing (CAM)

a. Flexible manufacturing assembly (FMA)
b. Direct numerical control (DNC)
c. Data acquisition system (DAS)
- production data acquisition
- machine data acquisition
d. Area computers (AC)
e. Cell computer (CC)

Different types of computers which are used in CIM as follows:

1. Mainframes
2. mini computers
3. micro computers
4. personal computers
5. PLCs
6. Robotic computers
7. Workstations

Total quality management

The goal of any industry is to provide a product or service at the most economical cost,
ensuring full customer satisfaction this can be achieved by total quality management.
The scope of total quality management is applied to the following industries-
a. Marketing
b. Engineering
c. Purchasing
d. Manufacturing
e. Mechanical
f. Shipping
g. Installation and product service

Benefits of Total Quality Management

- customer satisfaction
- economic improvements

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 Customer satisfaction-oriented benefits
- improvement in product quality
- improvement in product design
- improvement in product flow
- improvement in quality consciousness
- improvement in product service
- improvement in Marketplace acceptance

Economic improvement-oriented benefits

- reduction in in operating costs
- reduction in operating losses
- reduction in field service cost
- production in liability expense
Fundament aspects affecting quality
a. Market
b. Money
c. Management
d. Men
e. Motivation
f. Material
g. machines and mechanism
h. modern information method
i. mounting product requirements

Quality control activities during production cycle

This can be classified into-
- new design control
- incoming materials control
- product control

New Design Control

a. selling quality products
b. engineering quality product
c. manufacturing quality products

Incoming materials control

a. buying quality materials
b. receiving quality materials

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 c. manufacturing quality parts

Product control
a. shipping quality products
b. installing and servicing quality products

Operating Quality Cost-

These can be classified into:
- costs of control
- cost of failure to control

Costs of control
This can be classified into
- cost of prevention
- cost of appraisal

a. Cost of prevention
The following activities involve cost of prevention-
1. quality planning
2. process control
3. design and development of quality information equipment
4. quality training of workforce
5. product design verification
6. system development

b. cost of appraisal
the following are here-
1. test and inspection of purchased material
2. laboratory acceptance testing
3. Inspection
4. quality audits
5. maintenance and collaboration of quality information test
6. product engineering reviews
7. field tests

Costs of failure to control

This can be categorized as-
a. Cost of internal failure

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 b. Cost of external failure

ISO 9000 Series

ISO 9000 standards expect firms to have a quality manual that meet ISO guidelines
document etc.
This have five International standards
1. ISO 9000
2. ISO 9001
3. ISO 9002
4. ISO 9003
5. ISO 9004

Standard Objective task

ISO 9000 Selection and use of quality management and

quality assurance standards.

ISO 9001 It has 20 elements covering design,

development, production etc. applicable for
industries making their own design

ISO 9002 It has 18 elements covering production and

installation. It has some 9001 without the
first two tasks.

ISO 9003 It has 12 elements covering final inspection

and testing for Laboratories and warehouses.

ISO 9004 The this provides guidelines to the interpret

the quality management and quality
assurance.

Benefits of ISO 9000 series-

1. this gives competitive advantage in global market
2. consistency in quality
3. documentation of quality procedure
4. it ensures adequate and regular quality training for all members of the organization
5. it helps the customer to have cost effective purchase procedure
6. helps in increasing productivity
7. gives level of job satisfaction

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Steps in ISO 9000 registration-

1. preparation of quality manual to cover all the elements in the selected model.
2. preparation of procedures and shop loan instructions which are used at the time to
implementation.
3. Preparation of procedures and shop floor instructions which are used at the time of
implementation
4. selection of a registration and application to obtain the certificate

PokeYoke
This means mistake proofing. The Poke Yoke devices are developed based on the
answers to the following questions related to products-
- what is the defect?
- when is the defect discovered?
- what are the standard elements involved in making the part?
- what mistakes were made?
- why are the mistakes made?

Classification of poke Yoke-

Steps of PokeYoke-
1. select a pilot process or a troublesome area of the facility of interest
2. ask the workers to make a less of most common mistakes that result in the loss of
materials
3. workers should use Pareto analysis to rank order these errors
4. workers should rank errors according to their importance and impact on the process
and the environment
5. workers should develop Poke Yoke devices in in consultation with engineers
6. the implementation Team should analyze the errors, frequency and other respective
cost before applying any poke yoke method.

Benefits and limitation of Poke Yoke-

Benefits:
1. reduction in waist and associated machining as non-conforming material is identified
at each stage rather than an inspection stage between leads to production in in
inventory holding.
2. improvement in customer satisfaction
3. improvement in employee’s relationship as it encourages more involvement of
operations and team members

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 Limitations:
• It increases the time of inspection.

Kaizen
Kaizen means continuous improvement.
Kai= change, Zen =good.

In any organization 3 things should happen simultaneously i.e. maintenance, Innovation

and Kaizen.

Key elements of Kaizen-

1. elimination of waste and inefficiency
2. The Kaizen 5s framework of good housekeeping
3. Standardization

Steps of implementation of Kaizen Blitz-

1. defining the project goal and identifying the problem
2. forming of a team

Guidelines of Kaizen team-

1. get to Gemia (real life problem)
2. get hands-on experience
3. get the facts about Gemba
4. abandon fixed ideas
5. focus on process and not on person
6. ask what can we do today?
7. ask why? 5 x be classified with the answer and label and take the root cause corrective
action.
8. think ‘can do’ do and how to make it work
9. form multidisciplinary teams
10. assign one full time Kaizen manager per 100 employees and 1 Kaizen workshop per
hundred employees per month

Benefits of Kaizen-
1. realization of immediate result
2. incorporation of vision and action-oriented tasks
3. It fosters communication amongst employees
4. facilitate team concept within an organization

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Business process engineering
This is defined as fundamental rethinking and radical redesign of business processes to
achieve dramatic improvement in critical, contemporary measures of performance such
as cost, quality and speed of products/ services delivered/ provided by an organization.

Steps of BPR-
1. development of process vision and Determination of process objectives
2. definition of processes to Re-engineered
3. measurement of existing processes
4. identification of Information Technology application
5. design of prototype and implementation

Application of BPR-
It can be applied to all situations of their dramatic improvement is required.

Supply chain management

In the Global competitiveness the customer can source his goods and services from
anywhere in the world. This objective can be met through proper supply chain
management. One can call the supply chain management as the integrated logistics
system.

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Lean manufacturing
This is a systematic approach to identify and to eliminate wastes of all non-value-added
activities through continuous improvement of that is being adopted by world-class high-
performance firms to produce remarkable results. The traditional manufacturing way of
thinking has been “cost+profit= selling price”. But in the Global competitiveness
customers more or less influences the selling price of a product. Hence lean way of
thinking,
Selling price-cost= profit.
The only way to survive in the market is to decrease caused by eliminating all forms of
ways.

Lean manufacturing achieves the following-

1. production in cycle time
2. on-time delivery
3. improvement in quality
4. reduction in scrap rework

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 Components of Lean manufacturing-
The following are the components of Lean manufacturing-
1. standardized production
2. continuous improvement in production
3. adoption of JIT in production
4. design for manufacturing
5. Poke Yoke adoption
6. cellular manufacturing
7. single minute exchange d i e
8. flexible workforce

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