III UNIT

OPERATIONS MANAGEMENT
OPERATIONS MANAGEMENT

Availability of amenities:- :- Locations with good external amenities such as housing,

shops, community services, communication systems etc… are more attractive than those
located in the remote areas.
Availability of services:- Electricity, water, gas, drainage, and disposal of waste are
some of the important services that need to be considered while selecting a location.
Safety requirements:- some units such as nuclear power stations and other chemical and
explosive factories may present potential threat to the surrounding neighbourhood . so
firms should ensure that such units are located in remote areas where the damage will be
minimum in case of an accident.
Political interference:- This applies more in case of public enterprises, many a time,
political considerations over ride the economic rational in assigning an industry to a
particular location.
Site cost:- The management of the firm should ensure that the cost of the site is
reasonable for the benefits that it is going to provide.

PRODUCT DESIGN, PROCESS DESIGN AND PRODUCTION DESIGN

Product Design : One way for manufacturers to satisfy customers and gain a differentia advantage
is through product design which refers to the arrangement of elements tha collectively form a good
or service.
Product Design is concerned with the form and function of a product. Form desig involves the
determination of what a product would look like, i.e., the shape and appearanc of the product, what
it will be made of (product structure) and how it will be made (proces design). Functional design
deals with what function the product will perform and how performs.
Functional Design is concerned with the first and foremost requirement of a good produ i.e., the
product should effectively perform the function for which it is developed. For example for a
television set, the picture quality (video) and the sound quality (audio) is more import than the
appearance of the cabinet in which the picture tube is fixed. Form Design is concerned with the
appearance, and aesthetic considerations and al the size, volume and weight of the product which
are secondary to the performance of product. s of opetyne
Process Design: Process design is concerned with the overall se required to achieve the design
specifications of the product. It spe

Product Design:
Concerned with form and function of a product. It refers to the arrangement
of elements or parts that collectively form a product.
Process Design: Concerned with the overall sequence of operations required
tion processes are key elements in successful production and operations
the product and services to be produced as well as the design and selection of production today's
global economy. Also, design of the productive system depends largely on the design of processes.
For all companies, whether high tech, low tech or no tech (i.e., degree of technology used) product
design plays an important role in the profitability and their very survival. link between product
design and the success of the organisation. Those organisations which The essence of any
organisation is the product or services it offers. There is an obvious have well-designed products
are more likely to realise their goals than those with poorly designed products. Hence organisations
have a vital stake in achieving good product design.

 PROCESS SELECTION

Process selection refers to the way production of goods or services is organised. It is the basis for
decisions regarding capacity planning, facilities (or plant) layout, equipments and design of work
systems. Process selection is necessary when a firm takes up production of new products or
services to be offered to the customers.
Three primary questions to be addressed before deciding on process selection are: (i) How much
variety of products or services will the system need to handle?
(ii) What degree of equipment flexibility will be needed?
(iii) What is the expected volume of output?

PRODUCTION AS A SYSTEM

A system is understood as a whole which cannot be taken apart. It must be studied as a whole.
While looking from this perspective, we may note that there are three systems:
(i) production system,
(ii) conversion sub-system, and
(iii) control sub-system.
Read Table 1.1 for definitions of the three concepts.
Table 1.1: Production System Concepts
Inpu
Environment Legal/Political Social, Economic Technological
Market Competition Product Inform Customer Des
Primary Re Materials & Personnel
Capital Ass Capital (Mc Utilities
Concept
1. Production system
2. Conversion sub-system
3. Control sub-system
Definition
A system whose function is to convert a set of inputs into a set of desired outputs.
A sub-system of the larger production system where inputs are converted into outputs.
A sub-system of the larger production system where a portion of the output is monitored for
feedback signals to provide corrective action if required.
Production system receives inputs in the form of materials, personnel, capital, utilities and
information. These inputs are changed in a conversion sub-system into desired products and
services, which are called the outputs. A portion of the output is maintained in the control sub-
system to determine if it is acceptable in terms of quantity, cost and quality. If the output is
acceptable, no changes are required in the system. If, however, the appropriate standards are not
met, managerial corrective action is required. The control sub-system ensures a uniform level of
system performance by providing feedback information so that corrective action may be taken by
managers. Exhibit 1.1 illustrates the production system.

TYPES OF PRODUCTION

Productivity is defined as the rate at which the goods and services are produced. It refers to
the relationship between the inputs and the outputs. It is calculated as a ratio between the
amount produced and the amount of resources used in the production.
Productivity =output/input
Productivity is different from production. Productivity is the rate of production of goods and
services while production refers to the actual amount of goods and services produced.
Methods of production:- The methods of production can be of the following types.
o Job production
o Batch production
o Continuous or mass production
Job production:- The production of small number of a product at a time, which may
or may not be repeated in future is known as job production or unit production.
The products are manufactured to meet the specific requirements of a customer.
Generally, a special job order is made and it is connected with some special
machinery, special models and projects. These are produced in very small quantity
according to the customer requirements.
Ex:- Lifting equipments, pressure vessels, processing plants etc
Batch production:- The production of sufficient number of identical items, mostly
repeated with time intervals is known as batch production. It is also known as quantity
production.
There are several standard components which are used in different
Operations Management

machineries . Batch production is mainly concerned with the production of such items
to meet a specific demand. When a particular batch is manufactured, the plant should
be available for the production of similar products. This type of production needs
general purpose equipments and is very useful in manufacturing machine tools,
paints, drugs etc
Mass production:- The production of large number of identical items, continuously
is known as mass production.
In this case, the production is carried out throughout the day and plant
facilities are fully engaged. Production goes on the same sequence of process . It is
associated with large quantity production and with high rate of demand.
The main advantage of this method of production is the lowest unit cost
of production.
The products such as Tv’s, air conditioners, cars, scooters, and others
are manufactured through mass production.

PLANT LOCATION
Introduction:
The location where firms set up their operation is simply called as plant location. All the
manufacturing and service organizations carefully plan where they should locate their plants and
service facilities because location will have a serious affect on the success of an organization.
Firms conduct plant location analysis where they evaluate different locations and finally choose
an optimum location to start their operations.
Importance:
Selection of a plant location is a strategic decision for any organization. Therefore, it has to
be made after considering all the factors which have a bearing on it. Location decisions are
important for several reasons.
1. The location of a plant will fix the production technology and cost structure.
2. The significance of plant location depends on the size and nature of the business.
3. The location of the facility affects the company’s ability to serve its customers quickly and
conveniently.

Factors affecting plant location:-

The following factors are to be considered in locating the plant since they influence the prosperity
of the enterprise. availability of raw material
proximity to market availability of fuel, power and water availability of transport and
communication facilities climate and topography of the region supply of labour prevailing wage-
rate existence of similar enterprises banking and credit facilities social attitude of people of the
region local taxes and legislation
Urban Site
Production and Operations Management-
A big city has all the facilities which favor a location for a plant. For example,:
• Transport facilities are no problem;
• Labour is available in plenty;
• Municipal services for water, sewage disposal, public health and education are
available;
• All type of technical and commercial institutions and universities for the training of
the staff and workers are available;
• Banking, repair and related services are available;
• Facilities for contracting out a portion of the work are available
• A large local market is available;
• High advertising value is available.
These are some of the advantages available in a big city. On the other hand, sites in big
cities suffer from certain drawbacks. These are:
• The cost of land is exorbitant;
• House taxes, water taxes, sanitation taxes and other similar taxes and rates are fairly high;
• Labour unions are many and labour unrest is frequent.
• The cost of labour is high;
• Because of limited space, factory buildings are awkwardly shaped, ill-lighted and ill- ventilated;
• Several restrictions have been imposed in regard to smoke and the disposal of effluents. Thus, all
the three types of sites, namely village, suburban and city, offer advantages as well as
disadvantages. Sometimes, it becomes a problem for an entrepreneur to choose one from among
these three. A city location is preferable for small plants. A country location is best suited for very
large plants, provided that skilled labour can be easily drawn from
nearby places.

I LOCATION MODELS

Facility Location
The steps invol 1. List the ma 2. Rate each relative im the higher
3. Rate each on each f 4. Compute for each 5. Compute Decision: S ratings as the ch Illustration
factor ratings ass location rating f factors consider
Since the choice. Factor
1. Tax adverb
2. Suitability
3. Proximity
4. Proximal
5. Adequacy

Rural Site
The facilities available at a village site are not as many as are found in a city; but they are more
attractive. For example,
• Land is available at cheaper rates;
• The rates and taxes are negligible;
Spacious layout available and open spaces are possible; Advantages of single-storey buildings are
available;
• Low wages for unskilled workers but high wages for skilled workers because they have to be
mobilized from elsewhere;
• Fewer labour troubles;
• Avoidance of danger from fire and other hazards resulting from the operations of neighboring
units;
• Avoidance of undesirable neighbors;
• Absence of restrictions on smoke and disposal of waste.
• Against this, a country site raises such problems as:
• Lack of supply of skilled workers;
• Lack of civic amenities for employees;
• Lack of transport facilities.
(ii) Suburban Site
Suburban sites offer a compromise between the city and the village and have the advantages of
both. They are less costly. All the rail and road transport facilities are available; illages: quarters
for workers are provided by the
TYPES OF LAYOUT
A layout essentially refers to the arranging and grouping of machines which are meant to produce
goods. Grouping is done on different lines. The choice of a particular line depends on several
factors. The methods of grouping or the types of layout are:
(i) Process layout or functional layout or job shop layout;
(ii) Product layout or line processing layout or flow-line layout;
(iii) Fixed position layout or static layout;
(iv) Cellular manufacturing (CM) layout or Group Technology layout;
(v) Combination layout or Hybrid layout.
These methods are discussed in the following paragraphs.

Process Layout
Also called the functional layout, layout for job lot manufacture or batch production a grouping
layout, the process layout involves a grouping together of like machines in one department.

As in this type of production, two or more types of products are manufactured in lots (i.e., batches)
at regular interval, therefore this is known as batch production. Most of the engineering concerns
are adopting batch production. In this type of production, different products are manufactured and
stocked and then sold on receipt of orders.

The items generally made under batch production are cars, drugs, forging machines, LPG
cylinders, lathe machines, presses, etc.
Advantages:
1. While comparing with mass production, it requires less capital. 2. If demand for one product
decreases then production for another product may be increased, thus the risk of loss is very less.
3. Comparing with job production, it is more advantageous commercially.

PRODUCT LAYOUT

Also called the straight-line layout or layout for serialized manufacture, the product the sequence
of layout involves the arrangement of machines in one line, depending upon operations. Material
are fed into the first machine and finished products come out of the last machine. In between,
partly finished goods travel automatically, from machine to machine, the output of one machine
becoming the input for the next. It is a feast for the eyes to watch the way sugarcane, fed at one
and of the mill, comes out as sugar the other end. Similarly, in paper mill, bamboos are fed into the
machine at one end and paper comes out at the other
end.
lines
In product layout, if there are more than one line of production, there are as many of machines.
The emphasis here, therefore, is on special purpose machines in contrast to general purpose
machines, which are installed in the process layout. Consequently, the investment on machines in a
straight line layout is higher than the investment on machines in
functional layout Exhibit 9.2 illustrates the product layout.

LINE-OF-BALANCE
A technique used in production scheduling and control to determine
at a review date,
not only how many of an item should have been completed by that date, but also
how many should have passed
through the up- stream operation stages by that time, so as to ensure the completion of the required
delivery schedule.
LOB Technique
Production and Operations Management
The Line of Balance technique is used in production scheduling and control to determine, at a
review date, not only how many (quantity) of an item should have been completed by that date, but
also how many should have passed through the previous (upstream) operation stages (processing
steps) by that time so as to ensure the completion of the required delivery schedule.
Sol
LOB is a charting and computational technique for monitoring and controlling products and
services that are made to meet specific delivery schedules. The concept of LOB is similar to the
time phased order point system (TPOP) and MRP system (Material Requirements Planning).
Starting from the delivery schedule (date) for the final product and the quantity, the product
structure tree is drawn on a horizontal scale, off-setting lead time on a time scale, reflecting the
previous processing steps or stages of production. The processing steps or production stages may
include purchased parts, machined parts, sub-assemblies and major assembly operations to support
delivery schedule for the finished product. The LOB chart shows the quantity of parts,
components, sub assemblies, major assemblies and end products produced at every stage and at
any given review date. It indicates the quantity of goods or services that should have been
completed at every production stage or processing step and at any given time, so as to meet the
delivery date for the end product.
The LOB technique shows the desired progress as well as the actual progress achieved on the LOB
chart.

VALUE ANALYSIS

Also called as value engineering, value analysis is an important activity that typically occurs
jointly between purchasing and methods engineering. However, purchasing people have a very
definite role to play, in value analysis, hence the topic is included as a part of purchasing function.
This activity is aimed at modifying the specifications of materials, parts, and products to reduce
their costs while reducing their original function. Focus is placed on the value of the product -
what function is to be performed by the product - and how that value can be achieved at the lowest
cost. Although value analysis is applied to all phases of the production process, primary attention
is devoted to the materials and components going into the product.
Value engineering typically follows a rather close structured pattern of analysis. A value analysis
team or committee takes a product, which has been designed or produced and attempts to define
what function the product should fulfil. Once the function has been identified, the analysis
committee examines the possible ways of performing the function at the lowest cost. 
VALUE ANALYSIS/VALUE ENGINEERING

It is a structural process that seeks to improve a product design while maintaining its functional
characteristics and marketing appeal to customers. Many companies now invite supplier input
during product design by enhancing their value engineering functions to include suppliers on
project teams.
Potential benefits of value engineering projects are :
(i) Reduction in average purchasing costs by 25 per cent
(ii) Significant rate of return
(iii) Improved customer satisfaction
(iv) Discovery of ways to simultaneously enhance performance and reduce costs and (v) Higher
employee morale due to better teamwork and creativity.
Techniques of value engineering: Value engineering begins by trying to improve functional
characteristics rather than reduce costs. An initial focus on cost tends to result in lower quality and
reduced performance due to cheaper materials. Instead, reduced costs emerge as a by-product of
the value
Value engineering/Value analysis in product design: Value engineering or value analysis is
concerned with the improvement of design and specifications at various stages such as research,
development, design and product development. Benefits of value engineering
are:
(i) Cost reduction.
(ii) Less complex products.
(iii) Use of standard parts/components.
(iv) Improvement in functions of the product.
the best which designee Value
(v) Better job design and job safety.
(vi) Better maintainability and serviceability.
(vii) Robust design.
Value engineering aims at cost reduction at equivalent performance. It can reduce costs to the
extent of 15% to 70% without reducing quality. While value engineering focuses on preproduction
design improvement, value analysis, a related technique seeks improvements during the production
process