Chapter 1 - Introduction to Operations Management - set the direction for the entire company;

Operation Management they are broad in scope and long-term in

- Business function responsible for planning, nature
coordinating, and controlling the resources - Less frequent
needed to produce products and services for a B. Tactical decision
company - Focus on specific day-to-day issues like
Role of Operation Management resource needs, schedules, & quantities to
❖ Transforms inputs to outputs produce
➢ Inputs - resources such as people, material, - are frequent
and money
➢ Outputs - goods and services
Strategic Decisions Tactical Decisions
● Broad in scope ● Narrow in scope
● Long-term ● Short-term
● All encompassing ● Concerning a
small group of
Ex. What are the unique issues
features of our product
that make us Ex. Who will work the
competitive? 2nd shift tomorrow?
Today’s OM Environment
● Customers demand better quality, greater speed,
❖ To add value
and lower costs
➢ Increase product value at each stage
● Companies implementing lean system concepts
➢ Value added is the net increase between
– a total systems approach to efficient operations
output product value and input material
● Recognized need to better manage information
value
using ERP and CRM systems
❖ Provide an efficient transformation
● Increased cross-functional decision making
➢ Efficiency - performing activities well for
OM in Practice
least possible cost
● OM has the most diverse organizational function
Services Manufacturers ● Manages the transformation process
● Intangible product ● Tangible product ● OM has many faces and names such as;
● Cannot be ● Inventoried ○ V. P. operations, Director of supply chains,
inventoried ● Low customer ○ Manufacturing manager
● High customer contact ○ Plant manager, Quality specialists, etc.
contact ● Longer response ● All business functions need information from OM
● Short response time time in order to perform their tasks
● Labor intensive ● Capital intensive OM Across the Organization
● Most businesses are supported by the functions of
Similarities operations, marketing, and finance
● use technology ● The major functional areas must interact to
● have quality, productivity, & response issues achieve the organization goals
● must forecast demand OM Across the Organization – con’t
● can have capacity, layout, and location issues ● Marketing is not fully able to meet customer
● have customers, suppliers, scheduling and needs if they do not understand what operations
staffing issues can produce
- Manufacturing often provides services which ● Finance cannot judge the need for capital
provides tangible goods investments if they do not understand operations
- Some organizations are a blend of concepts and needs
service/manufacturing/quasi-manufacturing ● Information systems enables the information flow
- Quasi-Manufacturing characteristics include throughout the organization
- Low customer contact & Capital ● Human resources must understand job
Intensive requirements and worker skills
OM Decisions ● Accounting needs to consider inventory
- All organizations make decisions and follow a management, capacity information, and labor
similar path standards
A. Strategic Decisions
Chapter 2 - Plant Location and Layout
Plant Location
- Choice of region or the selection of a particular
site for setting up a business or factory
- Plant location or the facilities location problem
is an important strategic level decision-making
for an organization
- One of the key features of a conversion
process (manufacturing system) is the
efficiency with which the products (services)
are transferred to the customers. This fact will
include the determination of where to place the
plant or facility.
- Before a location for a plant is selected, long
range forecasts should be made anticipating
future needs of the company.
- The purpose of the location study is to find an
optimum location one that will result in the
greatest advantage to the organization
2.2 Need for Selecting a Suitable Location
Reason
● When starting a new organization, i.e., location,
choice for the first time
● In case of existing organization
● In case of Global Location
Selection Criteria for Location
● Natural or climatic conditions
● Availability and nearness to the sources of raw
material
● Transport costs
● Access to market
● Availability of infrastructural facilities
● Availability of skilled and unskilled labor and
technically qualified and trained managers
● Banking and financial institutions are located
nearby
I. In Case of Location Choice for the First
Time or New Organizations
Cost economies are always important while
selecting a location for the first time, but should keep in
the mind the cost of long-term business/organizational
objectives
The following are the factors to be considered
while selecting the location for the new organization:
1. Identification of Region
- Organizational objectives along with the
various long-term consideration about
marketing, technology, internal
organizational strengths and
weaknesses, region-specific resources
and business environment, legal-
governmental environment, social
environment and geographical
environment suggest a suitable region
for locating the operations facility.
2. Choice of a site within a region
- Once the suitable region is identified,
the next step is choosing the best site
from an available set. Choice of a site is
less dependent on the organization’s
long-term strategies. Evaluation of
alternative sites for their tangible and
intangible costs will resolve facilities-
location problems.
3. Dimensional Analysis
- If all the costs were tangible and
quantifiable, the comparison and
selection of a site is easy. The location
with the least cost is selected. In most
of the cases intangible costs which are
expressed in relative terms than in
absolute terms. Their relative merits
and demerits of sites can also be
compared easily. Since both tangible
and intangible costs need to be
considered for a selection of a site,
dimensional analysis is used.
II. In case of location choice for existing
organizations
In this case, a manufacturing plant has to fit
into a multi-plant operations strategy. That is,
additional plant location in the same premises and
elsewhere under following circumstances:
1. Plant manufacturing distinct products.
2. Manufacturing plant supplying to specific
market areas.
3. Plant divided on the basis of the process or
stages in manufacturing.
4. Plants emphasizing flexibility.
III. In case of global location
Because of globalization, multinational
corporations are setting up their organizations in India
and Indian companies are extending their operations in
the other countries.
In case of global locations there is scope for:
● Virtual Proximity
● Virtual Factory
Reasons for a global/foreign location
A. Tangible Reasons
- Reaching the customer
B. Intangible Reasons
- Customer-related reasons
- Organization Learning- related reasons
- Other strategic reasons
Factors Influencing Plant Location/Facility
Locations

Location Theories
Alfred Weber’s Theory of the Location of Industries
(1909)
- Put forth the first developed general theory of
industrial location
- His model took into account several spatial
factors for finding the optimal location and
minimal cost for manufacturing plants.
The point for locating an industry that minimizes costs
of transportation and labor requires analysis of three
factors:
1. The point of optimal transportation based on
the costs of distance to the ‘material index’ -
the rational of weight to intermediate products
(raw materials) to finished product
2. The labor distortion, in which more favorable
sources of lower cost of labor may justify
greater transport distances.
3. Agglomeration and degglomerating
● Agglomeration or concentration
- Occurs when there is sufficient demand
for support services for the company
and labor force, including new
investments in schools and hospitals.
- Also supporting companies, such as
facilities that build and service machines
and financial services, prefer closer
contact with their customers
● Degglommeration
- Occurs when companies and services
leave because of over concentration of
industries or of the wrong types of
industries, or shortages of labor, capital,
affordable land, etc. Weber also
examined factors leading to the
diversification of an industry in the
horizontal relations between processes
within the plant.
Plant Layout
- Physical arrangement of production facilities
- Configuration of departments, work centers and
equipment in the conversion process
- Floor plan of the physical facilities, which are
used in production
Objectives of Plant Layout
- Primary goal: maximize the profit by
arrangement of all the plant facilities to the best
advantage of total manufacturing of the product
1. Streamline the flow of materials through the
plant
2. Facilitate the manufacturing process
3. Maintain high turnover of in-process inventory
4. Minimize materials handling and cost
5. Effective utilization of men, equipment, and
space
6. Make effective utilization of cubic space
7. Flexibility of manufacturing operations and
arrangements
8. Provide for employee convenience, safety, and
comfort.
9. Minimize overall production time
10. Maintain flexibility of arrangement and
operation
11. Facilitate the organizational structure
Principles of Plant Layout
1. Principle of integration
2. Principle of minimum distance
3. Principle of cubic space utilization
4. Principle of flow
5. Principle of maximum flexibility
6. Principle of safety, security and satisfaction
7. Principle of minimum handling
Classification of Layout
I. Process Layout
- Recommended for batch production
- All machines performing similar type of
operations are grouped at one location in the
process layout e.g., all lathes, milling
machines, etc. are grouped in the shop and will
be clustered in like groups.
II. Product Layout
- Machines and auxiliary services are located
according to the processing sequence of the
product.
- If the volume of production of one or more
products is large, the facilities can be arranged
to achieve efficient flow of materials and lower
cost per unit.
III. Combination Layout
- Possible where a time is being made in
different types and sizes.
- Machinery is arranged in a process layout but
the process grouping is then arranged in a
sequence to manufacture various types and
sizes of products.
 - Sequence of operations remains same with the
variety of products and sizes.
III. Fixed Position Layout
- Also called project type of layout
- Material or major components remain in a fixed
location and tools, machinery, men and other
materials are brought to this location
- Suitable when one or a few pieces of identical
heavy products are to be manufactured and
when the assembly consists of large number of
heavy parts, the cost of transportation of these
parts is very high
IV. Group Layout (Cellular Layout)
- Combination of product and process layout
- Combines the advantages of both layout
system
Service Layout
- Should provide for easy entrance to these
facilities from the freeways
- Well organized packing areas, easily
acceptable facilities, well designed walkways
and parking areas are some of the
requirements of service facility layout
Organization of Physical Facilities
I. Factory Building
- Factor which is the most important
consideration for every industrial
enterprise
- Like skin and bones of a living body for
an organization
Following factors are considered for an industrial
building:
A. Design of the building
- Should designed so as to provide a
number of facilities-such as lunch
rooms, cafeteria, locker rooms,
creches, libraries, first-aid and
ambulance rooms, material handling
facilities, heating, ventilation, air-
conditioning, etc.
Factors to consider
1. Flexibility
2. Product and Equipment
3. Expansibility
4. Employee facilities and service area
B. Types of buildings
1. Single Storey Buildings
2. Multi Storey Buildings
II. Lighting
Points to consider:
● For uniform light distribution, install an
independent switch for the row of lighting
fixtures closest to the windows. This allows the
lights to be switched on and off depending on
whether or not natural light is sufficient.
● To prevent glare, avoid using highly shiny,
glossy work surfaces.
● Use localized lighting to achieve the desired
level for a particular fine job.
● Clean light fixtures regularly and follow a
maintenance schedule so as to prevent
flickering of old bulbs and electrical hazards
due to worn out cables.
● Avoid direct eye contact with the light sources.
This is usually achieved by positioning them
properly. The use of diffusers is also quite
effective.
III. Climatic Conditions
- Control of the climatic conditions at the
workplace is paramount importance to the
workers health and comfort and to the
maintenance of higher productivity. With
excess heat or cold, workers may feel very
uncomfortable, and their efficiency drops. In
additio, this can lead to accidents
IV. Ventilation
- Dynamic parameter that complements the
concept of air space.
 - For a given number of workers, the smaller the
work premises, the more should be the
ventilation
V. Work-related Welfare Facilities
- Offered at or through the workplace can be
important factors. Some facilities are very
basic, but often ignored, such as drinking-water
and toilets. Others may seem less necessary,
but usually have an importance to workers far
greater than their cost to the enterprises.
1. Drinking Water
2. Sanitary Facilities
3. First-aid and Medical Facilities
4. Rest Facilities
5. Feeding Facilities
6. Child-care Facilities
7. Recreational Facilities
Chapter 3 - Material Handling
What is Material Handling?
- Haynes defines “Material handling embraces
the basic operations in connection with the
movement of bulk, packaged and individual
products in a semi-solid or solid state by means
of gravity manually or power-actuated
equipment and within the limits of individual
producing, fabricating, processing or service
establishment”.
- does not add any value to the product but adds
to the cost of the product and hence it will cost
the customer more.
- also defined as ‘the function dealing with the
preparation, placing and positioning of
materials to facilitate their movement or
storage’.
- art and science involving the movement,
handling and storage of materials during
different stages of manufacturing. Thus the
function includes every consideration of the
product except the actual processing operation.
- In many cases, the handling is also included as
an integral part of the process. Through
scientific material handling considerable
reduction in the cost as well as in the
production cycle time can be achieved.
Objectives of Material Handling
1. Minimise cost of material handling.
2. Minimise delays and interruptions by making
available the materials at the point of use at
right quantity and at the right time.
3. Increase the productive capacity of the
production facilities by effective utilisation of
capacity and enhancing productivity.
4. Safety in material handling through
improvement in working conditions.
5. Maximum utilisation of material handling
equipment.
6. Prevention of damages to materials.
7. Lower investment in process inventory.
Principles of Material Hadling
A. Planning principle
- All handling activities should be planned.
B. Systems principle
- Plan a system integrating as many handling
activities as possible and co-ordinating the
full scope of operations (receiving, storage,
production, inspection, packing,
warehousing, supply and transportation).
C. Space utilisation principle
- Make optimum use of cubic space.
D. Unit load principle
- Increase quantity, size, weight of load
handled.
E. Gravity principle
- Utilise gravity to move a material wherever
practicable.
F. Material flow principle
- Plan an operation sequence and equipment
arrangement to optimize material flow.
G. Simplification principle
- Reduce, combine or eliminate unnecessary
movement and/or equipment.
H. Safety principle
- Provide for safe handling methods and
equipment.
I. Mechanisation principle
- Use mechanical or automated material
handling equipment.
J. Standardisation principle
- Standardise method, types, size of material
handling equipment.
K. Flexibility principle
- Use methods and equipment that can perform
a variety of task
and applications.
L. Equipment selection principle
- Consider all aspect of material, move and
method to be utilised.
M. Dead weight principle
- Reduce the ratio of dead weight to pay load in
mobile equipment.
N. Motion principle
- Equipment designed to transport material
should be kept in motion.
O. Idle time principle
- Reduce idle time/unproductive time of both MH
equipment and manpower.
P. Maintenance principle
- Plan for preventive maintenance or scheduled
repair of all handling equipment.
Q. Obsolescence principle
- Replace obsolete handling methods/equipment
when more efficient methods/equipment will
improve operation.
R. Capacity principle
 - Use handling equipment to help achieve its full
capacity.
S. Control principle
- Use material handling equipment to improve
production control, inventory control and other
handling.
T. Performance principle
- Determine efficiency of handling performance
in terms of cost per unit handled which is the
primary criterion.
Selection of Material Handling Equipment
- important decision as it affects both cost and
efficiency of the handling system. The following
factors are to be taken into account while
selecting material handling equipment.
1. Properties of the Material
- Whether it is solid, liquid or gas, and in
what size, shape and weight it is to be
moved, are important considerations
and can already lead to a preliminary
elimination from the range of available
equipment
2. Layout and Characteristics of the Building
- Another restricting factor is the
availability of space for handling. Low-
level ceiling may preclude the use of
hoists or cranes, and the presence of
supporting columns in awkward places
can limit the size of the material-
handling equipment. If the building is
multi-storeyed, chutes or ramps for
industrial trucks may be used. Layout
itself will indicate the type of production
operation (continuous, intermittent, fixed
position or group) and can indicate
some items of equipment that will be
more suitable than others. Floor
capacity also helps in selecting the best
material handling equipment.
3. Production Flow
- If the flow is fairly constant between two
fixed positions that are not likely to
change, fixed equipment such as
conveyors or chutes can be
successfully used. If, on the other hand,
the flow is not constant and the direction
changes occasionally from one point to
another because several products are
being produced simultaneously, moving
equipment such as trucks would be
preferable.
4. Cost Considerations
- This is one of the most important
considerations. The above factors can
help to narrow the range of suitable
equipment, while costing can help in
taking a final decision. Several cost
elements need to be taken into
consideration when comparisons are
made between various items of
equipment that are all capable of
handling the same load. Initial
investment and operating and
maintenance costs are the major cost to
be considered. By calculating and
comparing the total cost for each of the
items of equipment under consideration,
a more rational decision can be reached
on the most appropriate choice.
5. Nature of Operations
- Selection of equipment also depends on nature
of operations like whether handling is
temporary or permanent, whether the flow is
continuous or intermittent and material flow
pattern-vertical or horizontal.
6. Engineering Factors
- Selection of equipment also depends on
engineering factors like door and ceiling
dimensions, floor space, floor conditions and
structural strength.
7. Equipment Reliability
- Reliability of the equipment and supplier
reputation and the after sale service also plays
an important role in selecting material handling
equipment.
Evaluation of Material Handling System
FACTORS FOR EVOLUTION OF MATERIAL
HANDLING EQUIPMENT
cost factors include investment cost, labour cost, and
anticipated service hours per year, utilization, and unit
load carrying ability, loading and unloading
characteristics, operating costs and the size
requirements. The effectiveness of the material
handling system can be measured in terms of the ratio
of the time spent in the handling to the total time spent
in production. This will
cover the time element. The cost effectiveness can be
measured by the expenses incurred per unit weight
handled. the efficiency of materials handling mainly
depends on the following factors:
I. efficiency of handling methods employed for
handling a unit weight through a unit distance,
Ii. efficiency of the layout which determines the
distance through which the materials have to be
handled,
Iii. utilisation of the handling facilities, and (iv)
efficiency of the speed of handling.
Two Categories of Material Handling
A. Fixed path equipment which moves in a fixed
path.
 B. Variable path equipment has no restrictions in
the direction of movement although their size is
a factor to be given due consideration trucks,
forklifts, mobile cranes and industrial tractors
belong to this category.
Five Major Categories:
1. Conveyors
- useful for moving material between two fixed
workstations, either continuously or
intermittently.
- Mainly used for continuous or mass production
operations—indeed, suitable for most
operations where the flow is more or less
steady.
- Conveyors may be of various types, with
rollers, wheels or belts to help move the
material along: these may be power-driven or
may roll freely. The decision to provide
conveyors must be taken with care, since they
are usually costly to install; moreover, they are
less flexible and, where two or more converge,
it is necessary to coordinate the speeds at
which the two conveyors move.
2. Industrial Trucks
- more flexible in use than conveyors since they
can move between various points and are not
permanently fixed in one place.
- most suitable for intermittent production and for
handling various sizes and shapes of material.
- There are many types of truck-
petrol-driven, electric, hand-powered, and so on. Their
greatest advantage lies in the wide range of
attachments available; these increase the trucks ability
to handle various types and shapes of material.
3. Cranes and Hoists
- The major advantage of cranes and hoists is
that they can move heavy materials through
overhead space. However, they can usually
serve only a limited area. Here again, there are
several types of crane and hoist, and within
each type there are various loading capacities.
- Cranes and hoists may be used both for
intermittent and for continuous production.
4. Containers
- either ‘dead’ containers (e.g. Cartons, barrels,
skids, pallets) which hold the material to be
transported but do not move themselves, or
‘live’ containers (e.g. wagons, wheelbarrows or
computer self-driven containers). Handling
equipment of this kind can both contain and
move the material, and is usually operated
manually.
5. Robots
- Many types of robot exist. They vary in size,
and in function and maneuverability. While
many robots are used for handling and
transporting material, others are used to
perform operations such as welding or spray
painting. An advantage of robots is that they
can perform in a hostile environment such as
unhealthy conditions or carry on arduous tasks
such as the repetitive movement of heavy
materials
.
Guidelines for Effective Utilization of MHE
1. Eliminate handling whenever possible
2. Sequence operations in a logical manner
3. Use gravity wherever possible.
4. Install a regular preventive maintenance
programe
5. Selection of handling equipments, criteria of
versatility and adaptability must be a governing
factor.
6. Weight of unit load must be maximum.
7. Work study aspects.
8. Non-productive operations should be kept at a
minimum .
9. Standardize the handling equipments to the
extent possible
10. Location of stores should be as close as
possible
11. Application of OR techniques can be very
effective in optimal utilisation.
12. The system designed should be simple and
safe to operate.
13. Avoid any wasteful movements- method.
14. Ensure proper coordination.
Relationship Between Plant Layout and Material
Handling
- There is a close relationship between plant
layout and material handling. A good layout
ensures minimum material handling and
eliminates rehandling in the following ways:
1. Material movement does not add any value to
the product so, the material handling should be
kept at minimum though not avoid it. This is
possible only through the systematic plant
layout. Thus a good layout minimises handling.
2. The productive time of workers will go without
production if they are required to travel long
distances to get the material tools, etc. Thus a
good layout ensures minimum travel for
workmen thus enhancing the production time
and eliminating the hunting time and travelling
time.
3. Space is an important criterion. Plant layout
integrates all the movements of men, material
through a well designed layout with material
handling system.
4. Good plant layout helps in building efficient
material handling system. It helps to keep
material handling shorter, faster an economical.
A good layout reduces the material
backtracking, unnecessary workmen
movement ensuring effectiveness in
manufacturing. Thus a good layout always
ensures minimum material handling.