UNIT I

Production: - The conversion of raw material into finished goods and services is known as
Production.

Production Management: - Step by step conversion process through chemical or

mechanical change to enhance the utility of raw material according to the specification of
consumer as per scheduled demand at min cost.

Production process: - Process by which resources are transformed into a different and more
useful commodity or service. This concept of production is however limited to only
manufacturing. Production requires a wide variety of input, depending on the nature of
product.

Random Fluctuation

INPUT OUTPUT

MAN ADJUSTMENT MONITOR

MONEY PROCESS GOODS
NEED OUTPUT
MATERIAL SERVICES
MACHINE

COMPARISON
ACTUAL VS. DESIRED

Random Fluctuation: - Production random fluctuation these are unplanned, uncontrollable

influence that cause different in actual and expected output.

Ex: - (i) Late delivery of raw material.

(ii) Strikes.

(iii) Lock out.

Production Management: - Production management deals with decision making to production

process so that the resulting goods & services are produced according to specification in the
amount and by the schedule demand at min cost.
Operation Management: - The aspect of a business organization that is responsible for
producing goods and services. A function or system that transform inputs into output or greater
value.

The Business function responsible for planning, coordinating and controlling the
resources needed to produce and service for a company

“The Science and art of ensuing goods and services are created and delivered successfully to
customers”

Why Operations Management?

 OM is an integrative body of knowledge, whose skills are needed in industries as diverse

as health care, education, telecommunication, hospitality, food service, banking,
consulting and manufacturing.
 OM is one of the three major functions of any organization, and its integrally related to
all the other business functions.
 To know how goods and services are produced.
 To understand what operations manager do.
 Systematic direction, control and evaluation of the entire range of processes that
transform inputs into finished goods or services.
 Environmental factors-culture, political, and market influences.
 Inputs-HR, capital, materials and land energy, information, customer.

Objectives of Operations Management.

 Right Quality
 Right Quantity.
 Predetermined time.
 Pre Established cost (manufacturing cost)

Production System: - Production Process is an act of manufacturing something with the object
of satisfying demand.
“The processing of raw material into finished goods is known as production system”.

Types of Production System:- There are two types of Production System:-

(1) Receipt and storage of raw materials.

(2) Means of Transportation.
(3) Inspection of in- process and finished goods.
(4) Storage of finished goods.
(5) The production management is active throughout by the information and control function.
Intermittent Production System: -The goods are manufacturing specially fulfill made by
customers rather than stock. Intermittent systems are those where the production system or
facilities are flexible enough to handle a wide variety of product and sizes.

Chief Characteristics of Intermittent system:-

(i) Most products are produced in small quantities.

(ii) Machine equipment is laid out by process.
(iii) Work load are generally unbalanced.
(iv) Highly skilled operators are required for efficient uses of machines and equipment.
(v) In –Process inventory is large.
(vi) Flexible to suit production varieties.

Mechanism for Intermittent System:-

(i) This type of system covers specialization of every type and sub- assemblies.
(ii) Due to variety of orders and different lot sizes.
(iii) Proper regulation and close inspection.
(iv) Storage facilities are to be provided at each operation stage.

FEATURES OF INTERMITTENT SYSTEM:-

(1) Demand can be discontinuous.

(2) All operation stages may not be balanced.
(3) Elaborate sequencing and scheduling is required.
(4) Needs high investment.
(5) Planning, routing and scheduling changes with fresh orders.
(6) Storage is necessary at each stage of production process.
(7) Can adjust to new situation and specifications.
(8) Inspection is not in line with production.
(9) Items are manufactured according to order.
 (A) Job Production System: - Job or make complete production is the production of single
complete unit by one group of operator. EX: - Bridge, Building, Dams. In this system the
goods are produced to definite consumer orders.

Characterized by:-

(i) Whole Project is taken as a single operation.

(ii) Work should be completed on each product before processing the next item.
(iii) Versatile and skilled labour is needed.
(iv) High capital investment.
(v) Control operations are relatively simple.
(vi) High unit cost of production.
(vii) Any organization manufacturing heavy and special purpose machinery use job
Production System.
(B) Batch Production system: - The production schedule can chalk out according to specific
orders or on the basis of demand system forecasts. The items are produced in batches
unlike job type system where one item is produced during each production run. The best
ex. of batch production system is of chemical industry where difference medicines are
manufactured in batches. A common characteristic of job-batch production is that items
are produced to definite customer orders and not for stock.

Continuous System: - In this system the item are produced for the stock and not for the specific
orders. Here the inputs are standardized and a standard set of processes and sequence of
processes can be opted.

Mechanism:-

(i) This system does not involve diverse work.

(ii) Scheduling is required to rate the output of various standard products
(iii) Work relating to dispatching.
(iv) More effective co-ordination of various departments.
 (A) Mass Production System: - Standardization is the fundamental characteristics of this
system here items are produced in large quantities and much emphasis is not given to
consumers orders. In fact the production is to stock not to order.

In this present era of mass production system is generally used to manufacture sub-
assemblies. One advantage of this approach is that different combination of sub-
assemblies or part can be used to manufacture different kinds of products.

(B) Process Production System: - This system is analogous to mass production system with
more stress on automation in production process. The volume of production is very high.
This method is used for manufacturing those items whose demand is continuous and
high.

Difference between Intermittent and continuous:-

Intermittent Continuous
Same product is not produced continuously. Same product produced continuously.
Items produced for orders. Items produced for stock.
Production process flexible. Process not flexible.
Small scale of production. Large scale production.
Capital investment may be low. Capital investment high
Cost of production is high. Cost of production is low.
Change in location. Change in location difficult.
Accuracy is low. Accuracy is high.

Classification of Operation:-

(1) Consumer: - Benefits from improved industrial productivity, increases the use
value of the product. Products are available to them at right place, at right time, at
right price, in desired quantity and desired quality.
(2) Investors: - They got increased security for their investments, adequate market
returns, and creditability and good image in the society.
(3) Employee: - Gets adequate wages, job security, improved working conditions and
increased personal and job satisfaction.
(4) Suppliers: Will get confidence in management and their bills can be realized
without any delay.
(5) Community: Community enjoys benefits from economic and social stability.
(6) The Nation: Will achieve prospects and security because of increased
productivity and healthy industrial atmosphere.
FUNCTIONS OF PRODUCTION MANAGEMENT DEPARTMENT

All the functions are categorized in three stage, that is Pre-planning, planning, and control
stage.

= Functional responsibility

= Feed back

PRODUCTIVITY: - Productivity may be defined as the ratio between output and input of
resources of production.

Output
Pr oductivity 
Re sourceEmployed

Difference between Productivity and Production: -

Production is related to the activity of producing goods or services. It is a process of converting

input into some useful, value added output.

Productivity is related to the efficient utilization of input resources into produced output in the
form of value added goods and services.
Productivity will increase if the production increase without adding to the resource employed. If
production increase at the cost of additional resources in many cases productivity may even
decrease.

Ex: - Suppose a company manufacturing electronic calculators produces 10000 calculators by

employing 50 people at 8 hr. /day for 25 days. Then: -

Production= 10000

10000
Pr oductivity   1 calculator / manhour
50 X 8 X 25

Suppose this company increases its production to 12000 calculators by hiring 10 additional
workers at 8 hr. /day for 25 days: -

Production= 12000

12000
Pr oductivity   1 calculator / manhour
60 X 8 X 25

(i) Partial Productivity: - Partial productivity is the ratio of output to one class of input among
many factors of production. Ex. Labor productivity measures the productivity of labor, capital,
material, machine etc.

Output
Labour Pr oductivity 
Labour Input

Output
Capital Pr oductivity 
capital employed

Output
Material Pr oductivity 
Material Input
(ii) Total factor Productivity: - is the ratio of net output to the sum of associated labor and
capital inputs. Net output means (- Material), capital, energy and other input expenses. Thus: -

Net Output
Total Factor Pr oductivity 
Labour Input  Capital Inputs
(iii) Total Productivity: - It is the ratio of total output to the sum of all inputs factors.

Total measurable output

Total Pr oductivity 
Total Input
FACILITY LOCATION OR PLANT LOCATION

A plant should be located at a place where the inhabitants are interested in its success the product
can be sold profitably and the cost is minimum.

 Location of plant partially determines operating and capital costs.

 Each prospective location implies a new allocation of capacity for respective market area.
 Location fixes some of the physical factors of the overall plant design.
 Govt. sometimes plays an important role in the choice of the location keeping in view the
national benefits.
Factor Responsible For Plant Location:-

 Availability of Raw Material.

 Availability of Power.
 Availability of Technician
 Availability of Cheaper labor.
 Availability of Less Tax.
 Availability of Capital.
 Availability of Easy Transport.
 Risk Taking Ability.
 Risk of Uncertainty.
 Nearness to potential Market.
 Shift in Structure.

NEED FOR FACILITY LOCATION: - Location Analysis: - Revenues and cost are both
affected by facility location. A technique called Break even analysis relate cost and revenue to
facility location.

Break Even Analysis: - The level of output volume for which total cost is equal to total revenue.

“The point where no profit and no loss occurs is known as Break Even point.”

Fixed Cost: - are those cost which are fixed with respect of output.

Variable cost: - are those cost fluctuate directly with the volume.

Fig: - Cost structure and BEP for operation in two contrasting locations:-

Location A:- FC is High and VC is low

Location B: - FC is Low and VC is high

Factor Rating: - A decision procedure in which alternatives is rated according to each factor
relevant to the decision and each factor is weighted according to importance.

Factor rating are frequently used to evaluate location alternative because:-

 Their simple facility communication about why one site is better than another.
 They enables manager to bring diverse locational consideration into the evaluation
process.
 They foster consistency of judgment about location alternatives.

Table for Factor Rating for location alternatives:-

Factor Factor Rating Location Rating Product Rating

Tax Advantage 4 8 32
Suitability of Labor Skill 3 2 6
Proximity to customer 3 6 18
Proximity to supplier 5 2 10
Adequacy to water 1 3 3
Receptivity of community 5 4 20
Quality of educational system 4 1 4
Suitability of climate 2 7 14
Availability of Power 2 6 12
Center of Gravity Method: -

 Find the X and Y coordinates for all the destinations.

 Can use an arbitrary coordinate’s grid.
 Calculate center of gravity location for facility as weighted average of X and Y
Coordinates.
 Minimizes the transportation cost approximately.
 Location is not necessarily optimal, but is usually close.
 Decision based on minimum distribution costs.
 Find location of single facility serving several destinations.
 Used for services and distribution Centres.

Requires: -

 Location of existing destinations (Markets, retailers etc.)

 Volume to be shipped.
 Shipping distance (or cost)

Transportation: - Requirement: -

 List of origins and each one’s capacity.

 List of destinations and each one’s demand.
 Unit cost of Shipping.

Assumptions: -
  Items to be shipped are homogenous.
 Shipping cost per unit is the same.
 Only one route between origin and destination

LAYOUT PLANNING

The Layout of a facility is the physical location of the various departments/units of the facility
within the premises of the facility. The departments may be located base on some considerations
such as less walking distance, logical sequence of the processing requirements of the product, or
any special requirements such as emergency services etc.

“Layout identically involves the allocation of space and the arrangement of the equipment in
such a manner that overall operating costs are minimized.”

Stages of Plant Layout:-

(a) Product demand.

(b) Production requirements.
(c) Components and parts analysis.
(d) Work methods and measurements.
(e) Machine requirements.
(f) Handling and movement requirements.
(g) Space requirements.

Objective of Layout:-

 Economies on materials, facilitate manufacturing process and handling of semi-finished

and finished goods.
 Proper and efficient utilization of available floor space.
 To ensure that work proceeds from one point to another point inside the plant without any
delay.
 Careful planning to avoid frequent changes in layout which may result in undue increase
in cost of production.
 To provide adequate safety to the workers from accidents.
 To meet the quality and capacity requirement in the most economical manner.
 To provide material handling system.

There are four basic layouts:-

 Product Layout
Process Layout.
Mixed Layout
Fixed Position layout.

Product layout: - A product layout is suitable when a product having standard features is to be
produced in large volumes. The production process thus involves repetitive tasks to be performed
on items arranged in a sequence. The specialized machines and equipment are arranged one after
the other in the order of sequence required in the production process, such that a production line
is formed by them. This production line is often called the assembly line. In this layout
intermittent production system are involved.

(a) Line Layout

(b) U-Shaped Layout

Advantages of Product Layout:-

 A high output rate and thus low cost of item per unit.
 High efficiency of labor and equipment.
 Less supervision and labor training costs.
 Easier material handling less inventory costs.
 No need of routing or scheduling once the line is operational.

Disadvantage of Product Layout:-

 Maintenance cost is fairly high to ensure smooth running of the line.

 Inflexible to design changes in products or processes.
 Monotonous repetitive tasks lead to frustration for workers.
 Breakdown of a machine or high absenteeism of workers leads to halt in production.

Process layout:-
In a process layout, general-purpose machines are arranged in on particular sequence, as the
processing requirements and sequence are different for the various types of products to be
manufactured. These machines include the lathe machine, drilling machine, milling machine,
grinding machine etc., which handle different types of processing requirements. In a production
set-up, such a layout is also called a machine shop or job shop. In this Continuous production
system are involved.

Advantages of Process layout:-

 Maintenance cost is low because of low cost general purpose machines.

 The system is more flexible to design changes in products or processes compared to
product layout.
 Breakdown of a machine does not lead to halt in production as substitute machines are
kept ready for such situations.
 The system promotes creativity of workers due to the variety of tasks performed by
them.

Disadvantage of Process Layout:-

 Material handling is time consuming as there is no fixed route.

 Work in progress inventory is usually high in batch processing.
 A low output rate and thus high cost per unit.
 Routing and scheduling is dull and time consuming for different products.
 High cost of supervision because of special treatment to every product being processed.

Fixed Position Layout: - In this layout the product is very bulky, heavy, and large or has a fixed
position. For e.g. the construction of a building, dam, or a plant, drilling of the crude oil or
construction of an aero plane, a ship. Thus machines equipment, raw materials, workers, etc.
have to be taken to this site of the product. The important aspect is the placement of all these
things inside or around the product so that no overcrowding takes place.

Mixed or combined Layout: - This combination of Product and process layout. A combination
of process and product layouts combines the advantages of both types of layouts. A combination
layout is possible where an item is being made in different types and sizes. Here 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. It is to be noted that the sequence of operations
remains same with the variety of products and sizes.

WORK STUDY: -

Work study is a generic term for those techniques, method study and work measurement which are used

in the examination of human work in all its contexts. And which lead systematically to the investigation

of all the factors which affect the efficiency and economy of the situation being reviewed, in order to

effect improvement.”

Advantages of Work Study:-

1. It helps to achieve the smooth production flow with minimum interruptions.

2. It helps to reduce the cost of the product by eliminating waste and unnecessary operations.

3. Better worker-management relations.

4. Meets the delivery commitment.

5. Reduction in rejections and scrap and higher utilization of resources of the organization.

6. Helps to achieve better working conditions.

7. Better workplace layout.

8. Improves upon the existing process or methods and helps in standardization and simplification.

9. Helps to establish the standard time for an operation or job which has got application in manpower

planning, production planning.

METHOD STUDY: enables the industrial engineer to subject each operation to systematic

analysis. The main purpose of method study is to eliminate the unnecessary operations and to

achieve the best method of performing the operation.

“Method study is the systematic recording and critical examination or existing and proposed ways or

doing work as a means or developing and applying easier and more effective methods and reducing

cost.”

Objectives of Method Study: -

1. Present and analyse true facts concerning the situation.

2. To examine those facts critically.

3. To develop the best answer possible under given circumstances based on critical examination

of facts.

Scope of Method Study: -

The areas to which method study can be applied successfully in manufacturing are:

1. To improve work methods and procedures.

2. To determine the best sequence of doing work.

3. To smoothen material flow with minimum of back tracking and to improve layout.

4. To improve the working conditions and hence to improve labor efficiency.

5. To reduce monotony in the work.

6. To improve plant utilization and material utilization.

7. Elimination of waste and unproductive operations.

8. To reduce the manufacturing costs through reducing cycle time of operations.

Steps or Procedure Involved in Methods Study

1. SELECT: - the work to be studied and define its boundaries.

2. RECORD: the relevant facts about the job by direct observation and collect such additional data as
may be needed from appropriate sources.
3. EXAMINE the way the job is being performed and challenge its purpose, place sequence and method
of performance.
4. DEVELOP the most practical, economic and effective method, drawing on the contributions of those
concerned.
5. EVALUATE different alternatives to developing a new improved method comparing the cost-
effectiveness of the selected new method with the current method with the current method of
performance.
6. DEFINE the new method, as a result, in a clear manner and present it to those concerned, i.e.,
management, supervisors and workers.
7. INSTALL the new method as a standard practice and train the persons involved in applying it.
8. MAINTAIN the new method and introduce control procedures to prevent a drifting back to the
previous method of work.

ADVANTAGES OF METHOD STUDY:-

(a) Work Simplification.

(b) Better working method.

(c) Better product quality.

(d) Improved plant layout.

(e) Improved equipment design.

(f) Better working conditions.

TECHNIQUES OF METHOD STUDY: -

(1) PROCESS CHARTS: - A process chart is a representation of events and information related
to the process during a series or operation.

Symbols used in process charts:-

1.Operation It indicates the main step in process.

2.Storage When a raw material awaits an action.

3.Delay It indicates work waiting between consecutive

D operations.

4.Transprotation It indicates the movement of workers materials.

5.Inspection This shown an examination

CLASSIFICATION OF PROCESS CHARTS:

(1) Flow Process Chart: - Is defined as a graphical representation of all operation,

transportation, inspection, delays and storage during a process.

(a) Operator Type: - It records what the worker does.

(b) Product Type: - It records what happens to the material.

(c) Equipment Type: - It records how the equipment is used.

Outlined Process Chart: - Outlined process chart gives the overall picture of the process. It
considers only operation and inspections.

It is the graphical representation of the points at which materials are introduced into the process
and sequence of all operation and inspection associated with the process.

Outline process chart of changing refill of a ball pen:-

Two handed Process Charts: - is a charts in which the activities of the worker hands are
recorded in their relationship to one another. Such charts are generally used for repetitive works
of short duration. The symbols and their descriptions are shown below: -

Symbol Activity Description

Operation For activities for grasp, position, use release, etc., of the total
component or material.
Hold Hold is used to represent the activity of holding work, tool or material.

Delay Time during which the hand or limb being charted as idle.
D
Transport Movement from the work or a tool or material.
Procedure: -

(1) First of all study the operation cycle few times.

(2) Observe one hand at a time and record few symbols.

(3) Start observing and recording at a position which could be easily distinguished.

(4) Care must be taken while observing and recording.

(5) Avoid combining different activity.

Left hand Symbol Right Hand

Left hand Right Hand
Pick up bolt Idle
D
Hold Pick up nut

Hold To left hand

Hold Assemble (Screw up)

MOTION STUDY

Analysis of an operation when carried out in terms of individual motions of a worker.

Objective of motion study

(1) Eliminating unwanted motions.

(2) Simplifying complex motions.

(3) Increase the efficiency of activities.

(4) Improving the order of necessary motions.

(5) Change the sequence of activity.

(6) Improve the material handling process.

(7) Make the activity safer.

PROCEDURE OF MOTION STUDY:-

Step 1. Select the job.

Step 2. Collection of all related facts.

Step 3. To examine the recorded facts carefully.

Step 4. Develop the latest and improved method.

Step 5 Select new method and its requirements.

Step 6. Install new method with co-ordination.

Step 7. A proper training should be given to operators.

WORK MEASUREMENT: - As the application of techniques designed to establish the work

content of a specified task by determining the time required for carrying out the task.

OBJECTIVE OF WORK METHOD OR MEASUREMENT:-

(1) Improve planning and control of activities.

(2) Reliable ideas for workers performance.

(3) Reliable basis for workers cost control.

(4) Basis for suitable incentives schemes.

ADVANTAGES OF WORK MEASUREMENT:-

(1) Establishing the work content in each method of doing the job.

(2) To prepare logical work schedules.

(3) To set standards of performance for labour utilization.

(4) To compare actual time taken by the worker.

(5) To assist in labour cost estimation.

(6) To provide information related to estimation of workers.

Techniques: -

(1) Direct time study.

(2) Synthesis method.

(3) Analytical estimating.

(4) Pre-determined motion time system.

(5) Work Sampling.

 TIME STUDY

Time study consists in finding the time required to perform each elementary details of an
operation.

Objective of Time Study: -

(1) To set labor standard for satisfactory performance.

(2) To determine standard costs related to the work.

(3) To determine the normal times.

(4) To determine the cycle time for completion of a job.

(5) To determine equipment and labor requirement.

(6) To determine the no. of equipment an operator can handle.

(7) To balance the work of operators in production.

(8) To provide a basis for setting incentives wages.

Advantages: -

(a) Time studies may be taken for checking operator complaints about times t=rates.

(b) During times study the observer may note inconsistencies in methods.

(c) It enables the engineer to recommend further improvement in work method.

(d) Output standard are easily convertible into standard labor cost.

(e) Output standard also facilitate evaluation of machine capacity.

(f) Output standard facilities scheduling and controlling the line of production.

Procedure:
•Step 1: -First select the job to studied. Breakdown the work content of the job into smallest
possible elements.
•Step2: - Observe the time for appropriate number of cycles.
•Step3: -Determine the average cycle time (CT)
•Step4: -Determine the normal time (NT)
NT = CT (PR)
Where PR= Performance Rating
Step5: -Determine the standard time using the following formula:
ST=NT (AF)
Where AF =Allowance factor.