Industrial Engineering Full Subject

INDUSTRIAL
ENGINEERING
Shijil p k
MODULE I
SUBJECT TOPICS
● MODULE 1: Production Planning and Control
● MODULE 2: Method Study and Work study for optimization
● MODULE 3: Quality Control
● MODULE 4: Estimating and Costing
SUBJECT TOPICS
● Introduction
● Production and Productivity – difference
● Types of Production systems – Job production, Batch Production, Mass Production, Flow Production,
One time large production
● Production Planning and Control – Benefits and Functions
● Pre Planning
● Process Planning
● Routing
● Dispatching
● Value engineering
● Plant Location and Layout
● Plant maintenance
INTRODUCTION
● “Concerned with design, improvement and installation of integrated
systems of people, materials, equipment and energy” – The American
Institute of Industrial Engineers (AIIE)
● It is an approach to the detailed analysis of the use and cost of the
resources of an organisation
● Main resources 4M : Men, Material, Machine, Money
Main Focus of Industrial Engineer
Productivity Improvement
Output/Input
Input – human effort, energy, material, capital investment

➢ Industrial Engineering roots back to industrial revolution
(1750)
Frederick Winslow Taylor

Father of The scientific Management
Father of Industrial Engineering
MECHANICAL ENGINEER
PRODUCTION
● Production is the process of combining units of inputs
(natural, man-made and human resources) to create
output (finished goods and services) in proper quantity
and quality capable of satisfying human needs and
wants.
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PRODUCTIVITY
● Analogous to Efficiency of a machine
● Productivity of an organisation is defined as the ratio of
outputs (goods and services) produced by the
organisation to the inputs (resources) consumed in the
process.
Output – Amount or number of items
produced
Input – Resources such as land & building
Material ,Machinery Labour, money etc
Productivity = Output/Input
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IMPORTANCE OF PRODUCTIVITY
● Reduction in the cost of raw materials (through increase in the
productivity of raw materials).
● Reduction in labour cost per unit of output.
● Reduction in power costs per unit of output.
● Reduction in the price of goods.
● Increase in wages and salaries (through schemes for sharing
the gains of productivity).
● Increase in the reserve fund that can be utilized for expansion
and modernization.
● Better standards of living for people through increase in their
incomes and improvement in the quality of goods that can be
made available at cheaper prices.
● Increase in the competitive strength of the country in export
market through reduction in cost of production and
improvement in quality of output.
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PRODUCTION AND PRODUCTIVITY
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For management
Increase Profit
To clear Debts or Loans
To sell more
To stand better in Market
For Worker
Higher wages
Higher standard of living
Job security and satisfaction
For Consumer
Reduced price of the article
(a) Employee based technique
▪ financial incentive
▪ fringe benefits
▪ skill enhancement programs
▪ Quality circles
▪ Job rotation
▪ Employee promotion
▪ Recognition
▪ Good working environment
▪ Punishment
(b) Material based technique
▪ Inventory control
▪ Material requirement planning
▪ Material handling systems
▪ Material recycle and reuse

(c) Task based technique
▪ Methods engineering
▪ Work measurement
▪ Job design
▪ Human factor engineering

(d) Product based technique
▪ Product Diversification
▪ Product simplification
▪ Product sandardisation
▪ R & D
▪ Advertising and promotion
▪ Value analysis
(e) Technology based technique
▪ CAD/CAM
▪ Robotics
▪ Electronic data processing
▪ R & D
▪ Rebuilding old machinery

Continuous & Intermittent
Almost continuous Interrupted flow of

physical flow of material
material
Use of special purpose Use of general purpose

machines machines
a) Mass production & a) Batch production

flow line production
b) Job production
b) Process production
1) Mass production and Flow line production
 Mass production means production of items
in large scale
 Cycle of manufacture involves one or more
operations on one machine
 Eg: metal screws, Plastic products
 In flow production items are manufactured in

continuous stages from process to process
 Eg: air conditioner, TV sets, Motor cycles
 There is a scope for considerable division of
labour
 Machinery laid as per sequence of production
 Material handling required to minimum
 Very little time spent in resetting machine
 The flow of work is balanced
 Work cycles are short and repetitive nature
 Time study can be applied to different processes
 Work in progress is small compared to
intermittent production
 It is preferred when there is a continuous
and regular demand
 It offers lowest production cost per unit
2) Process production
 The relevant factors are ingredients and
formulas not parts
 Production of bulk quantity of material rather
than individual unit
 Eg: food, beverage, Chemical, Electricity, Petrol
 Highly mechanised and material handling is
automatic
 Semi skilled and skilled workers are required
 o/p and i/p are measured and regulated with
sophisticated controls
2) Process production
 Plant and machinery designed for only one
product
 Good Plant maintenance and effective quality
control are required
3) Batch production
 Articles are manufactured in batches as per
the specific order procured
 Eg: Drugs, paint
Batch produced repeatedly at regular

intervals when need arises –
new year greetings, umbrellas
Batch produced only once –

Fashion goods, garments
3) Batch production
 Process and product planning done for each
batch
 Products are produced in batches of small
quantity
 Production is started only after the receipt of
sufficient supply orders
 It is a very common type of production
4) Job Order production
 Each job is different from the previous
regards its type, specification, quality and
quantity
 Product design takes a lot of time
 Flow of material is intermittent
 High degree of mechanisation and division of

labour is not economical
 Skilled worker required
 High degree of control is essential

4) Job Order production
 Eg:
Manufacture of custom made m/c for

food industry
Manufacture of a special heat treatment
furnace
 A job shop consist of a number of m/c
centres, each with a fundamentally different
activity
 Open job shop and Closed job shop
5) One time large production
 How it is different from job shop?
 In job shop job moves between m/c centres
whereas in one time large production
material and other major components remain
at fixed place. Workers, tools and other
attachments are brought to place
 Activities planned in one time using network
analysis
 Eg: fabrication of ship, Space shuttle, rapair
of big aircraft
5) One time large production
Production Planning and
Control(PPC)
Production Planning and Control (PPC)
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● Products are manufactured by the
transformation of raw material into finished
product.
● Production planning looks ahead possible
difficulties and decides in advance as how the
production best to be carried out.
● Production planning anticipates future
difficulties and decides in advance as how
the production is carried out efficiently.
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● Production control phase makes sure that the programmed
production is constantly maintained.
● Production control looks to utilize different type of control
techniques to achieve optimum performance out of the
production system as to achieve overall production planning
targets.
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Objectives of Production Planning and
Control(PPC)
1. To find out the demand for a new product.
2. To forecast the demand for an existing
product.
3. To execute in advance the cost of a new
product.
4. To make a route sheet.
5. To prepare schedules for production.
6. To order for various activities to be
performed.
7. To control labour and material.
8. To simplify the activity.
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Functions of Production Planning and Control(PPC)
● The main functions of PPC are the coordination of all the
activities, which exist during production or
manufacturing.
1. Material
2. Methods
3. Machines and equipments
4. Routing
5. Estimating
6. Loading and Scheduling
7. Dispatching
8. Inspection Evaluating
9. Expediting
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Advantages of Production Planning and
Control(PPC)
➢ It increases productivity
➢ Last hour rush is avoided
➢ Problems areas of bottleneck get reduced
➢ Cost reduction
➢ Optimum utilization of resources
➢ Better coordination of plants activities
➢ Benefits to workers
➢ Improved services to customers
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Forecasting
Prior planning Order writing

1) Planning Phase Product Design
Process Planning and

Routing
Active planning
Material Control
2) Action Phase Dispatching Tool Control
Loading
Scheduling
Progress Reporting Data Processing

3) Control Phase Expediting
Corrective Action
Replanning
 Forecasting:- Estimating of quantity and quality of work in
advance before action begins
 Order writing:- Giving authority to one or more person to
undertake a particular job
 Product design
 Process planning and routing:- Finding the most economical
process of doing a work and then deciding how and where
the work will be done
 Material control:- MRP, inventory control

 Tool control:- Requirement and control of tools/machines
 Loading:- Assignment of work to men, machines etc.
 Scheduling:- It fixes starting and ending time of the job.
 Dispatching:- Worker ordered to start the work
 Progress reporting:-
 Corrective action:- If progress report indicates any devition
from the plan
Fore casting
Estimation of type, quantity and quality of
future work
 Sales forecast
 Econometric forecasting
 Technological forecasting
Fore casting:- Sales forecast - Purpose
 It determines volume of production and
production rate
 It forms the basis for production budget,
labour budget, material budget, etc.
 It suggests the need for plant expansion,
product research and development
 Helps in establishing pricing policies
 To decide extent of advertising, product

distribution, etc.
Fore casting:- Sales forecast – Factors to be
considered
 Trends - Long term variation of data
 Cycles – Shorter duration, alternative periods

of expansion and contraction.
 Seasonal variation – occurs within a certain
period of an year
 Irregular variations – unforeseen or non
recurring events
Fore casting:- Sales forecast – Techniques
a) Historic Estimate
 What happened in the past will happen in the
future
 It is not scientifically valid. It is successful only
when pattern of events remains unchanged. ie.
economy is static
b) Sales force estimate

 Person in contact with market know best about
the future market trends
 Useful when an industry making a limited
number of products and there are few large
customers
c) Trend line technique

 Employed when there is an appreciable amount
of historical data
 More reliable than historical estimate
 A single best fitting line is drawn and projected
to show sales estimate for future
d) Market Survey
 When a new product is introduced
 Generally the new product is introduced in a
relatively small critical trial area, market reaction
is noted and total sales (country – wide) is
projected from the result.
e) Judgement technique
 Opinions from the consumers and customers
f) Prior Knowledge
 Applicable for ancillary units
 The large organisation informs each ancillary

unit how many component part to make.
Fore casting:- Econometric forecasting
 Finding relationship between sale and some

other factor related to sale (such as national
income, population growth, weather, etc.)
a) Correlation Analysis
 Finding correlation coefficient
b) Linear Regression analysis

 Useful when past data fall about a straight
line
Fore casting:- Technological forecasting
 Forecasting the future technology that may

affect the operation of the enterprise
a) Delphi Method
 Approach in which consensus agreement is
reached among a group of experts
b) Opportunity Oriented
Process Planning
 Determining the most economical process of

performing an activity or operation
 Process planning comes after it has been
decided as WHAT IS TO BE MADE ?
Process Planning:-
Information Required
 Quantity and quality of work with product
specification
Process Planning:-
Information Required
 Availability of equipment, tools and worker
(giving dates, etc)
 Sequence of operation performed with name
of the equipment
 Standard time for each operation
Process Planning:- Procedure
1) Selection of process
 Select most economical process
 Depends on
◦ current production commitments
◦ Delivery date
◦ Quantity
◦ Quality
PRODUCTION PLANNING AND CINTROL
Process planning: procedure

1) Selection process
➢ Break even analysis of a machine selection
● The Break-even analysis or cost-volume-profit analysis
(c-v-p analysis) helps in finding out the relationship of
costs and revenues to output. This analysis is usually
presented on a breakeven chart.
● It helps in understanding the behaviour of profits in
relation to output
FIXED COST
● For manufacturing and selling a product or service, every
business has to incur costs. Some of these are fixed which
may represent financing outlays to be made regardless of
sales.
● They may also consist of depreciation charges, property
taxes and insurance which arise because of the mere
existence of a plant, equipment and office space.
VARIABLE COST
● Variable costs are related to the activity itself rather than
to the physical and administrative framework which
makes the activity possible.
● These costs expand or contract as the activity rises or
falls. For instance, the number of items produced in a
period directly determines the amount of material used in
their production
BREAK EVEN CHART
● It is a graphical representation of relation between cost
and revenue at a given time. It is a device used to
determine break-even point and profits under given
conditions of output.
● The point of intersection of total cost line and total
revenue line is called break even point.it is also
● called no profit no loss point.
BREAK EVEN CHART
● P is the break-even point in the break-even chart where
OS and CT—being the sales line and total cost line—
intersects. Loss results in the left side of P, i.e., before the
break-even point is reached, and, beyond P, profit starts
to generate.
● Break-even point has a wide use in the field of marginal
costing and helps to decide the product mix, fixation of
selling price, steps to be taken in long-term planning etc
1) Selection of process
 Break even analysis for machine selection
Total cost 2=
Cost of F2 + N x variable cost 2
production
Total cost 1=
F1 + N x variable cost 1
(raw material cost
+ wages
+ electricity
+ wages + etc)
Fixed cost 1 =
cost of machinery + salary + etc.
F2 Q
N (Number of items produced)

2) Material selection: It should be right quality and chemical
composition as per product specification.
3) Selection of jigs, fixtures and other special attachments :
This will give higher production rate and reduce cost of
production per piece.
4) Selection of cutting tools and inspection gauges: this will
help accurate inspection and reduce production time.
5) Selection of process layout: It indicates every operation
and the sequence in which each operation is to be carried
out
6) Calculation of setup time and standard time for each
machine (machine capacity)
7)Preparation of documents: Documents such as operation
and route sheets which summarize the operations required,
preferred sequence of operations etc.
Routing
 Routing decides the path and sequence of
operations to be performed on the job from
one machine to another.
 The purpose is to establish the optimum
sequence of operations.
• Routing lays down the flow of work in the
plant.
 It determines what work is to be done and
where and how it will be done. It decides the
path and sequence of operations to be
performed on the job from one machine to
another
PRODUCTION PLANNING AND CONTROL
Routing: procedure
1) Make and Buy Decision: The product is thoroughly
analysed to find out which parts are required for it.
● The second decision is taken regarding the production or
purchase of various components. Some components may be
manufactured by the firm and others may be procured from
the market
2) Bill of materials: The analysis of the product will enable us
to know the type of materials required for producing various
components. The right type of quality, quantity, and time
when needed should also be decided in advance.
3)
Routing: procedure
3) Preparation of Route Sheet: The routing decision
establishes the operations necessary for processing the
product and lists them in their sequence on route sheet or
operation sheet.
● From this route sheet process, flowchart can be prepared
which helps in visualizing operations that may be
simplified, combined or eliminated. Further it may help in
changing the sequence of operations.
Routing:- Route sheet
Routing: procedure
4) Lot Size Determination: The idea is to determine the
number of units to be produced in one lot.
5) Determination of Scrap Factor: The scrap factor is the
anticipated normal scrap encountered during the course of
manufacturing. In determining the scrap factor, it should be
known where the scrap is going to occur, whether it occurs
progressively during the fabrication/production of parts,
end assembly or all of sudden after a certain operation or
after completion of assembly.
Routing: procedure
6) To Provide Necessary Information and Forms: cost of the
component is analysed and estimated through the
information obtained in the above steps
Routing: Advantages
● Effective utilization of available resources.
● Reduction in production costs.
● Quality improvement occurs.
● Productivity of the system improves.
● Provides a basis for loading & scheduling
Routing:- Difference between Route sheet and process sheet
Process sheet Route sheet

Only code of the machine is given Identification of the particular
machine given
The sequence of operation can be Sequence of operation should be
altered during production strictly followed
Prepared well advance Prepared based on process sheet
Remains same for a product Modified for every repeat order
Scheduling
 It determines the starting and completion of
various operations in the manufacture of a product
 It is similar to a railway time table showing when
the product will enter particular process and when
it will leave the same for next operation.
Scheduling:- Factors Affecting
 Process duration
 Availability of machinery, equipment
 Availability of material
Internal
 Availability of skilled worker Factors
(Within the
 Economic batch size control of
management)
 Stock of finished good in the firm
Scheduling:- Factors Affecting
 Customer demand External Factors
(Not under the
 Customer delivery date control of
management)
 Dealers and retailers inventory
Scheduling:- Types
1) Master Schedule
 Timely breakdown (weekly/monthly/yearly) of
production requirement
 As the orders are received, depending upon the delivery
date or priorities they are marked on the master
schedule.
 When the shop capacity is full for present period, the
newly acquired orders are carried over to the next
period and so on
 It is the basis for all subsequent scheduling techniques.
Scheduling:- Types
1) Master Schedule
Scheduling:- Types
1) Master Schedule
Advantages
 Simple and easy to understand
 It can be kept running
 Less cost to make and maintain
 Can be maintained by non technical staff
Disadvantage
 It gives only overall picture
Scheduling:- Types
2) Part Schedule
 Prepared based on master schedule
 Time table for production of different parts
 Also known as production schedule
Scheduling:- Types
3) Machine Loading Schedule
 Allocating workload to various machines for the perod
Scheduling:- Gantt Chart
 First designed by Mr. Henry L Gantt
 Graphical representation of scheduling
Scheduling:- Gantt Chart for Master Schedule
 Time Table for production of various products for one
year
Scheduling:- Gantt Chart for Part Schedule
Scheduling:- Gantt Chart with computer help
Scheduling:- Gantt Chart with computer help
DISPATCHING
 Releasing of the work order and other documents
to different departments to start production
activities
 Instruction issued to carry out the production
process as given in the route sheet and schedule
chart
 Executing the plan
DISPATCHING:- Procedure
1) Store issue order : authorise store to deliver required raw materials

2) Tool order: authorise tool store to release the necessary tools
3) Job order: instruct the worker to proceed with the operation.
4) Time ticket: it records the beginning and ending time of the operations
and forms the basis for workers’ pay
5) Inspection order: notify the inspector to carry out necessary inspections
and report the quality of the component
6) Move order: authorise the movement of materials and components from
one facility to another for further operations
DISPATCHING:- Functions
➢ To check the availability of input materials and ensure the movement of

material from store to first process and then from process to process.
➢ To ensure the availability of all production and inspection aids
➢ To obtain the requisite drawings, specifications and material lists.
➢ To assign the work appropriate machine, workplace and men.
➢ The issue of job orders authorising operations in accordance with dates and
times previously planned and entered on load charts and route sheets.
➢ The issue of time tickets, instruction cards and other required items to the
workers who are to perform the various activities.
➢ The issue of inspection orders after each operation in order to determine result
regarding the quality of products if excessive spoilage occurs, to find out its
causes.
DISPATCHING:- Functions
➢ Clean up on jobs, collection of time tickets, blueprints and instruction cards

and their return to appropriate section of production control department.
➢ To ensure that the work is forwarded to next department or storeroom etc.
➢ To record the beginning and completion times of jobs on time tickets for
calculation of time interval. To forward time ticket to accounts department for
preparing wages.
➢ To record and report idle time of men and machines and request for corrective
action required.
CENTRALIZED AND DECENTRALIZED DISPATCHING
● In a centralized dispatch system, a central dispatching department orders directly to the
work station. It maintains full record of the characteristics and capacity of each equipment
and work load against each machine. The orders are given to the shop supervisor who runs
his machines accordingly.
● A greater degree of overall control and effective coordination between different facilities are
possible.
● In a decentralized dispatching system, the shop supervisor performs the dispatch functions.
He decides the sequence of handling different orders. He dispatches the orders and materials
to each equipment and worker and is required to complete the work within the prescribed
duration
DISPATCHING:- Documents prepared
1) Job order or shop order

 Issued for authorizing production department to start the work.
 As many copies as the number of departments in the route –

Yellow colour
 One copy for control – Green colour
 One copy for Accounts department – White colour
 One Copy for record – White colour
1) Job order or shop order

2) Material Issue order/Material requisition slip

 Authorize store to issue the material required for
production. It contains
◦ Material description
◦ Quantity
◦ Time of issue
◦ Department to which material is delivered
◦ Cost of the material
2) Material Issue order/Material requisition slip
3) Move order
 From store to production shop
 Within the shop
 From one shop to another
 From shop to finished stores

4) Tools Issue order
 Issued to tool room
 Authorize issue of tools, jigs and fixtures to shop
 A copy of the order sent to the shops requiring tools
 The shop people can collect tools from tool room by
submitting tool issue order.
5) Inspection order
 Notify the inspectors to carry out necessary inspections and
report the quality of component
 Inspection Card
◦ Type of inspection
◦ Timing of inspection
◦ Inspection tool to be used
6) Job time ticket or Job card
 Given to each operation
 Time of starting and completion entered by worker
 Sent to cost control section for further processing
6) Job time ticket or Job card
Final delivery notification

 Semi finished products delivered from one
department to other in stages.
 First – Good units of products are delivered to next
department
 Second – The defective units (may be of some other
kind) are rectified and delivered.
 Problem – The second department changed
machine setup
 Solution – Final delivery notification
FOLLOW UP AND CONTROL
 Monitoring progress of the job
 Purpose
◦ To see material reached at the shops as per schedule
◦ To see all operations carried out as per schedule
◦ To see all parts ready for assembly as per schedule
◦ To see causes of delays (equipment breakdown, lack of
proper tools, gauges, jigs and fixtures etc)
◦ To see cause of major rejections
◦ To see errors due to routing, scheduling and dispatching.
FOLLOW UP AND CONTROL:-
1) Material control
 Small saving in material cost leads to heavy
reduction in production cost
Purchase
Right quantity
Right quality
Right time
Store keeping
Receiving
Receive, issue
Material Inspect material
and keep records
Control for quality and
of materials
quantity
Verify the stock
Issuing
Material issued by
store to shops
through issue order
● 2) Labour utilization control

 Time keeping – recording arrival and departure
● time of the worker

 Time booking – Actual time spent on each job.
Obtained from job card
 Difference between above two gives idle time of the worker
which should be checked for reasonability.
● 3) Manufacturing cost control
 Material cost control – Through inventory control
 Labour cost control– Time study and motion study, Standard

time setting for each job, financial and non financial
motivation, Job evaluation and merit rating
 Expenses or overheads control– Direct and indirect
expenses control
VALUE APPROACH
VALUE APPROACH
● It is the application of the concepts of value analysis at the design or
remanufacture stage of the component parts with a view to cut down
the unnecessary costs, without impairing the function or utility of the
product.
Value = Function(Utility)/Cost
VALUE APPROACH
TYPE OF VALUES
● Cost value: cost of manufacturing a product/component
● Use value: it considers the work done, functions performed or services rendered by
product/component
● Esteem value: it involves the qualities and appearance of a product which attracts persons
and creates in them a desire to possess the product
● Exchange value: a product is said to possess the exchange value if the same can be
exchanged for something else
VALUE APPROACH
 Value approach has two elements, namely Value
analysis and Value engineering
 Value analysis
◦ It examines the design, function and cost of each and
every component in order to produce it economically
without decreasing its utility, function or reliability
◦ It is normally applied to existing product rather than new
product.
◦ A value analysis team consist of personnel from different
sections such as R&D, purchase, material control, design,
manufacture, inspection, marketing, finance etc.
VALUE APPROACH
 Value analysis procedure
1) Identify the product for which value analysis is to be
carried out
2) Collect relevant information (Technical spec, drawing,
process details, time study & manufacturing capacity,
Blast
complete cost data, marketing details, latest
development in related products
3) Define different functions – 10, 20, 30 – Specify value
content of each function and identify high cost areas
1) Create different alternatives – Brainstorming techniques

Create
2) Critically evaluate the alternatives
1) Develop the best alternative – Drawing, models and

Refine prototype, finance purchase marketing plans
2) Implement the alternative

VALUE APPROACH
 Value engineering
◦ It is the application of the concepts of value analysis at the
design or pre manufacture stage of the component parts with a
view to cut down the unnecessary costs, without altering the
function or utility of the product.
VALUE APPROACH
 Applications
◦ Military equipment
◦ Import substitutes
◦ Machine tool industry
◦ Industries making material handling equipments
◦ Automobile industry
 Advantages
◦ Fast cost reduction programme
◦ Very little expenditure
◦ Eliminates unnecessary functions
◦ Improves value of goods and service
◦ Increase profit
PLANT LOCATION ,LAYOUT AND
MAINTENANCE
PLANT LOCATION
● Plant is a place where men, material, money, machinery etc. are
brought together for manufacturing products
● Make or buy decision
● Subcontract instead of expansion
● Expand existing plant
● Build a new plant instead shifting
● Disposing off the existing plant and build a new one
PLANT LOCATION
Factors affecting plant location
● Availability of raw material
● Proximity to market
● Transport facilities
● Availability of fuel and power
● Availability of suitable labour
● Climate and atmospheric condition
● Financial and other aids
● Availability of land
● Government policies
● Community attitude
PLANT LOCATION
Rural v/s Urban plant sites
 Urban
◦ Well connected by rail, road and air
◦ Right labour force available
◦ Power and water availability
◦ Good hospitals, Marketing centres, schools, banks, etc
◦ Service experts and specialist available
◦ Possibility of ancillary units
 Disadvantages
◦ Limited land area
◦ Land and building cost
◦ Expansion not possible
◦ Local taxes and salaries high
◦ Union problems are more. Employee employer relations not good
PLANT LOCATION
Rural v/s Urban plant sites
 Small Town (More or less a rural area)
◦ Plenty of area available
◦ Land cheap
◦ Undesirable manufacturing neighbour are not likely to be present
◦ Taxes are less
◦ Government gives inducements
 Disadvantages
◦ Skilled labour not available
◦ Air, road, rail links not adequate
◦ Power problem
◦ Market may be away
◦ Education, hospitals, banks are rare
◦ Expert and specialist service not available
PLANT LAYOUT
● Floor plan indicating the location of machines, materials, men,
supporting facilities etc.
● To facilitate un interrupted and quick movement of input materials
through predetermined cycle of operations
PLANT LAYOUT
Objectives
● Minimize investment in equipment.
● Minimize overall production time.
● Utilize existing space most effectively.
● Provide for employee convenience, safety and comfort.
● Maintain flexibility of arrangement
● Minimize Material handling cost.
● Minimize variation in types of material handling equipment
PLANT LAYOUT
FACTORS AFFECTING PLANT LAYOUT
● Type of product
● Type of production
● Type of production system
● Availability of area
● Material handling system
● Building
● Future expansion plan
PLANT LAYOUT
TYPES
1. Process layout
2. Product layout
3. Combination layout
4. Fixed position layout
PLANT LAYOUT
PROCESS LAYOUT
● It is also known as functional layout and is characterised by keeping similar machines or
similar operations at one location. This type of layout is generally engaged in job order
production and non-repetitive kind of maintenance or manufacturing activities
PLANT LAYOUT
PROCESS LAYOUT
PLANT LAYOUT
PRODUCT LAYOUT
● It is also known as line layout. It implies that various operations on raw
material are performed in a sequence and the machines are placed
along the product flow line
PLANT LAYOUT
PRODUCT LAYOUT
PLANT LAYOUT
COMBINATION LAYOUT
● A combination of process and product layouts combines the advantage of the both type of
layouts.
● Combination layout is also useful when a number of items are produced in same sequence
but none of the items are to be produced in bulk. For example hack saw, files, wood saws
etc.
PLANT LAYOUT
FIXED POSITION LAYOUT
● In this type of layout, the product is kept at a fixed position and all other material;
components, tools, machines, workers, etc. are brought and arranged around it. Then
assembly or fabrication is carried out.
● The layout of the fixed material location department involves the sequencing and placement
of workstations around the material or product. It is used in aircraft assembly, shipbuilding,
and most construction projects
PLANT LAYOUT
FIXED POSITION LAYOUT
PLANT MAINTENANCE
● A plant is a place where men, material, money, equipment, machinery etc. are brought
together for manufacturing projects. The objective of plant maintenance is to achieve
minimum breakdown and to keep the plant in good working condition at the lowest possible
cost.
Maintenance can be classified into following categories.
1. Corrective or breakdown maintenance
2. Scheduled maintenance
3. Preventive maintenance
4. Predictive maintenance
PLANT MAINTENANCE
CORRECTIVE OR BREAKDOWN MAINTENANCE
● Corrective or breakdown maintenance implies that repairs are made after the equipment is
out of order and it cannot perform its normal function any longer, e.g., an electric motor will
not start, a belt is broken, etc. Under such conditions, production department calls on the
maintenance department to rectify the defect.
PLANT MAINTENANCE
SCHEDULED MAINTENANCE
● Scheduled maintenance is a stich-in-time procedure aimed at avoiding breakdowns.
Scheduled maintenance practice incorporates (in it), inspection, lubrication, repair and
overhaul of certain equipment which if neglected can result in breakdown
PREDICTIVE MAINTENANCE
● Comparatively newer maintenance technique. It makes use of human senses or other
sensitive instruments such as
● Audio gauges
● Vibration analysers
● Pressure, temperature and resistive strain gauges To predict trouble before the equipment
fails
PLANT MAINTENANCE
PREVENTIVE MAINTENANCE (PM)
● It locates weak spots (such as bearing surfaces, parts under excessive vibrations, etc.) in all
equipment, provides them regular inspection and minor repairs thereby reducing the danger
of unanticipated breakdown.
● The underlying principle of preventive maintenance is that prevention is better than cure. To
minimize the possibility of unanticipated production interruption or major breakdown by
locating or uncovering any condition which may lead to it.
PLANT MAINTENANCE
PREVENTIVE MAINTENANCE (PM): OBJECTIVES
● To make plant equipment and machinery always available and ready for use.
● To maintain the value of equipment and machinery by periodic inspections, repairs,
overhauls, etc.
● To maintain the optimum productive efficiency of the plant equipment and machinery
● To maintain the operational accuracy of the plant equipment.
● To reduce the work content of maintenance jobs.
● To achieve maximum production at minimum repair cost.
● To ensure safety of life and limbs of the workmen
PLANT MAINTENANCE
PREVENTIVE MAINTENANCE (PM): ADVANTAGES
● Reduced breakdowns and connected down-time.
● Lesser odd-time repairs and reduced overtime to the maintenance work-force.
● Greater safety for workers.
● Fewer large-scale and repetitive repairs.
● Low maintenance and repair costs.
● Less stand-by or reserve equipment, and spare parts.
● Identification of equipment requiring high maintenance costs.
● Lower unit cost of manufacture.
● Better product quality and fewer product rejects.
● Increased equipment life
PLANT MAINTENANCE COST
● Breakdown of equipment makes the workers and the machines idle resulting in loss of
production, delay in schedules and expensive emergency repairs. These downtime costs
usually exceed the preventive maintenance costs of inspection, service and scheduled repairs
up to the point M shown in figure
PLANT MAINTENANCE COST
● Beyond this optimal point an increasingly higher level of preventive maintenance is not
economically justified and it is economical to adopt breakdown maintenance policy. The
optimal level of maintenance activity M, is easily identified on a theoretical basis.
COSTS ASSOCIATED WITH MAINTENANCE
1. Down time (Idle time cost) cost due to equipment breakdown.
2. Cost of spares or other material used for repairs.
3. Cost of maintenance labour and overheads of maintenance departments.
4. Losses due to inefficient operations of machines.
5. Capital requirements required for replacement of machines
Material Handling
MATERIAL HANDLING
● Starting from the time, the raw material enters and goes out of the factory in the form of
finished products, it is handled at all stages in between. It has been estimated that average
material handling cost is roughly 20 to 60% of total production cost
FUNCTIONS AND PRINCIPLES
● To select machines/equipment and plant layout to eliminate or minimize material handling
requirements.
● Minimization of movement of semi-finished items during the production process.
● Minimization of distance moved by adopting shortest routes.
● Increasing speed of material handling operation through mechanization.
● By utilization of gravity for material handling.
● Using the principle of containerization, palletization aim at moving optimum number of
pieces in one unit
MATERIAL HANDLING
SELECTION OF MATERIAL HANDLING EQUIPMENT
● The choice of particular equipment depends upon the specific requirement or the condition
of an industry. Following factors may be considered while selecting a material handling
equipment.
1. Material to be moved – size, shape, weight, delicacy, nature of material should be considered
2. Plant buildings and layout – cubic dimension of building
3. Type of production machines – it should handle machines which should be able to provide
maximum output per unit time.
4. Type of material flow pattern- a vertical flow pattern will require conveyor, elevators etc.
and horizontal flow pattern will need truck, crane etc.
5. Type of production
6. Cost of material handling equipment
MATERIAL HANDLING
FACTORS AFFECTING MATERIAL HANDLING
ENGINEERING FACTOR
a) The condition of existing building and plant layout
b) Production process and equipment
c) Nature of materials and products to be handled
d) Existing material handling equipment
ECONOMIC FACTOR
a) Cost of material handling equipment
b) Operating cost
c) Repair and maintenance cost
d) Insurance and depreciation cost
MATERIAL HANDLING- TYPES
● Industrial trucks: most widely used and flexible
● Cranes
● Hoists
● Monorail
● Belt and Roller Conveyors
● Slides and chutes
● Lift
● Tractors and Trailers
PREVIOUS YEAR QUESTIONS
▪ Differentiate between preventive maintenance and

breakdown maintenance
▪ Explain process plant layout and its advantages and
disadvantages
▪ Explain routing and procedures for routing
▪ List the principles of effective material handling
▪ Factors considered for selection of industrial plants
▪ Explain preventive and predictive maintenance
▪ What are the objectives of forecasting and factors to be
considered for forecasting
▪ principles of plant layout
▪ Advantage of value engineering
▪ list out factors to be considered for selection of material
handling equipment
▪ What are the factors considered for scheduling ?
▪ Distinguish between production and productivity
▪ List out the methods for increasing productivity
MODULE II
SUBJECT TOPICS
● MODULE 3: Quality Control
WORK STUDY
WORK STUDY
● Aims at finding the best and most efficient way of using available resources, (ie. Men,
Material, Machine, Money) to achieve best possible quality or in minimum possible time.
WORK STUDY = METHOD STUDY(MOTION STUDY) + WORK

MEASUREMENT (TIME STUDY)
● Method study: Aims at finding the best way of doing a job, achieved by eliminating
unnecessary motions involved in certain procedure or by changing the sequence of
operation or changing the operation itself
● Work measurement: Find the time allowed to complete the job by different techniques
WORK STUDY
ROLE OF WORK STUDY IN IMPROVING PRODUCTIVITY
● In order to understand the role of work study, we need to understand the role of method
study and that of time study.
● Method study (also sometimes called Work Method Design) is mostly used to improve the
method of doing work. It is equally applicable to new jobs. When applied to existing jobs
method study aims to find better methods of doing the jobs that are economical and safe,
require less human effort, and need shorter make-ready / put-away time. The better method
involves the optimum use of best materials and appropriate manpower so that work is
performed in well-organized manner leading to increased resource utilization, better quality
and lower costs.
● It can therefore be stated that through method study we have a systematic way of
developing human resource effectiveness, providing high machine and equipment
utilization, and making economical use of materials.
WORK STUDY
ROLE OF WORK STUDY IN IMPROVING PRODUCTIVITY
● Time study, on the other hand, provides the standard time, that is the time needed by
worker to complete a job by the standard method. Standard times for different jobs are
necessary for proper estimation of
○ manpower, machinery and equipment requirements
○ daily, weekly or monthly requirement of materials
○ production cost per unit as an input to better make or buy decision
○ labour budgets
○ Worker’s efficiency and make incentive wage payments.
● By the application of method study and time study in any organization, we can thus achieve
greater output at less cost and of better quality, and hence achieve higher productivity
WORK STUDY
ADVANTAGES
● Uniform and improved production flow
● Reduced manufacturing costs
● Fast and accurate delivery dates
● Job satisfaction
● Higher wages to worker
METHOD STUDY
METHOD STUDY
OBJECTIVES
● Standardized procedures
● Less fatigue to operator
● Effective utilization of resources
● Efficient and fast material handling
● Reduced health hazards
METHOD STUDY
PROCEDURE
METHOD STUDY
PROCEDURE
● Select the job – on which method study is to be applied.
● Obtain information and record. Recording can be done with the help of process
charts, diagrams, models etc.
● Examine the information critically.
● Develop the most practical, economical and effective method by considering
real limitations of the situation.
● Install the new method as standard practice.
● Maintain the standard practice by regular follow up
METHOD STUDY
PROCEDURE: SELECT
● While selecting a job for doing method study, the following factors are considered:
1.Economical Factors
● The money saved as a result of method study should be sufficiently more. Then only the
study will be worthwhile. Based on the economical factors, generally the following jobs
are selected.
1. Operations having bottlenecks (which holds up other production activities).
2. Operations done repetitively.
3. Operations having a great amount of manual work.
4. Operations where materials are moved for a long distance
METHOD STUDY
PROCEDURE: SELECT
2.Human Factors
The method study will be successful only with the co-operation of all people concerned
viz., workers, supervisor, trade unions etc. Workers may resist method study due to
● The fear of unemployment.
● The fear of reduction in wages.
● The fear of increased work load
3.Technical Factors
To improve the method of work all the technical details about the job should be available.
Every machine tool will have its own capacity
METHOD STUDY
PROCEDURE: RECORD
● All the details about the existing method are recorded. This is done by directly observing the
work. Symbols are used to represent the activities like operation, inspection, transport,
storage and delay.
● Different charts and diagrams are used in recording. They are
1. Operation process chart: All the operations and inspections are recorded.
2. Flow process chart
○ Man type - All the activities of man are recorded
○ Material type - All the activities of the material are recorded
○ Equipment type - All the activities of equipment or machine are recorded
METHOD STUDY
PROCEDURE: RECORD
3. Two-handed process chart: Motions of both lands of worker are Right hand-Left hand chart
recorded independently.
4. Multiple activity chart: Activities of a group of workers doing a single job or the activities of a
single worker operating a number of machines are recorded.
5. Flow diagram: This is drawn to suitable scale. Path of flow of material in the shop is
recorded.
6. String diagram: The movements of workers are recorded using a string in a diagram drawn to
scale.
7. Motion and film analysis – SIMO chart
METHOD STUDY
PROCEDURE: EXAMINE
● The recorded events are critically examined with following basic Questions
● The above mentioned five basic questions are further subjected to enquiries like Why?
Alternate ways of doing? Best method of doing
METHOD STUDY
PROCEDURE: DEVELOP
● Develop the bestmethod as a result of critical examination and record it. The developed
method should be
○ Practical and feasible
○ Safe and effective
○ Economical
○ Acceptable to design, production control, quality control and sales departments.
PROCEDURE: INSTALL
● Install developed method Involves three phases- planning, arranging, implementing
METHOD STUDY
PROCEDURE: MAINTAIN
● Ensure proper functioning of the installed method
● Periodic checks and verifications
● Deviations if any and its reasons may be noted
● Reasons are explored and changes are made if necessary
METHOD STUDY
PROCESS CHART
Symbols:
1) Operation Represents an action Eg. Cutting
Finished good or raw material or tool retained for

2) Storage quite some time before further action
Eg. Milling cutter lying in tool store
3) Delay or Idle When something stops the process
Eg. Power failure, waiting for lift
Movement of an item
4) Transport Eg. Oil flowing through pipe, Movement with crane
(NB: Direction of arrow not important)
Checking for correctness
5) Inspection Eg. Inspection with gauges
METHOD STUDY
PROCESS CHART
Symbols:
In addition to the basic symbols, there are symbols for combined activities.
The important event has an outer symbol
6) Operation cum transportation
Eg. Assembly operation in a conveyor line
7) Inspection cum operation

Eg. Packing of the food item while being weighed
METHOD STUDY
PROCESS CHART : Types (Recall from “Record”)
1. Operation Process Chart
● An operation process chart is a graphic representation of the sequence of all
operations and inspections taking place in a process.
● It is a process chart which gives an overall view of a process by recording only
the main operations and sequences in proper sequence. So, it is obvious that
such a chart requires only symbols for 'Operations' and 'inspection
● It is also known as Outline process chart.
● It gives a bird‘seye view of the overall activities.
● Entry points of all material are noted in the chart.
METHOD STUDY
2. Flow Process Chart
● It is a graphic representation of all operations, transportations, inspections, delays and
storage occurring during a process and also includes the information such as time required
and distance moved etc. It is more informative than operation process chart. There are three
types
1. Man type flow process chart: This flow process chart records what the worker does.
2. Material type flow process chart: This flow process chart records how the material is
handled or treated.
3. Equipment type flow process chart : This flow process chart records how the
equipment or machine is used
1. Man type flow process
chart: 2 min For Preparation of Requisition (By
charge hand)
Eg: Collection of material
0.5 min Collect Requisition
from store
100 feet To supervisor
Convert to Give requisition To supervisor

0.5 min
table form
0 min For signature
Give to
10 min storekeeper To store
For material Collect requisition
0.5 min 500 feet 0.5 min
Check material 3 min Summary

Process Count Time (Min) Distance (feet)
Collect material 0.5 min ? ?
? ?
To shop 500 feet ? ?
? ?
2. Material type flow process chart:
Summary
Process Count Time (Min) Distance (feet)
? ?
? ?
? ? ?
? ?
3. Machine/Equipment type flow process
chart:
Eg. Machining operation in Lathe
Dist. Time
Moved (mts)
Material loading in chuck 8
Tool loading 5
Turn on the machine and start 20
machining
Inspect the material 2
(Machine idle)
Unload material 1
METHOD STUDY
3. TWO HANDED PROCESS CHART
○ Two handed process chart is also known as Left and Right Hand process
chart. As the name suggests, activities of a worker’s hand are recorded with
respect to each other.
○ This usually comes into picture when the work involves repetitive and short
operations
METHOD STUDY
3. TWO HANDED PROCESS CHART
METHOD STUDY
4. MULTIPLE ACTIVITY CHART
● It records all the activities of workers and machines on a common time
scale and thus shows interrelations between them. This chart is useful
where a number of workers work in a group or individual operator
handles two or more machines
METHOD STUDY
4. MULTIPLE ACTIVITY CHART
METHOD STUDY
5. FLOW DIAGRAM
● Flow diagram is a drawn to a scale that shows the relative position of machines, various
activities identified by numbers and associated with a particular flow chart
● In the above figure , raw material from store moves to station A where an operation is
performed and moves B,C,D and reaches E, Where inspection is carried out and moves to F.
then it is being sent to G where it halts for a short while and ultimately goes out of factory
METHOD STUDY
6. STRING DIAGRAM
● This diagram is a layout on which the length of string is used to record the extent as well as
the pattern of movement.
● In this diagram, every machine tool or equipment is marked with a peg or pin struck in the
area.
● A continuous coloured thread or string traces the path taken up by the material or workers
while performing particular operation. This type is suitable where
○ The paths are many and repetitive
○ The path becomes congested
METHOD STUDY
6. STRING DIAGRAM
METHOD STUDY
MICRO MOTION STUDY
● One macroscopic motion may contain a number of microscopic motions.
● It may hot be possible to eliminate completely a macro motion but an unnecessary
micromotion can definitely be avoided.
● Since microsystem is very detailed, it is simpler to understand what precisely the worker is
doing.
● Therblig colours make the charts more meaningful
● The procedure of making a micromotion study consists of:
○ Filming the operation to be studied.
○ Analysing the film.
○ Charting the results of the analysis.
○ Developing the improved method
METHOD STUDY
MICRO MOTION STUDY
Therbligs
Sl No. Therblig Letter Symbol Colour Definition
1 Assemble A Violet Putting objects together.
2 Disassemble DA Light violet Separating different parts

of an assembled unit
3 Avoidable delay AD Lemon A delay within
yellow operator’s control
4 Unavoidable delay UD Yellow A delay on which
operator has no control
5 Transport loaded TL Green Moving an article
from one place to another
6 Transport empty TE Olive green Moving (a body

member, say hand) empty
METHOD STUDY
MICRO MOTION STUDY
Therbligs
7 Search SH Black Hunting for an object
8 Plan PN Brown Mental reaction before action
9 Rest R Orange An allowance, idleness or pause

to overcome fatigue incurred
during previous work
10 Position P Blue Turning to line up, orient or
change position.
11 Find F Grey Mental reaction at end of search
12 inspect I Burnt ochre Examining an object for its

quality
METHOD STUDY
MICRO MOTION STUDY
Therbligs
13 Preposition PP Pale blue Locating an article in
predetermined position so that it
is ready for use
14 Grasp G Red Taking hold of something
15 Use U Purple Manipulating or causing a tool to

do its function
16 Hold H Gold ochre Retention (after grasp)
17 Select ST Light grey Choosing one object from

amongst many
18 Release load RL Carmine Releasing an object

red
METHOD STUDY
MICRO MOTION STUDY
Therbligs
METHOD STUDY
MICRO MOTION STUDY
S.I.M.O Chart (Simultaneous Motion Cycle Chart)
● It is an extremely detailed left-and right-hand operation chart.

● It showsbon a common time scale the simultaneous minute
movements (therbligs) performed by the two hands of an operator.
● Besides hands, the movements of other limbs of an operator may
also be recorded.
● The time scale is represented in winks (1/2000 of a minute)
METHOD STUDY
MICRO MOTION STUDY
S.I.M.O Chart (Simultaneous Motion Cycle Chart)
• S.I.M.O. chart is generally used for micromotion

analysis of
(a) short cycle repetitive jobs
(b) High order skill jobs
METHOD STUDY
MICRO MOTION STUDY

S.I.M.O Chart :construction
(1)Using a 16-mm movie camera a number of repetitive work cycles
are filmed (at 16 frames per second) as the worker performs the job.
For recording time, a timing device (wink counter) is placed in the
field of view.
(2)The film thus obtained is viewed and the most efficiently
performed one whole cycle is selected for analysis. (A cycle involves
complete series of motions from beginning to the end for completing a
unit of work).
(3)A projector is employed to study the work cycle recorded on the
film. The work study Engineer analyses the film, frame by frame,
studying one frame at a time, and concentrating first on the left-hand
and then on right-hand movements.
METHOD STUDY
MICRO MOTION STUDY
S.I.M.O Chart :construction
(4)The data noted in step-3 is recorded in the form of a therblig chart.
The durations of actual movements are also read from the wink
counter.
(5) A simo chart is then drawn for further study and analysis.
(6)This simo chart of the existing method is subjected to questioning
procedure based on the principles of motion economy; the purpose is
to develop a better and improved procedure for doing a job.
(7) A new Simo chart is then prepared for the new method.
(8) The new method is then checked as regards the advantages
claimed for the same.
METHOD STUDY
MICRO MOTION STUDY
S.I.M.O Chart
METHOD STUDY
PRINCIPLE OF MOTION ECONOMY
● A set of rules were designed by Gilbreth in order to develop better methods.
● A better method of doing a job is one which consumes minimum of time and
energy in performing limb (hand, foot, leg, arm, etc.) motions in order to
complete the task and this is possible only, by economising the use of motions.
● The rules of human motions as presented by Gilbreth were rearranged and
amplified by Barnes, Lowry, Maynard, and others. The various rules are as
follows :
METHOD STUDY
1. Rules Concerning Human Body
● Both hands should be used for productive work.
● Both the hands should start and finish their motions at the same time
● Except for the rest period, the two hands should not be idle at one time.
● Motions of hands or arms should be symmetrical, simultaneous and opposite.
● Motions should be simple and involve minimum number of limbs (of course depending upon
the type of work). The purpose is to perform the work in the shortest duration of time and
with minimum of fatigue.
METHOD STUDY
1. Rules Concerning Human Body
● It is very desirable for a worker to employ momentum to assist himself rather than using
his own muscular efforts.
● Motions should be smooth and continuous; they should not involve frequent stops and
sharp directional changes.
● A worker may use mechanical aids to assist him to overcome muscular effort.
● Work movements should be rhythmical and automatic, if possible
METHOD STUDY
2. Rules Concerning Work Place Layout and Material Handling
Diagonal Lifting
METHOD STUDY
2. Rules Concerning Work Place Layout and Material Handling
● Tools and materials should preferably be located in the order or sequence in which they will
be required for use. It reduces mental strain (on the operator) and the process becomes
more or less mechanical.
● Good illumination is necessary for proper seeing, fast operating and reducing accidents.
● In order to impart rest to some of his limbs, an operator may sometimes sit or stand while
working.
● In order to reduce fatigue, the seating arrangement of the worker should be comfortable
and adjustable.
● All heavy parts should be lifted by mechanical devices
METHOD STUDY
3. Rules Concerning Tools and Equipment Design
● Jigs, fixtures and foot operated devices shouldbe employed to reduce the work load on the
hands,
● Wherever possible, those tools should be used which can perform more than one
operations. This saves a lot of time, otherwise wasted in searching and picking a number of
tools. .
● There should be maximum surface contact between the tool (handle) and the hand. It helps
proper application of hand force and minimizes fatigue
METHOD STUDY
4. Rules Concerning Time Conservation
● Even temporary ceasing of work, by a man or machine should not be encouraged.
● Machine should not run idle.
● Two or more jobs should be worked upon at the same time or two or more operations
should be carried out on a job simultaneously. For example, a drill and a turning tool may
simultaneously operate on a part being manufactured on a turret lathe.
● Number of motions involved in completing a job should be minimized.
TIME STUDY
● It may be defined as application of different techniques to measure and establish the time
required to complete the job by a qualified worker at a defined level of performance
OBJECTIVES
● Target time for each job can be scientifically estimated, with this estimate realistic
● schedules and manpower requirements can be prepared.
● Sound comparison of alternative methods is possible by comparing their basic times.
● Useful wage incentive schemes can be formulated on the basis of target times.
● In can lead to proper balancing of the work distribution.
● It can help to analyse the activities for performing a job with the view to eliminate or
● reduce unnecessary or repetitive operations so that human effort can be minimized.
● To standardise the efficient method of performing operations..
TIME STUDY
OBJECTIVES
● To standardise conditions for efficient performance.
● To determine man and machines ratio for effective and efficient utilisation of both.
● To provide information’s and basis for production planning and scheduling activities
METHODS OF WORK MEASUREMENTS
1. Stopwatch time study
2. Standard data
3. Predetermined motion time study (PMTS)
4. Work sampling
TIME STUDY
1. STOPWATCH TIME STUDY
● Stop watch is one of the important timing devices used for measuring the time taken by a
worker to complete a job. Stop watch is an accurate time measuring equipment which can
normally run continuously for half an hour or one hour and record the time by its small hand
PROCEDURAL STEPS
1. Analyse the job to establish the quality to be achieved in the job.
2. Identify key operations to be timed in the job.
3. Get improved procedure from the method study department.
4. Organise resources and explain the objectives of time study to the worker and supervisor.
5. Explain details to worker about improved working procedure.
6. Break operation into elements to separate the constant elements from variable elements.
TIME STUDY
STOPWATCH TIME STUDY:PROCEDURAL STEPS
7. Observe and record the time taken by an operator.
8. Determine for number cycles to be timed and then the average time or representative time
can be found out.
9. Rate of performance of the worker during observation.
10. Calculate normal time from observed time by using performance rating factor.
11. Add process allowance rest and personal allowance and special allowances to the normal
time in order to obtain standard time or allowed time.
12. Standard time determination by adding normal time and allowances
TIME STUDY
2. STANDARD DATA
● Standard data is a catalogue of normal time values for different elements of jobs or
minute movements involved in different jobs.
● Once the standard data is ready, one require to list the job elements or minute hand
movements of operation, take their time from the catalogue and add them up.
● The standard time can be found by adding normal time to allowances
● Standard time may be defined as the amount of time required to complete a unit of
work
TIME STUDY
Standard data (macro data) Universal standard data( microdata)
● It is based upon the elements of job, ● It is based upon the minute movements (therbligs) in an operation
known as Element standard data and is compiled by microscopic methods.
● It is compiled by the groups of elements ● This analysis is carried out by frame to frame study of the film of
of jobs the work cycle recorded by movie camera. (Micro motion analysis
● Macro data deals with big elements ● Microdata with minute motion
● It is collected by time study (stop watch ● It is the result of micro motion study and analysis.
study) ● E.g: MTM(Method Time Measurement) and WFS( Work factor
system)
TIME STUDY
3. PREDETERMINED MOTION TIME SYSTEM (PMTS)
● A predetermined motion time system (PMTS) may be defined as a procedure that analyses
any manual activity in terms of basic or fundamental motions required to perform it.
● Each of these motions is assigned a previously established standard time value and then the
timings for the individual motions are synthesized to obtain the total time needed for
performing the activity.
● The main use of PMTS lies in the estimation of time for the performance of a task before it is
performed.
TIME STUDY
3. PREDETERMINED MOTION TIME SYSTEM (PMTS) :PROCEDURE
1. Select large number of workers doing varieties of jobs under normal working
conditions in industries
2. Record the job operations on a movie frame
3. Analyse the film, note down the time taken to complete each element and
compile the data in the form of a table or chart
TIME STUDY
3. PREDETERMINED MOTION TIME SYSTEM (PMTS) :OBJECTIVES
● Determination of job time standards.
● Comparing the times for alternative proposed methods so as to find the economics of the
proposals prior to production run.
● Estimation of manpower, equipment and space requirements prior to setting up the facilities
and start of production.
● Developing tentative work layouts for assembly lines prior to their working in order to
minimize the amount of subsequent re-arrangement and re-balancing.
● It provides basis for wage plan and incentives
● It facilitates training of the workers and supervisors
TIME STUDY
ADVANTAGES
● It eliminates the inaccuracies associated with stop watch time study
● It is superior to stop watch time study when to short cycle highly repetitive operations
● It helps in tool and product design
● The time and cost associated with finding the standard time for a job is considerably
reduced
DISADVANTAGES
● It deals with manual motion of an operations only
● All categories of motions have not been considered while collecting PMTS data.
TIME STUDY
APPLICATION
● Machining work
● Maintenance work
● Assembly jobs
● Office work
● Servicing
TYPES OF PMT
● There are two types of PMTSs
1. Method time measurement (MTM)
2. Work factor system (WFS
TIME STUDY
METHOD TIME MEASUREMENT (MTM)
● This system was developed by MTM association and it got recognition in 1948. It measures
time in terms of TMUs (time measurement units) and I TMU=0.0006 minutes.
● MTM analyses an industrial job or any manual operation or method into the basic motions or
human movements required to perform it and assigns to each motion a predetermined time
standard which is determined by the nature of the motion and the conditions under which it
is made. When all such times are added up it provides normal time for the job.
● Standard time can be determined by adding suitable allowances.
● MTM may be defined as procedure which analyses any manual operation or method into
basic motions required to perform it and assigns to each motion a predetermined time
standard which is determined by nature of motion and conditions under which it is made.
TIME STUDY
● According to MTM, various classification of motions are
TIME STUDY
4. WORK SAMPLING
● Work sampling can tell what percentage of the working day, a person spends how i.e. how
much time he works, what time he expends for his personal needs and for how long he
remains idle.
● Activities of very long duration cannot economically timed with the help of stop watch time
study.
● In such cases the most appropriate technique for work measurement is work
● sampling which takes only 1/20th of the time required for stop watch study and gives the
results within an accuracy of + or - 2%.
● It relies upon statistical theory of sampling and probability theory. Normal frequency
distribution and confidence level are associated with work sampling
TIME STUDY
4. WORK SAMPLING: PROCEDURE
● Step 1: Define the problem.
○ Determine the main objectives and define each activity to be measured
● Step 2: Make sure that all the persons connected with the study
● Step 3: State the desired accuracy limits for ultimate results
● Step 4: Conduct a pilot study to
○ Estimate the approximate percentage occurrence of the activity
○ Estimate the required number of observations for the desired accuracy set
○ Ensure that workers have become habituated to the visits of the work study engineer
● Step 5: Design the actual study
● Step 6: Using the data obtained from pilot study calculate the number of observations to be
made
TIME STUDY
4. WORK SAMPLING: ADVANTAGES
● Work sampling gives an unbiased result since workmen are not under close observation.
● A work sampling study may be interrupted at any time without affecting the results.
● Work sampling can be conducted by anyone with limited training. There is no need to have
experts.
● Team work can be studied by work sampling and not by the time-study.
● Work sampling is economical and less time-consuming than time study. This is because more
than one worker can be studied at the same time. Secondly, observer needs not to be
present himself for a long time
TIME STUDY
4. WORK SAMPLING: DISADVANTAGES
● Work sampling is not economical for short cycle jobs. It is also uneconomical to study a single
worker or even small group of workers.
● Unlike time study, it does not allow a small breakdown of activities and delays.
● Working men may change their normal method of working when they see an observer.
Therefore, the results from the work study may not be accurate.
● In work sampling method, the observations are limited or insufficient. So, the results may not
be accurate.
● This method normally does not record the workers' speed of working.
TIME STUDY
4. WORK SAMPLING: APPILICATION
● Work of teams has to be investigated/studied.
● There is clear distinction between working time and idle time.
● To indicate areas of delay.
● To investigate and to locate areas underutilization.
● For establishing overall performance levels.
● For determination of machine utilizations.
● In determining the distribution of duties among a group of workers.
● In the study of nature, causes and extent of interference with effective accomplishment of a
project.
● For the purpose of cost control and accounting.
1. What is flow process chart and explain three types of flow process charts
2. State the applications of work sampling
3. Explain SIMO chart with examples
4. Illustrate and explain string diagram
5. Explain process chart symbols - preparation of charts
6. Principles of motion economy
7. Explain Stop watch time study procedure
8. Explain the applications of work samplings
9. Describe briefly ‘SIMO Chart’ and state its application
10. Define micro motion study and state its objective

11. State and explain the various allowances to be considered while estimating the
standard time
12. Describe the point method of job evaluationwith its advantages
13. Define micromotion study and state its objective
14. Write a short note on method time measurement
15. What Are the methods of job evaluation siting their advantages and disadvantages
MODULE III
SUBJECT TOPICS
● MODULE 3: Quality Control and Inspection
QUALITY
INTRODUCTION
● Now a days, every organization wants quality for their products to
satisfy customer’s requirements.
● Quality is what the customers desires. Thus the management always
desire to look at customer’s requirement and achieve their satisfaction
by successfully running their business
QUALITY DEFINITION
COST OF QUALITY
● Costs of quality or quality costs does not mean the use of expensive or
very highly quality materials to manufacture a product.
● The term refers to the costs that are incurred to prevent, detect and
remove defects from products.
● Quality costs are categorized into four main types ,These are:
1. Prevention costs
2. Appraisal costs
3. Internal failure costs and
4. External failure costs
COST OF QUALITY
PREVENTION COST
● It is much better to prevent defects rather than finding and removing them from products.
● The costs incurred to avoid or minimize the number of defects at first place are known as
prevention costs. Some examples of prevention costs are improvement of manufacturing
processes, workers training, quality engineering, statistical process control etc.
● These costs are associated with the design, implementation, and maintenance of the quality
management system.
● Product or service requirements: Establishment of specifications for incoming materials,
processes, finished products and services
● Quality planning: Creation of plans for quality, reliability, operations, production and
inspection
● Quality assurance
● Training: Development, preparation and maintenance of programs
PREVENTION COST
Examples of prevention cost
○ System development
○ Quality engineering
○ Quality circles
○ Statistical process control
○ Supervision of prevention
○ Quality improvement projects
○ Technical support to suppliers
○ Quality data gathering, analysis and reporting
○ Audit of the quality system
APPRAISAL COST
● Appraisal costs (also known as inspection costs) are those cost that are incurred to identify
defective products before they are shipped to customers.
● All costs associated with the activities that are performed during manufacturing processes to
ensure required quality standards are also included in this category.
● Identification of defective products involve the maintaining a team of inspectors. It may be
very costly for some organizations
● Appraisal costs are associated with measuring and monitoring activities related to quality.
● Verification: Checking of incoming material, process setup, and products against agreed
specifications
● Quality audits: Confirmation that the quality system is functioning correctly
● Supplier rating : Assessment and approval of suppliers of products and services
APPRAISAL COST
Examples of appraisal cost
○ Test and inspection of incoming materials
○ Final product testing and inspection
○ Supplies used in testing and inspection
○ Supervision of testing and inspecting activities
○ Depreciation of test equipment
○ Maintenance of test equipment
○ Plant utilities in inspection area
○ Field testing and appraisal at customer site
INTERNAL FAILURE COST
● Internal failure costs are those costs that are incurred to remove defects from the products
before shipping them to customers. Examples of internal failure costs include cost of rework,
rejected products, scrap etc.
● Internal failure costs are incurred to remedy defects discovered before the product or
service is delivered to the customer.
● Scrap: Defective product or material that cannot be repaired, used, or sold
● Rework or rectification: Correction of defective material or errors
● Failure analysis: Activity required to establish the causes of internal product or service failure
INTERNAL FAILURE COST
Examples of internal failure cost
○ Net cost of scrap
○ Net cost of spoilage
○ Rework labour and overhead
○ Reinspection of reworked products
○ Disposal of defective products
○ Down time caused by quality problems
○ Analysis of the cause of defects in the production
○ Retesting of reworked products
○ Re-entering data because of keying
○ Debugging software errors
EXTERNAL FAILURE COST
● If defective products have been shipped to customers, external failure
costs arise.
● External failure costs include warranties, replacements, lost sales
because of bad reputation, payment for damages arising from the use
of defective products etc.
● The shipment of defective products can dissatisfy customers, damage
goodwill and reduce sales and profits
EXTERNAL FAILURE COST
Examples of external failure cost
○ Cost of field servicing and handling complaints
○ Warranty repairs and replacement costs
○ Liability arising from defective products
○ Lost sales arising from a reputation of poor quality
○ Returns and allowances arising from quality problems
○ Product recalls
○ Repairs and replacements beyond the warranty period
QUALITY
CONTROL
QUALITY CONTROL
● It is a system for measuring and checking a phenomenon. It suggests
when to inspect, how often to inspect, and how much to inspect.
● In addition, it incorporates a feedback mechanism which explores the
cause of poor quality and takes corrective action
QUALITY CONTROL
OBJECTIVES
● Improvement of quality
● Reduction of scrap and rework
● Efficient use of men and machines
● Economy in use of materials
● Decreased inspection cost
● Scientific evaluation of quality and production
● Reduction in customer complaints
● To check the variation during manufacturing
QUALITY CONTROL
How Quality is ensured ?
INSPECTION
● An item or component or product which is manufactured is required to
perform certain function
● The act of checking whether a component actually does so or not is
called Inspection
● Inspection measures the quality of a product or service in terms of pre
decided standards
INSPECTION
INSPECTION
● Inspection means checking the acceptability of the manufactured product. It measures the
quality of a product or service in terms of pre decided standards
OBJECTIVES
● Inspection separates defective components from non-defective ones and thus ensures
adequate quality of products
● It detects defects I raw material and flaws in process
● It prevents further work being done on semi-finished products already detected as spoiled
● It makes sure that the product works and it works without hurting anybody
● It build up the reputation of the concern as it reducing the number of complaints from the
customers
● It detects the sources of weakness and trouble in the finished products
INSPECTION
STAGES
Incoming raw material inspection
● Eliminate materials that do not meet specification
● Evaluate vendor’s quality
● Raw materials involving high transportation cost are inspected by the buyer at
vendor’s end
● Visual check up, dimensional check, test for physical property and chemical
composition.
● 100 % inspection and sampling inspection
INSPECTION
STAGES
In process inspection
● Eliminate further work on defective material
● Prevent defect being concealed in the final product.
● Carried out by workers doing the job and by inspection department.
Inspection of finished good
● Prevents faulty product to be dispatched to the customer
● Last chance to detect imperfections
● Visual and functional inspection
● Destructive and Non destructive testing (NDT)
INSPECTION
TYPES
1. First piece inspection
2. Operation Inspection
3. Functional Inspection
4. Floor/Process/Patrolling inspection
5. Centralized inspection
INSPECTION
1. First piece inspection
● In automatic machines first three or four products are inspected
carefully
● Sometimes a vendor must submit first pieces which will be inspected
before giving order.
● E.g: book publishing
INSPECTION
2. Operation Inspection
● When more than one process/operations are required to manufacture
a product, it will be inspected after each stage
3. Functional inspection
● Ensures all parts of the assembly functions as per requirements
INSPECTION
4. Floor/Process/Patrolling inspection
● The inspector walks round on the shop floor from machine to machine and checks samples of
the work of various machine operators or workers
Advantages
● Inspected at floor itself, defects rectified immediately. Thus saving time, material and labour
● A worker can understand his mistakes
Disadvantages
● Inspection with advanced modern instruments not possible
● Work at workstations kept pending
● Worker may influence the inspector
● Rejection of work piece leads to friction between worker and inspector
INSPECTION
● Inspection carried out at one place
● The components are brought to the inspection room
Advantages
● Costly and accurate measuring instruments kept in separate room at recommended
conditions
● Worker and inspector doesn’t come in direct contact
● Work at workstation doesn’t kept pending
● Automatic inspection devices like CMM can be provided thus reducing cost of inspection
INSPECTION
Disadvantages
● Increased material handling
● Machine error detection delayed which causes more material spoilage
● Unsuitable for heavy parts
● While routing is done, inspection room has to be considered. Thus proper
production control is required
STATISTICAL
QUALITY
CONTROL
STATISTICAL QUALITY CONTROL (SQC)
● This came from two words statistics and quality control.
● Statistics means data, a good amount of data to obtain reliable results.
● The science of statistics handles this data in order to draw certain
conclusions.
● Using SQC technique one can collect and analyse the data to control
the product quality.
● SQC is used to check whether variation in quality is due to a chance
cause or due to assignable cause
BENEFITS OF SQC
● It provides a means of detecting error at inspection.
● It leads to more uniform quality of production.
● It improves the relationship with the customer.
● It reduces inspection costs.
● It reduces the number of rejects and saves the cost of material.
● It provides a basis for attainable specifications.
● It points out the bottlenecks and trouble spots.
● It provides a means of determining the capability of the manufacturing process.
● It promotes the understanding and appreciation of quality control
Commonly used techniques of statistical quality control are as follows
1. Sampling inspection
2. Control charting
3. Analysis of data
SAMPLING
INSPECTION
SAMPLING INSPECTION
● Sampling inspection is a technique to determine whether a lot or population should be
rejected or accepted on the basis of the number of defective parts found in a random sample
drawn from the lot. If the number of defective parts exceeds a predefined level, the lot is
rejected.
ADVANTAGES
● It involves less amount of inspection to achieve a pre-decided degree of certainty about the
quality.
● It consumes less time, and is less expensive.
● Fatigue and boredom incurred by the inspectors is much less, hence their operating
efficiency remains high,
SAMPLING INSPECTION
ADVANTAGES
● It is more accurate because in 100 percent inspection, errors get introduced because of the
fatigue and boredom incurred by the inspectors due to large inspection work of repetitive
nature.
● Since fewer pieces are inspected, no damage is done to the remaining pieces of the lot as
they are not handled.
● In certain cases where the components are to be inspected by destructive testing or where a
powder is to be chemically analysed, 100 percent inspection can never be employed.
● Rejection of a complete batch on the basis of a sample decidedly pressurizes for
improvements in quality.
CONTROL
CHARTING
CONTROL CHARTING
● A control chart is a graphical representation of collected information
● Control chart is a device which specifies the state of statistical control, second a
device for attaining statistical control, and third a device to judge whether
statistical control has been attained.
● Control charts are based on characteristics of departure from the specified
tolerance limit. The departure is due to chance causes as well as assignable causes
CONTROL CHARTING
ADVANTAGES
CONTROL CHARTING
TYPE OF CONTROL CHARTS
CONTROL CHARTING
1. VARIABLE CONTROL CHARTS
● It involves the measurement of job dimensions and an item is accepted
or rejected if its dimensions are within or beyond the fixed tolerance
limits.
2. ATTRIBUTE CONTROL CHART
● These charts are drawn for the process in which the output products
are not subjected to any dimensional measurements
CONTROL CHARTING
VARIABLE CHART ATTRIBUTE CHART
● measure the quality characteristics in ● No direct measurement of the product
numbers ● Less detailed
● More detailed ● Require comparatively bigger sample size
● Small sample size ● It is based upon GO and NO GO data
● Relatively expensive because of greater cost
of collecting measured data
VARIABLE CHART
X BAR CHART (MEAN CHART)
● it shows the change in process average and is affected by changes in process variability
● it is a chart for the measure of central tendency
● it shows erratic and cyclic shifts in the process
● it detects steady progress changes like tool wear
R CHART (RANGE CHART)
● it is a chart for the measure of spread
● it controls general variability of the process and is affected by changes in process variability
● it is generally used with x bar chart
VARIABLE CHART
● PROCEDURE TO DRAW X BAR AND R CHART
VARIABLE CHART
PROCEDURE TO DRAW X BAR AND R CHART
Where A2, D3, D4 are the constants that depends upon the number of items per sample, which is
called sample size.
5. Plot UCL and LCL on X bar chart. Similarly draw for R chart
6. Plot the means of subgroups in X bar chart. similarly plot the range of subgroups for R chart
7. If the values of X bar and R for each sample lies within the control limit, process is in under
control
ATTRIBUTES
● It is based upon GO and NO GO data. These types are drawn for the
process in which output products are not subjected to any dimensional
measurements.
● Attribute charts differentiates between a defective item and a non-
defective item without going into the measurement of its dimension.
● Examples: P chart, np chart and C chart
ATTRIBUTES
P CHART OR 100 P CHART
● It can be a fraction defective chart or % defective chart (100p).This type of chart calculates
proportion defectives in a sample. P chart is used to find the average proportion defective
items in a sample.
STEPS TO DRAW A P CHART
1. Record the data for each subgroups on the number inspected to the defective item in a
sample
2. Calculate fraction defective (P) for each subgroup
𝑁𝑜 𝑜𝑓 𝑑𝑒𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑖𝑛 𝑎 𝑠𝑢𝑏 𝑔𝑟𝑜𝑢𝑝
P=
𝑁𝑜 𝑜𝑓 𝑖𝑡𝑒𝑚𝑠 𝑖𝑛𝑠𝑝𝑒𝑐𝑡𝑒𝑑 𝑖𝑛 𝑎 𝑠𝑢𝑏 𝑔𝑟𝑜𝑢𝑝
ATTRIBUTES
3. Calculate average fraction defective (P bar)
𝑇𝑜𝑡𝑎𝑙 𝑛𝑜 𝑜𝑓 𝑑𝑒𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑖𝑛 𝑎 𝑝𝑒𝑟𝑖𝑜𝑑
P bar =
𝑇𝑜𝑡𝑎𝑙 𝑛𝑜 𝑜𝑓 𝑖𝑡𝑒𝑚𝑠 𝑖𝑛𝑠𝑝𝑒𝑐𝑡𝑒𝑑
Sample size in P chart must be greater than or equal to 50
4. Determine UCL and LCL for P chart
ATTRIBUTES
5. Plot each point and the control limits thus identify the points which lies outside the limits
Example of P Chart
ATTRIBUTES
C CHART
● It is the control chart in which number of defects in apiece or a sample are
plotted.
● Defect is a single non-conforming characteristics of an item, while defective is an
item that has one or more defects.
● C chart is based on Poisson probability distribution
ATTRIBUTES
CONSTRUCTION OF C CHART
1. Estimate the average number of defects per unit C
2. Find the average C bar from K samples of equal size n
3. Calculate UCL and LCL using formula
4. Plot the UCL and LCL in the chart and check whether the process is in control or out of control
ANALYSIS OF
DATA
ANALYSIS OF DATA
FREQUENCY AND TALLY SHEET
ANALYSIS OF DATA
FREQUENCY AND TALLY SHEET
ANALYSIS OF DATA
BAR CHART
● Bar chart plotted form the data given in the frequency distribution table. A bar chart make
use of and places bars at different values of measured dimensions. The height of each bar is
proportional to the frequency of particular measured dimensions
ANALYSIS OF DATA
FREQUENCY POLYGON
ANALYSIS OF DATA
HISTOGRAM
● Histogram is another way of representing frequency distribution
graphically. Histogram make use of constant width bars.
● The left and right side of the bar represent the lower and upper
boundary of the measured dimension respectively.
● The height of each bar is proportional to the frequency within that
boundary
ANALYSIS OF DATA
HISTOGRAM
ANALYSIS OF DATA
HISTOGRAM
ANALYSIS OF DATA
ANALYSIS OF DATA
Less than Ogive
ANALYSIS OF DATA
ANALYSIS OF DATA
Greater than Ogive
ANALYSIS OF DATA
problem
● Following data shows time (in minutes) required to drill a hole for different persons
● Make a histogram with three classes
● Make a frequency polygon
● Make Ogives
ANALYSIS OF DATA
Problem: solution
● histogram
ANALYSIS OF DATA
Problem: solution
● histogram
ANALYSIS OF DATA
Problem: solution
● Less than ogive curve
ANALYSIS OF DATA
Problem: solution
● Greater than ogive curve
ANALYSIS OF DATA
MEASURE OF CENTRAL TENDENCY
● A measure of central tendency (also referred to as measures of centre or central location) is a
summary measure that attempts to describe a whole set of data with a single value that
represents the middle or centre of its distribution.
● There are three main measures of central tendency:
○ Mode
○ Median
○ Mean.
● Each of these measures describes a different indication of the typical or central value in the
distribution.
ANALYSIS OF DATA
MEASURE OF CENTRAL TENDENCY: MODE
● The mode is the most commonly occurring value in a distribution
ANALYSIS OF DATA
MEASURE OF CENTRAL TENDENCY: MEDIAN
● The median is the middle value in distribution when the values are arranged in ascending or
descending order.
● The median divides the distribution in half (there are 50% of observations on either side of
the median value). In a distribution with an odd number of observations, the median value is
the middle value.
● Looking at the retirement age distribution (which has 11 (odd) observations), the median is
the middle value, which is 57 years:
54, 54, 54, 55, 56, 57, 57, 58, 58, 60, 60
ANALYSIS OF DATA
MEASURE OF CENTRAL TENDENCY: MEDIAN
● When the distribution has an even number of observations, the median value is the mean of
the two middle values. In the following distribution, the two middle values are 56 and 57,
therefore the median equals 56.5 years:
52, 54, 54, 54, 55, 56, 57, 57, 58, 58, 60, 60
● The median is less affected by outliers and skewed data than the mean, and is usually the
preferred measure of central tendency when the distribution is not symmetrical
ANALYSIS OF DATA
MEASURE OF CENTRAL TENDENCY: MEAN
● The mean is the sum of the value of each observation in a dataset divided by the number of
observations.
● This is also known as the arithmetic average.
● Looking at the retirement age distribution :
54, 54, 54, 55, 56, 57, 57, 58, 58, 60, 60
● The mean is calculated by adding together all the values
(54+54+54+55+56+57+57+58+58+60+60 = 623) and dividing by the number of observations
(11) which equals 56.6 years.
● The mean can be used for both continuous and discrete numeric data
ANALYSIS OF DATA
STANDARD DEVIATION (σ)
● the Standard Deviation is a measure of how spread out numbers are.
● Its symbol is σ (the Greek letter sigma)
● it is the square root of the Variance
VARIANCE (σ2)
● The average of the squared differences from the Mean
To calculate the variance follow these steps:
○ find out the Mean (the simple average of the numbers)
○ Then for each number: subtract the Mean and square the result (the squared
difference).
○ Then find out the average of those squared differences.
ANALYSIS OF DATA
STANDARD DEVIATION (σ), VARIANCE (σ2)
ANALYSIS OF DATA
Example:
● For the following dogs the heights (at the shoulders) are: 600mm, 470mm, 170mm, 430mm
and 300mm. Find out the Mean, the Variance, and the Standard Deviation.?
ANALYSIS OF DATA
Example:
● first step is to find the Mean:
ANALYSIS OF DATA
Example:
● So the mean (average) height is 394 mm. Let's plot this on the chart:
ANALYSIS OF DATA
Example:
● To calculate the Variance (σ2), take each difference, square it, and then average the result
ANALYSIS OF DATA
Example:
● The Standard Deviation (σ) is just the square root of Variance
ANALYSIS OF DATA
Example:
● And the good thing about the Standard Deviation is that it is useful. Now we can show which
heights are within one Standard Deviation (147mm) of the Mean:
● So, using the Standard Deviation we have a "standard" way of knowing what is normal, and
what is extra large or extra small
ANALYSIS OF DATA
problem
● Find mean and standard deviation of the following
23.1, 23.4, 23.5, 23.6, 23.7
ANALYSIS OF DATA
NORMAL DISTRIBUTION
● A normal distribution, sometimes called the bell curve, is a distribution that occurs naturally
in many situations.
ANALYSIS OF DATA
NORMAL DISTRIBUTION
● The empirical rule tells you what percentage of your data falls within a certain number of
standard deviations from the mean
ANALYSIS OF DATA
NORMAL DISTRIBUTION
ANALYSIS OF DATA
NORMAL DISTRIBUTION: Problem
ANALYSIS OF DATA
NORMAL DISTRIBUTION: CHARACTERISTICS
● The mean, mode and median are all equal.
● The curve is symmetric at the centre (i.e. around the mean).
● Exactly half of the values are to the left of centre and exactly half the values
are to the right.
● The total area under the curve is 1.
● 68% of the data falls within one standard deviation of the mean.
● 95% of the data falls within two standard deviations of the mean.
● 99.7% of the data falls within three standard deviations of the mean
1. Explain floor and centralized inspection
2. Objectives of quality control
3. Explain inspection methods available and explain first piece inspection and key point
inspection
4. Explain normal distribution curve and its characteristics
5. What are the applications of quality control ?
6. Advantages of centralized inspection ?
7. Write the difference between variables and attributes
8. Explain the three measures of central tendency
9. Explain the term mean , mode , median
10. Draw and explain normal distribution curve and its characteristics
MODULE IV
SUBJECT TOPICS
● MODULE 3: Quality Control and Inspection
● MODULE 4: Acceptance sampling, Estimating and Costing
ACCEPTANCE
SAMPLING
INTRODUCTION
● Sampling inspection is a technique to determine whether a lot or population should be

rejected or accepted on the basis of number of defective parts found in a random sample
drawn from the lot.
● If the sample confirms to quality standards, then the lot is accepted otherwise rejected.
The method of accepting or rejecting the lot is called acceptance sampling.
INTRODUCTION
● A SQC technique, where a random sample is taken from a lot, and upon the results of
appraising the sample, the lot will either be rejected or accepted
● A procedure for sentencing incoming batches or lots of items without doing 100% inspection
● It Determine the quality level of an incoming shipment or at the end of production
● It Judge whether quality level is within the level that has been predetermined
● But Acceptance sampling gives you no idea about the process that is producing those items
ACCEPTANCE SAMPLING
TYPES OF SAMPLING PLANS
1. Acceptance sampling based on variables: Actual measurements are taken and testing of the
sample is done. If the result is as per the requirements, then lot is accepted otherwise
rejected.
2. Acceptance sampling based on attribute: No actual measurement is done and inspection is
done on GO and NO GO gauge way. If the sample meets the requirements, then lot is
accepted otherwise rejected.
○ Three often-used attribute sampling plans are the single-sampling plan, the double
sampling plan, and the sequential-sampling plan.
ACCEPTANCE SAMPLING
TERMS USED IN ACCEPTANCE SAMPLING
● Manufacture’s Risk (α): It is the small probability of a batch being good or even better than
A.Q.L. (acceptable quality level). In other words, it is the probability of rejecting a good lot
which otherwise would have been accepted.
● Purchaser’s Risk (β): it is the probability of a lot being good or even worse than limiting
quality but yielding a good sample and thus getting accepted.
● Acceptable Quality Level (A.Q.L): It indicates a small proportion of bad components in a lot
such that lots having less than this proportion of bad components have a high probability of
getting accepted.
● Lot Tolerance Percent Defective (L.T.P.D) or Limiting Quantity (L.Q): It indicates a small
proportion of bad components somewhat larger than A.Q.L in a lot such that the lots having
more than this proportion of defective components have a small probability of getting
accepted.
ACCEPTANCE SAMPLING
A LOT-BY-LOT SAMPLING PLAN
● Specify the plan (n, c) given N

● For a lot size N, determine
○ The sample size n, and
○ The acceptance number c.
● Reject lot if number of defects > c
● Specify course of action if lot is rejected
ACCEPTANCE SAMPLING
SAMPLING PLANS
● Acceptance sampling is based on two factors i.e. the sampling plan and sample size.
● All sampling plans are devised to provide a specified producer’s and consumer’s risk.
However, it is in the consumer’s best interest to keep the Average Number of Items
inspected (ANI) to a minimum because that keeps the cost of inspection low.
● Sampling plans differ with respect to ANI.
● Three often-used attribute sampling plans are the single-sampling plan, the double sampling
plan, and the sequential-sampling plan
ACCEPTANCE SAMPLING
SINGLE SAMPLING PLAN
● The single-sampling plan is a decision rule to accept or reject a lot based on the results of
one random sample from the lot. The procedure is to take a random sample of size (n)
and inspect each item.
● If the number of defects does not exceed a specified acceptance number (c), the
consumer accepts the entire lot. Any defects found in the sample are either repaired or
returned to the producer
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING
○ N = lot size
○ n = sample size (randomized)
○ c = acceptance number
○ d = number of defective items in sample
● Rule: If d  c, accept lot: else reject the lot
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING
Producer’s Risks due to mistaken sentencing
● TYPE I ERROR = P(reject good lot)
○ a or Producer’s risk 5% is common
○ rejecting lot at AQL quality level
Consumer’s Risks due to mistaken sentencing
● TYPE II ERROR = P(accept bad lot)
○ b or Consumer’s risk 10% is typical value
○ accepting a lot at RQL quality level
● The OC curve for a sampling plan quantifies these risks
ACCEPTANCE SAMPLING
SINGLE SAMPLING PLAN: CHARACTERISTICS
● A single sampling plan is easy to design, explain and administer.
● It is the only practical type of sampling plan under conveyorized production conditions when
only one sample can be selected.
● It involves a lower cost of training and supervising employees, transporting and sorting
samples, etc.
● It very accurately estimates lot quality.
● It is more economical than double sampling plan when lots have their % defectives close to
the AQL.
● It involves a bigger sample size than the double sampling plan.
● It involves record keeping less than that of double and multiple sampling plans.
ACCEPTANCE SAMPLING
DOUBLE SAMPLING PLAN

● Take small initial sample
○ If defectives < lower limit, accept
○ If defectives > upper limit, reject
○ If defectives between limits, take second sample
● Accept or reject lot based on 2 samples
● Less inspection than in single-sampling
ACCEPTANCE SAMPLING
DOUBLE SAMPLING PLAN
ACCEPTANCE SAMPLING
DOUBLE SAMPLING PLAN: CHARACTERISTICS
● A double sampling plan is more expensive to administer than a comparable single sampling
plan.
● It involves less inspection than that required for a single sampling plan.
● Double sampling plan is easier to sell to the personnel because psychologically the idea of
giving a second chance to a lot before rejecting it exercises popular appeal.
● It permits a smaller first sample than the sample size of the corresponding single sampling
plan.
● A double sampling plan involves more overheads than a single sampling plan.
● It involves more record keeping than a single sampling plan.
ACCEPTANCE SAMPLING
SEQUENTIAL SAMPLING PLAN
● Take initial sample
○ If defectives < lower limit, accept
○ If defectives > upper limit, reject
○ If defectives between limits, re-sample
● Continue sampling until accept or reject lot based on all sample data
TYPES
1. Multiple sampling plan
2. Item by item analysis
ACCEPTANCE SAMPLING
MULTIPLE SAMPLING PLAN
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING
MULTIPLE SAMPLING PLAN: CHARACTERISTICS
● A multiple sampling plan involves smaller first samples than single or double sampling plans.
● A multiple sampling plan is comparatively difficult to design and explain, and expensive to
administer.
● It involves a higher overhead cost as compared to single and double sampling plans.
● It involves more record keeping.
● In theory, multiple sampling may often permit lower total inspection than double sampling
for a given degree of protection because of smaller sample sizes required.
● New methods, which simplify multiple sampling, such as automatic sampling boxes may
result in greatly improved efficiency in administering multiple sampling plans
ACCEPTANCE SAMPLING
OPERATING CHARACTERESTIC CURVE (OC CURVE)
● OC curve is graphical representation of fraction defective in a lot with respect to probability
of acceptance. A single sampling plan involves two parameters, (n) - the sample size and the
acceptance number (c).
● A batch is rejected or accepted depending upon the criteria whether the number of
defective components in a sample is more than the acceptance number (c) or not.
● The shape of OC curve depends upon the value of (c) and (n) and accordingly it defines the
risk involved.
● A balance has to strike regarding the value of sample size (n). A large sample size raises the
cost of selecting, handling and inspection. A small size does not truly represent the lot.
ACCEPTANCE SAMPLING
IDEAL OC CURVE
● The concept of ideal OC curve having rectangular operating characteristics is that the lots
having not more than 1% defective components will definitely be accepted and others with
more than 1% will certainly be rejected
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING
Customers Acceptance Levels
● Most customers understand that 100% inspection is impractical and are generally willing to
accept that a certain level of defectives will be produced.
● The Acceptable Quality Level (AQL) is the percentage level of defects at which a customer is
willing to accept as lot as “good”.
● The Lot Tolerance Percent Defective (LTPD) is the upper limit on the percentage of defectives
that a customer is willing to accept.
● Customers want lots with quality better than or equal to the AQL but are willing to live with
some lots with quality as poor as the LTPD, but prefer not to accept lots with quality levels
worse than the LTPD
ACCEPTANCE SAMPLING
OPERATING CHARACTERESTIC CURVE (OC CURVE )
Customers Acceptance Levels: Defining good and bad lot
ACCEPTANCE SAMPLING
Customers Acceptance Levels
● Therefore the sampling plan must be designed to assure the customer that they will be
receiving the required AQL and LTPD.
● The Consumer’s Risk is the probability that an unacceptable lot (e.g. above the LTPD) will be
accepted.
● The Producer’s Risk is the probability that a “good” lot will be rejected
ACCEPTANCE SAMPLING
Customers Acceptance Levels: Sampling Risks
ACCEPTANCE SAMPLING
Constructing OC Curve
ACCEPTANCE SAMPLING
Properties of OC Curves
● The acceptance number c and sample size n are most important factors in defining the OC
curve
● Decreasing the acceptance number is preferred over increasing sample size
● The larger the sample size the steeper is the OC curve (i.e., it becomes more discriminating
between good and bad lots)
● If the acceptance level c is changed, the shape of the curve will change
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING: ADVANTAGES
● It is usually less expensive because there is less inspection.
● There is less handling of the product, hence reduced damage.
● It is applicable to destructive testing.
● Fewer personnel are involved in inspection activities.
● It often greatly reduces the amount of inspection error.
● The rejection of entire lots are opposed to the sample return of defectives often provides a
stronger motivation to the vendor for quality improvements
ACCEPTANCE SAMPLING
ACCEPTANCE SAMPLING: Disadvantages
● There are risk of accepting “bad” lots and rejecting “good” lots.
● Less information is usually generated about the product or about the process that
manufactured the product.
● Acceptance sampling requires planning and documentation of the acceptance sampling
procedure whereas 100% inspection does not.
ESTIMATING AND
COSTING
ESTIMATING
● The calculation of the probable cost of an article before it is actually
manufactured is known as estimated cost.
● It is predetermination of cost of an article before the manufacturing starts
● It gives the probable cost of the product before it is actually produced
● It require high technical knowledge
● It indicates whether it would be profitable to manufacture a product or buy from
outside
COSTING
● The calculation of the actual cost of an article on the basis of different expenditures already
incurred to make it is known as costing.
● The calculation of the actual cost of an article on the basis of the different expenditures
incurred to make it is known as costing.
● It is the determination of actual cost of an article after different expenses incurred in
various departments.
COSTING
OBJECTIVES
● Ascertainment and analysis of cost and income by product, function and responsibility.
● Accumulation and utilisation of cost data for control purposes to have the minimum possible
cost consistent with maintenance of quality. This objective is achieved through fixation of
targets, ascertainment of actuals, comparison of actuals with targets, analysis of reasons of
deviations between actuals and targets and reporting deviations to management for taking
corrective action
● Providing useful data to management for taking decisions. To ascertain the cost per unit of
the different products manufactured by a business concern
● To provide a correct analysis of cost both by process or operations and by different elements
of cost
● To advise management on future expansion policies and proposed capital projects
COSTING
OBJECTIVES
● To disclose sources of wastage whether of material, time or expense or in the use of
machinery, equipment and tools and to prepare such reports which may be necessary to
control such wastage
● To provide requisite data and serve as a guide for fixing prices of products manufactured or
services rendered
● To ascertain the profitability of each of the products and advise management as to how
these profits can be maximised
● To exercise effective control if stocks of raw materials, work-in-progress, consumable stores
and finished goods in order to minimise the capital locked up in these stocks
● To reveal sources of economy by installing and implementing a system of cost control for
materials, labour and overheads
COSTING
ELEMENTS OF COSTING
COSTING
ELEMENTS OF COSTING
● The elements that constitute the cost of manufacture are known as the elements of cost.
Such element of cost is divided into three categories.
● They are Material, Labour and Expenses.
● Again, these elements of cost are divided into two categories such as Direct Material and
Indirect Material, Direct Labour and Indirect Labour, Direct Expenses and Indirect Expenses.
● All direct material, direct labour and direct expenses are added to get prime cost
● All indirect material, indirect labour and indirect expenses are added to get overhead.
● Again, overhead is divided into four categories. They are factory overhead, administration
overhead, selling overhead and distribution overhead
COSTING
MATERIAL COST
Direct material cost
● It refers to material out of which a product is to be produced or manufactured.
● It is the cost of those materials which are directly used for the manufacture of the product
and become a part of the finished product.
● The amount paid for or the money spent on direct materials is known as Direct material cost
● This expenditure can be directly allocated and charged to the manufacture of a specific
product or job and includes the scrap and waste that has been cut away from original bar or
casting
● e.g., A H.S.S. bit for making a turning tool for lathe; Fe, Ni, Cr. etc., to make alloy steels.
COSTING
MATERIAL COST
Indirect material cost
● An indirect material is one which is necessary in the production process but is not directly
used in the product itself.
● It refers to material required to produce a product but not directly and does not form a part
of a finished product.
● The costs associated with indirect materials is called Indirect material cost
● E.g.: In vehicles the indirect materials include oils, general tools, greases, sand papers,
coolants, cotton waste etc
COSTING
Labour Cost
Direct labour cost
● The direct labour cost is the cost of labour that utilised directly for the manufacture of the
product
● Eg: The wages of a welder fabricating a structure
Indirect labour cost
● Indirect labour cost is the cost of the labour that does not alter the construction, composition
or condition of the direct material but is necessary for the manufacture of the product
● Eg: maintenance men, helpers (in a machine shop or foundry), machine setters, supervisors
and foremen, etc
COSTING
EXPENSES
● It is a collective title which refers to all charges other than labour cost and material cost.
direct expenses: It refers to the expenses that are specifically incurred by the company to
produce a product. A product cannot be produced without incurring such expenses. It varies
directly with the level of output
○ Costs of special layouts, designs or drawings produced for a specific job
○ Hire of special or single purpose machine tools or other equipment for completing a
particular production order
Indirect expenses: It refers to the expenses that are incurred by the organization to produce a
product. But, these expenses cannot be easily found out accurately.
○ Insurance premium.
○ Telephone bill
COSTING
Expenses
● Another classification of expense is
● Fixed expenses: Fixed expenses are those costs that tend to remain relatively constant
regardless of the volume of production.
○ Taxes on land and building.
○ Depreciation arising from time
○ Rent
● Variable expenses: Variable expenses are those which tend to vary directly with the volume
of production.
○ Royalties paid on a volume basis
○ Electricity bill (Some times).
COSTING
OVERHEAD COST
● It is the combination of all indirect materials, indirect labour and indirect expenses
● Indirect costs, Overheads, Oncost and Burden are synonymous terms.
● They classified as
○ Factory overhead
○ Administration overhead
○ Selling overhead
○ Distribution overhead
○ R & D overhead
COSTING
OVERHEAD COST
Factory overhead
● It is otherwise called Production Overhead or Works Overhead. It refers to the expenses that
are incurred in the production place or within factory premises.
● Example: Indirect material, rent, rates and taxes of factory, canteen expenses etc.
COSTING
OVERHEAD COST
Administration Overhead
● It is otherwise called Office Overhead. It refers to the expenses that are incurred in
connection with the general administration of the company.
● Example.
○ Office rent
○ Salaries and wages of clerks
○ Director’s, general manager’s fees
○ Insurance
○ Legal costs
○ Rates and Taxes
○ Postage and telephones
○ Audit fees
COSTING
OVERHEAD COST
Selling Overhead
● It refers to all expenses incurred in connection with sales
● Example
○ Advertising
○ Salaries and commission of sales managers, travellers and agents
○ Rent of sales-rooms and offices
○ Consumer service and service after sales, etc
COSTING
OVERHEAD COST
Distribution Overhead
● It refers to all expenses incurred in connection with the delivery or distribution of goods and
services from the producer to the consumer
● Example
○ Warehouse charges
○ Cost of transporting goods
○ Loading and unloading charges
○ Upkeep and running of delivery vehicles
○ Salaries of clerks and labourers
○ Depreciation
COSTING
OVERHEAD COST
R & D overhead
Much depends upon the nature of product or service being produced. R & D overhead is
proportional to the size of R & D department
COSTING
COMPONENTS OF COST
● The various components of cost are
1. Prime cost
2. Factory cost
3. Office cost
4. Total cost
COSTING
COMPONENTS OF COST
1. PRIME COST
● It consists of direct material cost, direct labour cost and direct expenses
● Prime cost is limited in its use to the manufacturing division of a business concern
Prime cost = Direct material cost + Direct labour cost + (Variable) direct expenses.
2. FACTORY COST
● It consists of prime cost and factory expenses
Factory cost = Prime cost + Factory overhead
COSTING
COMPONENTS OF COST
3. OFFICE COST (Manufacturing Cost)
● It consists of factory cost and administrative expenses
Office cost = Factory cost + Administrative expenses
4. TOTAL COST
● It includes office cost and selling and distribution expenses
Total cost = Factory cost + Selling overhead + Distribution overhead +
Administration overhead
SELLING PRICE
Selling Price = Total cost ± Profit or loss
COSTING
COMPONENTS OF COST
COSTING
COMPONENTS OF COST
COSTING
COMPONENTS OF COST
COSTING
ALLOCATION OF ON-COST OR OVERHEAD COST
● It is essential to know the variation of overhead expenses with the variation of production to
run the organization most economical way. Therefore total overhead expenses are to be
calculated and distributed over production. The various methods of allocation of overhead
expenses are given below
1. Percentage method
○ Percentage of direct labour cost
○ Percentage on direct material cost.
○ Percentage on prime cost
2. Hourly rate method
○ Man hour method.
○ Machine hour method.
○ Combination of man hour and machine hour method
3. Unit rate method
COSTING
Percentage on Direct Labour Cost
● In this method direct labour cost is taken as a basis for allocation of overhead expenses. This
is very simple and popular method. This method is more accurate when applied to the work
where work is done by hands only.
● Ex:
○ Work in assembly section
○ Work in fitting shop
𝐹𝑎𝑐𝑡𝑜𝑟𝑦 𝑜𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝑓𝑜𝑟 𝑏𝑢𝑑𝑔𝑒𝑡 𝑝𝑒𝑟𝑖𝑜𝑑

Percentage on Direct Labour Cost = x 100
𝐷𝑖𝑟𝑒𝑐𝑡 𝑙𝑎𝑏𝑜𝑢𝑟 𝑐𝑜𝑠𝑡 𝑓𝑜𝑟 𝑏𝑢𝑑𝑔𝑒𝑡 𝑝𝑒𝑟𝑖𝑜𝑑
COSTING
Percentage on Direct Material Cost
● It is the percentage ratio of the total on cost to the direct material cost for a particular
period. This method is not accurate and reliable and therefore not generally used. More over
the cost of material does not remain constant and changes from time to time.
● This method is suitable where material cost alone is a major part as in the case of foundries
and mines.

Percentage on Direct Material Cost = x 100
𝐷𝑖𝑟𝑒𝑐𝑡 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝑐𝑜𝑠𝑡 𝑓𝑜𝑟 𝑏𝑢𝑑𝑔𝑒𝑡 𝑝𝑒𝑟𝑖𝑜𝑑
COSTING
Percentage on Prime Cost
● This method is suitable, where labour and material both play equal role. The prime cost and
overhead expenses are calculated separately. Then the total overhead expenses are
expressed as percentage of the prime cost.
● This will be useful where only one type of product is being manufactured and when direct
labour and direct materials costs are nearly equal.
Percentage on Prime Cost = x 100
𝑃𝑟𝑖𝑚𝑒 𝑐𝑜𝑠𝑡 𝑓𝑜𝑟 𝑏𝑢𝑑𝑔𝑒𝑡 𝑝𝑒𝑟𝑖𝑜𝑑
COSTING
Man Hour Rate/ Labour Hour Rate
● This method is very similar to the percentage on direct labour cost method.
● The difference in the two methods is that in which the basis of allocation was the total direct
labour cost, whereas in this basis of the total hours spent by the direct labour and not the
wages paid to them.
● This is an important method over the direct labour cost method.

Man Hour Rate = x 100
𝐷𝑖𝑟𝑒𝑐𝑡 𝐿𝑎𝑏𝑜𝑢𝑟 ℎ𝑜𝑢𝑟 𝑓𝑜𝑟 𝑏𝑢𝑑𝑔𝑒𝑡 𝑝𝑒𝑟𝑖𝑜𝑑
COSTING
Machine Hour Rate
● This method is generally used where work is done mostly by machines and not by hand. The
overhead increased in each shop during a particular period are distributed over a group of
similar machines.
● These expenses are then distributed on the basis of total productive machine hours. Machine
hour rate is the rate of the total overheads to the total productive machine hour.

Machine Hour Rate = x 100
𝑀𝑎𝑐ℎ𝑖𝑛𝑒 ℎ𝑜𝑢𝑟 𝑓𝑜𝑟 𝑏𝑢𝑑𝑔𝑒𝑡 𝑝𝑒𝑟𝑖𝑜𝑑
COSTING
Combination of Man-Hour and Machine-Hour Method
● As the name indicates, this method is simply a combination of man-hour rate and machine-
hour rate methods.
● The man-hour rate method is suitable only where work is done by hand, for example, in
fitting and assembly shops etc.
● Similarly, machine hour rate method is suitable where almost all the work is done by
machines. Thus, in this way, both the methods can be applied in one factory.
● This method is combination of man-hour and machine-hour rate method of allocation
COSTING
Unit Rate Method
● This is also known as production unit basis method. This method is mostly used where only
one type of production is carried out. This method cannot be used in factories, where
different kinds of products are manufactured. Unit rate is the overheads for one unit.
● It can be calculated as the ratio of total overheads to the quantity of production during a
particular period.
𝐹𝑎𝑐𝑡𝑜𝑟𝑦 𝑜𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝑓𝑜𝑟 𝑏𝑢𝑑𝑔𝑒𝑡 𝑝𝑒𝑟𝑖𝑜𝑑 𝑜𝑟 𝑇𝑜𝑡𝑎𝑙 𝑂𝑣𝑒𝑟 ℎ𝑒𝑎𝑑

Over head/Unit = x 100
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛
COSTING
Problems
COSTING
Problems
COSTING
Problems
COSTING
Problems
COSTING
Problems
COSTING
Problems
COSTING
Problems
DEPRECIATION
DEPRECIATION
● It represents the reduction in market value of an asset due to age, wear and tear and
obsolescence. The physical deterioration of the asset occurs due to wear and tear with
passage of time.
● Obsolescence occurs to due to availability of new technology or new product in the market
that is superior to the old one and the new one replaces the old even though the old one is
still in working condition
DEPRECIATION
COMMON TERMS USED IN DEPRECIATION ANALYSIS
● These terms are

○ Initial cost
○ Salvage value
○ Book value
○ Useful life
DEPRECIATION
COMMON TERMS USED IN DEPRECIATION ANALYSIS
● Initial cost is the total cost of acquiring the asset.
● Salvage value represents estimated market value of the asset at the end of its useful life. It is
the expected cash inflow that the owner of the asset will receive by disposing it at the end of
useful life.
● Book value is the value of asset recorded on the accounting books of the firm at a given time
period. It is generally calculated at the end of each year. Book value at the end of a given year
equals the initial cost less the total depreciation amount till that year.
● Useful life represents the expected number of years the asset is useful in terms of generating
revenue. The asset may still be in working condition after the useful life but it may not be
economical. Useful life is also known as depreciable life. The asset is depreciated over its
useful life.
DEPRECIATION
CAUSES OF DEPRECIATION
DEPRECIATION
Depreciation due to wear and tear
● When the machine or equipment performs useful work, the wear and tear is bound to occur.
It can be reduced with proper care and regular maintenance using lubricating oils. But it
cannot be prevented. The reduction in the value of the equipment due to this reason is called
depreciation due to wear and tear.
Depreciation due to physical delay
● Certain items in a factory like furniture, electric cables, poles, buildings, chemical vessels etc.
get delay due to climatic and atmospheric effect and therefore the value of these articles
goes on reducing with the lapse of time Inspite of taking every care to keep them in
serviceable condition there will be reduction in their value. The reduction in values is known
as depreciation due to physical decay
DEPRECIATION
Accidental depreciation
● The reduction in the value of equipment caused due to accidents is called accidental
depreciation. Accident may occur due to some wrong operation or loose component or some
other cause which may result in heavy damage. The depreciation in machine caused due to
this reason is called accidental depreciation.
Depreciation due to deferred maintenance and neglect
● After purchasing the equipment the user has to follow all the instructions supplied by the
manufacturer for the smooth and efficient running of the equipment. If the instructions of
the manufacturer is not properly followed because of neglect and if proper maintenance is
not done the value of equipment is reduced. The reduction in value of the equipment
because of this reason is called depreciation due to deferred maintenance and neglect
DEPRECIATION
Inadequacy
● This is a functional depreciation. Inadequacy means reduction in efficiency of an asset. This
may result even if any equipment is servicing under proper precautions and sufficient
maintenance is provided, there is fall in efficiency with the lapse of time.
Depreciation by obsolescence
● Obsolescence is the depreciation of existing machinery or equipment due to invention of
better or more efficient equipment or process etc. even if the equipment is in good condition
it becomes useless or uneconomical to use it due to introduction of new machines to the
market which are more efficient and more economical. The reduction in value of the existing
equipment due to new inventions is called obsolescence
DEPRECIATION
Methods of Calculating Depreciation
● The various methods for calculating depreciation fund are given below
1. Straight line method
2. Reducing balance method
3. Sinking fund method
4. Annuity charging method
5. The insurance policy method
6. The revaluation or regular valuation method
7. Machine hour basis method
8. The sum of the year’s digit method
DEPRECIATION
● This method assumes that the loss of value machine is directly proportional to its age.
● it means one should deduct the scrap value from the original value and divide the remaining
value by the number of useful life.
○ C = initial cost of a machine
○ S = scrap value
○ N = number of years of life of a machine
○ D = the depreciation amount per year
𝑪−𝑺
■ D=
𝑵
DEPRECIATION
Advantages
○ This is simple method and easy to understand
○ This method is frequently used in practice
Disadvantages
○ The wear and tear of any asset exactly same in all the years of its life
○ which is not realistic
DEPRECIATION
DEPRECIATION
2. Reducing Balance Method
● This is also called diminishing balance method or percentage on book value method. A fixed
percentage is charged as depreciation on current book value. The rate of depreciation
calculated by this method is neither constant nor linear. The rate of depreciation is more in
the early years of asset and gradually the rate of decreases and becomes asymptotic to X
axis.
● Let X be the fixed percentage taken to calculate the yearly depreciation on the book value
● C=initial cost, S=scrap value, N= number of years of life
𝟏
𝑺
■ X= 1- ( )𝑵
𝑪
DEPRECIATION
Advantages
○ It is simple to understand and calculate
○ This method is desirable because depreciation is more when repair charges are less and
depreciation is less when repair charges are more
Disadvantages
○ It is not easy to fixed percentage X accurately
○ It is not possible to arrive at total replacement cost by this method.
○ It approaches the full value asymptotically but never reaches it
DEPRECIATION
● A car purchased for Rs.96, 000-Its estimated life period is 10 years. The residual value of the
car after its useful life is Rs.24, 000 a) Calculate the depreciation rate using diminishing
balance method b) Calculated the depreciation fund at the end of two years
○ C = 96,000
○ N = 10 Years
○ S = 24,000
○ X =?
DEPRECIATION
DEPRECIATION
3. Sinking Fund Method
● In this method the depreciation is charged in equal instalments. The rate of depreciation is
constant throughout the life a machine. But interest earned upon the deposits of
depreciation fund every year is also taken into account.
● The rate of depreciation per year is given by the formula
r(C−S)
D=
(1+r)N−1
● Where r is the rate of interest charged on depreciation fund
D(1+r)N−1
C1 =
r
● Where C1 is the depreciation amount collected during N years
DEPRECIATION
3. Sinking Fund Method
● The total amount received at the end of 10 years = Rs.145000 + 62900 = 2,07,900
● Original value of plant = Rs.20000:
● Therefore profit to the owner = 207900 – 200000 = Rs.7900
DEPRECIATION
4. Annuity Charging Method
● In this interest is charged on the cost of machine or assets every year on the book value, but
the rate of depreciation is constant every year
○ C=cost of machine
○ S=scrap value
○ N= No. of years of machine life
○ R= rate of interest
○ D=rate of depreciation
● If the value machine after 1 year becomes C1,then
D=CR+C—C1=C(1+R0-C1)
● In the same way, the value of machine after 2 years will be say C2
● Then D=C1R+C1-C2 = C1 (1+R)- C2
DEPRECIATION

Hence the standard formula will be
𝑪 𝟏+𝑹 𝑵−𝑺 [𝟏− 𝟏+𝑹 ]

D=
[𝟏− 𝟏+𝑹 𝑵]
DEPRECIATION
DEPRECIATION
DEPRECIATION
5. The Insurance Policy Method
● This method covers the risk, if the machine becomes unserviceable before its estimated life.
In this method the machine is insured with the insurance company and premiums are paid on
the insurance policy. When the policy matures, the company provides sufficient sum to
replace the machine
6. Revelations or Regular Valuation Method
● In this every year the value of machine is revaluated and the difference between the book
value and revaluated value is charged as a depreciation fund.
DEPRECIATION
● In this method, rate of depreciation is calculated, considering the total number of hours a
machine runs in a year and therefore a work chart of every machine is maintained to know
the total number of hours the machine runs in a year.
Amount of depreciation in a year

Depreciation charges/hour =
number of working hours of the machine in a year
DEPRECIATION
● A machine costing RS.11000 and is expected to run for 10 years at the end of which its scrap
value is likely to be Rs.1000 machine is expected to run 2000 hours per year on the average.
Estimate depreciation charge per hour of the machine ?
○ Initial cost of the machine = Rs.11,000
○ Scrap value = Rs.1000
○ Depreciation fund to be collected = Rs11,000-1000=Rs.10,000
○ Life of the machine = 10 Years
○ Depreciation per year = 10000/10 =rs.1000
○ Machine runs 2000 hours in a year
○ Depreciation per hour=1000/2000=Rs.0.50
DEPRECIATION
8. The Sum of Years Digit Method
● As the new equipment is installed, the reduction in the value will be greater initially and it
will go on decreasing gradually. This fact is taken into account and therefore grate amount of
depreciation is made during the early years of the life and it goes on reducing as the life of
equipment decreases.
● Therefore, for calculating depreciation, the net amount (total cost – scrap value) is spread
over whole life in a decreasing proportion
DEPRECIATION
DEPRECIATION
ESTIMATION
ESTIMATION
● Cost estimating may be defined as the process of forecasting the expenses that must be
incurred to manufacture a product.
● These expenses take into consideration all expenditures involved in design and
manufacturing with all the related service facilities such as pattern making tool making, as
well as a portion of the general administrative and selling costs
● . Cost estimating also includes predetermination of the quantity and quality of material,
labour required etc.
ESTIMATION
● Estimating requires highly technical knowledge about manufacturing methods and operation
times etc. Cost estimates are the joint product of the engineer and the cost accountant, and
involves two factors.
○ Physical data.
○ Costing data
Physical data
● The engineer as part of his job of planning and manufacturing determines the physical data.
Costing data
● The cost accountant compiles and applies the costing data
ESTIMATION
OBJECTIVES
● To establish the selling price of a product.
● To ascertain whether a proposed product can be manufactured and marketed profitably.
● To determine how much must be invested in equipment
● To find whether parts or assemblies can be more cheaply fabricated or purchased from
outside (make or buy decision).
● To determine the most economical process, tooling or material for making a product.
● To establish a standard of performance at the start of project.
● For feasibility studies on possible new products.
● To prepare production budget.
● To evaluate alternate designs of a product
ESTIMATION
FUNCTIONS
● To calculate the cost of new material needed to manufacture a product
● To find the cost of parts to be purchased from outside vendors.
● To find the cost of equipment, machinery, tools, jigs and fixtures etc. required to be
purchased to make the product.
● To calculate the direct and indirect labour cost associated with the manufacture of the
product, based upon work study.
● To calculate various overhead charges associated with the product.
● To calculate the selling price of the product.
● To decide the most economical method of making the product.
● To submit cost estimates with the competent authority for further action
ESTIMATION
Principal Constituents of Estimation
● The constituents of estimation are given below
1. Design Time
2. Drafting time
3. Time and motion studies, planning and production control time
4. Design and arrangement of special items
5. Experimental work
6. Material
7. Labour
8. Time allowances
9. Overheads
ESTIMATION
Design time
● It is the time required to design a particular product. The cost of the design is estimated on
the basis of similar products already designed in the past or on the basis of good judgment of
designer
Drafting time
● Drawings are required for all the products manufactured in a factory. This drafting work can
be taken up after the design work is over. The product is to be split up into simple parts and
part drawings and assembly drawings are prepared by the draftsman as required to the
factory workers in different production shops for manufacturing. Drafting time is the time
required for preparing necessary drawings or blue prints for production. The estimated cost
is calculated on the basis of standard rates of remuneration paid per hour to the draftsman.
ESTIMATION
Time and motion studies, planning and production control time
● Time and motion studies may be conducted to eliminate all directed, wasteful time and
movements. The time required for this may be estimated with the help of past records and in
consultation with experienced engineers.
● The time needed for planning and production control may be calculated carefully to fix up
appropriate delivery dates and cost.
Design and arrangement of special items
● The cost of the special facilities are required for manufacturing in different production shops
such as patterns, dies, jigs fixtures recorded to add the same in the selling price of articles..
ESTIMATION
Experimental work
● Experiments are to be performed on old and new methods for ensuring quality product for
lowest market price. The services of highly qualified and trained personnel are needed for
experimental work. The cost of such activities may be estimated.
Materials
● The material cost can be estimated when quality, quantity of material and their market rates
are known. Quantity of materials required may be calculated with the help of samples or
drawings. Estimator has to add necessary allowances for finishing, holding, turning etc. to
size of finished products in drawings.
● Estimator has to prepare rough drawings after adding all allowances and calculate their
volumes and weight. Then the cost of direct material can be estimated taking into
consideration of direct materials and indirect materials required
ESTIMATION
Labour
● Labour cost plays important role in estimating total cost of a product. Estimator should have
technical knowledge about various machines used in production and different operations
performed on them. Different allowances like personal, fatigue, tool changing should also be
taken into consideration
Time allowances
● The time allowances generally allowed are given below
○ Set up time: time required for setting and fixing job and tools
○ Operation time: time required to perform all the elements of an operation. It include
handling time, machining time
○ Tear down time: it includes time for removal of tools, removal of jigs, fixtures, cleaning
chips etc.
ESTIMATION
Time allowances
○ Miscellaneous allowances: includes personal allowance, fatigue allowances, toll
changing and grinding allowances, measurement and checking allowances, cleaning
allowances etc
Overheads
● The expenditure cannot be definitely charged to any particular product during production. It
includes
○ Indirect material cost: These are the cost of grease, coolants, cotton waste, water etc.
○ Indirect labour cost: Salaries of supervisor, designers, helpers etc.
ESTIMATION
Overheads
○ Administrative overheads: Salaries of officers, salaries of staff working in office and
expenses on telephone, insurance etc.
○ Selling overheads: Expenses on salaries of salesman, expenditure on advertisements
etc
○ Depreciation overheads: Depreciation of building furniture, equipment repair and
maintenance charges etc. Other expenses of any also beaded to these overheads
ESTIMATION
ESTIMATING PROCEDURE
● The estimate is prepared on the basis of past record and by mathematical calculations.
● The estimation is usually considered to have three stages
1. Finalizing the design, accuracy, and finish required

2. Deciding the sale price by estimating departments
3. Delivery dates scheduling from the progress department
ESTIMATION
The main items to be estimated in the order of sequence after the fixing of design,
accuracy and finish are as follows
1. Decide the specification of product: Production planning department decides the
requirements and specification of the product
2. Preparation of drawings: production planning department makes the drawings, lays down
the method and sequence of operation, machines to be used etc. in consultation with other
departments
3. Prepare a part list: prepare the list of all parts or components of the product
4. Manufacture or buy decision: decide which components should be manufactured in the
factory itself and which components procured from market
ESTIMATION
5. Calculation of material cost: calculate the quantity of various types of material required for
the product and determine the total material cost
6. Determine machining or processing data: determine the cutting speeds, feeds for that
particular material
7. Add machining and other allowances: add material handling time, tool setup time, tear
downtime and other allowances to machining time to arrive at total time.
8. Calculation of labour cost: calculate the labour cost by multiplying the total time taken to
complete the job considering the wages rates allowed for various categories of workers
employed
ESTIMATION
9. Determine prime cost: determine prime cost after adding direct expenses to the direct
material and direct labour costs.
10. Determine overhead charges and total cost: determine the factory over heads including
depreciation and expenditure on the maintenance of the plant, insurance, power etc. and
add them to prime cost to calculate the total cost.
11. Decide selling price: decide the suitable profits and add to the total cost in order to fix up the
sale price
12. Decide discount and market price: decide the reasonable discount to be allowed to the
distributor and add this to scale price to get market price or catalogue price.
13. Submission for approval of management: supply this data to the management for approval
and fix up the above calculated market price
1. Compare floor and centralized inspections in detail
2. What are the objectives of quality control
3. Differentiate between costing and estimation
4. What is costing ?What are the elements of cost? Explain briefly
5. State the causes of depreciation
6. State the objectives and functions of inspection
7. Explain different methods for calculating depreciation
8. Briefly describe about fixed and variable overheads
9. What are the objectives of costing ?
10. Explain straight line and sinking fund methods for calculating depreciation
11. Explain the procedure for estimating a product and which are the items to be estimated for
this
12. Find the machining time to drill a 15 mm hole through a 50mm thick plate take the feed for a
15 mm drill is 0.2 mm per revolution and speed 1500 RPM. Assume an allowance of 0.3 times
the drill diameter for the taper end of the drill and tool approach and overrun are mm each
13. A product purchased for Rs.8000 and the assumed life is 10 years. The scrap value is Rs.2000.
If the depreciation is calculated by diminishing balance method calculate the percentage with
which value of the product I reducing every year and the depreciation fund after 2 Years
14. A machine was purchased for rs 60000 .Life of the machine was estimated as 10 yrs and scrap
value is rs 20000 .If the rate of interest on depreciation fund is 5% , calculate the annual
depreciation using sinking fund method and straight line method
15. Using straight line method find out the depreciation fund at the end of 5 yrs for the machine
whose initial cost is Rs 100000 and the scrap value after 10 years is 25000
16. A machine cost Rs.3Lakhs has a residual value of Rs.1 Lakh after 10 Years. The estimated rate
of production is 10 Units per Year. Assume 50 Weeks per year and 45 hours per week. Find
the rate of depreciation using production unit method
17. The cost of a certain scooter is Rs.5000 and its scrap value is Rs-10,000 after a period of 4
years’ service. Determine the depreciation charges for each year using sum of year’s digits
method
18. The market price of a lathe is Rs-2,00,000 and the discount allowed to the distributor is 10%
of the market prize. It is found that the selling expenses are ¼ th of the factory cost. If the
material cost, labour cost and factory overheads are in the ratio of 1:4:2,what profit is made
by the factory on each machine, if the material cost is 16,000
THE END

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INDUSTRIAL

Input – human effort, energy, material, capital investment

Frederick Winslow Taylor

▪ Material requirement planning

▪ Material handling systems

▪ Material recycle and reuse

▪ Human factor engineering

▪ Advertising and promotion

▪ Electronic data processing

▪ Rebuilding old machinery

Almost continuous Interrupted flow of

Use of special purpose Use of general purpose

a) Mass production & a) Batch production

 In flow production items are manufactured in

Batch produced repeatedly at regular

Batch produced only once –

 Flow of material is intermittent

 High degree of mechanisation and division of

 High degree of control is essential

Manufacture of custom made m/c for

Prior planning Order writing

Process Planning and

Progress Reporting Data Processing

 Material control:- MRP, inventory control

 Scheduling:- It fixes starting and ending time of the job.

 Dispatching:- Worker ordered to start the work

 To decide extent of advertising, product

 Cycles – Shorter duration, alternative periods

b) Sales force estimate

c) Trend line technique

 The large organisation informs each ancillary

 Finding relationship between sale and some

b) Linear Regression analysis

 Forecasting the future technology that may

 Determining the most economical process of

Process planning: procedure

N (Number of items produced)

Process sheet Route sheet

1) Store issue order : authorise store to deliver required raw materials

➢ To check the availability of input materials and ensure the movement of

➢ Clean up on jobs, collection of time tickets, blueprints and instruction cards

1) Job order or shop order

 As many copies as the number of departments in the route –

1) Job order or shop order

2) Material Issue order/Material requisition slip

 Within the shop

 From one shop to another

 From shop to finished stores

Final delivery notification

● 2) Labour utilization control

● time of the worker

 Labour cost control– Time study and motion study, Standard

1) Create different alternatives – Brainstorming techniques

1) Develop the best alternative – Drawing, models and

2) Implement the alternative

▪ Differentiate between preventive maintenance and

WORK STUDY = METHOD STUDY(MOTION STUDY) + WORK

Finished good or raw material or tool retained for

7) Inspection cum operation

Convert to Give requisition To supervisor

For material Collect requisition

0.5 min 500 feet 0.5 min

Check material 3 min Summary