Design of Production Systems

Chapter 2
DESIGN OF PRODUCTION
SYSTEMS
Industrial Engineering and Management, BME III/II 1

Course outline -Design of production system
1. Plant Location
2. Factory Building and Plant Layout
3. Material Handling
4. Production, Planning and Control
5. Product Research, Development and Design
6. Process Planning Introduction
Industrial Engineering and Management, BME III/II

, Thapathali Campus, IOE,TU
2
Design of production system
The conscious effort to design for producibility

and low manufacturing cost is referred to as
‘production design’ fulfilling all the functional
requirement of the product. Design process is
always iterative one.
The three aspects of production system design
are
1. Plant location
2. Plant layout and design
3. Material handling
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A. Plant Location - course outline
 Importance of Plant Location
 Factors affecting Plant
Location

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1. Importance of plant location
Every entrepreneur is faced with the problem of deciding
the best site for location of his plant or factory.
What is plant location?

Plant location refers to the choice of region and the
selection of a particular site for setting up a business or
factory.
But the choice is made only after considering cost and
benefits of different alternative sites. It is a strategic
decision that cannot be changed once taken. If at all
changed only at considerable loss, the location should be
selected as per its own requirements and circumstances.
Each individual plant is a case in itself. Businessman should
try to make an attempt for optimum or ideal location.

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What is an ideal location?
An ideal location is one where the cost of the product is
kept to minimum, with a large market share, the least
risk and the maximum social gain. It is the place of
maximum net advantage or which gives lowest unit
cost of production and distribution. For achieving this
objective, small-scale entrepreneur can make use of
locational analysis for this purpose.
Importance
1. Cost of production reduced.
2. Cost of distribution reduced.
3. Raw materials feasibility.
4. Loss minimized.
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Locational analysis is a dynamic process where
entrepreneur analyses and compares the
appropriateness or otherwise of alternative sites with
the aim of selecting the best site for a given enterprise.
It consists the following:
1. Demographic Analysis: It involves study of population
in the area in terms of total population (in no.), age
composition, per capita income, educational level,
occupational structure etc.
2. Trade Analysis: It is an analysis of the
Areageographic area that provides continued clientele to
the firm. He would also see the feasibility of
accessing the trade area from alternative sites.

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3.Competitive Analysis: It helps to judge the nature,
location, size and quality of competition in a given trade
area.
4.Traffic analysis: To have a rough idea about the number
of potential customers passing by the proposed site
during the working hours of the shop, the traffic analysis
aims at judging the alternative sites in terms of
pedestrian and vehicular traffic passing a site.
5.Site economics: Alternative sites are evaluated in terms
of establishment costs and operational costs under this.
Costs of establishment is basically cost incurred for
permanent physical facilities but operational costs are
incurred for running business on day to day basis, they
are also called as running costs.

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2. Factors affecting plant location
The important considerations for selecting a suitable location
are given as follows:
1. Availability of raw- materials.
 To reduce cost of transportation and storage (due
to lead time).
 To reduce the loss of good amount of weight during processing.
2. Proximity to markets.
 To reduce cost of transporting finished goods, advertising and
distribution etc.
3. Availability of labor.
 To assure right kind of labor is available at right number and
reasonable price.
4. Transport and communication facilities.
 For transporting raw materials, parts and finished goods.
 For regularity of service, safety, speed and low cost.

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5. Availability of power and fuel.
 coal, electricity, oil and natural gas are the important
sources of power in the industries.
6. Climatic conditions.
 Moist climate is working climate and reduce the cost
due to air-conditioning techniques.
7. Availability of water.
 For drinking and sanitary purposes, water should be
available in adequate quantity.
8. Ancillary industries.
 Will be an added advantage if there is
industry producing the assembling parts etc.

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9. Financial and other aids.
 By government i.e. certain incentives and facilities such as
cash subsidy concessional financial assistance, land,
power, tax concessions etc.
10. Business and commercial facilities.
 Banking services for day to day management of finance
and working capital needs.
 Facilities depositing surplus cash, discounting of
sending out stations cheque for collection bills,
withdrawals, meeting cash storage. and
11. Educational, recreational and civic facilities.
12. Population statistics.
13. Analysis of communities.

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Industrial estate is a piece of vast land sub-divided into different industrial
plots systematically developed, wherein factory shades are constructed. E.g.
Balaju, Biratnagar, Butwal, Patan etc.
Comparison between urban and rural sites

Factors Urban Rural
Cost of land High Low
Transportation facilities Better Poor
Power supply Better Good
Pollution High Low
Strikes Strong unions Less unified
Skilled manpower High Low
Banking facilities Good Poor

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Analyzing Location Decisions
1. Qualitative Approaches
 Factor rating
 weighted factor rating methods
2. Quantitative Approaches
 Rate of Return Method
 Break-even analysis
Qualitative Approaches
The measures of evaluating & making competing sites are team
appraisal system. Multidisciplinary teams comprises of operations
manager, town planners, project managers, lawyers, marketing
managers, financial experts, etc. they visit sites & carry out their
assessment of factors chosen to form the basis of evaluation. All the
competing sites are evaluated & their overall weighted average is
arrived at.

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1. Qualitative Methods
a. Factor Rating Method
The process of selecting a new facility location involves a series of following
steps:
Identify the important location factors.
Rate each factor according to its relative importance, i.e., higher the ratings
is indicative of prominent factor.
Assign each location according to the merits of the location for each factor.
Calculate the rating for each location by multiplying factor assigned to each
location with basic factors considered.
Find the sum of product calculated for each factor and select best location
having highest total score.

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ILLUSTRATION : Let us assume that a new medical facility, Health-care, is to
be located in Kathmandu. The location factors, factor rating and scores for
two potential sites are shown in the following table. Which is the best
location based on factor rating method?

15

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b. Weighted Factor Rating Method
In this method to merge quantitative and qualitative factors, factors are
assigned weights based on relative importance and weightage score for each
site using a preference matrix is calculated.
The site with the highest weighted score is selected as the best choice.
Q: Let us assume that a new medical facility, Health-care, is to be located in

Kathmandu. The location factors, weights, and scores (1 = poor, 5 = excellent)
for two potential sites are shown in the following table. What is the weighted
score for these sites? Which is the best location?

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18

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SOLUTION: The weighted score for this particular site is calculated by

multiplying each factor’s weight by its score and adding the results:
Weighed score location 1 = 25 × 3 + 25 × 4 + 25 × 3 + 15 × 1 + 10 × 5 = 75 + 100 +
75 + 15 + 50 = 315
Weighed score location 2 = 25 × 5 + 25 × 3 + 25 × 3 + 15 × 2 + 10 × 3 = 125 + 75 +
75 + 30 + 30 = 335
Location 2 is the best site based on total weighted scores.
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Q. Two sites A and B are evaluated in terms of above mentioned two costs as
follows:
The above cost statement indicates that site B is preferable to site A keeping in mind economic
considerations only although in some respects site A has lower costs. By applying the definition of ideal
location which is the place of maximum net advantage or which gives lowest unit cost of production and
distribution, site B would be preferred.

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Quantitative Method
1. Rate of Return Method
An ideal location is one which results in lowest production cost and least
distribution cost per unit.
Rate of Return analysis is carried out to decide as to which locate best location.
𝑡𝑜𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠 −𝑡𝑜𝑡𝑎𝑙

Rate of Return = 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠
𝑡𝑜𝑡𝑎𝑙
X 100%
𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡

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Q. Select the most advantageous location.
S.N. Particulars Site A (Rs.) Site B (Rs.)
1. Total investment 30,00,000 30,00,000
2. Total sales 45,00,000 37,50,000
3. Total expenses 28,00,000 32,00,000
𝑡𝑜𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠 −𝑡𝑜𝑡𝑎𝑙
Solution: Rate of Return = 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠
𝑡𝑜𝑡𝑎𝑙
X 100%
For site A, 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
Rate of return = ((45,00,000 – 28,00,000)/30,00,000)*100% =56.66%
For site B,
Rate of return = ((37,50,000 – 32,00,000)/30,00,000)*100% =18.33%
Hence, select site A.

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Q. From the following data select the most advantageous location for setting
a plant for making transistor radios.
S.N. Particulars Site – X (Rs.) Site – Y (Rs.) Site – Z (Rs.)
1. Initial investment 2,00,000 2,00,000 2,00,000
2. Expected sales 2,50,000 3,00,000 2,50,000
3. Distribution expenses 40,000 40,000 75,000
4. Raw material expenses 70,000 80,000 90,000
5. Power and water supply 40,000 30,000 20,000
expenses
6. Wages and salaries 20,000 25,000 20,000

7. Other expenses 25,000 40,000 30,000
8. Community attitude Indifferent Want business Indifferent
9. Employment housing Poor Excellent Good

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Solution: we can select on the basis of Rate of Return which is

given by:
𝑡𝑜 𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠 −𝑡𝑜𝑡𝑎𝑙
Rate of Return = 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 X 100%
𝑡 𝑜𝑡 𝑎𝑙
For site X, 𝑖𝑛 𝑣𝑒𝑠𝑡 𝑚𝑒𝑛 𝑡
Rate of return = ((2,50,000 – 1,95,000)/2,00,000)*100% =27.5%

For site Y,
Rate of return = ((3,00,000 – 2,15,000)/2,00,000)*100% =42.5%
For site Z,
Rate of return = ((2,50,000 – 2,35,000)/2,00,000)*100% =7.5%
Hence, select site Y.

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Quantitative Approaches
2. Breakeven Analysis
Break even analysis implies that at some point in the operations, total revenue equals
total cost.
Break even analysis is concerned with finding the point at which revenues and costs agree
exactly. It is called ‘Break-even Point’.
It is easy to understand that decision of site selection is an economic one. The site that
offers least cost of operations should be the one selected for implementation. Total
operation cost can be classified in two broad categories.
- Fixed Costs
- Variable Costs.
It is easy to prepare the Break even point (BEP) as it would facilitate for optimal decisions
by taking into account volume of business. BEP are drawn for different locations to
compare the sites. Fixed Costs, Variable Costs & Revenue / Output are taken into
account to do so.
Mathematically,
BE Volume = FC = Fixed cost
Contribution. Selling price – variable cost per unit
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Q. Potential location A, B and C have the cost

structure shown in following table. Find out the
yearly economic volume of production for each
location. Assume the following data as economic
volume of production.
a. 0 -500 units b. 500 -1000 units c. more than
1000 units
Location sites Fixed cost/year (Rs.) Variable cost/unit (Rs.)
A 20,000 140
B 60,000 60
C 80,000 40

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Solution:
Table below shows the total costs for
different units in sites A, B and C.
Total costs
Units Site A Site B Site C
0 20000 60000 80000

250 55000 75000 90000
500 90000 90000 100000
750 125000 105000 110000
1000 160000 120000 120000
1250 195000 135000 130000
1500 230000 150000 140000

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Total costs vs units
250000
200000
150000
100000
50000
0
0 250 500 750 1000 1250 1500
Total costs Site A Total costs Site B Total costs Site C

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From the graph,

1. For Q = 0-500 units, select site A.
2. For Q = 500 -100 units, select site B.
3. For Q = more than 1000 units, select site C.

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Q. Potential locations X, Y and Z have the cost structures shown below. The ABC company has
a demand of 1,30,000 units of a new product. Three potential locations X, Y and Z having
following cost structures shown are available. Select which location is to be selected and also
identify the volume ranges where each location is suited?
Location sites Fixed cost/year (Rs.) Variable cost/unit (Rs.)

A 1,50,000 10
B 3,50,000 8
C 9,50,000 6

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Solution,
Solve for the crossover between X and Y:
10X + 150,000 = 8X + 350,000
2X = 200,000
X = 100,000 units
Solve for the crossover between Y and Z:
8X + 350,000 = 6X + 950,000
2X = 600,000
X = 300,000 units
Therefore, at a volume of 1,30,000 units, Y is the appropriate strategy.
From the graph we can interpret that location X is suitable up to 100,000 units,
location Y is suitable up to between 100,000 to 300,000 units and location Z is
suitable if the demand is more than 300,000 units.

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Class work
Q. Potential location A, B and C have the cost structure shown below for
manufacturing of product expected to sale for Rs. 2700/unit. Find the most
economical location for an expected volume of 2000 units/year. Also find out
volume of production for each unit.
Site Fixed cost/year (Rs.) Variable cost/unit (Rs.)
A 6,000,000 1500
B 7,000,000 500
C 5,000,000 4000

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Solution:
Table below shows the total costs for different units in sites A, B
and C.
Total Costs
Units Site A Site B Site C
0 6000000 7000000 5000000

250 6375000 7125000 6000000
500 6750000 7250000 7000000
750 7125000 7375000 8000000
1000 7500000 7500000 9000000
1250 7875000 7625000 10000000
1500 8250000 7750000 11000000
1750 8625000 7875000 12000000
2000 9000000 8000000 13000000
2250 9375000 8125000 14000000
2500 9750000 8250000 15000000
2700 10050000 8350000 15800000

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18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
0 1000 1500 2000 2500 3000
500
Total Costs Site B Total Costs Site C
Total Costs Site A
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For break even point and break even sales revenues,
Break even point = 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡/(𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 −
𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡)
Break even sales revenues = 𝑏𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑝𝑜𝑖𝑛𝑡 × 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡
For site A,
BEP = 6000000/(2700-1500) = 5000 units.
BE sales revenues = 5000 * 2700 = Rs. 13,500,000.
For site B,
BEP = 7000000/(2700-500) = 3182 units.
BE sales revenues = 500 * 2700 = Rs. 85,591,400.
For site C,
BEP = 5000000/(2700-4000) =
BE sales revenues =

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From the graph,

1. The most economical location for
an expected volume of 2000 units/year is
Site B.
2. If Q ≤ 400, select C.
3. If 400 ≤ Q ≤ 1000, select A.
4. If Q ≥ 1000, select B.

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B. Factory building and plant layout - course outline
 Types of Factory Building

 Types of Plant Layout
 Flow Patterns

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Factory building and plant layout
The building must possess the functional,
constructional and architectural characteristics.
1. The functional characteristics consider the
production processes intended to be performed in the
factory.
2. Constructional characteristics consider the safety
and durability of the building.
3. While, the architectural aspect is mainly concerned with
the beautification of the factory building.
The ideal plant is one which is built to house the most

efficient layout that can be devised for the process involved,
yet which is architecturally attractive and of such a
standard, shape and design as to be flexible in its use and
inexpensive in construction.
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1. Types of Factory Building
I. Single storeyed or horizontal buildings
Advantages Disadvantages
• Greater flexibility in layout.
• High cost of land.
• Cheaper and efficient
material handling. • Non-availability of
• Efficient supervision. gravitational
• Facilitates expansion. flow.
• Use of natural light and • Cost of heating is
ventilation. high.
• Low cost and quick
construction.
• Suitable for heavy
plans.
• Reduced fire
hazards.Industrial Engineering and Management, BME III/II 42
II. Multi storeyed or Vertical buildings
• Use of gravity flow. • High cost of construction.
• Wastage of floor space.
• Low cost of land.
• Poor natural lighting.
• Lower heating cost. • Rigid layout.
• More storage space. • High cost of supervision.
• Compact layout. • Difficult in
• Upper stories free from material handling.
• Low load bearing capacity.
noise.
• Difficulty in expansion.
• Safer storage.
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Factors affecting the factory buildings.
1. Types of manufacturing process.
 Nature of product to be produced determines the
manufacturing process to be used and the equipment
used in the process of manufacture dictate the shape of
factory buildings.
2. Plant location.
 If in city, firm foundations should be laid for possible
vertical expansion in future.
 If in terai, cellars may be constructed for use in storage of
materials, employee facilities etc.
3. Material handling.
 Height of ceiling should facilitate movement of trucks and
overhead cranes.

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4. Factory layout.
 The location of the administrative production
department
offices, and service departments, both technical and
personal services, size of the bay, degree of flexibility in
relation to future expansion etc. play a decisive role in
designing the building facilities.
5. Provision of facilities.
 Heating, lighting and air-conditioning, use of insulations, fewer
windows, fire fighting, sewage treating etc
6. Future expansion
 So that it can be easily expanded whenever necessary.
7. Safety and security.
 Build so that to provide maximum protection against fire,
hazards, earthquakes, boundary walls, fencing wire.

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8. Employee facilities
 Lunch rooms, cafeteria , water coolers, locker rooms,
crunches and parking.
9. Flexibility.
 Accommodate different types of
operations, temporary partitions.
10. Appearance
 Pleasant atmosphere thereby boosting
morale of employees.
work the
 Kept clean and colored.

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Types of construction of factory buildings

1. Wood
2. Brick
3. Steel
4. Reinforced
5. Pre-cast

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2. Types of plant layout
A plant layout is an arrangement of facilities and
services in the plant . Plant layout is a techniques of
location machines, processes and plant services within
the factory in order to secure the greatest possible
output of high quality at the lowest possible total cost
of production.
Objectives of a good plant layout

1. Integrate the production centers.
2. Reduces the material handling.
3. Effective utilization of available space.
4. Worker convenience and job specification.

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According to Riggs, “the overall objective of plant layout is
to design a physical arrangement that most economically
meets the required output – quantity and quality.”
According to J. L. Zundi, “Plant layout ideally involves
allocation of space and arrangement of equipment in such
a manner that overall operating costs are minimized.”
Principles of plant layout

1. Principle of overall integration.
2. Principle of minimum movement.
3. Principle of smooth and continuous flow.
4. Principle of satisfaction and safety.
5. Principle of flexibility.

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I. Process (functional/job) layout
• All similar machines Advantages
grouped together.
are High product flexibility
• Different sections or Lower initial investment level
such
shops turning section,
as section,
milling welding drilling Disadvantages
section, line etc.
assembly Higher labor-skill
• Used in job and section, batch requirements
production non- More worker training
and repetitive
More supervision
• work.
Leaves the equipment
in condition.
flexible More complex
production
planning and
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, Thapathali Campus, IOE,TU controlling
Cutting Planing Shaping Assembly Sanding Finishing
1 2 5 6 7
2 3
Job B 3 4
1 4 5 6
Drilling Turning
Examples
Machine shop
Auto body repair
Custom
woodworking
Industrial
shop Engineering and Management, BME III/II
51
Fig: layout of auto workshop

.

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I. Product (line) layout
• Machines and
services
Advantages
auxiliary are arranged
line
in according to the Lower labor-skill requirements
sequence of operations to
be performed on the work. Reduced worker training
• The raw material enters in Reduced supervision
the line at one end, the
operation are carried out in Ease of planning and
succession, in a smooth controlling production
flow and finished goods is
delivered at the other end
of the line. Disadvantages
• Separate production
line for each type of layout. Higher initial investment level
• Suitable for Relatively low product
continuous
flexibility
production.
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II. Product (line) layout

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Raw Material Components

2 4
Assemblies Fin. Goods

1 3 5 7
Raw Material Components Subassem.
Purchased
Product/Material Flow
6
Production Operation Components,
Subassemblies
Two general forms
Discrete unit – automobiles, dishwashers
Process (Continuous) – petrochemicals, paper
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III. Mixed and combined layout
• Combination of process and product layout.
• Incorporates the benefits of process and product
layout.
• Production shops may be arranged by process
layout, while the assembly is accomplished on
line.
• Some processes may be segregated from the
product line e.g.. Objectionable, hazardous,
requiring special treatment and repetitive
performance etc.
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III. Mixed and combined layout
Assembly
8 10 9 12
11
4 Cell 1 Cell 2 6 Cell 3
7
2 1 3 5
A B C
Raw materials

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IV. Static or fixed position layout
Advantages
• Adopted when the work piece  It saves time and cost.
is very big or too heavy  The layout is flexible.
to move from one position to  It is more economical when several
orders in different stages of progress
other and is consequently
the are being executed simultaneously.
fixed in one place .  Adjustments can be made to meet
shortage of materials or absence of
• The machines and men move workers.
with respect to the work to
Disadvantage
perform the required •s Production period being very
operation. capital
long, investment is very heavy
• E.g. in construction work, • Very large space is required
storage
for of material and
ship-building, in fabrication equipment near the product.
of tanks, aircrafts. • there is possibility of confusion and
conflicts among different workgroups.

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IV. Static or fixed position layout

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Product Volume and Variety
Cellular
Product
Quantity
Layouts
Fixed
Position
Layouts Mixed Layouts Process Layouts
Number of Different Products

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Products, Processes and Layouts
PRODUCTS PROCESSES LAYOUT
S
Make-to-stock Continuous high volume,
standardized process industries Product Layout
commodities repetitive mfg low variety
Assemble-to-order Hybrid, FMS, low volume,

Cellular Layout
modular CAM, CIM medium variety
Make-to-order low volume,

Job-Shop(Intermittent) Process Layout
custom high variety
Engineer-to-order low volume,

Special project Fixed Position
one-of-kind low variety
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3. Flow patterns
Flow patterns means the system to be adopted for the movement of
raw-materials from the beginning and up to the point when it is
converted into finished product.
Factors governing flow pattern

 External transport facilities.
 Number of products to be handled.
 Number of units to be processed.
 Number of sub-assemblies made up ahead of assembly line.
 Type of plant layout, availability of floor space etc.
The material flow system can be broadly classified as

1. Horizontal flow system.
2. Vertical flow system.

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3. Flow patterns
1. Horizontal flow system
The horizontal flow system is adopted on a shop floor in the
single storey building. The starting point is the receiving (R) of
the raw material and the terminal point is the shipment (S) of
finished goods or components. In between these two points
the materials move from one work station to another for the
purpose of processing.
There are five basic types of horizontal flow system.
1. I – flow.
2. L – flow.
3. U – flow.
4. S – flow.
5. O – flow.

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3. Flow patterns
a. I flow R S
R
b. L flow
S
R
c. U flow
S

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3. Flow patterns
d. S flow
R
S
e. O circuit flow
R

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3. Flow patterns
2. Vertical flow system

The vertical flow system is used in multi-storey buildings.
Multi-storey buildings are used where limited area is
available and the processing is done on light materials.
The advantages of gravity flow can be tapped.
Following are some of the important vertical flow system.

1. Processing upwards.
2. Processing downwards.
3. Retraction type of flow.
4. Inclined flow.

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3. Flow patterns
4th floor 4th floor
3rd floor 3rd floor
2nd floor 2nd floor
S 1st floor R 1st floor
R S
ii. Processing downwards

i. Processing upwards

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3. Flow patterns
4th floor 4th floor S
3rd floor 3rd floor
2nd floor 2nd floor
S 1st floor 1st floor
R R
iv. Inclined flow

iii. Retraction type of flow

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69
B. Material Handling- course outline
 Engineering factors and

economic factors.
 Classification of material
handling equipment.
“We will either find a way, or make one.” - Hannibal

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Material handling
Material handling may be defined as the handling of raw-
materials, semi finished parts and finished products,
mechanically or manually through the production as well as
storage areas.
Material handling emphasizes upon the need of installing
efficient and safe and economical methods and equipment
for material handling. A material handling equipment is not
a production machinery, but is an auxiliary equipment that
improves the flow of materials which in turn reduces
stoppages in production machines and thus increases
productivity.
The two most important factors for analyzing or

solving material handling problems are
1. Engineering factors, and
2. Economic factors.
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1. Engineering factors and economic factors
The engineering factors are

1. Nature of materials and products to
be handled.
2. Production process and equipment.
3. Building construction.
4. Layout.
5. The existing material handling equipment.
6. Production, planning and control.
7. Packaging.

72
The economic factors

For economic analysis while selecting material handling
equipment following cost factors must be taken into
consideration.
Initial cost of equipment, cost of installation,
rearrangement of the present equipment, cost of
alternation necessary to the building, cost of maintenance,
repairs, supplies etc., cost of power, depreciation, cost of
labor to operate, cost of any necessary auxiliary equipment
(such as charging equipment for truck batteries, etc.),
savings that the equipment will bring about in direct labor
cost, (number of men released for other work), space
required, increased production brought about etc. A
material handling equipment with the lowest prospective
cost is selected.

73
Principles of material handling

1. Reduction in handling.
2. Reduction in time.
3. Principle of ‘unit load’.
4. Use of gravity.
5. Safety.
6. Use of containers.
7. Stand by facility.
8. Periodical check up.
9. Avoid interference with production line.
10. Flexibility

74
2. Classification of material handling equipment
Material handling devices are of five types.

1. Lifting and lowering devices (vertical movement)
i. Block and tackle
ii. Hand and power winches
iii. Hoists
iv. Elevators
v. Pillar crane
vi. Overhead crane
2. Transporting devices (horizontal movement)

vii. Wheel barrows
viii. Hand and power trucks
ix. Industrial narrow railways
x. Tractors and trailers
xi. Pipe lines
xii. Pumps
xiii. Aerial tram ways

75
2. Classification of material handling equipment
3. Devices which lift and transport (combination devices)

i. Chutes
ii. Hoists with trolleys running on overhead rails
iii. Fork lift truck
iv. Crane trucks
v. Different type of conveyors
vi. Spiral chutes
vii. Spiral rollers
viii. Cranes
4. Robots
5. Automatically guided vehicles

76
, Thapathali Campus, IOE,TU 67
77
D. Production, Planning and Control
 Types of production system

 Routing, Scheduling and
Loading
“We always take credit for the good and attribute the bad to
fortune.” – Jean De La Fontaine
78
Production, Planning and Control
Production is the process by which goods and services are
created. It can also be defined as a means of converting raw
materials into finished products by performing a set of
manufacturing operations in a pre-determined sequence
that done in one or in a combination of the following ways.
 Transformation by integration.
 Transformation by integration or assembly.
 Transformation by service.
Planning means preparing the scheme in advance before the

actual work is started. It may be defined as the pre-
determination of future achievement to meet the desired
objectives. Planning begins with an analysis of the given data
on the desired target may be most effectively attained.
Planning in facts set up the standards of performance.

79
Production, Planning and Control
Controlling means the supervision of all the relevant operations with the
help of control mechanism that feed back the progress of the work.
Controlling is made by comparing the actual performance with the present
standards (plans) and deviations are analyzed. The control mechanism is
also responsible for subsequently and adjusting, modifying and redefining
plans and targets, in order to ensure attainment of pre-specified
production goals, in the most efficient and effective manner.
Production planning and control may be defined as the direction and co-
ordination of the firm’s material and physical facilities towards the
attainment of pre-specified goals, in the most efficient and economical
manner.
In simple words, production planning and control means
i. A complete plan.
ii. A follow up procedure for determining how closely the plans are being
followed.
iii. A means to regulate the mechanism to meet the
requirements of proposed plan.
iv. A procedure to employ right quantity and right type of personnel at the
right place.
80
Production planning and control
The various functions of production planning and control can be classified into
three main categories or phases as follows:
1. Planning phase
i. Prior planning
a) Forecasting
b) Order writing
c) Product design
ii. Action planning
a) Process planning and routing
b) Material control
c) Tool control
d) Loading
e) scheduling
2. Action phase -
Dispatching
3. i. Control phase
a) Progress
Datareporting
collection
b) Data interpretation
ii. Corrective action
a) Expediting
b) Replanning

81
Production planning and control
Relation between production planning and control
INPUTS OUTPUTS
Men PRODUCTION Goods and
ACTIVITY OBJECTIVE
Materials Services
Planning
Machines
Forecast
PRODUCTION
CONTROLLER COMPARISON PLAN
Modify Plan

82
1. Types of production system
Production system
 A collection of workstations that perform operations such
as manufacturing, assembly, inspection, finishing, testing,
etc. to create products
Production system design
 The general arrangement of workstations, dictating
the pattern of flow of the products, and the resource
requirements at each workstation
WS5
WS2
WS1
WS3
WS4

83
Workstation
 A collection of machines/ perform the
operators that same
operation for the same set of products
 A machine/operator may be:
• A
Anmachine operated
automated by a human
machine
• A human operator performing a manual operation
The production systems to be addressed are discrete

part
production systems
 Each part produced is a distinct entity
• Vehicle, computer, hamburger, etc.
 This is in contrast to continuous goods production such as fluids,
powders, etc.
• Often in the domain of chemical process engineers
Thus, the product being produced will be referred to generically
as a part or job.
84
The different types of production system are

1. Job production
2. Batch production
3. Continuous production
4. Computer aided manufacturing
5. Group technology
6. Flexible manufacturing
7. Just in time manufacturing
8. Computer integrated manufacturing

85
Job production system

It is the manufacture Characteristics
of products to meet 1. Small production plans.
customer requirement
specific 2. Long
of s orders. manufacturing cycle
quantity
special involved
The is 3. time.
Discontinuousflow of
small, usually one off materials.
or several off. 4. Process plant
It is concerned with layout of
special projects, models, and equipment.
proto-types, 5. Skill required.
machinery
special or 6. Experts are
to perform specialized
equipment available for
and specific tasks. supervision of quality.
7. High cost of production.
86
Batch production system

It is the manufacture of number
Characteristics
of similar articles, either to
meet
a specific order or to satisfy 1. Short runs.
continuous demand. When the 2. High investment.
batch is terminated the plant and 3. Skilled labor.
equipment are available 4. Specific
offorsimilar or other process supervision of
production 5. quality.
Plant layout is process.
Ifproducts.
the order is only executed only 6. Less material
once, will be handling than job
justification
there less production.
elaborate production
for aids than 7. Flexibility in production
when the order isproviding
repeated. schedule.
87
Continuous production system

It is the specialized manufacture of
identical articles on which the Characteristics
equipment is fully engaged. 1. Continuous flow of
material.
It is normally associated with large 2. Product
quantities and high rate of demand. layout.
Since articles are 3. Less
identical operation are material
produced production
repetitive, the auxiliary aids 5. handling.
Very short manufacturing
such as special tools, jigs and 4. cycle time.
Relatively low
fixtures, inspection devices can be 6. Easier supervision of
skilled labor.
quality.
advantageous.
7. Flexibility in production
It can be mas production and also schedules.
flow production.
88
2. Routing, Scheduling and Loading
Routing
Routing may be defined as the selection of the path which each
part of the product will flow, while being transferred from raw
materials to finished products. Path of the product will also give
sequence of operations to be adopted while manufacturing. It is
an important function of the production planning and control
because it has direct bearing on the ‘time’ as well as ‘cost’ of the
operations.
Routing procedure
1. Analyze the product
The finished product is analyzed and broken into number of
components required for the product.

89
2. Make and buy decision

It means to decide whether all components are to be manufactured in the
plant or some are to be purchased from outside. Make or buy decision
depends upon the work load in the plant already existing, availability of
equipment, labor and economy considerations.
3. Raw materials requirements
A part list and bill of materials is prepared showing name of the part, quantity,
material specifications, amount of material required etc.
4.Operations through which raw materials are to undergo are listed (in a
proper sequence).
5. Machines are to be used, their capacity is also listed.
6. Time required for each operation and subassemblies is listed.
7. The lot size is also recorded.

90
Routing sheet includes:

– A description of the operation
– The product rate in pieces per hour
– The number of operators and machines needed
– The cost of producing the product in standard
units
Advantages of routing
• Efficient use of available resources.
• Reduction of manufacturing costs.
• Improvement in quality and quality of the product.
• Provides a basis for scheduling and loading.

91

92

93
Scheduling
It may be defined as the assignment of work to the facility with the
specification of times and the sequence in which the work is to be done.
‘The determination of time that is required to perform each operation
and also the time required to perform the entire series as routed in
scheduling.
Factors affecting scheduling

A. External factors
1. Customer’s demand.
2. Customer’s delivery date.
3. Stock of goods already lying with dealers and retailers

94
B. Internal factors
1. Stock of finished goods within the firm.
2. Time interval to process finished goods from raw materials.
3. Availability of machines.
4. Availability of manpower.
5. Availability of facilities.
6. Feasibility of economic production runs.

95
Scheduling Machines in Parallel

A 31
B 5 Machine 1
C 25
A F I H
Time
D 7
31 43 55 61
E 10
F 12 Machine 2
G 28 G J E B L
H 6 28 45 55 60 64
I 12
Machine 3
J 17
C K M D
K 21
25 46 54 61
L 4
M 8 Greedy heuristic: Biggest job first.

Schedule next longest job on next available
machine
96
Machine loading
Machine load charts are prepared to assist in production scheduling as
routing. Machine load charts show the amount of work (in terms of
hours, days and weeks) that has been assigned and scheduled to each
machine, groups of identical machines or shop departments.
Objectives of loading
 To plan new work orders on the basis of space capacity available.
 To balance the work load in a plant.
 To maintain the delivery promises.
 To check the feasibility go production programs.
 They are also used during plant layout for balancing capacity and a
uniform flow of work.
97
Dispatching (Release of work order)

Dispatch function executes planning function. It is concerned with getting the
work started. Dispatching ensures that the plans are properly implemented.
Dispatch function authorizes the workers to do the work.
The activities of dispatching may be listed as below:
1. Issue of move orders.
2. Issue of tool orders.
3. Issue of job orders (job tickets).
4. Issue of inspection orders.
5. Issue of drawing, time tickets, instruction cards and other
necessary
information.
6. Issue of store orders.
7. Issue of orders to finished product stores.
8. Recording time of beginning and completing.
98
Production control
Production control is the function of management which plans,
directs and control the material supply and processing activities
of an enterprise; so that specified products are produced by
specific methods to meet an approved sales programs. It ensures
that the activities are carried in such a way that the available labor
and capital are used in the best possible way.
1. Progress reporting
a. Data collection.
b. Data interpretation.
2. Corrective action

99
10
E. Product research, development and design
 Tools for product

development.
 Standardization.
 Simplification and
specialization.
“The best way to succeed in life is to act on the advice we

give to others.”
10
Product research, development and design
The growing productivity of industry is the result of

technological progress made possible by research and
development. The research may be of two types:
i. Pure research.
ii. Applied research.
Primary aims of research and development

iii. To preserve profitability of the firm’s current investment.
iv. To protect the firm from technological obsolescence.
v. To insure success in the firm’s primary field of business.
vi. To reduce the cost of production and increase productivity
to face the competition in the market.

10
Areas of applied research

1. Energy and fuel.
2. Materials.
3. Processes.
4. Products.
5. Scientific management.
Product development
Product development is carried out after applied research
which follows pure research. Development is the work
contributing towards improvement in the existing
knowledge by way of improved ideas, systems,
techniques etc.

10
Product development procedure

The various stages involved in selecting
and developing the product may de listed as:
1. Venture new product ideas
a. Imitation.
b. Adaptation.
c. Invention (research and development)
d. Other sources (dealers, customers)
2. Screening of ideas. (poor ideas are dropped and
only the most promising, feasible and profitable
ideas are selected)
3. Concept development. (develop ideas into
mature product concepts)
10
4. Product analysis.
a. Marketing aspects
b. Product characteristics. (functional,
operational, durability, aesthetic)
c. Economic analysis. (profit, break even analysis)
d. Production aspects.
5. Product design and development program.
6. Test marketing.
7. Commercialization.

10
Product design
It is necessary to design the product before starting its manufacture.
When a product idea is conceived and then developed to the point at
which it shows itself to be both technically and commercially viable, it
is considered how the product should be made. Design is the
conversion of knowledge and requirement into a form, convenient and
suitable for use or manufacture.
Product design a specialized field of engineering has two basic aspects:

1. Functional design
It should serve the purpose for which it is designed.
2. Production design
It is concerned with the economy of production.

10
Test marketing
Once the product has been developed, it has to be tested in the actual
market place to learn how consumers react to the product’s features,
its performance and its marketing program including branding,
packaging, price and distribution. Test marketing decisions include
deciding on the test.
Commercialization
Once the test marketing gives a green signal the company
undertake the full scale manufacture,
can considering the necessary
modifications. The marketing management can then launch a full
fledged advertising and promotion campaign for distribution of the
product in the entire market.

10
1. Tools for product development
The three S’s (Standardization, Simplification and

Specialization) are at the root of any economic analysis of
product design.
Standardization is the process of defining and applying
the conditions necessary to ensure that a given range of
requirements can normally be met with a minimum
variety and in a reproducible and economic manner on a
basis of the best current technique.
Simplification is the process of reducing the number of
types of products within a definite range.
Specialization is the process whereby a particular firm
concentrates on the manufacture of a limited number of
products or types of products.

10
2. Standardization
Standardization
1. Eliminate wastage and 1. Too much standardization has
an adverse effect on the
reduces cost of production. efficiency and morale of the
workers.
2. Reduced investments in
2. Due to monotonous work the
stocks andreduced spirit of challenge and initiative
inventories. vanishes with the passage of
time.
3. Less set up costs. 3. Difficult to introduce new
4. Less skill is required. models.
4. Resist change, so may become
5. Reduction in repair obstacle to progress.
and 5. For small scale enterprises
maintenance cost. standardization may not
be advantageous.
6. PPC becomes easier.
7. Better inspection and quality
control. Industrial Engineering and Management, BME III/II
10
3. Simplification and specialization
Simplification Specialization
Advantages Advantages
1. Better inventory control. 1. Lead to higher productivity.
2. Increase in output and
2. Efficiency of production reduction in per unit cost of
process increases; more production.
productivity. 3. Saving in purchase of raw
material and improvement in
3. Quick delivery and after sales quality of the finished product.
service. 4. The firm can afford to carry out
research and development for
4. Lower the production costs. further improvement.
5. Simplifies inspection
Disadvantages
and 5. Less flexibility in
control. adjustment to changed
situation.
6. Reduction in storage space. 6. Monotony and boredom
7. expenditures.
Less overheads and handling may adversely affect the
Industrial efficiency.
Engineering and Management, BME III/II
,By:
Thapathali Campus, Thapathali
Khem Gyanwali, IOE,TU Campus, IOE,TU 100
11
11
F. Process planning
“A career is born in public– talent in privacy.” – Marilyn

Monroe
112
11
F. Process planning
Process can be defined as a method of converting the raw material

into finished products which possesses utility or which can be sold in
the market.
The various manufacturing process are
1. Forming processes.
2. Moulding processes.
3. Machining processes.
4. Assembly processes.
Process planning is the systematic determination of method or
process by which the product is to be manufactured economically and
competitively the limits of design consideration (specification) laid
down. It consists of selecting and specifying processes, machine tools
and other equipment to convert raw materials into finished product.

113
11
F. Process planning
Steps in process planning

1. Analysis of the product print and specifications.
2. Improvement of the specifications.
3. Make or buy decision.
4. Selection of basic manufacturing process.
5. Determine the sequence of operations.
6. Combine the operations.
7. Prepare the list of raw materials.

114
11
F. Process planning
8. Selection of the machine tools or equipments.

9. Inspection.
10. Requirements of tools, gauge etc.
11. Labor requirements.
12. Time standards.
13. Cost of production.
14. Prepare the operation sheet and route sheet.

115
11
F. Process planning
Factors affecting process planning.

1. Size and form of raw materials.
2. Processing method.
3. Choice of plant layout.
4. Capacities of machine tools.
5. Tolerance and surface finish.
6. Surface finish.
7. Quantity to be manufactured.

116
11
F. Process planning
Make or buy decision

The decision of make or buy depends upon the following:
1. Volume required.
2. Economic advantage.
3. Life of the product.
4. Quality considerations.
5. Degree of product standardization.
6. Degree of manufacturing standardization.
7. Emergency.
8. Seasonal variation.
9. Reliability of supplier.
10. Sub-contracting.

117
11
F. Process planning
Process selection
There are many production processes, moreover, a part or a
component can be manufactured by two or more processes. The
process engineer should select a process that will be most suitable and
economical for the purpose.
The following factors should be considered for selection of process:

1. Quantity to be produced.
2. Requirement of the product.
3. Utilization of existing equipment.
4. Minimum idle time.
5. Less scrap.
6. Flexibility.
118
11
F. Process planning
Steps in process selection

1. Establish the process objectives.
2. Collect all the facts about the problem.
3. Plan alternative process.
4. Evaluate alternative process.
5. Establish as a standard process.

119
11
F. Process planning
Plant capacity
Plant capacity is the rate of output of a plan i.e. the maximum
number of products manufactured in a given time (per year,
per month or per day per shift). In order to translate capacity
into workable units, it is necessary to understand two factors.
Plant efficiency factor = (useful productive time)/(total
working time)
It range generally from 0.50 to 0.95.
Scrap factor = (No. of defective units)/(total no. of units)

This scrap factor may vary from 4 to 15%.

120
12
F. Process planning
Individual machine capacity

It is the output of that machine for a specified
method of operation.
Operation cycle time = loading + unloading
+ machining + inspection.
Weekly load = operation cycle time/piece * No.
of pieces.
No. of machines required = weekly load/ weekly
working hours
121
12
F. Process planning
Machine selection
The following factors should be considered while selecting a
machine for performing a definite operation:
1. Machine capability (accuracy and surface finish)
2. Capacity of the machine (special purpose or
general purpose)
3. Range of machine (and size and shape of the
work piece)
4. Machine available
5. Cost consideration

122
12
F. Process planning
Q. Calculate the number of machines required to

manufacture three components from the following data:
The plant is working for 8 hrs. per day in one shift.
S.N. Components A B C
1. Setting time 25 min. 55 min. 45 min.
per lot.
2. Operating cycle 1.75 min 3 min. 2.1 min.
time/piece
3. Lot size 350 550 575
4. Production per 2450 4400 2875
month

123
12
F. Process planning
Machine occupancy time for the component A for

one month = set up time + operation time.
= (2450*25/350*60) + (2450*1.75/60) = 74.374 hrs.
Machine occupancy time for the component B

= (4400*55/550*60) + (4400*3/60) = 227.33 hrs.
Machine occupancy time for the component C

= (2875*45/575*60) + (2875*2.1/60) = 104.375 hrs.

124
12
F. Process planning
Total number of hours available per month = 8*6*4 = 192

hrs. (assuming six working days per week)
Total machine hours required = 74.374 + 227.33 + 104.375 =

406.079 hrs.
Therefore, No. of machines required = (total machine hrs.

required)/ (No. of working hours available)
= 406.079/192 = 2.115 = 3

125
12
12

Design of Production Systems

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Chapter 2

Industrial Engineering and Management, BME III/II 1

Industrial Engineering and Management, BME III/II

The conscious effort to design for producibility

Industrial Engineering and Management, BME III/II

What is plant location?

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Comparison between urban and rural sites

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Q: Let us assume that a new medical facility, Health-care, is to be located in

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

SOLUTION: The weighted score for this particular site is calculated by

Industrial Engineering and Management, BME III/II

𝑡𝑜𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠 −𝑡𝑜𝑡𝑎𝑙

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

6. Wages and salaries 20,000 25,000 20,000

Industrial Engineering and Management, BME III/II

Solution: we can select on the basis of Rate of Return which is

Rate of return = ((2,50,000 – 1,95,000)/2,00,000)*100% =27.5%

Industrial Engineering and Management, BME III/II

Q. Potential location A, B and C have the cost

Industrial Engineering and Management, BME III/II

0 20000 60000 80000

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

From the graph,

Industrial Engineering and Management, BME III/II

Location sites Fixed cost/year (Rs.) Variable cost/unit (Rs.)

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

0 6000000 7000000 5000000

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

From the graph,

Industrial Engineering and Management, BME III/II

 Types of Factory Building

Industrial Engineering and Management, BME III/II

The ideal plant is one which is built to house the most

Industrial Engineering and Management, BME III/II

Industrial Engineering and Management, BME III/II

Factors affecting the factory buildings.

Industrial Engineering and Management, BME III/II

Types of construction of factory buildings

Industrial Engineering and Management, BME III/II

Objectives of a good plant layout

Industrial Engineering and Management, BME III/II

Principles of plant layout

Industrial Engineering and Management, BME III/II