Production And Operation Management

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MTU Syllabus
Unit I
Production & Operations Management An introduction, Systems Approach,
Differentiating between goods and services, Production Management vs
Operations Management, Input-Output Profit (Business) Model
Unit II
Production processes: types, Plant layout: types, Factors governing the location of
a plant
Unit-III
Operations Planning & Control Aggregate Production Planning, Master
Production Scheduling, Loading, Sequencing, Routing, Scheduling, Despatching,
Line balancing. Inventory Management : EOQ Models, Inventory Classification
Systems, Just in Time (JIT)
Unit-IV
Basic concepts of quality, PDCA cycle, Quality circles, Quality improvement
tools- Kaizen, Six Sigma, TQM, ISO 9000-2000 clauses.
Unit- V
Maintenance Management: Objectives, concept, advantages and limitations of
Breakdown Maintenance and Preventive maintenance, Total Productive
Maintenance

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Introduction of Production and Operation Management

Production and operations management (POM) is the management of an organizations

production system.

A production system takes inputs and converts them into outputs.

The conversion process is the predominant activity of a production system.

The primary concern of an operations manager is the activities of the conversion process

The very essence of any business is to cater needs of customer by providing services and goods,
and in process create value for customers and solve their problems. Production and operations
management talks about applying business organization and management concepts in creation of
goods and services

According to E.L Brech: -Production management is the process of effective planning

and regulating the operations of that section of an enterprise which is responsible for the
actual transformation of materials into finished products.

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This definition limits the scope of production management to those activities of an

enterprise, which is directly related to the transformation of inputs (materials) into output
(finished products). It also states that production management is concerned with planning
and controlling the operations relating to production process. In brief, production
management is basically concerned with production planning and control.
According to E.S. Buffa: -production management deals with decision-making related to
production process so that the resulting goods or services is produced according to
specification, in the amounts and by the schedule demanded and at specification, in the
amounts and by the schedule demanded and at minimum cost.
According to Carl Heyel, Production is the process of transforming raw materials or
purchased components into finished products for sale.

Production
Production is a scientific process which involves transformation of raw material (input) into
desired product or service (output) by adding economic value. Production can broadly categorize
into following based on technique:

Production through separation: It involves desired output is achieved through separation

or extraction from raw materials. A classic example of separation or extraction is Oil into various
fuel products.

Production by modification or improvement: It involves change in chemical and

mechanical parameters of the raw material without altering physical attributes of the raw
material. Annealing process (heating at high temperatures and then cooling), is example of
production by modification or improvement.

Production by assembly: Car production and computer are example of production by

assembly.

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Importance of Production Function and Production Management

Successful organizations have well defined and efficient line function and support function.
Production comes under the category of line function which directly affects customer experience
and there by future of organization itself.
Aim of production function is to add value to product or service which will create a strong and
long lasting customer relationship or association. And this can be achieved by healthy and
productive association between Marketing and Production people. Marketing function people are
frontline representative of the company and provide insights to real product needs of customers.
An effective planning and control on production parameters to achieve or create value for
customers is called production management.

Operations Management
Operations management (OM) is defined as the design, operation, and
improvement of the systems that create and deliver the firms primary
products and services

Systematic Approach
to Org. Processes

Business Education

Operation
Management

Cross-Functional
Applications

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The Future of Operations

Outsourcing everything
Smart factories
Talking inventory
Industrial army of robots
Whats in the box
Mass customization

Operations Management Decision Types

Strategic (long-term)
Tactical (intermediate-term)
Operational planning and control (short-term)

Transformation Process
A transformation process is defined as a use of resources to transform inputs into some desired
outputs Transformations

Physical--manufacturing
Location--transportation
Exchange--retailing
Storage--warehousing
Physiological--health care
Informationaltelecommunications

As to deliver value for customers in products and services, it is essential for the company to do
the following:
1.
Identify the customer needs and convert that into a specific product or service (numbers
of products required for specific period of time)
2.
Based on product requirement do back-ward working to identify raw material
requirements
3.
Engage internal and external vendors to create supply chain for raw material and finished
goods between vendor production facility customers.

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Operations management captures above identified 3 points.

The Importance of Operations Management

Synergies must exist with other functional areas of the organization

Operations account for 60-80% of the direct expenses that burden a firms
profit.

The Basics of Operations Management

Operations Management
The process of managing the resources that are needed to produce an organizations
goods and services.
Operations managers focus on managing the five Ps of the firms operations:
People, plants, parts, processes, and planning and control systems.

Production Management v/s Operations Management

A high level comparison which distinct production and operations management can be done on
following characteristics:
Output: Production management deals with manufacturing of products like (computer,
car, etc) while operations management cover both products and services.
Usage of Output: Products like computer/car are utilized over a period of time whereas
services need to be consumed immediately
Classification of work: To produce products like computer/car more of capital
equipment and less labour are required while services require more labour and lesser capital
equipment.
Customer Contact: There is no participation of customer during production whereas for
services a constant contact with customer is required.
Production management and operations management both are very essential in meeting objective
of an organization.

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Difference between Goods and Services

Goods are considered as tangible objects. Services are intangible commodities that cannot be
touch, felt, tasted, etc.

Almost all things can be separated into goods and services. These are very different from each
other, though in todays world there are a variety of companies that offer both goods and
services. Hence, it is often overlapping and companies are trained in both to offer proper goods
as well as adequate services.
In economics, goods are considered as tangible objects. These are obviously things that you can
see, touch, smell, taste, etc. In order for a good to be classified as good, it must something a
person can hold, taste, consume or use. Goods are also easily transferable from one person to
another. Goods also have a physical dimension and take up space someplace. Dictionary.com
defines goods as, possessions, especially movable effects or personal property; articles of
trade; wares; merchandise. Goods are often acquired in exchange of money or earlier it was
traded for another good (i.e. wheat for rice, etc.).
Goods also do not require interaction with the customer. Goods are often made in factories where
they are separate from the customers. After the good is prepared in the factory, workshop, etc. is
it sold to the customer. Another feature of goods is that it does not change or modify day to day,
it is a repetitive process. For example a company producing toothpaste, does not continuously
keep changing the process or the ingredients of the toothpaste. The ingredients and process for
creating the toothpaste remain the same time and time again. Lastly, many goods are also not
perishable, though some such as foods or medicines are. Goods can be kept for months or years
depending on the product.
Services are something completely different from goods. Services are intangible commodities
that cannot be touch, felt, tasted, etc. They are the opposite of goods, where goods are something
that can be traded for money; services are when you hire a person or someone to do something
for you in exchange of money. Services are usually hired or rented, they cannot be owned like
goods can. Since it requires people and one cannot legally own a person in todays world,
services can only be for hire. Services are often described by using five key characteristics:
Intangibility, Perishability, Inseparability, Simultaneity and Variability.
As previously stated services are intangible and they cannot be touched, tasted or held. They are
insubstantial and can be sold and resold to other persons as well. Services are quickly perishable
and they cannot stay after a long time. Some services such as cable, electricity, etc. require
monthly fee for long-term continuance, however if a person stops paying the services are then
cut and no longer provided. Other services are also assigned for a short period of time for which

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the service provider asks you for a fee in exchange of the service. When the time period is over,
the service quickly vanishes and is provided to someone else. Inseparability is another
characteristic of services, the provider and consumer must be in the same place at the same time
in order to receive and consume the service. In case the service provider cannot show up, he
must hire staff or other people to take his place. For example, a person walks into a salon to get a
haircut; the salon must offer a chair and a hair dresser to the person to sit on and get a haircut.
This leads to simultaneity, which is that the service is rendered at the same time that it is
consumed. The provider offers the service, while the customer consumes it. Using the same
example, the hair dresser will cut the hair at that moment, not later. Lastly, each service differs
for each person. No two services can be the same. The services must be changed according to the
needs of the customer. In the above example: the hair dresser must cut the hair according to the
consumers needs. If one consumer wants just a trim, the dresser will give them a trim; if they
want wash, cut and blow dry or a different haircut, the person must be willing to provide them
with that.
Though these are completely different things, they often overlap in many places. Many
companies must train their staff to provide a proper environment along with providing the proper
good that a customer wants. Both of these overlap in places such as restaurants, shops. For
example: if a person goes to a restaurant and offers food, the food would become the good, while
the ambience or the waiters service will become service. Similarly, ever go to an HP or Apple
Store. They offer products, but they also hire people that are meant to be helpful and
knowledgeable. In these places, the provider has an upper hand if they can provide both goods as
well as services.

1. Goods are tangible but services are intangible.

2. The ownership rights of goods are transferable, but there is no ownership involved in
services.
3. Once goods are produced, their quality remains uniform, but the qulality of service
varies step to step (with the change in evironmental conditions)
4. Goods may be perishable or non-perishable, but they can be stored for a long time.
Serivices cant be stored for a long time and they are only perishable.
5. Goods are produced using raw material, but services are not produced using raw
material. They are automatically formed with the change in evironment.
6. Services have ultimate and strong impact on demand for goods. But services have
not ultimate effect on demand for goods, and if there is an impact, it will be negligible.

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System Approach
System
The term system may defined as
An arrangement of various intrected, interrelated, interdependent, components,
processes, methods designed to achieve a common task or goal.
A system can also be viewed as a bounded transformation process, that is, a process or collection
of processes that transforms inputs into outputs. Inputs are consumed; outputs are produced. The
concept of input and output here is very broad. E.g., an output of a passenger ship is the
movement of people from departure to destination.

Subsystem
A subsystem is a set of elements, which is a system itself, and a component of a larger system.

System model
A system comprises multiple views. For the man-made systems it may be such views as
planning, requirement (analysis), design, implementation, deployment, structure, behavior, input
data, and output data views. A system model is required to describe and represent all these
multiple views.

System architecture
System architecture, using one single integrated model for the description of multiple views such
as planning, requirement (analysis), design, implementation, deployment, structure, behavior,
input data, and output data views, is a kind of system model.

Types of systems
Systems are classified in different ways

Physical or abstract systems.

Open or closed systems.
'Man-made' information systems.
Formal information systems.
Informal information systems.
Computer-based information systems.
Real-time system.
Physical systems are tangible entities that may be static or dynamic in operation.

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An open system has many interfaces with its environment. i.e. system that interacts freely with
its environment, taking input and returning output. It permits interaction across its boundary; it
receives inputs from and delivers outputs to the outside. A closed system does not interact with
the environment; changes in the environment and adaptability are not issues for closed system.

System Approach in Production and Operation Management

POM system is the part of organization that produces the organization a physical product
or services.
Inputs are the basic need of production functions.
Conversion process is the process of creation of utility(s) and economic value added to
the inputs.
Output is the desired physical product or services which fulfill the desired of the
customer as well as stakeholders.
Random Fluctuations are the unplanned or uncontrolled environmental influences which
influence the production process.
Feedback is the control mechanisms of the production function. Production Function is
the system of conversion of inputs in to outputs with addition of economic values and
utility(s).
The systems approach sees an organisation as being made up of interdependent factors,
including individuals, groups, attitudes, motives, formal structure, interactions, goals, status,
and authority. All those interdependent factors must work together so that the organisations
goals can be achieved. In addition, the systems approach implies that decisions and actions
taken in one organisational area will affect others and vice versa
In concern of production and operation scenario system means Many Machine, Materials,
Processes, Humans, Capitals, Information, Departments combined together to transform
the input in to outputs. Production and operation management is a system of various
departments as

Purchase Department
Inventory Management
Manufacturing Department
Engineering Department
Maintenance Department
Inspection Department
Dispatch Department etc.

A complex structure of Production and Operation Management is combination of above

departments (may be refers as subsystem of production management). The interaction,

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interrelation and co- ordination of above department make a smooth flow of production. It helps
an organization to achieve desired target to meet customer demand and maximize profit.
Either than production and operation department has to interact with many other department of
the organization such as Finance, Sales, Personnel, R&D, Government affaires, etc. sales
department provide estimated demand for next coming year for production planning and
personnel department provide a regular flow of labour, Finance department provide capital for
running the process and R&D department provide new technique to cut the cost and information
regarding modification or innovation in to the product, marketing department provide
information regarding changes in consumer behavior, competitive products in market and on the
other hand Production and Operation department provide the real output to run all other
department.
Production and Operation department has to Interact with external environment also as to change
in policy, new rules and regulation about production, New tax or any other duty, subsidy on
production.

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Business model
A business model describes the rationale of how an organization creates, delivers, and captures
value[1] (economic, social, cultural, or other forms of value). The process of business model
construction is part of business strategy.

Input-output models
Input-output models are used to forecast various effects that can occur to an industry as it
interacts with other industries under changing conditions in the general economy. The conceptual
framework for such models was established many years ago by such economic theoreticians as
Quesnay ( 1758) and Leon Walras (1877) and, more recently, Leontief. As is readily apparent,
these inter industry interactions are not only complex but numerous.

Understanding the input-output model

An understanding of the economy as consisting of linked sectors goes back to the French
economist Franois Quesnay, and was fully developed by Lon Walras in 1874.[2] However,
Wassily Leontief was the first to use a matrix representation of a national (or regional) economy.
His model depicts inter-industry relationships within an economy, showing how output from one
industrial sector may become an input to another industrial sector. In the inter-industry matrix,
column entries typically represent inputs to an industrial sector, while row entries represent
outputs from a given sector. This format therefore shows how dependent each sector is on every
other sector, both as a customer of outputs from other sectors and as a supplier of inputs. Each
column of the input-output matrix shows the monetary value of inputs to each sector and each
row represents the value of each sector's outputs.

Usefulness
Because the input-output model is fundamentally linear in nature, it lends itself to rapid
computation as well as flexibility in computing the effects of changes in demand. Input-output
models for different regions can also be linked together to investigate the effects of inter-regional
trade, and additional columns can be added to the table to perform environmental input-output
analysis (EIOA). For example, information on fossil fuel inputs to each sector can be used to
investigate flows of embodied carbon within and between different economies.
The structure of the input-output model has been incorporated into national accounting in many
developed countries, and as such can be used to calculate important measures such as national
GDP. Input-output economics has been used to study regional economies within a nation, and as
a tool for national and regional economic planning. A main use of input-output analysis is to
measure the economic impacts of events as well as public investments or programs as shown by
IMPLAN and RIMS-II. It is also used to identify economically related industry clusters and also
so-called "key" or "target" industries (industries that are most likely to enhance the internal
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coherence of a specified economy). By linking industrial output to satellite accounts articulating

energy use, effluent production, space needs, and so on, input-output analysts have extended the
approaches application to a wide variety of uses.

Basic derivation
Say that we have an economy with sectors. Each sector produces a single homogeneous good, .
Assume that the th sector, in order to produce 1 unit, must use units from sector . Furthermore,
assume that each sector sells some of its output to other sectors (intermediate output) and some
of its output to consumers (final output, or final demand). Call final demand in the th sector .
Then we might write
or total output equals intermediate output plus final output. If we let
be the matrix of
coefficients , be the vector of total output, and be the vector of final demand, then our
expression for the economy becomes
which after re-writing becomes . If the matrix is invertible then this is a linear system of
equations with a unique solution, and so given some final demand vector the required output can
be found. Furthermore, if the principal minors of the matrix are all positive (known as the
Hawkins-Simon Condition), the required output vector is non-negative.

Example
Consider an economy with two goods, A and B. The matrix of coefficients and the final demand
is given by
Intuitively, this corresponds to finding the amount of output each sector should produce given
that we want 7 units of good A and 4 units of good B. Then solving the system of linear
equations derived above gives us
For practical purposes it might be challenging to actually compute the inverse matrix, given that
some input-output tables are in excess of hundreds of sectors.

Further research
There are many interesting aspects of the Leontief system, and there is an extensive literature.
There is the Hawkins-Simon Condition on producibility. There has been interest in
disaggregation to clustered inter-industry flows, and the study of constellations of industries. A
great deal of empirical work has been done to identify coefficients, and data have been published
for the national economy as well as for regions. This has been a healthy, exciting area for work
by economists because the Leontief system can be extended to a model of general equilibrium; it
offers a method of decomposing work done at a macro level.

Introducing transportation
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Transportation is implicit in the notion of inter-industry flows. It is explicitly recognized when

transportation is identified as an industry how much is purchased from transportation in order
to produce. But this is not very satisfactory because transportation requirements differ,
depending on industry locations and capacity constraints on regional production. Also, the
receiver of goods generally pays freight cost, and often transportation data are lost because
transportation costs are treated as part of the cost of the goods.
Walter Isard and his student, Leon Moses, were quick to see the spatial economy and
transportation implications of input-output, and began work in this area in the 1950s developing
a concept of interregional input-output. Take a one region versus the world case. We wish to
know something about interregional commodity flows, so introduce a column into the table
headed exports and we introduce an import row.
Table: Adding Export And Import Transactions
Economic Activities 1
Outputs

Exports

Final Demand Total

1
2

Z
Imports
A more satisfactory way to proceed would be to tie regions together at the industry level. That is,
we could identify both intra-region inter-industry transactions and inter-region inter-industry
transactions. The problem here is that the table grows quickly.
Input-output is conceptually simple. Its extension to a model of equilibrium in the national
economy is also relatively simple and attractive but requires great skill and high-quality data.
One who wishes to do work with input-output systems must deal skillfully with industry
classification, data estimation, and inverting very large, ill-conditioned matrices. Moreover,
changes in relative prices are not readily handled by this modeling approach alone. Of course,
input-output accounts are part and parcel to a more flexible form of modeling, Computable
general equilibrium models.
Two additional difficulties are of interest in transportation work. There is the question of
substituting one input for another, and there is the question about the stability of coefficients as

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production increases or decreases. These are intertwined questions. They have to do with the
nature of regional production functions.
[edit]Measuring input-output tables
The mathematics of input-output economics is straightforward, but the data requirements are
enormous because the expenditures and revenues of each branch of economic activity have to be
represented. As a result, not all countries collect the required data and data quality varies, even
though a set of standards for the data's collection has been set out by the United Nations through
its System of National Accounts (SNA): the most recent standard is the 2008 SNA. Because the
data collection and preparation process for the input-output accounts is necessarily labor and
computer intensive, input-output tables are often published long after the year in which the data
were collected--typically as much as 5-7 years after. Moreover, the economic "snapshot" that the
benchmark version of the tables provides of the economy's cross-section is typically taken only
once every few years, at best.
However, many developed countries estimate input-output accounts annually and with much
greater recency. This is because while most uses of the input-output analysis focus on the matrix
set of interindustry exchanges, the actual focus of the analysis from the perspective of most
national statistical agencies is the benchmarking of gross domestic product. Input-output tables
therefore are an instrumental part of national accounts. As suggested above, the core input-output
table reports only intermediate goods and services that are exchanged among industries. But an
array of row vectors, typically aligned below this matrix, record non-industrial inputs by industry
like payments for labor; indirect business taxes; dividends, interest, and rents; capital
consumption allowances (depreciation); other property-type income (like profits); and purchases
from foreign suppliers (imports). At a national level, although excluding the imports, when
summed this is called "gross product originating" or "gross domestic product by industry."
Another array of column vectors is called "final demand" or "gross product product consumed."
This displays columns of spending by households, governments, changes in industry stocks, and
industries on investment, as well as net exports. (See also Gross domestic product.) In any case,
by employing the results of an economic census which asks for the sales, payrolls, and
material/equipment/service input of each establishment, statistical agencies back into estimates
of industry-level profits and investments using the input-output matrix as a sort of doubleaccounting framework.
Input-output Analysis Versus Consistency Analysis
Despite the clear ability of the input-output model to depict and analyze the dependence of one
industry or sector on another, Leontief and others never managed to introduce the full spectrum
of dependency relations in a market economy. In 2003, Mohammad Gani, a pupil of Leontief,
introduced Consistency Analysis in his book 'Foundations of Economic Science' (ISBN
984320655X), which formally looks exactly like the input-output table but explores the

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dependency relations in terms of payments and intermediation relations. Consistency analysis

explores the consistency of plans of buyers and sellers by decomposing the input-output table
into four matrices, each for a different kind of means of payment. It integrates micro and
macroeconomics in one model and deals with money in an ideology-free manner. It deals with
the flow of funds via the movement of goods.

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Unit II
Production process
The production process is concerned with transforming a range of inputs into those outputs that
are required by the market.
This involves two main sets of resources - the transforming resources, and the transformed
resources.
The transforming resources include the buildings, machinery, computers, and people that carry
out the transforming processes. The transformed resources are the raw materials and components
that are transformed into end products.
Any production process involves a series of links in a production chain. At each stage value is
added in the course of production. Adding value involves making a product more desirable to a
consumer so that they will pay more for it. Adding value therefore is not just about
manufacturing, but includes the marketing process including advertising, promotion and
distribution that make the final product more desirable.

Types of Production system

Service System

Manufacturing System

Intermittent Production

Continuous Production

Batch Production
Mass production( Flow)

Processing Production

TYPES OF PRODUCTION/OPERATIONS PROCESSES

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Effective production/operations process is essential to the companys continuing success. Not only
are there numerous types of production, there are also many ways of classifying or grouping them for
descriptive purposes. Classifying production/operations processes by their characteristics can provide
valuable insights into how they should be managed.
In general, the processes by which goods and services are produced can be categorised in two
traditional ways. Firstly, we can identify continuous, repetitive, intermittent and job shop production
process.

Job shop (jumbled flow). A wide variety of customized products are made by a highly skilled
workforce using general-purpose equipment. These processes are referred to as jumbled-flow
processes because there are many possible routings through the process.
Examples: Mayo Clinic, home renovating firm, stereo repair shop, gourmet restaurant.

Intermittent (batch) flow. A mixture of general-purpose and special-purpose equipment is used

to produce small to large batches of products.
Examples: clothing and book manufacturers, winery, caterer.

Repetitive flow (mass production). The product or products are processed in lots, each item of
production passing through the same sequence of operations, i.e. several standardized products
follow a predetermined flow through sequentially dependent work centers. Workers typically are
assigned to a narrow range of tasks and work with highly specialised equipment.
Examples: automobile and computer assembly lines, insurance home office.

Continuous flow (flow shop). Commodity like products flow continuously through a linear
process. This type of process will theoretically run for 24 hrs/day, 7 days/week and 52 weeks/year
and, whilst this is often the objective, it is rarely achieved.
Examples: chemical, oil, and sugar refineries, power and light utilities.

These four categories represent points on continuum of process organisations.

Processes that fall within a particular category share many characteristics that fundamentally influence
how a process should be managed.

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The second and similar classification divides production processes into

Process Production. Processes that operate continually to produce a very high volume of a
standard product are termed Processes.This type of process involves the continuous production
of a commodity in bulk, often by chemical rather than mechanical means, such as oil and gas.
Extra examples of a continuous processes oil refinery, electricity production and steel making.

Mass Production. Is conceptually similar to process production, except that discrete items such
as motorcars and domestic appliances are usually involved. A single or a very small range of
similar items is produced in very large numbers. In other words, processes that produce highvolume and low-variety products are termed line or mass processes. Because of the high volumes
of product it is cost-effective to use specialised labour and equipment.

Batch Production. Processes that produce products of medium variety and medium volume are
termed batch processes. Occurs where the number of discrete items to be manufactured in a
period is insufficient to enable mass production to be used. Similar items are, whereossible,
manufactured together in batches. In other words, batch processes cover a relatively wide range
of volume and variety combination. Products are grouped into batches whose batch size can range
from two to hundreds.

Jobbing Production (Project Type Production). Processes that produce high-variety

and low-volume products are termed jobbing.Although strictly consisting of the
manufacture of different products in unit quantities (in practice corresponds to the
intermittent process mentioned above). This type of production assumes a one-of-a-kind
production output, such as a new building or developing a new software application. The
equipment are typically designed for flexibility and often general purpose, meaning it can be used
for many different production requirements.

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Bulk
Discret
e

Fig.3: The types of production.

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Frequently a firm has more than one type of operating process in its production system. e.g. a firm
may use a repetitive-flow process to produce high-volume parts but use an intermittent-flow process for
lower-volume parts.
A link often exists between a firms product line and its operating processes. Job shop organisations
are commonly utilised when a product or family of products is first introduced. As sales volumes increase
and the product's design stabilises, the process tends to move along the continuum toward a continuousflow shop. Thus, as products evolve, the nature of the operating processes used to produce them evolves
as well.

There are three main types of process: job, batch and flow production.
The benefits of job production are:
1. The job is a unique product, which exactly matches the requirements of the customer, often
from as early as the design stage. It will therefore tend to be specific to a customer's order and
not in anticipation of a sale. For example, someone doing a customised spray paint job on a
motorcycle will first discuss with a customer the sort of design he would like. A detailed sketch
would then be produced on a piece of paper. Once the sketch has been approved the back of the
sketch will be chalked over and traced on to the relevant piece of the motorbike. The background
work is then sprayed on with an airbrush before the fine detail is painted on. The finished work is
then inspected by the customer who will pay for a unique product.
2. As the work is concentrated on a specific unit, supervision and inspection of work are
relatively simple.
3. Specifications for the job can change during the course of production depending upon the
customer's inspection to meet his or her changing needs. For example, when a printing firm like
Polestar is asked to produce a catalogue for a grocery chain it is relatively simple to change the
prices of some of the goods listed in the catalogue.
4. Working on a single unit job, coping with a variety of tasks and being part of a small team
working towards the same aim would provide employees with a greater level of satisfaction. For
example, aircrews working for United Airways would treat each flight as a specific job, with
passengers requiring individual attention to their specific needs - e.g. for vegetarian dishes,
wheelchair access to the flight, etc.

Batch production
The term batch refers to a specific group of components, which go through a production process
together. As one batch finishes, the next one starts.

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For example on Monday, Machine A produces a type 1 engine part, on Tuesday it produces a
type 2 engine part, on Wednesday a type 3 and so on. All engine parts will then go forward to the
final assembly of different categories of engine parts.
Batches are continually processed through each machine before moving on to the next operation.
This method is sometimes referred to as 'intermittent' production as different job types are held
as work-in-progress between the various stages of production.
The benefits of batch production are:
It is particularly suitable for a wide range of almost similar goods, which can use the same
machinery on different settings. For example batches of letters can be sent out to customers of an
insurance company.
It economises upon the range of machinery needed and reduces the need for a flexible workforce.
Units can respond quickly to customer orders by moving buffer stocks of work-in-progress or
partly completed products through the final production stages.
It makes possible economies of scale in techniques of production, bulk purchasing and areas of
organisation.
It makes costing easy and provides a better information service for management.

Flow production
Batch production is described as 'intermittent' production and is characterised by irregularity. If
the rest period in batch production disappeared it would then become flow production. Flow
production is therefore a continuous process of parts and sub-assemblies passing on from one
stage to another until completion.
Units are worked upon in each operation and then passed straight on to the next work stage
without waiting for the batch to be completed. To make sure that the production line can work
smoothly each operation must be of standard lengths and there should be no movements or
leakages from the line, i.e. hold-ups to work-in-progress.
For flow production to be successful there needs to be a continuity of demand. If demand varied,
this could lead to a constant overstocking of finished goods.
Although with modern robotics it is possible to create variations in products being produced
through continuous flow techniques, typically such products will be relatively standardised.

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Achieving a smooth flow of production requires considerable pre-production planning to make

sure that raw materials are purchased and delivered just-in-time, that sufficient labour is
employed and that there is continuous attention to quality throughout the production process.
The benefits of flow production are:
ease of using just-in-time techniques to eliminate waste and minimise costs
labour and other production costs will be reduced through detailed planning and the use of
robotics and automation
deviations in the line can be quickly spotted through ongoing quality control techniques
as there is no rest between operations, work-in-progress levels can be kept low
the need for storage space is minimal
the physical handling of items is minimal
investment in raw materials and parts are quickly converted into sales
control is easy.

Definition: Plant layout refers to the arrangement of physical facilities such as machines, equipment, tools, furniture
etc. in such a manner so as to have quickest flow of material at the lowest cost and with the least amount of handling
in processing the product from the receipt of raw material to the delivery of the final product.

Objectives of good Plant Layout:

A well designed plant layout is one that can be beneficial in achieving the following objectives:

Proper and efficient utilization of available floor space

Transportation of work from one point to another point without any delay

Proper utilization of production capacity.

Reduce material handling costs

Utilize labour efficiently

Reduce accidents

Provide for volume and product flexibility

Provide ease of supervision and control

Provide for employee safety and health

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Allow easy maintenance of machines and plant.

Improve productivity

TYPES OF LAYOUT:

There are mainly four types of plant layout:

(a) Product or line layout

(b) Process or functional layout

(c) Fixed position or location layout

(d) Combined or group layout

PRODUCT OR LINE LAYOUT:

In this type of layout the machines and equipments are arranged in one line depending upon the sequence of
operations required for the product. It is also called as line layout. The material moves to another machine
sequentially without any backtracking or deviation i.e the output of one machine becomes input of the
next machine. It requires a very little material handling.
It is used for mass production of standardized products.

Advantages of Product layout:

Low cost of material handling, due to straight and short route and absence of backtracking

Smooth and continuous operations

Continuous flow of work

Lesser inventory and work in progress

Optimum use of floor space

Simple and effective inspection of work and simplified production control

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Lower manufacturing cost per unit

Disadvantages of Product layout:

Higher initial capital investment in special purpose machine (SPM)

High overhead charges

Breakdown of one machine will disturb the production process.

Lesser flexibility of physical resources.

PROCESS LAYOUT:
In this type of layout the machines of a similar type are arranged together at one place. This type of layout is
used for batch production. It is preferred when the product is not standardized and the quantity produced is very
small.

Advantages of Process layout:

Lower initial capital investment is required.

There is high degree of machine utilization, as a machine is not blocked for a single product

The overhead costs are relatively low

Breakdown of one machine does not disturb the production process.

Supervision can be more effective and specialized.

Greater flexibility of resources.

Disadvantages of Process layout:

Material handling costs are high due to backtracking

More skilled labour is required resulting in higher cost.

Work in progress inventory is high needing greater storage space

More frequent inspection is needed which results in costly supervision

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COMBINED LAYOUT:

A combination of process & product layout is known as combined layout.

Manufacturing concerns where several products are produced in repeated numbers with no likelihood of continuous
production, combined layout is followed

FIXED POSITION OR LOCATION LAYOUT:

Fixed position layout involves the movement of manpower and machines to the product which remains stationary.
The movement of men and machines is advisable as the cost of moving them would be lesser. This type of layout is
preferred where the size of the job is bulky and heavy. Example of such type of layout islocomotives, ships, boilers,
generators, wagon building, aircraft manufacturing, etc.

Advantages of Fixed position layout:

The investment on layout is very small.

The layout is flexible as change in job design and operation sequence can be easily incorporated.

Adjustments can be made to meet shortage of materials or absence of workers by changing the sequence
of operations.

Disadvantages of Fixed position layout:

As the production period being very long so the capital investment is very high.

Very large space is required for storage of material and equipment near the product.

As several operations are often carried out simultaneously so there is possibility of confusion and conflicts
among different workgroups.

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