OPERATION MANAGEMENT Module4

Goods and Services Selection (module2) Format and coverage

 Organizations exist to provide Manufacturing businesses use production planning to
 goods or services to society determine the number of items they can produce during a
 Great products are the key to specific period, balanced against the orders or demand for
 success their products. 
 Top organizations typically focus on The planning process includes ensuring that you procure
 core product enough raw materials, labor resources and items such as
 Customers buy satisfaction, not just a packaging to achieve the required production
 physical good or particular service Monthly Scheduling
o Fundamental to an organization's strategy with Production planning is the function of establishing an
o implications throughout the operations overall level of output, called the production plan.
o function The process also includes any other activities needed to
o Goods or services are the basis for an satisfy current planned levels of sales, while meeting the
o organization's existence firm's general objectives regarding profit, productivity,
o Limited and predicable life cycles requires lead times, and customer satisfaction, as expressed in the
o constantly looking for, designing, and overall business plan
o developing new products Work study (Time and motion Study)
o New products generate substantial revenue A time and motion study is a business efficciency technique
combining the Time Study work of Frederick Winslow Taylor
Generating New Products with the Motion Study work of Frank and Lillian Gilbret
 Basic research using a SWOT analysis INTRO Productivity has now become an everyday watch word. It is
 (Strengths, Weaknesses, Opportunities & crucial to the welfare of industrial firm as well as for the economic
 Threats) progress of the country.
 Market and Consumer Trends. Productivity- is the quantitative relation between what we produce and we use as a
 Company's R&D Department and Competitors resource to produce them, i.e., arithmetic ratio of amount produced (output) to the
 Create Effective Customer Feedback amount of resources (input). Productivity can be expressed as..
 Channels -Productivity refers to the efficiency of the production system. It is the concept that
 Employees guides the management of production system. It is an indicator to how well the
 Trade Shows factors of production (land, capital, labour and energy) are utilized
Product Development Factors Influencing Productivity
The Process Factors influencing productivity can be classified broadly into two categories: (A)
1. Idea controllable (or internal) factors and (B) un-controllable (or external) factors
2. Define it CONTROLLABLE (OR INTERNAL) FACTORS
3. Test it Product factor
4. Design it
Plant and equipment
5. Brand it
Technology
6. Fund it/protect it
7. Make it Material and energy
8. Launch it/sell it Human factors
Issue for Product Design Work methods
 Price Alignment with the Market. Management style
 Production Method Experience is a must. UN-CONTROLLABLE (OR EXTERNAL) FACTORS
 Require Transparent Communication Structural adjustments
 Find an Expert Risk Advisor Natural resources
 Physical + Digital Design Government and infrastructure
 Design for Manufacturability Early (DFM) Work study -is a generic term for those techniques, method study and work
 Stakeholder Alignment measurement which are used in the examination of human work in all its context
Product Development Continuum Work study is a means of enhancing the production efficiency (productivity) of the
1. Denial-Misses Difference Firm by elimination of waste and unnecessary operation
2. Polarization-Judges Difference Method study-enables the industrial engineer to subject each
3. Minimization-De-emphasizes difference operation to systematic analysis. The main purpose of
4. Acceptance-Deeply Comprehends difference method study is to eliminate the unnecessary operations and
5. Adaption-Bridge across difference to achieve the best method of performing the operation.
It is also called methods engineering or work design. Method
Defining a Product— A product is any good, service, or idea that can be offered to a engineering is used to describe collection of analysis
market to satisfy a want or need techniques which focus on improving the effectiveness of
Documents for Production- The process of delivering, or making available for men and machines.
review, documents in response to a request for documents, such as a request Objectives of Method Study
for production and a subpoena Method study is essentially concerned with
Service design -The activity of planning and organizing people, infrastructure, finding better ways of doing things. It adds value and
communication and material components of a service in order to improve its increases the efficiency by eliminating unnecessary
quality and the interaction between the service provider and its users operations, avoidable delays and other forms of
Application of decision trees into product-Decision trees can be used for new- waste
product decisions as well as for a wide variety of other management problems when The improvement in efficiency is achieved through:
uncertainty is present. 1. Improved layout and design of workplace.
Transition to Production -The process of selecting the right supplier partners 2. Improved and efficient work procedures.
and manufacturing processes while working through design 3. Effective utilization of men, machines and materials.
revisions can be challenging. 4. Improved design or specific action of the final product
The objectives of method study techniques are:
Module3 1. Present and analyze true facts concerning the situation.
Corporate Social Responsibility-is a management concept whereby companies 2. To examine those facts critically.
integrate social and environmental concerns in their business operations and 3. To develop the best answer possible under given circumstances based
interactions with their stakeholders. on critical examination of facts.
Sustainability-A method of evaluating whether a business can maintain existing Scope and Method Study-The scope of method study is not restricted to only
practices without placing future resources at risk manufacturing industries. Method study techniques can be applied effectively in
Operational sustainability is also focused on social or economic resources service sector as well. It can be applied in offices, hospitals, banks and other service
Design and Production for sustainability-Sustainable design (also called Eco-design, organizations.
green design and environmental design) is the philosophy of designing physical Steps or Procedure Involved in Methods Study
objects, the built environment, and services to comply with the principles of The basic approach to method study consists of the following eight
sustainability (environmental, economic and social). 80% of product impacts are steps. The detailed procedure for conducting the method study.
influuenced during the design process 1. SELECT the work to be studied and define its boundaries.
Regulations and Industry Standards-Thee principles behind a work and values 2. RECORD the relevant facts about the job by direct observation and collect such
associated with it but regulations refers to the set of laws and rules that are need to additional data as may be needed from appropriate sources.
be followed while performing a certain task. 3. EXAMINE the way the job is being performed and challenge its purpose, place
sequence and method of performance.
4. DEVELOP the most practical, economic and effective method, drawing on the
contributions of those concerned. Following are the objectives of material handling:
5. EVALUATE different alternatives to developing a new improved method comparing 1. Minimize cost of material handling. 
the cost effectiveness of the selected new method with the current method with the 2. Minimize delays and interruptions by making available the materials at the point of
current method of performance. use at right quantity and at right time. 
6. DEFINE the new method, as a result, in a clear manner and present it to those 3. Increase the productive capacity of the production facilities by effective utilization
concerned, i.e., management, supervisors and workers. of capacity and enhancing productivity. 
7. INSTALL the new method as a standard practice and train the persons involved in 4. Safety in material handling through improvement in working condition. 
applying it. 5. Maximum utilization of material handling equipment. 
8. MAINTAIN the new method and introduce control procedures to prevent a drifting 6. Prevention of damages to materials. 
back to the previous method of work. Note: Only the 7. Lower investment in process inventory.
first two steps have been dealt Following are the principles of material handling: 
in detail. 1. Planning principle: All handling activities should be planned. 
MODULE5 2. Systems principle: Plan a system integrating as many handling activities as possible
Quality strategy-means an overarching system and/or process whereby quality and coordinating the full scope of operations (receiving, storage, production,
assurance and quality improvement activities are incorporated and infused into all inspection, packing, warehousing, supply and transportation). 
aspects of an organization's or system's operations 3. Space utilization principle: Make optimum use of cubic space. 
Quality-In business, engineering, and manufacturing, quality has a pragmatic 4. Unit load principle: Increase quantity, size, weight of load handled. 
interpretation as the non-inferiority or superiority of something; it's also defined as 5. Gravity principle: Utilize gravity to move a material wherever practicable. 
being suitable for its intended (fitness for purpose) while satisfying customer 6. Material flow principle: Plan an operation sequence and equipment arrangement
expectations. to optimize material flow. 
Implications of Quality 7. Simplification principle: Reduce combine or eliminate unnecessary movement
In addition to being a critical element in operations, quality has other implications. and/or equipment. 
Here are three other reasons why quality is important:  8. Safety principle: Provide for safe handling methods and equipment.
1. Company reputation 9. Mechanization principle: Use mechanical or automated material handling
2. Product liability  equipment. 
3. Global implications 10. Standardization principle: Standardize method, types, size of material handling
Malcolm Baldrige National Quality Award equipment. 
 The global implications of quality are so important that the U.S. has 11. Flexibility principle: Use methods and equipment that can perform a variety of
established the Malcolm Baldrige National Quality Award for quality task and applications. 
achievement.  12. Equipment selection principle: Consider all aspect of material, move and method
 The award is named for former Secretary of Commerce Malcolm to be utilized. 
Baldrige.  13. Dead weight principle: Reduce the ratio of dead weight to pay load in mobile
 Winners include such firms as Motorola, Milliken, Xerox, FedEx, Ritz- equipment. 
Carlton Hotels, AT&T, Cadillac, and Texas Instruments. 14. Motion principle: Equipment designed to transport material should be kept in
ISO 9000 International Quality Standards motion. 
 The move toward global supply chains has placed so much emphasis on 15. Idle time principle: Reduce idle time/unproductive time of both MH equipment
quality that the world has united around a single quality standard, ISO and man power. 
9000 . 16. Maintenance principle: Plan for preventive maintenance or scheduled repair of all
 ISO 9000 is the quality standard with international recognition.  handling equipment.
Its focus is to enhance success through eight quality management principles: 17. Obsolescence principle: Replace obsolete handling methods/equipment when
 top management leadership,  more efficient method/equipment will improve operation. 
 customer satisfaction,  18. Capacity principle: Use handling equipment to help achieve its full capacity. 19.
 continual improvement,  Control principle: Use material handling equipment to improve production control,
 involvement of people,  inventory control and other handling. 
 process analysis,  20. Performance principle: Determine efficiency of handling performance in terms of
 use of data-driven decision making,  cost per unit handled which is the primary criterion.
 a systems approach to management, and  Selection of Material Handling equipmen- is an important decision as it affects both
 mutually beneficial supplier relationships. cost and efficiency of handling system. The following factors are to be taken into
Total quality management- consists of organization-wide efforts to "install and make account while selecting material handling equipment.
permanent climate where employees continuously improve their ability to provide on The following factors are to be taken into account while selecting material handling
demand products and services that customers will find of particular value. equipment.
o Properties of the Materials 
 Pareto Principle- The Pareto principle states that for many outcomes
roughly 80% of consequences come from 20% of the causes. Other o Layout and characteristics of the Building 
names for this principle are the 80/20 rule, the law of the vital few, or o Production Flow 
the principle of factor sparsity o Cost Consideration 
 Scatter Plots- is a type of plot or mathematical diagram using Cartesian o Nature of Operations 
coordinates to display values for typically two variables for a set of data. o Engineering Factors 
If the points are coded, one additional variable can be displayed o Equipment Reliability
 Control Charts- is a graph used to study how a process changes over EVALUATION OF MATERIALS HANDLING ASYSTEM
time. Data are plotted in time order. A control chart always has a central The effectiveness of the material handling system can be measured in terms of the
line for the average, an upper line for the upper control limit, and a ratio of the time spent in the handling to the total time spent in production.
lower line for the lower control limit. These lines are determined from Equipment Utilization Ratio -is an important indicator for judging the materials
historical data. handling system. This ratio can be computed and compared with similar firms or in
 Flow Charts- is a type of diagram that represents a workflow or process. the same over a period of time.
 Cause and Effect , Fishbone, Ishikawa Diagram- Ishikawa diagrams are In order to know the total effort needed for moving materials, it may be necessary to
causal diagrams created by Kaoru Ishikawa that show the potential compute Materials Handling Labour (MHL) ratio. This ratio is calculated as under: 
causes of a specific event. Common uses of the Ishikawa diagram are MHL = Personnel assigned to materials handling 
product design and quality defect prevention to identify potential factors              Total operating work force   
causing an overall effect. In order to ascertain whether is the handling system delivers materials work centers
 Histogram or Bar Graph- Here is the main difference between bar charts with maximum efficiency, it is desirable to compute direct labor handling loss ratio.
and histograms. With bar charts, each column represents a group The ratio is: 
defined by a categorical variable; and with histograms, each column  DLHL = Materials handling time lost of labor 
represents a group defined by a continuous, quantitative variable.                            Total direct labor time
 Check Lists-  is a type of job aid used to reduce failure by compensating (a) Fixed path equipment’s which move in a fixed path. Conveyors,
for potential limits of human memory and attention. It helps to ensure monorail devices, chutes and pulley drive equipment’s belong to this
consistency and completeness in carrying out a task. A basic example is category. A slight variation in this category is provided by the overhead
the "to do list". crane, which though restricted, can move materials in any manner
 Check Sheets- is a form (document) used to collect data in real time at within a restricted area by virtue of its design. Overhead cranes have a
the location where the data is generated. The data it captures can be very good range in terms of hauling tonnage and are used for handling
quantitative or qualitative. bulky raw materials, stacking and at times palletizin
MODULE6 (b) Variable path equipment’s have no restrictions in the direction of
Haynes defines “Material handling embraces the basic operations in connection with movement although their size is a factor to be given due consideration
the movement of bulk, packaged and individual products in a semi-solid or solid state trucks, forklifts mobile cranes and industrial tractors belong to this
by means of gravity manually or power-actuated equipment and within the limits of category. Forklifts are available in many ranges, they are maneuverable
individual producing, fabricating, processing or service establishment”. and various attachments are provided to increase their versatility.
Material Handing Equipment’s may be classified in five major categories.
 Product Layout- In manufacturing engineering, a product layout refers to a
production system where the work stations and equipment are located along the line
of production, as with assembly lines. Usually, work units are moved along line by a
conveyor. Work is done in small amounts at each of the work stations on the line.
Cellular layouts are the actual organization of a department so that similar products
Material Handing Equipment’s may be classified in five major categories. are manufactured together.
 Conveyors - are useful for moving material between two fixed
workstations, either continuously or intermittently.
 Industrial Trucks- are more flexible in use than conveyors since they can
move between various points and are not permanently fixed in one Fixed Position- an element with position: fixed; is positioned relative to the viewport,
place  which means it always stays in the same place even if the page is scrolled. The top,
 Cranes and Hoists- The major advantage of cranes and hoists is that they right, bottom, and left properties are used to position the element.
can move heavy materials through overhead space. However, they can Material requirements planning is a production planning, scheduling, and inventory
usually serve only a limited area.  control system used to manage manufacturing processes. Most MRP systems are
 Containers - These are either ‘dead’ containers (e.g. Cartons, barrels, software-based, but it is possible to conduct MRP by hand as well.
skids, pallets) which hold the material to be transported but do not Just-in-time manufacturing, also known as just-in-time production or the Toyota
move themselves, or ‘live’ containers (e.g. wagons, wheelbarrows or Production System, is a methodology aimed primarily at reducing times within the
computer self-driven containers).  production system as well as response times from suppliers and to customers
 Robots- Many types of robot exist. They vary in size, and in function and
maneuverability. SUMMARY
MODULE 7  Plant layout is the most effective physical arrangement, either existing
 Materials management is a function, which aims for integrated or in plans of industrial facilities i.e. arrangement of machines, processing
approach towards the management of materials in an industrial equipment and service departments to achieve greatest co-ordination and
undertaking.  efficiency of 4 M’s (Men, Materials, Machines and Methods) in a plant. 
 Its main objective is cost reduction and efficient handling of materials at
all stages and in all sections of the undertaking.   Layout problems are fundamental to every type of
 Its function includes several important aspects connected with material, organization/enterprise and are experienced in all kinds of
such as, purchasing, storage, inventory control, material handling, concerns/undertakings. The adequacy of layout affects the efficiency of
standardization etc subsequent operations.
Materials management- is defined as “the function responsible for the coordination
of planning, sourcing, purchasing, moving, storing and controlling materials in an  It is an important pre-requisite for efficient operations and also has a
optimum manner so as to provide a pre-decided service to the customer at a great deal in common with many problems. Once the site of the plant has
minimum cost”. been decided, the next important problem before the management of the
From the definition it is clear that the scope of materials management is vast. The enterprise is to plan suitable layout for the plant. 
functions of materials management can be categorized in the following ways: 
1. Material Planning and Control- is a scientific technique of determining in advance
the requirements of raw materials, ancillary parts and components, spares etc. as
directed by the production programme. It is a sub-system in the overall planning
activity.(macro and micro)
2. Purchasing -is an important function of materials management. In any industry
purchase means buying of equipment’s, materials, tools, parts etc. required for
industry. The importance of the purchase function varies with nature and size of
industry. 
3. Stores Management - Stores play a vital role in the operations of company.
It is in direct touch with the user departments in its day-to-day activities.
4. Inventory Control or Management - Inventory generally refers to the materials in  
stock. It is also called the idle resource of an enterprise. Inventories represent those
items which are either stocked for sale or they are in the process of manufacturing or
they are in the form of materials, which are yet to be utilized.
Reasons for Keeping Inventories
 To stabilize production 
 To take advantage of price discounts 
 To meet the demand during the replenishment period 
 To prevent loss of orders (sales)
 To keep pace with changing market conditions

5. Standardization - Standardization means producing maximum variety of products

from the minimum variety of materials, parts, tools and processes. 
-It is the process of establishing standards or units of measure by which extent,
quality, quantity, value, performance etc., may be compared and measured.
6. Simplification - The concept of simplification is closely related to standardization.
Simplification is the process of reducing the variety of products manufactured.
Simplification is concerned with the reduction of product range, assemblies, parts,
materials and design.
7. Value Analysis - Value engineering or value analysis had its birth during the World
War II Lawrence D. Miles was responsible for developing the technique and naming
it.
-Value analysis is defined as “an organized creative approach which has its objective,
the efficient identification of unnecessary cost-cost which provides neither quality
nor use nor life nor appearance nor customer features.” 
-Value analysis focuses engineering, manufacturing and purchasing attention to one
objective equivalent performance at a lower cost.  
8. Ergonomics - The word ‘Ergonomics’ has its origin in two Greek words Ergon
meaning laws. So it is the study of the man in relation to his work.
9. Just-in-Time (JIT) 

MODULE 8
Facility Location is the right location for the manufacturing facility, it will have
sufficient access to the customers, workers, transportation, etc.  A manufacturing
unit is the place where all inputs such as raw material, equipment, skilled labors, etc.
come together and manufacture products for customers.
Facility layout is an arrangement of different aspects of manufacturing in an
appropriate manner as to achieve desired production results. Facility
layout considers available space, final product, safety of users and facility and
convenience of operations.
Process Layout- In manufacturing engineering, process layout is a design for the floor
plan of a plant which aims to improve efficiency by arranging equipment according to
its function.