UNIT I-INTRODUCTION TO OPERATIONS MANAGEMENT

Specific learning objectives

After going through this Unit, you will be able to understand and appreciate:
• the important concepts related to operations management;
• the need to learn about operations management in service organization;
• differences between products and services.

Structure
1.1 Introduction
1.2 Why Learn Operations Management?
1.3 The Historical Evolution of Operations Management
1.4 Operations Today

1.5 Key Issues For Today’s Business Operations

1.6 Important Concepts
1.7 Goods and Service
1.8 Summary
1.9 Key Words

1.1 INTRODUCTION
Operations management has been recognized as an important factor in a country’s economic
growth. The traditional view of manufacturing management is the concept of Production
Management with the focus on economic efficiency in manufacturing. Later the new name
Operations Management was identified, as service sector became more prominent. Rapid changes in
technology have posed numerous opportunities and challenges, which have resulted in
enhancement of manufacturing and service capabilities through new materials, facilities, techniques
and procedures. Hence, managing a health care service system has become a major challenge in the
global competitive environment.
Operations Management has been a key element in the improvement and productivity in all types of
business around the world. Operations Management leads the way for the organizations to achieve
its goals with minimum effort. Healthcare industry is no exception. Operations management is
important if we aim at delivering quality medical care which has to be Appropriate, Affordable and
Accessible.

Operation is that part of an organization, which is concerned with the transformation of a range of
inputs into the required output (services) having the requisite quality level. Management is the
process, which combines and transforms various resources used in the operations subsystem of the
organization into value added services in a controlled manner as per the policies of the organization.

The set of interrelated management activities, which are involved in manufacturing certain products,
is called as production management. If the same concept is extended to services management, then
the corresponding set of management activities is called as operations management.

Operations and supply chains are intrinsically linked and no business organization could exist
without both. A supply chain is the sequence of organizations—their facilities, functions, and
activities—that are involved in producing and delivering a product or service.

The sequence begins with basic suppliers of raw materials and extends all the way to the final
customer. Facilities might include warehouses, factories, processing centers, offices, distribution
centers, and retail outlets. Functions and activities include forecasting, purchasing, inventory
management, information management, quality assurance, scheduling, production, distribution,
delivery, and customer service. Thus at the most fundamental level, Operations and supply chain
management (OSM) is all about getting work done efficiently, quickly, without any error and at a low
cost.
1.2 WHY LEARN ABOUT OPERATIONS MANAGEMENT?

This is because every aspect of Health care management affects or is affected by operations. We
can generalize by saying that every organization whether Service or Production, has 3 broad primary
categories of functions:
• Operations
• Marketing
• Finance

Although the three primary functions in organizations perform different activities, many of their
decisions impact the other areas of the organization. Consequently, these functions have numerous
interactions, as depicted by the overlapping circles shown in the figure.
Three major functions of business organizations overlap

Operations

Marketing Finance

In practice, there is significant interfacing and collaboration among the various functional areas,
involving exchange of information and cooperative decision making. For example

Finance and operations management personnel cooperate by exchanging information and expertise
in such activities as the following:
Budgeting
Budgets must be periodically prepared to plan financial requirements. Budgets must sometimes be
adjusted, and performance relative to a budget must be evaluated.

Economic analysis of investment proposals

Evaluation of alternative investments in plant and equipment requires inputs from both operations
and finance people.

Provision of funds
The necessary funding of operations and the amount and timing of funding can be important and
even critical when funds are tight. Careful planning can help avoid cash-flow problems.

Similarly significant interface exists between marketing and operations

Marketing’s focus is on selling and/or promoting the goods or services of an organization. Marketing
is also responsible for assessing customer wants and needs, and for communicating those to
operations people (short term) and to design people (long term). That is, operations need
information about demand over the short to intermediate term so that it can plan accordingly (e.g.
Various preventive health checkup system.).

Marketing also can supply information on consumer preferences so that design will know the kinds
of products and features needed; operations can supply information about capacities and judge the
appropriateness of designs. Operations will also have advance warning if new equipment or skills will
be needed for new products or services.

Finance people should be included in these exchanges in order to provide information on what funds
might be available (short term) and to learn what funds might be needed for new products or
services (intermediate to long term). One important piece of information marketing needs from
operations is the manufacturing or service lead time in order to give customers realistic estimates of
how long it will take to fill their orders.

Thus, marketing, operations, and finance must interface on product and process design,
forecasting, setting realistic schedules, quality and quantity decisions, and keeping each other
informed on the other’s strengths and weaknesses. Working together successfully means that all
members of the organization understand not only their own role, but they also understand the roles
of others. This is precisely why all business students, regardless of their particular major, are
required to take a common core of courses that will enable them to learn about all aspects of
operations.

Interface with Support Functions

Operations also interacts with other functional areas of the organization, including legal,
management information systems (MIS), accounting, personnel/human resources, and public
relations, as depicted in Figure below.

Operations interfaces with a number of supporting functions

Legal

Public
MIS
relations

OPERATIONS

Personnel/
Accounting Human
resources

The legal department must be consulted on contracts with employees, customers, suppliers, and
transporters, as well as on liability and environmental issues.

Accounting supplies information to management on costs of labor, materials, and overhead, and
may provide reports on items such as scrap, downtime, and inventories.
Management information systems (MIS) is concerned with providing management with the
information it needs to effectively manage. This occurs mainly through designing systems to capture
relevant information and designing reports. MIS is also important for managing the control and
decision-making tools used in operations management.

The personnel or human resources department is concerned with recruitment and training of
personnel, labor relations, contract negotiations, wage and salary administration, assisting in
manpower projections, and ensuring the health and safety of employees.

Public relations have responsibility for building and maintaining a positive public image of the
organization. Good public relations provide many potential benefits. An obvious one is in the
marketplace. Other potential benefits include public awareness of the organization as a good place
to work (labor supply), improved chances of approval of zoning change requests, community
acceptance of expansion plans, and instilling a positive attitude among employees.

1.3 THE HISTORICAL EVOLUTION OF OPERATIONS MANAGEMENT

Systems for production have existed since ancient times. The production of goods for sale, at least in
the modern sense, and the modern factory system had their roots in the Industrial Revolution.

The Industrial Revolution

The Industrial Revolution began in the 1770s in England and spread to the rest of Europe and to the
United States during the 19th century. Prior to that time, goods were produced in small shops by
craftsmen and their apprentices. Under that system, it was common for one person to be
responsible for making a product, such as a horse-drawn wagon or a piece of furniture, from start to
finish. Only simple tools were available; the machines in use today had not been invented.

Then, a number of innovations in the 18th century changed the face of production forever by
substituting machine power for human power. Perhaps the most significant of these was the steam
engine, because it provided a source of power to operate machines in factories. Ample supplies of
coal and iron ore provided materials for generating power and making machinery.
The new machines, made of iron, were much stronger and more durable than the simple wooden
machines they replaced.

In the earliest days of manufacturing, goods were produced using craft production:
highly skilled workers using simple, flexible tools produced goods according to customer
specifications.

Craft production had major shortcomings. Because products were made by skilled craftsmen who
custom fitted parts, production was slow and costly. And when parts failed, the replacements also
had to be custom made, which was also slow and costly. Another shortcoming was that production
costs did not decrease as volume increased; there were no economies of scale, which would have
provided a major incentive for companies to expand. Instead, many small companies emerged, each
with its own set of standards.

A major change occurred that gave the Industrial Revolution a boost: the development of standard
gauging systems. This greatly reduced the need for custom-made goods. Factories began to spring
up and grow rapidly, providing jobs for countless people who were attracted in large numbers from
rural areas.

Scientific Management
The scientific management era brought widespread changes to the management of factories. The
movement was spearheaded by the efficiency engineer and inventor Frederick Winslow Taylor, who
is often referred to as the father of scientific management. Taylor believed in a “science of
management” based on observation, measurement, analysis and improvement of work methods,
and economic incentives. He studied work methods in great detail to identify the best method for
doing each job. Taylor also believed that management should be responsible for planning, carefully
selecting and training workers, finding the best way to perform each job, achieving cooperation
between management and workers, and separating management activities from work activities.

Taylor’s methods emphasized maximizing output. They were not always popular with workers, who
sometimes thought the methods were used to unfairly increase output without a corresponding
increase in compensation. Certainly some companies did abuse workers in their quest for efficiency.
Eventually, the public outcry reached the halls of Congress, and hearings were held on the matter.
Taylor himself was called to testify in 1911, the same year in which his classic book, The Principles of
Scientific Management, was published. The publicity from those hearings actually helped scientific
management principles to achieve wide acceptance in industry.

A number of other pioneers also contributed heavily to this movement, including the
following:
Frank Gilbreth was an industrial engineer who is often referred to as the father of motion study. He
developed principles of motion economy that could be applied to incredibly small portions of a task.

Henry Gantt recognized the value of nonmonetary rewards to motivate workers, and developed a
widely used system for scheduling, called Gantt charts.

Harrington Emerson applied Taylor’s ideas to organization structure and encouraged the use of
experts to improve organizational efficiency. He testified in a congressional hearing that railroads
could save a million dollars a day by applying principles of scientific management.

Henry Ford, the great industrialist, employed scientific management techniques in his factories. He
adopted the scientific management principles espoused by Frederick Winslow Taylor. He also
introduced the moving assembly line, which had a tremendous impact on production methods in
many industries. Among Ford’s many contributions was the introduction of mass production to the
automotive industry, a system of production in which large volumes of standardized goods are
produced by low-skilled or semiskilled workers using highly specialized, and often costly, equipment.

Ford was able to do this by taking advantage of a number of important concepts. Perhaps the key
concept that launched mass production was interchangeable parts. The basis for interchangeable
parts was to standardize parts so that any part in a batch of parts would fit any automobile coming
down the assembly line. This meant that parts did not have to be custom fitted, as they were in craft
production. The standardized parts could also be used for replacement parts. The result was a
tremendous decrease in assembly time and cost. Ford accomplished this by standardizing the gauges
used to measure parts during production and by using newly developed processes to produce
uniform parts.
A second concept used by Ford was the division of labor, which Adam Smith wrote about in The
Wealth of Nations (1776). Division of labor means that an operation, such as assembling an
automobile, is divided up into a series of many small tasks, and individual workers are assigned to
one of those tasks. Unlike craft production, where each worker was responsible for doing many
tasks, and thus required skill, with division of labor the tasks were so narrow that virtually no skill
was required.

Together, these concepts enabled Ford to tremendously increase the production rate at his factories
using readily available inexpensive labor. Both Taylor and Ford were despised by many workers,
because they held workers in such low regard, expecting them to perform like robots. This paved the
way for the human relations movement.

The Human Relations Movement

Whereas the scientific management movement heavily emphasized the technical aspects of work
design, the human relations movement emphasized the importance of the human element in job
design. Lillian Gilbreth, a psychologist and the wife of Frank Gilbreth, worked with her husband,
focusing on the human factor in work. (The Gilbreths were the subject of a classic 1950s film,
Cheaper by the Dozen.) Many of her studies in the 1920s dealt with worker fatigue. In the following
decades, there was much emphasis on motivation. During the 1930s, Elton Mayo conducted studies
at the Hawthorne division of Western Electric. His studies revealed that in addition to the physical
and technical aspects of work, worker motivation is critical for improving productivity.

During the 1940s, Abraham Maslow developed motivational theories, which Frederick Hertzberg
refined in the 1950s. Douglas McGregor added Theory X and Theory Y in the 1960s. These theories
represented the two ends of the spectrum of how employees view work. Theory X, on the negative
end, assumed that workers do not like to work, and have to be controlled—rewarded and
punished—to get them to do good work. This attitude was quite common in the automobile industry
and in some other industries, until the threat of global competition forced them to rethink that
approach.

Theory Y, on the other end of the spectrum, assumed that workers enjoy the physical and mental
aspects of work and become committed to work. The Theory X approach resulted in an adversarial
environment, whereas the Theory Y approach resulted in empowered workers and a more
cooperative spirit. In the 1970s, William Ouchi added Theory Z, which combined the Japanese
approach with such features as lifetime employment, employee problem solving, and consensus
building, and the traditional Western approach that features short-term employment, specialists,
and individual decision making and responsibility.

Decision Models and Management Science

The factory movement was accompanied by the development of several quantitative techniques. F.
W. Harris developed one of the first models in 1915: a mathematical model for inventory order size.
In the 1930s, three coworkers at Bell Telephone Labs, H. F. Dodge, H. G. Romig, and W. Shewhart,
developed statistical procedures for sampling and quality control. In 1935, L.H.C. Tippett conducted
studies that provided the groundwork for statistical-sampling theory.

At first, these quantitative models were not widely used in industry. However, the onset of World
War II changed that. The war generated tremendous pressures on manufacturing output, and
specialists from many disciplines combined efforts to achieve advancements in the military and in
manufacturing. After the war, efforts to develop and refine quantitative tools for decision making
continued, resulting in decision models for forecasting, inventory management, project
management, and other areas of operations management. The widespread use of personal
computers and user friendly software in the workplace contributed to a resurgence in the popularity
of these techniques.

The Influence of Japanese Manufacturers

A number of Japanese manufacturers developed or refined management practices that increased
the productivity of their operations and the quality of their products, due in part to the influence of
Americans W. Edwards Deming and Joseph Juran. This made them very competitive, sparking
interest in their approaches by companies outside Japan. Their approaches emphasized quality and
continual improvement, worker teams and empowerment, and achieving customer satisfaction. The
Japanese can be credited with spawning the “quality revolution” that occurred in industrialized
countries, and with generating widespread interest in lean production.

Table below provides a chronological summary of some of the key developments in the evolution of
operations management.
Date Contribution Contributor

1776 Specialization of labour in manufacturing Adam Smith

1799 Interchangeable parts, cost accounting Eli Whitney & others

1832 Division of labour by skill; assignment of jobs by Skill; Charles Babbage

1900 Scientific management time study and work study .Taylor

Developed; dividing planning and doing of work

1900 Motion of study of jobs Frank B. Gilbreth

1901 Scheduling techniques for employees, machines Jobs in Henry L. Gantt

manufacturing

1915 Economic lot sizes for inventory control F.W. Harris

1927 Human relations; the Hawthorne studies Elton Mayo

1931 l Statistical inference applied to product quality: quality W.A. Shewart

control charts

1935 Statistical Sampling applied to quality control: H.F.Dodge & H.G.Roming

inspection sampling plans

1940 Operations research applications in world war II .M.Blacker & others

1946 Digital Computer John Mauchlly and J.P.Eckert

1947 Linear Programming G.B.Dantzig, Williams & others

1950 Mathematical programming, on-linear and stochastic A.Charnes, W.W.Cooper &

processes others

1951 Commercial digital computer: large-scale Sperry Univac

computations available

1960, Organisational behavior: continued study of people at L.Porter

work L.Cummings

1970 Integrating operations into overall strategy and policy W.Skinner J.Orlicky & G. Wrig
Computer applications to manufacturing, scheduling,
and control, Material Requirement Planning(MRP)
1980, Quality and productivity applications from Japan: . Deming & J.Juran
robotics/ CAD-CAM

1980 Emphasis on flexibility, time-based competition, T. Ohno, S. Shingo,

lean production Toyota

1990s Internet, supply chain management Numerous

2000s Applications service providers and outsourcing Numerous

1.4 OPERATIONS TODAY

Advances in information technology and global competition have had a major influence on
operations management. While the Internet offers great potential for business organizations, the
potential as well as the risks must be clearly understood in order to determine if and how to exploit
this potential. In many cases, the Internet has altered the way companies compete in the
marketplace.

• Electronic business, or e-business, involves the use of the Internet to transact business.
E-business is changing the way business organizations interact with their customers and their
suppliers.

• Most familiar to the general public is e-commerce, consumer–business transactions

such as buying online or requesting information. However, business-to-business transactions such as
e-procurement represent an increasing share of e-business. E-business is receiving increased
attention from business owners and managers in developing strategies, planning, and decision
making.

• The word technology has several definitions, depending on the context. Generally, technology
refers to the application of scientific discoveries to the development and improvement of goods
and services. It can involve knowledge, materials, methods, and equipment.
The term high technology refers to the most advanced and developed machines and methods.

Operations management is primarily concerned with three kinds of technology:

• product and service technology
• process technology
• information technology (IT)

All three can have a major impact on costs, productivity, and competitiveness.

Product and service technology refers to the discovery and development of new products
and services. This is done mainly by researchers and engineers, who use the scientific

Process technology refers to methods, procedures, and equipment used to produce goods
and provide services. They include not only processes within an organization but also supply chain
processes.

Information technology (IT) refers to the science and use of computers and other electronic
equipment to store, process, and send information. Information technology is
heavily ingrained in today’s business operations. This includes electronic data processing,
the use of bar codes to identify and track goods, obtaining point-of-sale information, data
transmission, the Internet, e-commerce, e-mail, and more.

Management of technology is high on the list of major trends, and it promises to be high well into
the future. For example, computers have had a tremendous impact on businesses in many ways,
including new product and service features, process management, medical diagnosis, production
planning and scheduling, data processing, and communication.

However, technological advance also places a burden on management. For example, management
must keep abreast of changes and quickly assess both their benefits and risks. Predicting advances
can be tricky at best, and new technologies often carry a high price tag and usually a high cost to
operate or

Globalization and the need for global supply chains have broadened the scope of supply chain
management. However, tightened border security in certain instances has slowed some movement
of goods and people. Moreover, in some cases, organizations are reassessing their use of offshore
outsourcing.

Lean Production
During the 1970s and 1980s, many companies neglected to include operations strategy in their
corporate strategy. Some of them paid dearly for that neglect. Now more and more companies are
recognizing the importance of operations strategy on the overall success of their business as well as
the necessity for relating it to their overall business strategy.
Working with fewer resources: due to layoffs, corporate downsizing, and general cost cutting is
forcing managers to make trade-off decisions on resource allocation, and to place increased
emphasis on cost control and productivity improvement.

Revenue management: is a method used by some companies to maximize the revenue they receive
from fixed operating capacity by influencing demand through price manipulation. Also known as
yield management, it has been successfully used in the travel and tourism industries by airlines,
cruise lines, hotels, amusement parks, and rental car companies, and in other industries such as
trucking and public utilities.

Process analysis and improvement: includes cost and time reduction, productivity improvement,
process yield improvement, and quality improvement and increasing customer satisfaction.

This is sometimes referred to as a six sigma process.

Quality Management
Given a boost by the “quality revolution” of the 1980s and 1990s, quality is now ingrained in
business. Some businesses use the term total quality management (TQM) to describe their quality
efforts. A quality focus emphasizes customer satisfaction and often involves teamwork.

Process improvement can result in improved quality, cost reduction, and time reduction.
Time relates to costs and to competitive advantage, and businesses seek ways to reduce the time to
bring new products and services to the marketplace to gain a competitive edge. If two companies
can provide the same product at the same price and quality, but one can deliver it four weeks earlier
than the other, the quicker company will invariably get the sale.
Agility refers to the ability of an organization to respond quickly to demands or opportunities. It is a
strategy that involves maintaining a flexible system that can quickly respond to changes in either the
volume of demand or changes in product/service offerings. This is particularly important as
organizations scramble to remain competitive and cope with increasingly shorter product life cycles
and strive to achieve shorter development times for new or improved products and services.

Lean production: a new approach to production, emerged in the 1990s. It incorporates a number of
the recent trends listed here, with an emphasis on quality, flexibility, time reduction, and teamwork.
This has led to a flattening of the organizational structure, with fewer levels of management.

Lean systems: are so named because they use much less of certain resources than typical mass
production systems use—space, inventory, and workers—to produce a comparable amount of
output. Lean systems use a highly skilled workforce and flexible equipment. In effect, they
incorporate advantages of both mass production (high volume, low unit cost) and craft production
(variety and flexibility). And quality is higher than in mass production.
This approach has now spread to services, including health care, offices, and shipping
and delivery.

The skilled workers in lean production systems are more involved in maintaining and improving the
system than their mass production counterparts. They are taught to stop an operation if they
discover a defect, and to work with other employees to find and correct the cause of the defect so
that it won’t recur. This results in an increasing level of quality over time and eliminates the need to
inspect and rework at the end of the line.

Because lean production systems operate with lower amounts of inventory, additional emphasis is
placed on anticipating when problems might occur before they arise and avoiding those problems
through planning. Even so, problems can still occur at times, and quick resolution is important.
Workers participate in both the planning and correction stages.

Compared to workers in traditional systems, much more is expected of workers in lean

production systems. They must be able to function in teams, playing active roles in operating and
improving the system. Individual creativity is much less important than team success.
Responsibilities also are much greater, which can lead to pressure and anxiety not present in
traditional systems. Moreover, a flatter organizational structure means career paths are not as steep
in lean production organizations. Workers tend to become generalists rather than specialists,
another contrast to more traditional organizations.

1.5 KEY ISSUES FOR TODAY’S BUSINESS OPERATIONS

There are a number of issues that are high priorities of organizations. . Chief among the issues are
the following:

Economic conditions
The lingering recession and slow recovery in various sectors of the economy has made managers
cautious about investment and rehiring workers that had been laid off during the recession.

Innovating
Finding new or improved products or services are only two of the many possibilities that can provide
value to an organization. Innovations can be made in processes, the use of the Internet, or the
supply chain that reduce costs, increase productivity, expand markets, or improve customer service.

Quality problems
There is a need to improve the way operations are managed. That relates to product design and
testing, oversight of suppliers, risk assessment, and timely response to potential problems.

Risk management
The need for managing risk is underscored by recent events that include the crisis in housing,
product recalls, blood spills, medication errors and natural and man-made disasters, and economic
ups and downs.

Competing in a global economy

Low labor costs in third-world countries have increased pressure to reduce labor costs. Companies
must carefully weigh their options, which include outsourcing some or all of their operations to low-
wage areas, reducing costs internally, changing designs, and working to improve productivity.

Environmental Concerns
Concern about global warming and pollution has had an increasing effect on how businesses
operate. Stricter environmental regulations, particularly in developed nations, are being imposed.

Furthermore, business organizations are coming under increasing pressure to reduce their carbon
footprint (the amount of carbon dioxide generated by their operations and their supply chains) and
to generally operate sustainable processes.

Sustainability refers to service and production processes that use resources in ways that do not harm
ecological systems that support both current and future human existence. Sustainability measures
often go beyond traditional environmental and economic measures to include measures that
incorporate social criteria in decision making.

All areas of business will be affected by this. Areas that will be most affected include product and
service design, consumer education programs, disaster preparation and response, supply chain
waste management, and outsourcing decisions.

Because they all fall within the realm of operations, operations management is central to dealing
with these issues. Sometimes referred to as “green initiatives,” the possibilities include reducing
packaging, materials, water and energy use, and the environmental impact of the supply chain,
including buying locally.

Ethical Conduct
Ethics is a standard of behavior that guides how one should act in various situations. The need for
ethical conduct in business is becoming increasingly obvious, given numerous examples of
questionable actions in recent history. In making decisions, managers must consider how their
decisions will affect shareholders, management, employees, customers, the community at large, and
the environment. Finding solutions that will be in the best interests of all of these stakeholders is not
always easy, but it is a goal that all managers should strive to achieve. Furthermore, even managers
with the best intentions will sometimes make mistakes. If mistakes do occur, managers should act
responsibly to correct those mistakes as quickly as possible, and to address any negative
consequences.

Ethical issues arise in many aspects of operations management, including:

• Financial statements: accurately representing the organization’s financial condition.

• Worker safety: providing adequate training, maintaining equipment in good working condition,
maintaining a safe working environment.

• Product safety: providing products that minimize the risk of injury to users or damage to
property or the environment.

• Patient Safety

• Quality: honoring warranties, avoiding hidden defects.

• The environment: not doing things that will harm the environment.

• The community: being a good neighbor.

• Hiring and firing workers: avoiding false pretenses (e.g., promising a long-term job when that is not
what is intended).

• Closing facilities: taking into account the impact on a community, and honoring commitments that
have been made.

• Workers’ rights: respecting workers’ rights, dealing with workers’ problems quickly and
fairly.

Many organizations have developed codes of ethics to guide employees’ or members’ conduct.

Ethical Principles
• The Utilitarian Principle is that the good done by an action should outweigh any harm it causes. An
example is not allowing a person who has had too much to drink to drive.

• The Rights Principle is that actions should respect and protect the moral rights of others.
An example is not taking advantage of a vulnerable person.

• The Fairness Principle is that equals should be held to, or evaluated by, the same standards.
An example is equal pay for equal work.

• The Common Good Principle is that actions should contribute to the common good of the
community. An example is an ordinance on noise abatement.

• The Virtue Principle is that actions should be consistent with certain ideal virtues.
Examples include honesty, compassion, generosity, tolerance, fidelity, integrity, and self-control.

The center expands these principles to create a framework for ethical conduct.

1.6 IMPORTANT CONCEPTS

Operations
Operations consist of the jobs or tasks composed of one or more elements or subtasks, performed
typically in one location. Operations transform resource or data inputs into desired goods, services,
or results, and create and deliver value to the customers.

Two or more connected operations constitute a process.

Operations are essential to any organization and, hence, so are operations management.

Operations management
Definition
Operations management is an area of management concerned with overseeing, designing, and
controlling the process of production and redesigning business operations in the production of
goods and/or services. It involves the responsibility of ensuring that business operations are efficient
in terms of using as few resources as needed, and effective in terms of meeting customer
requirements. It is concerned with managing the process that converts inputs (in the forms of
materials, labor, and energy) into outputs (in the form of goods and/or services).

So as to deliver value for customers in products and services, it is essential for the company to do
the following:

• Identify the customer needs and convert that into a specific product or service (numbers of
products required for specific period of time).
 • Based on product requirement do back-ward working to identify raw material requirements.

• Engage internal and external vendors to create supply chain for raw material and finished
goods between vendor → production facility → customers.

According to the U.S. Department of Education, operations management is the field concerned with
managing and directing the physical and/or technical functions of a firm or organization, particularly
those relating to development, production, and manufacturing. Operations management programs
typically include instruction in principles of general management, manufacturing and production
systems, plant management, equipment maintenance management, production control, industrial
labor relations and skilled trades supervision, strategic manufacturing policy, systems analysis,
productivity analysis and cost control, and materials planning[1][2][3]. Management, including
operations management, is like engineering in that it blends art with applied science. People skills,
creativity, rational analysis, and knowledge of technology are all required for success.

Operations management can also be defined as the design, improvement, and the management of
the transformation processes that create value by converting inputs, such as raw materials, labor,
and/or customers into outputs, such as goods or services. Operations managers solicit feedback at
each stage of the transformation processes.

Thus operational management is involved with a transformational role

Thus
Opera
tions
mana
geme
nt is
conce
rned
about Systems and how to make them operate better, whether more efficiently, more effectively, at
a higher level of quality, at reduced cost, and/or at lower environmental emissions, using the
appropriate criterion or criteria determined by the organization.

Operations Management (OM) is one of the major functions of any organization (Finance,
Marketing, Operations Management).

Examples of Some Systems and the Transformation Processes

The transformation processes may be:

• Physical: as in the manufacturing operations.
• Locational: as in transportation and distribution operations.
• Exchange: as in retail operations.
• Physical: as in healthcare operations.
• Informational: as in communications and education.
• Psychological: as in entertainment.

INPUT
Transformed resources
The resources that are treated, transformed or converted in some way. The transformed resources
which operations take in are usually a mixture of materials, information and customers.

Transforming resources
The resources that act upon the transformed resources. Facilities and staff are the two types of
transforming resources. Facilities include building, equipment, plant and process technology etc.,
Staff includes all those who operate, maintain, plan and manage the operation.

Output
The output from most operations is a mixture of goods and services.

Goods: These are physical items that include raw materials, parts, and subassemblies such as
motherboards that go into computers, and final products such as cell phones and automobiles.

Services: These are activities that provide some combination of time, location, form, or psychological
value.

Examples of goods and services are found all around you. Every book you read, every video you
watch, every e-mail you send, every telephone conversation you have, and every medical treatment
you receive involves the operations function of one or more organizations.

Efficiency: It means doing something at lowest possible cost. The goal of an efficient process is to
provide a good or service by using the smallest input of service.

Effectiveness: It means doing the right things to create the most value for the company. Often
maximizing the effectiveness and efficiency at the same time creates conflict between the two goals.
Ex- at the registration counter of a hospital, being efficient means using fewest people at the
counters whereas being effective means minimizing the amount of time a patient has to wait in the
line.

Productivity: It is a Measure of process improvement and represents output relative to input

Productivity= Units produced/Inputs used. Productivity is defined in terms of utilization of resources,
like material and labour. In simple terms, productivity is the ratio of output to input. For example,
productivity of labour can be measured as units produced per labour hour worked. Productivity is
closely linked with quality, technology and profitability.

Hence, there is a strong stress on productivity improvement in competitive business environment.

Productivity can be improved by (a) controlling inputs, (b) improving process so that the same input
yields higher output, and (c) by improvement of technology. These aspects are discussed in more
detail in the lesson on Productivity Management.

Productivity can be measured at firm level, at industry level, at national level and at international
level.

Modern Dynamic Concept of Productivity

Productivity can be treated as a multidimensional phenomenon. The modern dynamic concept of
productivity looks at productivity as what may be called “productivity flywheel”. The productivity is
energized by competition. Competition leads to higher productivity, higher productivity results in
better value for customers, this results in higher share of market for the organization, which results
in still keener competition. Productivity thus forms a cycle, relating to design and products to satisfy
customer needs, leading to improved quality of life, higher competition i.e. need for having still
higher goals and higher share of market, and thereby leading to still better designs.

Productivity Analysis
For the purposes of studies of productivity for improvement purposes, following types of
analysis can be carried out:

Trend analysis: Studying productivity changes for the firm over a period of time.

Horizontal analysis: Studying productivity in comparison with other firms of same size and
engaged in similar business.
 Vertical analysis: Studying productivity in comparison with other industries and other firms of
different sizes in the same industry.

Budgetary analysis: Setting up a norm for productivity for a future period as budget, based on
studies as above, and planning strategies to achieve it.

Factors Affecting Productivity

Economists site a variety of reasons for changes in productivity. However some of the principle
factors influencing productivity rate are:

Capital/labour ratio: It is a measure of whether enough investment is being made in plant,

machinery, and tools to make effective use of labour hours.

Scarcity of some resources: Resources such as energy, water and number of metals will create
productivity problems.

Work-force changes: Change in work-force effect productivity to a larger extent, because of the
labour turnover.

Innovations and technology: This is the major cause of increasing productivity.

Regulatory effects: These impose substantial constraints on some firms, which lead to change
in productivity.

Bargaining power: Bargaining power of organized labour to command wage increases excess of
output increases has had a detrimental effect on productivity.

Managerial factors: Managerial factors are the ways an organization benefits from the unique
planning and managerial skills of its manager.
 Quality of work life: It is a term that describes the organizational culture, and the extent to
which it motivates and satisfies employees.

INTERNATIONAL DIMENSIONS OF PRODUCTIVITY

Industrialized nations are developing two strategies to remain competitive in the business.

• Moving to a new and more advanced products, and

• Employing better and more flexible system.

New Products
High Volume Products like steel, textiles, etc. with constitute an industrial base are not secure.

Nations such as Japan, France and West Germany are shifting their industrial base towards
products and processes that make better use of their research capabilities and skilled workers.
Their future lies in microelectronics, precision manufactured castings, specialty steels, custom
fabrics, fiber optics, lasers, etc.

1.7 GOODS AND SERVICE

Similarities
There are also many similarities between managing the production of products and managing
services. These are:
• Forecasting and capacity planning to match supply and demand
• Process management
• Managing variations
• Monitoring and controlling costs and productivity
• Supply chain management
• Location planning, inventory management, quality control, and scheduling.

Note that many service activities are essential in goods-producing companies. These include training,
human resource management, customer service, equipment repair, procurement, and
administrative services.

• All use technology

 • Both have quality, productivity, & response issues
• All must forecast demand
• Each will have capacity, layout, and location issues
• All have customers and suppliers
• All have scheduling and staffing issues

Comparison Between Goods and Services

Degree of customer contact

Many services involve a high degree of customer contact, although services such as Internet
providers, utilities, and mail service do not. When there is a high degree of contact, the interaction
between server and customer becomes a “moment of truth” that will be judged by the customer
every time the service occurs.

Labor content of jobs

Services often have a higher degree of labor content than manufacturing jobs do, although
automated services are an exception.

Uniformity of inputs
Service operations are often subject to a higher degree of variability of inputs. Each client, patient,
customer, repair job, and so on presents a somewhat unique situation that requires assessment and
flexibility. Conversely, manufacturing operations often have a greater ability to control the variability
of inputs, which leads to more-uniform job requirements.

Measurement of productivity
Measurement of productivity can be more difficult for service jobs due largely to the high variations
of inputs. Thus, one doctor might have a higher level of routine cases to deal with, while another
might have more difficult cases. Unless a careful analysis is conducted, it may appear that the doctor
with the difficult cases has a much lower productivity than the one with the routine cases.

Quality assurance
Quality assurance is usually more challenging for services due to the higher variation in input, and
because delivery and consumption occur at the same time. Unlike manufacturing, which typically
occurs away from the customer and allows mistakes that are identified to be corrected, services
have less opportunity to avoid exposing the customer to mistakes.

Inventory
Many services tend to involve less use of inventory than manufacturing operations, so the costs of
having inventory on hand are lower than they are for manufacturing. However, unlike manufactured
goods, services cannot be stored. Instead, they must be provided “on demand.”

Wages
Manufacturing jobs are often well paid, and have less wage variation than service jobs, which can
range from highly paid professional services to minimum-wage workers.

Ability to patent
Product designs are often easier to patent than service designs, and some services cannot be
patented, making them easier for competitors to copy.

Differences between Goods and Services

There are five essential differences between goods and services.

Services are intangible processes which cannot be measured or weighed. Goods on the other hand
are a tangible output of a recess that has physical dimensions. This has important business
implication as service innovation unlike goo’s innovation cannot be patented. Thus a service
company with a new concept must expand rapidly before a competitor copies its
strategies/procedures. Service intangibility is also a problem for customers since it cannot be tried
out and tested before purchase.

Services require some degree of interaction with the customer for it to be a service. The interaction
can be brief bit it has to exist for the service to be complete. On the other hand goods are produced
in a facility separate from the customer.
Services with exceptions of ATMs, and IT Technologies are inherently heterogeneous-that is they
vary from day to day and even hour by hour as a function of the attitudes of customers and the
servers. One thus cannot accurately predict the outcomes. Goods on the other hand can be
produced to meet the tight specifications day in and day out with zero variability.
Services as a process are perishable and time dependent and unlike goods cannot be stored.

The specifications of services are defined and evaluated as a package of features that affect the five
senses. These are:

Supporting facility: (Ex-Location, Layout, architectural appropriateness, supporting services of a

hospital)

Explicit services: Examples are:

• Training of Service Personnel
• Consistency of service performance
• Availability and access to the service
• Comprehensiveness of the services

Implicit Services: Examples are

• Attitude of service provider
• Service atmosphere
• Waiting time
• Status
• Privacy
• Security
• Convenience

Goods that goes with services: Examples are food items that accompany the diet in a hospital.

To summarize Characteristics of Goods:

• Tangible product
• Consistent product definition
• Production usually separate from consumption
• Can be inventoried
 • Low customer interaction

Characteristics of Services
• Intangible product
• Produced & consumed at same time
• Often unique
• High customer interaction
• Inconsistent product definition
• Often knowledge-based
• Frequently dispersed

The Goods and Services Continuum

Most of the product offerings is a combination of goods and services. The figure below
shows the combination of goods and services in various types of organizations.

Based on this providers can be classified as

Pure Goods Providers: Ex- Food products, Chemicals etc.
Core Good Providers: Ex- automobiles, Data Storage system, Appliances. These provide a significant
service component as a part of their business.

Core Service Providers: Example – Hotels and Airlines, these integrate tangible goods. For example,
cable TV company must provide cable hook up and repair services and cable boxes.

Pure Services: Examples - Hospitals, Teaching Institutions

1.8 SUMMARY

The chief role of an operations manager is that of planner/decision maker. In this capacity, the
operations manager exerts considerable influence over the degree to which the goals and objectives
of the organization are realized. Most decisions involve many possible alternatives that can have
quite different impacts on costs or profits. Consequently, it is important to make informed decisions.

Operations management professionals make a number of key decisions that affect the
entire organization. These include the following:

What: What resources will be needed, and in what amounts?

When: When will each resource be needed? When should the work be scheduled?
When should materials and other supplies be ordered?
When is corrective action needed?

Where: Where will the work be done?

How: How will the product or service be designed? How will the work be done (organization,
methods, equipment)?

How will resources be allocated?

Who: Who will do the work?

An in depth knowledge of operations management will help the organization to deliver quality
health care at the least possible cost.

1.9 KEY WORDS

Operations: Operations consist of the jobs or tasks composed of one or more elements or subtasks,
performed typically in one location. Operations transform resource or data inputs into desired
goods, services, or results, and create and deliver value to the customers.

Operations management is an area of management concerned with overseeing, designing, and

controlling the process of production and redesigning business operations in the production of
goods and/or services. It involves the responsibility of ensuring that business operations are efficient
in terms of using as few resources as needed, and effective in terms of meeting customer
requirements. It is concerned with managing the process that converts inputs (in the forms of
materials, labor, and energy) into outputs (in the form of goods and/or services).

So as to deliver value for customers in products and services, it is essential for the company to do
the following:

• Identify the customer needs and convert that into a specific product or service (numbers of
products required for specific period of time).
• Based on product requirement do back-ward working to identify raw material requirements

• Engage internal and external vendors to create supply chain for raw material and finished goods
between vendor → production facility → customers

INPUT:-
• Transformed resources – the resources that are treated, transformed or converted in some
way. The transformed resources which operations take in are usually a mixture of materials,
information and customers.
• Transforming resources – the resources that act upon the transformed resources. Facilities
and staff are the two types of transforming resources. Facilities include building, equipment,
plant and process technology etc., Staff includes all those who operate, maintain, plan and
manage the operation
Goods: These are physical items that include raw materials, parts, and subassemblies such as
motherboards that go into computers, and final products such as cell phones and automobiles.
Services: These are activities that provide some combination of time, location, form, or
psychological value.

Examples of goods and services are found all around you. Every book you read, every video you
watch, every e-mail you send, every telephone conversation you have, and every medical treatment
you receive involves the operations function of one or more organizations.

Efficiency: It means doing something at lowest possible cost. The goal of an efficient process is to
provide a good or service by using the smallest input of service
Effectiveness: It means doing the right things to create the most value for the company. Often
maximizing the effectiveness and efficiency at the same time creates conflict between the two goals.
Ex- at the registration counter of a hospital, being efficient means using fewest people at the
counters whereas being effective means minimizing the amount of time a patient has to wait in the
line.

Productivity: It is a Measure of process improvement and represents output relative to input

Productivity= Units produced/Inputs used
Productivity is defined in terms of utilization of resources, like material and labour. In simple terms,
productivity is the ratio of output to input. For example, productivity of labour can be measured as
units produced per labour hour worked.

Characteristics of Goods:
• Tangible product
• Consistent product definition
• Production usually separate from consumption
• Can be inventoried
• Low customer interaction
Characteristics of Services
• Intangible product
• Produced & consumed at same time
• Often unique
• High customer interaction
• Inconsistent product definition
• Often knowledge-based
• Frequently dispersed

Similarities Between goods And Services

There are also many similarities between managing the production of products and managing
Services. These are:
• Forecasting and capacity planning to match supply and demand.
• Process management.
• Managing variations.
• . Monitoring and controlling costs and productivity.
• Supply chain management.
• Location planning, inventory management, quality control, and scheduling.

Note that many service activities are essential in goods-producing companies. These include
training, human resource management, customer service, equipment repair, procurement, and
administrative services
• All use technology
• Both have quality, productivity, & response issues
• All must forecast demand
• Each will have capacity, layout, and location issues
• All have customers and suppliers
• All have scheduling and staffing issues
UNIT 2: PRODUCTION AND OPERATIONS MANAGEMENT

Specific learning objectives

After going through this Unit you will be able to understand:

• basic concepts of production management;

• basic concepts of operations management;
• difference between production management and operations management;
• concept of strategic planning.

Structure

2.1 Introduction to Production Management

2.2 Classification of Production System
2.3 production Management
2.4 Operations Management
2.5 Strategic Role of Operations
2.6 Strategic Planning
2.7 Production System Versus Operations Management
2.8 International Dimensions of Productivity
2.9 Supply Chain Management-The Need
2.10 Summary
2.11 Key Words

2.1 INTRODUCTION TO PRODUCTION MANAGEMENT

Concept of Production
Production function is ‘the part of an organization, which is concerned with the transformation of a
range of inputs into the required outputs (products) having the requisite quality level’.

Production is defined as ‘the step-by-step conversion of one form of material into another
form through chemical or mechanical process to create or enhance the utility of the product to the
user’. Thus production is a value addition process. At each stage of processing, there will be value
addition.

Edwood Buffa defines production as ‘a process by which goods and services are created’.
Some examples of production are: manufacturing custom-made products like, boilers with a specific
capacity, constructing flats, some structural fabrication works for selected customers, etc., and
manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.

Production System
The production system is ‘that part of an organization, which produces products of an organization.

It is that activity whereby resources, flowing within a defined system, are combined and transformed
in a controlled manner to add value in accordance with the policies communicated by management’.

A simplified production system is shown below:

Schematic Production System

The production system has the following characteristics:
• Production is an organized activity, so every production system has an objective.
• The system transforms the various inputs to useful outputs.
• It does not operate in isolation from the other organization system.
• There exists a feedback about the activities, which is essential to control and improve system
performance.

2.2 CLASSIFICATION OF PRODUCTION SYSTEM

Production systems can be classified as Job-shop, Batch, Mass and Continuous production systems.
Classifications of production systems
Job-Shop Production
Job-shop production are characterized by manufacturing one or few quantity of products designed
and produced as per the specification of customers within prefixed time and cost. The distinguishing
feature of this is low volume and high variety of products.

A job-shop comprises of general-purpose machines arranged into different departments. Each job
demands unique technological requirements, demands processing on machines in a certain
sequence.

Job-shop Production is characterized by

• High variety of products and low volume.
• Use of general purpose machines and facilities.
• Highly skilled operators who can take up each job as a challenge because of uniqueness.
• Large inventory of materials, tools, parts.
• Detailed planning is essential for sequencing the requirements of each product, capacities for
each work center and order priorities.

Limitations
Following are the limitations of Job-shop Production:
• Higher cost due to frequent set up changes.
• Higher level of inventory at all levels and hence higher inventory cost.
• Production planning is complicated.
 • Larger space requirements.

Batch Production
American Production and Inventory Control Society (APICS) defines Batch Production as a form of
manufacturing in which the job pass through the functional departments in lots or batches and each
lot may have a different routing. It is characterized by the manufacture of limited number of
products produced at regular intervals and stocked awaiting sales.
Batch Production is characterized by:
• Shorter production runs.
• Plant and machinery are flexible.
• Plant and machinery set up is used for the production of item in a batch and change of set
up
• is required for processing the next batch.
• Manufacturing lead-time and cost are lower as compared to job order production.

Advantages
Following are the advantages of Batch Production:
• Better utilization of plant and machinery.
• Promotes functional specialization.
• Cost per unit is lower as compared to job order production.
• Lower investment in plant and machinery.
• Flexibility to accommodate and process number of products.
• Job satisfaction exists for operators.

Limitations
Following are the limitations of Batch Production:
• Material handling is complex because of irregular and longer flows.
• Production planning and control is complex.
• Work in process inventory is higher compared to continuous production.
• Higher set up costs due to frequent changes in set up.

Mass Production
Manufacture of discrete parts or assemblies using a continuous process are called Mass Production.
This production system is justified by very large volume of production. The machines are arranged in
a line or product layout. Product and process standardization exists and all outputs follow the same
path.
6
Operations Management
Mass Production is characterized by:
• Standardization of product and process sequence.
• Dedicated special purpose machines having higher production capacities and output rates.
• Large volume of products.
• Shorter cycle time of production.
• Lower in process inventory.
• Perfectly balanced production lines.
• Flow of materials, components and parts is continuous and without any back tracking.
• Production planning and control is easy.
• Material handling can be completely automatic.
Advantages
Following are the advantages of Mass Production:
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Less skilled operators are required.
• Low process inventory.
• Manufacturing cost per unit is low.

Limitations
Following are the limitations of Mass Production:
• Breakdown of one machine will stop an entire production line.
• Line layout needs major change with the changes in the product design.
• High investment in production facilities.
• The cycle time is determined by the slowest operation.

Continuous Production
Production facilities are arranged as per the sequence of production operations from the first
operations to the finished product. The items are made to flow through the sequence of operations
through material handling devices such as conveyors, transfer devices, etc.
Continuous Production is characterized by:
 • Dedicated plant and equipment with zero flexibility.
• Material handling is fully automated.
• Process follows a predetermined sequence of operations.
• Component materials cannot be readily identified with final product.
• Planning and scheduling is a routine action.

Advantages
Following are the advantages of Continuous Production:
• Standardization of product and process sequence.
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Manpower is not required for material handling as it is completely automatic.

Advantages
Following are the advantages of Job-shop Production:
• Because of general purpose machines and facilities variety of products can be produced.
• Operators will become more skilled and competent, as each job gives them learning
opportunities.
• Full potential of operators can be utilized.
• Opportunity exists for Creative methods and innovative ideas

• Person with limited skills can be used on the production line.

• Unit cost is lower due to high volume of production.

Limitations
Following are the limitations of Continuous Production:
• Flexibility to accommodate and process number of products does not exist.
• Very high investment for setting flow lines.
• Product differentiation is limited.
1.6

2.3 3PRODUCTION MANAGEMENT

Production management is ‘a process of planning, organizing, directing and controlling the activities
of the production function. It combines and transforms various resources used in the production
subsystem of the organization into value added product in a controlled manner as per the policies of
the organization’.

E.S.Buffa defines production management as follows:

‘Production management deals with decision-making related to production processes so that the
resulting goods or services are produced according to specifications, in the amount and by the
schedule demanded and out of minimum cost’.

Objectives of Production Management

The objective of the production management is ‘to produce goods and services of Right Quality and
Quantity at the Right time and Right manufacturing cost’.

Right Quality: The quality of product is established based upon the customers need. The right
quality is not necessarily being the best quality. It is determined by the cost of the product and the
technical characteristics as suited to the specific requirements.

Right Quantity: The manufacturing organization should produce the products in right number. If
they are produced in excess of demand the capital will block up in the form of inventory and if the
quantity is produced in short of demand, leads to shortage of products.

Right Time: Timeliness of delivery is one of the important parameter to judge the effectiveness of
production department. So, the production department has to make the optimal utilization of input
resources to achieve its objective.
Right Manufacturing Cost: Manufacturing costs are established before the product is actually
manufactured. Hence, all attempts should be made to produce the products at pre-established cost,
so as to reduce the variation between actual and the standard (pre-established) cost.

Operations System
An operation was defined in terms of the mission it serves for the organization, technology it
employs and the human and managerial processes it involves. Operations in an organization can be
categorized into Manufacturing Operations and Service Operations. Manufacturing Operations is a
conversion process that includes manufacturing yields a tangible output: a product, whereas, a
conversion process that includes service yields an intangible output: a deed, a performance, an
effort.
Operations Management
Operations system converts inputs in order to provide outputs, which are required by a customer. It
converts physical resources into outputs, the function of which is to satisfy customer wants.

Everett E. Adam & Ronald J. Ebert defines as ‘An operating system is the part of an
Organization that produces the organist ion’s physical goods and services’.

Ray Wild defines operations system as ‘a configuration of resources combined for the provision of
goods or services’.

In some of the organization the product is a physical good (breakfast in hotels) while in others it is a
service (treatment in hospitals). Bus and taxi services, tailors, hospital and builders are the examples
of an operations system. The basic elements of an operation system show in figure below.

A departmental store's has an input like land upon which the building is located, labour as a stock
clerk, capital in the form of building, equipment and merchandise, management skills in the form of
the store’s manager. Output will be serviced customer with desired merchandise. Random
fluctuations will be from external or internal sources, monitored through a feedback system.

Operations system for hospital stores

A Framework of Managing Operations
Managing Operations can be enclosed in a frame of general management function as shown in
figure .Operation managers are concerned with planning, organizing, and controlling the activities,
which affect human behavior through models.
Planning is the activity that establishes a course of action and guide future decision-making. The
operations manager defines the objectives for the operations subsystem of the organization, and the
policies, and procedures for achieving the objectives. This stage includes clarifying the role and focus
of operations in the organization’s overall strategy. It also involves product planning, facility
designing and using the conversion process.

Organizing is the activities that establish a structure of tasks and authority. Operation managers
establish a structure of roles and the flow of information within the operations subsystem. They
determine the activities required to achieve the goals and assign authority and responsibility for
carrying them out.

Controlling is the activities that assure the actual performance in accordance with planned
performance. To ensure that the plans for the operations subsystems are accomplished, the
operations manager must exercise control by measuring actual outputs and comparing them to
planned operations management. Controlling costs, quality, and schedules are the important
functions here.

Operations Management Concepts 9

Behavior
Operations managers are concerned with the activities, which affect human behavior through
models. They want to know the behavior of subordinates, which affects managerial activities. Their
main interest lies in the decision-making behavior.

Models
Models represents schematic representation of the situation, which will be used as a tool for
decision-making. Following are some of the models used.

Aggregate planning models for examining how best to use existing capacity in short term, break-
even analysis to identify break-even volumes, Linear programming and computer simulation for
capacity utilization, Decision tree analysis for long-term capacity problem of facility expansion,
simple median model for determining best locations of facilities, etc.
 General Model for Managing Operations

Planning
Planning Conversion system
Opeartion Startegies Organizing
Forecasting
Product/Process Choices
Organizing For Conversion
Facility Location Planning Job Design
Layput Planning Production Standard
Operation Standards
Scheduling Conversion System
Work Measuremenr
Scheduling System
Controlling Project Mnangement
Aggregate Palnning
Opeartions scheduling
Material Control

Inventory Control
Material Requirement Planning(MRP)

Managing Competition
Quality Management
Quality Control

2.4 OPERATIONS MANAGEMENT

Joseph G .Monks defines Operations Management as the process whereby resources, flowing within
a defined system, are combined and transformed by a controlled manner to add value in accordance
with policies communicated by management.

The operations managers have the prime responsibility for processing inputs into outputs. They
must bring together under production plan that effectively uses the materials, capacity and
knowledge available in the production facility. Given a demand on the system work must be
scheduled and controlled to produce goods and/or services required. Control must be exercised over
such parameters such as costs, quality and inventory levels.
The definition of the operations Management contains following keywords: Resources, Systems,
transformation and Value addition Activities.

RESOURCES
Resources are the human, material and capital inputs to the production process. Human resources
are the key assets of an organization. As the technology advances, a large proportion of human input
is in planning and controlling activities. By using the intellectual capabilities of people, managers can
multiply the value of their employees into by many times. Material resources are the physical
facilities and materials such as plant equipment, inventories and supplies. These are the major assets
of an organization. Capital in the form of stock, bonds, and/or taxes and contributions is a vital asset.
Capital is a store of value, which is used to regulate the flow of the other resources.

SYSTEMS
Systems are the arrangement of components designed to achieve objectives according to the plan.
The business systems are subsystem of large social systems. In turn, it contains subsystem such as
personnel, engineering, finance and operations, which will function for the good of the organization.
A systems approach to operations management recognizes the hierarchical management
responsibilities. If subsystems goals are pursued independently, it will results in sub-optimization. A
consistent and integrative approach will lead to optimization of overall system goals.

The system approach to specific problems requires that the problem first be identified and
isolated from the maze of the less relevant data that constitute the environment. The problem
abstracted from the overall (macro) environment. Then it can be broken into manageable (micro)
parts and analyzed and solutions proposed. Doing this analysis is advantageous before making any
changes. If the solution appears to solve the problem in a satisfactory way, changes can be made to
the real system in an orderly and predictable way.

The ability of any system to achieve its objective depends on its design and its control. System design
is a predetermined arrangement of components. It establishes the relationships that must exist
between inputs, transformation activities and outputs in order to achieve the system objectives.

With the most structured design, there will be less planning and decision-making in the operations
of the system. System control consists of all actions necessary to ensure that activities conform to
preconceived plans or goals. It involves following four essential elements:
 • Measurement by an accurate sensory device.
• Feedback of information in a timely manner.
• Comparison with standards such as time and cost standards.
• Corrective actions by someone with the authority and ability to correct.

Operations Management Concepts a closed loop control system can automatically function on the
basis of data from within its own system.

Transformation and Value Adding Activities

The objective of combining resources under controlled conditions is to transform them into goods
and services having a higher value than the original inputs. The transformation process applied will
be in the form of technology to the inputs. The effectiveness of the production factors in the
transformation process is known as productivity.

The productivity refers to the ratio between values of output per work hour to the cost of inputs.
The firms overall ratio must be greater than 1, then we can say value is added to the product.
Operations manager should concentrate improving the transformation efficiency and to increase the
ratio.

Production Management becomes the acceptable term from 1930s to 1950s. As F.W. Taylor’s works
become more widely known, managers developed techniques that focused on economic efficiency
in manufacturing. Workers were studied in great detail to eliminate wasteful efforts and achieve
greater efficiency. At the same time, psychologists, socialists and other social scientists began to
study people and human behavior in the working environment. In addition, economists,
mathematicians, and computer socialists contributed newer, more sophisticated analytical
approaches.

With the 1970s emerge two distinct changes in our views. The most obvious of these, reflected in
the new name Operations Management was a shift in the service and manufacturing sectors of the
economy. As service sector became more prominent, the change from ‘production’ to ‘operations’
emphasized the broadening of our field to service organizations. The second, more suitable change
was the beginning of an emphasis on synthesis, rather than just analysis, in management practice
Integrated Product and Process Development - Meaning, Advantages and Key Factors, Introduction,
Objective of any organization is to provide customer satisfaction by building product and services,
which not only satisfy needs and want but also create value for them.

This requires product design based on the customer feedback and production process which not
only minimizes cost but also provides a competitive advantage. However, most organizations tend to
follow conventional production method and process.

However, in the global age of new technology and competition organization have to re-invent the
way they cater to needs of customer, focus on specialization and customization is ever increasing.
Given this scenario it is imperative for the organization to integrate technology and innovation
within the framework of integrated product and process development.

Integrated Product and Process Development (IPPD)

Integrated product and process development combines the product design processes along with the
process design process to create a new standard for producing competitive and high-quality
products.

Integration of new technologies and methods provide a complete new dimension to product design
process. This process starts with defining of the requirements of products based on the customer
feedback while considering the design layout and other constraints. Once the finer details are
finalized, they are fed into CAD models where extensive testing and modeling are done to get the
best product.

With integration of production method and technology with product design, it is natural for
integration of product design and process design. Therefore, integrated product and process
development can be defined as a process starting from product idea to development of final product
through modern technology and process management practices while minimizing cost and
maximizing efficiency.

Advantages of Integrated Product and Process Development Organization stands to benefit greatly
from the implementation of IPPD. Some of the advantages are as follows: Using modern
technologies and implement logical steps in production design, the actual production is likely to
come down, thereby reducing product delivery time. Through optimum usage of resources and using
efficient process, organizations are able to minimize cost of production thus improving profitability
of the organization.

Since extensive uses of CAD model are employed chances are of product or design failure are greatly
reduced thus reducing risk for organization. As the focus is solely in delivering value to customer,
quality is paramount importance and achieved through technology and methods.

Key Factors for IPPD

There are certain factors, which can vastly improve IPPD. These factors are as follows:
IPPD success is greatly dependent on agreement on the end objective which is the successful
address to customer requirements. All the stakeholders and management should be aligned to the
single objective.

Since this is a scientific approach, its success dependent on building up of plan, implementation of
plan and constant review of the implemented plan. With implementation of modern methods and
technology comes usage of modern tools and systems. This tools and systems need to be integrated
within the organization framework.

Skilled manpower is another essential; therefore, organization needs to make investment in human
capital. Customer is the focal point of IPPD. Therefore, constant feedback from them is essential for
IPPD to be a success. Therefore, IPPD is approach design to address all the concern of modern
organization in the globalized world.

Operations Management Objectives

Joseph G .Monks defines Operations Management as the process whereby resources, flowing
within a defined system, are combined and transformed by a controlled manner to add value in
accordance with policies communicated by management. Objectives of Operations Management can
be categorized into Customer Service and Resource Utilization.

Customer Service
The first objective of operating systems is to utilize resources for the satisfaction of customer wants.
Therefore, customer service is a key objective of operations management. The operating system
must provide something to a specification, which can satisfy the customer in terms of cost and
timing. Thus, providing the ‘right thing at a right price at the right time’ can satisfy primary objective.

Operations Management
These aspects of customer service – specification, cost and timing – are described for four
functions in Table. They are the principal sources of customer satisfaction and must therefore be the
principal dimension of the customer service objective for operations managers. Generally, an
organization will aim reliably and consistently to achieve certain standards and operations manager
will be influential in attempting to achieve these standards. Hence, this objective will influence the
operations manager’s decisions to achieve the required customer service.

Aspects of customer service

Principal function Primary Customer considerations Other considerations

Manufacture Goods of a given, requested or acceptable Cost, i.e. purchase price or cost of obtaining
specification goods. Timing, i.e. delivery delay from order
or request to receipt of goods.

Supply Goods of a given, requested or acceptable Cost, i.e. purchase price or cost of obtaining
specification goods. Timing, i.e. delivery delay from order
or request to receipt of goods.

Service Treatment of a given, requested or Cost, i.e. cost of movements. Timing, i.e.
acceptable specification
1. Duration or time required for treatment.

2. Wait or delay from requesting treatment

to its commencement

Resource Utilization

Another major objective of operating systems is to utilize resources for the satisfaction of customer
wants effectively. Customer service must be provided with the achievement of effective operations
through efficient use of resources. Inefficient use of resources or inadequate customer service leads
to commercial failure of an operating system.

Operations management is concerned essentially with the utilization of resources, i.e. obtaining
maximum effect from resources or minimizing their loss, underutilization or waste. The extent of the
utilization of the resources’ potential might be expressed in terms of the proportion of available time
used or occupied, space utilization, levels of activity, etc. Each measure indicates the extent to which
the potential or capacity of such resources is utilized. This is referred as the objective of resource
utilization.

Operations management is concerned with the achievement of both satisfactory customer service
and resource utilization. An improvement in one will often give rise to deterioration in the other.
Often both cannot be maximized, and hence a satisfactory performance must be achieved on both
objectives. All the activities of operations management must be tackled with these two objectives in
mind, and because of this conflict, operations managers’ will face many of the problems. Hence,
operations managers must attempt to balance these basic objectives.

The type of balance established both between and within these basic objectives will be influenced by
market considerations, competitions, the strengths and weaknesses of the organization, etc. Hence,
the operations managers should make a contribution when these objectives are set.

The twin objectives of operations management are:

• The customer service objective i.e. to provide agreed/adequate levels of customer service
(and hence customer satisfaction) by providing goods or services with the right specification,
at the right cost and at the right time.

• The resource utilizations objective i.e. to achieve adequate levels of resource utilizations (or
productivity) e.g. to achieve agreed levels of utilizations of materials, machines and labour.

2.5 THE STRATEGIC ROLE OF OPERATIONS

Primary goals of the organizations are related market opportunities. Economy and efficiency of
conversion operations are the secondary goals, which will be predominant with the study and
practice of operations management.

A Strategic Perspective
In figure the basic downward flow of strategy influence leading to managing conversion
operations and results. The general thrust of the process is guided by competitive and market
conditions in the industry, which provide the basis for determining the organization’s strategy.
 • Where is the industry now, and where it will be in the future?
• What are the existing and potential markets?
• What market gaps exist, and what competencies do we have for filling them?

A careful analysis of market segments and the ability of our competitors and ourselves to meet the
needs of these segments will determine the best direction for focusing an organization’s efforts.

After assessing the potential within an industry, an overall organizational strategy must be
developed, including some basic choices of the primary basis for competing. In doing so, priorities
are established among the following four characteristics:
• Quality (product performance)
• Cost efficiency (low product price)
• Dependability (reliable, timely delivery of orders to customers)
• Flexibility (responding rapidly with new products or changes in volume)

In recent years, most organizations cannot be best on all these dimensions and, by trying to do so,
they end up doing nothing well. Furthermore, when a competency exists in one of these areas, an
attempt to switch to a different one can lead to a downfall in effectiveness (meeting the primary
objectives).

Time is emerging as a critical dimension of competition in both manufacturing and service

industries. In any industry the firm with the fastest response to customer demands has the potential
to achieve an overwhelming market advantage. In an era of time-based competition, a firm’s
competitive advantage is defined by the total time required to produce a product or service. Firms
able to respond quickly have reported growth rates over three times the industry average and
double the profitability. Thus the pay-off for quick response is market dominance. These basic
strategic choices set the tone for the shape and content of the operations functions.

Operations Objectives
The overall objective of the operations subsystem is to provide conversion capabilities for meeting
the organization’s goals and strategy. The sub-goals of the operations subsystem, must specify the
following:
• Product/service characteristics
 • Process characteristics
• Product/service quality
• Efficiency
• Effective employee relations and cost control of labour
• Cost control of material
• Cost control in facility utilization
• Customer service (schedule)
• Producing quantities to meet expected demand
• Meeting the required delivery date for goods or services
• Adaptability for future survival

The priorities among these operations’ sub-goals and their relative emphases should be direct
reflections of the organization’s mission. Relating these six operations sub-goals to the broader
strategic choices above, it is clear that quality, efficiency, and dependability (customer service) are
reflected in the sub-goals. Flexibility encompasses adaptability but also relates to product/service
and process characteristics: Once choices about product and process are made, boundaries for
meeting the other operations objectives are set.

Operations Alternatives and Tradeoffs

The operations sub-goals can be attained through the decisions that are made in the various
operations areas. Each decision involves important tradeoffs between choices about product and
process versus choices about quality, efficiency, schedule and adaptability.

Once a decision is made, it leads to many choices. Where should facilities be located? How
large should they be? What degree of automation should be used? How skilled must labour be to
operate the automated equipment? Will the product be produced on site? How do these decisions
impact quality, efficiency, schedule (customer service), and adaptability? Are we prepared for
changes in product or service, or do these decisions lock in our operations? These are examples of
the tough, crucial tradeoffs that are at the heart of understanding the choices that must be made
when planning strategically and tactically.

2.6 STRATEGIC PLANNING

Strategic planning is the process of thinking through the current mission of the organization and the
current environmental conditions facing it, then setting forth a guide for tomorrow’s decisions and
results. Strategic planning is built on fundamental concepts: that current decisions are based on
future conditions and results.

Strategic Planning for Production and Operations

In the production or operations function, strategic planning is the broad, overall planning that
precedes the more detailed operational planning. Executives who head the production and
operations function are actively involved in strategic planning, developing plans that are consistent
with the firm’s overall strategies as well as such functions as marketing, finance accounting and
engineering. Production and operations strategic plans are the basis for (1) operational planning of
facilities (design) and (2) operational planning for the use of these facilities.

Strategic Planning Approaches for Production/Operations

Henry Mintzberg suggests three contrasting modes of strategic planning: the entrepreneurial, the
adaptive, and the planning modes. In the entrepreneurial mode, one strong, bold leader takes
planning action on behalf of the production/operations function. In the adaptive mode, a manager’s
plan is formulated in a series of small, disjointed steps in reaction to a disjointed environment. The
planning model uses planning essentials combined with the logical analysis of management science.
There are many approaches to strategic planning. The key point is that operations strategies must be
consistent with the overall strategies of the firm. Operations typically utilize the overall corporate
approach to strategic planning, with special modifications and a focus upon operations issues and
opportunities. One general approach to strategic planning is a forced choice model given by Adam
and Ebert.

Strategic Planning—Forced Choice Model

One of many planning models that have been used in strategic planning is a forced choice model,
shown in Figure .In-group sessions or individually, analysts assess environmental considerations
together with the organization’s current production/operations position, thus forcing management
to develop strategic options for Operations.
forced choice model of strategic planning for operations
Source: Charles, N. Greene, Everett E. Adam, Jr., and Ronald J. Ebert, Management for Effective
Performance (Prentice Hall 1985)

A Strategic Planning Operations Model

Professor Chris A. Voss of the London Business School, England, has set forth a framework for
strategy and policy development in manufacturing. Concept is that manufacturing strategy tries to
link the policy decisions associated with operations to the marketplace, the environment, and the
company’s overall goals. A simplified framework for examining operations strategy is shown in
Figure .One feature of this approach that is crucial to competitiveness is market-based view of
strategic planning. It suggests that any strategic business unit of a company operates in the context
of its corporate resources, the general and competitive industry environment, and the specific
corporate goals of the company. In any area in which the company chooses to compete is a set of
specific market-based criteria for success.

A low-cost, high productivity operation makes efficiency possible. Minimum use of scarce
resources while sustaining high outputs is the key to productivity. Effectiveness is how well a
company is able to meet specific criteria such as delivery schedules and technical capability. Quality
is the degree to which the product or services meets customer and organization expectations.

Quality reflects the ‘goodness’ of the product or services to the customer. Flexibility is the
adoptability, the capability to change as business conditions change.

Operations strategy framework

Environment
Corporate Corporate
and Industry
Strategy Strategy

Efficiency

Dependability

Quality

Flexibility
 Facility Mission

Process Capacity Facilities Infrastructure Vertical

2.7 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.

Productivity Analysis
For the purposes of studies of productivity for improvement purposes, following types of analysis
can be carried out:

Trend analysis: Studying productivity changes for the firm over a period of time.
Horizontal analysis: Studying productivity in comparison with other firms of same size and
engaged in similar business.

Vertical analysis: Studying productivity in comparison with other industries and other firms of
different sizes in the same industry.

Budgetary analysis: Setting up a norm for productivity for a future period as budget, based
on studies as above, and planning strategies to achieve it.
1.14
Factors Affecting Productivity
Economists site a variety of reasons for changes in productivity. However some of the principle
factors influencing productivity rate are:

Capital/labour ratio: It is a measure of whether enough investment is being made in plant,

machinery, and tools to make effective use of labour hours.

Scarcity of some resources: Resources such as energy, water and number of metals will
create productivity problems.

Work-force changes: Change in work-force effect productivity to a larger extent, because

of the labour turnover.

Innovations and technology: This is the major cause of increasing productivity.

Regulatory effects: These impose substantial constraints on some firms, which lead to change in
productivity.

Bargaining power: Bargaining power of organized labour to command wage increases excess of
output increases has had a detrimental effect on productivity.

Managerial factors: Managerial factors are the ways an organization benefits from the
unique planning and managerial skills of its manager.
Quality of work life: It is a term that describes the organizational culture, and the extent to
which it motivates and satisfies employees.

20 Operations Management
1.1

2.8 INTERNATIONAL DIMENSIONS OF PRODUCTIVITY

Industrialized nations are developing two strategies to remain competitive in the business.
• Moving to a new and more advanced products
• Employing better and more flexible system

Trend towards More Flexible Systems

The production runs of these higher valued specialty items and custom designed products are often
much shorter than for traditional mass produced goods. But the non-productive time (downtime)
required to set up equipment for producing different options, new models and new products are
very costly. So production facilities must be designed with the utmost flexibility to accommodate
change overs in rapid fashion. This is where computers, robotics come into play.

German executives understand the need for a strong technological focus and the dangers of
hierarchical bureaucracies and paper profits. Studies reveal that over 50 per cent of Germany’s large
manufacturing firms are managed by Ph.D.’s with technical backgrounds.
In recent years, the managerial techniques and productivity methods in Japanese firms have
attracted worldwide attention. The following are some of the characteristics of the Japanese firm as
compared with the American firms.

Corporate objectives: Employees and customers are given priority over shareholders. Honesty in
business is important.

Time horizon: Long-term viability is more important than short-term profits.

Production systems: Automated systems with extensive use of microprocessors and robotics.
Quality is paramount, and things happen on schedule.
Employment relations: Long-term employment of loyal workers. Unions cooperate to benefit total
firm. Politeness and harmony are emphasized.

Materials: Resources are limited. Space is used efficiently and inventories are kept to a
bare minimum.

Financing: More use is made of debt capital and less of equity capital.

Training: Employees are thoroughly trained and rotated to learn a variety of skills.

Worker participation: Employees are thoroughly trained and rotated to learn a variety of
productivity improvements via suggestions, quality circles and consultation with supervisors.
1.1
The Environment of Operations
One of the most encompassing influences on productivity is the environment in which organization
operates. The social impact of an organization is a reflection of the values held by top management.

Operations Management Concepts 21

It evolves from the religious and cultural norms of society, from childhood training, education, and
reflection on the purpose of life and the value of one’s self and of others. The preferred values of the
society reflect purpose, integrity and a respect for the life and humanity of others.

2.9 SCOPE OF OPERATIONS MANAGEMENT

Operations Management concern with the conversion of inputs into outputs, using physical
resources, so as to provide the desired utilities to the customer while meeting the other
organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from
other functions such as personnel, marketing, finance, etc. by its primary concern for ‘conversion by
using physical resources’.
Following are the activities, which are listed under Production and Operations Management
functions:
• Location of facilities
• Plant layouts and Material Handling
• Product Design
• Process Design
• Production and Planning Control
• Quality Control
• Materials Management
• Maintenance Management

Scope of operations management

 Location

Quality Materials
Control Management

Production Quality
Planning SCOPE Management
&Control

Process Materia
Design Handling
Product
Design

Location of Facilities
Location of facilities for operations is a long-term capacity decision, which involves a long-term
commitment about the geographically static factors that affect a business organization. It is an
important strategic level decision-making for an organization. It deals with the questions such as
‘where our main operations should be based?’

The selection of location is a key-decision as large investment is made in building plant and
machinery. An improper location of plant may lead to waste of all the investments made in plant and
machinery equipments. Hence, location of plant should be based on the company’s expansion plan
and policy, diversification plan for the products, changing sources of raw materials and many other
factors. The purpose of the location study is to find the optimal location that will results in the
greatest advantage to the organization.

Plant Layout and Material Handling

Plant layout refers to the physical arrangement of facilities. It is the configuration of departments,
work centers and equipment in the conversion process. The overall objective of the plant layout is to
design a physical arrangement that meets the required output quality and quantity most
economically.
According to James More ‘Plant layout is a plan of an optimum arrangement of facilities including
personnel, operating equipment, storage space, material handling equipments and all other
supporting services along with the design of best structure to contain all these facilities’.

Operations Management Concepts 23

‘Material Handling’ refers to the ‘moving of materials from the store room to the machine and from
one machine to the next during the process of manufacture’. It is also defined as the ‘art and science
of moving, packing and storing of products in any form’. It is a specialized activity for a modern
manufacturing concern, with 50 to 75% of the cost of production. This cost can be reduced by
proper section, operation and maintenance of material handling devices. Material handling devices
increases the output, improves quality, speeds up the deliveries and decreases the cost of
production.
Hence, material handling is a prime consideration in the designing new plant and several existing
plants.

Product Design
Product design deals with conversion of ideas into reality. Every business organization has to design,
develop and introduce new products as a survival and growth strategy. Developing the new products
and launching them in the market is the biggest challenge faced by the organizations. The entire
process of need identification to physical manufactures of product involves three functions—
Design and Marketing, Product, Development, and manufacturing. Product Development translates
the needs of customers given by marketing into technical specifications and designing the various
features into the product to these specifications. Manufacturing has the responsibility of selecting
the processes by which the product can be manufactured. Product design and development provides
link between marketing, customer needs and expectations and the activities required to
manufacture the product.

Process Design
Process design is a macroscopic decision-making of an overall process route for converting the raw
material into finished goods. These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities. Hence, the important decisions in
process design are to analyses the workflow for converting raw material into finished product and to
select the workstation for each included in the workflow.
Production Planning and Control
Production planning and control can be defined as the process of planning the production in
advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to
give production orders to shops and to follow-up the progress of products according to orders.

The principle of production planning and control lies in the statement ‘First Plan Your Work and then
Work on Your Plan’. Main functions of production planning and control include Planning, Routing,
Scheduling, Dispatching and Follow-up.

Planning is deciding in advance what to do, how to do it, when to do it and who is to do it.
Planning bridges the gap from where we are, to where we want to go. It makes it possible for things
to occur which would not otherwise happen.

Routing may be defined as the selection of path, which each part of the product will follow, which
being transformed from raw material to finished products. Routing determines the most
advantageous path to be followed for department to department and machine to machine till raw
material gets its final shape.
24
Scheduling determines the programmer for the operations. Scheduling may be defined as 'the
fixation of time and date for each operation' as well as it determines the sequence of operations to
be followed.

Dispatching is concerned with the starting the processes. It gives necessary authority so as to start a
particular work, which has been already been planned under ‘Routing’ and ‘Scheduling’. Therefore,
dispatching is ‘Release of orders and instruction for the starting of production for any item in
acceptance with the Route sheet and Schedule Charts’. The function of Follow-up is to report daily
the progress of work in each shop in a prescribed proforma and to investigate the causes of
deviations from the planned performance.

QUALITY CONTROL (QC)

Quality Control may be defined as ‘a system that is used to maintain a desired level of quality in a
product or service’. It is a systematic control of various factors that affect the quality of the product.
Quality Control aims at prevention of defects at the source, relies on effective feedback system and
corrective action procedure.

Quality Control can also be defined as ‘that Industrial Management technique by means of
Which product of uniform acceptable quality is manufactured’? It is the entire collection of activities,
which ensures that the operation will produce the optimum quality products at minimum cost.

The main objectives of Quality Control are:

• To improve the company’s income by making the production more acceptable to the
customers i.e. by providing long life, greater usefulness, maintainability, etc.
• To reduce companies cost through reduction of losses due to defects.
• To achieve interchangeability of manufacture in large-scale production.
• To produce optimal quality at reduced price.
• To ensure satisfaction of customers with productions or services or high quality level, to
build customer good will, confidence and reputation of manufacturer.
• To make inspection prompt to ensure quality control.
• To check the variation during manufacturing.

Materials Management
Materials Management is that aspect of management function, which is primarily concerned with
the acquisition, control, and use of materials needed and flow of goods and services connected with
the production process having some predetermined objectives in view.

The main objectives of Material Management are:

• To minimize material cost.

• To purchase, receive, transport and store materials efficiently and to reduce the related
cost.

• To cut down costs through simplification, standardization, value analysis, import

substitution, etc.

• To trace new sources of supply and to develop cordial relations with them in order to ensure
continuous supply at reasonable rates.

• To reduce investment tied in the inventories for use in other productive purposes and to
develop high inventory turnover ratios.
 • 25
Maintenance Management
In modern industry, equipment and machinery are a very important part of the total productive
effort. Therefore their idleness or downtime becomes are very expensive. Hence, it is very important
that the plant machinery should be properly maintained.

The main objectives of Maintenance Management are:

• To achieve minimum breakdown and to keep the plant in good working condition at the
lowest possible cost.

• To keep the machines and other facilities in such a condition that permits them to be used at
their optimal capacity without interruption.

• To ensure the availability of the machines, buildings and services required by other sections
of the factory for the performance of their functions at optimal return on investment.

1.9. SUPPLY CHAIN MANAGEMENT-THE NEED

Supply chain management is being given increasing attention as business organizations face
mounting pressure to improve management of their supply chains. In the past, most organizations
did little to manage their supply chains. Instead, they tended to concentrate on their own and
inventory management functions in organizations in supply chains have often operated
independently of each other. As a result, supply chains experienced a range of problems that were
seemingly beyond the control of individual organizations. The problems included large oscillations of
inventories, inventory stockouts, late deliveries, and quality problems. These and other issues now
make it clear that management of supply chains is essential to business success. The other issues
include the following:

The need to improve operations

During the last decade, many organizations adopted practices such as lean operation and total
quality management (TQM). As a result, they were able to achieve improved quality while wringing
much of the excess costs out of their systems.

Although there is still room for improvement, for many organizations, the major gains have
been realized. Opportunity now lies largely with procurement, distribution, and logistics—the supply
chain.
Increasing levels of outsourcing
Organizations are increasing their levels of outsourcing, buying goods or services instead of
producing or providing them themselves. As outsourcing increases, organizations are spending
increasing amounts on supply-related activities (wrapping, packaging, moving, loading and
unloading, and sorting). A significant amount of the cost and time spent on these and other related
activities may be unnecessary. Issues with imported products, including tainted food products,
toothpaste, and pet foods, as well as unsafe tires and toys, have led to questions of liability and the
need for companies to take responsibility for monitoring the safety of outsourced goods.

Increasing transportation costs

Transportation costs are increasing, and they need tube more carefully managed.

Competitive pressures
Competitive pressures have led to an increasing number of new products, shorter product
development cycles, and increased demand for customization. And in some industries, most notably
consumer electronics, product life cycles are relatively short. Added to this are adoption of quick-
response strategies and efforts to reduce lead times.

Increasing globalization
Increasing globalization has expanded the physical length of supply chains. A global supply chain
increases the challenges of managing a supply chain. Having far-flung customers and/or suppliers
means longer lead times and greater opportunities for disruption of deliveries. Often currency
differences and monetary fluctuations are factors, as well as language and cultural differences. Also,
tightened border security in some instances has slowed shipments of goods.

Increasing importance of e-business

The increasing importance of e-business has added new dimensions to business buying and selling
and has presented new challenges.

The complexity of supply chains

Supply chains are complex; they are dynamic, and they have many inherent uncertainties that can
adversely affect them, such as inaccurate forecasts, late deliveries, substandard quality, equipment
breakdowns, and canceled or changed orders.
The need to manage inventories
Inventories play a major role in the success or failure of a supply chain, so it is important to
coordinate inventory levels throughout a supply chain. Shortages can severely disrupt the timely
flow of work and have far-reaching impacts, while excess inventories add unnecessary costs. It
would not be unusual to find inventory shortages in some parts of a supply chain and excess
inventories in other parts of the same supply chain.

Elements of Supply Chain Management

Supply chain management involves coordinating activities across the supply chain. Central to this is
taking customer demand and translating it into corresponding activities at each level of the supply
chain.

The key elements of supply chain management are listed in Table The first element, customers, is
the driving element. Typically, marketing is responsible for determining what customers want as well
as forecasting the quantities and timing of customer demand. Product and service design must
match customer wants with operations capabilities.

Processing occurs in each component of the supply chain: it is the core of each organization. The
major portion of processing occurs in the organization that produces the product or service for the
final customer (the organization that assembles the computer, services the carpet.). A major aspect
of this for both the internal and external portions of a supply chain is scheduling.
Inventory is a staple in most supply chains. Balance is the main objective; too little causes delays and
disrupts schedules, but too much adds unnecessary costs and limits flexibility.
Purchasing is the link between an organization and its suppliers. It is responsible for obtaining goods
and or services that will be used to produce products or provide services for the organization’s
customers.

Purchasing selects suppliers, negotiates contracts, establishes alliances, and acts as liaison between
suppliers and various internal departments.

The supply portion of a value chain is made up of one or more suppliers, all links in the chain, and
each one capable of having an impact on the effectiveness—or the ineffectiveness— of the supply
chain. Moreover, it is essential that the planning and execution be carefully coordinated between
suppliers and all members of the demand portion of their chains.

Elements of Supply Chain Management

ELEMENTS ISSUES

Customers Determining what products and/or services customers want

Forecasting Predicting the quantity and timing of customer demand

Design Incorporating customers, wants, manufacturability, and

time to market

Capacity planning Matching supply and demand

Processing Controlling quality, scheduling work

Inventory Meeting demand requirements while managing the costs of

holding inventory

Purchasing Evaluating potential suppliers, supporting the needs of

operations on purchased goods and services

Suppliers Monitoring supplier quality, on-time delivery, and flexibility;

maintaining supplier relations

Location Determining the location of facilities

Logistics Deciding how to best move information and materials

Location can be a factor in a number of ways. Where suppliers are located can be important, as can
location of processing facilities. Nearness to market, nearness to sources of supply, or nearness to
both may be critical. Also, delivery time and cost are usually affected by location.
Two types of decisions are relevant to supply chain management—strategic and operational.
The strategic decisions are the design and policy decisions. The operational decisions relate to day-
to-day activities: managing the flow of material and product and other aspects of the supply chain in
accordance with strategic decisions.

The major decision areas in supply chain management are location, production, distribution, and
inventory.

The location decision relates to the choice of locations for both production and distribution facilities.
Production and transportation costs and delivery lead times are important. Production and
distribution decisions focus on what customers want, when they want it, and how much is needed.
Outsourcing can be a consideration. Distribution decisions are strongly influenced by transportation
cost and delivery times, because transportation costs often represent a significant portion of total
cost. Moreover, shipping alternatives are closely tied to production and inventory decisions. For
example, using air transport means higher costs but faster deliveries and less inventory in transit
than sea, rail, or trucking options. Distribution decisions must also take into account capacity and
quality issues. Operational decisions focus on scheduling, maintaining equipment, and meeting
customer demand. Quality control and workload balancing are also important considerations.
Inventory decisions relate to determining inventory needs and coordinating production and stocking
decisions throughout the supply chain. Logistics management plays the key role in inventory
decisions.

2.10 SUMMARY

The operations function in business organizations is responsible for producing goods and providing
services. It is a core function of every business. Supply chains are the sequential system of suppliers
and customers that begins with basic sources of inputs and ends with final customers of the system.

Operations and supply chains are interdependent—one couldn’t exist without the other, and no
business organization could exist without both.

Operations management involves system design and operating decisions related to product and
service design, capacity planning, process selection, location selection, work management, inventory
and supply management, production planning, quality assurance, scheduling, and project
management.
2.11 KEY WORDS

Integrated product and process development combines the product design processes along with
the process design process to create a new standard for producing competitive and high-quality
products. Integration of new technologies and methods provide a complete new dimension to
product design process. This process starts with defining of the requirements of products based on
the customer feedback while considering the design layout and other constraints. Once the finer
details are finalized, they are fed into CAD models where extensive testing and modeling are done to
get the best product.
SYSTEMS
Systems are the arrangement of components designed to achieve objectives according to the plan.
The business systems are subsystem of large social systems. In turn, it contains subsystem such as
personnel, engineering, finance and operations, which will function for the good of the organization.

RESOURCES
Resources are the human, material and capital inputs to the production process. Human resources
are the key assets of an organization
10
Operations Management
Operations Management is the process whereby resources, flowing within a defined system, are
combined and transformed by a controlled manner to add value in accordance with policies
communicated by management.

Models: Models represents schematic representation of the situation, which Ray Wild defines
operations system as ‘a configuration of resources combined for the provision
Of goods or services’.

An operation was defined in terms of the mission it serves for the organization, technology it
employs and the human and managerial processes it involves.

Production management is ‘a process of planning, organizing, directing and controlling the activities
of the production function. It combines and transforms various resources used in the production
subsystem of the organization into value added product in a controlled manner as per the policies of
the organization’.
The production system is ‘that part of an organization, which produces products of an organization.
It is that activity whereby resources, flowing within a defined system, are combined and transformed
in a controlled manner to add value in accordance with the policies communicated by management’.

Strategic planning is the process of thinking through the current mission of the organization and the
current environmental conditions facing it, then setting forth a guide for tomorrow’s decisions and
results. Strategic planning is built on fundamental concepts: that current decisions are based on
future conditions and results.
UNIT 3 OPERATIONS MANAGEMENT AND DECISION MAKING

Specific learning objectives

After going through this Unit you will be able to understand and appreciate:
• characteristics of decisions
• importance of decision making in operations management
• the different methodologies for decision making
• quantitative techniques of decision making

Structure
3.1 Characteristics of Decisions
3.2 Framework for Decision Making
3.3 Decision Making Methods
3.4 Decision Support System

3.5 Systems Approach

3.6 Break even Analysis
3.7 Summary
3.8 Key Words

3.1 CHARACTERISTICS OF DECISIONS

Operations decision range from simple judgments to complex analyses, which also involves
judgment. Judgment typically incorporates basic knowledge, experience, and common sense. They
enable to blend objectives and sub-objective data to arrive at a choice.
The appropriateness of a given type of analysis depends on:
• The significant or long lasting decisions
• The time availability and the cost of analysis
• The degree of complexity of the decision
• The significant or long lasting decisions deserve more considerations than routine ones.
• Plant investment, which is a long-range decision, may deserve more thorough analysis.

• The time availability and the cost of analysis also influence the amount of analysis.
• The degree of complexity of the decision increases when many variables are involved,
variables are highly independent and the data describing the variables are uncertain.
Business decision makers have always had to work with incomplete and uncertain data.

Above figure depicts the information environment of decisions. In some situations a decision maker
has complete information about the decision variables; at the other extremes, no information is
available. Operations management decisions are made all along this continuum.

Complete certainty in decision-making requires data on all elements in the population. If such data
are not available, large samples lend more certainty than do small ones. Beyond this, subjective
information is likely to be better than no data at all.

The chief role of an operations manager is that of planner/decision maker. In this capacity, the
operations manager exerts considerable influence over the degree to which the goals and objectives
of the organization are realized. Most decisions involve many possible alternatives that can have
quite different impacts on costs or profits. Consequently, it is important to make informed decisions.

Operations management professionals make a number of key decisions that affect the
entire organization. These include the following:
What: What resources will be needed, and in what amounts?
When: When will each resource be needed? When should the work be scheduled? When
should materials and other supplies be ordered? When is corrective action needed?

Where: Where will the work be done?

How: How will the product or service be designed? How will the work be done (organization,
methods, equipment)? How will resources be allocated?

Who: Who will do the work?

3.2 FRAMEWORK FOR DECISION-MAKING

An analytical and scientific framework for decision implies the following systematic steps:
• Defining the problem
• Establish the decision criteria
• Formulation of a model
• Generating alternatives
• Evaluation of the alternatives
• Implementation and monitoring

Defining the Problem

Defining the problem enables to identify the relevant variables and the cause of the problem.
Careful definition of the problem is crucial. Finding the root cause of a problem needs some
questioning and detective work. If a problem defined is too narrow, relevant variable may be
omitted. If it is broader, many tangible aspects may be included which leads to the complex
relationships.

Establish the Decision Criteria

Establish the decision criterion is important because the criterion reflects the goals and purpose of
the work efforts. For many years profits served as a convenient and accepted goal for many
organizations based on economic theory. Nowadays organization will have multiple goals such as
employee welfare, high productivity, stability, market share, growth, industrial leadership and other
social objectives.

Formulation of a Model
Formulation of a model lies at the heart of the scientific decision-making process. Model describes
the essence of a problem or relationship by abstracting relevant variables from the real world
situation.

Models are used to simplify or approximate reality, so the relationships can be expressed in tangible
form and studied in isolation. Modeling a decision situation usually requires both formulating a
model and collecting the relevant data to use in the model. Mathematical and statistical models are
most useful models for understanding the complex business of the problem. Mathematical models
can incorporate factor that cannot readily be visualized. With the aid of computers and simulation
techniques, these quantitative models reflex able.

Generating Alternatives
Alternatives are generated by varying the values of the parameters. Mathematical and statistical
models are particularly suitable for generating alternatives because they can be easily modified. The
model builder can experiment with a model by substituting different values for controllable and
uncontrollable variable.

Evaluation of the Alternatives

Evaluation of the alternatives is relatively objective in an analytical decision process because the
criteria for evaluating the alternatives have been precisely defined. The best alternative is the one
that most closely satisfies the criteria. Some models like LPP model automatically seek out a
maximizing or minimizing solution. In problems various heuristic and statically techniques can be
used to suggest the best course of action.

Implementation and Monitoring

Implementation and monitoring are essential for completing the managerial action. The best course
of action or the solution to a problem determined through a model is implemented in the business
world. Other managers have to be convinced of the merit of the solution. Then the follow-up
procedures are required to ensure about appropriate action taken. This includes an analysis and
evaluation of the solution along with the recommendations for changes or adjustments.

3.3 DECISION MAKING METHODOLOGY

The kind and amount of information available helps to determine which analytical methods are most
appropriate for modeling a given decision. Figure 2.2 illustrates some useful quantitative methods
that are classified according to the amount of certainty that exists with respect to the decision
variables and possible outcomes. These analytical techniques often serve as the basis for formulating
models, which help to reach operational decisions.

Quantitative methods as a function of degree of certainty

Complete Certainty Methods

Under complete certainty conditions, all relevant information about the decision variables and
outcomes is known or assumed to be known. Following are some of the methods used:
Algebra
This basic mathematical logic is very useful for both certainty and uncertainty analysis.
With valid assumptions, algebra provides deterministic solutions such as break-even analysis and
benefit cost analysis.
Calculus
The branch of mathematics provides a useful tool for determining optimal value where functions
such as inventory costs, are to be maximized or minimized.

Mathematical programming
Programming techniques have found extensive applications in making a product mix decisions;
minimizing transportation costs, planning and scheduling production and other areas.

Risk and Uncertainty Methods

In risk and uncertainty situations, information about the decision variables or the outcomes is
probabilistic. Following are some of the useful approaches.

Statistical analysis: Objective and subjective probabilities with the use of probability and
probability distribution, Estimation and tests of hypothesis, Bayesian statistics, Decision theory,
Correlation and regression technique for forecasting demand and Analysis of variance are some of
the techniques used for decision-making.

Queuing theory: The analysis of queues in terms of waiting-time length and mean waiting time is
useful in analyzing service systems, maintenance activities, and shop floor control activities.

Simulation: Simulation duplicates the essence of an activity. Computer simulations are valuable tools
for the analysis of investment outcomes, production processes, scheduling and maintenance
activities.

Heuristic methods: Heuristic methods involve set of rules, which facilitate solutions of scheduling,
layout and distribution problems when applied in a consistent manner.

Network analysis techniques: Network approaches include decision trees, CPM and PERT
methods. They are helpful in identifying alternative course of action and controlling the project
activities.
Utility theory: Utility theory or preference theory allows decision-makers to incorporate their own
experience and values into a relatively formalized decision structure.

Extreme Uncertainty Methods

Under extreme uncertainty, no information is available to assess the likelihood of alternative
outcomes. Following are some of strategies to solve this.

Game theory: Game theory helps decision-makers to choose course of action when there is no
information about what conditions will prevail.

Coin flip: Flipping a coin is sometimes used in situation where the decision-makers are wholly
indifferent.

Decision-Making Under Uncertainty

No information is available on how likely the various states of nature are under those conditions.
Four possible decision criteria are Maximin, Maximax, Laplace, and Minimax regret. These
approaches can be defined as follows.

Maximin: Determine the worst possible pay-off for each alternative, and choose the alternative that
has the “best worst.” The Maximin approach is essentially a pessimistic one because it takes into
account only the worst possible outcome for each alternative. The actual outcome may not be as
bad as that, but this approach establishes a “guaranteed minimum.”

Maximax: Determine the best possible pay-off, and choose the alternative with that pay-off. The
Maximax approach is an optimistic, “go for it” strategy; it does not take into account any pay-off
other than the best.

Laplace: Determine the average pay-off for each alternative, and choose the alternative with the
best average. The Laplace approach treats the states of nature as equally likely.

Minimax regret: Determine the worst regret for each alternative, and choose the alternative with
the “best worst.” This approach seeks to minimize the difference between the pay-off that is
realized and the best pay-off for each state of nature.
Illustration 1: Referring to the pay-off table, determine which alternative would be
chosen under each of these strategies:
(a) Maximin, (b) Maximax, and (c) Laplace.

Possible Future Demand in Rs

Alternatives Low Moderate High

Small 10 10 10

Medium 7 12 12

Large 4 2 16

SOLUTION
(a) Using Maximin, the worst pay-offs for the alternatives are:
Small facility: Rs.10 million
Medium facility: 7 million
Large facility: –4 million
Hence, since Rs.10 million is the best, choose to build the small facility using the maximum
strategy.

(b) Using Maximax, the best pay-offs are:

Small facility: Rs.10 million
Medium facility: 12 million
Large facility: 16 million
The best overall pay-off is the Rs.16 million in the third row. Hence, the Maximax criterion
leads to building a large facility.

(c) For the Laplace criterion, first find the row totals, and then divide each of those amounts by the
number of states of nature (three in this case). Thus, we have:

Alternatives Raw (Total In Rs) Raw (Average In Rs)

Small 30 10

Medium 31 10.33

Large 14 4.67

Illustration 2: Determine which alternative would be chosen using a Minimax regret

Approach to the capacity-planning programmer.
Operations Decision-Making 33

SOLUTION: The first step in this approach is to prepare a table of opportunity losses, or regrets. To
do this, subtract every pay-off in each column from the best pay-off in that column. For instance, in
the first column, the best pay-off is 10, so each of the three numbers in that column must be
subtracted from 10. Going down the column, the regrets will be 10 – 10 = 0, 10 – 7 = 3, and 10 – (– 4)
= 14. In the second column, the best pay-off is 12. Subtracting each pay-off from 12 yields 2, 0, and
10. In the third column, 16 is the best pay-off. The regrets are 6, 4, and 0. These results are
summarized in a regret table.

Regrets In Rs
Alternatives Low Moderate High Worst

Small 0 2 6 6

Medium 3 0 4 4

Large 14 10 0 14

The second step is to identify the worst regret for each alternative. For the first alternative, the
worst is 6; for the second, the worst is 4; and for the third, the worst is 14. The best of these worst
regrets would be chosen using Minimax regret. The lowest regret is 4, which is for a medium facility.
Hence, that alternative would be chosen.

Decision-Making Under Risk

Between the two extremes of certainty and uncertainty lies the case of risk: The probability of
occurrence for each state of nature is known. (Note that because the states are mutually exclusive
and collectively exhaustive, these probabilities must add to 1.00.) A widely used approach under
such circumstances is the expected monetary value criterion.
The expected value is computed for each alternative, and the one with the highest expected value is
selected. The expected value is the sum of the pay-offs for an alternative where each pay-off is
weighted by the probability for the relevant state of nature.

Illustration 3: Determine the expected pay-off of each alternative, and choose the alternative that
has the best-expected pay-off. Using the expected monetary value criterion, identify the best
alternative for the previous pay-off table for these probabilities: low = 0.30, moderate = 0.50, and
high = 0.20. Find the expected value of each alternative by multiplying the probability of occurrence.

Possible future demand in Rs.

Alternatives Low Moderate High

Small 10 10 10

Medium 7 12 12

Large 4 2 10

SOLUTION: For each state of nature by the pay-off for that state of nature and summing them:
EVsmall = 0.30 (Rs.10) + 0.50 (Rs.10) + 0.20 (Rs.10) = Rs.10
EVmedium = 0.30 (Rs.7) + 0.50 (Rs.12) + 0.20 (Rs.12) = Rs.10.5
EVlarge = 0.30 (–4) + 0.50 (Rs.2) + 0.20 (Rs.16) = Rs. 3
Hence, choose the medium facility because it has the highest expected value

3.4 DECISION SUPPORT SYSTEM

Decision support system (DSS) is computer-based systems designed to aid decision-makers of any
stage of the decision process in the development of alternatives and evaluation of possible course of
action. Their purpose is to provide the information and analytical support that enables managers to
better control and guide the decision process. Emphasis is given for giving useful information and
appropriate quantitative models that support the manager’s skills. Thus, DSS are a logical extension
of the managerial decision processes. This helps the managers to learn better, how to apply data
processing and modeling capabilities of computers to the analysis of ill-structured and value based
decisions.

Models
A model is an abstraction of reality, a simplified representation of something. For example, a child’s
toy car is a model of a real automobile. It has many of the same visual features (shape, relative
proportions, wheels) that make it suitable for the child’s learning and playing. But the toy does not
have a real engine, it cannot transport people, and it does not weigh 2,000 pounds.

Other examples of models include automobile test tracks and crash tests; formulas, graphs
and charts; balance sheets and income statements; and financial ratios. Common statistical
models include descriptive statistics such as the mean, median, mode, range, and standard
deviation, as well as random sampling, the normal distribution, and regression equations.
Models are sometimes classified as physical, schematic, or mathematical.

Physical models look like their real-life counterparts. Examples include miniature cars,
trucks, airplanes, toy animals and trains, and scale-model buildings. The advantage of
these models are their visual correspondence with reality.

Schematic models are more abstract than their physical counterparts; that is, they have
less resemblance to the physical reality. Examples include graphs and charts, blueprints,
pictures, and drawings. The advantage of schematic models is that they are often
relatively simple to construct and change. Moreover, they have some degree of visual
correspondence.

Mathematical models are the most abstract: They do not look at all like their real-life
counterparts. Examples include numbers, formulas, and symbols. These models are usually
the easiest to manipulate, and they are important forms of inputs for computers and
calculators.

The variety of models in use is enormous. Nonetheless, all have certain common features:
They are all decision-making aids and simplifications of more complex real-life phenomena.
Real life involves an overwhelming amount of detail, much of which is irrelevant for any particular
problem. Models omit unimportant details so that attention can be concentrated on the most
important aspects of a situation.

Because models play a significant role in operations management decision making, they
are heavily integrated into the material of this text. For each model, try to learn
• its purpose
• how it is used to generate results
• how these results are interpreted and used
• what assumptions and limitations apply

The last point is particularly important because virtually every model has an associated set of
assumptions or conditions under which the model is valid. Failure to satisfy all of the assumptions
will make the results suspect. Attempts to apply the results to a problem under such circumstances
can lead to disastrous consequences.

Managers use models in a variety of ways and for a variety of reasons. Models are beneficial
because

Benefits
• Are generally easy to use and less expensive than dealing directly with the actual
situation.

• Require users to organize and sometimes quantify information and, in the process, often
indicate areas where additional information is needed.
• Increase understanding of the problem.
• Enable managers to analyze what-if questions.
• Serve as a consistent tool for evaluation and provide a standardized format for analyzing a
problem.
• Enable users to bring the power of mathematics to bear on a problem.

This impressive list of benefits notwithstanding, models have certain limitations of which
you should be aware. The following are three of the more important limitations:

Limitations
 • Quantitative information may be emphasized at the expense of qualitative information.
• Models may be incorrectly applied and the results misinterpreted. The widespread use of
computerized models adds to this risk because highly sophisticated models may be placed in
the hands of users who are not sufficiently knowledgeable to appreciate the subtleties of a
particular model; thus, they are unable to fully comprehend the circumstances under which
the model can be successfully employed.
• The use of models does not guarantee good decisions.

Quantitative Approaches
Quantitative approaches to problem solving often embody an attempt to obtain mathematically
optimal solutions to managerial problems.

Linear programming and related mathematical techniques are widely used for optimum allocation
of scarce resources.

Queuing techniques are useful for analyzing situations in which waiting lines form. Inventory models
are widely used to control inventories.

Project models such as PERT (program evaluation and review technique) and CPM (critical path
method) are useful for planning, coordinating, and controlling large-scale projects. Forecasting
techniques are widely used in planning and scheduling.

Statistical models are currently used in many areas of decision making. In large measure,
quantitative approaches to decision making in operations management (and in other functional
business areas) have been accepted because of calculators and computers capable of handling the
required calculations. Computers have had a major impact on operations management. Moreover,
the growing availability of software packages for quantitative techniques has greatly increased
management’s use of those techniques.
Although quantitative approaches are widely used in operations management decision
making, it is important to note that managers typically use a combination of qualitative and
quantitative approaches, and many important decisions are based on qualitative approaches.
Performance Metrics
All managers use metrics to manage and control operations. There are many metrics in use,
including those related to profits, costs, quality, productivity, flexibility, assets, inventories,
schedules, and forecast accuracy. As you read each chapter, note the metrics being used and how
they are applied to manage operations.

Analysis of Trade-Offs
Operations personnel frequently encounter decisions that can be described as trade-off decisions.
For example, in deciding on the amount of inventory to stock, the decision maker must take into
account the trade-off between the increased level of customer service that the additional inventory
would yield and the increased costs required to stock that inventory.

Decision makers sometimes deal with these decisions by listing the advantages and disadvantages—
the pros and cons—of a course of action to better understand the consequences of the decisions
they must make. In some instances, decision makers add weights to the items on their list that
reflect the relative importance of various factors. This can help them “net out” the potential impacts
of the trade-offs on their decisions.

Degree of Customization

A major influence on the entire organization is the degree of customization of products or services
being offered to its customers. Providing highly customized products or services such as home
remodeling, plastic surgery, and legal counseling tends to be more labor intensive than providing
standardized products such as those you would buy “off the shelf ” at a mall store or a supermarket
or standardized services such as public utilities and Internet services. Furthermore, production of
customized products or provision of customized services is generally more time consuming, requires
more highly skilled people, and involves more flexible equipment than what is needed for
standardized products or services. Customized processes tend to have a much lower volume of
output than standardized processes, and customized output carries a higher price tag. The degree of
customization has important implications for process selection and job requirements. The impact
goes beyond operations and supply chains. It affects marketing, sales, accounting, finance, and
information systems.
3.5 SYSTEMS APPROACH

A systems viewpoint is almost always beneficial in decision making. A system can be defined as a set
of interrelated parts that must work together. In a business organization, the organization can be
thought of as a system composed of subsystems (e.g., marketing subsystem, operations subsystem,
finance subsystem), which in turn are composed of lower subsystems.

The systems approach emphasizes interrelationships among subsystems, but its main theme is that
the whole is greater than the sum of its individual parts. Hence, from a systems viewpoint, the
output and objectives of the organization as a whole take precedence over those of any one
subsystem. An alternative approach is to concentrate on efficiency within subsystems and thereby
achieve overall efficiency. But that approach overlooks the facts that organizations must operate in
an environment of scarce resources and that subsystems are often in direct competition for those
scarce resources, so that an orderly approach to the allocation of resources is called for.

A systems approach is essential whenever something is being designed, redesigned, implemented,

improved, or otherwise changed. It is important to take into account the impact on all parts of the
system. For example, if the upcoming model of an automobile will add antilock brakes, a designer
must take into account how customers will view the change, instructions for using the brakes,
chances for misuse, the cost of producing the new brakes, installation procedures, recycling worn-
out brakes, and repair procedures. In addition, workers will need training to make and/or assemble
the brakes, production scheduling may change, inventory procedures may have to change, quality
standards will have to be established, advertising must be informed of the new features, and parts
suppliers must be selected.

Global competition and outsourcing are increasing the length of companies’ supply chains, making it
more important than ever for companies to use a systems approach to take the “big picture” into
account in their decision making.

Establishing Priorities
In virtually every situation, managers discover that certain issues or items are more important than
others. Recognizing this enables the managers to direct their efforts to where they will do the most
good.
Typically, a relatively few issues or items are very important, so that dealing with those factors will
generally have a disproportionately large impact on the results achieved. This well-known effect is
referred to as the Pareto phenomenon.

Pareto phenomenon: A few factors account for a high percentage of the occurrence of
some event(s).

3.6 BREAKEVEN ANALYSIS

Break-even Analysis is an economic model describing cost-price-volume relationships. It is a

complete certainty type of model because costs and revenues are known quantities.

Break-even Analysis
One of the techniques to study the total cost, total revenue and output relationship is known as
Break-even Analysis. ‘A Break-even Analysis indicates at what level of output, cost and revenue are
in equilibrium’. In other words, it determines the level of operations in an enterprise where the
undertaking neither gains a profit nor incurs a loss.

Notations and Terminology As Used In Break-Even Analysis

Break-even chart (BEC): It is a graph showing the variation in total costs at different levels of output
(cost line) as well as the variation in the total revenues at various levels of output.

Break-even point: It is that point of activity (sales volume) where total revenues and total
expenses are equal. It is point of zero profit, i.e. stage of no profit and no loss. BEP can be used to
study the impact of variations in volume of sales and cost of production on profits.

Angle of incidence: It is an angle at which total revenue line intersects total cost line. The
magnitude, of this angle indicates the level of profit. Larger the angle of incidence, higher will be the
profits per unit increase in sales and vice versa

Margin Of Safety = (actual sales minus sales at BEP)/actual sales. A high margin of safety would
mean that even with a lean period, where sales go down, the company would not come in loss area.
A small margin of safety means a small reduction in sale would take company to cross BEP and come
in red zone.

Calculation of BEP
Relationship between costs and activity level (AL) is also assumed to be linear. For every elemental
cost, actual cost figures at different activity levels are plotted, and by ‘least square analysis’ a ‘line of
best fit’ is obtained. This would give a fixed cost component and a variable cost component for the
elemental cost.

This analysis is carried out for all elemental costs. The total cost function would give total fixed cost
and total variable cost for the company. The Break-even Point is that volume where the fixed and
variable costs are covered. But no profit exists. Thus at BEP, the total revenues equal to the total
costs.
If F – Fixed Costs, which are independent on quantity produced
a – Variable Cost per unit
b – Selling Price per unit
Q – Quantity (Volume of output)
The total costs are given by
Total Cost (TC) = Fixed Cost + Variable Cost
TC = (F + a . Q)
Sales Revenue (SR) = Selling price per unit × Quantity
SR = b.Q
The point of Intersection of Total Cost line and the sales revenue is the Break-even Point
i.e. at Break-even Point, Total Cost (TC) = Sales Revenue (SR)
F+a.Q=b.Q
F = Q (b – a)
Q = F/b- a in units ...(1)
In terms of the number of units sold the break-even point is given by :
QBEP = F/b- a in units

Profit volume ratio (PVR) is defined as the ratio between Contribution Margin and Sales Revenue.
i.e. Profit Volume Ratio (f) =Contribution .Margin

Sales Revenue
 = Sales Re venue – Total×Variable×Cost/ Sales Revenue

ψ =(b Q – a Q)/b Q

ψ = Q(b – a) /b Q -Eq 2

From Equation 1, F = Q . (b – a), Hence Equation 2 can be written as

=Q (b – a)/b Q=F/b.Q
i.e. b .Q =F/Q

So BEP can also be given by

QBEP =F/PV Ratio=F/

Margin of safety (MOS) is defined as the ratio between Operating Profit and Contribution
Margin. It signifies the fractional reduction in the current activity level required to reach the
breakeven point.

Sales turnover (STO) is defined as ratio between Sales Revenue and the Capital Employed. It
represents the number of times capital employed is turned over to reach the sales revenue level that
is called Operating management performance [OMP].

IMPROVING OMP
A company interested in improving its OMP will have to improve its operating profit. Following any
of the strategies given below or a combination of them can do this:
(a) By reducing variable costs
(b) By reducing fixed costs
( c ) increasing sales price
(d) By increasing the activity level.

(a) A reduction in variable costs will bring down BEP, increase PV ratio and increase margin of
safety. To achieve a required Targeted Profit (Z), variable cost would have to be controlled at V=SR –
(F+Z )
(b) A reduction in fixed costs will bring down BEP and increase margin of safety. It will have no effect
on PV ratio. To achieve a required TP by controlling fixed cost alone, the fixed cost would have to be
controlled as F=(SR – V) – Z

(c) An increase in selling price will bring BEP down, it will increase PV ratio and it will also
increase the margin of safety. To get the targeted profit level the increase required in selling price is
given by b' =F+Z/b-a x b

(d) An increase in activity level will of course have no effect on BEP, it will not change PV
ratio, but will increase the margin of safety. The new activity level required to achieve the
desired TP is given by New SR=F+Z/PV Ratio or F+Z/SR-VxSR

ILLUSTRATION 6: A hospital is contemplating adding a new test in its lab, which will
require additional monthly payment of Rs. 6,000. Variable costs would be Rs. 2.00 per new
product, and its selling price is Rs. 7.00 each.
40
(a) How many new products must be sold in order to break-even?
(b) What would the profit (loss) be if 1,000 units were sold in a month?
(c) How many units must be sold to realize a profit of Rs.4,000?

SOLUTION
Fixed Cost (F) = Rs. 6,000, Variable Cost (a ) = Rs. 2 per unit,
Sales Price (b) = Rs.7 per unit
(a) QBEP =F/b-a=6000/7-2=1200 units/month
(b) For Q = 1000
Operating Profit (Z) = Q (b – a) – F = 1000 (7 – 2) – 6000 = Rs. (1000)
(c) Operating Profit (Z) = Rs. 4000: solve for Q
Q =Z+ F/b- a=4000+6000/7-2=2000units

Illustration 11: A firm has annual fixed costs of Rs.3.2 million and variable costs of Rs.7 per unit. It is
considering an additional investment of Rs. 800,000, which will increase the fixed costs by Rs.
150,000 per year and will increase the contribution by Rs. 2 per unit. No change is anticipated in the
sales volume or the sales price of Rs.15 per unit. What is the
break-even quantity if the new investment is made?
SOLUTION: The Rs. 2 increase in contribution will decrease variable cost to Rs.7 – Rs.2 = Rs. 5 per
unit. The addition to fixed cost makes them Rs. 3.2 million + Rs.150,000 = Rs. 3,350,000.
QBEP =F/b-a=3350000/15-5=335000units

3.7 SUMMARY

Decision theory can be used by management in an organization for a variety of different

decisions, including capacity planning, location planning, production and service design, and
equipment selection. There are three different elements that should be considered in decision
making: list of alternatives, known payoff for each alternative, and a set of possible future conditions
for each alternative. There are three basic environments in which decisions need to be made:
certainty, uncertainty, and risk.

3.8 KEY WORDS

Decision-Making Under Uncertainty
No information is available on how likely the various states of nature are under those conditions.
Four possible decision criteria are Maximin, Maximax, Laplace, and Minimax regret. These
approaches can be defined as follows:

Maximin: Determine the worst possible pay-off for each alternative, and choose the alternative that
has the “best worst.” The Maximin approach is essentially a pessimistic one because it takes into
account only the worst possible outcome for each alternative. The actual outcome may not be as
bad as that, but this approach establishes a “guaranteed minimum.”

Maximax: Determine the best possible pay-off, and choose the alternative with that pay-off. The
Maximax approach is an optimistic, “go for it” strategy; it does not take into account any pay-off
other than the best.

Laplace: Determine the average pay-off for each alternative, and choose the alternative with the
best average. The Laplace approach treats the states of nature as equally likely.
Minimax regret: Determine the worst regret for each alternative, and choose the alternative with
the “best worst.” This approach seeks to minimize the difference between the pay-off that is
realized and the best pay-off for each state of nature.
UNIT 4 SERVICE OPERATIONS MANAGEMENT

Specific learning objectives

After going through this chapter you will be able to understand the concept of:
• Service Operation Management;
• The different stages through which service operations management went through;
• How to make an agenda for Service Operations Management.

Structure
4.1 Introduction
4.2 Stages in Service Operations Management
4.3 Stage 1-Service Awakening
4.4 Stage Two - Breaking Free From Product-Based Roots
4.5 Stage 3-SERVICE management Era
4.6 Stage 4- The Mature Stage
4.7 Service Operations Management Agenda
4.8 8 Summary
4.9 Key Words

4.1 INTRODUCTION

"Service" captured the interest and imagination of operations management (OM) academics in the
1980s. The service movement was driven, in part, by a realization that classes were filled with
students who would be, or were, involved in non-manufacturing tasks. There was some disillusion
felt with the existing operations management material, by both the students and by academics.
Economic batch quantities, line balancing and stock control are just a few of the topics widely taught
then which bore little relation to the key issues faced by managers running service operations. That
is not to say that these tools and techniques were of no value, but customer service, service quality
and service design were central issues facing many service operations managers, yet there were no
tools or techniques to help them in these matters.
The need for service-based material was also timely. It matched the emerging realization of the
importance of the customer and a more customer-oriented view of operations. This was a significant
shift away from the more internally-focused efficiency view of operations management. It also fitted
with a growing "strategic" trend in operations. This questioned the traditional reactive role of
operations and attempted to make the subject more market-oriented by understanding how
operations could not only support but also help develop a strategic advantage.

Service operations have great appeal, and they are all around us. There is a plethora of examples
and experiences and, indeed, research data that can be gleaned from everyday life: service
operations are all-pervasive. They are Service OM: therefore a normal part of our students' lives.
They can easily relate to the return to roots problems of scheduling hospital beds, the layout of a
multiplex cinema or the
quality of a retail encounter.

There was growing concern about the product-based nature of their material. Marketing seemed
preoccupied with the marketing of white goods. Accountancy academics used examples which were
based around an imaginary product, thus the service management movement was born in many
different disciplines by people united by a shared enthusiasm and interest for all things intangible.
From these early beginnings, a large-scale, world-wide movement gained pace.

4.2 STAGES IN SERVICE OPERATIONS MANAGEMENT

The service operations movement, like the service marketing movement, has been characterized by
a number of stages:
• An initial realization of the difference between goods and service.
• The development of conceptual frameworks.
• The empirical testing of these frameworks.
• A fourth stage concerned with the application of the tools and frameworks to improve
service management.

The service movement has grown, with increasing overlap between the subjects of operations,
marketing and HRM for example, this fourth stage is also characterized by a "return to roots", a
realization that we might have lost, or inadvertently ignored, the strength of our core disciplines and
the need to bring a sense of academic rigor and depth to the developing subject of service
management.

4.3 STAGE ONE - SERVICE AWAKENING

Before 1980, business academics were primarily concerned with the production, marketing and
management of physical goods. By 1955 the service sector accounted for just over 50 per cent of the
UK's gross domestic product, overtaking the product-based sectors. Yet it took another 20 years
before the operations management academics of the day started to apply their knowledge and skills
to service operations.

Operations management in 1970 was known as production management (see for example Chase
and Aquila no, 1973). It had developed out of an even more focused view of operations, factory
management (see for example Lockyer, 1962). Factory management was the name given to the
search for efficiency in the post-industrial revolution era based upon Frederick Taylor's philosophy of
scientific management (1911).

Production management was concerned with:

• applying method study techniques
• production planning and control
• capacity management and materials management
for example in production settings, with examples coming from a wider base than "pure
“manufacturing and including examples such as( distribution, transportation, hospitals, libraries
and publishers)

In the 1970s there was an emerging recognition of service operations and the first two texts to place
some emphasis on the service sector were Johnson et al. (1972) and Buff (1976). Both books were
entitled Operations Management "to reflect the growing emphasis on the breadth of application of
management concepts and techniques...(in) non-manufacturing and service OM;industries as well as
manufacturing" (Buffa, 1976) return to roots.

The service movement appears to have gathered greater momentum in the field of marketing
Service operations was a little slower off the mark, as service operations management was
"essentially operations research (OR) applied to service settings" (Chase, 1996). A major
breakthrough came in 1976 with the publication of Earl Sasser's article "Match supply and demand
in service industries" in the Harvard Business Review, followed two years later by the pioneering
textbook Management of Service Operations (Sasser et al., 1978) containing what are now regarded
as classic cases and issues.

Dick Chase challenged the operations management community to consider two types of operations;
• the traditional back office factory
• and the customer-facing, customer contact front office

In essence, stage one using the analogy of the development of the human species) was the
"crawling out" stage and was characterized by recognition of the existence of service. The nature of
work was primarily descriptive and focused on the difference between goods and era".

Although Levitt et al. and colleagues had started the service operations revolution, service
operations was still very wedded to its factory roots.
Furthermore, whilst there was awareness of some of the efforts in other functions (Chase, 1996),
the concept of a cross-functional subject of service management was some way off. Research was
undertaken in subject areas with little or no cross-fertilization.

4.4 STAGE TWO - BREAKING FREE FROM PRODUCT-BASED ROOTS

The period between 1980 and 1985 was a time of "high interest and enthusiasm" in services (Brown
et al., 1994). It was accepted that services were different from goods. During this "scurrying about"
period many substantive issues were debated. The work was principally conceptual in nature and
was characterized by the development of frameworks to help understand the characteristics of
service and service management .Service operations academics continued their work on "customer
operations. This focus on the customer and the service encounter was growing apace in the other
functions. Publications on this topic included "The critical incident as a technique for analyzing the
service encounter" (Bitner et al, 1985).
Operations academics were also breaking ground with new perspectives on traditional themes.
Wyckoff (1984), for example, wrote what might be considered an early TQM paper "New tools for
achieving service quality".

The main characteristic of stage two was that the study of service appeared to have broken free
from its product-based roots. There was also recognition of, and reference to, the research
undertaken in the other disciplines undertaking service research.

The epitome of this era was the well-regarded paper by Parasuraman et al., "A conceptual model of
service quality and its implications for future research" (1985). This was a major step in the
development of the cross-functional subject of service management. Service quality was a topic
which was seen as important by all of the different functional areas and where they could all make a
contribution.

Interest in internally-focused service operations did not cease. The service management area was
also gaining some degree of respectability for operations this was a period when the nature of
service and service operations was classified as a prelude to the development of tools and concepts.
The dimensions included:
• customer contact time
• degree of customization
• the amount of judgement exercised by front office staff
• whether the value was added in the front or back office
• the operation's product or process focus

These discussions resulted in the now widely-accepted categorization of service operations;

mass, professional and service shop .The key characteristics of stage 1 and 2 are depicted below:

STAGE NATURE Focus Outcome Operation Relation between functions

management issues
OF OF

RESEARCH RESEARCH
ONE Descriptive Good vs Services services growing
MKT O
are different awareness of the
ING M
importance of HR
M
service, customer

operations and

customer contact

TWO Conceptual Characteristics conceptual challenge to

MK O
of service and existing
TIN M
service frameworks operations G

management paradigms and the HR

M
development of

"customer

operations

4.5 STAGE THREE - THE SERVICE MANAGEMENT ERA

The third stage in the development of the service movement, which Brown described as the
"walking erect" stage, has been characterized by the cross disciplinary nature of service research; a
coming together of disciplines.

Marketing, operations and HRM, in particular, brought together their various strengths and
perspectives to issues of common concern. This period, from around 1985 to 1995, was the era of
service management (as distinct from service marketing or service operations); a subject whose
strength lies in its crossdisdplinary nature and approaches.

The research undertaken in this stage was predominantly concerned with the empirical testing of
ideas and frameworks resulting in underpinned and tested Parasuraman et al, 1988; Rust and Oliver,
1994). Conceptual frameworks .There was also a realization that service management and service
operations in particular might be able to make some new contributions to the core production-
oriented operations management field. The benefits of a customer based approach, the role of
service in the product mix and the development of service-based strategies were all contributions
that were offered to the manufacturing community. The points relating to stage three ideas
continued to emerge to form the basis for fresh empirical work. This period was certainly an
important milestone in the development of the subject.

Chase (1996) referred to this stage as the "theory testing/empirical era" where we "have been
moving from developing conceptual frameworks to refining their dimensions and validating them
empirically". Industry-focused studies, survey research and case studies seem to have dominated
this stage of development. There was also a realization that service management and service
operations in particular might be able to make some new contributions to the core production-
oriented operations management field. The benefits of a customer based approach, the role of
service in the product mix and the development of service-based strategies were all contributions
that were offered to the manufacturing community.
New concepts in Service Management
• Customer relationships
• Failure prevention in services
• Internal services
• JIT in service
• Managing the customer
• Performance measurement
• Process control
• Quality measurement
• Satisfying the customer
• Service capacity
• Service design
• Service encounter
• Service environment
• Service focus
• Service guarantees
• Service operations strategy
• Service process
• Service productivity
• Service quality
• Service recovery
• Service technology
• TQM in services
 • Yield management
• Zero defections

4.6 STAGE FOUR :-MATURE STAGE

This can be considered the final step in the creation of a "mature" subject which has been in
evidence since 1995: the intention and ability to be prescriptive. A stage when much (but not
necessarily all) of the material can be taken and applied, and where the outcome of its application
can be predicted.

For example, has been developing models to show the relationship between perceived service
quality and operational performance. It is important to understand the links between operations
drivers, for example, quality, staff satisfaction, internal quality, and outcomes such as profit and
customer satisfaction. It is this type of work that seems set to continue for some years to come.

However, a new significant wind of change is that the previous trend towards cross-functional work
seems in reverse. I believe we are witnessing some tensions between the functions. Indeed I would
venture to suggest that rather than seeing a continuance of the overlapping of the areas of
marketing.

Stage three - the service management era

STAGE NATURE Focus Outcome Operation management issues Relation between functions

OF OF
O
RESEARCH RESEARCH M

One Descriptive Good vs Services services Growing awareness of the

importance of MKT
are different ING
service, customer HR
M
 operations and

customer contact

Two Conceptual Characteristics conceptual challenge to existing

MK O
of service and operations paradigms and the TIN M
G
development of "customer
service frameworks
HR
operations
management M

Three empirical development large amount development of service

processes, quality, failure, O MK
and testing of of service
MG TIN
design and technology with a G
HR
frameworks material based
view that service could M

on new cross contribute to manufacturing

functionally
derived

models

Operations and HRM for example, we are witnessing their moving apart from each other. This
change is driven by a basic desire to re-establish the service material within the core disciplines. It
appears that we have forgotten, or mislaid, our established roots and academics have focused on
material and approaches depicted in the circles in the last column. We seem to have been swept
along on the tide of interest in service focused predominantly from a customer perspective. Whilst
there is nothing unhealthy, or indeed inappropriate, in this, we seem to have ignored the strength
that our core discipline has to offer.

In service quality, for example, we have focused on customer-based notions of service quality but
appear to have ignored quality of conformance and the delivery of customer-based quality, surely
key issues for operations managers and academics. In service design, we seem to have followed the
blueprinting movement but we appear to have ignored the process of design in favor of this
descriptive activity and the relationship between important and often ignored, back-office activities
in favor of customer-facing processes.

Stage Four -
STAGE NATURE Focus Outcome Operation management Relation between functions
issues
OF OF

RESEARCH RESEARCH
O
ONE Descriptive Good vs Services services growing M
MKT
are different awareness of the ING

HR
importance of M

service, customer

operations and

customer contact

TWO Conceptual Characteristics conceptual challenge to

MK O
of service and existing TIN M
G
service frameworks operations
HR
management paradigms and the M

development of

"customer

operations

Three empirical development large amount development of

O MK
and testing of of service seen/ice processes,
M TIN
HR G
frameworks material based quality, failure,
M

on new cross design and

functionally
technology with a
derived
view that service
models
could contribute

to manufacturing
Four APPLIED PRESCRIPTION linking the rectum to roots
O MK
operations - the need to refocus M TIN
G
drivers to service
Har
ms
outcomes operations

towards

traditional

operational issues

and approaches

4.7 SERVICE OPERATIONS MANAGEMENT AGENDA

This growing awareness of the need to re-operationalize service management material has led to an
attempt to develop an agenda. This section identifies some possible research issues and questions
emphasizing the core operational issues.

Linking Operational Performance to Business Drivers

There is growing awareness of the importance of linking business drivers such as leadership,
customer orientation and more operational issues such as benchmarking, quality control and service
design, with their impact on business performance.

Although the work cited above has made significant inroads into this area, there is much more work
to do. Indeed there is significant practitioner interest in this area, witnessed by the growing interest
in the use of the Baldrige criteria and the UK/European Foundation for Quality Awards on this side of
the Atlantic. Service operations are the appropriate discipline to begin to move business from its
current emphasis on reengineering to the next step – revenue enhancement" (Chase, 1996). Two
key research questions are:
• What are the most efficient operational profit levers and under what circumstances?
• Can we map the relationships between the controllable and the outcome variables? ,

Performance Measurement and Operations Improvement

Despite some major work in the performance measurement area (Fitzgerald et al., 1991; Kaplan and
Norton, 1996; Lynch and Cross, 1991), many organizations seem reluctant to critically review and
develop their performance measurement systems. The balanced scorecard, although a major step
forward for many organizations, has led to a degree of complacency once an organization, and its
SBUs, have found measures to fit all four boxes. (One organization was pleased to have developed
new measures including "number of staff training days" and "number of processes benchmarked"
without any concern as to whether any improvements resulted from these activities.):The important
questions to ask are:
• How can we develop frameworks to help organizations review the nature and effect of the
performance measures used?

• In what situations are historical measures and targets appropriate and in Service OM

• In what situations are externally based targets more appropriate?

• Do radical step change improvement programmers yield better or faster results than TQM
type continuous change programmers?
• Does benchmarking yield the desired results or does it get caught up in interminable and
unfruitful discussions about "apples and pears" or degenerate into "industrial tourism"?

Guarantees, Complaints and Service Recovery Tool for Performance Improvement

Organizational practice in the area of complaints and recovery must not regress into mere
marketing ploys. Complaints procedures in some organizations have become mechanisms to pass on
tokens or small payouts to disgruntled customers.

Guarantees often seem little more than statutory rights, or an "opportunity" to purchase insurance
so that, if the product or service fails, the vendor is not troubled with the problem (and so is
unaware of the in-built problems of their products or services).

Service recovery appears to have become reactive, with staff carefully listening to, sympathizing
with, and then paying off the customer but never sorting out the root problem. Ex- (At a recent visit
to a hotel. When the manager was given about a whole series of problems I had encountered
during a ten-hour stay by a customer ,without making notes of any of them, the customer was
offered another breakfast free of charge. The important questions to ask are:
• How can we link complaints and failures to organizational improvement?
 • How can organizational learning develop from mistakes?
• How can organizations be proactive in finding and dealing with mistakes before their
customers tell them (or more often don't tell them)?

• What are good service guarantees and how can they is operationalized?
• What evidence are there that complaints, guarantees or service recovery drive in
improvements within an organization?

• How is learning best captured and applied?

People Management
Operations academics need to retrace their roots and focus on the design of jobs. The problem is not
knowing that customers expect empathy, reliability, assurance etc., but delivering it time after time,
month after month, week after week, day after day, hour after hour. We need to understand how
all employees can deliver constant and consistent high levels of service and how we can design jobs
and motivate employees to do this: The important questions to ask are:
• What are the key service operational competencies?
• How do we develop those competencies?
• How do operations managers go about maintaining the energy and commitment of front-
line workers?

• How does one ensure that a constant level of service is provided?

The service design models used in the literature are strongly based upon product design processes,
yet there is some evidence that product design processes are not used, or indeed applicable, in
service situations.

Important Questions to ask?

• Do we understand how services are designed from conception to consumption and
how existing product-based models can be applied?
• What is a service design?
• How is a service concept developed into a service?
• What is a service concept?
• What are the most effective methods of developing a service?
• What are good design tools and techniques?
• Seamless service is a great idea for a customer but how does one achieve this in most "silo-
based" organizations?
 • How can the World Wide Web are utilized to create new services, even virtual services and
the use of virtual reality simulations in service.
• How do we capture the technological dimensions of the next century?

Service Technology
There are a few documented examples of technological disasters, yet there are many more but less
well-known, or documented, examples of technological successes. One reason for failure is that
technology is often superimposed on inefficient, outdated operational systems, in the expectation
that it will overcome inherent problems (Lewis and Chambers, 1997). Unfortunately there is only
limited material in the service literature about the difficulties of implementing new technology, or
indeed any categorization of the various types of technologies in use. It would also appear that
managers seem to have a difficulty in assessing the "true" impact of new.

Important Questions

• What are the categories of service technologies and their relative impact?
• What are the inherent difficulties in implementing new technology?
• What are the success factors?
• What is the relationship between investment in technology and cost Service OM.?

The Design of Internal Networks

Grumbler et al. (1994) define internal service encounters as the didactic interrelation between an
internal customer and an internal service provider. The supply chain literature, however, has moved
away from such simplistic relationships to the idea of networks of relationships. This network
approach needs to underpin future research in the internal customer chain. Can notions of external
quality and customer satisfaction be used with internal supply chains? Internal customers cannot be
treated in exactly the same way as external customers.

External customers usually, though not always, operate in a free market. The internal customer is
often a captive customer and so many of the current concepts of service quality and performance
measurement from an external customer perspective (e.g. customer satisfaction) have found little
credence in internal customer-supplier relationships. This seems to be changing as organizations are
looking increasingly at contracting-out internal services.
Important Questions
• Can supply chain networks be implemented within organizations?
• How well does service quality translate to internal supply networks?
• What is the relationship between internal service quality and staff satisfaction and external quality
and customer satisfaction?
• How can organizations cost and value internal services?

The Service Encounter

The service encounter is the crux of service delivery, yet how much do we know about which are the
right scripts, attitudes, behaviors to achieve the desired effect?

Important Questions
• How do we ensure that each encounter in a service process has the right cumulative effect
on customers' overall perceived service quality?

• What are the "right" scripts for different types of service?

• Do we know how to design and control the series of encounters that comprise the service
process?

Managing Service Capacity

Some work exists in the management of service capacity in terms of staff scheduling Strategies for
managing demand and supply in service operations have also been documented; however, there has
been little advancement . Yet this is an area which is fundamental to the planning and control of
service.

Another issue, the subject of a preliminary investigation, is the relationship between capacity levels
and the level of service quality delivered. Clark and James (1997) provide some conceptual models of
intuitively derived relationships between resource utilization and service quality.

Important Questions

• Is it now possible to derive empirically these functions and assess strategies for effective
resource utilization linked to required quality levels?

• What are appropriate capacity strategies? How does customer contact relate to types of
strategies?
 • What is the relationship of capacity levels and capacity strategies to the level of service
quality delivered, for example?

4.8 SUMMARY

Over the last 20 years we have witnessed the emergence of a large-scale, world-wide academic
movement concerned with the management of services. As the service movement has grown, with
increasing overlap between tile subjects of operations, marketing and Humor example, there is a
need to "return to roots and academics, I to develop cross-functional service management material,
without losing focus or inadvertently ignoring, the strength of their core disciplines. Re-focusing on
the traditional strengths of operations management, such as performance quality, design, and
operational improvement. Might help provide a greater vigor to the developing subject of service
management.

4.9 KEY WORDS

STAGES IN SERVICE OPERATIONS MANAGEMENT
The service operations movement, like the service marketing movement, has been characterized by
a number of stages:
• An initial realization of the difference between goods and service,
• The development of conceptual frameworks
• The empirical testing of these frameworks.
A fourth stage concerned with the application of the tools and frameworks to improve service
management.
UNIT 5 OPERATIONS MANAGEMENT IN HEALTH CARE INDUSTRY

Specific learning objectives

After going through this Unit you will be able to understand:
• Importance of Operations management in hospitals;
• Need For Operations Management In Health Care and the various associated
issues;
• How to solve the various operational challenges.

Structure
5.1 Introduction
5.2 What Is Operations Management In Hospitals?
5.3 Need for Operations Management in Health Care
5.4 Issues in Health Care
5.5 Responsibilities of Operations Management
5.6 Challenges-solutions through operations management
5.7 Systems Approach to Hospital Operations Management
5.8 Summary
5.9 Key Words

5.1 INTRODUCTION

From bottlenecks to backlog, hospitals everywhere face the same business challenges. These
problems exhaust resources, hinder improvement, and compromise customer satisfaction. But
unlike other industries such as transportation, banking, and food services, many health care leaders
have failed to capitalize on one powerful, fundamental notion: smarter management is not costly
management.

Hospital operations management is an emerging category. Now, organizations are truly beginning to
focus on managing the business differently from an operational standpoint. That includes such
things as patient flow, capacity, throughput and utilization. It also includes looking at the ability to
harness data in a different way.

Given the cost of health care today and the fact that it accounts for about 18 percent of the gross
domestic product, there is greater focus and energy to manage the business from an operational
standpoint.

5.2 WHAT IS OPERATION MANAGEMENT IN HOPSITALS?

• It probably would be described best as the day-to-day functions of keeping an organization

running. So, it's the soup to nuts of taking care of patients.

• It's also about creating value. And how you do it makes all the difference. Walmart and
Kmart have essentially the same strategies, but their execution is entirely different. It really
matters how you organize internally for flow and operations. We often think of it as day-to-
day operations because we're so rooted in that in our daily lives. But the decision to build a
hospital, make a capital investment and long-term strategic plan are also part of
operations management.

• It is driving the way to do business differently in a hospital setting because it's not just about
day-to-day activities. It's about length of stay, among other things, and understanding
patient throughput. But it goes further than just looking at length of stay. It tells us what's
going on throughout the day for the patient. For example, the data may tell us that it takes
62 minutes to get a patient from Point A to Point B. We can then take a deep look at our
processes and make improvements. That's important. The transformation is just beginning
within the hospital setting to make us truly efficient.

5.3 NEED FOR OPERATIONS MANAGEMENT IN HEALTH CARE

Our world is changing significantly. Health care is no longer hospital-centric. There's a huge
opportunity for improvement inside the hospital. But there's an even greater opportunity
throughout the continuum of care. If we can truly achieve the right care at the right time in the right
setting, quality will go up significantly and costs will come down.
Healthcare is the most changing and the most regulated industry today. Today’s healthcare is:
– moving with the population
– creating clinics: hospital / freestanding, surgical / non-surgical, usually specialized
and dispersed
– Seeing primary hospitals sought for critical care, major surgery and “no pay” patients
– New FACILITIES are getting smaller, specialized, and dispersed.
– There is a growing shortage of SKILLED EMPLOYEES
– TECHNOLOGY is advancing rapidly – CT, MRI, Robotics, EMR (electronic medical
records)
– INFORMATION SYSTEMS infrastructure is a growing focus
– Quality is critical throughout the process

5.4 ISSUES IN HEALTHCARE

• SHRINKING REVENUE
• Reimbursement has shifted from Retrospective (cost plus) to Prospective

– P4P: Pay for Performance – incentive for better outcomes

– EBM: Evidence Based Medicine – scientific validation of procedures
– Bundling: payments (hospital and physician share)
– Gain sharing: hospital and physician share savings
– “Never Events”: will not be reimbursed for “avoidable errors
• There is a shortage of DOCTORS
o Especially in rural areas
• There is a shortage of NURSES
o More nurses are leaving the profession than are entering
o Nursing schools are turning away qualified applicants due to a lack of instructors
• COSTS OF ADVANCING TECHNOLOGY – expensive technology is now the expectation of the
patient, physician, employee, …
• GOVERNMENT & OVERSIGHT REPORTING – “8 indicators which must be reported for each
patient”
• MANAGING DECENTRALIZED FACILITIES – women’s, urology, spinal, bariatric, minor medical,
etc.
• RESOURCE TRACKING AND MANAGEMENT
 o Capital equipment location and utilization
• Consumable inventory location and IMPROVE OPERATIONAL EFFICIENCY
– Flows: caregiver, support, lab, physician, housekeeping, visitors
– Processes - routings
– Scheduling – resource utilization
– Wait Times – ED, at resources
• Growing focus on Hospital Materials Management( Supply chain Management, Materials
Management)

• LEAN / JIT / 6 sigma / DMAIC

• 12.Process / value stream mapping
• Growing focus on Hospital Management
– Materials management
– Supply chain management
– CPFR
– S&OP
– “De-bottlenecking”
Examples Managing limited resources – surgeons/ORs
– Managing inventories in a distributed structure – clinics
– Employee education of cost / revenue and process improvement – consumable
charges
– Resource utilization – scheduling clinic surgery suites
– Reduced product variety for price leveraging – stents
– Process flow and improvement - reduce wait times in the ED (emergency
department)

a. RESPONSIBILITIES OF OPERATIONS MANAGEMENT

Planning

– Capacity, utilization
– Location
– Choosing products or services
 – Make or buy
– Layout
– Projects
– Scheduling
– Market share
– Forecasting

Controlling

– Inventory
– Quality
– Costs

Organization

– Degree of standardization
– Subcontracting
– Process selection

Staffing

– Hiring/lay off
– Use of overtime
– Incentive plans

In a nutshell, the challenge is “Matching the Supply with Demand

Consequences of the Mismatch are Severe

Supply Air Travel Emergency room

Demand Travel for specific time and Urgent need for medical
destination service

Supply exceeds demand Empty seat Doctors, nurses,

 andinfrasructure underutilized
Demand exceeds supply Overbooking, Customer takes other Crowding and delay in
flights treatment
Quality of care compromised
Actions to match supply Dynamic pricing; booking policies Staffing to predicted demand,
and demand prioritization, triage
Managerial Importance About 30% of all Delays in treatment or
seats fly empty; a 1 transfer
2% increase in seat
linked with death
utilization makes
difference between
profits and losses

5. 6 CHALLENGES-SOLUTIONS THROUGH OPERATIONS MANAGEMENT

Waiting Time
Patients wait to be admitted. Doctors wait for test results. Patients wait for treatment. Rooms wait
to be cleaned. Nurses wait for doctors. Doctors wait for equipment. Patients wait for
transport. Families wait for news. Patients wait to be discharged. Everyone waits for someone or
something.

Waiting is pervasive in healthcare today. A bird’s eye view of care delivery in most hospitals might
resemble the start-stop quality of our nation’s busiest expressways: discrete instances of productive
movement (a patient is triaged, a bed is filled, labs arrive, a nurse gives medication instructions,
surgery begins) separated by lengthy “wait states” in which value-add activities come to halt as the
operational systems grind, trying to keep pace with demand.

Waiting is symptomatic of not only the complexity of care delivery, but also the complex processes
and disparate systems used to coordinate that care. Too often, wait states have become the status
quo to the frustration of patients, physicians, nurses, and administrators. Everyone is waiting for
someone or something...

Hospitals are inherently unsafe places due to the complexity of the processes that exist. So, to the
extent that you can minimize wait times at any stage in care and make sure that that care is
provided in the right place, you will improve quality. You want to get the patient to the right level of
care and do the right thing the right way, but as quickly as possible.

It's similar to air traffic control. It's patient traffic control. Whatever the needs are is what this
patient traffic control system would map out for the patient in advance so that the treatment of the
patient can flow smoothly. It doesn't mean that every decision is made centrally or needs to be
made centrally. It means that there is responsibility across the organization. The information comes
from the command center, but it is targeted to a specific unit or floor. It contributes to the overall,
greater good.

How to tackle this problem? Solution:

Answer is Waiting Line (Queue) Management

The waiting line or queue management is a critical part of service industry. It deals with issue of
treatment of customers in sense reduce wait time and improvement of service. Queue management
deals with cases where the customer arrival is random; therefore, service rendered to them is also
random.

A service organization can reduce cost and thus improve profitability by efficient queue
management. A cost is associated with customer waiting in line and there is cost associated with
adding new counters to reduce service time. Queue management looks to address this trade off and
offer solutions to management.

Management needs to work on formulae, which will reduce wait time and create delighted
customers without incurring an additional cost. Generally, queue management problems are trade
off’s situation between cost of time spent in waiting v/s cost of additional capacity or machinery

Queuing System
To solve problems related to queue management it is important to understand characteristics of the
queue. Some common queue situations are waiting in line for service in super-market or banks,
waiting for results from computer and waiting in line for bus or commuter rail. General

premise of queue theory is that there are limited resources for a given population of customers and
addition of a new service line will increase the cost aspect to the business. A typical queue system
has the following:

Arrival Process: As the name suggests an arrival process look at different components of customer
arrival. Customer arrival could in single, batch or bulk, arrival as distribution of time, arrival in finite
population or infinite population.
Service Mechanism: this looks at available resources for customer service, queue structure to avail
the service and preemption of service. Underlining assumption here is that service time of
customers is independent of arrival to the queue.

Queue Characteristics: this looks at selection of customers from the queue for service. Generally,
customer selection is through first come first served method, random or last in first out. As a result,
customers leave if the queue is long, customer leave if they have waited too long or switch to faster
serving queue.

Service Configuration
Another aspect of waiting line management is the service configuration. There are four types of
service configuration, and they are as follows:
• Single Channel, Single Phase (e.g. ship yards and car wash)
• Single Channel, Multi Phase (e.g. bank tellers)
• Multi-Channel, Single Phase (e.g. separate queue of man and women for single ticket
window)
Multi-Channel, Multi Phase (e.g. Laundromat, where option of several washers and several dryers)

Characteristics of a Queuing system are:

• Distribution of time between arrivals
• Distribution of service times
• Number of parallel servers
• Maximum number of customers a system can accommodate
Based on the above characteristics, there can be different queuing models. These characteristics can
be represented with the help of Kendall’s notation. Kendall’s notation is the most popular notation
to represent characteristics of a queuing model, which is presented below:
A | B| C | N
Where,
A – Inter-arrival distribution
B – Service time distribution
C – Number of parallel servers
N – Number of customers allowed in the system.

Inter-arrival (A) and service time (B) distributions

A and B can take various distributions:
M: Exponential inter-arrival time or service time distribution (Equivalent Poisson distribution
of arrival or service rate)
D: Deterministic or constant inter-arrival or service time
G: General distribution (Normal, Uniform or any Empirical distribution)

Number of parallel servers (C)

A service system can have a single server or more than one server also called parallel servers. These
servers in parallel helps in reducing the waiting time and the service process become faster.

Number of customers (N) in the queuing system

A number of customers (N) in the system can be restricted to a number or can be infinite. If the
queuing system has infinite number of customers, the queue characteristics are represented by A |
B|C

Examples of queuing models exhibiting various characteristics

M | M | 1: A single server queuing model with Poisson arrival rate and exponential service time
distribution, with no restriction in the number of customers allowed in the service system.

M | G | 3: A three-parallel server queuing model with Poisson arrival rate and generally distributed
service times and infinite customers
M | M | 1 | N: A single-server queuing model with Poisson arrival rate and exponential service time,
with finite queue length. (e.g.: A hospital’s waiting area with a limited number of seats)

Other Methods to Reduce Waiting Time

Tracking of door-to-doc time in the emergency department/OPDs. Through patient feedback and
direct observational studies. This simple tool is able to reduce the wait times significantly in the
emergency department to get patients up to their beds faster.

Asset /Resource Management

Patient Discharge Management In ICU

One of the most challenging things in hospital operations management is timely moving patients
from the intensive care unit to step down care as soon as they are fit to be moved out One has to
free up the ICU beds as soon as possible so that the beds are available to those who need them most
and at the same time maximizing the resource utilization...

Solution:
Now consider length of stay. Suppose the no of total ICU beds is 120.Say our average length of stay
is 5.4 days. A tenth of a day is worth four beds. If I can drive the length of stay down to 5.0 days, I've
freed up 16 beds. All of the stuff that goes on during the day–tests, transport, therapy–that all
contributes to patient flow and our ability to reduce length of stay. So we need to focus on
maximizing all of our resources. Just by keeping a track of LOS and make timely transfer process of
patient by coordinating timely documentation and patient shifting will solve the problem.

Hoarding of Assets
It's the natural behavior of the nurses to hoard equipment, because we want to be able to assist
patients in a timely manner. As we try to become more efficient, we want to make sure that all
clinicians have ready access to the tools they need to get their jobs done. This leads to building up of
unnecessary idle inventory, raises the inventory carrying cost, duplication and inefficient utilization
of resources. Each unit has between two and four pumps, depending on utilization.
Solution:
Asset management is a big cultural change, too. One can implement an asset-tracking
systemwhichnot only ensure availability of a device at the right time but also save allot of money in
wasteful procurement. In a hospital without such tracking one can find IV pumps in the back of
patient rooms, in closets and in corners. Regular inspection to identify such places and then getting
them in one place and dispatch as needed, will result in proper utilization of equipments
Leadership must ensure the processes work and build a confidence level among nurses to change
their behavior.

5.7 SYSTEMS APPROACH TO HOSPITAL OPERATIONS MANAGEMENT

The following steps are required to develop a comprehensive hospital operations management
:
• Set-up of a Management Structure for hospital operations management.
• Development of Operations Manuals & Policies.
• Quality & Accreditation Support.
• Human Resource Management Support.
• Finance Management and Tariff Fixation.
• Management Information System and Reporting.
• Supplies & Equipments, including Maintenance Management.
• Pharmaceuticals Management.
• Internal Medical Audit.
• Transfer of Knowledge and Service Continuity Obligations.

Development of Standard Operation Manual

This includes:

• Medical Services
• Nursing Services
• Emergency Services and Operation Theaters
• Laboratory Services
• Diagnostic Services (X-Ray, Ultrasonography, etc.)
• Drugs and Medicaments
• Support Services (Laundry, Catering, Cleaning & Hygiene, etc.)
 • Other Services
• Quality Assurance Committee and Monitoring
• Joint Survey Committee
• Patient Safety Manual
• Procurement Policies
• Storage System
• Consumables Standards
• Reporting System
• Service Providers Database
• Waste Management
• Maintenance Master plan for infrastructure and equipments

Set-up of a Management Structure

The management structure for Hospital Operations management should include the following:
• Hospital Consultant
• CEO/COO
• Materials Manager
• Finance Manager
• Department Heads
• Nursing head
• Patient/community Representative

These management experts will develop and apply appropriate management practices, including
regular team meetings, time management, goal setting, internal decision making, monitoring,
evaluation, reporting, etc.

Development of Operations Manual & Policies

The next step is development Operations Manual & Policies. This manual shall be reviewed and
updated periodically, at least annually.

The “Operations Manual” shall describe the functions, procedures and regulations of the following
operational units:
 • Provision of Medial Services
• Provision of Nursing Services
• Provision of Pharmaceuticals Services
• Human Resource Plan
- Manpower Deployment Plan
- Building capacity and Training Plan
• Financial Management
• Management Information System
• Supplies & Equipments Management
• Quality Management
• Strategic Planning, Risk Management and Governance

Quality & Accreditation Support

The aim is to develop the capacity of the hospital in regards to management and service delivery
up to the highest possible standards, as a matter of fact preparing the hospital for ISO certification
and accreditation under the Mph’s evolving health service provider accreditation scheme at a later
stage.

Human Resource Management Support

Modern human resource management principles must be adopted in a transparent and efficient
way. Recruitment, remuneration, career development and training of all hospital staff shall be
guided by the principles of transparency and reward of performance. A manpower deployment
plan that is based on the required qualifications and staff recruitment needs for the whole pool of
hospital staff must be developed.

Finance Management
A comprehensive system of financial management, including essential functions like budgeting,
accounting, internal controlling and audit, etc., and put in place all necessary regulations, procedures
and controls to ensure transparent and sound financial management based on the national
applicable laws must be set up. Annual business plan for the hospital, including clear performance
and output targets, an annual budget, projections for investments needs, etc. must be developed.
Management Information System

A Management Information System should be developed for both the medical services and non-
medical services. The design of the system should include the reporting system and computerized
retrieval with a system of data analysis.

Management of Medical Supplies and Pharmaceuticals

A system of medical supplies and pharmaceuticals / drug supply management based on the hospital
requirements and the available resources. The system should include all aspects of management
specifying the processes of forecasting; bidding, storage and continuity of supplies, as well as
continuous education of medical personnel on rational prescription and use of drugs.

The national essential drug list should be the basis for all drug supply management. Procurement of
drugs needs to follow Government procedures, favoring high-quality, low-price generic drugs in
whole-sale packages.

Internal Medical Audit

Within the scope of the service, Internal Audit should be integrated within the management routine
and shall be conducted on periodic basis. The review shall encompass review of functions of
different service departments as well as a medical and ethics committees to ensure appropriate
clinical governance.

Transfer of Knowledge and Service Continuity Obligations

Within the scope of the service and its duration, every effort should be made to ensure continuity in
competent and successful management of the hospital services.

Monitoring, Evaluation and Reporting

An easy-to-access and complete Management Information System is to be developed in a way that
a allows continuous monitoring of the hospitals functions and services.
5.8 SUMMARY

There is no way that health care, as it's designed today, can continue to function. We have to
experiment. Not only does it have to be safer and faster, it has to feel different for the patient.
Reimbursement is being tied to all those things. Technology is going to play a big role in the
transformation of care. We have to be conscious about where we deploy technology. What are we
looking for in the data and how can we use this information to create positive change? It's extremely
important to know what's going on within our organizations at any given moment. You can identify
bottlenecks and respond in a timely manner. In my organization, we get lots of data but it's often 24
hours after the fact. An efficient hospital operations management system is the answer if we have to
ensure that appropriate, affordable health care is made available to the patient at the right time and
right place

5.9 KEY WORDS

Arrival Process: As the name suggests an arrival process look at different components of customer
arrival. Customer arrival could in single, batch or bulk, arrival as distribution of time, arrival in finite
population or infinite population.
Service Mechanism: this looks at available resources for customer service, queue structure to avail
the service and preemption of service. Underlining assumption here is that service time of
customers is independent of arrival to the queue.
Queue Characteristics: this looks at selection of customers from the queue for service. Generally,
customer selection is through first come first served method, random or last in first out. As a result,
customers leave if the queue is long, customer leave if they have waited too long or switch to faster
serving queue.
Service Configuration
Another aspect of waiting line management is the service configuration. There are four types of
service configuration, and they are as follows:
• Single Channel, Single Phase (e.g. ship yards and car wash)
• Single Channel, Multi Phase (e.g. bank tellers)
• Multi-Channel, Single Phase (e.g. separate queue of man and women for single ticket
Channel, Multi Phase (e.g. Laundromat, where option of several washers and several dryers)
UNIT 6:-OPERATIONS MANAGEMENT OF OUTPATIENT SERVICES:-
PROTOCOLS

Specific learning objectives

After going through this Unit you will be able to understand:
• The concept and importance of protocol;
• What are the different types of protocols to be used in OPD?
Structure
6.1 Introduction
6.2 Scope of protocol
6.3 Staff Development & Training
6.4 Information and Communication Technology (It)
6.5 Clinical Priority & Chronological Management
6.6 Maximum Waiting Time
6.7 Capacity Analysis & Management

6.8 Protecting Capacity & Cancellation/Reduction of Clinics

6.9 Appointment/Booking Systems

6.10 Calculation of the Outpatient Waiting Time

6.11 The Management of Appointments
6.12 Transfers between Hospitals or To Alternative Providers
6.13 Summary
6.14 Key Words

6.1 INTRODUCTION

The Protocol for the Management of Outpatient Services sets out a suite of processes that will
enable the provision of quality outpatient services. The protocol forms the core guidance of the
Outpatient Services Performance Improvement Programmed. When used in conjunction with the
supporting material, the protocol will ensure that consistent management processes exist across all
publically funded healthcare facilities providing outpatient services

6.2 SCOPE OF THE PROTOCOL

This protocol applies to healthcare facilities providing outpatient services. The protocol is designed
specifically for use in consultant-led outpatient services, the majority of which are provided in acute
hospital settings. However, the maximum waiting time guarantee for patients, and therefore this
guidance, applies to any location where consultant-led outpatient services take place. Local
implementation plans should be developed to take account of the specific requirements of non-
hospital based consultant-led outpatient services

6.3 STAFF DEVELOPMENT & TRAINING

The effective delivery of the outpatient services programmer of change and protocol objectives will
depend on the competency of individuals and teams across all staff groups in outpatient services.
The planned changes to processes and work practices will require all staff to develop new skills or
enhance existing ones.

All staff involved in the administration of outpatient waiting lists will ensure that the local policies
and procedures relating to data collection and entry are strictly adhered to. This is to ensure the
accuracy and reliability of data held on the PAS and the waiting lists for outpatient assessment.

All staff involved in the implementation of this protocol, whether clinical, managerial, or
clerical/administrative, will undertake training and regular annual updating.

Service-providers should provide appropriate information and training to staff so they can make
informed decisions when implementing and monitoring this protocol.

Training will be cascaded at and by each clinical, managerial, or administrative tier within
hospital/hospital group, providing the opportunity where required, for staff to work through
operational scenarios. All staff involved in the administration of outpatient waiting lists will be
expected to read and sign off this protocol.

6.4 INFORMATION AND COMMUNICATION TECHNOLOGY (ICT)

Implementation of the outpatient services performance improvement programmer and delivery of

the standards in this protocol will require modifications to existing hospital systems.
Service-providers are expected to develop robust information systems to support the delivery of
targets and protocol objectives. Daily management information should be available at both
managerial and operational level so that staff responsible for selecting persons for appointment are
working with up-to-date and accurate information.

Service-providers must develop and administer systems designed to maximize the proficient
management of outpatient services enabling efficient registration, tracking, tracing, and
management of the patient along the care pathway from initiation until discharge.

Underlying Principles
The provision of outpatient services must be built upon this set of underpinning principles. The full
implementation of these principles is essential as each affects multiple parts of the outpatient
journey.

The administration and management of the outpatient pathway from receipt of referral until the
end of the episode of care, within and across service-providers, must be consistent, easily
understood, patient-focused and responsive to clinical decision making.

6.5 CLINICAL PRIORITY & CHRONOLOGICAL MANAGEMENT

Patients referred to outpatients should be treated based on clinical urgency, with urgent referrals
seen and treated first. The definition of clinical urgency and associated maximum wait times will be
agreed at specialty/condition level by the clinical programmers and agreed locally through the
clinical programmer governance structure.

Patients of equal clinical priority will be selected for appointment in strict chronological order and
service-providers will put systems in place to ensure that the relevant maximum waiting time
standards are achieved.

Centralized Management of Referrals

• There will be a dedicated central referral service for the management of outpatient
referrals per service-provider/group.
 • The central referral service will act as the organizational hub for the receipt, management,
tracking, administration, and closing of referrals. It will also be the

Central point of contact for sources of referral (SORs) and service-providers, should queries arise.
The central referral service will also act as the central point of contact for patients wishing to cancel,
reschedule, or enquire about appointments.

6.6 MAXIMUM WAITING TIME

The length of time a patient needs to wait for a first appointment with a consultant is an important
quality issue and is a visible public indicator of the efficiency of the service.

The successful management of patients awaiting outpatient assessment and diagnostic investigation
is the responsibility of a number of key individuals within the healthcare-provider group. SORs,
clinical staff, managers, and clerical/administrative staff have significant roles in ensuring access,
quality, and efficient healthcare for potential users of outpatient services.

Site, specialty, and departmental managers are expected to produce implementation plans setting
out the key steps required to ensure the delivery of wait time targets within the area(s) of their
responsibility.

Service-providers must ensure that all staff is conversant with the l outpatient wait time targets.
They must be committed to training and developing staff and putting in place systems to ensure
progressive improvement in care for service-users.

6.7 CAPACITY ANALYSIS & MANAGEMENT

It is important for service-providers to understand their baseline capacity, the make-up of the
cohort of patients waiting, and the likely changes in demand that will impact on their ability to treat
them and meet the relevant access and quality targets.

At departmental, specialty, and clinician level, managers are required to have, as a minimum (taking
account of any standards set by the clinical programmers), an overview of core capacity including:
 • Number of clinicians and contractual commitment.
• Number of clinic sessions.
• Session length.
• Average clinic slot time.

Similar information is required for diagnostic services related to the provision of outpatient services
as this capacity currently forms a core component of outpatient service capacity.

Systems must be developed to ensure assessment can be made of available capacity and flexible
working arrangements developed accordingly.

Service-providers should ensure that robust prospective capacity planning arrangements are in
place, with clear escalation procedures where capacity gaps are identified enabling solutions to be
found in a timely manner to support operational booking processes and delivery of the targets.
Specialty/service managers will be expected to initiate plans to expedite solutions and agree these
through the regional performance management review process.

Approximately eight weeks prior to appointment, service-providers should calculate prospective slot
capacity for each appointment type (new urgent, new routine and review) and escalate where
capacity gaps exist.

Capacity should be linked to the service level agreement for outpatients and used to inform
development, monitoring, and achievement of the outpatient plan. Key considerations will include
resource requirements and escalation processes to ensure effective delivery.

There is a continual need to identify capacity constraints that could threaten the delivery of access
targets and quality outcomes and to speed up the planning and delivery of extra capacity, where
needed, to address these constraints.

There will need to be a co-ordinated approach to capacity planning taking into account local, group,
and regional capacity available to the population of that particular region.

6.8 PROTECTING CAPACITY & CANCELLATION/REDUCTION OF CLINICS

Capacity lost due to cancelled or reduced clinics has negative consequences for patients and on the
service-provider’s ability to manage the appointment process. Clinic cancellation and re-booking of
appointments is an extremely inefficient way to use valuable resources.

It is essential that planned medical and other clinical absence is organized in line with an agreed
protocol and there should be clear medical and clinical commitment to this leave protocol.

Medical and clinical staff must apply, in writing, to the clinical director, and the OSMG six (6) weeks
in advance of their intended leave and clearly outline any clinic cancellations/temporary reductions

The leave protocol is designed to minimize the disruption to clinical activity as a result of short-
notice of planned leave. It is accepted that short-notice cancellations/clinic reductions may occur
due to illness or other unplanned events. However, the level of these cancellations/clinic reductions
should be monitored by the OSMG and appropriate action taken to reduce the risks to clinical
activity.

Protecting Capacity & the Management of Clinical Leave

Service-providers will have specific processes in place to manage planned leave for outpatient staff
due to the critical impact that these staff have on the provision of outpatient services Service-
providers are required to establish leave management processes (in accordance with industrial and
HR requirements) in relation to all outpatient staff, underpinned by a communication strategy
whereby:

• There is clear medical and clinical agreement and commitment to this HR policy.
• There is approval of leave by the relevant line manager a minimum of six (6) weeks in
advance.
• Approval of leave requires notification to the accountable officer and OSMG a minimum of
six (6) weeks in advance.
• There is proactive planning and approval of conference/CME leave.
• There is an ongoing review by the OSMG of the impact of staff leave on appointment
schedules, with risk-management processes being put in place where necessary.

6.9 APPOINTMENT/BOOKING SYSTEMS

All of the principles in this section underpin the effective management of access to outpatient
services. Fair access to outpatient services requires booking systems built on these principles that
offer the patient choice in the date and time of their appointment, and the ability to agree their
appointment as part of a reasonable process. Advanced booking systems are not only more
convenient for patients, but offer increased efficiency for outpatient services.

Moving to booking systems will require changes in working practices for all staff involved in the
provision of outpatient services. Implementation of the principles and pathway guidance outlined in
this protocol will provide the administrative foundation upon which successful booking systems can
be built. It will also require technological change to information systems to enable provision of
quality information to support the booking process.

The first step towards the development of advanced booking systems is to ensure consistent
administration of fixed appointments and reduce variation in the current system. All service-
providers should implement the “hold and treat” method of appointing patients. Implementation
should focus on new patients in the first instance, followed by review patients.

The hold and treat system manages patients on the appropriate waiting list until the decision to
appoint. The key principles of this approach are:

New Urgent Patients

Clinical Urgency will determine how quickly urgent patients need to be seen, and this will vary
between and within specialties.
Slots are identified on the clinic template for new urgent patients.

New Routine Patients

Slots are identified for new routine patients on the clinic template.
Using the primary targeting list (PTL), routine patients should be selected for appointment.
Routine patients are given a minimum of three (3) weeks‟ notice of their appointment, which
ensures that they receive a „reasonable‟ offer.
Review Patients
Those patients who are to be reviewed within six (6) weeks should negotiate their appointment
before leaving the clinic. Review patients who require an appointment beyond six (6) weeks should
be managed on a review waiting list on PAS, using the indicative date / month of treatment for
listing. The future vision for the outpatient services performance improvement programmer is to
progress the development of advanced booking systems.

6.10 CALCULATION OF THE OUTPATIENT WAITING TIME

The starting point for the waiting time of a new outpatient referral is the date the referral is received
by the service-provider. All referral letters, including those electronically delivered, must be date
stamped on the date received into the organization. All time spent waiting, including the wait for
clinical prioritization and decision making is counted as part of the total wait time.

As the outpatient services performance improvement programmer develops, systems will be put in
pace to ensure that patients who require a diagnostic test to determine the appropriate clinical
pathway are managed on an appropriate waiting list. Pending introduction of these systems, such
patients will remain on the outpatient waiting list.

Patients who cancel or re-schedule and will have their waiting time clock reset to the date the
hospital was informed of the request.

Patients who fail to attend their appointment without giving prior notice (DNA) will have their
waiting time clock reset to the date of the DNA.

Patients who request that an appointment is cancelled and not re-scheduled will be removed from
the waiting list. Notification of reason for removal from the waiting list will be forwarded to the
clinician/specialty, SOR, and patient.

Patients who refuse a short-notice appointment (less than three weeks‟ notice) will not have their
waiting time reset. Patients whose appointment is cancelled by the hospital/service will not have
their waiting time reset. No patient will have their outpatient waiting time suspended. The use of
this function should cease with immediate effect.
The Receipt and Clinical Prioritization of Referrals

All outpatient service referrals to service-providers will be received in a dedicated central referral
service, registered on PAS, and added to the outpatient waiting list module within one working day
of receipt.
Status must be recorded at the point of registration to facilitate booking of urgent patients where
the turnaround time for categorization is not met.

Where required, referrals will also be scanned to enable cross-site referral management.

Where referrals bypass the centralized referral point (for example, sent directly to a consultant), a
process should be in place to ensure that these are date stamped upon receipt and immediately
forwarded to the central referral management point and registered with the date on the date stamp.

A process should be in place to notify SORs that their referral has been received.

Clinical priority must be identified for each patient. All referrals should be categorized and PAS
updated with the outcome within five (5) working days of receipt of referral.

Service-providers will work towards a system whereby the location of all referral letters can be
tracked at all times throughout the episode of care. This system will ensure that referrals sent for
clinical prioritization that are not returned in the permitted time-frames can be identified and
expedited.

Arrangements should be put in place to facilitate cross-site clinical prioritization of referrals (e.g.
scanning) in order to ensure that the standard is met.

Where clinics take place, or referrals are reviewed less frequently than weekly (five working days), a
process must be put in place, agreed with clinicians, whereby SOR prioritization is accepted in order
to proceed with appointing urgent patients.
Service-providers should ensure that arrangements are in place for categorization of referrals during
times of planned/unplanned clinical leave. Clinicians will be responsible for ensuring that cover is
provided for referrals to be read and categorized during their absence.

Categorization of referrals should allocate patients to one of two streams, that is, urgent or routine.
The use of the „soon‟ category should be phased out and will no longer be required as waiting times
reduce. Clinic templates should be constructed to ensure enough capacity is available to treat each
stream within agreed clinical and maximum waiting time guarantees.

The consultant in charge of the specialty/service has overall responsibility for clinical prioritization
and categorization of referrals; however, this may be delegated to a member of their team (for
example, medical registrar, nurse or AHP) where clearly defined service models and protocols have
been agreed with the clinical programmers.

Compliance with the five (5) working day turnaround standard for clinical prioritization and
categorization of referrals will be monitored. Monitoring will take place at clinician level on a weekly
basis and local protocols should be developed to include escalation procedures where the standard
is not routinely being met.

Where clinical prioritization and categorization is not determined within the five (5) working day
standard, a process should be in place to initiate booking of urgent patients according to the SOR‟s
categorization.

6.11 THE MANAGEMENT OF APPOINTMENTS

Urgent New Appointments

Patients categorized as urgent must be booked within the maximum wait times agreed locally with
clinicians and the clinical programmers. The timeframe for appointing urgent patients should be
made explicit to clerical/administrative staff/booking teams.

When administering patients who require urgent appointments, service-providers should ensure
that the process is robust and that clinical governance requirements are met.
Service-providers must ensure that clinic templates are constructed to provide sufficient capacity for
urgent patients to be appointed within the clinically indicated timeframe.
Service-providers must put systems in place to ensure that those categorized as suspected cancer or
„red-flag‟ are clearly identified on the waiting list and booked within the specified clinical
timeframe.

The booking of referred patients with suspected cancer and other conditions with ‘red-flag’
signs and symptoms should be as follows:

• All suspected cancer referrals should be identified by SOR, expedited, and booked in line
with the agreed clinical pathways locally, as set out by the clinical programmers.

• Conditions (not including cancer) for which the local clinician and the clinical programmers
list specified red-flag signs and symptoms should be identified by SOR, expedited, and
booked, in keeping with the time-lines set out in the care pathway.

• Dedicated registration functions for suspected cancer and/or red-flag referrals should be in
place within central referral offices.

• Clinical teams must ensure triage is undertaken daily, irrespective of leave, in order to
ensure fast-tracked booking of this cohort of patients.

• Patients will be contacted by telephone twice (morning and afternoon).

• If telephone contact cannot be made, a fixed appointment will be issued to the patient
within a maximum timeframe as set out by the NCCP/clinical programmers.

• Systems should be established to allow the tracking of urgent and ref-flag patient referrals.

The Management of Routine New Appointments

All routine new patients should be appointed within the maximum waiting time guarantee and
service-providers should ensure that sufficient capacity is available at clinics to facilitate this.

An acknowledgement letter should be sent to routine patients within five (5) working days of receipt
of referral that is, immediately following outcome of clinical prioritization and categorization.
The estimated length of wait, along with information on how the patient will be booked, should be
included on the acknowledgement letter.

Management of Review Appointments

All review appointments must be made within the time-frame specified locally by clinicians, taking
account of any care pathway requirements set out by the clinical programmers.

Patients who require an appointment within the following six (6) weeks should agree a date with
the central referral service at the current appointment. Review slots should be clearly identified on
the clinic template and sufficient capacity made available to meet the clinical needs of this cohort of
patients.

Patients who require a review appointment beyond six (6) weeks should be placed on a review wait
list. Service-providers must actively monitor patients on the review wait list to ensure that they do
not go past their indicative month of treatment and escalate/initiate remedial action where
required.

The Management of Patients Who Do Not Attend (DNA)

Where a patient is issued with a fixed appointment and fails to attend (DNA), they will be offered
one more opportunity to attend. If a patient DNAs a second appointment, they will be discharged
back to the care of the SOR.

Where patients fail to attend for cancer, red-flag or urgent appointments, every effort must be made
to contact the patient and the SOR by phone to support successful management of this cohort.

When a patient cancels or asks to reschedule a fixed appointment, they should be offered a second
opportunity to attend, which ideally should be within six (6) weeks of the request to re-schedule. If
the patient cancels on a second occasion, they will be discharged back to the SOR.

Under certain circumstances (for example, patient vulnerability or imminent clinical need) a clinician
may decide not to discharge a patient after DNA/CNA. Additional steps in the pathway should be
agreed in order to priorities patient safety and this may include contacting the patient or the
SOR/other relevant professional/s directly to discuss rather than issuing further fixed appointments.
This will assist in understanding the reason for the DNA/cancellation, support appropriate booking
arrangements for these patients, and maximize capacity.

There may be instances for new or review patients where the clinician may wish to review notes
prior to any action to remove the patient from the wait list. Service-providers should ensure that
robust and locally agreed rules and processes are in place so that booking staff are clear about how
to administer these patients.

If a patient requests to be removed from the waiting list, or cancels an appointment and requests no
further appointment, the reason for cancellation/removal should be recorded. It is good practice to
request clinicians to review the notes to confirm that the patient’s healthcare needs are being met
and that no identifiable risks are present. A letter of confirmation of removal should be sent to the
clinician, SOR and patient.

The Management of Patients Requiring Ongoing Specialist Care

A cohort of service-users will require ongoing specialist care in outpatient services, particularly
those with complex, chronic, non-resolvable, or degenerative conditions. As the outpatient and
relevant clinical programmers develop, protocols for the management of these patients will be
implemented.

In the transition period, care pathways should be developed for these patients that will ensure that
the patient is being managed in the most appropriate location for their current level of illness.

These care pathways should allow evidence-based schedules of review and fast-tracked review in
outpatient services, where required.

As a general rule, chronic disease pathway development should ensure that the care of the patient
takes place seamlessly between the acute and community sectors.

Validation of Outpatient Waiting Lists

A continuous process of data quality validation should be in place to ensure data accuracy at all
times. Data validation of waiting lists is a corporate requirement and should be undertaken weekly
and continually reviewed as waiting times reduce. This is essential to ensure PTLs are accurate and
robust at all times while fixed appointment systems are being used, a process of patient-level
validation will be required and is a core task of individual departments managing outpatient services.
As advanced booking processes are implemented, the need for patient-level validation will cease.

6.12 TRANSFERS BETWEEN HOSPITALS OR TO ALTERNATIVE PROVIDERS

Effective planning on the basis of available capacity should minimize the need to transfer patients
between hospitals or to alternative providers. Transfers should not be a feature of an effective
scheduled system.

Administrative speed and good communication are very important to ensure that this process runs
smoothly. Detailed guidance for the PAS management of transferred patients will be developed as
the outpatient programmer progresses.

In the interim, the principles of this protocol apply to all patients, irrespective of the location or
provider of their service. Transferred patients remain the operational responsibility of the
transferring hospital and should be administered in line with the requirements of this protocol.

6.13 SUMMARY

The outpatient department is considered as the shop window of the hospital. It is the first point of
contact between the hospital and the patient. Hence it is of utmost importance to develop and
implement comprehensive standard protocols encompassing all functional aspects for this
department.

6.14 KEY WORDS

The length of time a patient needs to wait for a first appointment with a consultant is an important
quality issue and is a visible public indicator of the efficiency of the service.

The successful management of patients awaiting outpatient assessment and diagnostic

investigation is the responsibility of a number of key individuals within the healthcare-provider
group. SORs, clinical staff, managers, and clerical/administrative staff have significant roles in
ensuring access, quality, and efficient healthcare for potential users of outpatient services.
UNIT 7 DESIGNING OPERATIONAL MANAGEMENT IN ACCIDENT
AND EMERGENCY DEPARTMENT

Specific learning objectives

After going through this Unit, you will be able to understand:
• Importance of Operations management in hospitals;
• Need For Operations Management In Health Care and the various associated
issues;
• How to solve the various operational challenges.

Structure
7.1 Introduction
7.2 What Is Operations Management In Hospitals?
7.3 Need for Operations Management in Health Care
7.4 Issues in Health Care
7.5 Responsibilities of Operations Management
7.6 Challenges-solutions through operations management
7.7 Systems Approach to Hospital Operations Management
7.8 Summary
7.9 Key Words

7.1 INTRODUCTION

Acute care settings are often plagued with waits, delays, and dissatisfaction. Nowhere is this more
observable and its impact more palpable than in hospital emergency departments (ED). Hospitals are
increasingly being challenged to address ED service and quality. A recent report from the Institute of
Medicine, Hospital-Based Emergency Care: At the Breaking Point has focused significant attention on
this topic. EDs (Emergency Departments) are busy places and only getting busier, and when patients,
information, and materials do not flow through the ED Emergency Departments) in a timely and
efficient way, patient safety, patient and staff satisfaction, and hospital bottom lines can all be
negatively affected.
Following four key drivers affecting ED (Emergency Departments) service and performance:
• Leadership
• Service operations
• The effective use of data
• Making the right diagnosis and applying the right treatment

Terms

Emergency department crowding: An ED is considered crowded when inadequate resources to meet

patient care demands lead to a reduction in the quality of care Ambulance diversion: An ambulance
is diverted when hospitals request that ambulances bypass their ED and transport patients to other
medical facilities Boarding: A patient remains in the ED after the decision to admit or transfer the
patient has been made (e.g., because an inpatient bed elsewhere in the hospital is not yet available).

7.2 IMPORTANCE OF OPERATIONAL EFFICIENCY IN ACCIDENT AND

EMERGENCY DEPARTMENT

Every healthcare leader wants his or her hospital to be successful in a competitive marketplace while
providing services that its community requires. An emergency department that works can be a
distinctive service that helps leaders accomplish both missions. But many, if not most, healthcare
leaders feel they have not achieved this goal in their ED. This is not a result of disinterest or a lack of
trying. Most hospital executives are fully aware that the ED is now the front door to their healthcare
facility, with 50%–70%1 of hospital admissions arriving through the ED. While some hospitals
executives may neither like nor want this state of affairs, most understand it is a condition of
healthcare today. That’s why many have embedded in the hospital’s core mission and strategic plan
a desire to have a department that they are not only proud of but that they would be willing to visit
as a patient or family member of a patient. However, quality, safety, and service can seem fleeting.

EDs are complex, often chaotic environments—microsystems that can challenge even the best of
leaders. EDs contribute too many important aspects of the hospital, such as:
• patient and employee satisfaction
• patient safety, risk reduction
• Evidence based outcomes
 • and even profitability

Therefore, it is imperative for healthcare executives to build processes that can stabilize the ED’s
performance in the areas of quality, safety, and service. The ED can be, and should be, an asset that
gives healthcare systems a substantial service advantage and competitive edge.

Because the ED is the front door of the hospital and accounts for such a large part of hospital
admissions, how the department is viewed has a direct impact on how the hospital itself is perceived
by the community. A bad patient experience in the ED has a way of making itself known to
administration, the board of trustees, and the public. Thus, ensuring that things run smoothly and
professionally in the ED is in the hospital executive’s best interest.

Traditionally, the nursing management team has run the ED with input from the ED physician group.
Nursing staff members are more often than not hospital employees. The physicians may be
employed directly by the hospital; A hospital board and administrator have several options when
deciding how their emergency care center will be staffed—from small, independent, physician-
owned groups to large, nationwide staffing companies.
Historically, hospitals have accepted “good enough” as satisfactory performance from their Beds.
But a “gentleman’s C” may no longer be a passing grade, thanks to the baby boomer generation. As
this population ages, emphasis will increasingly be placed on the issues of patient safety and
satisfaction, risk reduction, timeliness of care, and a satisfied medical staff

7.3 THE NATURE OF THE PROBLEM

Various studies on Accident and emergency department have shown the following common
problems:

Overcrowding with patient diversion to other facilities.

Patients Wait Longer than Recommended Time

Financial pressures lead hospitals to limit capacity in this department. There is a competition
between ED admissions and scheduled admissions, such as surgery patients, who are generally
considered more profitable. Herein lies a significant dilemma. If the more profitable cases are not
served, less money is available to help meet the space, staffing, and equipment needs of the less
profitable cases. Hospital officials indicated that emergency patients are less profitable because a
larger proportion of emergency admissions are for patients who self-pay (including the uninsured)
and generally provide lower reimbursement, the study found.

Poor infrastructure (Facility, Equipment and staff)

That there are too many patients in the ED who do not belong there—that is the most pervasive and
persistent. Everyone from the hospital administrator to the average person on the street seems to
think EDs are overcrowded because too many patients are treated there who should be treated
somewhere else. This perception raises two points:

• Every patient in a has to be examined and stabilized, what else are emergency
department(ED) are expected or able to do for patients?
• Who decides the emergency-Patient/Doctor?

Studies show that walk-in volume is not an independent predictor of diversion. Diversion had
nothing to do with walk-in flow. It had everything to do with how many patients were being boarded
in the ED. Staff members in the ED certainly feel overworked or overwhelmed because of the
volume of walk-ins, but that is not what causes diversion. Diversion is not a walk-in problem. ED
diversion is an inpatient access problem.

A multitude of factors are responsible for crowding, such as:

• ED patients are sicker, but getting patients admitted is more difficult than ever. Hospitals are
trying to run at close to 100% occupancy—a factory model where everybody is busy all the time
and there is seldom unused capacity.

• Hospitals aim at maximizing revenues, but without surge or backup capacity, inpatient
admissions from the ED can be delayed, resulting in decreased patient satisfaction and other
service and safety problems.
• There aren’t enough nurses to meet patient demand. The severe nursing shortage is causing
nurses to be overloaded. In addition, The Joint Commission has found that this overloading causes
25% of all medical errors.

• Lack of access to on-call specialists can delay care and slow down the admission process.

• Many patients using the ED, such as the uninsured, have little or no alternative for medical care.
The ED offers these patients high-quality care, access to every diagnostic test the hospital offers,
and guaranteed treatment without any up-front cost. These patients will continue to use the
EDas their primary care provider until a better system is found.

All of these factors contribute to problems ranging from difficulties with staffing and resources to
compromises in patient care and safety.

7.4 GOAL AND VISION OF ACCIDENT AND EMERGENCY DEPARTMENT

The goal of Emergency department is to create unique and replicable processes that ensure
increased productivity, safety, and patient satisfaction.

Vision

Every ED will be noted for its commitment to quality and excellence and offer the finest possible
service in emergency physician leadership, management, clinical care, patient satisfaction, and
patient safety to not only patients but also to hospitals, physicians, and medical staffs.

Every patient will experience and receive this care.

Every healthcare worker (many of them heroes already) will get to practice in this type of
environment and facility.

The process of elevating this facility to this level and then sustaining that performance is a worthy
challenge, one with tremendous potential to improve patient care and safety, as well as to provide
returns to the bottom line.

7.5 KEY COMPONENTS TO EFFICIENT FUNCTIONING

Organizations should implement a comprehensive design for ED patient flow, services, and
operations to ensure their ED provides every patient the finest clinical care in a safe environment
and meets or exceeds patient, staff, and physician satisfaction goals. There are eight key
components that should be included in this design.

Key Components
Before you can devise a plan for improving an ED, you must have a reasonable idea of what you’re
getting into, and to obtain that requires drawing an accurate picture of what the current department
is like.

Making the Right ED Diagnosis

A critical first step is to carry out an environmental assessment to determine what the strengths and
weaknesses of the department are, what areas need to be fixed immediately, and what areas
require planned long-term change for future payoff. Using information gathered during the
assessment, along with input from the onsite team, the project leader should sort the ED into one of
six categories and develop a treatment plan.

A Diagnostic Model
A Major Project: seriously deficient in all major areas; requires intensive work;
success is not assured.

A Complete Turnaround: requires significant investment of effort and time on the part of the
management team due to serious deficiencies in staffing, operations, and leadership
A Fixer-Upper: requires upgrading in just one or perhaps two of the core elements (staffing,
operations, or leadership).

Basic Rebranding and Realignment: requires moderate upgrade in one or two of the major
components of the ED program.

Leadership Development: the major deficiency is in leadership; requires upgrading, coaching, or

recruiting the necessary leadership.

Business as Usual: “staying the course”—a well-run facility; requires continuing and maintaining the
current model.

The assessment component should include the following three basic steps:
Review of key documents like:
• Physician and nurse schedules
• Patient volume, variation, and trends
• Cycle times for patient flow, subprocesses, and ancillary services
• Patient satisfaction survey results (both inpatient and ED)
• Evaluation and management coding broken down by payer and trended over time
 • Review of any previous ED studies (The Joint Commission, risk management, internal review
and strategic plan, consulting reports)
• Organizational chart and administrative architecture

A two-day on-site operations assessment

• Interview with all key participants
• Interview with representative samples of all “service-line” people who provide direct patient
care

Direct observation of patient flow

• Direct observation of team interactions

Formulation of an action plan and selection of performance improvement teams

Recruiting, Credentialing, And Retaining Your Team

One cannot overemphasize how critical recruiting, credentialing, and retention are in establishing a
smoothly running ED. Hiring correctly is a cornerstone of quality, safety, and service. Indeed, the
most important part of optimizing an ED’s development and operational design is recruiting and
employing the requisite professional staff. Yet hiring the right people is easier said than done. You
may have to use many approaches in selecting medical professionals, such as:
• Interviewing and assessing those professionals already on-site
• Use of direct mail
• Telemarketing and cold calling
• Advertising
• Word-of-mouth advertising
• Use of professional recruiting firms
• Interaction with various training and professional programs

It is an arduous process with no guarantee of immediate success. It requires an effective, reliable

way to screen for and select the desired attributes. You must rely on professional training,
references, personal interviews—and a bit of luck.

Once you’ve chosen the appropriate medical professional, and the job offer has been accepted and
secured, the next step is to credential the physician or midlevel provider for hospital privileges as
quickly and seamlessly as possible. This process is also labor intensive, requiring coordination by the
hospital credentialing service, the group’s credentialing staff, and the medical professional.

The higher goals are to carefully select highly trained and motivated professionals, provide a setting
of support, and align their goals with the strategic objectives of the hospital, the nursing staff, the
medical staff, and the community.

Leadership Selection and Development

Equally critical in the success of any ED is selecting and developing effective medical leadership.
Because the medical director is the most influential physician employee in the ED contract group,
the administration must carefully select, coach, and mentor that individual. Similarly, the ED nurse
manager or director is the most prominent nursing employee in the department, so administrators
should just as carefully select, coach, and mentor that person as well. If you want to succeed in your
mission of effectively serving the hospital and its patients, the director is critical to the mission. The
director acts as the coach and general manager of the “service franchise.” To enable the director to
effectively fulfill that role, you must assess, reinforce, and enhance his or her leadership and change-
management skills.

To support your director, you should employ a teaching, coaching, and mentoring process. One
recommendation is enrolling the director in a leadership institute for further leadership
development as well as collaboration with peers. As a leader and manager, you should use a
balanced scorecard format to continually monitor and evaluate the department and the director’s
performance.

This approach focuses on four areas: safety, service, sustainability, and staff. The director and the
team must achieve measurable success in all four quadrants to optimize patient flow and service
within the ED. In using the balanced scorecard, you set goals and metrics. Weekly conference calls
and quarterly ED practice reviews help implement the scorecard and keep it in play.

Patient Flow and Operations Management

Flow can be defined as the movement of people and materials through a service system. In working
to improve flow, hospitals apply strategies developed both within and outside the healthcare
industry. Flow is not unique to healthcare, but it is an important element of many service and
industrial processes. We define patient flow in the ED as the movement of patients from the time
they enter the department until the time they are released or are admitted to the hospital, and if
they are admitted, then until the time they are discharged from the ED to the floor.

The following are the nine key principles in making patient management more efficient and
effective:
• Match capacity to demand
• Monitor patient flow in real time
• Help shape demand
• Manage, reduce, or eliminate variability
• Reduce waste (anything that does not add value to the service or to the encounter)
• Forecast and predict demand for services
• Understand the implications and insights of queuing and queuing theory
• Understand the implications and insights of the Theory of Constraints
• Appreciate that the ED is part of a system

The process of improving patient flow begins with analyzing all the relevant metrics and reviewing all
the previous studies of patient flow. It continues with the two-day, hands-on operational assessment
we described earlier. The management and operational team should then be guided, coached, and
mentored by establishing and coaching performance improvement teams through the production
and execution of a process-improvement task matrix. Performance improvement teams play a vital
role in the development of hospital processes and relationships.

Any critical-care area, such as the ED or the department of surgery, can develop an “us versus the
world” mentality. With their particular needs and demands for special skills, these departments
commonly become isolated, working as silos. Yet this mentality is counterproductive to smoothing
flow throughout the unit and integrating flow with the rest of the hospital. Since more than half of
the admissions coming into any hospital arrive through the ED, this integration is important. With
coaching and process-improvement strategies in place, the ED staff can move beyond its silo and
help significantly increase the efficiency of the hospital as a whole.

Customer Service and Survival Skills

Patient satisfaction and excellent customer service are critical attributes of high performance EDs.
Patients, medical staffs, and hospital administrators have come to value satisfaction and service as
defining features of quality healthcare. Two factors are converging that will likely make the provision
of satisfactory service an even stronger driver in healthcare:
• the fact that consumer culture continues to infiltrate the medical world
• and the aging of the baby boomer generation

Each physician/staff should be recruited with customer service skills in mind, and those skills should
be monitored by compliment-and-complaint analysis.

Change Management
Improvements mean change, and embarking on cultural change can be quite challenging. It requires
patience, humor, and tenacity. Physicians and nurses are not always early adopters of change. They
are highly intelligent individuals who are trained to be independent and often don’t see themselves
as part of a possible problem. When you set out to improve your ED, a significant part of your time is
going to be spent interacting with physicians, earning their trust, and then obtaining agreement on
the vision, mission, values, and goals of the department that coincide with their clinical practices.
With the right investments in time, metrics, and communication, you can take major steps toward
optimizing any ED.

Success in managing change depends fundamentally on a positive, proactive, and evolving

relationship with each partner in the clinical provision of care. In the ED, our partners include the
hospital, the medical staff, patients, and physicians and midlevel practitioners. It is crucial to align
strategic incentives among each of those partners to ensure that their needs are met to the best
extent possible. The best way to meet those needs is to engage our emergency physicians and
nurses in an intensive change-management process. This program, which was outlined in the
American College of Emergency Physicians white paper on ED operations management, delineates
the following five steps:

• Bring dissatisfaction with the present state into the open and create a sense of urgency
• Communicate a clear vision of the proposed change
• Promote participation in the proposed change
• Communicate clearly
• Maintain the commitment
Organizational change can seem like navigating through swirling rapids. You find your way through
them by a combination of diagnostic assessments, team and leadership development, establishing a
common vision, creating an ongoing dialogue, and implementing measures and rewards that
monitor the process and promote the envisioned results. Always keep in mind that people support
what they help create. If they are with you on the takeoff, they will be with you at the landing.

Building a Risk-Free Facility

The key to successful management of professional liability exposure is not just risk management—
which is, after all, dealing with problems after they have occurred—
but risk reduction: creating, implementing, and monitoring a system that reduces risk by preventing
medical errors from occurring in the ED. To reduce the risk of medical errors, organizations should
implement programs that integrate staff education, ongoing Internet training, and continuous
monitoring of high-risk areas.

With professional liability premiums continuing to rise, establishing a risk-free ED not only enhances
patient safety but also frees up clinical practice revenues for rewarding the clinicians who practice in
a safe and measured manner.

Having staff members who communicate effectively and work well together for the common goals of
safety and excellent service is critical to risk reduction.

One has to embrace the principles of teamwork and training embedded within the Discipline of
crew-resource management. In all of our EDs, the physicians, midlevel practitioners, and nurses
undergo training in teamwork through crew-resource management. As with so many of our
programs, we achieve success through education,
training, mentoring, and focused repetition. An incentive program rewards and reinforces the
desired behaviors.

Billing and Collection

Billing and collection are traditionally outsourced. The billing process is complicated, requiring a
certain level of tenacity, experience, and expertise. Amounting to approximately 8%–15% of
revenue, it is one of the largest expenses after wages.
As a staffing company grows, it can consider acquiring or developing an internal billing system as a
means to save capital and, in the future, generate new revenue.

Each ED should have on-site office staff members responsible and accountable for ensuring that
each chart is signed, properly coded, and promptly sent to the billing component. Any holdup in the
charting process will have direct ramifications on the flow of revenue. Coding, billing, and collecting
are critical to the success of the operation.

7.6 ASSESSMENT METHOD FOR TESTING EFFICIENCY

Make a Plan and Stick to It

When you set out to evaluate your ED, you should follow a defined, scripted, and sequenced
process.

The process takes six to 12 months, with the majority of the work occurring within the first 90–120
days Significant scheduled points of contact occur in months one, two, three, six, nine, and 12

Scheduled project milestones in months six and 12 assess actions and progress to date and include a
review of progress with the on-site medical director

Assessment involves the use of a proprietary balanced scorecard approach, key metrics, and
multiple sources of feedback. During the first 90 to 120 days, there should be three individualized
department assessments that result in three corresponding concrete actions tailored to the facility.

Assessment 1: Patient Satisfaction

The first assessment is an in-depth examination of the current patient satisfaction tool and its
results. After the assessment, we provide our patient satisfaction and customer service training
course and survival skills, with emphasis placed on those areas flagged as deficient in the patient
satisfaction survey. Because patient satisfaction is an outcome of a system, we enroll all the ED staff
members—physicians, nurses, administrative assistants, and support staff members—in the one-day
course.
Assessment 2: Operations and Patient Flow
A two-day assessment is taken up. This phase involves a revisit assessment of throughput and
operations data and a two-day visit in the department. Activities include interviews with everyone
involved in operating a successful ED—lab, x-ray, pharmacy, nursing, and the medical staff and
hospital management. The operations assessment also includes several hours of direct observations
and analysis during the course of multiple clinical shifts.
Resulting from this assessment are a preliminary summary of the findings and plans for development
of a six- to 12-month action plan for operational improvements, presented to the medical director
and the process improvement team.

Assessment 3: Risk Management and Patient Safety

Finally assess risk management, using either a survey previously done by the malpractice carrier or
performing our own environmental assessment. This stage culminates with our Creating the Risk-
Free ED™ course, a half-day, on-site review of the high-risk, problem prone areas in emergency
medicine (an Internet-based version is also available). Again, because safety and risk management
are properties of individual and system performance, all key personnel are enrolled in the course. It
includes a session on crew-resource management or teamwork training, as well as an opportunity
for the staff to craft local responses to the issues that arise. Web-based risk-management tools,
support, and feedback are also utilized.

7.7 STEPS TO OPTIMIZE HIGH-QUALITY CARE

The following five “rights” of medical administration are to be practiced:

• The right care:
• To the right person:

At the right time: The length of stay in an ED is the primary indicator of the quality of care the ED is
able to give. When patients wait five hours in the waiting room, the staff members have been
stressed for five hours before they even see those patients. More and more, nurses are working a
12-hour shift, and we know that 75% of medical errors made by nurses on a 12-hour shift come in
the last few hours, when they are exhausted.
Industry studies dating back more than 35 years have proven that spending more than 10 hours on a
specific task creates problems with efficiency and effectiveness.2 Timeliness in the delivery of care
must be a high priority.

In the right place: Delivering care in the right place is critical for an ED. If patients waiting to be
admitted occupy 16 of an ED’s 17 beds, those patients are not in the right place. If an ED nurse has
three critical patients in ED beds and five in the hallway, those patients are not in the right place. In
situations such as these, which are common in EDs, the hospital cannot deliver quality care. We
must reshape the system to provide the best possible chance for the patient to have a positive
outcome.

By the right people

The patient experience

The ED should do all it can to make sure that the patient has a satisfactory care experience. This
does not mean that we can guarantee outcomes. Historically, we have talked in healthcare about
concrete and measurable patient outcomes; we can deliver very good care overall and yet still have
adverse outcomes or patients who are highly displeased with their care. Medicine has become a
scientific, technically accurate practice, with practitioners well educated in the science of healthcare.

Yet the patient often does not get the healing touch that comes with time spent at the bedside. If
patients are not satisfied, they will voice their displeasure to a wide audience and seek care
elsewhere.

The ED staff’s experience

The key to a positive staff experience lies in spending time with the patient and creating a positive
environment in which to work. First, a positive environment draws staff members, which in turn
contributes to creating more time available for each patient. Originally, religious organizations
trained nurses to be nurturers.

Caring for people was the hallmark of the profession. The satisfaction that comes from this
experience draws good nurses to the profession and keeps them there. As the nursing profession
has evolved, however, nurses are now required to be technical specialists who often have little time
to connect with and nurture patients. This has created an environment high in frustration and low in
career satisfaction, but the situation can be improved. For example, in one hospital ED, we began
with a 33% RN vacancy rate, and nurses were overwhelmed and overworked. One year later, 11
nurses within the hospital system were waiting to come to work in the ED. Changing the
environment by training and grooming the staff with a positive attitude transformed the ED for both
workers and patients.

7.8 SUMMARY

A study from the American Hospital Association indicated that 62 percent of hospitals feel they are
at or over operating capacity. That number jumps to 90 percent when considering Level 1 Trauma
Centers and larger (300+ beds) hospitals. Countless emergency departments are literally on life
support as they try to cope with capacity issues and workforce shortages. This calls for efficient
operational management to ensure proper utilization of resources.

7.9 KEY WORDS

Emergency department crowding: An ED is considered crowded when inadequate resources to meet

patient care demands lead to a reduction in the quality of care.

Ambulance diversion: An ambulance is diverted when hospitals request that ambulances bypass
their ED and transport patients to other medical facilities.

Boarding: A patient remains in the ED after the decision to admit or transfer the patient has been
made (e.g., because an inpatient bed elsewhere in the hospital is not yet available).
UNIT 8 PRODUCT, PROCESS DESIGNING, FACILITY LOCATION AND
LAYOUT

Specific learning objectives

After going through this Unit, you will be able to understand:

• The basic concepts of Product design and Product Development Process

• The basic concepts of Process And Design Analysis
• The basic concepts of Facility Planning
Structure

8.1 Introduction
8.2 Effective Product Design
8.3 Product Development Process
8.4 Process and Design Analysis
8.5 Essentials of Design Process
8.6 The Design Process
8.7 Facility Planning
8.8 Objectives of Facility Planning
8.9 Facility Planning Process
8.10 Summary
8.11 Key Words

8.1 INTRODUCTION

Product development is the process of creating a new product to be sold by a business or enterprise
to its customers. In the document title, Design refers to those activities involved in creating the
styling, look and feel of the product, deciding on the product's mechanical architecture, selecting
materials and processes, and engineering the various components necessary to make the product
work. Development refers collectively to the entire process of identifying a market opportunity,
creating a product to appeal to the identified market, and finally, testing, modifying and refining the
product until it is ready for production. A product can be any item from a book, musical composition,
or information service, to an engineered product such as a computer, hair dryer, or washing
machine. The task of developing outstanding new products is difficult, time-consuming, and costly.
People who have never been involved in a development effort are astounded by the amount of time
and money that goes into a new product. Great products are not simply designed, but instead they
evolve over time through countless hours of research, analysis, design studies, engineering and
prototyping efforts, and finally, testing, modifying, and re-testing until the design has been
perfected.

8.2 EFFECTIVE PRODUCT DESIGN

Organization success is dependent on customer satisfaction and delight. Customer satisfaction is

achieved through development of product and service, which have all attributes required by the
customer. A success product or services do not only have attractive package design but should be
also able to provide robust performance.
Thus, product design must be practical enough for production and powerful enough to provide a
competitive advantage.

Product Design
A good product design has following common features:

Utility: The product design should make product utility as per expectation of customers and provide
steady performance through the product life.

Aesthetics: Product aesthetics is important in success of the product. The product aesthetics is
dependent on market and end customer.

Producible: Product design should enable effective production of product through available
production methods.

Profitability: Product design should make economic sense as to deliver value to customer and
sustainability to the organization.
Differentiable: A good product design should enable product to be differentiate among its
competition. This can be achieved by attractive packaging and also by providing additional service on
the product.

Factors Affecting Product Design

A successful product design is combination factors as follows:

Correct Team Selection: This is very essential to get the correct team in place which has expert
designers who are not only aware and comfortable with technology but also understanding of
customer expectation.

Customer Involvement: Involvement of customer in product design and testing can provide insight
into the direction of the project

Prototyping and testing: Product design is high risk concept as it involves commitment of capital and
man-power; therefore, it is imperative that extensive prototyping and testing are done with
customer and market.

Raw Material: It is essential that raw material to be used in the production meets the quality
standards of the end product. Furthermore, procurement system needs to be in place to ensure
continuous, cost effective supply.

Production method and process layout: Feasibility of production method and process layout
determines future success of the product.

External Factors: Environmental and government regulations plays an important part in product
design. And these norms are updated from time to time, so product design should have the
flexibility to adapt.

Product Selection
Production selection process is done through a combination of financial analysis, risk analysis,
existing product portfolio, raw material supply and pre-determined product criteria.

8.3 PRODUCT DEVELOPMENT PROCESS

The process of developing new products varies between companies, and even between products
within the same company. Regardless of organizational differences, a good new product is the result
a methodical development effort with well-defined product specifications and project goals. A
development project for a market-pull product is generally organized along the lines shown in
Figure.

The Generic Product Development Process

concept System-Level Detail Testing andProduction

Development Design Design Refinement Ramp-Up

Marketing

Define market Develop plan for Develop Dev. promotion Place early
segments product options marketing plan and launch production
Identify Lead users and extended materials with key
Identify competitive product family Facilitate customers
products field tests

Design :-Study feasibility Generate Define part Reliability, Evaluate

of product concepts alternative geometry performance early
Develop industrial architectures Spec materials and life tests production
design concepts Define systems Spec tolerances Get regulatory output
Build and test and interfaces Industrial design approvals
experimental prototypes Refine industrial control Implement
design documentation design changes

Manufacturing

Estimate Identify suppliers Define processes Begin supplier Begin

manufacturing cost Make/buy study Design tooling ramp-up operation of
Assess production Define final Begin tooling Refine mfg. production
feasibility assembly scheme procurement processes system

Concept Development

Customer Establish Generate Select a Refine

Needs Target Product Product Specifications
Specifications Concepts Concept
 Perform Plan
Analyze Economic Remaining
Competitive Analysis
Development
Products Project

Good concept development is crucial. During this stage, the needs of the target market are
identified, competitive products are reviewed, product specifications are defined, a product concept
is selected, an economic analysis is done, and the development project is outlined. This stage
provides the foundation for the development effort, and if poorly done can undermine the entire
effort. Concept development activities are normally organized according to Figure

Identify Customer Needs: Through interviews with potential purchasers, focus groups, and by
observing similar products in use, researchers identify customer needs. The list of needs will include
hidden needs, needs that customers may not be aware of or problems they simply accept without
question, as well as explicit needs, or needs that will most likely be reported by potential purchasers.
Researchers develop the necessary information on which to base the performance, size, weight,
service life, and other specifications of the product. Customer needs and product specifications are
organized into a hierarchical list with a comparative rating value given to each need and
specification.

Establish Target Specifications: Based on customers' needs and reviews of competitive products,
the team establishes the target specifications of the prospective new product. While the process of
identifying customer needs is entirely a function of marketing, designers and engineers become
involved in establishing target specifications. Target specifications are essentially a wish-list
tempered by known technical constraints. Later, after designers have generated preliminary
products concepts, the target specifications are refined to account for technical, manufacturing and
economic realities.

Analyze Competitive Products: An analysis of competitive products is part of the process of

establishing target specifications. Other products may exhibit successful design attributes that
should be emulated or improved upon in the new product. And by understanding the shortfalls of
competitive products, a list of improvements can be developed that will make the new product
clearly superior to those of others. In a broader sense, analyzing competitive products can help
orient designers and provide a starting point for design efforts. Rather than beginning from scratch
and re-inventing the wheel with each new project, traditionally, the evolution of design builds on the
successes and failures of prior work.

Generate Product Concepts: Designers and engineers develop a number of product concepts to
illustrate what types of products are both technically feasible and would best meets the
requirements of the target specifications. Engineers develop preliminary concepts for the
architecture of the product, and industrial designers develop renderings to show styling and layout
alternatives. After narrowing the selection, non-functional appearance models are built of candidate
designs.
Select a Product Concept: Through the process of evaluation and tradeoffs between attributes, a
final concept is selected. The selection process may be confined to the team and key executives
within the company, or customers may be polled for their input. Candidate appearance models are
often used for additional market research; to obtain feedback from certain key customers, or as a
centerpiece of focus groups.

Refine Product Specifications: In this stage, product specifications are refined on the basis of input
from the foregoing activities. Final specifications are the result of tradeoffs made between technical
feasibility, expected service life, projected selling price, and the financial limitations of the
development project. With a new luggage product, for example, consumers may want a product that
is lightweight, inexpensive, attractive, and with the ability to expand to carry varying amounts of
luggage. Unfortunately, the mechanism needed for the expandable feature will increase the selling
price, add weight to the product, and introduce a mechanism that has the potential for failure.
Consequently, the team must choose between a heavier, more costly product, or one that does not
have the expandable feature. When product attributes are in conflict, or when the technical
challenge or higher selling price of a particular feature outweighs its benefits, the specification may
be dropped or modified in favor of other benefits.

Perform Economic Analysis: Throughout the foregoing activities, important economic implications
regarding development expenses, manufacturing costs, and selling price have been estimated. A
thorough economic analysis of the product and the required development effort is necessary in
order to define the remainder of the development project. An economic model of the product and a
review of anticipated development expenses in relation to expected benefits is now developed.

Plan the Remaining Development Project: In this final stage of concept development, the team
prepares a detailed development plan which includes a list of activities, the necessary resources and
expenses, and a development schedule with milestones for tracking progress.

System-Level Design

System-level design, or the task of designing the architecture of the product, is the subject of this
stage. In prior stages, the team was focused on the core product idea, and the prospective design
was largely based on overviews rather than in-depth design and engineering. Once the development
plan is approved, marketing may begin to develop ideas for additional product options and add-ons,
or perhaps an extended product family. Designers and engineers develop the product architecture in
detail, and manufacturing determines which components should be made and which should be
purchased, and identifies the necessary suppliers.

The product architecture defines the product in chunks, or the primary functional systems and
subsystems, and how these systems are arranged to work as a unit. For example, an automobile is
comprised of a body and a chassis with an engine, a transmission, final drive, frame, suspension and
braking system. The architecture of an automobile design determines the platform layout, whether
the vehicle is front-wheel-drive or rear-wheel-drive, the size and location of the engine, transmission
and final drive, the overall design of suspension system, and the layout and type of other necessary
subsystems such as brakes, wheels, and steering. The architecture may determine the layout of the
exhaust system, but it would not provide the detailed engineering needed to determine the
diameter and thickness of the exhaust pipe, the detailed design of mufflers, nor the engineering of
motor mounts and exhaust hangers needed to isolate vibrations from the passenger compartment.

The architecture of the product, how it is divided into chunks and how the chunks are integrated
into the total product, impacts a number of important attributes such as standardization of
components, modularity, options for change later on, ease of manufacture, and how the
development project is divided into manageable tasks and expenses. If a family of products or
upgrades and add-ons are planned, the architecture of the product would determine the
commonality of components and the ease with which upgrades and add-ons can be installed. A
system or subsystem borrowed from another product within the company's line will economize on
development, tooling and manufacturing costs. With outsourced components, the supplier may
contribute much of the associated design and engineering.

Detail Design

Detail design, or design-for-manufacture, is the stage wherein the necessary engineering is done for
every component of the product. During this phase, each part is identified and engineered.
Tolerances, materials, and finishes are defined, and the design is documented with drawings or
computer files. Increasingly, manufacturers and developers are turning to three-dimensional solid
modeling using programs such as Pro-Engineer. Three-dimensional computer models form the core
of today's rapid prototyping and rapid manufacturing technologies. Once the database has been
developed, prototype components can be rapidly built on computerized machines such as CNC mills,
fused deposition modeling devices, or stereo lithography systems.

Testing and Refinement

During the testing and refinement stage, a number of prototypes are built and tested. Even though
they are not made from production components, prototypes emulate production products as closely
as possible. These alpha prototypes are necessary to determine whether the performance of the
product matches the specifications, and to uncover design shortfalls and gain in-the-field experience
with the product in use. Later, beta prototypes are built from the first production components
received from suppliers.

Production Ramp-up

During production ramp-up, the work force is trained as the first products are being assembled. The
comparatively slow product build provides time to work out any remaining problems with supplier
components, fabrication, and assembly procedures. The staff and supervisory team are organized,
beginning with a core team, and line workers are trained by assembling production units.

Technology-Push Products

The generic development process is used with technology-push products, but with slight
modification. With technology-push products, the company acquires or develops a new technology
and then looks for appropriate markets in which to apply the technology. Consequently, an extra
phase is added at the beginning during which the new technology is matched to an appropriate
market opportunity. When the match has been made, the generic development process is carried
out as described.

8.4 PROCESS DESIGN AND ANALYSIS

The objective of organization is to provide service and product, which satisfy customer and create
value for them. A product and service designed is based on the customer feedback and requirement
of the market. Process design is where the product is broken down into parts, which further can be
helpful in the actual manufacturing process.

A product, for example, has attractive packaging to provide the right aesthetics plus has function and
features, which provide value to customers. Process design ensures that there is smooth and
continuous relationship between required output and all the intermediate process.

For example, manufacturing of Air-Conditioners, process design has to be such that maximum supply
is achieved during the hot months of summer when demand of the product is at the highest. So
people, process and machines need to align to give continuous production throughout the year as to
satisfy seasonal demand.

Assignment like a building or bridge (manufacturing) to interior design (service) and mass production
project like a car (manufacturing) to a fast-food joint (Services).

What Is Process Design? The activity of determining the workflow, equipment needs, and
implementation requirements for a particular process. Process design typically uses a number
of tools including flowcharting, process simulation software, and scale models.

Process design in operations in management means to align all the aspects of an organization with
the needs and wants of the client. It is concerned with the production, inventory and the delivery of
services and products. It is a new technology that controls the resources of the organization.

A successful process design has to take into account the appropriateness of the process to overall
organization objective. Process design requires a broad view of the whole organization and should
not have a myopic outlook. And the process should deliver customer value with constant
involvement of the management at various stages.
In order to achieve a good process design, effective process strategy is required, which deals with
singular line items required to manufacture the end product. Effective process strategy deals with
raw material procurement, customer participation, technology investment, etc.

Over a period of time process design has undergone change and new concepts like Flexible
Manufacturing Systems have been developed, which delivers efficient and effective production
design and analysis.

8.5 ESSENTIALS OF PROCESS DESIGNING

There are four V’s in operations management. These were

• volume
• variety
• variation
• visibility

The first two of these – volume and variety – are particularly important when considering
design issues in operations management. Not only do they usually go together (high variety
usually means low volume, high volume normally means low variety) but together they also
impact on the nature of products and services and processes which produce them.

The volume and variety of an operation’s activities are particularly influential in determining
the way it thinks about its performance objectives. The figure below illustrates how the
definitions of quality, speed, dependability, flexibility and cost are influenced by the volume-
variety position of the operation.
Quality
Quality in a low volume-high variety process such as an architects’ practice, for example, is largely
concerned with the final aesthetic appearance of the building and the appropriateness of its detailed
design. In an exceptionally high volume-low variety process, such as an electricity supply company,
quality is exclusively concerned with error-free service – electricity must be constantly available in
the correct form (in terms of voltage, frequency, etc.). The meaning of quality has shifted from being
concerned primarily with the performance and specification of the product or service towards
conformity to a predefined standard, as we move from low volume-high variety operations through
to high volume-low variety operations.

Speed
Speed for the architects’ practice means negotiating a completion date with each client, based on
the client’s needs and the architects’ estimates of how much work is involved in each project. Speed
is taken to its extreme in the electricity utility where speed means literally instant delivery. No
electricity company could ask its customers to wait for their ‘delivery’ of electricity. Speed therefore
means an individually negotiated delivery time in low volume-high variety operations, but moves
towards meaning ‘instant’ delivery in some high volume-low variety operations.

Dependability
Dependability in processes such as the architects’ practice means keeping to each individually
negotiated delivery date. In continuous operations, dependability often means the availability of the
service itself. A dependable electricity supply is one which is always there. So dependability has
moved from meaning ‘on-time delivery’ in low volume-high variety operations to ‘availability’ in high
volume-low variety operations.

Flexibility
Flexibility in low volume-high variety processes such as the architects’ practice means the ability to
design many different kinds of buildings according to its clients’ various requirements. With the
electricity company’s process, the need for product flexibility has disappeared entirely (electricity is
electricity, more or less) but the ability to meet almost instantaneous demand changes through
volume flexibility is vital if the company is to maintain supply. Flexibility has moved from meaning
product flexibility in low volume-high variety operations to volume flexibility in high volume-low
variety operations.

Cost
Cost, in terms of the unit cost per product or service, varies with both the volume of output of the
operation and the variety of products or services it produces. The variety of products or services in
low-volume operations is relatively high, which means that running the operation will be expensive
because of the flexible and high skill levels employed. Further, because the volume of output is
relatively low, a few products or services are bearing the operation’s high cost base. Also, and more
significantly for the operation, the cost of each product or service is different. At the other end of
the scale, high-volume operations usually produce similar products or services, output is high, so
that whatever the base cost of the operation, it is shared among a high number of products or
services. Cost per unit of output is therefore usually low for operations such as the electricity utility
but, more significantly, the cost of producing one second of electricity is the same as the next
second. Cost is relatively constant.

8.6 THE DESIGN PROCESS

Steps

The design process is achieved by following 10 stages.

1. Identify the problem/product innovation

2. Define the working criteria/goals
3. Research and gather data
4. Brainstorm / generate creative ideas
5. Analyze potential solutions
 6. Develop and test models
7. Make the decision
8. Communication and specify
9. Implement and commercialize
10. Perform post-implementation review and assessment

Stage -1: Identifying the problem/product innovation: Problems to be solved are often identified as
the specific needs and problems of customers.

Example: Patient identification errors in hospitals

Stage 2: Define the working criteria and goals: (RFID)is the solution

• How much will it cost?

• Will it be difficult to produce?
• What will be the size, weight, strength of new design?
• What will it look like?
• Will it be easy to use?
• Are there legal concerns?
• Will it be reliable Will it meet the EPA standard?
• Is this what the customer truly wanted?
• Will our customers want to use it?
• Will customers want to purchase this version instead of a competitor’s product?
• Is it feasible for our customer to buy it?

Stage 3: Research and gather data

• What information has been published about the problem?

• Is there a solution to the problem that already may be available?
• If the answer to the above is yes, who is producing it?
• What are the advantages of their solution?
• What are the disadvantages to their solution?
• What is the cost?
• Is cost significant issue?
• What is the ratio of time compared to overall cost?
• Are there legal issues to consider?
• Are there environmental concerns which must be considered?

Information can be obtained

 • Libraries
• Professional Society
• Journal, publications and newsletter
• Newspapers and magazines
• Market assessment surveys
• Government publications
• Patent searches and listings
• Technical salespersons and their references catalogs
• Professional experts including researchers, professors and other scientists

The competition’s product (how they designed it? Disassemble their product and study it

Stage 4: Brainstorm / Generate creative ideas

• Creative problem solving is a major method of generating multiple ideas to a problem by a

technique called brainstorming.

• No preliminary judgments are made about any member’s idea, and no negative comments
are allowed.

• The goal here is to list as many ideas as possible

Stage 5: Analyze potential solutions

• Computer analysis technique

• Analysis of compatibility
• Consistency of testing
• Estimation
• Economic analysis
• Common sense
• Analysis using basic engineering principles and laws

Develop and test models

• Mathematical models
• Computer models
• Scale model
• Diagrams or graphs
• Durability
• Ease assembly
• Reliability
• Strength
• Environmental
• Quality consistency
• Safety
Stage 7: Make the decision

• Cost Point Available Stag

#1 #2 e 8:
Com
• Production Difficulty 20 17 muni

15 catio
n
• Size, weight, strength 15 8 and

12 speci
fy
• Appearance 10 7 8 • C

• Convenient to use 5 3 omm

unic
3
ate data and design for each specific solution and get input
• Safety 10 7 8
• Legal issues 5 4 3
• 9:Reliability/Durability
Stage Implement and commercialize 15 9
11
Stage 10: Perform post-implementation review and assessment
•• Recyclability
Check if the final product is giving you what you5actually wanted4from 2feasibility and if the
consumer likes it, etc.
• Customer Appeal 10 8 9
8.7 FACILITY PLANNING
A facility has the following two attributes
Building
⚫ people
⚫ material
⚫ machines
Has a Stated purpose
⚫ objectives
Definition: Facilities planning determines how an activity's tangible fixed assets best support
achieving the activity's objective.
⚫ For a manufacturing firm, facilities planning involves the determination of how the
manufacturing facility best supports production.
⚫ For an airport, facilities planning involves determining how the airport facility is to
support the passenger-airplane interface.
⚫ For a hospital: How the hospital facility supports providing medical care to patients.
Components of Facility Planning
Facilities Location
If the organization can configure the right location for the manufacturing facility, it will have
sufficient access to the customers, workers, transportation, etc. For commercial success, and
competitive advantage following are the critical factors:

Customer Proximity: Facility locations are selected closer to the customer as to reduce
transportation cost and decrease time in reaching the customer.

Business Area: Presence of other similar manufacturing units around makes business area conducive
for facility establishment.

Availability of Skill Labor: Education, experience and skill of available labor are another important,
which determines facility location.

Free Trade Zone/Agreement: Free-trade zones promote the establishment of manufacturing facility
by providing incentives in custom duties and levies. On another hand free trade agreement is among
countries providing an incentive to establish business, in particular, country.

Suppliers: Continuous and quality supply of the raw materials is another critical factor in
determining the location of manufacturing facility

• Determining how the location of a facility supports meeting the facility's objective
- Its placement with respect to customer, suppliers, and other facilities with which it
interfaces.
- Its orientation on a specific plot of land.

Facilities Design
The determination of how the design components of a facility support achieving the facility's
objectives

Facility Systems
• Structural and enclosure systems
• Lighting, electrical, communication systems
• Life safety systems
 • Sanitation systems
For a plant:
• Power, light, gas, heat, ventilation, air conditioning, water, sewage needs.

Facilities Layout:For an organization to have an effective and efficient manufacturing unit, it is

important that special attention is given to facility layout. 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.
An effective facility layout ensures that there is a smooth and steady flow of production material,
equipment and manpower at minimum cost. Facility layout looks at physical allocation of space for
economic activity in the plant. Therefore, main objective of the facility layout planning is to design
effective workflow as to make equipment and workers more productive.

Facility Layout Objective

A model facility layout should be able to provide an ideal relationship between raw material,
equipment, manpower and final product at minimal cost under safe and comfortable environment.
An efficient and effective facility layout can cover following objectives:

• To provide optimum space to organize equipment and facilitate movement of goods and to
create safe and comfortable work environment.
• To promote order in production towards a single objective
• To reduce movement of workers, raw material and equipment
• To promote safety of plant as well as its workers
• To facilitate extension or change in the layout to accommodate new product line or
technology upgradation
• To increase production capacity of the organization

An organization can achieve the above-mentioned objective by ensuring the following:

• Better training of the workers and supervisors.
• Creating awareness about of health hazard and safety standards
• Optimum utilization of workforce and equipment
• Encouraging empowerment and reducing administrative and other indirect work
Design of Facility Layout
Principles which drive design of the facility layout need to take into the consideration objective of
facility layout, factors influencing facility layout and constraints of facility layout. These principles are
as follows:

Flexibility: Facility layout should provide flexibility for expansion or modification.

Space Utilization: Optimum space utilization reduces the time in material and people movement
and promotes safety.

Capital: Capital investment should be minimal when finalizing different models of facility layout.

Design Layout Techniques

There are three techniques of design layout, and they are as follows:

Two or Three Dimensional Templates: This technique utilizes development of a scaled-down model
based on approved drawings.

Sequence Analysis: This technique utilizes computer technology in designing the facility layout by
sequencing out all activities and then arranging them in circular or in a straight line.

Line Balancing: This kind of technique is used for assembly line.

Types of Facility Layout

• There are six types of facility layout, and they are as follows:
• Line Layout
• Functional Layout
• Fixed Position Layout
• Cellular Technology Layout
• Combined Layout, and
• Computerized Relative Allocation of Facility Technique
In the facility layout the following factors are to be considered.

• Equipment
 • Machinery
• Furnishings
• Production areas
• Support areas
• Personnel areas within the building

Factors affecting Facility Layout

• Facility layout designing and implementation is influenced by various factors. These factors
vary from industry to industry but influence facility layout. These factors are as follows:
• The design of the facility layout should consider overall objectives set by the organization.
• Optimum space needs to be allocated for process and technology.
• A proper safety measure as to avoid mishaps.
• Overall management policies and future direction of the organization

Handling System Design

• Mechanisms needed to satisfy the required facility interactions.

• Materials, personnel, information, and equipment-handling systems required to support
production.

8.8 OBJECTIVES OF FACILITY PLANNING

• Customer satisfaction
• Return on assets (ROA)
- Maximize inventory turns
- Minimize obsolete inventory
- Maximize employee participation
- Maximize continuous improvement
• Speed for quick customer response
• Costs and supply chain profitability
• Supply chain through partnerships and communication
• Organization’s vision
• Utilizations of people, equipment, space, energy.
 • Return on investment (ROI) on all capital expenditures
• Adaptability and ease of maintenance
• Employee safety and job satisfaction

8.9 FACILITY PLANNING PROCESS

Defıne The Problem

• The objective of the facility
- Products/Volumes/Role in the SC
• The primary and support activities
- Operations, equipment, personnel, material flows
- Maintenance
Analyze The Problem
• The interrelationships among all activities
(Qualitative and quantitative)

Determıne The Space Requırements For All Actıvıtıes

• For all equipment, material, and personnel
- Alternative designs
- Alternative facilities plans
Evaluate The Alternatıves
Select The Preferred Desıgn
Implement The Desıgn
- Implement the plan
- Maintain and adapt the plan
- Redefine the objective of the facility
Flow Chart of Facility planning
Facility Planning –A Systems Approach: The figure below depicts the systems approach to facility
planning
 Type and Quantity of
Determining Flow of
Facility Location Material Handling
Products and People
Devices

Type & Volume of Determine Material Scheduling and

Products (services) Handling Methods Planning Jobs

Manufacturing
Layout of Equipment
(services) Processes Overall System Design
within Each Cell
Required

Design of Components
Layout of machine cells Inventory Control
(services)

Determination of
Type and Quantity of
Machine (service) Distribution of Goods
Equipment Required
Cells

Tooling and Fixture Quality Control and

Process Planning
Determination Customer Service

8.10 SUMMARY

The involvement of Industrial Engineers in the design process enhances and optimizes all
aspects of architectural professional practice in commercial, healthcare, or industrial projects.
Traditionally IES possess skills and analytical tools for determining site selection, space
requirements, flow/activity analysis, and space/function relationship programming. Using these
skills, the engineer brings value to the overall design by assisting in operations planning, concept
design, and layout evaluation and therefore yielding a more cost-effective and functional
design.”

8.11 KEY WORDS

A good product design has following common features:

Utility: The product design should make product utility as per expectation of customers and provide
steady performance through the product life.
Aesthetics: Product aesthetics is important in success of the product. The product aesthetics is
dependent on market and end customer.
Producible: Product design should enable effective production of product through available
production methods.
Profitability: Product design should make economic sense as to deliver value to customer and
sustainability to the organization.
Differentiable: A good product design should enable product to be differentiate among its
competition. This can be achieved by attractive packaging and also by providing additional service on
the product.

1 Definition: - Facilities planning determines how an activity's tangible fixed assets best support
achieving the activity's objective.
⚫ For a manufacturing firm, facilities planning involves the determination of how the
manufacturing facility best supports production.
⚫ For an airport, facilities planning involves determining how the airport facility is to
support the passenger-airplane interface.
⚫ For a hospital: How the hospital facility supports providing medical care to
patients.
Facility Systems
⚫ Structural and enclosure systems
⚫ Lighting, electrical, communication systems
⚫ Life safety systems
⚫ Sanitation systems
Facility Layout Objective
• A model facility layout should be able to provide an ideal relationship between raw material,
equipment, manpower and final product at minimal cost under safe and comfortable
environment. An efficient and effective facility layout can cover following objectives:
• To provide optimum space to organize equipment and facilitate movement of goods and to
create safe and comfortable work environment.
• To promote order in production towards a single objective
• To reduce movement of workers, raw material and equipment
• To promote safety of plant as well as its workers
• To facilitate extension or change in the layout to accommodate new product line or
technology upgradation
To increase production capacity of the organization
UNIT 9: CAPACITY PLANNING

Specific learning objectives

After going through this Unit, you will be able to understand:

• the basic concepts of capacity planning;

• the process of capacity planning;
• the basic concepts of aggregate planning;
• concept of design and systems capacity;
• application of capacity planning in hospitals.

Structure

9.1 Introduction
9.2 Need for Capacity Planning
9.3 Process of Capacity Planning
9.4 Importance of Capacity Decisions
9.5 Aggregate Planning
9.6 Strategic Capacity Planning
9.7 Design and Systems Capacity
9.8 Improving Hospital Operational Efficiency by Appropriate Capacity Comparison
9.9 Summary
9.10 Key Words

9.1 INTRODUCTION

The production system design planning considers input requirements, conversion process and
output. After considering the forecast and long-term planning organization should undertake
capacity planning.

Capacity is defined as the ability to achieve, store or produce. For an organization, capacity would be
the ability of a given system to produce output within the specific time period. In operations,
management capacity is referred as an amount of the input resources available to produce relative
output over period of time.
In general, terms capacity is referred as maximum production capacity, which can be attained within
a normal working schedule.
Capacity planning is essential to be determining optimum utilization of resource and plays an
important role decision-making process, for example, extension of existing operations, modification
to product lines, starting new products, etc.

9.2 NEED FOR CAPACITY PLANNING

Design of the production system involves planning for the inputs, conversion process and outputs of
production operation. The effective management of capacity is the most important responsibility of
production management. The objective of capacity management (i.e. planning and control of
capacity) is to match the level of operations to the level of demand.

Capacity planning is to be carried out keeping in mind future growth and expansion plans, market
trends, sales forecasting, etc. It is a simple task to plan the capacity in case of stable demand. But in
practice the demand will be seldom stable. The fluctuation of demand creates problems regarding
the procurement of resources to meet the customer demand. Capacity decisions are strategic in
nature.

Capacity is the rate of productive capability of a facility. Capacity is usually expressed as volume of
output per period of time.

Production managers are more concerned about the capacity for the following reasons:

• Sufficient capacity is required to meet the customers demand in time.

• Capacity affects the cost efficiency of operations.
• Capacity affects the scheduling system.
• Capacity creation requires an investment.

Capacity planning is the first step when an organization decides to produce more or new products.

3.5

9.3 PROCESS OF CAPACITY PLANNING

Capacity planning is concerned with defining the long-term and the short-term capacity needs of an
organization and determining how those needs will be satisfied. Capacity planning decisions are
taken based upon the consumer demand and this is merged with the human, material and financial
resources of the organization.

Capacity requirements can be evaluated from two perspectives—long-term capacity strategies and
short-term capacity strategies.

Long-term capacity strategies: Long-term capacity requirements are more difficult to determine
because the future demand and technology are uncertain. Forecasting for five or ten years into the
future is more risky and difficult. Even sometimes company’s today’s products may not be existing in
the future. Long-range capacity requirements are dependent on marketing plans, product
development and life-cycle of the product. Long-term capacity planning is concerned with
accommodating major changes that affect overall level of the output in long-term. Marketing
environmental assessment and implementing the long-term capacity plans in a systematic manner
are the major responsibilities of management.

Following parameters will affect long-range capacity decisions:

Multiple products

Company’s produce more than one product using the same facilities in order to increase the profit.
The manufacturing of multiple products will reduce the risk of failure. Having more than on product
helps the capacity planners to do a better job. Because products are in different stages of their life
cycles, it is easy to schedule them to get maximum capacity utilization.

Phasing in capacity

In high technology industries, and in industries where technology developments are very fast, the
rate of obsolescence is high. The products should be brought into the market quickly. The time to
construct the facilities will be long and there is no much time, as the products should be introduced
into the market quickly. Here the solution is phase in capacity on modular basis. Some commitment
is made for building funds and men towards facilities over a period of 3-5 years. This is an effective
way of capitalizing on technological breakthrough.

Phasing out capacity

The outdated manufacturing facilities cause excessive plant closures and down time. The impact of
closures is not limited to only fixed costs of plant and machinery. Thus, the phasing out here is done
with humanistic way without affecting the community. The phasing out options makes alternative
arrangements for men like shifting them to other jobs or to other locations, compensating the
employees, etc.

Short-term capacity strategies

Managers often use forecasts of product demand to estimate the short-term workload the facility
must handle. Managers looking ahead up to 12 months, anticipate output requirements for different
products, and services. Managers then compare requirements with existing capacity and then take
decisions as to when the capacity adjustments are needed.

For short-term periods of up to one year, fundamental capacity is fixed. Major facilities will not be
changed. Many short-term adjustments for increasing or decreasing capacity are possible. The
adjustments to be required depend upon the conversion process like whether it is capital intensive
or labour intensive or whether product can be stored as inventory. Capital-intensive processes
depend on physical facilities, plant and equipment. Short-term capacity can be modified by
operating these facilities more or less intensively than normal. In labour intensive processes short-
term capacity can be changed by laying off or hiring people or by giving overtime to workers. The
strategies for changing capacity also depend upon how long the product can be stored as inventory.

The short-term capacity strategies are:

Inventories: Stock finished goods during slack periods to meet the demand during peak period.

Backlog: During peak periods, the willing customers are requested to wait and their orders are
fulfilled after a peak demand period.

Employment level (hiring or firing): Hire additional employees during peak demand period and lay
off employees as demand decreases.

Employee training: Develop multi skilled employees through training so that they can be

rotated among different jobs. The multi skilling helps as an alternative to hiring employees.

Subcontracting: During peak periods, hire the capacity of other firms temporarily to make

the component parts or products.

Process design: Change job contents by redesigning the job.

3.6

9.4 IMPORTANCE OF CAPACITY DECISIONS

• Capacity decisions have a real impact on the ability of the organization to meet future
demands for products and services; capacity essentially limits the rate of output possible.
Having capacity to satisfy demand can allow a company to take advantage of tremendous
opportunities.

• Capacity decisions affect operating costs. Ideally, capacity and demand requirements will be
matched, which will tend to minimize operating costs. In practice, this is not always achieved
because actual demand either differs from expected demand or tends to vary (e.g.,
cyclically). In such cases, a decision might be made to attempt to balance the costs of over
and under capacity.

• Capacity is usually a major determinant of initial cost. Typically, the greater the capacity of a
productive unit, the greater its cost. This does not necessarily imply a one for-one
relationship; larger units tend to cost proportionately less than smaller units.

• Capacity decisions often involve long-term commitment of resources and the fact that, once
they are implemented, it may be difficult or impossible to modify those decisions without
incurring major costs.
• Capacity decisions can affect competitiveness. If a firm has excess capacity, or can quickly
add capacity, that fact may serve as a barrier to entry by other firms. Then too, capacity can
affect delivery speed, which can be a competitive advantage.

• Capacity affects the ease of management; having appropriate capacity makes management
easier than when capacity is mismatched.

9.5 AGGREGATE PLANNING

Aggregate planning is an operational activity critical to the organization as it looks to balance long-
term strategic planning with short term production success. Following factors are critical before an
aggregate planning process can actually start;
• A complete information is required about available production facility and raw materials.

• A solid demand forecast covering the medium-range period

• Financial planning surrounding the production cost which includes raw material, labor,
inventory planning, etc.

• Organization policy around labor management, quality management, etc.

• In a scenario where demand is not matching the capacity, an organization can try to balance
both by pricing, promotion, order management and new demand creation.

• In scenario where capacity is not matching demand, an organization can try to balance the
both by various alternatives such as.

• Laying off/hiring excess/inadequate excess/inadequate excess/inadequate workforce until

demand decrease/increase.

• Including overtime as part of scheduling there by creating additional capacity.

• Hiring a temporary workforce for a fix period or outsourcing activity to a sub-contractor.

Importance of Aggregate Planning

Aggregate planning plays an important part in achieving long-term objectives of the organization.
Aggregate planning helps in:
• Achieving financial goals by reducing overall variable cost and improving the bottom line
• Maximum utilization of the available production facility
• Provide customer delight by matching demand and reducing wait time for customers
• Reduce investment in inventory stocking
• Able to meet scheduling goals there by creating a happy and satisfied work force

Aggregate Planning Strategies

There are three types of aggregate planning strategies available for organization to choose from.
They are as follows.
Level Strategy
As the name suggests, level strategy looks to maintain a steady production rate and workforce level.
In this strategy, organization requires a robust forecast demand as to increase or decrease
production in anticipation of lower or higher customer demand. Advantage of level strategy is steady
workforce. Disadvantage of level strategy is high inventory and increase back logs.

Chase Strategy
As the name suggests, chase strategy looks to dynamically match demand with production.
Advantage of chase strategy is lower inventory levels and back logs. Disadvantage is lower
productivity, quality and depressed work force.

Hybrid Strategy
As the name suggests, hybrid strategy looks to balance between level strategy and chase strategy.

Factors Affecting Aggregate Planning: Design Capacity, System Capacity, Actual output
Reduced by long Range
DESIGN CAPACITY
Effects, Product mix, market
Conditions, tight quality
Specifications, imbalance in
Equipment and labour

Reduced by short Range

SYSTEM CAPACITY
Effects, Actual Demand, Inefficiency
Of workers, machines, scheduling
Planning and control

ACTUAL OUTPUT

9.6 STRATEGIC CAPACITY PLANNING

A technique used to identify and measure overall capacity of production is referred to as strategic
capacity planning. Strategic capacity planning is utilized for capital intensive resource like plant,
machinery, labor, etc.

Strategic capacity planning is essential as it helps the organization in meeting the future
requirements of the organization. Planning ensures that operating cost are maintained at a
minimum possible level without affecting the quality. It ensures the organization remain competitive
and can achieve the long-term growth plan.

Capacity Planning Classification

Capacity planning based on the timeline is classified into three main categories long range, medium
range and short range.

Long Term Capacity: Long range capacity of an organization is dependent on various other capacities
like design capacity, production capacity, sustainable capacity and effective capacity. Design capacity
is the maximum output possible as indicated by equipment manufacturer under ideal working
condition.

Production capacity is the maximum output possible from equipment under normal working
condition or day.

Sustainable capacity is the maximum production level achievable in realistic work condition and
considering normal machine breakdown, maintenance, etc. Effective capacity is the optimum
production level under pre-defined job and work-schedules, normal machine breakdown,
maintenance, etc.

Medium Term Capacity: The strategic capacity planning undertaken by organization for 2 to 3 years
of a time frame is referred to as medium term capacity

Short Term Capacity: The strategic planning undertaken by organization for a daily weekly or
quarterly time frame is referred to as short term capacity planning.

Goal of Capacity Planning

The ultimate goal of capacity planning is to meet the current and future level of the requirement at a
minimal wastage. The three types of capacity planning based on goal are lead capacity planning, lag
strategy planning and match strategy planning.

Factors Affecting Capacity Planning

Effective capacity planning is dependent upon factors like
• production facility (layout, design, and location)
• product line or matrix
• production technology
• human capital (job design, compensation)
• operational structure (scheduling, quality assurance) and
• external structure ( policy, safety regulations)

Forecasting v/s Capacity Planning

There would be a scenario where capacity planning done on a basis of forecasting may not exactly
match. For example, there could be a scenario where demand is more than production capacity; in
this situation, a company needs to fulfill its requirement by buying from outside. If demand is equal
to production capacity; company is in a position to use its production capacity to the fullest. If the
demand is less than the production capacity, company can choose to reduce the production or share
it output with other manufacturers.

9.7 DESIGN AND SYSTEMS CAPACITY

Production systems design involves planning for the inputs, transformation activities, and outputs of
a production operation. Design plays a major role because they entail significant investment of funds
and establish cost and productivity patterns that continue in future.

The capacity of the manufacturing unit can be expressed in number of units of output per period. In
some situations measuring capacity is more complicated when they manufacture multiple products.
In such situations, the capacity is expressed as man-hours or machine hours. The relationship
between capacity and output is shown in the Figure

Design Capacity
Designed capacity of a facility is the planned or engineered rate of output of goods or services under
normal or full scale operating conditions. For example, the designed capacity of the cement plant is
100 TPD (Tonnes per day). Capacity of the sugar factory is 150 tonnes of sugarcane crushing per day.

The uncertainty of future demand is one of the most perplexing problems faced by new facility
planners. Organization does not plan for enough regular capacity to satisfy all their immediate
demands. Design for a minimum demand would result in high utilization of facilities but results in
inferior service and dissatisfaction of customers because of inadequate capacity. The design capacity
should reflect management’s strategy for meeting the demand. The best approach is to plan for
some in-between level of capacity.

System/effective capacity: System capacity is the maximum output of the specific product or product
mix the system of workers and machines is capable of producing as an integrated whole.

System capacity is less than design capacity or at the most equal it because of the limitation of
product mix, quality specification, and breakdowns. The actual is even less because of many factors
affecting the output such as actual demand, downtime due to machine/equipment failure,
unauthorized absenteeism.

The system capacity is less than design capacity because of long-range uncontrollable factors. The
actual output is still reduced because of short-term effects such as breakdown of inefficiency of
labour. The system efficiency is expressed as ratio of actual measured output to the system capacity.

These different measures of capacity are useful in defining two measures of system effectiveness:
efficiency and utilization. Efficiency is the ratio of actual output to effective capacity. Utilization is
the ratio of actual output to design capacity.

Efficiency =Actual output/Effective capacity

Utilization =Actual output/ Design capacity

It is common for managers to focus exclusively on efficiency, but in many instances, this emphasis
can be misleading. This happens when effective capacity is low compared with design capacity. In
those cases, high efficiency would seem to indicate effective use of resources when it does not.
9.8 IMPROVING HOSPITAL OPERATIONAL EFFICIENCY BY APPROPRIATE
CAPACITY COMPARISON

Healthcare executives and managers are always searching for better ways to improve production
capacity for medical treatment and thereby improving operational efficiency. This paper offers an
effective technique to compare capacities of different types of resources within a single hospital
system so that appropriate system capacity can be derived in order to improve system efficiencies in
healthcare systems and add value of care provided. It identifies the bottleneck resources that are
not very obvious in traditional methods. It also offers managerial insights to this common situation
in many hospitals that always scramble to find more capacity.

Service capacity is a perishable commodity. Once an event is over, the revenue generating capability
is lost forever. For example, a hospital with vacant beds loses the opportunity of generating revenue
from admitting the potential additional patients for a specific day, even though the same beds may
be utilized the next day. Contrary to this, physical products can be stored in a warehouse for future
consumption. Service is an intangible personal experience that cannot be transferred from one
person to the other. Service is produced and consumed simultaneously. Thus, whenever demand for
a service drops below capacity to offer the service, it results in idle servers and facilities. Variability
in service demand is quite unpredictable.

These variations of service demand create periods when the servers are idle and, on other times,
consumers have to wait.

Because of some of these reasons, it is more challenging to plan for capacity in services than in
manufacturing. Healthcare executives and managers are always searching for better ways to
improve production capacity for medical treatment and thereby, improving operational efficiency.
Many times, capacity in a health care organization is a vague, hard-to-measure concept which varies
over time and with local economic conditions. In any hospital, resources are limited and they are
mostly dissimilar in nature. This dissimilarity nature of capacity for different forms of resources
makes the comparison of capacities very important to determine the exact capacity of the system
taken as a whole. Inappropriate capacity comparison would lead to inaccurate system capacity,
resulting in inefficiencies in the system – observed in excessive waiting, poor capacity utilization
across different resources and poor bottleneck management.

Consequently, when capacity management is done properly, it could lead to lean service models in
healthcare by minimizing all the wastage and inefficiencies mentioned above.
The objectives of capacity planning in hospital:

• Considering the limited resources, find an optimal way to treat the maximum number of
patients in order to maximize efficiency.
• Explore operating strategies that can increase overall capacity utilization by better matching
supply and demand for services.

Managing Capacity:

The healthcare industry has been investigating different strategies to manage capacity with a view to
enhance efficiency and productivity, which can add value of the service provided. Some of the
common methods that generic service companies apply can also be applied by the healthcare
industry (Fitzsimmons and Fitzsimmons 2006).

These methods include:

• daily work shift scheduling (for doctors and nurses)

• increasing customer participation (patients’ share of responsibilities)
• creating adjustable capacity (adjustable physical resources such as rooms and beds)
• sharing capacity (with other services), cross-training employees (nurses and staff),
• part time employees (floating staff), etc.
Some of these methods have found varied degrees of success. These capacity management

strategies can be reasonably successful when handled one resource at a time. But when a facility is
operating with multiple bottleneck or near-bottleneck resources, the capacity management
becomes increasingly complex.

Managing Demand

While it is common to attempt to manage capacity, which is internal to a service provider (supply
side) with the thinking that demand is external and therefore not controllable by the provider,
increasing number of service firms today are also addressing the demand side of the equation. These
demand management strategies attempt to influence the consumer behavior in a way so as to suit
the desired operations of the service firm.

Some of the demand management strategies include:

 • demand partitioning (walk-in vs. appointments)
• offering price incentives (two for the price of one)
• promoting off-peak demand (off-season surgery discounts)
• developing complementary services (keeping customer flow going)
• overbooking and “no-show management”

Capacity Management in Health Care

Healthcare executives and managers are always searching for better ways to improve hospital
operational efficiency and the subsequent value of care to patients. Treatment capacity in a health
care organization does not have a clear, universal definition. The term "capacity" is generally used to
refer to the sustainable maximum output that is produced in an organization, depending on factors
such as labor and technology availability.

The health and social care systems have become more streamlined and have been operating closer
to capacity; thus, coping effectively with seasonal pressures presents an increasingly difficult
challenge.

• Pressure put on the availability of acute beds caused by rises in emergency

admissions can result in the refusal of emergency admissions.

• The premature discharge of existing patients, the cancellation of elective admissions and
operations and hence potential rises in hospital waiting lists and times.
In any hospital, resources are generally limited. Considering the limited resources, it is essential to
find the optimal way to admit patients in order to maximize efficiency and productivity, and thereby,
patient throughput. This could directly affect the bottom line – maximizing revenue or profit.

Typically the resources in any hospital are: doctors, nurses, operating rooms, waiting rooms, number
of beds, laboratory, etc.

The variables that are also critical in defining the capacity of these resources are

• Number of surgeries per doctor per day that can be performed

• Hours of operations in a day
• Average stay of a patient
• Days of the week for operations
Most of these resources are expensive for a hospital to maintain and one of the major problems is to
be able to maximize the utilization of each of these resources. One of problems commonly faced
while trying to maximize utilization and throughput is the difficulty in comparing capacities of
different types of resources and identifying the bottleneck. When any single resource’s capacity is
increased, the bottleneck seems to shift to another resource.

Similarly, if we increase the capacity of this bottleneck resource now, a brand new bottleneck may
appear elsewhere. It is very difficult to find a balance in the resources where each one of them is
performing to maximum capacity and thus the resources as a whole generate the maximum
throughput for the entire system.

Example:

• number of doctors = 12

• Number of surgeries/doctor/day = 3

• operating rooms = 4

• operating room (OR) hours/day = 9

• beds available = 100

• average length of stay per patient = 3 days

• five days of surgery per week operating schedule

In a “state” formulation, we define any operating state as:

[# doctors, # surgeries/doctor/day, # OR, OR hours/day, # beds, average length of stay, # days /week
surgery is done];

The base case, then, can be written as:

[12, 3, 4, 9, 100, 3, 5]

We would take the performance measurement for our analysis as the weekly throughput, which is
defined as the average number of patients treated in a week. Attempts will be made to maximize
this performance measurement, without sacrificing quality of care.

In the first cut, we observe some interesting results that would establish that the problem needs to
be studied in greater detail.
In order to explain the current hospital capacity management issue in greater detail, let us assign the
following notations to the resources and variables:

Cb: Weekly capacity of beds; Cd: Weekly capacity of doctors; Co: Weekly capacity of operating
rooms cb: Daily capacity of beds; cd: Daily capacity of doctors; co: Daily capacity of operating rooms
Then,

Cb = p*cb; Cd = p*cd; Co = p*co

where p = number of days operated in a week

The lowest of the above three numbers will represent the bottleneck for the system, and the system
capacity for the week can be represented by,

Min [ Cb , Cd , Co]

For the base case whose state was depicted earlier as [12, 3, 4, 9, 100, 3, 5], let us try to calculate
the weekly capacity of the entire system.

Weekly capacity of doctors = 12 * 3 = 36/day; 36 * 5 = 180/week

Weekly capacity of OR = 4 * 9 = 36/day; 36 * 5 = 180/week

Weekly capacity of beds = 100 * 5 / 3 = 167/week

Therefore, the calculation of Min [180, 180, 167] would result in a weekly system capacity of 167
patients and beds will be marked as the bottleneck.

This is too simplistic. Several questions can be raised about the validity of the above method:

• Are the three capacities really comparable as directly as the above method?
• Is the calculation for bed capacity accurate?
• What assumptions are implicitly made in this calculation?
• What other flexibility in scheduling has not been considered?

Calculating the True Capacity of Beds

Calculation of weekly capacity of beds in this situation is not trivial. For a given 100 beds, five days a
week surgery and an average patient stay of three days, the calculation of 100*5/3 = 167 is, in fact,
not the correct method to determine the weekly capacity of the beds. This calculation is true only if
patients are admitted uniformly across the five days of the week. But in reality, there is no need to
impose that constraint to the patient admittance policy. Next comes the real bottleneck questions –
Are the beds the true bottleneck? What is the true capacity of the beds?

To answer these questions, let us consider beds as an independent resource that is unaffected by
other resources. We would like to maximize the weekly capacity (thereby throughput) of the beds.
The only constraints will be: (1) daily available beds of 100, and (2) admittance of Sunday

through Thursday, since there is no surgery during the weekend.

The simple linear programming maximization formulation can be written as:

Thu

[P1] Maximize Σ X n -Eq 1

N=sun

Subject to,

Daily beds occupied: Bn = Bn-1 + Xn - Dn ≤ 100 (2)

Daily discharges: Dn = Xn-3 (3)

No admittance: XFri = XSat = 0 (4)

where, the decision variables are:

Xn = patients admitted on a given day, with n = day of the week

Dn = patients discharged on a given day, with n = day of the week

Bn = beds occupied on a given day, with n = day of the week

Solving this simple linear programming formulation, we get very interesting results. The

optimal solution would admit 50 patients on Sunday, Monday, Wednesday and Thursday, and zero
patient on Tuesday – for a weekly capacity of 200. This weekly capacity of 200 patients is higher than
the weekly capacity of doctor and OR at 180 patients. Should we then report that the beds are not
indeed the bottleneck?

Therein lies the central theme of this paper – how do we compare capacities of dissimilar

resources? This question is further complicated in our above case since surgeries are not
Performed during the weekend, but patients are allowed to recover through the weekend (e.g.
those who were operated on Fridays, will arrive on Thursdays, stay through the weekend and be
released on Sundays).

In a more detailed report of this research, we have address the above issue in much more depth,
using state consideration, a simulation study, a stochastic formulation and a mean-variance model.
Those results are not reported here due to space limitation.

9.9 SUMMARY

Capacity planning and analysis has the following important contributions in the health care field:
analysis in the following

• Improved operational efficiency – in minimizing excess capacity and in achieving a smoother

utilization of capacities across a service enterprise;
• Enhanced service operations strategy – in leveraging capacity utilization in obtaining a higher
level of patient throughput for a given set of resources;
• Better capacity and demand management – in aligning capacity allocation with demand
pattern of patient arrivals; and
• Leaner service delivery process – in minimizing system wastage arising out of poor use of
capacities of different resources across the system.

9.10 KEY WORDS

A technique used to identify and measure overall capacity of production is referred to as strategic
capacity planning. Strategic capacity planning is utilized for capital intensive resource like plant,
machinery, labor, etc.

Strategic capacity planning is essential as it helps the organization in meeting the future
requirements of the organization. Planning ensures that operating cost are maintained at a
minimum possible level without affecting the quality. It ensures the organization remain competitive
and can achieve the long-term growth plan.
Designed capacity of a facility is the planned or engineered rate of output of goods or services under
normal or full scale operating conditions. For example, the designed capacity of the cement plant is
100 TPD (Tonnes per day).

System/effective capacity: System capacity is the maximum output of the specific product or product
mix the system of workers and machines is capable of producing as an integrated whole.

System capacity is less than design capacity or at the most equal it because of the limitation of
product mix, quality specification, and breakdowns. The actual is even less because of many factors
affecting the output such as actual demand, downtime due to machine/equipment failure,
unauthorized absenteeism.
UNIT 10: FACILITY PLANNING AND DESIGNING OF A HOSPITAL

Specific learning objectives

After going through this chapter you will be able to understand:

• The basic concepts of hospital planning;

• The guiding principles in hospital facility planning;
• Essential Features and issues Of Hospital Designing;
• Phasing of hospital projects;
• Guidelines for designing a hospital for physically challenged.
Structure

10.1 Introduction
10.2 Factors Affecting Utilization of Hospital Services
10.3 Data Required In Planning the Hospital
10.4 Guiding Principles in Facility Planning Of a Hospital
10.5 Essential Features of Hospital Designing
10.6 Emerging Issues in Hospital Design
10.7 Phases of Hospital Project
10.8 Project Planning and Implementation
10.9 Guidelines in the Planning and Design of A Hospital and Other Health Facilities
10.10 Guidelines in Facility Designing Of a Hospital for Physically Challenged
10.11 Summary
10.12 Key Words

10.1 INTRODUCTION

• The fundamental reason for facility planning and designing of a hospital must be clear in the
minds of a hospital planner. The following questions must be asked:
• What is the vision of the hospital?
• What type of hospital?
• Is it a new construction?
• Are you planning to introduce new facilities/modernize to the existing ones?
• Are you planning to increase the capacity of an existing hospital?
 • Are you planning to reduce the cost of operations and maximize efficiency?
• Are you planning to increase the utilization of existing facilities?
• What will be the population coverage and the catchment area?
• What is the status of health of population covered?
• What are the existing health facilities in the area?
• In addition to the wide range of services that must be accommodated, hospitals must serve
and support many different users and stakeholders. Ideally, the design process incorporates
direct input from the owner and from key hospital staff early on in the process. The designer
also has to be an advocate for the patients, visitors, support staff, volunteers, and suppliers
who do not generally have direct input into the design. Good hospital design must integrate
the functional requirements with human needs of its varied users. The basic functions of a
hospital are as under:

• bed-related inpatient functions

• outpatient-related functions
• diagnostic and treatment functions
• administrative functions service functions (food, supply
• Training and research related functions
• Community health related functions.

Basic Functions of the hospital are depicted below:

These flow diagrams show the movement and communication of people, materials, and waste. Thus
the physical configuration of a hospital and its transportation and logistics systems are inextricably
intertwined. The transportation systems are influenced by the building configuration, and the
configuration is heavily dependent on the transportation systems the hospital configuration is also
influenced by site restraints and opportunities, climate, surrounding facilities, budget, and available
technology. New alternatives are generated by new medical needs and new technology.

In a large hospital, the form of the typical nursing unit, since it may be repeated many times, is a
principal element of the overall configuration. Nursing units today tend to be more compact shapes
than the elongated rectangles of the past. Compact rectangles, modified triangles, or even circles
have been used in an attempt to shorten the distance between the nurse station and the patient's
bed. The chosen solution is heavily in a large hospital, the form of the typical nursing unit, since it
may be repeated many times, is a principal element of the overall configuration. Nursing units today
tend to be more compact shapes than the elongated rectangles of the past in a large hospital, the
form of the typical nursing unit, since it may be repeated many times, is a principal element of the
overall configuration. Nursing units today tend to be more compact shapes than the elongated
rectangles of the past. Compact rectangles, modified triangles, or even circles have been used in an
attempt to shorten the distance between the nurse station and the patient's bed. The chosen
solution is heavily dependent on program issues such as organization of the nursing program,
number of beds to a nursing unit, and number of beds to a patient room.

10.2 FACTORS AFFECTING UTILIZATION OF HOSPITAL SERVICES

Morbidity and Mortality Profile of the Catchment Population: The type of diseases common in the
locality will determine the utilization of hospital services. The incidence and prevalence of various
diseases (Acute diseases/chronic diseases) must be taken into consideration before planning and
designing the various facilities. For example in rural and semi-urban population where the incidence
and prevalence of communicable diseases like diarrhea, acute respiratory infections may be
common ,hospital facilities must be made to treat and prevent such diseases rather than going for
an expensive catch lab..

Availability of Beds: The number of beds should be planned and calculated based on existing beds
and their utilization and the availability of beds in the surrounding hospitals (Perimeter of 10-15
kms).

Age Profile Of The Population: Population with extremes of agrees (Pediatrics, Geriatrics) have rates
of hospital services utilization.

Availability of Medical/Hospital Services In The surrounding Area: Existing hospitals dispensaries,

health centers in the surrounding area affect the hospital utilization.
• Customs, Attitudes Of Population
• Availability of qualified manpower
• Type of hospital
• Morbidity/mortality profile of the population
• Method Of payment(Profit/not for profit hospitals/Direct payment, Insurance)

10.3 DATA REQUIRED IN PLANNING THE HOSPITAL

• Geographic Data
• Morbidity & Mortality Status
• Need & Demand
• Details of existing Facilities
 • Financial Feasibility
• Demographic Details
- Population Strength
- Sex & Age Ration
- Social Status
- Educational level

10.4 GUIDING PRINCIPLES IN FACILITY PLANNING OF A HOSPITAL

A hospital is responsible to render an essential service. In fulfilling this responsibility, hospital

planning should be guided by certain universally acknowledged principles. These are:

Ensure Patient Care OF A High Quality: These are ensured by following measures:
• Provision of appropriate technical equipment and facilities necessary to support the
hospital’s objective.
• An organizational structure that assigns responsibility appropriately and requires
accountability for the various functions within the institution.
• A continuous review of the adequacy of care provided by physicals, nursing staff
and paramedics

Effective Community Orientation: The hospital must have effective community orientation. This can
be achieved through following measures:
• Hospital must actively participate in implementing Primary Health Care.
• Must have a public information system that keeps the community informed about
the hospital’s goals, objectives and plans.

Economic Viability: A hospital must have economic viability. This can be achieved by:
• Developing patient care objectives that are consistent with projected service
demands, availability of operating finances and having adequate personnel and
equipments.
• A planned program of expansion based solely on actual community needs.
• A sound system of funding that will assure replacement, improvement and
expansion of facilities and equipments without imposing too much of cost burden
on patient charges.
 • An annual budget plan and a sound financial management.

Orderly Planning: - Orderly planning should be achieved by the following:

• Establishment of short and long term planning objectives with prioritization and
target dates.
• Preparation of a functional plan.
Sound Architectural Plan: This involves
• Engaging a sound hospital architect
• Establishing a planning team
• Appropriate site selection
• Flexibility and expansion facilities
• Incorporation of Green concept

Building Attributes

Regardless of their location, size, or budget, all hospitals should have certain common attributes
• Efficiency
• Cost Effectiveness
An efficient hospital layout should
• Promote staff efficiency by minimizing distance of necessary travel between frequently
used spaces

• Allow easy visual supervision of patients by limited staff

• Include all needed spaces, but no redundant ones. This requires careful pre-design
programming.
• Provide an efficient logistics system, which might include elevators, pneumatic tubes, box
conveyors, manual or automated carts, and gravity or pneumatic chutes, for the efficient
handling of food and clean supplies and the removal of waste, recyclables, and soiled
material

• Make efficient use of space by locating support spaces so that they may be shared by
adjacent functional areas, and by making prudent use of multi-purpose spaces

• Consolidate outpatient functions for more efficient operation—on first floor, if possible—
for direct access by outpatients

• Group or combine functional areas with similar system requirements

 • Provide optimal functional adjacencies, such as locating the surgical intensive care unit
adjacent to the operating suite. These adjacencies should be based on a detailed
functional program which describes the hospital's intended operations from the
standpoint of patients, staff, and supplies.

10.5 ESSENTIAL FEATURES OF HOSPITAL DESIGNING

Flexibility and Expandability

Since medical needs and modes of treatment will continue to change, hospitals should

• Where size and program allow, be designed on a modular system basis... This system also
uses walk-through interstitial space between occupied floors for mechanical, electrical, and
plumbing distribution. For large projects, this provides continuing adaptability to changing
programs and needs, with no first-cost premium, if Follow modular concepts of space
planning and layout.

• Use generic room sizes and plans as much as possible, rather than highly specific ones

• Be served by modular, easily accessed, and easily modified mechanical and electrical
systems properly planned, designed, and bid. The VA Hospital Building System also allows
vertical expansion without disruptions to floors below.

• Be open-ended, with well-planned directions for future expansion; for instance positioning
"soft spaces" such as administrative departments, adjacent to "hard spaces" such as clinical
laboratories.

Therapeutic Environment

Hospital patients are often fearful and confused and these feelings may impede recovery. Every
effort should be made to make the hospital stay as unthreatening, comfortable, and stress-free as
possible.

The interior designer plays a major role in this effort to create a therapeutic environment. A
hospital's interior design should be based on a comprehensive understanding of the facility's mission
and its patient profile. The characteristics of the patient profile will determine the degree to which
the interior design should address aging, loss of visual acuity, other physical and mental disabilities,
and abusiveness.
 • Using familiar and culturally relevant materials wherever consistent with sanitation and
other functional needs.

• Using cheerful and varied colors and textures, keeping in mind that some colors are
inappropriate and can interfere with provider assessments of patients' pallor and skin
tones, disorient older or impaired patients, or agitate patients and staff, particularly
some psychiatric patients.

• Admitting ample natural light wherever feasible and using color-corrected lighting in
interior spaces which closely approximates natural daylight

• Providing views of the outdoors from every patient bed, and elsewhere wherever
possible; photo murals of nature scenes are helpful where outdoor views are not
available

• Designing a "way-finding" process into every project. Patients, visitors, and staff all need
to know where they are, what their destination is, and how to get there and return. A
patient's sense of competence is encouraged by making spaces easy to find, identify,
and use without asking for help. Building elements, color, texture, and pattern should all
give cues, as well as artwork and signage

Cleanliness and Sanitation

Hospitals must be easy to clean and maintain. This is facilitated by
• Appropriate, durable finishes for each functional space
• Careful detailing of such features as doorframes, casework, and finish transitions to avoid
dirt-catching and hard-to-clean crevices and joints
• Adequate and appropriately located housekeeping spaces
• Special materials, finishes, and details for spaces which are to be kept sterile, such as
integral cove base.
• The new antimicrobial surfaces might be considered for appropriate locations.
• Incorporating practices that stress indoor environmental quality
Accessibility
All areas, both inside and out, should:

• Comply with the minimum requirements of physically handicapped persons

• In addition to meeting minimum requirements of physically handicapped persons, the
hospital is to be designed so as to be easy to use by the many patients with temporary or
permanent handicaps
• Ensuring grades are flat enough to allow easy movement and sidewalks and corridors are
wide enough for two wheelchairs to pass easily
• Ensuring entrance areas are designed to accommodate patients with slower adaptation
rates to dark and light; marking glass walls and doors to make their presence obvious

Controlled Circulation: A hospital is a complex system of interrelated functions requiring constant

movement of people and goods. Much of this circulation should be controlled.

• Outpatients visiting diagnostic and treatment areas should not travel through inpatient
functional areas nor encounter severely ill inpatients
• Typical outpatient routes should be simple and clearly defined
• Visitors should have a simple and direct route to each patient nursing unit without
penetrating other functional areas
• Separate patients and visitors from industrial/logistical areas or floors
• Outflow of trash, recyclables, and soiled materials should be separated from movement
of food and clean supplies, and both should be separated from routes of patients and
visitors
• Transfer of cadavers to and from the morgue should be out of the sight of patients and
visitors
• Dedicated service elevators for deliveries, food and building maintenance services

Aesthetics: Aesthetics is closely related to creating a therapeutic environment (homelike,

attractive.) It is important in enhancing the hospital's public image and is thus an important
marketing tool. A better environment also contributes to better staff morale and patient
care. Aesthetic considerations include:
• Increased use of natural light, natural materials, and textures
• Use of artwork
 • Attention to proportions, color, scale, and detail
• Bright, open, generously-scaled public spaces
• Homelike and intimate scale in patient rooms, day rooms, consultation rooms, and
offices
• Compatibility of exterior design with its physical surroundings

Security and Safety: In addition to the general safety concerns of all buildings, hospitals have several
particular security concerns:
• Protection of hospital property and assets, including drugs
• Protection of patients, including incapacitated patients, and staff
• Safe control of violent or unstable patients
• Vulnerability to damage from terrorism because of proximity to high-vulnerability
targets, or because they may be highly visible public buildings with an important role
in the public health system.

Sustainability: Hospitals are large public buildings that have a significant impact on the environment
and economy of the surrounding community. They are heavy users of energy and water and produce
large amounts of waste. Because hospitals place such demands on community resources they are
natural candidates for sustainable design.

10.6 EMERGING ISSUES IN HOSPITAL DESIGN

Among the many new developments and trends influencing hospital design are:

• The decreasing numbers of general practitioners along with the increased use of emergency facilities
for primary care.

• The increasing introduction of highly sophisticated diagnostic and treatment technology

• Requirements to remain operational during and after disasters.

• State laws requiring earthquake resistance, both in designing new buildings and retrofitting existing
structures

• Preventative care versus sickness care; designing hospitals as all-inclusive "wellness centers"
• Use of hand-held computers and portable diagnostic equipment to allow more mobile, decentralized
patient care, and a general shift to computerized patient information of all kinds. This might require
computer alcoves and data ports in corridors outside patient bedrooms.

• Need to balance increasing attention to building security with openness to patients and visitors

• Emergence of palliative care as a specialty in many major medical centers

• A growing interest in more holistic, patient-centered treatment and environments such as promoted
by Planetree. This might include providing mini-medical libraries and computer terminals so patients
can research their conditions and treatments, and locating kitchens and dining areas on inpatient
units so family members can prepare food for patients and families to eat together.

10.7 PHASES OF HOSPITAL PROJECT

Of utmost importance in planning a new hospital or addition of new facilities to a new hospital is to
have a planning team. The nucleus of the team consists of
• Hospital consultant
• Nursing Administrator
• Hospital Architect
• Core group of engineers (Civil, Electrical etc.)

Hospital project staging-(book)

A hospital project undergoes the following phases as depicted in the figure

INCEPTION

FEASIBILTY STUDY

OUTLINE PROPOSAL

SCHEME DESIGN

DETAIL DESIGN

TENDER ACTION

CONSTRUCTION

COMMISSIONING

SHAKE DOWN
;

Feasibility Study: One of the most important tasks of the planning team is to assess the need for
particular hospital planned and the range of services planned.

The various components of feasibility study are depicted in the figure given below:
 Data
Collection

Need
level of medical
care to be Assesment
provided
Feasibility
Study

staging of
site selection proeject

Data Collection: Data pertaining to the following needs to be collected:

Demographic data Of Population to be covered
• Age and sex profile
• Population Density
• Occupational Characteristics
• Extent of urbanization
• Economic Development
• Extent of migratory population
• No Of direct and indirect population who will utilize the services.

Morbidity/Mortality Statistic
• Incidence and prevalence of communicable diseases
• Incidence and prevalence of Non communicable diseases
• Incidence and prevalence of Lifestyle diseases
• Incidence and prevalence of accidents
• Death Rate
• Birth Rate
• Infant Mortality Rate
• Maternal mortality Rate
• Disease specific mortality rates
Socio-Economic Data
• Literacy Rate
• Economic status of the community
• Housing conditions
• Availability of safe drinking water and hygiene and sanitation facilities.
• Degree of industrialization
• Cultures/customs

Hospital Data
• Type of existing health and health facilities
• No Of beds available in the locality
• Admission rates
• Utilization of existing hospital facilities.

Geographical Data
• Availability of Existing rail and road communication
• Terrain-Mountainous, Plains ,riverine, desert
• Susceptibility to natural disasters (Cyclone/earthquakes/floods etc.)
• Ecology:-
• Building height restrictions
• Water table

Meteorological Data
• Temperature
• Rainfall
• Humidity
• Pollution free environment

Miscellaneous Data
• Availability of trained manpower
• Availability of water:-Availability of deep table subsoil water/availability of water
@400lit/bed
 • Electricity: 3 phase electricity,1kw/bed, dedicated substation/Standby genset
• Sewage : Access to sewage plant
• Availability of Biomedical Waste Management plant

Need Assessment: There are two methods for assessing the functional need of a hospital.

Empirical Method: This applies the norms of the past and rules of thumb with appropriate
modifications.

Analytical Method: It has a more systematic approach to the problem. This is based on analyzing
parameters related to
• Availability of existing services
• Accessibility
• Appropriateness of facilities
• Acceptability by the population

Bed Planning: - In the need assessment, the following questions also must be asked?

How Many Beds? A simple and practical way of calculating the no of beds required is given as under:
For Example
Direct Population who will utilize the hospital services:-6, 00,000
In direct Population who will utilize the hospital services:-8, 00,000
Admission /year/1000 of direct Population:-165
Admission /year/1000 of in direct Population:-55
Average length of stay desired:-10days
% of occupancy desired: - 85%
• Admission /year of direct Population=6,00,000x165/1000=99,000
• Admission /year of In direct Population=8,00,000x55/1000=44,000
• Total Admissions/year=99,000+44,000=1,43,000
• Total bed days/year=Total AdmissionsxALS=1,43,000x10=1,43,0000
• Total beds required with 100% occupancy=1,43,000/365=3918
• Total beds required 85% occupancy=3918x1085=4610

Total No of Beds required=4610-Total No Available beds in the locality

 Beds kept in the following areas of the hospital are not a part of bed complement of a hospital.
• Observation beds
• Baby bassinets/incubators Beds in casualty/preoperative and postoperative rooms
• Beds in labour rooms

Staging of a Hospital Project

Stage A • Project team

Functional content: • Assessment of functional content
Outline brief • Submission of owners (Govt, private organization etc.)for approval
• Site appraisal, gross floor areas
• Building space. Draft master plan
• Estimation of cost and phasing
• Appraisal of work by owners

Stage B • Operational policies

Operational policies: • Departmental and inter related activities
Developmental plan • Departmental and hospital policies
• Development control plan
• Budget cost
• Continuous informal discussion with owners

Stage C • Schedules of accommodation

Schedules of accommodation, sketches, • Sketch drawing
Final cost estimate • Equipment schedules component estimates
• Cost revenue and staffing estimates
• Final cost approval

Stage D • Working drawings

Detail design working drawings, tender • Engineering details
action: • Bills of quantities
• Calling tenders

Stage E • Assessments of tenders

Contract and construction • Award of contract
• Construction
• Engineering commissioning
Stage F • Staff assembly and training
Commissioning: • Equipment and supplies assembly
• Testing of installation
•

Selection of site- It will depend on

• Needs of the community
- Ease of accessibility
- Range of services offered
- Availability of specialists
- Availability of technology
• Study of existing hospital(if any)
• Requirements of staff and services
• Availability land large enough to cater for future growth and expansion.
• Soil and subsoil conditions:- Subsoil water level and the bearing quality of the soil will
determine the type of foundation
• Proper drainage of the hospital
• Availability of Electricity, water and sewage as discussed earlier.

Land Requirement: It will depend on many factors like

• Site coverage %
• FAR(Floor Area ratio)of the area
• Restriction on height
• Whether to go for vertical/horizontal building

Gross Space Requirement:-900-1000 soft/bed

• At FAR of 0.5 :1-for 500beds-22acres

• At FAR of 1.5 :1--for 500beds-6acres
• At FAR of 2:1-for 500beds-6acres

Space requirements of some basic departments-

Area Sq. . . .ft. / bed

Nursing unit 250-280

Nursery 12-18

Delivery suite 15-20

Operation theatre 30-50

Physical medicine 12-18

Radiology 25-35

Laboratory 25-35

Pharmacy 4-6

CSSD 8-25

Dietary 25-35

Medical record 8-15

Area Sq. . . .ft. / bed

House keeping 4-5

Laundry 12-18

Mechanical installation 50-75

Maintenance work shop 4-6

Stores 25-35

Public areas 8-10

Staff facilities 10-15

Administration 40-50

Total 567-751

Circulation 115-751

Total net area 682-891

Add walls/partitions: 95-125 sqft, Total Area=780-1005 sqft

Distribution of Floor Space By wards/Depts
Wards: - 37-45%
OPD: - 12-18%
Diagnostics/Therapeutics: - 18-22%
Admin: - 8-12%
Service Department-15-20%

Bed Distribution
• Mediacl-30%
• Surgical-20%
• Obs/Gynaec-17.5%
• Pediatrics:- 7.5%
 • Orthopedics:-2.5%
• Eye-5%
• ENT-5%
• Dermatology-2.5%
• Isolaion-3%
• Psychiatry-2.5%
• ICU-4%

Level of Care to be provided: Another important opponent of feasibility study is to decide the type
of hospital services r to be provided.i, e.
• Primary Health Care
• Secondary Health care
• Tertiary/super specialist care
This will depend on the
• Location (Rural/Urban)
• Availability of health care facilities in the surrounding areas
• Availability of trained manpower
• Availability of finances
• The health need of population based on their morbidity and mortality profile

10.8 PROJECT PLANNING AND IMPLEMENTATION

This goes through the following phases as depicted in the figure

 Proposal Outline

Deatiled Proposal of project

Approval

RESOURCE ALLOCATION

LAND ACQUISITION

ARCHITECT's BRIEF

Construction Planning

TENDERING& Award OF CONTRACT

CONSTRUCTION &COMMISSIONING

Project Outline: In this, the following questions are to be answered and Justified with statistics:-

• What we expect to do?

• Why it will be done?
• Where will it be done?
• When we expect to do it?
• Who all are going to do it?
• How will it be done?
• What size?
• Who are going to benefit?
Detailed Project Proposal: - This will highlight the following:
• Type, Size, location and layout of the project.
 • Available land size
• Types of services proposed
• Approximate costing:- The most common method of calculating hospital
construction cost is by per bed method =(7-9lakhs/bed).The breakdown of this cost
is as under:
- Land acquisition cost
- Site survey cost
- Landscaping cost
- Actual building construction cost
- Cost of equipment and consumables
- Supervision cost
- Fees for planning team

Project Approval: - Approval is accorded by administrative authority after due

verifications.

Resource Allocation:-After administrative approval, a Finance committee is constituted

for obtaining financial allocation and release of necessary funds.

LAND ACQUISITION: - The following activities are involved”

• Land purchase
• Land clearance and non-encumbrance certificate
• Clearance from municipality /Electricity ,J al Boards, Rural/Urban
Development authorities/Pollution control board
• Registration

Architect’s Brief: This contains the following details:

Analysis of functional needs
Defining interdepartmental relations
Grouping of Accommodation
Traffic flow definitions
Location and layout of various functional areas
Work flow
Preparation of drawings/models
 Electricity, Water, Air-conditioning
Staffing
Firefighting details
Intramural Transportation details.

Construction Planning:- this will include:

• Preparation of Master Plan
• Design of circulation area
• Layout Plan
• Design of various clinical,ancilliary and support service areas
Tendering and Award of Contract as per procedures
Construction and Commissioning of Hospital: Simultaneous with construction, the planning team
carries the process of staff, medicine, and furniture and equipment acquisition. Once these are
completed wide publicity is given regarding the commissioning of hospital and the hospital starts
functioning after the initial shake down period...
10.9 GUIDELINES IN THE PLANNING AND DESIGN OF A HOSPITAL AND OTHER
HEALTH FACILITIES

A hospital and other health facilities shall be planned and designed to observe appropriate

architectural practices, to meet prescribed functional programs, and to conform to applicable codes
as part of normal professional practice

Environment: A hospital and other health facilities shall be so located that it is readily accessible to
the community and reasonably free from undue noise, smoke, dust, foul odor, flood, and shall not
be located adjacent to railroads, freight yards, children's playgrounds, airports, industrial plants,
disposal plants.
Occupancy: A building designed for other purpose shall not be converted into a hospital. The
location of a hospital shall comply with all local zoning ordinances.

Safety: A hospital and other health facilities shall provide and maintain a safe environment for
patients, personnel and public. The building shall be of such construction so that no hazards to the
life and safety of patients, personnel and public exist. It shall be capable of withstanding weight and
elements to which they may be subjected.

3.1 Exits shall be restricted to the following types: door leading directly outside the building, interior
stair, ramp, and exterior stair.

3.2 A minimum of two (2) exits, remote from each other, shall be provided for each floor of the
building.

3.3 Exits shall terminate directly at an open space to the outside of the building.

Security: A hospital and other health facilities shall ensure the security of person and

property within the facility.

Patient Movement: Spaces shall be wide enough for free movement of patients, whether they are
on beds, stretchers, or wheelchairs. Circulation routes for transferring patients from one area to
another shall be available and free at all times.

Corridors for access by patient and equipment shall have a minimum width of 2.44 meters.

Corridors in areas not commonly used for bed, stretcher and equipment transport may be reduced
in width to 1.83 meters.

A ramp or elevator shall be provided for ancillary, clinical and nursing areas located on the upper
floor.

A ramp shall be provided as access to the entrance of the hospital not on the same level of the site.

Lighting: All areas in a hospital and other health facilities shall be provided with sufficient
illumination to promote comfort, healing and recovery of patients and to enable personnel in the
performance of work.
Ventilation: Adequate ventilation shall be provided to ensure comfort of patients, personnel and
public.

Auditory and Visual Privacy: A hospital and other health facilities shall observe acceptable sound
level and adequate visual seclusion to achieve the acoustical and privacy requirements in designated
areas allowing the unhampered conduct of activities.

Water Supply: A hospital and other health facilities shall use an approved public water supply
system whenever available. The water supply shall be potable, safe for drinking and adequate, and
shall be brought into the building free of cross connections.

Waste Disposal: Liquid waste shall be discharged into an approved public sewerage system
whenever available, and solid waste shall be collected, treated and disposed of in accordance with
applicable codes, laws or ordinances.

Sanitation: Utilities for the maintenance of sanitary system, including approved water supply and
sewerage system, shall be provided through the buildings and premises to ensure a clean and
healthy environment. A hospital and other health facilities shall provide and maintain a healthy and
aesthetic environment for patients, personnel and public.

Maintenance: There shall be an effective building maintenance program in place. The buildings and
equipment shall be kept in a state of good repair. Proper maintenance shall be provided to prevent
untimely breakdown of buildings and equipment.

Material Specification: Floors, walls and ceilings shall be of sturdy materials that shall allow
durability, ease of cleaning and fire resistance.

Segregation: Wards shall observe segregation of sexes. Separate toilet shall be maintained for
patients and personnel, male and female, with a ratio of one (1) toilet for

every eight (8) patients or personnel.

Fire Protection: There shall be measures for detecting fire such as fire alarms in walls, peepholes in
doors or smoke detectors in ceilings. There shall be devices for quenching fire such as fire
extinguishers or fire hoses that are easily visible and accessible in strategic areas.

Signage: There shall be an effective graphic system composed of a number of individual visual aids
and devices arranged to provide information, orientation, direction, identification, prohibition,
warning and official notice considered essential to the optimum operation of a hospital and other
health facilities.

Parking: A hospital and other health facilities shall provide a minimum of one (1) parking space for
every twenty-five (25) beds.

Zoning: The different areas of a hospital shall be grouped according to zones as follows:

Outer Zone: areas that are immediately accessible to the public: emergency service, outpatient
service, and administrative service. They shall be located near the entrance of the hospital.

Second Zone: areas that receive workload from the outer zone: laboratory, pharmacy, and
radiology. They shall be located near the outer zone.

Inner Zone – areas that provide nursing care and management of patients: nursing service. They
shall be located in private areas but accessible to guests.

Deep Zone – areas that require asepsis to perform the prescribed services: surgical service, delivery
service, nursery, and intensive care. They shall be segregated from the public areas but accessible to
the outer, second and inner zones.

Service Zone – areas that provide support to hospital activities: dietary service, housekeeping
service, maintenance and motor pool service, and mortuary. They shall be located in areas away
from normal traffic.

Function: The different areas of a hospital shall be functionally related with each other.

The emergency service shall be located in the ground floor to ensure immediate access. A separate
entrance to the emergency room shall be provided.

The administrative service, particularly admitting office and business office, shall be located near
the main entrance of the hospital. Offices for hospital management can be located in private areas.

The surgical service shall be located and arranged to prevent non-related traffic. The operating room
shall be as remote as practicable from the entrance to provide asepsis. The dressing room shall be
located to avoid exposure to dirty areas after changing to surgical garments. The nurse station shall
be located to permit visual observation of patient movement.

The delivery service shall be located and arranged to prevent non-related traffic. The delivery room
shall be as remote as practicable from the entrance to provide asepsis. The dressing room shall be
located to avoid exposure to dirty areas after changing to surgical garments. The nurse station shall
be located to permit visual observation of patient movement. The nursery shall be separate but
immediately accessible from the delivery room.

The nursing service shall be segregated from public areas. The nurse station shall be located to
permit visual observation of patients. Nurse stations shall be provided in all inpatient units of the
hospital with a ratio of at least one, nurse station for every thirty-five (35) beds. Rooms and wards
shall be of sufficient size to allow for work flow and patient movement. Toilets shall be immediately
accessible from rooms and wards.

The dietary service shall be away from morgue with at least 25-meter distance.

20 Space: Adequate area shall be provided for the people, activity, furniture, equipment

and utility.

10.10 GUIDELINES IN FACILITY DESIGNING OF A HOSPITAL FOR PHYSICALLY

CHALLENGED

General
Floor and ground surfaces shall be stable, firm, and slip resistant A stable surface is one that
remains unchanged by contaminants or applied force, so that when the contaminant or force is
removed, the surface returns to its original condition. A firm surface resists deformation by either
indentations or particles moving on its surface. A slip-resistant surface provides sufficient frictional
counterforce to the forces exerted in walking to permit safe ambulation...

Carpet
Carpet or carpet tile shall be securely attached and shall have a firm cushion, pad, or backing or no
cushion or pad. Carpet or carpet tile shall have a level loop, textured loop, level cut pile, or level
cut/uncut pile texture. Pile height shall be ½ inch (13 mm) maximum. Exposed edges of carpet shall
be fastened to floor surfaces and shall have trim on the entire length of the exposed edge. Carpets
and permanently affixed mats can significantly increase the amount of force (roll resistance) needed
to propel a wheelchair over a surface. The firmer the carpeting and backing, the lower the roll
resistance. A pile thickness up to ½ inch (13 mm) (measured to the backing, cushion, or pad) is
allowed, although a lower pile provides easier wheelchair maneuvering. If a backing, cushion or pad
is used, it must be firm. Preferably, carpet pad should not be used because the soft padding
increases roll resistance.

Openings

Openings in floor or ground surfaces shall not allow passage of a sphere more than ½ inch (13 mm)
diameter. Elongated openings shall be placed so that the long dimension is perpendicular to the
dominant direction of travel.

Elongated Openings in Floor or Ground Surfaces

Changes in Level

General
Where changes in level are permitted in floor or ground surfaces, they shall comply with 303.
303.2 Vertical. Changes in level of ¼ (6.4mm) high maximum shall be permitted to be vertical.
 Vertical Change in Level

3 Beveled: Changes in level between ¼ (6.4mm) high minimum and ½ inch (13 mm) high maximum
shall be beveled with a slope not steeper than 1:2.

A change in level of ½ inch (13 mm) is permitted to be ¼ (6.4mm) vertical plus ¼

(6.4mm) beveled. However, in no case may the combined change in level exceed ½
inch (13 mm). Changes in level exceeding ½ inch (13 mm) must comply with 405
(Ramps) or 406 (Curb Ramps).

Figure 303.3 Beveled Change in Level

303.4 Ramps. Changes in level greater than ½ inch (13 mm) high shall be ramped, and shall comply
with 405 or 406.

Turning Space

Circular Space
The turning space shall be a space of 60 inches (1525 mm) diameter minimum.

T-Shaped Space
The turning space shall be a T-shaped space within a 60 inch (1525 mm) square minimum with arms
and base 36 inches (915 mm) wide minimum. Each arm of the T shall be clear of obstructions 12
inches (305 mm) minimum in each direction and the base shall be clear of obstructions 24 inches
(610 mm) minimum. The space shall be permitted to include knee and toe clearance.

Clear Floor or Ground Space

e clear floor or ground space shall be 30 inches (760 mm) minimum by 48 inches (1220 mm)
minimum.
Slopes not steeper than 1:48 shall be permitted.
Approach
One full unobstructed side of the clear floor or ground space shall adjoin an accessible route or
adjoin another clear floor or ground space.

Maneuvering Clearance
Where a clear floor or ground space is located in an alcove or otherwise confined on all or part of
three sides, additional maneuvering clearance shall be provided.

Forward Approach
Alcoves shall be 36 inches (915 mm) wide minimum where the depth exceeds 24 inches (610 mm).

Parallel Approach

Alcoves shall be 60 inches (1525 mm) wide minimum where the depth exceeds 15 inches (380 mm).

Maneuvering Clearance in an Alcove, Parallel Approach

Toe Clearance
General
Space under an element between the finish floor or ground and 9 inches (230 mm) above the finish
floor or ground shall be considered toe clearance

Maximum Depth

Toe clearance shall extend 25 inches (635 mm) maximum under an element.

Minimum Required Depth

Where toe clearance is required at an element as part of a clear floor space, the toe clearance shall
extend 17 inches (430 mm) minimum under the element.

Additional Clearance

Space extending greater than 6 inches (150 mm) beyond the available knee clearance at 9 inches
(230 mm) above the finish floor or ground shall not be considered toe clearance.

Width

Toe clearance shall be 30 inches (760 mm) wide minimum.

Toe Clearance

Knee Clearance
General
Space under an element between 9 inches (230 mm) and 27 inches (685 mm) above the finish floor
or ground shall be considered knee clearance.
Maximum Depth
Knee clearance shall extend 25 inches (635 mm) maximum under an element at 9 inches (230 mm)
above the finish floor or ground.
Minimum Required Depth
Where knee clearance is required under an element as part of a clear floor space, the knee clearance
shall be 11 inches (280 mm) deep minimum at 9 inches (230 mm) above the finish floor or ground,
and 8 inches (205 mm) deep minimum at 27 inches (685 mm) above the finish floor or ground.

Clearance Reduction
Between 9 inches (230 mm) and 27 inches (685 mm) above the finish floor or ground, the knee
clearance shall be permitted to reduce at a rate of 1 inch (25 mm) in depth for each 6 inches (150
mm) in height.

Width
Knee clearance shall be 30 inches (760 mm) wide minimum.

Knee Clearance

Protruding Objects

General
Protruding objects shall comply with 307.

Protrusion Limits
Objects with leading edges more than 27 inches (685 mm) and not more than 80 inches (2030 mm)
above the finish floor or ground shall protrude 4 inches (100 mm) maximum horizontally into the
circulation path.
EXCEPTION: Handrails shall be permitted to protrude 4½ inches (115 mm) maximum.

Protrusion Limits. When a cane is used and the element is in the detectable range, it
gives a person sufficient time to detect the element with the cane before there is
body contact. Elements located on circulation paths, including operable elements,
must comply with requirements for protruding objects. For example, awnings and
their supporting structures cannot reduce the minimum required vertical
clearance. Similarly, casement windows, when open, cannot encroach more than 4
inches (100 mm) into circulation paths above 27 inches (685 mm).

Limits of Protruding Objects

Mounted Objects
Free-standing objects mounted on posts or pylons shall overhang circulation paths 12 inches (305
mm) maximum when located 27 inches (685 mm) minimum and 80 inches (2030 mm) maximum
above the finish floor or ground. Where a sign or other obstruction is mounted between posts or
pylons and the clear distance between the posts or pylons is greater than 12 inches (305 mm), the
lowest edge of such sign or obstruction shall be 27 inches (685 mm) maximum or 80 inches (2030
mm) minimum above the finish floor or ground.

Exception: The sloping portions of handrails serving stairs and ramps shall not be required to comply
with these limits.
Post-Mounted Protruding Objects

Vertical Clearance
Vertical clearance shall be 80 inches (2030 mm) high minimum. Guardrails or other barriers shall be
provided where the vertical clearance is less than 80 inches (2030 mm) high. The leading edge of
such guardrail or barrier shall be located 27 inches (685 mm) maximum above the finish floor or
ground.

Exception: Door closers and door stops shall be permitted to be 78 inches (1980 mm) minimum
above the finish floor or ground.

Vertical Clearance

Required Clear Width. Protruding objects shall not reduce the clear width required
for accessible routes.

Reach Ranges
General
Reach ranges shall comply with 308.
The following table provides guidance on reach ranges for children according to age where building
elements such as coat hooks, lockers, or operable parts are designed for use primarily by
children. These dimensions apply to either forward or side reaches. Accessible elements and
operable parts designed for adult use or children over age 12 can be located outside these ranges
but must be within the adult reach ranges required by 308.
Forward or Side ReachAges 3 and 4 Ages 5 through 8 Ages 9 through 12

High (maximum) 36 in (915 mm) 40 in (1015 mm) 44 in (1120 mm)

Low (minimum) 20 in (510 mm) 18 in (455 mm) 16 in (405 mm)

Forward Reach
Unobstructed
Where a forward reach is unobstructed, the high forward reach shall be 48 inches (1220 mm)
maximum and the low forward reach shall be 15 inches (380 mm) minimum above the finish floor or
ground.

Unobstructed Forward Reach

Obstructed High Reach

Where a high forward reach is over an obstruction, the clear floor space shall extend beneath the
element for a distance not less than the required reach depth over the obstruction. The high
forward reach shall be 48 inches (1220 mm) maximum where the reach depth is 20 inches (510 mm)
maximum. Where the reach depth exceeds 20 inches (510 mm), the high forward reach shall be 44
inches (1120 mm) maximum and the reach depth shall be 25 inches (635 mm) maximum.
Obstructed High Forward Reach

Side Reach
Unobstructed
Where a clear floor or ground space allows a parallel approach to an element and the side reach is
unobstructed, the high side reach shall be 48 inches (1220 mm) maximum and the low side reach
shall be 15 inches (380 mm) minimum above the finish floor or ground.

Exceptions: An obstruction shall be permitted between the clear floor or ground space and the
element where the depth of the obstruction is 10 inches (255 mm) maximum.
Operable parts of fuel dispensers shall be permitted to be 54 inches (1370 mm) maximum measured
from the surface of the vehicular way where fuel dispensers are installed on existing curbs.

Unobstructed Side Reach

Obstructed High Reach

Where a clear floor or ground space allows a parallel approach to an element and the high side
reach is over an obstruction, the height of the obstruction shall be 34 inches (865 mm) maximum
and the depth of the obstruction shall be 24 inches (610 mm) maximum. The high side reach shall
be 48 inches (1220 mm) maximum for a reach depth of 10 inches (255 mm) maximum. Where the
reach depth exceeds 10 inches (255 mm), the high side reach shall be 46 inches (1170 mm)
maximum for a reach depth of 24 inches (610 mm) maximum.
Exceptions: The top of washing machines and clothes dryers shall be permitted to be 36 inches (915
mm) maximum above the finish floor. parts of fuel dispensers shall be permitted to be 54 inches
(1370 mm) maximum measured from the surface of the vehicular way where fuel dispensers are
installed on existing curbs.

Obstructed High Side Reach

Accessible Routes

Components Accessible routes shall consist of one or more of the following components:
• walking surfaces with a running slope not steeper than 1:20
• doorways
• ramps
• curb ramps excluding the flared sides, elevators, and platform lifts

Walking surfaces must have running slopes not steeper than 1:20. Other
components of accessible routes, such as ramps and curb ramps are permitted to
be more steeply sloped.

Walking Surfaces
 Slope
The running slope of walking surfaces shall not be steeper than 1:20. The cross slope of walking
surfaces shall not be steeper than 1:48.

Clear Width
The clear width of walking surfaces shall be 36 inches (915 mm) minimum.
EXCEPTION: The clear width shall be permitted to be reduced to 32 inches (815 mm) minimum for a
length of 24 inches (610 mm) maximum provided that reduced width segments are separated by
segments that are 48 inches (1220 mm) long minimum and 36 inches (915 mm) wide minimum.

Clear Width of an Accessible Route

Clear Width at Turn

Where the accessible route makes a 180 degree turn around an element which is less than 48 inches
(1220 mm) wide, clear width shall be 42 inches (1065 mm) minimum approaching the turn, 48 inches
(1220 mm) minimum at the turn and 42 inches (1065 mm) minimum leaving the turn.

Exception: Where the clear width at the turn is 60 inches (1525 mm) minimum compliance with
403.5.2 shall not be required.
 Clear Width at Turn

Passing Spaces
An accessible route with a clear width less than 60 inches (1525 mm) shall provide passing spaces at
intervals of 200 feet (61 m) maximum. Passing spaces shall be either: a space 60 inches (1525 mm)
minimum by 60 inches (1525 mm) minimum; or, an intersection of two walking surfaces providing a
T-shaped space complying with 304.3.2 where the base and arms of the T-shaped space extend 48
inches (1220 mm) minimum beyond the intersection.

Handrails. Where handrails are provided along walking surfaces with running slopes not steeper
than 1:20

Doors, Doorways, and Gates

Revolving Doors, Gates, and Turnstiles: Revolving doors, revolving gates, and turnstiles shall not be
part of an accessible route.

Clear Width
Door openings shall provide a clear width of 32 inches (815 mm) minimum. Clear openings of
doorways with swinging doors shall be measured between the face of the door and the stop, with
the door open 90 degrees. Openings more than 24 inches (610 mm) deep shall provide a clear
opening of 36 inches (915 mm) minimum. There shall be no projections into the required clear
opening width lower than 34 inches (865 mm) above the finish floor or ground. Projections into the
clear opening width between 34 inches (865 mm) and 80 inches (2030 mm) above the finish floor or
ground shall not exceed 4 inches (100 mm).
EXCEPTIONS: In alterations, a projection of 5/8 inch (16 mm) maximum into the required clear width
shall be permitted for the latch side stop.

Door closers and door stops shall be permitted to be 78 inches (1980 mm) minimum above the finish
floor or ground.
 Clear Width of Doorways

Maneuvering Clearances
Minimum maneuvering clearances at doors and gates shall comply with 404.2.4. Maneuvering
clearances shall extend the full width of the doorway and the required latch side or hinge side
clearance.

Exception: Entry doors to hospital patient rooms shall not be required to provide the clearance
beyond the latch side of the door.

Swinging Doors and Gates

Swinging doors and gates shall have maneuvering clearances complying with Table below
Type of Use Minimum Maneuvering Clearance

Approach Door or GatePerpendicular toParallel to Doorway (beyond latch side

Direction Side Doorway unless noted)

1. Add 12 inches (305 mm) if closer and latch are provided.

2. Add 6 inches (150 mm) if closer and latch are provided.
3. Beyond hinge side.
4. Add 6 inches (150 mm) if closer is provided.

From front Pull 60 inches (1525 mm) 18 inches (455 mm)

Type of Use Minimum Maneuvering Clearance

Approach Door or GatePerpendicular toParallel to Doorway (beyond latch side

Direction Side Doorway unless noted)

From front Push 48 inches (1220 mm) 0 inches (0 mm) 1

From hinge Pull 60 inches (1525 mm) 36 inches (915 mm)

side

From hinge Pull 54 inches (1370 mm) 42 inches (1065 mm)

side

From hinge Push 42 inches (1065 22 inches (560 mm) 3

side mm) 2

From latch Pull 48 inches (1220 24 inches (610 mm)

side mm) 4

From latch Push 42 inches (1065 24 inches (610 mm)

side mm) 4

Maneuvering Clearances at Manual Swinging Doors and Gates

 Maneuvering Clearances at Manual Swinging Doors and Gates

Doorways without Doors or Gates, Sliding Doors, and Folding Doors. Doorways less than 36 inches
(915 mm) wide without doors or gates, sliding doors, or folding doors shall have maneuvering
clearances complying with Table below:
Minimum Maneuvering Clearance

Perpendicular toParallel to Doorway (beyond stop/latch side unless

Approach Direction Doorway noted)

1. Doorway with no door only.

2. Beyond pocket/hinge side.

From Front 48 inches (1220 mm) 0 inches (0 mm)

 Minimum Maneuvering Clearance

Perpendicular toParallel to Doorway (beyond stop/latch side unless

Approach Direction Doorway noted)

From side ¹ 42 inches (1065 mm) 0 inches (0 mm)

From pocket/hinge 42 inches (1065 mm) 22 inches (560 mm) ²

side

From stop/latch side 42 inches (1065 mm) 24 inches (610 mm)

Table 404.2.4.2 Maneuvering Clearances at

Doorways without Doors or Gates, Manual Sliding Doors, and Manual Folding Doors

Maneuvering Clearances at
Doorways without Doors, Sliding Doors, Gates, and Folding Doors

Recessed Doors and Gates

Maneuvering clearances for forward approach shall be provided when any obstruction within 18
inches (455 mm) of the latch side of a doorway projects more than 8 inches (205 mm) beyond the
face of the door, measured perpendicular to the face of the door or gate.
Maneuvering Clearances at Recessed Doors and Gates

Thresholds
Thresholds, if provided at doorways, shall be 1/2 inch (13 mm) high maximum.
EXCEPTION: Existing or altered thresholds 3/4 inch (19 mm) high maximum that have a beveled
edge on each side with a slope not steeper than 1:2 shall not be required to comply with tisstandard.

Doors in Series and Gates in Series

The distance between two hinged or pivoted doors in series and gates in series shall be 48 inches
(1220 mm) minimum plus the width of doors or gates swinging into the space.
Doors in Series and Gates in Series

Door and Gate Hardware

Handles, pulls, latches, locks, and other operable parts on doors and gates shall comply with
309.4. Operable parts of such hardware shall be 34 inches (865 mm) minimum and 48 inches (1220
mm) maximum above the finish floor or ground. Where sliding doors are in the fully open position,
operating hardware shall be exposed and usable from both sides.
EXCEPTIONS: 1. Existing locks shall be permitted in any location at existing glazed doors without
stiles, existing overhead rolling doors or grilles, and similar existing doors or grilles that are designed
with locks that are activated only at the top or bottom rail.

Access gates in barrier walls and fences protecting pools, spas, and hot tubs shall be permitted to
have operable parts of the release of latch on self-latching devices at 54 inches (1370 mm) maximum
above the finish floor or ground provided the self-latching devices are not also self-locking devices
and operated by means of a key, electronic opener, or integral combination lock.

Door and Gate Hardware. Door hardware that can be operated with a closed fist
or a loose grip accommodates the greatest range of users. Hardware that requires
simultaneous hand and finger movements require greater dexterity and
coordination, and is not recommended.

Door Closers and Gate Closers

Door closers and gate closers shall be adjusted so that from an open position of 90 degrees, the time
required to move the door to a position of 12 degrees from the latch is 5 seconds minimum.

Spring Hinges
Door and gate spring hinges shall be adjusted so that from the open position of 70 degrees, the door
or gate shall move to the closed position in 1.5 seconds minimum.

Door and Gate Opening Force

Fire doors shall have a minimum opening force allowable by the appropriate administrative
authority. The force for pushing or pulling open a door or gate other than fire doors shall be as
follows:
- Interior hinged doors and gates: 5 pounds (22.2 N) maximum.
- Sliding or folding doors: 5 pounds (22.2 N) maximum.
These forces do not apply to the force required to retract latch bolts or disengage other devices that
hold the door or gate in a closed position.

Door and Gate Opening Force. The maximum force pertains to the continuous
application of force necessary to fully open a door, not the initial force needed to
overcome the inertia of the door. It does not apply to the force required to retract
bolts or to disengage other devices used to keep the door in a closed position.

Door and Gate Surfaces

Swinging door and gate surfaces within 10 inches (255 mm) of the finish floor or ground measured
vertically shall have a smooth surface on the push side extending the full width of the door or
gate. Parts creating horizontal or vertical joints in these surfaces shall be within 1/16 inch (1.6 mm)
of the same plane as the other. Cavities created by added kick plates shall be capped.

EXCEPTIONS:
• Sliding doors shall not be required to comply with 404.2.10.
• Tempered glass doors without stiles and having a bottom rail or shoe with the top leading
edge tapered at 60 degrees minimum from the horizontal shall not be required to meet the
10 inch (255 mm) bottom smooth surface height requirement.
• Doors and gates that do not extend to within 10 inches (255 mm) of the finish floor or
ground shall not be required to comply with the standards.
• 4. Existing doors and gates without smooth surfaces within 10 inches (255 mm) of the finish
floor or ground shall not be required to provide smooth surfaces complying with the
standards. Provided that if added kick plates are installed, cavities created by such kick
plates are capped.

Vision Lights
Doors, gates, and side lights adjacent to doors or gates, containing one or more glazing panels that
permit viewing through the panels shall have the bottom of at least one glazed panel located 43
inches (1090 mm) maximum above the finish floor.

Automatic and Power-Assisted Doors and Gates

Clear Width
Doorways shall provide a clear opening of 32 inches (815 mm) minimum in power-on and power-off
mode. The minimum clear width for automatic door systems in a doorway shall be based on the
clear opening provided by all leaves in the open position.

Break Out Opening

Where doors and gates without standby power are a part of a means of egress, the clear break out
opening at swinging or sliding doors and gates shall be 32 inches (815 mm) minimum when operated
in emergency mode.

Revolving Doors, Revolving Gates, and Turnstiles

Revolving doors, revolving gates, and turnstiles shall not be part of an accessible route.

Ramps

Slope

Ramp runs shall have a running slope not steeper than 1:12.

Slope Maximum Rise

1. A slope steeper than 1:8 is prohibited.

Steeper than 1:10 but not steeper than 1:8 3 inches (75 mm)

Steeper than 1:12 but not steeper than 1:10 6 inches (150 mm)

Ramp Slope and Rise

for Existing Sites, Buildings, and Facilities

Cross Slope. Cross slope of ramp runs shall not be steeper than 1:48.

Cross Slope. Cross slope is the slope of the surface perpendicular to the direction
of travel. Cross slope is measured the same way as slope is measured (i.e., the rise
over the run).

Floor or Ground Surfaces

Changes in level other than the running slope and cross slope are not permitted on ramp runs.

Clear Width
The clear width of a ramp run and, where handrails are provided, the clear width between handrails
shall be 36 inches (915 mm) minimum.

Rise
The rise for any ramp run shall be 30 inches (760 mm) maximum.

Landings
Ramps shall have landings at the top and the bottom of each ramp run. Landings shall comply with
405.7.

Landings. Ramps that do not have level landings at changes in direction can create
a compound slope that will not meet the requirements of this document. Circular or
curved ramps continually change direction. Curvilinear ramps with small radii also
can create compound cross slopes and cannot, by their nature, meet the
requirements for accessible routes. A level landing is needed at the accessible door
to permit maneuvering and simultaneously door operation.

Ramp Landings

Width
The landing clear width shall be at least as wide as the widest ramp run leading to the landing.
Length
The landing clear length shall be 60 inches (1525 mm) long minimum.

Change in Direction
Ramps that change direction between runs at landings shall have a clear landing 60 inches (1525
mm) minimum by 60 inches (1525 mm) minimum.
Doorways
Where doorways are located adjacent to a ramp landing, maneuvering clearances is required

Curb or Barrier
A curb or barrier shall be provided that prevents the passage of a 4 inch (100 mm) diameter sphere,
where any portion of the sphere is within 4 inches (100 mm) of the finish floor or ground surface.

Curb or Barrier Edge Protection

Wet Conditions. Landings subject to wet conditions shall be designed to prevent the accumulation
of water.

Curb Ramps

Counter Slope
Counter slopes of adjoining gutters and road surfaces immediately adjacent to the curb ramp shall
not be steeper than 1:20. The adjacent surfaces at transitions at curb ramps to walks, gutters, and
streets shall be at the same level.

Counter Slope of Surfaces Adjacent to Curb Ramps

406.3 Sides of Curb Ramps. Where provided, curb ramp flares shall not be steeper than 1:10.
 Sides of Curb Ramps

406.4 Landings. Landings shall be provided at the tops of curb ramps. The landing clear length shall
be 36 inches (915 mm) minimum. The landing clear width shall be at least as wide as the curb ramp,
excluding flared sides, leading to the landing.
EXCEPTION: In alterations, where there is no landing at the top of curb ramps, curb ramp flares shall
be provided and shall not be steeper than 1:12.

Landings at the Top of Curb Ramps

Location
Curb ramps and the flared sides of curb ramps shall be located so that they do not project into
vehicular traffic lanes, parking spaces, or parking access aisles. Curb ramps at marked crossings shall
be wholly contained within the markings, excluding any flared sides.

Diagonal Curb Ramps

Diagonal or corner type curb ramps with returned curbs or other well-defined edges shall have the
edges parallel to the direction of pedestrian flow. The bottom of diagonal curb ramps shall have a
clear space 48 inches (1220 mm) minimum outside active traffic lanes of the roadway. Diagonal curb
ramps provided at marked crossings shall provide the 48 inches (1220 mm) minimum clear space
within the markings. Diagonal curb ramps with flared sides shall have a segment of curb 24 inches
(610 mm) long minimum located on each side of the curb ramp and within the marked crossing.

Diagonal or Corner Type Curb Ramps

Islands
Raised islands in crossings shall be cut through level with the street or have curb ramps at both
sides. Each curb ramp shall have a level area 48 inches (1220 mm) long minimum by 36 inches (915
mm) wide minimum at the top of the curb ramp in the part of the island intersected by the
crossings. Each 48 inch (1220 mm) minimum by 36 inch (915 mm) minimum area shall be oriented
so that the 48 inch (1220 mm) minimum length is in the direction of the running slope of the curb
ramp it serves. The 48 inch (1220 mm) minimum by 36 inch (915 mm) minimum areas and
the accessible route shall be permitted to overlap.

Figure 406.7 Islands in Crossings

 Elevators

Call buttons Height

Existing call buttons and existing keypads shall be permitted to be located at 54 inches (1370 mm)
maximum above the finish floor, measured to the centerline of the highest operable part.
Size
Call buttons shall be 3/4 inch (19 mm) minimum in the smallest dimension.

Clear Floor or Ground Space. The clear floor or ground space required at elevator
call buttons must remain free of obstructions including ashtrays, plants, and other
decorative elements that prevent wheelchair users and others from reaching the call
buttons. The height of the clear floor or ground space is considered to be a volume
from the floor to 80 inches (2030 mm) above the floor. Recessed ashtrays should
not be placed near elevator call buttons so that persons who are blind or visually
impaired do not inadvertently contact them or their contents as they reach for the
call buttons.

Destination-oriented elevators

Location Exception. A destination-oriented elevator system provides lobby controls

enabling passengers to select floor stops, lobby indicators designating which
elevator to use, and a car indicator designating the floors at which the car will
stop. Responding cars are programmed for maximum efficiency by reducing the
number of stops any passenger experiences.

Signals
Call buttons shall have visible signals to indicate when each call is registered and when each call is
answered.

Visible and Audible Signals

 A visible and audible signal shall be provided at each hoist way entrance to indicate which car is
answering a call and the car's direction of travel. Where in-car signals are provided, they shall be
visible from the floor area adjacent to the hall call buttons.

Visible Signals. Visible signal fixtures shall be centered at 72 inches (1830 mm) minimum above the
finish floor or ground. The visible signal elements shall be 2 1/2 inches (64 mm) minimum measured
along the vertical centerline of the element. Signals shall be visible from the floor area adjacent to
the hall call button.

Exceptions: 1. Destination-oriented elevators shall be permitted to have signals visible from the
floor area adjacent to the hoist way entrance.

Visible Hall Signals

Audible Signals
Audible signals shall sound once for the up direction and twice for the down direction, or shall have
verbal annunciators that indicate the direction of elevator car travel. Audible signals shall have a
frequency of 1500 Hz maximum. Verbal annunciators shall have a frequency of 300 Hz minimum and
3000 Hz maximum. The audible signal and verbal annunciator shall be 10 dB minimum above
ambient, but shall not exceed 80 dB, measured at the hall call button.

Minimum Dimensions

Door ClearInside Car, SideInside Car, Back WallInside Car, Back Wall to
Door Location Width to Side to Front Return Inside Face of Door
 Minimum Dimensions

Door ClearInside Car, SideInside Car, Back WallInside Car, Back Wall to
Door Location Width to Side to Front Return Inside Face of Door

1. A tolerance of minus 5/8 inch (16 mm) is permitted. 2. Other car configurations that provide a
turning space complying with 304 with the door closed shall be permitted.

Centered 42 inches 80 inches 51 inches (1295 54 inches (1370 mm)

(1065 mm) (2030 mm) mm)

Side (off- 36 inches 68 inches 51 inches (1295 54 inches (1370 mm)

centered) (915 mm)1 (1725 mm) mm)

Any 36 inches 54 inches 80 inches (2030 80 inches (2030 mm)

(915 mm) ¹ (1370 mm) mm)

Any 36 inches 60 inches 60 inches (1525 60 inches (1525 mm) ²

(915 mm) ² (1525 mm) ² mm) ²

407.4.1 Elevator Car Dimensions (text version)

 Elevator Car Dimensions

Platform to Hostway Clearance

The clearance between the car platform sill and the edge of any hoist way landing shall be 1 1/4 inch
(32 mm) maximum.
Leveling. Each car shall be equipped with a self-leveling feature that will automatically bring and
maintain the car at floor landings within a tolerance of 1/2 inch (13 mm) under rated loading to zero
loading conditions.

Illumination
The level of illumination at the car controls, platform, car threshold and car landing sill shall be 5
foot candles (54 lux) minimum.

Control Button Tactile Symbol Braille Message

Emergency Stop “ST”OP Three cells

Alarm AL“AR”M four cells

Door Open OP“EN” three cells

Door Close CLOSE five cells

Control Button Tactile Symbol Braille Message

Main Entry Floor MA"IN" three cells

Phone PH"ONE" four cells

Elevator Control Button Identification

Limited-Use/Limited-Application (LULA) Elevator Car Dimensions

10.11 SUMMARY

It is essential to apply the principles of facility planning in hospital design. The facility planning and
designing of a hospital must not only cater to the needs of general patients but also to the needs of
physically challenged.
10.12 KEY WORDS

GUIDING PRINCIPLES IN FACILITY PLANNING OF A HOSPITAL

A hospital is responsible to render an essential service. In fulfilling this responsibility, hospital

planning should be guided by certain universally acknowledged principles. These are:

Ensure Patient Care OF A High Quality: These are ensured by following measures:
• Provision of appropriate technical equipment and facilities necessary to support the
hospital’s objective.
• An organizational structure that assigns responsibility appropriately and requires
accountability for the various functions within the institution.
• A continuous review of the adequacy of care provided by physicals, nursing staff
and paramedics

Effective Community Orientation: The hospital must have effective community orientation. This can
be achieved through following measures:
• Hospital must actively participate in implementing Primary Health Care.
• Must have a public information system that keeps the community informed about
the hospital’s goals, objectives and plans.

Economic Viability: A hospital must have economic viability. This can be achieved by:
• Developing patient care objectives that are consistent with projected service
demands, availability of operating finances and having adequate personnel and
equipments.
• A planned program of expansion based solely on actual community needs.
• A sound system of funding that will assure replacement, improvement and
expansion of facilities and equipments without imposing too much of cost burden
on patient charges.
• An annual budget plan and a sound financial management.
Orderly Planning: Orderly planning should be achieved by the following:
• Establishment of short and long term planning objectives with prioritization and target
dates.
• Preparation of a functional plan.

Sound Architectural Plan: - This involves

• Engaging a sound hospital architect
• Establishing a planning team
• Appropriate site selection
• Flexibility and expansion facilities.
• Incorporation of Green concept

BUILDING ATTRIBUTES

Regardless of their location, size, or budget, all hospitals should have certain common attributes
• Efficiency
• Cost Effectiveness