Thursday, April 28, 2011

PRODUCTION MANAGEMENT UNIT I

PRODUCTION MANAGEMENT UNIT I
INTRODUCTION TO PRODUCTION MANAGEMENT

Operations Management

 Meaning of Production Management
Importance of Operations Management

Historical contributions

Systems view of OM
 Functions of OM

Promoting Productivity

Efficiency and Effectiveness

Types of Production Systems

Plant Location
 Factors influencing Plant Location

Plant Layout
 Objectives
 Factors
Types of Layout
1. OPERATIONS MANAGEMENT
Production/operations management is the process, which combines
and transforms various resources used in the production/operations subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization. Therefore, it is that part of an organization, which is concerned with the transformation of a range of inputs into the required (products/services) having the requisite quality level.
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.
1.1 MEANING OF PRODUCTION
Production function is that 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.

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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 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, “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.”
2. IMPORTANCE OF PRODUCTION MANAGEMENT
The importance objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost’.
1. RIGHT QUALITY
The quality of product is established based upon the customers needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements.
2. 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.

3. RIGHT T IME
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.
4. 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.
3. HISTORICAL CONTRIBUTIONS OF PRODUCTION AND OPERATIONS MANAGEMENT
For over two centuries operations and production management has been recognised as an important factor in a country’s economic growth.
The traditional view of manufacturing management began in eighteenth century when Adam Smith recognised the economic benefits of specialisation of labour. He recommended breaking of jobs down into subtasks and recognises workers to specialised tasks in which they would become highly skilled and efficient. In the early twentieth century, F.W. Taylor implemented Smith’s theories and developed scientific management. From then till 1930, many techniques were developed prevailing the traditional view. Brief information about the contributions to manufacturing management is shown in the Table 1.1.
TABLE 1.1 Historical summary of operations management
Date
Contribution
Contributor
1776
Specialization of labour in manufacturing
Adam Smith
1799
Interchangeable parts, cost accounting
Eli Whitney and others
1832
Division of labour by skill; assignment of jobs by skill;
basics of time study
Charles Babbage
1900
Scientific management time study and work study
developed; dividing planning and doing of work
Frederick W. Taylor
1900
Motion of study of jobs
Frank B. Gilbreth
1901
Scheduling techniques for employees, machines jobs in
Manufacturing
Henry L. Gantt
1915
Economic lot sizes for inventory control
F.W. Harris
1927
Human relations; the Hawthorne studies
Elton Mayo
1931
Statistical inference applied to product quality: quality
control charts
W.A. Shewart
1935
Statistical sampling applied to quality control: inspection
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sampling plans
H.F. Dodge & H.G.
1940
Operations research applications in World War II
P.M. Blacker and 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.
processes
& others
1951
Commercial digital computer: large-scale computations
available.
Sperry Univac
1960
Organizational behaviour: continued study of people
at work
L. Cummings, L. Porter
1970
Integrating operations into overall strategy and policy,
W. Skinner J. Orlicky
Computer applications to manufacturing, Scheduling and control, Material requirement planning (MRP)
G. Wright
1980
Quality and productivity applications from Japan:
W.E. Deming and
robotics, CAD-CAM
J. Juran.
Production management becomes the acceptable term from 1930s to 1950s. As F.W. Taylor’s works become more widely known, managers developed techniques that focussed 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 behaviour in the working environment. In addition, economists, mathematicians, and computer socialists contributed newer, more sophisticated analytical approaches.
With the 1970s emerges 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 practices.
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4. SYSTEM VIEW OF OM
The production system of an organization is that part, 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.
The production system has the following characteristics:
1. Production is an organized activity, so every production system has an objective.
2. The system transforms the various inputs to useful outputs.
3. It does not operate in isolation from the other organization system.
4. There exists a feedback about the activities, which is essential to control and improve system performance.
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4.1 FUNCTIONS / SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENT
Production and 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:
1. Location of facilities
2. Plant layouts and material handling
3. Product design
4. Process design
5. Production and planning control
6. Quality control
7. Materials management
8. Maintenance management.
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 centres and equipment in the conversion process. The overall objective of
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the plant layout is to design a physical arrangement that meets the required output quality and quantity most economically.
According to James Moore, “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”.
‘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 specialised 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 have 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: marketing, product development, 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 analyse the workflow for converting raw material into finished product and to select the workstation for each included in the workflow.
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PRODUCTION PLANNING ANDCONTROL
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 includes 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 from department to department and machine to machine till raw material gets its final shape.
Scheduling determines the programme 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. Functions of production and operations management
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Scope of production and operations management
Dispatching is concerned with the starting the processes. It gives necessary authority so as to start a particular work, which has 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 C ONTROL
Quality Control (QC) 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 feed back system and corrective action procedure.
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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.
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The main objectives of quality control are:
1. To improve the companies income by making the production more acceptable to the customers i.e., by providing long life, greater usefulness, maintainability, etc.
2. To reduce companies cost through reduction of losses due to defects.
3. To achieve interchangeability of manufacture in large scale production.
4. To produce optimal quality at reduced price.
5. To ensure satisfaction of customers with productions or services or high quality level, to build customer goodwill, confidence and reputation of manufacturer.
6. To make inspection prompt to ensure quality control.
7. To check the variation during manufacturing.
MATERIALS M ANAGEMENT
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 materials management are:
1. To minimise material cost.
2. To purchase, receive, transport and store materials efficiently and to reduce the related cost.
3. To cut down costs through simplification, standardisation, value analysis, import substitution, etc.
4. To trace new sources of supply and to develop cordial relations with them in order to ensure continuous supply at reasonable rates.
5. To reduce investment tied in the inventories for use in other productive purposes and to develop high inventory turnover ratios.
MAINTENANCE M ANAGEMENT
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:
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1. To achieve minimum breakdown and to keep the plant in good working condition at the lowest possible cost.
2. To keep the machines and other facilities in such a condition that permits them to be used at their optimal capacity without interruption.
3. 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
5. PROMOTING PRODUCTIVITY
Productivity is a relationship between the output (products/services) and the input (resources consumed in providing them) of a business system.
• A measure of the effective use of resources, usually expressed as the ratio of output to input
• Productivity ratios are used for
• Planning workforce requirements
• Scheduling equipment
• Financial analysis
• Productivity measures
• output/ input
1. Partial Productivity measures
a. output/(single input)
2. Multi-factor measures
a. output/(multiple inputs)
3. Total measure
a. output/(total inputs)
For the survival of any organization, this productivity ratio must be at least 1. If it is more than one, the organization is in a comfortable position. So, the objective of the organization should be to identify ways and means to improve productivity to the highest possible level. There are several strategies for improving the productivity which are:
1. Increased output for the same input
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2. Decreased input for the same output
3. Proportionate increase in the output is more than the proportionate increase in the input
4. Proportionate decrease in the input is more than the proportionate decrease in the output
5. Simultaneous increase in the output with decrease in the input.
6. EFFICIENCY AND EFFECTIVENESS
The concepts of input, output, and cost can be used to explain the meaning of efficiency and effectiveness, which are the two criteria by which the performance of a responsibility center is judged.
Efficiency is the ratio of outputs to inputs, or the amount of output per unit of input Responsibility Center A is more efficient than Responsibility Center B (1) if it uses fewer resources than Responsibility Center B but produces the same output, or (2) if it uses the same amount of resources but produces a greater output.
Effectiveness is determined by the relationship between a responsibility center's output and its objectives. The more this output contributes to the objectives, the more effective the unit. Since both objectives and outputs are difficult to quantify, effectiveness tends to be expressed in subjective, non-analytical terms
7. TYPES OF PRODUCTION SYSTEM
Production systems can be classified as Job Shop, Batch, Mass and Continuous Production systems.
JOB SHOP PRODUCTION
Job shop production are characterised by manufacturing of 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.
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Characteristics
The Job-shop production system is followed when there is:
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge because of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of each product, capacities for each work centre and order priorities.
Advantages
Following are the advantages of job shop production:
1. Because of general purpose machines and facilities variety of products can be produced.
2. Operators will become more skilled and competent, as each job gives them learning opportunities.
3. Full potential of operators can be utilised.
4. Opportunity exists for creative methods and innovative ideas.
Limitations
Following are the limitations of job shop production:
1. Higher cost due to frequent set up changes.
2. Higher level of inventory at all levels and hence higher inventory cost.
3. Production planning is complicated.
4. Larger space requirements.
BATCH PRODUCTION
Batch production is defined by American Production and Inventory Control Society (APICS) “as a form of manufacturing in which the job passes through the functional departments in lots or batches and each lot may have a different routing.” It is characterised by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales.
Characteristics
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Batch production system is used under the following circumstances:
1. When there is shorter production runs.
2. When plant and machinery are flexible.
3. When 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.
4. When manufacturing lead time and cost are lower as compared to job order production.
Advantages
Following are the advantages of batch production:
1. Better utilisation of plant and machinery.
2. Promotes functional specialisation.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process number of products.
6. Job satisfaction exists for operators.
Limitations
Following are the limitations of batch production:
1. Material handling is complex because of irregular and longer flows.
2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production.
4. 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 standardisation exists and all outputs follow the same path.
Characteristics
Mass production is used under the following circumstances:
1. Standardisation of product and process sequence.
2. Dedicated special purpose machines having higher production capacities and output rates.
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3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and without any back tracking.
8. Production planning and control is easy.
9. Material handling can be completely automatic.
Advantages
Following are the advantages of mass production:
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilisation due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.
Limitations
Following are the limitations of mass production:
1. Breakdown of one machine will stop an entire production line.
2. Line layout needs major change with the changes in the product design.
3. High investment in production facilities.
4. The cycle time is determined by the slowest operation.
CONTINUOUSPRODUCTION
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.
Characteristics
Continuous production is used under the following circumstances:
1. Dedicated plant and equipment with zero flexibility.
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2. Material handling is fully automated.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with final product.
5. Planning and scheduling is a routine action.
Advantages
Following are the advantages of continuous production:
1. Standardisation of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilisation due to line balancing.
4. Manpower is not required for material handling as it is completely automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production.
Limitations
Following are the limitations of continuous production:
1. Flexibility to accommodate and process number of products does not exist.
2. Very high investment for setting flow lines.
3. Product differentiation is limited.
8. PLANT LOCATION
Business systems utilize facilities like, plant and machineries, warehouses, etc., white performing the task of producing products/services. A proper planning of these facilities would definitely reduce their cost of operation and maintenance.
Plant location decisions are very important because they have direct bearing on factors like, financial, employment and distribution problems. In the long run, relocation of plant may even benefit the organization. But, the relocation of the plant involves stoppage of production, and also cost for shifting the facilities to a new location. In addition to these things, it will introduce some inconvenience in (he normal functioning of the business. Hence, at the time of starting any industry, one should generate several alternate sites for locating (he plant. After a critical
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analysis, the best site is lo be selected for commissioning the plant. Location of warehouses and other facilities arc also having direct bearing on the operational performance of organizations,
Reasons for plant location Study. The following events are quite common in any business venture.
• Establishment of a new venture.
• Expansion of existing business.
• Significant change in existing demand, supply and marketing Locations,
• Significant change in the cost structure.
• Government policies.
Because of these events, an organisation will be keen in additional or alternate sites for its production activities. So, the plant location becomes an important decision which in turn influences plant layout and facilities needed. Also, it influences capital investment and operating costs. For example, in steel industry, if we integrate the units right from ore extraction to final steel formation in a nearby area, die transportation cost would be substantially reduced and also, die reliability of supplies in the final stages of production in the integrated plant would be improved. This in turn, improves the productivity of the plant.
8.1 FACTORS INFLUENCING PLANT LOCATION
The factors which influence plant location can be classified into general factors and specific factors. These are presented in this section.
General factors 1. Availability of land Tor present and future needs and cost of land and land development and building etc.
2. Availability of inputs such as labour, raw materials, etc.
3. Closeness to the market places.
4. Stability of demand.
5. Availability of communication facilities.
6. Availability of necessary modes of transportation like road, rail, airport and water ways.
7. Availability of infrastructure facilities such as power, water, financial
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institutions, banks, etc. 8. Disposal of waste and effluent and their impact on the environment.
9. Government support, grant, subsidy, tax structure.
10. Availability of housing facilities and recreational facilities.
11. Demographic factors tike population, trained man power, academic institutions, standard of living, income level, etc.
12. Security, culture of society. 13. Fuel cost.
Specific factors. A multinational company, desiring to set up plant should consider the following aspects in addition to the normal factors.
1. The economic stability of the country and the concern of the country towards outside investments are to be considered.
2. The success of operation of the factory depends on the cultural factors, language and cultural differences which can present operating, control and even policy problems. A unit of measurement is also very important in international business.
3. Analysis must be based on the factors like wage rate, policy, duties, etc.
4. The company can set up joint ventures with any leading local giants dial will solve many operational problems
9, PLANT LAYOUT
Plant layout is a floor plan of the physical facilities which are used in production. Layout planning refers to the generation of several possible plans for the spatial arrangement of physical facilities and select the one which minimizes the distance between the departments.
9.1 OBJECTIVES OF PLANT LAYOUT
• Minimize investment in equipment.
• Minimize overall production time.
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• Utilize existing space most effectively.
• Provide for employee convenience, safety and comfort
• Maintain flexibility of arrangement and operation,
• Minimize materials-handling cost.
• Facilitate the manufacturing process.
• Facilitate the organizational structure,
9.2 TYPES OF LAYOUT
Layouts can be classified into the following four categories.
1. Process layout
2. Product layout
3. Group layout {Combination layout)
4. Fixed position layout
In a process layout, similar machines and services are located together. Therefore, all drills wilt be located in one area of the plant. Process layout is normally used when the production volume is not sufficient to justify a product layout. Typically, job shops employ process layouts due to the variety of products manufactured and their low production volumes.
Product layout is used when machines and auxiliary services are located according to the processing sequence of the product. The product layout is selected when the volume of production of a product is high such that a separate production line to manufacture it can be justified. In a strict product layout, machines are not shared by different products. Therefore the production volume must be sufficient to achieve satisfactory utilization of the equipment.
A group Layout is a combination of the product Layout and process layout. It combines the advantages of both layout systems. If there are m machines and n components, in a group layout (Group-Technology Layout), the m-machines and n-components will be divided into distinct number of machine-component cells (groups) such that alt the components assigned to a cell are almost processed within that cell itself. Here, the objective is to minimize the inter-cell movements.
The basic aim of a group technology layout is to identify families of
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components that require similar processing on a set of machines. In turn, these machines are grouped into cells. Each cell is capable of satisfying all the requirements of the component family assigned to it.
The layout design process considers mostly a single objective while designing layouts. In process layout, the objective is to minimize the total cost of materials handling. Because of the nature of the layout the cost of equipments will be the minimum in this type of layout. In product layout the cost of materials handling will be at the absolute minimum. But the cost of equipments would not be at the minimum if the equipments are not fully utilized.
In group technology layout the objective is to minimize the sum of the cost of transportation and the cost of equipments. So, this is called as multi-objective layout
A fourth type of layout is the static product layout or layout by fixed position, in which the physical characteristics of the product dictate as to which type of machines and men are to be brought to the product The ship building industry commonly employs a static product layout. Since, the static product layout is not justified except in unusual situations, it has limited scope.
9. 2.1 Advantages and Limitations of Process Layout
Advantages
1. Machines are belter utilized; fewer machines are required.
2. A high degree of flexibility in terms of task allocation to machines exists,
3. Comparatively' low investment in machines is requited.
4. The diversity of tasks offers a more interesting and satisfying occupation for the operator.
Limitations
1. Material handling cost will be high.
2. Production planning and control systems are more involved.
3. Throughput time is longer.
4. Large amounts of in-process inventory will result.
5. Space and capital are tied up by work in process.
6. Higher grades of skill are required.
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9.2.2 Advantages and Limitations of Product Layout
Advantages
1. The flow of product will be smooth and logical in flow lines.
2. In-process inventory is less.
3. Throughput time is less.
4. Material handling cost is minimum.
5. Operators need not be skilled.
6. Simple production planning and control systems are possible.
7. Less space is occupied by work in transit and for temporary storage.
Limitations
1. A breakdown of one machine in a product line may cause stoppages of machines in
the downstream of the line.
2. A change in product design may require major alterations in the layout.
3. The line output is decided by the bottleneck machine.
4. Comparatively high investment in equipments is required.
6.2.3 Advantages and Limitations of Group Technology Layout
Advantages, Group technology layout can increase the items given in List A and it can decrease the items given in List B-
List A
1. Component standardization and rationalization
2. Reliability of estimates
3. Effective machine operation
4. Productivity
5. Costing accuracy
6. Customer service
7. Order potential
List B
1. Planning effort
2. Paper work
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3. Setting time
4. Down time
5. Work in progress
6, Work movement
7. Overall production times
8, Finished part stock
9, Overall cost
Limitations. This type of Jay out may not be feasible for all situations. If me produce mix is completely dissimilar, then we may not have meaningful cell formation.
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EXERCISES
Section A
1. What do you mean by ‘Production’?
2. What do you mean by production system?
3. Mention the different types of production systems.
4. What is job shop production?
5. What is batch production?
6. What is mass production?
7. What is product layout?
8. Define production management.
9. Mention any four advantages and Limitations of Process Layout
10. .Define operating system.
Section B
1. Briefly explain the production system and its characteristics.
2. What is job shop production? What are its characteristics, advantages and limitations?
3. What is batch production? What are its characteristics, advantages and limitations?
4. What is mass production? What are its characteristics, advantages and limitations?
5. What is continuous production? What are its characteristics, advantages and limitations?
6. Explain in brief the importance of operations management.
7. Distinguish between manufacturing operations and service operations.
Section C
1. Explain the different types of production systems.
2. Explain the different types of plant layouts.
3. Discuss the factors affecting plant location.
4. Explain the functions of production and operations management.
5. An automobile company has extra capacity that can be used to produce gears that the company has been buying for rs.300 each. if the company makes the gears, it will incur materials cost of rs.90 per unit, labour cost of Rs.120 per unit and variable overhead cost of rs.30 per unit. The annual fixed cost associated with the unused capacity is rs.2, 40,000. Demand over the next year is estimated at 4000 units.
6. A manufacturer of motor cycles buys side box at Rs.240 each. in case he makes it himself, the fixed and variable costs would be Rs.3,00,000 and Rs.90 per side box, respectively. Should the manufacturer make or buy the side box if there is a demand over the next year is estimated at 2500 side boxes?
7. A manufacturer of motor cycles produced 7040 Units of gears and Sold for Rs 1.10/Unit for that it will incur materials cost of Rs.520, total labour cost of Rs.1000 and variable overhead cost of Rs.2000. you are asked to find out
• What is the Total productivity ?
• What is the multifactor productivity of labor and materials?
• What is the multifactor productivity of overhead and materials?
• What is the multifactor productivity of labor and overhead?
• What is the partial productivity of each of the inputs?
PRODUCTION MANAGEMENT UNIT I


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