manufacturing and operations management
TRANSCRIPT
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 1
Contents
1. Introduction to Operations Management
Nature, Scope, Importance and Functions
Evolution from manufacturing to operations management – Evolution of the factory system –
manufacturing systems – Quality – mass customization
(Contribution of Henry Ford, Deming, Cross by, Taguchi)
2. Types of industries – Variety of Business – Integration of Manufacturing and services – scale
of operations. Methods of Manufacturing – Project/ Jobbing, Batch Production, Flow/
continuous production, Process production, Characteristics of each method
3. Facilities Location and Layout – Strategic importance – factors affecting location and layout
– Installation of facilities – Single location, multi-location decisions, Principles and types of
facilities layout.
4. Importance and functions of Production Planning and control - Introduction to PERT/ CPM
Network crashing (Numerical expected for PERT/ CPM)
5. Maintenance Management – Importance and Types of maintenance – Maintenance planning –
Spare parts Management – Concept of TPM
6. Inspection – Cent percent inspection, Sample inspection, Operation characteristics Curves,
statistical Quality control – Construction and Interpretations of Control charts (X-R), n, p, c,
np). Introduction to six sigma, (Numerical expected for control charts). Gap analysis for service
quality assessment.
7. Productivity – Work Study – Objectives, Scope and Uses – Methods study – Flow process
chart, Flow diagram and Process mapping – Work Measurement – Elements – Performance
Rating – Allowances – Standard Time – Synthetic Time standards Work sampling (Numerical
expected for standard Time)
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 2
Introduction The production (or manufacturing) management since long has been associated with a factory
situation where goods are produced in physical sense.
Definition of a Factory
Factory is defined as “as any premises in which persons are employed for the purpose of making,
altering, repairing, finishing, cleaning, washing, breaking, demolishing or adopting for sale, any
article”. The above definition restricts the scope of production function.
“Production is the process by which goods and services are produced”
The essential feature of a production function is to bring together people, machines and materials
to provide goods and services thereby satisfying the wants of people. Since both manufacturing
and service organizations involve above mentioned features, the term production management is
gradually being replaced by Operations Management.
Operations Concept of Production The concept of “operations” instead of “production” includes both manufacturing as well as
service organizations. All operations add value to the objectives and thereby enhance their
usefulness. An operation may be defined “as the process of changing inputs into outputs thereby
adding value to some entity.” This can be done in following ways:
Alteration: It refers to the change in form or state of inputs
Transportation: It refers to the movement of the entity from one place to another.
Storage: It refers to the process of keeping an entity in a protected environment for some period
of time. Inspection: It is the verification of entity for its properties.
Production as the Conversion process Since production is the process of changing inputs into outputs, every organization has the
conversion system which can be shown as follows
Fig: A Conceptual model of a production (operations) System
The inputs in above system are raw materials, parts, consumable, energy, engineering details,
production schedules, information technology, capital or management and outputs are the
produced goods, transported goods, delivered messages, and serviced customers.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 3
Productivity of Conversion Process Effectiveness of production (or operations) management may be viewed as the efficiency with
which inputs are converted into outputs. This conversion efficiency can be gauged by the ratio of
the output to the input and is known as productivity of the system.
Productivity = Output
Inputs
Productivity = _______ Goods and Services___________________
Capital, Manpower, Material, Machines, Land and Building
The higher the productivity of production system, more efficient the production function.
Another way of looking at the concept of productivity is to look at the amount of waste
generated in the system.
Productivity of the system can be improved by minimizing/ eliminating the waste occurring in
the system.
Objectives of Production (or operations) management Effectiveness: Producing the right kind of goods and services that satisfy customer’s needs.
Efficiency: Maximizing output of goods and services with minimum resource inputs.
Quality: Ensuring that good & services produced conform to pre-set quality specifications.
Lead Time: Minimize delays, waiting time and idle time in the conversion process.
Capacity Utilization: Maximum utilization of manpower, machines etc.
Cost: Minimizing cost of producing goods or rendering a service.
The above mentioned six important objectives are to be achieved to increase the productivity &
ultimately the profit for the organization.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 4
Components of production (or operations) function Production (or operations) management is essentially planning, organizing and controlling of
production function. Management of production (or operations) can be described in terms of
fourteen components as under:
Production/ Operations as a Co-ordination function Production plays a vital role in coordinating efforts with three other major functions of an
organization, namely Marketing, Finance and Personnel.
Sales department prepares a forecast which includes products and quantities to be sold, price of
each product, profit margin etc. Production departments’ analyses the forecast in terms of
manufacturing capacities, inventory, sub controlling and subcontracting etc. and then they
modify/accept the forecast. Finance department next analyses the modified or accepted forecast
in terms of corporate objectives, profitability, investment etc. Production department then
finalizes the manpower plan with personnel department. Personnel department will arrange
recruitment and Training if required. Proper co-ordination between production and personnel
department thus ensures that adequate skills to meet finalized forecast (sales) are made available.
Production department also discuss investment plans regarding material, machines etc with
finance dept. to meet the required target production. Finance dept. if required will arrange funds
from most economical sources. Production also coordinates with purchase dept. who takes
procurement action for materials required for production.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 5
Manufacturing systems A typical production system comprises of three main components i.e. inputs, transformation
process and outputs.
1) Inputs are men, materials, machines, instructions, drawings, paper work etc.
2) The transformation process involves operations, mechanical or chemical to change/ convert
inputs into outputs. It also includes activities that assist conversions. They are as follows:
1. Planning and control of factors of production
2. Procurement of materials
3. Receipt, storage and issue of materials
4. Material handling
5. Inspection of in-process and parts
6. Assembly and testing of products
7. Storage of finished goods
8. Authorization, retrieval etc
3) Outputs are goods and services (e.g. Products, parts, paper work, served customer etc.)
The combination of operations and activities stated above, employed to create goods and services
is known as manufacturing system, (or method). A manufacturing system is an independent
group of sub-systems, each sub-system performing a distinct function. These systems are inter-
related and require to be unified to achieve overall objectives of the organization. Manufacturing
system needs to interact with both internal and external environment. The internal environment is
the combination of engineering, marketing, personnel and accounts activities whereas external
environment comprises of customers, competitors, suppliers, labor unions etc. The selection of
the manufacturing system is a strategic decision because changes in later stage are very
expensive to make. The system selected should be such that it can give the desired output,
required quality and is to be cost effective.
Factors influencing choice of manufacturing system
There is no best manufacturing system for any product. The manufacturing system which is
selected must meet two basic objectives namely:
1. It must able to meet the specifications of the final product and
2. It must be cost effective
Various factors which determine the choice of the manufacturing system are as follows:
a) Effect of Volume/ variety
When there are many products in one or few numbers to be produced (i.e. high product variety)
it requires highly skilled labor, general purpose machines, detailed and sophisticated production
planning and control systems. On the other hand when one or few products to be produced in
large volumes (i.e. low product variety) it enables the use of low skilled labor, highly automated
mass production processes using special purpose machines and simple production planning and
control system.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 6
b) Capacity of the plant
Whether the firm should use intermittent or continuous process will depend upon the projected
sales volume. Fixed costs are high for continuous process and variable costs are high for
intermittent process. Intermittent process will be cheaper to install and operate at low volumes
(small capacity) and continuous process will be economical to use at high volumes. (Large
capacity)
c) Flexibility
Flexibility implies the ability of the company to satisfy varied customer’s requirements.
Flexibility and product variety are inter-related. It requires high inventory, large manufacturing
lead times and sophisticated planning and control.
d) Lead Time
Lead time means delivery lead time expected by the customers. It is major influencing factor in a
competitive market. As a general rule, faster deliveries are expected in a competitive market.
e) Efficiency
Efficiency measures the speed and the cost of the manufacturing system. Depending upon the
sales volume, product variety will have to be considered and the process has to be selected which
will give the best efficiency in terms of machines and manpower utilization.
f) Environment
Environment brings in new technologies and forces for the adoption of new process of
manufacturing. Similarly as market preferences change due to fashions or other reasons, the
manufacturing system has to be changes accordingly.
Classification (Methods) of Manufacturing System
Manufacturing systems can basically be classifies into five groups:
1] Project Production: Here a single assignment of complex nature is undertaken for
completion within the given period and within the estimated expenditure.
2] Jobbing Production: In this one or few units of a product are produced as per the customer’s
requirement within the given date and price as per the contract.
3] Batch Production: Where limited quantity of each types of product is manufactured at a time.
4] Mass and flow production: In this system a single or number of machines are arranged
according to the sequence of operations and several number of products are manufactured at a
time and stock in warehouse awaiting sales.
5] Process Production: In this production run is conducted for an infinite period.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 7
Characteristics of Manufacturing System methods
A] Characteristics of Project Production
a) Definite beginning and definite end
b) Non-uniform requirement of sources
c) Involvement of different agencies
d) Fixed position assembly types of layout
e) Over running of project will affect and increase the cost
f) Personal problems
g) Great importance to scheduling and control
B] Characteristics of Jobbing Production
a) Small production runs
b) Discontinuous flows of materials
c) Disproportionate manufacturing cycle time
d) General purpose machines and process layout
e) Highly skilled labor requirement
f) Highly competent knowledgeable supervision required
g) Large work in progress
h) Limited functions of production planning and control
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 8
C] Characteristics of Jobbing Production
a) Short production runs
b) Skilled labor in specific trades
c) Supervisor to possess knowledge of a specific process
d) Limited span of control
e) General purpose machines and process type of layout
f) Manual materials handling
g) Large work in progress
h) Flexibility of production schedules
i) Need to have production planning and control
D] Characteristics of Mass and Flow Production
a) Continuous flow of materials
b) Special purpose machines and product type layout
c) Mechanized materials handling
d) Low skilled labor
e) Short manufacturing cycle time
f) Easy supervision
g) Limited work in-progress
h) Less flexibility in production schedules
E] Characteristics of Process Production
a) Special purpose machines with built-in-controls
b) Highly mechanized materials handling
c) Virtually zero manufacturing cycle time
d) Low skilled labor
e) Supervisor to be process specialist
f) Negligible work-in-progress
g) Limited production planning and control functions
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 9
Introduction of Facilities Location and Layout Plant location decisions concern both manufacturing and assembly units as well as service
organizations. Ideal plant location is important for business activities both in manufacturing and
service category. Plant location decisions are strategic, long term & non-repetitive. This is
because:
a) Poor location of the plant can be constant source of higher cost, difficult marketing and
transportation, dissatisfaction of employees and customers, frequent disturbance in production,
substandard quality, competitive disadvantage etc.
b) The investment in land and buildings is quite large in case of bigger firms and hence
economics of the locations needs to be evaluated carefully for fair returns on such investment.
Location decisions of large projects like fertilizers, cements, sugar, steel, thermal projects etc.
involve economists, geographers, town planners, marketing experts, accountants, politicians,
ecologists etc. Location decisions generally arise when:
A new manufacturing (or servicing) unit is to be set up
Existing plant operations are difficult to expand
Establishment of additional facilities in new territories because of growth of the business
Emergence of new social (chronic labor problem) political (political instability) problems or
economic conditions which suggest a change in the location of the existing plant.
E.g. Tata Nano plant; New plant requirement for new product developed according to new
technological environment. Changes by Government in Industrial policy which will not permit
expansion of existing plant
Factors affecting location
Plant location factors in general may be grouped under three heads which are as follows:
i. Regional factors (General territory selection)
ii. Community factors (Community selection)
iii. Site factors (Site selection)
i] Regional factors
It will decide the overall area (or region) within the country. It includes proximity to markets,
proximity to sources of raw materials, availability of utilities, transport facilities, climatic
conditions, industrial and taxation laws etc.
ii] Community factors
It influences selection of the plant location within the region. Such factors are, availability of
labor, industrial and labor attitudes, social structure, service facilities etc.
iii] Site factors
It is favorable specific site within the community. Such factors are, availability and cost of the
land, suitability of the land, waste disposal etc.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 10
Fig: Factors influencing three phases of plant location
Location factor
Phase of the study
Territory
Selection
Community
Selection
Site
Selection
1 Proximity to Markets *
2 Proximity to Raw Materials *
3 Infrastructural Facilities * *
4 Transportation Facilities * *
5 Labor and Wages * *
6 Legislation and taxation * *
7 Climatic condition * *
8 Ind & Labor attitude * *
9 Safety Requirements * *
10 Community attitudes *
11 Supporting industries and services *
12 Community attitudes *
13 Waste Disposal * *
14 Availability & Cost of the land * *
15 Suitability of the land * *
Let us discuss these location factors one by one:
1. Proximity to Markets
Every company is in business to market and it can survive only if their product reaches the
consumers on time and at the competitive price.
Location the plant nearer to the market is preferred. If the product is to be exported, location near
ports is desirable. It will reduce the transportation cost; shipment cost etc.
2. Proximity to source of Raw Materials
Since raw materials usually constitute 50 to 60 percent of the total product cost, it is important
that the firm gets its requirements of raw materials at the right time and at the reasonable price
for which the plant must be located nearby to the sources of required raw materials units.
If the raw materials come from a variety of locations, the plant may be situated so as to minimize
total transportation costs.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 11
3. Infrastructural facilities
It considers availability of utilities like power, water, disposal of waste etc.
4. Transportation Facilities
Transportation cost to value added is a key determinant of the plant location. It includes average
distance and medium of transport i.e. Rail, Road or sea and air.
5. Labor and Wages:
Plant location should be such that required labor is easily available in the neighborhood.
Importing labor from outside is usually costly and it causes a lot of administrative problems.
Prevailing wage pattern, living costs and industrial relations are other factors to be taken into
account.
6. Legislation and Taxation
The policies of the State Govt. and Local bodies relating to issue of licenses, building codes,
labor laws etc. are the factors in selecting or rejecting a particular community/ site.
In order to balance economic growth, both central and state Govt. offer a package of incentives
for setting up industries in particular locations.
Exemptions from excise duty, sales tax and octroi, soft loans, subsidy in electricity charges etc.
are some of the incentives offered by Govt. It will affect in minimizing the product cost.
7. Climate conditions
It is an important factor for textile mills which requires high humidity.
8. Industrial and Labor attitudes
Community attitudes towards supporting hostile trade union activities are an important factor.
Frequent labor problems and interruptions are harmful to the plant in the long run. Political
situation in the state and attitude of Govt. towards labor activities also influences selection of the
site for the plant.
9. Safety requirements
It is important for certain industries like
1. Nuclear power plants
2. Explosive factories
3. Location near to border areas is undesirable for such industries.
10. Community facilities (Social infrastructure)
It includes accommodation, education, medical, entertainment and transport facilities. It also
includes communication facilities.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 12
11. Community Attitudes
Community attitudes towards work (people are hardworking or not) as well as their attitudes
towards the incoming entrepreneurs (helpful, cooperative or not) can make or break the industry
in that particular location.
12. Supporting Industries and Services
Service needed by the firm as well as supporting industries to that firm should be as nearer as
possible for saving the time and cost.
13. Suitability of the land
Site selection should also take into account topography and soil structure of the land.
14. Availability and cost of the land:
Site/ Plot size must be large enough to accommodate present required facilities, parking and
access facilities and space for further expansion.
15. Waste Disposal
Proper infrastructure is to be created for the disposal of waste otherwise it will create the
problems like pollution of air, water etc.
Facilities (Plant) Layout Introduction
Plant layout is the disposition of the various facilities and services of the plant within the areas of
the site selected. Plant layout this involves determination of space requirement for the facilities
and arranging them in a manner that ensures steady flow of production with minimum overall
cost.
“Plant layout is the placing of right equipment, coupled with right method, in the right place to
permit the processing of the product in the most effective manner through the shortest possible
distance and through the shortest possible time.”
Plant layout decisions are strategic decisions. A good layout results in comforts, convenience,
appearance, safety, efficiency and profits. A poor layout causes dispersion of material flow,
unnecessary material handling, more scrap and rework, high output time, wasted movements,
frustration and inefficiency.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 13
Principles of a Good layout There are certain criteria which can be used to judge whether layout is good or not. These are as
follows:
a) Overall integration of factors
A good layout is one that integrates men, materials, machines, supporting activities and other in a
way that the best compromise is obtained.
b) Minimum Movement
A good layout is one that permits the minimum movement between the operations.
c) Uni-directional flow
A good layout is one that makes the materials to move only in the forward direction, towards
stage of completion, without any backtracking.
d) Effective use of available space
In good layout available space is effectively used either in horizontal or vertical position.
e) Maximum Visibility
Men, machines and materials are readily observable at all time in good layout.
f) Maximum accessibility
A good layout is one that makes all servicing and maintenance points readily accessible.
g) Minimum Handling
A good layout is one that reduces the materials handling activity to its minimum.
h) Inherent Safety
A good layout is always safe for workmen to work in all respect.
i) Safe and improved environments
Work centers and areas around them always satisfying the workmen.
j) Maximum Flexibility
A good layout is one that can be altered later if required, without much cost.
k) Maximum Security
A good layout safeguards the plant and machinery against fire, theft etc.
Types of layout
Layouts are basically of three types:
a) Process or functional layout
b) Product or line layout
c) Project or fixed position layout
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 14
Process or Functional Layout Process layout also called “layout by function” is generally associated with batch production.
In this the factory is divided into process units (or departmental) and within these process units
(or departments) and within these process units (or departments) all similar facilities are grouped
together.
E.g. Presses are kept at one place, milling machines are placed at another place, and drilling
machines are kept at third place, and so on. It is shown in following figure.
This type of layout is suitable when,
1) The products are non-standard and their quantities are small.
2) There is a wide variation in the processing times of individual operations.
Advantages of Process Layout
1. Lower capital investment since general purpose and less number of machines required
2. Higher utilization of available equipment
3. Greater flexibility of equipments and workers
4. Workers attain greater skills since they have to attend to one type of machine and operations
5. Imbalance of work in one section does not affect the working of the other section
6. Variety of the jobs makes the work interesting to the workmen
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 15
Disadvantages
1. For the given volume of production, space requirements are higher in this type of layout
2. Materials handling can not be mechanized which adds to extra cost
3. Work in process inventory is higher since jobs have to queue up for each operation
4. Routing and scheduling is difficult
5. Inspection required after each operation. This causes delays in production time
6. Setup costs are high because of frequent changes of jobs
Product or Line Layout Product layout is also called “layout by sequence”. The layout of plant, shape and size of its
buildings, location of services, stores, material handling equipments etc. are in such a way that
materials flows unidirectional and at the steady rate. Special purpose machinery and equipment
with built in-controls to measure output and input are employed. The equipment, if necessary, is
duplicated to avoid backtracking. In these type materials always flows in the forward direction
towards stage of completion.
This type of layout is suitable when:
1. Products are standard and to be produced in large quantity
2. Products have always reasonably stable demand
3. Processing times of each operation is more or less equal; E.g. Automobiles, T.V sets, food
processers, radios, transformers, cement, steel etc. (i.e. for single products)
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 16
Advantages of product Layout
1. Manufacturing cycle is small which reduces work in – progress
2. Material handling is minimum (or automatic)
3. Space required is small
4. Work is simplified by breaking into elemental tasks which are mechanized wherever
possible. Hence labor costs are minimized
5. Quality control is easy to exercise and more effective
6. Delivery commitments are reliable
7. Materials requirements can be scheduled easily and more accurately
Disadvantages
1. The changes in the products necessitate the change in the layout of machinery
2. All machines may not be used to their full capacity
3. Manufacturing cost depends upon volume of production
4. Breakdown of any machine will stop the further process till it gets required
5. Expansion of capacity is not possible
Project or Fixed Position Layout Project type of industries such as manufacturers of airplanes, ships, large turbines, heavy
machinery, pressure vessels etc. has this type of layout.
Heavy materials, components, sub-assemblies, under this layout remain fixed at one place.
Men, machines and other tools are brought to the project location to complete the job
This type of layout is suitable when,
1] One or few pieces of an identical product are to be manufactured
2] The cost of transportation of heavy machinery and parts is very high
Combination Layout (Mixed Layout) A mixed layout is the combination of process and product layout. It is generally used when,
1. Product contains lot many components and parts
2. Product requires to be produced in different types and sizes
In this type of layout, the parts are produced on facilities arranged in a process type of layout and
then they are assembled using the product type of layout.
Another concept of mixed layout is called cellular layout in which the facilities are clubbed
together into cells to utilize the concepts, principles and approaches of group technology.
In cellular layout, the facilitates are grouped into cells which are able to perform similar type of
operations for a group of components.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 17
Production Planning and control
Production is defined as transforming inputs into outputs in the form of goods and services
required by society. Planning contains a series of activities that are interrelated and co-ordinate
such as materials planning; process planning, scheduling etc. and which are designed to carry out
manufacturing efforts systematically. Control is nothing but the overall control on the
manufacturing process right from inputs to outputs.
Definition:
According to Gordon “Production planning & control involves generally the organization &
planning of the manufacturing process. Specifically it consists of planning of routing,
scheduling, dispatching & inspection coordination & control of materials, methods, machines,
tooling & operating times.” Thus planning is forward thinking while control is a mechanism for
execution. Planning & control are the two important wheels of the management process.
Objectives of Production Planning & Control
The main objectives of PPC are as follows:
1. To attain maximum utilization of resources
2. To produce quality products
3. To minimize manufacturing cycle time
4. To maintain optimum inventory levels
5. To achieve co-ordination between labor, machine & other supporting departments
6. To maintain flexibility in operations
7. To achieve cost reduction & cost control
8. To prepare & maintain the production schedules
9. To achieve organizational goals at minimum cost
Functions/ Scope of production planning & Control
Production planning & control covers the following activities
1. Procurement of raw materials, components & spare parts in right quantities at right time from
right source at right prices
2. Selecting best methods of processing & finding out the best sequence of operations
3. To determine the nature & magnitude of the output in consultation with marketing
department
4. To plan the layout of operations where different operations are to be performed
5. To prepare & maintain time schedule
6. To ensure continuous inspection over products produced
7. To impose controls over costs & to get work done according to the plan
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 18
Importance of Production Planning & Control
Production planning & control is heart of the production/ operations management function
because of several reasons.
a) It coordinates all phases of the production & operating system
b) An efficient system o production planning & control results into better quality, optimum
utilization of resources, lower level of inventories, reduction in production cycle time, faster
delivery, more efficient customer service, lower cost of production, lower capital investment etc.
c) It also results into higher production, economy in production, quality of goods & services,
timely delivery etc.
d) It also results into higher sales, more profits, increase in market share, increase in competitive
advantage etc.
e) Because of systematic planning & control, machinery breakdown are minimized, maintenance
is improved, excess capacity & idle time is minimized.
f) It contributes significantly increasing the Goodwill & image of the organization.
Thus production planning & control are not only complementary to each other but they are so
interrelated that they can be treated as one function. A number of scientific tools are available for
planning but incase of huge projects, the planning of projects is best performed through a well-
known techniques like program Evaluation & Review Techniques (PERT) & Critical Path
Method (CPM).
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 19
PERT/ CPM Program Evaluation & Review Techniques (PERT) & Critical Path Method (CPM) are the
network techniques, which are widely used in management of very large projects.
These techniques are useful in planning, scheduling & executing large but time bound projects.
PERT was developed in 1950’s by US Navy for scheduling the research & development work
for the Polaris missiles program whose activities were full of uncertainty.
In 1957 CPM techniques was developed by J. E. Kelly of Remington Raud & M. R. Walker of
Dupont. Now the applications of PERT & CPM are overlapping are both are used in a single
technique.
Similarities of PERT & CPM
1. Basic approach of PERT & CPM is the same
2. Both belong to Network Analysis
3. All the activities & tasks are defined in the project
4. Relationship among the activities is developed to decide which activities must proceed &
follow others
5. Network is drawn connecting all the activities
6. Time & cost estimates are assigned for each activity
7. The longest path is called the critical path & is computed through the network
8. Network is used for planning, scheduling, controlling & monitoring the project
Importance of PERT & CPM to Management
Every project manager is interested in completing the projects in time with minimum costs. So
an attempt is made to schedule the project properly to save it from delays & higher costs.
Hence timely completion of the projects through proper planning & scheduling is essential. This
can be achieved by the use of PERT & CPM is due to their following advantages:
1. During the planning phase all the activities & events are taken into consideration & scientific
approach is developed to complete the project in time without facing any crisis in scheduling
2. These techniques concentrate on the technological relations between different activities,
which enable the project managers to complete the project systematically in scheduled time
3. These techniques help in selecting a plan that minimizes total cost & time required for the
project
4. Responsibilities are clear for everyone to complete the project in time
5. These techniques enable the managers to revise the plan the suit the changes in the
environment
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 20
Illustration
The characteristics of a project schedule are given in table. On the basis of this information:
1. Construct a network
2. Find the critical path
Solution:
1. Network for given data:
2.
3. Critical Path
Now there can be three paths to complete the activity from 1 to 10
1––> 2 ––> 4 ––> 9 ––>10 = 17 days
1––> 3 ––> 5 ––> 7––> 8 ––>10 = 22 days
1––> 3 ––> 5 ––> 6 ––> 8 ––>10 = 17 days
Since critical path is the longest path it is:
1––> 3 ––> 5 ––> 7––> 8 ––>10 = 22 days
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 21
PERT concept of multiple times
This concept of three times estimate was evolved to reduce the extent of uncertainty
1) Optimistic Time – This indicates the minimum time an activity can take if everything goes
smoothly without any interruptions. It is represented by “a”
2) Pessimistic time – This indicates the minimum time an activity can take if everything goes
wrong. It is denoted by “b”.
3) Most likely time – This indicates the time an activity can take most often is it is repeated again
and again under the same conditions. It is represented by “m”
Three time estimates are not directly entered into the network. They are transformed into an
expected time (t e), using the statistical relation given below:
te = a + 4m + b
6
Critical path in a big Network
In a small network, it is simple process to identify the critical path by tracking and comparing all
the paths in network. As the number of activities increases, it becomes very difficult and time
consuming to find the critical. Therefore, in large networks, a more systematic procedure is
needed to determine the critical path.
The most commonly used method employs two sets of calculations:
1) Forward pass computation
2) Backward pass computation
The forward pass computation begins from the start event and moves towards the end event of
the project network. It determined the earliest expected time for each event, called earliest
expected time for each event, called earliest time (TE).
The backward pass computation begins from the end event and moves backward to the start
event of the project network. It determines the latest allowable time for each event called latest
event time (TL). This can be recorded as shown in the following diagram:
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 22
Let us consider the following network to show both forward and backward pass computation
Forward pass computation (earliest event times)
The following basic rules govern the computations of the earliest event times
1) The first activity of the project can be started as soon as the project is undertaken which
implies that the earliest event time of the initial event (first event) is zero. That is TE1 = 0
2) Each activity of the network starts as soon as the activities preceding to it are completed. It
implies that the earliest event time of a plain event equals (TE) of the preceding event plus
duration of activity emanating from the preceding event.
i.e.TEj = TEi + tij
where
TEj = the earliest event time of event j
TEi = the earliest event time of event preceding to event j
TEj = duration of the activity from event i to j
3) The earliest event time TE of a merge event equals largest of the sum of TE of the preceding
event plus duration of the activity emanating from the preceding event.
By applying these rules to our network we will get,
TE1 = 0 (starting event set at zero)
TE2 = TE1 + t12 = 0 + 7 = 7
TE3 = TE2 + t23 = 7 + 7 = 17
TE4 = TE3 + t34 = 14 + 2 = 16
TE5 = TE3 + t35 = 14 + 7 = 21
TE6 = TE4 + t46 = 16 + 4 = 20
TE7 = Max [TE3 + t37, TE5 + t37, TE6 + t67]
= Max [ 14 + 5, 21 + 7, 20 + 7 ]
= Max [19, 28, 27]
Therefore TE7 = 28
TE8 = TE7 + t78 = 28 + 2 = 30
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 23
This can be shown as follows
Backward pass Computation (Latest allowable event times)
Latest event time (TL) represents the latest occurrence time of the event. The following simple
rules govern the computation of the latest event times.
1) Latest event time of the end event equals the earliest event time otherwise the project
duration will be affected.
2) The latest event time of a plain event equals latest event time of the succeeding (head) event
less duration of the activity coverging on the head event.
This is ,
TLi = TLj – tij
Where,
TLi = the latest allowable time of the event i
TLj = the latest allowable time of the event j towards which the activity (i, j) is headed
Tij = the latest allowable time of the event i to event j.
3) The latest event time of a “burst” event equals “the smallest of the difference between the
latest event time of the head event less duration of the activity converging on the head
event”.
That is,
TLi = Min (TLij – tij)
For the sample network it can be calculated as follows:
1) Latest event time of the event 8 (TL8) = Earliest event time since it is the end event (TE8)
2) TL7 = TL8 – t78 = 30 – 2 = 28
TL6 = TL7 – t67 = 28 – 7 = 21
TL5 = TL7 – t57 = 28 – 7 = 21
TL4 = TL6 – t46 = 21 – 4 = 17
TL3 = Min (TL4 – t34, TL7 – t37, TL5 – t35)
= Min (17 – 2, 28 – 5, 21 – 7)
= Min (15, 23, 14)
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Therefore TL3 = 14
TL2 = TL3 – t23 = 14 – 7 = 7
TL1 = TL2 – t12 = 7 – 7 = 0
This can be shown as follows
Fig: Latest event time of the events
Analysis of activity durations based on computations
1) Earliest starting date (ES) – The earliest start time of an activity equals earliest event time
(TE) of the tail event
Symbolically – ESij = TEj
2) Earliest finishing date – It equals the earliest st
emanating from the tail event
EFij = ESij + tij
3) Latest finishing date – It is the latest event time of the head event
LFij = TLj
4) Latest starting date – It is the latest finishing time minus activity duratio
LSij = LFij – tij
Identify Critical Path based on computations:
Once the activity durations have been worked out, the critical path can be identified by
comparing the “earliest finish times” and “Latest finish times” of the activities. Clearly activitie
whose earliest finish times and latest finish times are equal will constitute the critical path.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 24
Fig: Latest event time of the events
Analysis of activity durations based on computations
The earliest start time of an activity equals earliest event time
It equals the earliest starting time plus duration of the activity
It is the latest event time of the head event
It is the latest finishing time minus activity duration
Identify Critical Path based on computations:
Once the activity durations have been worked out, the critical path can be identified by
comparing the “earliest finish times” and “Latest finish times” of the activities. Clearly activitie
whose earliest finish times and latest finish times are equal will constitute the critical path.
The earliest start time of an activity equals earliest event time
arting time plus duration of the activity
Once the activity durations have been worked out, the critical path can be identified by
comparing the “earliest finish times” and “Latest finish times” of the activities. Clearly activities
whose earliest finish times and latest finish times are equal will constitute the critical path.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 25
Activity Float Analysis
Introduction
Float is an important concept in project planning. It will help planner as follows
1. In deciding priorities in allocation of resources
2. It helps in transfer of resources from less pressing areas to more pressing areas
3. It will minimize the requirements of resources
4. It prevent peaks and valleys in requirements of resource
Float of an activity represents the excess of available time over its duration
Types of floats
Float is mainly of three types
a) Total float
b) Free float
c) Independent float
All activities lying on the non-critical paths have total float and some of them may also have free
float
a) Total float (Ft)
Total float signifies the maximum delay that can be permitted in the completion of the activity
without affecting the project completion.
It can be interpreted in two ways
The maximum time available to delay the commencement of an activity
The maximum expansion in the duration of the activity
Total Float = (Latest occurrence time) – (Earliest occurrence time) – (Duration of the activity)
of the succeeding event of the preceding event
Ft = TLj – Tei – tij
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 26
b) Free float (Ff)
Free float is the amount of time an activity can be delayed without affecting the commencement
of a succeeding activity at its earliest start time but may affect the float of previous activity.
Free float results when all preceding activities occur at the earliest event times and all succeeding
activities also occur at the earliest event times.
Therefore,
Free Float = (Earliest occurrence time) – (Earliest occurrence time) – (Duration of the activity)
of the succeeding event of the preceding event
Ff = TEj – Tei - tij
c) Independent Float (Fi)
Sometimes, it may be desirable to know what spare time is present in an activity if it is started as
late as possible and finished as early as possible. This characteristic is known as independent
float
Independent = (Earliest occurrence time) – (Latest occurrence time) – (Duration of the activity)
Float of the succeeding event of the preceding event
Fi = TEj – TLi – tij
Network Crashing
In the network system time & cost estimate are worked out for each activity. These are a normal
estimate & a crash estimate.
The normal estimate of time is similar to the most likely time estimate in PERT. The normal cost
is the cost of finishing the project in normal time. The crash time estimate is the reduction in
time achieved by applying more resources to the activity, which is to be speeded up.
The crash cost is the cost of doing the job on a crash basis in order to minimize the completion
time of the project.
E.g. Overtime, working for seven days a week, Extra manpower, machines etc. in night shifts
etc. Crashing is done only when the project is to be completed urgently even at higher costs.
CPM is an attempt of crashing project to its lowest possible time at the minimum possible cost.
The main steps involved in the crashing process are:
1. Locate the critical path of normal network
2. Crash the least expensive activity on the critical path to get a new critical path
3. Repeat the process till we get a critical path on which all activities are at their crash time.
4. Reverse the procedure taking into consideration the non-critical activities.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 27
Start un-crashing by selecting the most expensive activity to reach the least expensive
activity.
Illustration: The following table contains details of activities of a construction project &
other relevant information. On the basis of this information:
1. Draw activity network of the project & find out critical path & total cost
2. Crash the activities step by step until all paths are critical
Solution 1: Network for normal time duration
From this network we observe that,
Critical path: 1 ––> 2 ––> 3 ––> 4 ––> 5 ––> 6 ––>7
Project time = 20 + 10 + 5 + 10 + 10 = 55 days
Total cost = (600 + 200 + 300 + 400 + 300 + 300 + 600 + 500 + 400)
Total cost = 3600/- Rs
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 28
Solution 2: Step by Step crashing of activities
In order to shorten the activity time, those activities which are lying on the critical path are
crashed one by one starting with the lowest cost slope.
Step 1:
Activities (1-2) & (3-4) which lye on the critical path has minimum cost slope of Rs. 40/- when
both these activities will be crashed by 3 days each the resulting network will be as follows:
Critical paths:
a) 1 ––> 2 ––> 4 ––> 5 ––> 7 & b) 1 ––> 2 ––> 3 ––> 4 ––> 5 ––> 7
Total cost = 3600 + (40 x 3) + (40 x 3)
= 3600 + 120 + 120
Therefore Total cost = 3600 + 240 = Rs. 3840/-
Step 2:
Activities (4 – 5) & (5 – 7) are lying on critical path & also they have minimum cost slope of Rs.
60/-
Activity (6 – 7) also has a cost slope of Rs. 60 /-
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 29
Hence by crashing the activity (4 - 5) by 5 days & (5 – 7) by 5 days & (6 – 7) by 3 days although
it has slack of 5 days, we get the following network.
Critical Paths:
1 ––> 2 ––> 3 ––> 4 ––> 5 ––> 7
1 ––> 2 ––> 4 ––> 6 ––> 7
1 ––> 2 ––> 3 ––> 4 ––> 6 ––> 7
Total cost = 3840 + (60 x 5) + (60 x 5) + (60 x 3)
= 3840 + 300 + 300 + 180
Therefore Total cost = 3840 + 780 = Rs. 4620 / -
Step 3:
The activities (2-4) & (2-3) on the critical path having cost slope of Rs. 50 /- & Rs. 70/-
respectively are crashed by 2 days each. The resulting network will be as follows
All paths are now critical paths
Total cost of the project will be
Total cost = 4620 + (50 x 2) + (70x2)
= 4620 + 100+ 140
Therefore Total cost = Rs. 4860 / -
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 30
Maintenance Management
Plant maintenance includes all those activities which are needed to keep the plant, machinery,
tools & equipment services, buildings & all the fittings in standards working conditions.
Maintenance management is defined as “That function of manufacturing management which is
concerned with the day to day problems of keeping the physical plant in good operation
condition.”
It is an essential activity in every manufacturing organization. Maintenance management is such
a function of manufacturing management which will never become obsolete whatever may be
the technological advances. It has remained as important as it was long ago & will not lose its
status even in future.
Importance or Role of Maintenance Management:
Maintenance management is an important service function essential for efficient production
system, because of the several reasons as states below:
1. Plant maintenance on regular basis helps in maintaining & increasing the operational
efficiency of plant facilities.
2. It is useful for reducing the cost of production, improving the quality & quantity of output &
generating maximum sales revenue.
3. It helps organization in establishing a competitive edge & to provide reliable customer service
at fair prices.
4. Proper maintenance policy helps in promoting quality Assurance system of the organization
5. It helps in increasing the efficiency of cost control system in the organization
6. Proper maintenance system is essential & important in big projects like air transport, oil
refineries, heavy & explosive chemical industries etc. to keep all equipments in good working
conditions.
7. Neglect of plant maintenance is not only responsible for dislocation of production process but
also tends to increase the frequency of industrial accidents, which may reduce morale &
productivity of the workers of the organization.
Thus Maintenance management is an important service function in all modern organizations.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 31
Types of Maintenance
There are 5 major types of maintenance which are as follows:
1. Breakdown or Corrective Maintenance
2. Preventive Maintenance
3. Routine Maintenance
4. Predictive Maintenance
5. Planned Maintenance
Let’s discuss these types one by one.
1. Breakdown or Corrective Maintenance
Corrective maintenance is undertaken whenever there is a breakdown of machinery or equipment
leading to the work stoppage. It has been observed that the nature & time of breakdown of any
type of machine is a random phenomenon, hence it cannot be completely eliminated even by
most efficient preventive maintenance.
The breakdown maintenance policy is suitable for those types of equipments which have
relatively less downtime & repair costs. It is easy to administer & needs relatively less staff.
2. Preventive Maintenance
All machines & equipments deteriorate when they are used for the purpose of production. This
will result in changes in dimensions of components of that machine. It will affect the quality of
output. Preventive maintenance is an activity undertaken to prevent breakdowns, reduce
operating costs & improve quality & quantity of the output. It is the policy of “stitch in time” &
implementation of the principle of “Prevention is better than cure”
Preventive maintenance includes:
i. Regular cleaning, greasing & oiling of moving parts
ii. Replacement of worn out parts before they fail to operate
iii. Periodic & regular overhauling of entire machine
iv. Stand by provision for critical or key machines
3. Routine Maintenance
It includes activities such as periodic inspection, lubrication, cleaning, repairs etc. of machinery
& equipments after their service life. It includes tightening of the bolts, recharging of batteries,
replacing light bulbs & tubes in the plant areas etc.
Routine maintenance is classified in two categories:
i. Routine Maintenance, when machine or equipment is running. Here greasing or
lubrication is carried out when machine is in running condition
ii. Shut down Maintenance, where maintenance work is carried out only when the machine
or equipment is out of service e.g. repairing the machine after its complete failure to do
the normal job.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 32
4. Predictive Maintenance
In Predictive Maintenance, the user of the equipment senses that the equipment is going to give
some trouble by hearing to the noise made by the equipment while in operation. Then
immediately the equipment is stopped & maintenance is done to avoid the trouble & breakdown.
Predictive Maintenance extends the service life of the equipment.
If it is neglected, then the equipment may have to face a major repair work which will increase
the operating & production costs.
5. Planned Maintenance
Breakdown or failure of the machine to operate does not occur in a planned manner but the
maintenance work can be systematically planned well in advance.
The planned maintenance is also called as scheduled maintenance or productive maintenance. It
includes inspection of all plant, machinery & equipments, buildings, lubrication, repairs etc
according to a predetermined schedule in order to avoid actual breakdown. Planned maintenance
aims to reducing machine stoppage due to sudden breakdown calling for emergency
maintenance. It helps in reducing machine downtime, reducing cost of maintenance & achieves
significant increase in production & productivity as compared to the unplanned maintenance.
Total Productive Maintenance (TPM)
The TPM is an innovative approach of maintenance developed by Japanese manufactures. The
main objective of TPM is to develop an operational system, which is “maintenance free”.
Under this system maintenance prevention (MP) is achieved through a proper combination of
Preventive Maintenance (PM) & Predictive Maintenance Action (PMA).
In TPM, instead of waiting for a breakdown, a small group carries out preventive maintenance
on a selective basis. This is called as condition based maintenance. This leads to maintenance
free service.
Introduction of Inspection
Inspection is important function although it does not add any values to the product still it adds to
the cost of products. Proper inspection is necessary to get the desired results.
Inspection is an important tool of quality control, which aims at controlling the quality control,
which aims at controlling the quality of the product. Thus inspection is said to be a sorting
process on the basis of which products can be classified into acceptable or non-acceptable ones.
Inspection can be defined as “The process of measuring the qualities of a product or service in
terms of established standards.”
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 33
Objectives of Inspection
i. Maintenance of quality as per standard
ii. Improvement in quality of the products
iii. Minimization of the costs
iv. To detect sources of weaknesses
In Inspection process there are certain main steps involved & these steps are to be followed to
get the desired result.
Steps in Inspection
1. To identify most important characteristics of the quality of the items which are to be
inspected i.e. what to inspect?
2. To decide when & where the inspection should take place i.e. When & where to inspect?
3. To find out what size of the sample be selected for detailed inspection so that the sample will
be proper representation of the population under study i.e. Size of Sample?
4. To develop a sampling scheme for actually selecting the items from the lot i.e. How to select
the sample?
5. To define specification limits for the acceptation or rejection of the items i.e.: To fix limits of
tolerance of deviation from the standards.
Functions of Inspection
The main function of inspection department may be stated as follows:
1. To develop & maintain the specified standards of the quality of the product produced
2. To develop methods & techniques to carry out the inspection at minimum cost
3. To separate defective products & send them for re-operation
4. To maintain tools & equipments of inspection in good workable condition
5. To make an attempt to detect the defects at source so as to reduce scraps & defective
products
6. To advise operating workforce whenever difficulties in the production process arise
7. To report top management about the sources of manufacturing problems
Types of Inspection Inspection is of two types:
1. Cent Percent Inspection; 2. Sampling Inspection
Cent Percent Inspection
It is one in which each & every piece is verified against the pre-set specifications. However cent
percent inspection does not mean verification of each & every quality characteristic. Only
important characteristic which is necessary for satisfactory performance are verified.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 34
Weaknesses of Cent Percent Inspection
1. It involves huge costs & expenditure
2. It is time consuming & tedious
3. Not suitable for destructive tests quality specifications
4. It is not foolproof due to human error element
Sampling Inspection
In this method few samples (pieces) are taken out from the lot & they are inspected. Quality of
the lot is decided on the inspection result of these samples.
If the sample conforms to specifications the whole lot is accepted otherwise it is rejected. Since
the acceptance is based on the inference drawn from the sample, the technique is known as
acceptance sampling. Sampling Inspection however is subjected to sampling errors as there is
always a chance that the sample may not be the true representative of the population from which
it is drawn. It results in acceptance of a lot of bad quality or rejection of a lot of good quality.
Sampling errors can be minimized by random sampling method so that every portion of the lot
will have equal representation in the sample.
Sampling Inspection can be conducted on wither of the two basis:
a) Variable Basis
In this inspection of samples is conducted in measurement (variables) basis. E.g. weight of a
packet, Length of component etc.
b) Attribute Basis
In this inspection of sample is carried out on “go” & “no go” basis. E.g. cracks, color,
appearance etc.
Defects
Defects can be broadly classified as follows:
1. Critical defect
A defect that renders the item totally unfit for use
2. Major defect
A defect which is not critical but affects function, effectiveness, life or appearance of the item
3. Minor defect
A defect that does not materially reduce the usability of the product
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 35
The Operating Characteristic Curve
The sampling plan is supposed to separate good lots from bad lots but there are bound to be
sampling error. A sampling plan specifies the sample size (n) to be drawn & the number of
defectives (c) associated with it which are to be allowed in a batch of acceptable quality (“C” is
referred as acceptance numbers). The lot is accepted if the number of defectives in the sample is
equal to or below the permissible number of defectives. The lot is rejected if the number of
defectives in the sample exceeds the permissible limit. The capability of the sampling plan to
discriminate between good lots is determined with the help of operating characteristics (OC)
curve.
The construction of the OC curve
The operating characteristic curve gives the probability that a lot with particular percentage
defectives (P) shall be accepted on the basis of sampling inspection.
The curve drawn on a graph indicates percentage defectives (P) in the lot along the X-axis &
probability of acceptance (Pa) of the lot along Y-axis.
The figure below indicate the operating characteristic curve
Fig: The operating characteristic curve
The basic characteristic of an OC curve are:
i. The OC curve is based on the assumption that if the lot is large in comparison to the sample,
the probabilities of the OC curve will follow a binomial distribution
ii. An OC curve drawn for sample size “n” & the associated number of defectives © gives the
probability of acceptance of sampling from the lot.
iii. Zero percentage defectives are always accepted on OC curve
iv. Only two points (sample size & acceptance number) on the curve are sufficient to specify an
OC curve
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 36
Parameters of an OC curve
An OC curve has four parameters:
1. Producer Risk ( )
It is the probability that a good lot will be rejected by the sampling plan. It varies in between
0.01 to 10%
2. Consumers Risk ( )
It is the probability that a bad lot will be accepted by the sampling plan
3. Acceptable Quality Level (AQL)
It is the maximum percent defective (or maximum number of defects per hundred) that for the
purpose of sampling inspection can be considered satisfactory as a process average. A good
sampling plan should have a low producer’s risk for quality that is equal to or better than AQL
4. Lot Tolerance Percentage Defective (LTPD)
It is the defect level for which lots are regarded as bad lots & therefore should have very low
probability of acceptance.
Following is the OC curve which gives graphical summary of these four parameters
Fig: OC curve showing its four parameters
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 37
OC curve of an Ideal Plan: An operating characteristic curve indicates the ability of the sampling plan to discriminate
between lots of varying quality. An ideal OC curve is a rectangular shaped curve that accepts all
lots with quality equal to or better than AQL & rejects all other lots.
Fig: OC curve of an ideal sampling plan
From the above fig its suggests that
All lots less than 3% defectives have the probability of acceptance of 1.00 (certainty) (i.e.
accepted)
All lots greater than 3% defectives have the probability of acceptance zero (or rejected)
OC curve of a General Plan Only cent percent inspection can perfectly discriminate between lots of good & bad quality.
With a general OC curve, probability of acceptance of lots of good quality is never unity.
Similarly even lots with percent defectives equal to or greater than LTDP, though technically bad
lots have some chance of being accepted.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 38
A general OC curve is divided into three zones:
1. Zone of acceptance
2. Zone of indecision (inspection)
3. Zone of rejection
Fig: A general OC curve divided into three zones
Zone of acceptance & rejection The zone extending up to AQL & beyond LTPD is referred to as the zone of the acceptance &
the zone of rejection respectively.
Nearly all lots within zone of acceptance are accepted quickly & within the zone of rejection
nearly all are rejected.
An OC curve should therefore be chosen in such a way that its zone of acceptance only accepts
those lots which are considered to be satisfactory & its zone of rejection rejects lots which are
considered unsatisfactory.
Zone of indecision or inspection It is the zone in between the zone of acceptance & zone of rejection. Lots having percentage
defectives more than the AQL but less than LTPD fall within this zone.
No decision whether the lot should be accepted or rejected can be taken until cent percent
inspection is carried out. The width of the zone of inspection however can be reduced by taking a
large sample but it will increase the inspection cost.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 39
Statistical Quality Control (SQC) Under modern competitive conditions every producer has to produce quality products, which
will be preferred by the consumers.
In order to maintain quality of the final products quality control has to be applied to the
production process.
The statistical quality control (SQC) is the application of the statistical techniques to decide
whether to accept or reject the product produced or to control the process of production to
maintain product quality while the product is being produced.
Advantages of SQC
1. It helps in preventing the defects & thus reworking, rejection & scrap are avoided
2. It helps in avoiding risk of accepting a bad lot
3. It helps in maintaining high standards of quality & promotes goodwill about the organization
4. SQC reduces the task of inspecting the whole lot
5. It aims at reducing inspection expenses so as to produce the final product at minimum cost
6. As standard quality is maintained it helps in maintaining standard price
7. It promotes feeling of responsibility among the workers
8. SQC concentrates on empowering the quality of the product
Control charts as tool for process control
A fundamental aim of process control is to evolve system of differentiating the variations due to
chance causes & those due to assignable causes so that the latter can be identified & removed
thereby improving the quality of the product. The basic tool used for this purpose is called
control chart.
A control chart is a visual display of the inspection results of the samples of the product.
A control chart consists of three lines a central line, upper control limit & lower control limit.
To construct the chart, time variable is taken along the X-axis & the quality characteristic of the
product is taken along the Y-axis.
The control parameters – central line, upper control line & lower control line are horizontal lines.
Central line denotes the mean value of the quality characteristic. The upper control limit is
located at 3 standard deviations above the central line & the lower control limit is located at 3
standard deviations below the central line.
Samples of fixed size are taken at specified intervals of time. Each sample is inspected for the
given quality characteristic. The values of the samples are plotted on the graph according to the
time variable. The trend of the points in the chart is studied to know the state of process. So long
the sample points lie within the control limits, the process is said to be under control. The falling
of points outside the control limits indicates deterioration in quality & hence the presence of
assignable causes. Such cause are then identified & corrected.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 40
Types of control charts
Control charts are of two types
1. Those drawn for properties which are variables; these are called control charts by variables
2. Thos drawn for properties which are attributes; these are called control charts by attributes
Control charts for Variables
1. The average chart ( - chart), which measures the central tendency of the process
2. The range chare(R – chart), which measures the spread of the process
Since these two charts are used together, they are commonly known as - R charts.
Control charts for attributes
1. The fraction defective chart (P- chart) which records the proportion of defective items in a
sample
2. The number defective chart (np-chart) which records the number of defective items in a
sample
3. The defects chart (c-chart) which records the number of defects in a component/product.
Introduction to Six Sigma Six Sigma as a management standard in product variation (presently even for service variation)
can be treated back to the work during 1920’s when Walter Shewhart showed that three sigma
from the mean is the point where a process requires correction.
Definition
Six sigma is a disciplined data driven approach & methodology for eliminating defects which
amounts to driving towards six standard deviations between the mean & the nearer specifications
limit in any process of products/ services.
Six Sigma level indicates that we are 99.99966% confident that the product/ service delivered by
us is defect free. This means that only 0.00034% of the times the product/ service delivered are
defect prone.
When 0.0000034 is multiplied by one million, it comes to 3.4 defect s per million opportunities.
Actual sigma level = Actual number of defects
––––––––––––––––––––––––––– x 100
Total no. of opportunities for the
organization to make mistakes
from the customer angle
A process is said to be at six sigma level provided that the process is not producing more than 3.4
defects per million opportunities. The fundamental objective of six sigma methodology is the
process improvement & reduction of variation through its application.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 41
At its Core, Six Sigma revolves around the following few concepts
1. It is critical to attributes which are most important to the customers
2. It focuses on the process more specifically what it can deliver
3. It aims for stability of the process i.e. improve product quality which is the utmost
expectation of the customer
4. It focuses on the design for six sigma to meet customer needs & process capability
Approaches for Six Sigma There are two approaches for achieving six sigma which are as follows:
DMAIC & DMADV
DMAIC
DMAIC means Define, Measure, Analyze, Improve & Control.
The six sigma DMAIC process is an improvement system for existing processes falling below
specification & looking for incremental improvement. It is systematic, scientific & fact based.
DMADV
DMADV means Define, Measure, Analyze, Design & Verify. The six sigma DMADV process is
an improvement system used to develop new processes or products at six sigma quality levels.
This can be used even for existing processes if they require more than just incremental
improvement.
Steps of Six Sigma DMAIC Step – 1: Define
This step establishes a leadership team which will decide on the project on which it will work. It
also identifies key considerations like cost benefits, customer expectations, product quality
enhancement & ability of the team to have a positive impact on the process.
1. Define all your products by making a list of them along with corresponding end results
2. Identify your customers of each end product
Step – 2: Measure
In this step, the team examines all aspects of the project, develops a thorough understanding of it
& identifies the critical requirements & processes. The team defines performance measures for
key characteristics & establishes an effective means of measuring them. Then, the measurements
of the process to determine current performances are done.
Following are the sub-steps:
1. Define your needs in terms of essential inputs for projects/ products selected
2. Setup quality measures
3. Define the method of computing errors/ unit, errors/million & actual sigma level
4. Measure the current performance of the process
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 42
Step –3: Analyze
In this step, the team analyzes the results of this collected data & work for improvement of the
process if required. It includes identification & quantification of the sources & locations of
defect causing variables within the process.
Step-4: Improve
The following steps are performed
1. Identification of process improvements based on the collected data & analysis
2. Designing a plan of action
3. Performing risk assessments on the potential changes
4. Implementing the plan
5. Monitoring the results for the recommended changes
Step-5: Control
In this step, the team reviews the entire process to ensure that the appropriate changes have been
made & to identify the actions that will permanently maintain those changes.
Further, steps are taken to control future process performance.
Steps of Six Sigma DMADV The first three steps of DMAIC & DMADV are same except last two steps. The steps of
DMADV are as given
Step-1:
Define the project goals & customer (internal & external) deliverables
Step-2:
Measure & determine customer needs & specifications
Step-3:
Analyze the process options to meet the customer needs
Step-4:
Design detailed process to meet the customer needs
Step-5:
Verify the design performance & ability to meet customer needs
Benefits of Six Sigma
1. It ensures enhanced product quality
2. It enables predictable delivery of the products
3. It helps to achieve productivity improvement
4. It helps to have rapid response to changing needs of customers
5. It also facilities the development & introduction of new production in to the marketplace
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 43
Gap Analysis for Service Quality Assessment There are certain factors which are very important in case of quality of a service. This is because
of the intangible nature of services.
These factors are as follows:
1. Reliability
2. Responsiveness
3. Competence
4. Access
5. Courtesy
6. Communication
7. Credibility
8. Security
9. Understanding the customer
10. Tangibles
The above factors are very useful for quality improvement in case of services.
Fig: A service Quality Model
The gaps that are shown in the figure indicate the key discrepancies between the firm’s
perceptions & actions & the customer’s expectations. These gaps need to be closed in order to
improve the service quality.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 44
Explanation about these Gaps is given below:
Gap 1: This gap depicts that the management’s perceptions of customer’s expectations are
different from what the customer actually expects. This happens due to :
1. Insufficient market research
2. Inadequate interaction with the customers
3. Communication gaps within the organization
Gap 2: This gap represents the extent to which the service quality standards have gone wrong.
This is due to:
1. Inadequate tasks standardization
2. Absence of Goal- Setting
3. Inadequate management commitment to service quality
Gap 3: This is the gap between what the specifications of the company call for & what is
delivered. It may be called as the service performance Gap.
1. The job or the service task is not clear to the employee
2. Role conflict
3. Poor Employee – Job fit
4. Poor Technology – Job fit
5. Lack of Team- work
6. Inappropriate supervisory control systems
Gap 4: This is the gap between what has been promised to the customer & what is delivered to
him. This can happen because of:
1. Carelessness in terms of promising to the customer more than what can be delivered
2. Inadequacy in communication between the various departments of the service organization
Gap 5: This is the result of all the other gaps. It indicates as to how the customer experiences the
gap between what he expected & what he is perceiving as service received.
These above gaps can be minimized if the following factors can be considered by the service
organization
1. Assurance of providing basic service
2. Reliability of what you promise to deliver
3. Foster two- way communication
4. Customer Relationship Management
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 45
Introduction of Work Study
Under modern competitive conditions manufacturing organizations have to strive for achieving
lower production costs, higher quality of the products & attaining optimum utilization of
available resources. Hence to improve labor productivity & reducing costs by improving work
methods & developing simple work procedure needs to be given special attention by the
production managers.
Work study is constituted of two techniques known as:
1] Method Study & 2] Work Measurement
Definition:
ILO defined work study as “The techniques of method study & work measurement employed to
ensure that best possible use of human & material resources in carrying out a specified activity.”
Objectives of Work Study
1) To analyze systematically the present method of doing the job within a view to develop a
new better & efficient method.
2) To recommend & implement the improved work methods to carryout the job most
economically & in minimum time schedule
3) To establish standard time & standard cost for every job
4) To increase productivity of men & machines to produce quality products at minimum cost
5) To improve the efficiency of production processes
6) To emphasize the measurement of work values
7) To initiate & implement effective incentive schemes in the organization
Scope of work study Work study is constituted of the following elements
1. Method Study
It is systematic recording & critical examination of existing & proposed ways of doing the work
so as to develop more effective methods & to reduce costs through optimum use of the resources.
In this new & better methods are suggested to achieve higher efficiency & productivity.
2. Work Measurement
It deals with the application of techniques designed to establish the time for the qualified ideal
worker to carryout a given job at the defined level of performance.
It decides about the time required to carryout the job by using new methods.
Both these elements are inter-related.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 46
Uses of the work study
1. It helps in increasing productivity & efficiency
2. It determines the standards of performance
3. It helps in increasing the output & reducing
4. It enables to develop improved work place layout
5. It helps in achieving better manpower & capacity planning for the organization
6. It provides a standard of performance to measure labor efficiency
7. It helps in maintaining healthy industrial relations
8. It provides job satisfaction to employees
Under method study extensive use of the charts & diagrams is made to record the facts on
account of their simplicity & economy.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 47
Flow process Charts, Flow diagrams & Process Mapping Any job or process can be studied with the help of flow process chart for methods improvement
by recording all the events.
The symbols which are universally accepted for flow process charts are as follows:
Process charts are generally drawn for the material which goes from the raw material stage to the
finished product stage.
Sometimes they may refer to the activities performed by the worker in getting a certain process
done.
This can be shown with the help of following example:
Fig: Simple example of the flow process chart
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 48
Process charts do not refer to the material & men or machine simultaneously. Each one of the
activities can be analyzed to find whether it could be:
1. Eliminated or
2. Reduced in time or
3. Substituted by some other activities or
4. Put elsewhere in the sequence etc
The ultimate goal is to simplify the procedure to minimize the process cost.
Men & Machine charts
These charts can be used to study the joint operations & activities of men & machines. These
charts can help in identifying busy & idle time of both men & machines. These charts help in
identifying busy & idle time of both men & machines. They provide basis for the work
measurement & operational analysis.
Work Measurement Work Measurement is mainly concerned with the determination of the total time required to
perform a unit of work.
Definition: The work measurement may be defined as “The techniques applied to determine the
amount of time necessary for a qualified worker to perform a particular task.”
The amount of time required to complete a given job is expressed as time standard, work
standard, labor standard, labor standard, production standard or standard time. The standard time
is the amount of time a qualified worker working at the normal rate of speed, will require to
perform the specified task. It is expressed in terms of minutes per unit or output per hour.
Objectives of Work Measurement
This technique aims at achieving the following objectives
1. To fix standard time for each job scientifically, this will help to workout realistic schedules &
manpower requirements
2. To carry out sound comparison of alternative methods on the basis of time
3. To develop improved planning & control of activities or operations
4. To generate effective incentive scheme by linking them with target times
5. To develop reliable basis for the control of labor costs
6. To achieve proper balancing in work distribution
7. To provide basis for forecasting future manpower & related costs
Elements of Work Measurement
An element is a distinct part of a specified job. On the basis of observation, convenience,
measurement & analysis there are right types of elements which are as follows:
Repetitive Elements:
These are the elements which occur in every cycle of the given task. E.g. Loading & Unloading
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 49
Occasional Elements:
These elements which do not occur in every cycle of the task, but may occur at random or at
regular intervals. E.g. breaking of threads in Textile unit
Constant Elements:
These elements which may occur in every cycle or not but they are identified in specification &
time from cycle to cycle. E.g. switching on-off machine
Variable Elements:
These are the elements where the time of performance varies with characteristics of products
such as weight, size etc of the product. E.g. Loading & Unloading time of product
Manual Elements:
It is the element performed by the worker.
Machine Elements:
The element which is automatically performed by machine is the machine element. E.g.
Pressing, Forging etc.
Governing Elements:
When two elements are present at the same time in a given cycle then that element which takes a
longer time is called as Governing elements. E.g. boiling of water while setting out teapot &
cups
Foreign Elements:
Those elements that are observed during the study but do not form the necessary parts of the
given activity of the cycle are known as foreign elements.
E.g. An operator stopping the machine when he wants to talk with his friend.
Thus the study of elements is an important part of the work measurement.
Benefits of Work Measurement:
1) Developing a basis for alternative methods
2) Correcting manpower requirements for different tasks
3) Useful in preparation of accurate work schedules
4) Planning & scheduling to meet delivery dates
5) Estimating production cists accurately
6) Assessment of Labor cost accurately
7) Developing new better & more efficient methods
8) Training new employees for specific elements of job/ task
9) Checking progress of workers & taking necessary steps if required
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 50
Performance Rating: All the operators do not work at the same pace as same work at a faster rate while others work at
a slower rate. Hence, while establishing the time standard for the work performance some speed
allowance has to be made in the time values obtained through time study.
The determination of relative speed at which an operator id working is called as “rating”. Rating
the speed of the operator is a matter of subjective judgment of a time study analyst.
Various techniques are used to measure the performance rating such as wasting hour rating,
100% rating etc.
Assessment of Relaxation & other Allowance
When basic times of the various elements of the job added together, we get normal time for the
job as a whole. But it may not be equal to the standard time, because of lack of continuous work
by employees. Hence some extra time has to be added to the normal time to estimate the standard
time. In other words some allowance have to be made for the normal work due to interruption,
fatigue, personal needs etc.
Standard Time Standard time is the total time in which a job should be completed at standard performance i.e.
standard time = Basic time + Allowance
Calculation of standard time of the job Problem: -
The workmen in an engineering company are expected to work for 400 minutes in a shift of 8
hours. The remaining time is meant for rest & other personal needs etc.
a) Determine the standard time per piece of a job whose normal time is 2 minutes
b) Calculate number of pieces to be produced per day
c) If the workmen produced 180 pieces in the shift, what is his efficiency?
Solution: -
a) Standard time per piece
Normal time per piece = 2 minutes
Allowance in a shift of 8 hours = 480 – 400
= 80 minutes
Therefore, % allowance = 80 x 100
400
= 20% of normal time
Therefore, standard time per piece = 2 + 20 x 2 = 2 + 0.20 x 2 = 2 + 0.4 = 2.40 minutes
100
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 51
b) Quantity to be produced per day
Time available for the day = 8 hours
= 480 minutes
Standard time per piece = 2.40 minutes
Therefore, Qty to be produced/ day = 480
2.40
= 200 pieces
c) Operator’s efficiency
Qty actually produced = 180 pieces
Qty to be produced = 200 pieces
Therefore, Efficiency = 180 x 100
200
= 90 %
Therefore, Efficiency of operator = 90 %
Synthetic Time standards or Synthesis method of work measurement In some industries the work done is repetitive in nature & the products produced are in large
numbers or in batches of different sizes at irregular intervals. Under such conditions it is tedious
to carry out time studies, hence synthetic techniques are used.
Synthesis is a technique of work measurement adopted to estimate the time required to do a job
at a defined level of performance by totaling or synthesizing the values of elemental times
obtained from earlier time studies on other jobs having similar job elements.
With the help of standard time data the time required for each job element is collected & then by
adding of allowance to it the synthetic time standard for that particular job is prepared.
Advantages:
1. It helps in reducing cost of time studies
2. Time values are reliable as they are based on standard data
3. Can be useful to estimate labor cost for new jobs
Work Sampling/ Activity Sampling Work Sampling is a technique of work measurement which takes samples of the work of
employees randomly at periodic intervals to determine the production of total operations that is
accounted for in one particular activity.
The areas in which the work sampling is useful are as under:
a) Cost reduction & cost control
Work sampling data yields a lot of useful information on delays & interruptions & the causes
underlying them. This is very useful in preparing work specification program which will result in
cost reduction & control.
MANUFACTURING AND OPERATIONS MANAGEMENT NOTES
Page 52
b) Assessment of Allowances for output Standard:
The output standards besides relaxation allowance include allowances for delays & interruptions
incidental to the work. Such delays can be economically measured with work sampling
technique.
c) Fixation of output standards
Output standards for short-cycle-repetitive-jobs can be set economically with time study & allied
work measurement techniques. Work sampling is useful for setting output standards for long
cycle jobs & operations involving team work. This technique is also useful in measurement of
work load.
d) Testing the accuracy of the output standards
Work sampling is used to check the accuracy of the output standards in combination with work
measurement techniques.
Advantages of Work sampling:
1. Training is not required
2. More than one task can be studied simultaneously
3. More suitable than time study & work measurement
Procedure for conducting a Work sampling study
Following steps are required
1. Decide on the objective of the study
2. Explain to the concerned persons
3. Fix up work & delay elements
4. Decide on the duration of the study
5. Determine the desired accuracy of the final results & confidence level
6. Make the preliminary estimate of percentage occurrence of the activity or delay to be
measured
7. Design the study
8. Make the observations according to the plan
9. Summarize results
10. Check the accuracy of data at the end of the study
11. Prepare report with conclusions & recommendations