Operation Management Project upon AMUL Industry set up.

1. AMUL FACILITY LOCATION AND
LAYOUT

2. PREFACE
AMUL is the pride not only of Gujarat but also of entire country. It is a
Matter of great pleasure in preparing this project on such esteemed
Organization. A person aspiring to enter in management profession must
Have practical knowledge of the subject. The objective of industrial visit
Is to gain insight into practical knowledge in a student to supplement the
Theoretical study of management as well as industrial.
This project is been prepared under course objective of the subject
Operations Management under guidance of DR. ANSHU SARNA
(Faculty Guide).It has been a great learning experience visiting Amul
plant at Anand.
I have tried my best to present all the aspects related with the topics of
operations management. However I accept the sole responsibility of any
possible error of omission and will be grateful to the readers of this
project who bring mistakes to my notice.

3. CONTENTS
 Facility Location
 Factors That AMUL Management Keep in Mind
during Facility Location Analysis
 Facility Location Techniques
– MethodofFactor Rating
– Cost-Profit-VolumeAnalysis
 Facility layout
 Factors thatinfluence layout
 AdvantageofAMULGoodLayout
 AMUL Process Layout Map
 Conclusion And Recommendation
 Reference

4. Facility Location:
The facility location problem, also known as location analysis is a branch
of operations research concerned with the optimal placement of facilities to
minimize transportation costs while considering factors like avoiding placing
hazardous materials near housing, and competitors'facilities.
AMUL’s Facility Location
The brand name "Amul," fromthe Sanskrit"Amoolya," (meaning Precious) was
suggested by a quality controlexpert in Anand.), formed in 1946, is a dairy
cooperative in India. Itis a brand name managed by an apex cooperative
organization, GujaratCo-operativeMilk Marketing Federation Ltd. (GCMMF),
which today is jointly owned by some 2.8 million milk producers in Gujarat,
India.
AMUL is based in Anand, Gujaratand has been an example of a co-operative
organization's success in the long term. Itis one of the best examples of co-
operative achievement in the developing economy. "Anyonewho has seen the
dairy cooperatives in the state of Gujarat, especially the highly successfulone
known as AMUL, will naturally wonder what combination of influences and
incentives is needed to multiply such a model a thousand times over in
developing regions everywhere.” TheAmul Pattern has established itself as a
uniquely appropriatemodel for ruraldevelopment.
Amul has spurred the White Revolution of India, which has made India the
largest producer of milk and milk products in the world. Itis also the world's
biggest vegetarian cheese brand. Amul is the largest food brand in India and
world's LargestPouched Milk Brand with an annualturnover of US $1050
million (2006±07). Currently Unions making up GCMMF have 2.8 million
producer members with milk collection averageof 10.16 million liters per day.
Besides India, Amulhas entered overseas markets such as Mauritius, UAE,
USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South
African countries. Dr. Verghese Kurien, former chairman of the GCMMF, is
recognized as a key person behind the success of Amul.

5. Factors that amul management keeps in mind during
facility location layout
The location of an industry is determined by taking into consideration the
following factor:
• Primary Factors:
– Supply of raw materials
– Nearness to the market
– TransportFacilities
– Supply of Labour
– Availability of power
– Supply of Capital
• Secondary factors:
(1)Proximity to customers: AMUL Management during facility location analysis
keeps in mind the proximity of target customers and target market,
so that the target customer can be approached easily to outlets.
(2) Policies of management: AMUL managerialpolicies relate to future volume
of production and expansion, sizeof the plant, integration of production
processes; facilities to employees, sales and marketing policies and purchasing
policies etc.
(3) Plant location: Location of a plant greatly influences the layout of the
plant. Topography, shape, climate conditions, and sizeof the site selected
will influence the general arrangementof the layout and the flow of work in
and out of the building.

6. (4) Total Cost: The core objective of the KFC is to select a site with the
lowest total cost include land, labor, constructions, taxes and energy cost. By
minimizing the total costthey can be able to reduce the product cost
(5) Volume of production: Plantlayoutis generally determined by taking into
consideration the quantum of production to be produced.
(6) Availability of floor space: Availability of floor spaceis other decisive factor
in adopting the mode of layout. If there is a scarcity of space, productlayout
may be undertaken. On the other hand more space may lead to the adoption
of process layout.
(7) Nature of manufacturing process: The type of manufacturing process
undertaken by a business enterprisewill greatly affect the type of layout to be
undertaken
Facility Location Techniques
There are two types of techniques which followed by AMUL:
1) Factor Rating
2) Cost-Volume-ProfitAnalysis
Factor Rating
In the factorrating system, factors that are important in the location decision
are identified. Each factor is weighted from 0 to 1.00 to prioritize the factor and
reflect its importance. A subjective scoreis assigned (usually between 0 and
100) to each factor based on its attractiveness compared with other locations,
and the weighted scores are summed. Decisions typically will not be made
based solely on these ratings, but they provide a good way to organize and rank
factors.

7. EXAMPLE:
Following table gives you various factors considered for location decisions of
AMUL along with factor rating and location ratings based on the merits of each
location in the factors considered:
Locationfactor Factor rating Location Rating Product Rating
Location1 Location2 Location1 Location2
Suitable of labour
skill
Proximityto
customers
Adequacyof
water
Land and
constructioncost
Availabilityof
space
8
5
6
3
5
3
4
4
6
5
3
5
7
5
2
24
20
24
18
25
24
25
42
15
10
TOTAL 111 116
Since scoreof Location 2 is higher than the Location 1. So, the ideal location for
AMUL is Location 2.
Cost-Volume-ProfitAnalysis
When the fixed and variable costs for each site differ, Cost-volume-Profit Analysis
can be used to identify the location with the lowest cost.
EXAMPLE:
AMUL is considering 3 alternatives location considered for new plant. The
annual operating costare given below
Location 1: Laxmi Nagar
Location 2: Sahadra
Location 3: Preet Vihar
The Annual Production Cost associated with each alternative is a linear
function of the production volume.
Assumethat, the expected annual production volume is 250units
And further assumethat:
(X: production volume = 250)

8. For Location 1: Prod. Cost= 10,000+250 x
For Location 2: Prod. Cost= 25,000 +150 x
For Location 3: Prod. Cost= 60,000+50 x
Based on this information which Location has the lowest cost?
Sol. Total Production Cost = (Fixed Cost) +(variable unit cost) x (annual
production volume)
At a production volumeof 250units Location 2 has the lowestcost, because
For Location 1: Prod. Cost= 10,000 +250 (250) =72.500
For Location 2: Prod. Cost= 25,000 +150 (250) =62.500
For Location 3: Prod. Cost= 60,000 +50 (250) =72.500
This graph shows thatannual production cost changes with different
production volumes. If the expected annual production volume is below
150units, then chooseLocation 1. If the expected annual production volume is
between 150and 350 units, then chooseLocation 2. If the expected annual
production volume is over 350 units, then choose Location 3.
Facility Layout
Facility layout is an arrangement of differentaspects of manufacturing in an
appropriatemanner as to achieve desired production results. Facility layout
considers available space, final product, safety of users and facility and
convenience of operations.
An effective facility layoutensures that there is a smooth and steady flow of
production material, equipment and manpower at minimum cost. Facility
layout looks at physicalallocation of spacefor economic activity in the plant.
Therefore, main objective of the facility layout planning is to design effective
workflow as to make equipment and workers moreproductive.

9. AMUL plant is indigenously worked out with facilitation of various production
processes and production of multi products under one plant. The total plot is
nearly about2.27 kms.Separatebuildings are provided with required
arrangements of machine tools handling and computers connection through
the controlroom to fit for varying product manufacturing departments.
Factors that influence layout
 Volume, weight of items to be produced.
 Nature of the service to be provided.
 Cost of the building to house the operation.
 The fragility of the product or component
AMUL facility layout:
The plant is engaged in producing milk, ice creams, milk powder and ghee.
Entire department is uniquely provided with facilities for the processing each
Product. There are 4 production departments and packaging departments
pertaining to each productrespectively.

10. IMAGES OF FACILITIES AT AMUL PLANT

11. THE THREE-TIER “AMUL MODEL”
The Amul Model is a three-tier cooperative structure. This structureconsists of
a Dairy Cooperative Society at the village level affiliated to a Milk Union at
the Districtlevel, which in turn is further, federated into a Milk Federation at
the State level. The above three-tier structurewas set-up in order to delegate
the various functions, milk collection is doneat the Village Dairy Society, Milk
Procurement& Processing atthe DistrictMilk Union and Milk & Milk
Products Marketing at the State Milk Federation. This helps in eliminating not
only internal competition but also ensuring that economies of scale are
achieved. As the abovestructurewas firstevolved at Amul in Gujaratand
thereafter replicated all over the country under the Operation Flood
Programme, it is known as the Amul Model or Anand Pattern of Dairy
Cooperatives.
Advantages of amul good layout
1. Labour cost
 Increase in productivity with more units being produced per man hour.
 Reduction in the number of workers.
 Minimization of motions between operations.
2. Production control
 Increased production rate.
MILK UNION AT DISTRICT LEVEL
MILK FEDERATION AT STATE LEVEL
DAIRY COOPERATIVESOCIETYATVILLAGE LEVEL

12.  Providing convenient and adequate storage points.
 Increased production rate.
 Improved ability of forecasting manufacturing time.
3. Supervision
 Lesser requirement of supervision.
 Reduction in time spenton inspection.
 Reduction in costof inspection.
4. Other manufacturing costs
 Reduced consumption of power.
 Minimization of scrap and defectives.
 Better quality due to reduced handling.
 Reduced costs of maintenance.
 Improved utilization of materials
AMUL Process Layout Map

14. CONCLUSION
Reasons for Amul’s success are its Robust Supply
Chain, Low Cost Strategy, Diverse Product Mix, Strong
Distribution Network, Technology advancements & an
Initiatives and service availability. Because of all these
competences. Amul is the largest producer of milk
and milk products in the world. It has set world best
practices for dairy producers.