production and operations management

The Transformation Model is the framework we use to help
leaders understand their organizations and also guide a successful
redesign. The model reduces the complexity of an organization to
eight key variables that must be understood and aligned for a
business to be successful.
A transformation process is any activity or group of activities
that takes one or more inputs, transforms and adds value to
them, and provides outputs for customers or clients.

Transformation Process Model
Inputs
 Land
 Materials
 Labor
 Management
 Information
Transformation / Conversion
process
Outputs
 Goods
 Services
Control

Transformation Process Model (Exploited view)

Inputs
Some inputs are used up in the process of creating goods or services;
Others play a part in the creation process but are not used up.
To distinguish between these, input resources are usually classified as:
Transformed resources – those that are transformed in some way by
the operation to produce the goods or services that are its outputs.
Transforming resources – those that are used to perform the
transformation process.

Transformation
1. changes in the physical characteristics of materials or customers
2. changes in the location of materials, information or customers
3. changes in the ownership of materials or information
4. storage or accommodation of materials, information or customers
5. changes in the purpose or form of information
6. changes in the physiological or psychological state of customers
Categorizing different types of transformation
Manufacture – the physical creation of products
Transport – the movement of materials or customers
Supply – change in ownership of goods
Service – the treatment of customers or the storage of materials

Output
The principal outputs of a doctor's surgery are cured patients; the outputs of a
nuclear reprocessing plant include reprocessed fuel and nuclear waste.
Many transformation processes produce both goods and services.
For example, a restaurant provides a service, but also produces goods such as food
and drinks.

Operations
Operations transform resource or data inputs into desired goods, services, or
results, and create and deliver value to the customers. Two or more
connected operations constitute a process, and are generally divided into four
basic categories:
1. Processing,
2. Inspection,
3. Transport, and
4. Storage.
Types of Operation
1. Job Shops
2. Batch Processing
3. Repetitive/Assembly
4. Continuous Processing
5. Projects

Operations
Job Shops: Small lots, low volume, general equipment, skilled workers, high-
variety. Ex: tool and die shop, veterinarian’s office
Batch Processing: Moderate volume and variety. Variety among batches but not
inside. Ex:paint production , BA3352 sections
Repetitive/Assembly: Semi continuous, high volume of standardized items, limited
variety. Ex: auto plants, cafeteria
Continuous Processing: Very high volume an no variety. Ex: steel mill, chemical
plants
Projects: Non-routine jobs. Ex: preparing BA3352 midterm

Operations
Selecting A Process
1. Variety of products and services
2. Flexibility of the process; volume, mix, technology and design
3. Volume
Dimension Job Shop Batch Repetitive Continuous
Job variety Very High Moderate Low Very low
Process flexibility Very High Moderate Low Very low
Unit cost Very High Moderate Low Very low
Volume of output Very low Low High Very high

Operations managers
Operations managers play a leading role in managing both raw
materials and personnel. Oversight of inventory, purchasing and
supplies is central to the job. Human resources tasks include
determining needs, hiring employees, overseeing assignment of
employees and planning staff development.
So, Operations Managers are responsible for managing activities that
are part of the production of goods and services. Their direct
responsibilities include managing both the operations process,
embracing design, planning, control, performance improvement,
and operations strategy.

Operations managers
Responsibilities and Duties
1. Manage and direct operations team to achieve business targets.
2. Assist in developing or updating standard operating procedures for
all business operational activities.
3. Build strong relationship by addressing customer issues and
complaints in a timely manner.
4. Assist in employee appraisals, promotions, compensation and
termination based on the performance review.
5. Provide operational support and guidance to staff.
6. Assist in developing operating and capital budgets.
7. Monitor and control expense according to allotted budget.

Operations managers
Responsibilities and Duties
8. Assist in interviewing, recruiting and training candidates.
9. Manage work assignment and allocation for staff.
10.Conduct performance review and provide performance feedback to
staff.
11.Maintain accurate and clear documentation for operational
procedures and activities.
12.Work in compliance with company policies and procedures.
13.Ensure team follows standard operating procedures for all
operational functions.
14.Conduct regular meetings with team to discuss about issues,
concerns, updates etc.

Operations managers
Role of an Operations Manager
Communications and Conflict Resolution
A person in the role of an operations manager must be a master
communicator to be effective and successful. If even one of the departments
or managers He/she deals with has a change in plans, goals or objectives, it
could significantly affect the company's overall operations. His / Her role
requires:
Quick assessment of the effects of changing circumstances
Developing coping strategies that influence the positive contributions of
various departments
Spotting conflicts early on and resolving them to the satisfaction of all
involved parties.
The ability to quickly and independently process ideas and implement changes

Operations managers
Planning and Scheduling Skills
Proactively planning and scheduling projects is another important part of an
operations manager's job. This requires:
Interacting with a myriad of outside agencies and organizations
Making sure the company's key personnel are available as needed.
Simultaneously arranging multiple projects
Effective time management
Meeting with and ironing out details with numerous outside contractors,
service providers and vendors
Ensuring that deadlines are met without compromising quality

Operations managers
Computer Operations
Excellent computer software skills are great assets for an operations
manager. A successful operations manager is:
Proficient in commonly software applications like Microsoft Office,
Word and Excel
Able to electronically communicate internally and externally using
public and private email and messaging programs
Adept at planning schedules utilizing computer spreadsheet and
calendar software
An expert in creating visual presentations with multimedia software

Operations managers
Administrative Responsibilities
An operations manager provides administrative support and direction
to various managers and departments. These duties often include:
Regularly reviewing and sometimes revising the general manager's
schedule on a daily, weekly and monthly basis.
Confirming itineraries and meetings with key corporate contacts

Operations managers
Human Resources Duties
Since an operations manager is involved in the daily activities of
multiple departments, the job normally requires participation in
human resources functions like:
Screening, hiring and orientating new employees
Providing input on performance reviews and evaluations
Recommending skill development programs
Participating in decisions regarding terminations or layoffs

New Product Development
Flow chart of new product development
Idea generation
Idea screening
Concept development and testing
Marketing strategy development
Business analysis
Product development
Test marketing
Commercialization
Idea generation refers to the
systematic search for new-product
ideas.
Typically, a company generates hundreds
of ideas, maybe even thousands, to find
a handful of good ones in the end.
Internal idea sources: R&D, employees
External idea sources: Distributors and
suppliers, competitors

Idea generation
Idea screening
Business analysis
Product development
Test marketing
Commercialization
Idea screening means nothing else than
filtering the ideas to pick out good
ones.
Dropping the poor ideas as soon as
possible is, consequently, of crucial
importance.
Product ideas that will turn into
profitable products.

Idea generation
Idea screening
Business analysis
Product development
Test marketing
Commercialization
Attractive ideas must be developed into
a product concept.
A product concept is a detailed version
of the idea stated in meaningful
consumer terms.
New product concepts, need to be
tested with groups of target
consumers. The concepts can be
presented to consumers either
symbolically or physically.

Idea generation
Idea screening
Business analysis
Product development
Test marketing
Commercialization
To design an initial marketing strategy
for the new product.
The marketing strategy statement
consists of three parts and should be
formulated carefully:
1. Target market,
2. The planned value proposition,
&
3. The sales

Idea generation
Idea screening
Business analysis
Product development
Test marketing
Commercialization
The business attractiveness of the
proposed new product.
A review of the sales.
Costs and profit projections for the
new product.
History of similar products and
conduct market surveys.
Estimate the expected costs and
profits for a product, including
marketing, R&D, operations etc

Idea generation
Idea screening
Business analysis
Product development
Test marketing
Commercialization
Product concept passes the business
test, it must be developed into a
physical product to ensure that the
product idea can be turned into a
workable market offering.
R&D department will develop and test
one or more physical versions of the
product concept.
Tests to make sure they perform safely
and effectively.
Consumers can evaluate prototypes and
work with pre-release products.

Idea generation
Idea screening
Business analysis
Product development
Test marketing
Commercialization
The product and its proposed marketing
programme are tested in realistic
market settings.
Test marketing gives the marketer
experience with marketing the product
before going to the great expense.
when the risks are high, or when
the firm is not sure of the
product or its marketing

Idea generation
Idea screening
Business analysis
Product development
Test marketing
Commercialization
Introducing a new product into the
market.
At this point, the highest costs are
incurred:
Build or rent a manufacturing
facility.
Advertising, sales promotion and
other marketing efforts.
Factors should be considered
Timing, Place, Sales and profit
goals, Price distribution and
marketing budgets

Product Design & Process Selection
Product design
- the process of defining all of the companies product characteristics
- product design must support product manufacturability (the ease with
which a product can be made)
- product design defines a product’s characteristics of
appearance,
materials,
dimensions,
tolerances, and
performance standards

Product Design Process
Step 1 - Idea Development - Someone thinks of a need and a product/service
design to satisfy it: customers, marketing, engineering, competitors,
benchmarking, reverse engineering
Step 2 - Product Screening - Every business needs a formal/structured evaluation
process: fit with facility and labor skills, size of market, contribution margin,
break-even analysis, return on sales
Step 3 – Preliminary Design and Testing - Technical specifications are developed,
prototypes built, testing starts
Step 4 – Final Design - Final design based on test results, facility, equipment,
material, & labor skills defined, suppliers identified

Design for Manufacturing (DFM)
Guidelines to produce a product easily and profitably
Simplification - Minimize parts
Standardization
-design parts for multiply applications
Use modular design
Simplify operations

Break-even analysis
1. Compute quantity of goods that must be sold to break-even
2. Compute total revenue at an assumed selling price
3. Compute fixed cost and variable cost for several quantities
4. Plot the total revenue line and the total cost line
5. Intersection is break-even
6. Sensitivity analysis can be done to examine changes in all of the assumptions
made

Break-even analysis
QBE = F/ (SP - VC)
– QBE – Break even quantity
– F – Fixed costs
– SP – selling price/unit
– VC – Variable cost

Process selection is based on five principal considerations
1. Product-Process Grid
2. Degree of vertical integration
- Make 0r buy
3. Flexibility of resources
4. Mix between capital & human resources
5. Degree of customer contact

Design of Services
Service design is unique in that the service and entire service concept are being
designed
- must define both the service and concept
Physical elements, aesthetic & psychological benefits
e.g. promptness, friendliness, ambiance
- product and service design must match the needs and preferences of the
targeted customer group

Design of Services
Service Design Matrix
• Service Characteristics
– Pure services
– Quasi-Manufacturing
– Mixed services
• Service Package
– The physical goods
– The sensual benefits
– The psychological benefits
• Differing designs
– Substitute technology for people
– Get customer involved
– High customer attention

Process Types in Manufacturing

Nature of product :
In intermittent production system, goods are produced based on customer orders
and not for stocking.
In continuous production system, goods are produced based on demand forecast
and for stocking.
Flexibility of process :
In intermittent production system, production process is flexible. The product
design goes on changing.
In continuous production system, production process is not flexible. It is
standardized. The same product is manufactured continuously.

Scale of production :
In intermittent production system, goods are produced on a small scale, so there
is no economies of scale.
In continuous Production System, goods are produced on a large scale, so there
are economies of large-scale production.
Per unit cost :
In intermittent production system, cost per unit may be higher because
production is done on a small-scale.
In continuous production system, cost per unit may be lower because production
is done on large-scale.

Range of products :
In intermittent production system, wide ranges of products are manufactured.
In continuous production system, normally one particular type of product is
manufactured.
Staff :
Intermittent production system requires staff with high technical skills and
abilities.
Continuous production system requires more managerial skills and less technical
skills.

Instructions :
In an intermittent production system, many detailed instructions must be
provided depending upon the customer's specification.
In continuous production system, single set of instructions is sufficient for
operation. Here, there is no need to repeat the instructions.
Storage of final products :
In an intermittent production system, there is no need to store and stock the
final products, because items are produced as per customer's orders.
In a continuous production system, there is a need to store and stock the final
products until they are demanded in the market.

Location change :
In an intermittent production system, change in location is easy.
In a continuous production system, change in location is difficult.
Capital invested :
In an Intermittent production system, capital invested is small.
In a continuous production system, capital invested is very huge.

Job-Shop Production
Job-shop production are characterized by manufacturing one or few
quantity of products designed and produced as per the specification of
customers within prefixed time and cost. The distinguishing feature of
this is low volume and high variety of products.
A job-shop comprises of general-purpose machines arranged into
different departments. Each job demands unique technological
requirements, demands processing on machines in a certain sequence.

Job-Shop Production
Job-shop Production is characterized by:
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge
because of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of
each product, capacities for each work centre and order priorities.

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

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

Batch Production
American Production and Inventory Control Society (APICS) defines
Batch Production as a form of manufacturing in which the job pass
through the functional departments in lots or batches and each lot
may have a different routing.
It is characterized by the manufacture of limited number of products
produced at regular intervals and stocked awaiting sales.

Batch Production
Batch Production is characterized by
1. Shorter production runs.
2. Plant and machinery are flexible.
3. Plant and machinery set up is used for the production of item in
a batch and change of set up is required for processing the next
batch.
4. Manufacturing lead-time and cost are lower as compared to job
order production.

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

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

Mass Production
This production system is justified by very large volume of production.
The machines are arranged in a line or product layout. Product and
process standardization exists and all outputs follow the same path.
Mass Production is characterized by
1. Standardization of product and process sequence.
2. Dedicated special purpose machines having higher production capacities and output
rates.
3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and without any back tracking.
8. Production planning and control is easy.
9. Material handling can be completely automatic.

Mass Production
Advantages
Following are the advantages of Mass Production:
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.

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

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

Advantages
Following are the advantages of Continuous Production:
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as it is completely
automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production.

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

Services
Services can classified based on
Nature of service act and the recipient of service
Customization required by customer and the judgment of
customer contact personnel
The nature of demand for the service relative to supply
Common problems across service industries in terms of degree of
labor intensity and degree of interaction and customization.
Mostly used classification is represented by Service Process matrix

Services
In the service process matrix, service sectors pertaining to each quadrant faces
managerial challenges as shown.
Low interaction/low customization: Service Factory
• Marketing; Attention to physical surroundings
High interaction/high customization: Professional Service
• Cost control; Quality; Advancement of employees; Flat hierarchy; Employee
loyalty

Services
Low labor intensity:
• Capital decisions; Technology advances; Peak/Off-peak management;
Scheduling service delivery poses challenges for service organizations belongs to
Service factory and service shop.
High labor intensity:
• Hiring and training; Development of methods and Workforce scheduling
poses challenges in mass services and professional services.

Plant location
Plant location or the facilities location problem is an important strategic level
decision making for an organization.
Factors influencing plant location/facility location
1. General locational factors, which include controllable and uncontrollable
factors for all type of organizations.
2. Specific locational factors specifically required for manufacturing and
service organizations.

Plant location

Plant location
General locational factors (Controllable)
1. Proximity to markets
2. Supply of materials
3. Transportation facilities
4. Infrastructure availability
5. Labour and wages
6. External economies
7. Capital

Plant location
General locational factors (Uncontrollable)
1. Government policy
2. Climate conditions
3. Supporting industries and services
4. Community and labour attitudes
5. Community Infrastructure

Plant layout
Plant layout refers to the physical arrangement of production facilities. It is the
configuration of departments, work centres and equipment in the conversion
process. It is a floor plan of the physical facilities, which are used in production.
CLASSIFICATION OF LAYOUT
1. Process layout
2. Product layout
3. Combination layout
4. Fixed position layout
5. Group layout

Plant layout
Principles of Plant Layout
1. Principle of integration
2. Principle of minimum distance
3. Principle of cubic space utilisation
4. Principle of flow
5. Principle of maximum flexibility
6. Principle of safety, security and satisfaction
7. Principle of minimum handling

Plant layout
Process layout
Process layout is recommended for batch production. All machines performing
similar type of operations are grouped at one location in the process layout

Plant layout
Product layout
Machines and auxiliary services are located according to the processing sequence of
the product.

Plant layout
Combination layout
A combination of process and product layouts combines the advantages of
both types of layouts.
A combination layout is possible where an item is being made in different
types and sizes.

Plant layout
Fixed position layout
This is also called the project type of layout. In this type of layout, the
material, or major components remain in a fixed location and tools, machinery,
men and other materials are brought to this location.

Plant layout
Group layout
Group technology (GT) is the analysis and comparisons of items to group them
into families with similar characteristics. GT can be used to develop a hybrid
between pure process layout and pure flow line (product) layout.

Production Planning & Control
Production planning and control is the organization and planning of the
manufacturing process. It co-ordinates supply and movement of materials and
labor, ensures economic and balanced utilization of machines and equipment as
well as other activities related with production to achieve the desired
manufacturing results in terms of quantity, quality, time and place.
Planning : The choice from several alternatives of the best utilizing the available resources to
achieve the desired objective .
Operations: Performance in accordance with details set out in production plan.
Control: The monitoring of performance through a feed back by comparing the results achieved
with planned targets so that performance can be improved.

Objective of PPC
To deliver goods in required quantities to customers in required delivery schedule
To ensure maximum utilization of all resources
To ensure production quality products
To minimize the product throughput time
To maintain optimum level inventory
To maintain flexibility in manufacturing operations
Coordinate between labour and machines and various supporting departments

Functions of PPC
1. Routing
2. Estimating
3. Scheduling
4. Loading
5. Dispatching
6. Expediting
7. Evaluating
8. Inventory Control

Levels of PPC
Strategic Planning(Long range): It is process of thinking though the organizations
current mission and environment and setting a guide for future decisions and
results. e.g. Technology forecasting and choice of appropriate technology for the
long range time horizon.
Tactical Planning(Intermediate Range): It is done over an intermediate term or
medium range time horizon by middle level management. These plans focus on
aggregate products rather than individual products.
Operational Planning(Short Range ): It is done over a short range time span
developed by junior level management. It is concern with utilization of existing
facilities rather than creation of new facilities.

Benefits of PPC
1. PPC coordinates all the phases of production / Operating system
2. An efficient plan results in higher quality ,better utilization of resources,
reduced inventories, better customer services.
3. An efficient plan enable the firm to improve its sales turnover , market share
and profitability.

Limitations of PPC
1. PPC function is based on certain assumptions or forecasts of customer’s
demand, Plant capacity, availability of materials etc
2. Employee may resist change in production levels set as per production plans.
3. This process is time consuming when we need to carry out routing and
scheduling function for large products.
4. This function become difficult when environmental factors changes rapidly.

The following are the techniques of production planning and control
A. Planning
B. Routing
C. Scheduling
D. Despatching
E. Follow-up and Expediting
F. Inspection.

A. Planning
It is the first element of production planning and control. Planning is given an
important role in every business. A separate department is set up for this work.
Planning is deciding in advance what is to be done in future. Control devices are
also decided in advance so that all activities are carried on properly. An
organizational set up is created to prepare plans and policies. Various charts,
manuals and production budgets are also prepared. If production planning is
defective then control will also be defective. Planning provides a sound base for
control.

B. Routing:
It is determining the exact path or route which will be followed in production.
The stages from which goods are to pass are decided after a proper thought.
The question is— which route will be economical in time and money? The
passenger will decide the route only after taking into consideration various
factors. It is the selection of the path from where each unit have to pass before
reaching the final stage. The path must have the best and cheapest sequence of
operations.

Objects of Routing:
The main object of routing is to determine the best and cheapest sequence of
operations to be followed. In case of continuous manufacturing units where
standardized products are produced routing becomes automatic. In case of job
order and batch production every product requires different design and varying
sequence of operations, another object of routing is to help in determining proper
tools and equipment’s and the number of workers required for carrying out the
work.

The following steps are taken for a routing procedure:
1. Deciding what Part to be made or Purchased:
The product is thoroughly analyzed to find out which parts are required for it.
The second decision is taken regarding the production or purchase of various
components. Some components may be manufactured by the firm and others may
be procured from the market. During slack periods most of the components may
be manufactured by the firm but when industrial activity is at its peak then
supplies from outside may be contracted.
These decisions are taken after considering factors such as:
(a) The relative cost involved;
(b) Purchase policies of the firm;
(c) Technical considerations; and
(d) Availability of equipment and personnel.

2. Determining Materials Required:
The analysis of the product will enable us to know the type of materials required
for producing various components. The right type of quality, quantity, and time
when needed should also be decided in advance.
3. Determining Manufacturing Operations and Sequences:
The manufacturing operations and their sequences can be determined from
technical experience and layout of machines. A sound and economical operation is
selected for manufacturing various components.

4. Determining of Lot Sizes:
A decision has to be taken about the number of units to be produced in one lot.
If production is carried on the basis of orders then size of the lot depends upon
the quantity ordered plus some units for possible rejections during the process.
When production is done for the stock then lot is decided by considering various
economies which may accrue.
5. Determining of Scrap Factors:
There may be some scrap during the course of manufacture. The finished
products are generally less than the units introduced at the beginning. The scrap
during manufacturing should be anticipated so that routing is facilitated. If
products pass through three processes and a normal scrap is 5% of input at every
stage then it will be easy to anticipate the units entering various processes and
arrange equipments and manpower.

6. Analysis of Cost of the Product:
The determination of cost of products may be the duty of cost department but
still production department makes records of direct materials, labour, direct and
indirect expenses. These estimates are greatly useful to costing department also.
7. Preparation of Production Control Forms:
The carrying out of routing will be facilitated if forms are prepared to collect
information for control purpose. The requirements are: job cards, inspection
cards, move tickets, labour cards, tool tickets, etc.

C. Scheduling:
Scheduling is the determining of time and date when each operation is to be
commenced and completed. It includes the scheduling of materials, machines and
all other requisites of production. A number of components are required to
manufacture a product. The time and date of manufacturing each component is
fixed in such a way that assembling for final product is not delayed in any way.
Scheduling can be compared to a railway time table which informs a passenger
about his journey schedule. This time table shows the time when the train will
start from a particular place, the time of its arrival at different stations and
the time when it will reach its destination. Scheduling also gives exact
information about the time-table of manufacturing process at all the stages.

Types of Schedules:
Following are the three types of scheduling:
1. Master Scheduling
2. Manufacturing or Operation Scheduling
3. Retail Operation Scheduling.

1. Master Scheduling:
Scheduling starts with the master schedule. This schedule is prepared by keeping
in view the order or likely sales order in near future. Master scheduling is the
breakup of production requirements. This may be prepared for a week, a
fortnight, a month etc. If only one product is manufactured then scheduling is
easy but it becomes complex when more products are required to be produced.
Master schedule has to be adjusted as per the new order received. If plant
capacity is available then new requirements may be adjusted in the same schedule
but in case new orders may not be adjustable at present capacity then either the
schedule may be redrawn or new plant and equipment may be acquired. No
definite pattern may be suggested for master schedules because these may differ
from industry to industry or in the same industry.

1. Master Scheduling:
However, the following information is provided in them:
(a) The number of personnel available and the projected man hours in various
shifts etc.
(b) The estimated requirements in man-hours per product.
(c) The requirements of direct materials for the projected production.
(d) The amount of normal overhead expenses required at the projected work-
load.

2. Manufacturing or Operation Scheduling:
Manufacturing schedule is used where production process is continuous. When
same product is produced repeatedly or comparatively small number of products
are required then operation schedules are useful. The name and number of the
product and the quantity to be produced in a given time are required to prepare
a manufacturing schedule. If the product to be produced is in a variety of sizes,
colours, weights, types etc. then these things should also be mentioned in the
schedule. The order of preference for the manufacture is also mentioned in the
schedule for a systematic production planning.
3. Detail Operation Scheduling:
It indicated the time required to perform each and every detailed operations of a
given machine or process.

D. Despatching:
The term despatching refers to the process of actually ordering the work to be
done. It involves putting the plan into effect by issuing orders. It is concerned
with starting the process and operation on the basis of route sheets and schedule
charts. A practical shape is given to the production plan.
“Despatches put production in effect by releasing and guiding manufacturing order
in the sequence previously determined by route sheets and schedules.”
According to this definite despatching involves the process giving orders for actual
start of work. The routing and scheduling which is done earlier is put into
practice.

Steps Followed in Dispatching:
The following steps are involved in despatching function:
1. The issuing or moving of materials from stores to first production process or from process to
process.
2. Assigning of work to machines or work centres.
3. The issuing of required tools and equipment to production departments.
4. Issuing of job orders, authorizing operations in accordance with dates and times as per route
sheet and schedule charts.
5. Issuing of time tickets and instruction cards to the persons involved in the work.
6. Recording of time taken from starting to completion of each job and also the total production
time.
7. After the completion of work it should be ensured that all drawings, plans and tools are
returned to their correct location of issuing departments.
8. Ensuring necessary changes in scheduling, etc. if changed situations so demand.
9. Having proper liaison with routing and scheduling sections for effective performance.

Despatching Procedures:
Following two procedures may be used for despatching:
(A) Centralised Despatching:
Under centralised despatching orders are directly issued to workmen and machines.
The despatching section keeps full information of the capacity and work loads of
various machines or work centres and sends instructions as per requirements.
Centralised despatching helps in exercising effective control.
(b) Decentralised Despatching:
Under this procedure all work orders are issued to the foreman or despatch clerk
of the department or section. It is the responsibility of the department or
section to decide about the actual start of work on priority among different
products. The despatch of orders of materials is left to the decision of the
foreman or despatch clerk.

E. Follow Up and Expediting:
Follow-up and expediting is related to evaluation and appraisal of work performed.
This is an important function of production control. If goods are to be produced
as per the plans then a proper follow-up of work is essential to see whether
production schedule is properly adhered to or not.
In case there are any bottlenecks then these must be removed in time. In the
words of Bether and his associates, “follow up or expediting is that branch of
production control procedure which regulates the progress of materials and part
through the production process.” Follow up procedure. Progress may be assessed
with the help of routine reports or communication with operating departments.

The following procedure is used for expediting and checking the progress:
(i) The progress should be checked continuously.
(ii) In case there are deviations between planned and actual work then the causes
for these differences should be ascertained.
(iii) Helping in removing the causes of deviations.
(iv) Having a report with departments supplying materials and equipment to
production centres.

F. Inspection:
Inspection is also an important function of control. The purpose of
inspection is to see whether the products manufactured are of requisite quality
or not. It is carried on at various levels of production process so that pre-
determined standards of quality are achieved. In case the products are not of
proper quality then immediate steps are taken to correct the things. If
inspection is not regularly undertaken then there may be a possibility of more
rejections. Inspection is undertaken both of products and inputs. On the one
hand work-in-progress and finished products are inspected, on the other hand the
quality of materials issued, equipment’s used and machines employed is also taken
into account. The final product will certainly be influenced by the quality of
various inputs used in production. So inspection ensures the maintenance of
predetermined quality of products.

Aggregate planning is the process of developing, analyzing, and maintaining a
preliminary, approximate schedule of the overall operations of an organization.
The aggregate plan generally contains targeted sales forecasts, production levels,
inventory levels, and customer backlogs. This schedule is intended to satisfy the
demand forecast at a minimum cost. Properly done, aggregate planning should
minimize the effects of shortsighted, day-to-day scheduling, in which small
amounts of material may be ordered one week, with an accompanying layoff of
workers, followed by ordering larger amounts and rehiring workers the next week.
This longer-term perspective on resource use can help minimize short-term
requirements changes with a resulting cost savings.
Aggregate planning is considered to be intermediate-term (as opposed to long- or
short-term) in nature. Hence, most aggregate plans cover a period of three to
18 months.

AGGREGATE PLANNING STRATEGIES
LEVEL STRATEGY.
A level strategy seeks to produce an aggregate plan that maintains a steady
production rate and/or a steady employment level. In order to satisfy changes in
customer demand, the firm must raise or lower inventory levels in anticipation of
increased or decreased levels of forecast demand. The firm maintains a level
workforce and a steady rate of output when demand is somewhat low. This
allows the firm to establish higher inventory levels than are currently needed. As
demand increases, the firm is able to continue a steady production rate/steady
employment level, while allowing the inventory surplus to absorb the increased
demand. A second alternative would be to use a backlog or backorder. Negative
results of the level strategy would include the cost of excess inventory,
subcontracting or overtime costs, and backorder costs.

AGGREGATE PLANNING STRATEGIES
CHASE STRATEGY.
A chase strategy implies matching demand and capacity period by period. This
could result in a considerable amount of hiring, firing or laying off of employees;
insecure and unhappy employees; increased inventory carrying costs; problems with
labor unions; and erratic utilization of plant and equipment. It also implies a
great deal of flexibility on the firm's part. The major advantage of a chase
strategy is that it allows inventory to be held to the lowest level possible, and
for some firms this is a considerable savings. Most firms embracing the just-in-
time production concept utilize a chase strategy approach to aggregate planning.
Most firms find it advantageous to utilize a combination of the level and chase
strategy.

Techniques for aggregate planning
1. Determine demand for each period.
2. Determine capacity for each period. This capacity should match demand, which
means it may require the inclusion of overtime or subcontracting.
3. Identify company, departmental, or union policies that are pertinent.
4. Determine unit costs for units produced. These costs typically include the
basic production costs (fixed and variable costs as well as direct and indirect
labor costs).
5. Develop alternative plans and compute the cost for each.
6. If satisfactory plans emerge, select the one that best satisfies objectives.
Frequently, this is the plan with the least cost. Otherwise, return to step 5.

Mathematical approaches to aggregate planning
LINEAR PROGRAMMING.
Linear programming is an optimization technique that allows the user to find a
maximum profit or revenue or a minimum cost based on the availability of
limited resources and certain limitations known as constraints. A special type of
linear programming known as the Transportation Model can be used to obtain
aggregate plans that would allow balanced capacity and demand and the
minimization of costs. However, few real-world aggregate planning decisions are
compatible with the linear assumptions of linear programming. Supply Chain
Management: Strategy, Planning and Operation, by Sunil Chopra and Peter
Meindl, provides an excellent example of the use of linear programming in
aggregate planning.

MIXED-INTEGER PROGRAMMING.
For aggregate plans that are prepared on a product family basis, where the plan
is essentially the summation of the plans for individual product lines, mixed-
integer programming may prove to be useful. Mixed-integer programming can
provide a method for determining the number of units to be produced in each
product family.
LINEAR DECISION RULE.
Linear decision rule is another optimizing technique. It seeks to minimize total
production costs (labor, overtime, hiring/lay off, inventory carrying cost) using a
set of cost-approximating functions (three of which are quadratic) to obtain a
single quadratic equation. Then, by using calculus, two linear equations can be
derived from the quadratic equation, one to be used to plan the output for each
period and the other for planning the workforce for each period.
MANAGEMENT COEFFICIENTS MODEL.

MANAGEMENT COEFFICIENTS MODEL.
The management coefficients model, formulated by E.H. Bowman, is based on the
suggestion that the production rate for any period would be set by this general
decision rule:
P t = aW t-1 − bI t -1 + cF t+1 + K, where
P t = the production rate set for period t
W t - 1 = the workforce in the previous period
I t-1 = the ending inventory for the previous period
F t+1 = the forecast of demand for the next period
a, b, c, and K are constants
It then uses regression analysis to estimate the values of a, b, c, and K. The end
result is a decision rule based on past managerial behavior without any explicit
cost functions, the assumption being that managers know what is important,
even if they cannot readily state explicit costs. Essentially, this method

SEARCH DECISION RULE.
The search decision rule methodology overcomes some of the limitations of the linear cost
assumptions of linear programming. The search decision rule allows the user to state cost data
inputs in very general terms. It requires that a computer program be constructed that will
unambiguously evaluate any production plan's cost. It then searches among alternative plans for
the one with the minimum cost. However, unlike linear programming, there is no assurance of
optimality.
SIMULATION.
A number of simulation models can be used for aggregate planning. By developing an aggregate
plan within the environment of a simulation model, it can be tested under a variety of conditions
to find acceptable plans for consideration. These models can also be incorporated into a decision
support system, which can aid in planning and evaluating alternative control policies. These models
can integrate the multiple conflicting objectives inherent in manufacturing strategy by using
different quantitative measures of productivity, customer service, and flexibility.

FUNCTIONAL OBJECTIVE SEARCH APPROACH.
The functional objective search (FOS) system is a computerized aggregate
planning system that incorporates a broad range of actual planning conditions. It
is capable of realistic, low-cost operating schedules that provide options for
attaining different planning goals. The system works by comparing the planning
load with available capacity. After management has chosen its desired actions and
associated planning objectives for specific load conditions, the system weights each
planning goal to reflect the functional emphasis behind its achievement at a
certain load condition. The computer then uses a computer search to output a
plan that minimizes costs and meets delivery deadlines.

Seven Problem Solving Tools
1. Pareto Analysis
2. Flowcharts
3. Checklists
4. Histograms
5. Scatter Diagrams
6. Control Charts
7. Cause-and-Effect Diagrams

Pareto Analysis
A Pareto Chart is a vertical bar chart in which the bars are arranged in the
descending order of their height starting from the left and prioritize the
problems or issues.
 to prioritize problems
 to analyze a process
 to identify root causes
 to verify that whatever improvement process you implement continues to
work

Pareto Analysis
NUMBER OF
CAUSE DEFECTS PERCENTAGE
Poor design 80 64 %
Wrong part dimensions 16 13
Defective parts 12 10
Incorrect machine calibration 7 6
Operator errors 4 3
Defective material 3 2
Surface abrasions 3 2
125 100 %

Pareto Analysis
Percentfromeachcause
Causes of poor quality
0
10
20
30
40
50
60
70
(64)
(13)
(10)
(6)
(3) (2) (2)

Flow Charts
Flow charts are nothing but graphical representation of steps involved in a
process.
Flow charts give in detail the sequence involved in the material, machine and
operation that are involved in the completion of the process.
Thus, they are the excellent means of documenting the steps that are carried
out in a process.

Flow Charts
Operation DecisionStart/ Finish
Start/ Finish
Operation
OperationOperation
Operation
Decision

Check Sheet
Check sheets are nothing but forms that can be used to systematically collect
data.
Check sheet give the user a place to start and provides the steps to be followed
in
Collecting the data

Check Sheet
COMPONENTS REPLACED BY LAB
TIME PERIOD: 22 Feb to 27 Feb 2002
REPAIR TECHNICIAN: Bob
TV SET MODEL 1013
Integrated Circuits ||||
Capacitors |||| |||| |||| |||| |||| ||
Resistors ||
Transformers ||||
Commands
CRT |

Check Sheet
 to gather data
 to test a theory
 to evaluate alternate solutions
 to verify that whatever improvement process you implement continues to work

Check Sheet
 team agrees on what to observe
 decide who collects data
 decide time period for collecting data
 design Check Sheet
 collect data
 compile data in the Check Sheet
 review Check Sheet

Histogram
Histograms help in understanding the variation in the process. It also helps in
estimating the process capability.
0
5
10
15
20
1 2 6 13 10 16 19 17 12 16 2017 13 5 6 2 1

Scatter Diagram
It is a graph of points plotted; this graph is helpful in comparing two variables.
The distribution of the points helps in identifying the cause and effect
relationship Between two variables.
Y
X

Control Chart
A control chart is nothing but a run chart with limits. This is helpful in finding
the amount and nature of variation in a process.
18
12
6
3
9
15
21
24
2 4 6 8 10 12 14 16
Sample number
Numberofdefects
UCL = 23.35
LCL = 1.99
c = 12.67

Cause and Effect Diagram
Developed by Dr Kaoru Ishikawa in 1943. It is also known by the name of 1)
Ishikawa diagram, 2)Fishbone diagram.
This diagram is helpful in representing the relationship between an effect and the
potential or possible causes that influences it.
This is very much helpful when one want to find out the solution to a particular
problem that could have a number of causes for it and when we are interested in
finding out the root cause for it.

Cause and Effect Diagram

Quality assurance
Quality assurance (QA) is any systematic process of determining whether a
product or service meets specified requirements. QA establishes and maintains set
requirements for developing or manufacturing reliable products.
Role of Quality Assurance in Manufacturing
1. Provide a systematic and proactive approach for preventing defects
2. Implement procedures that ensure manufactured products consistently meet the required
quality specifications
3. Incorporate the QA requirements into the manufacturing traveler
4. Perform audits to ensure: Established procedures are being followed, Personnel performing the
work are adequately trained, Equipment is calibrated and in good repair

Quality assurance
Difference Between Quality Assurance and Quality Control
QC is used to verify the quality of the output;
QA is the process of managing for quality.
In the ISO 9000 standard, clause 3.2.10 defines
Quality Control as:
“A part of quality management focused on fulfilling
quality requirements”
Clause 3.2.11 defines Quality Assurance as:
“A part of quality management focused on providing
confidence that quality requirements will be fulfilled”

Quality assurance
As a consequence of formulating and executing a quality management plan the company
can expect:
1. Greater levels of customer satisfaction, which will very likely result in both repeat
business, as well as referral business
2. A motivated team that not only understand the policy objectives of the quality
management plan, but who also actively participate in executing the plan
3. Elimination of waste by eliminating rework arising from either the need to address
bugs, or to address gaps in the solution’s ability to meet customer requirements
4. Higher levels of confidence in planning, since the tasks arising from unplanned
rework will fall away
5. Financial rewards for the company, which are a consequence of new projects from
existing and referral clients, as well as through the reduction of monies spent on
rework tasks.

Quality assurance
7 Essential Steps to Implementing a Process of Quality Assurance
Step 1: Identify Organizational Goals
Step 2: Identify Critical Success Factors
Step 3: Identify Internal and External Customers
Step 4: Customer Feedback
Step 5: Implement Continuous Improvements
Step 6: Select Quality Management Software
Step 7: Measure Results

Total Quality management
The eight principles are:
1 Customer focus. ...
2 Leadership. ...
3 Involvement of people. ...
4 Process approach. ...
5 System approach to management. ...
6 Continuous improvement. ...
7 Factual approach to decision making. ...
8 Mutually beneficial supplier relationships.

production and operations management

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