What is “Operations Management”?

What are the objectives of Operations

Management? Enlist key elements of Operations Management.

Answer.1) An operation may be defined “as the process of changing inputs into
outputs thereby adding value to some entity”. Right quality, right quantity, right
time and right price are the four basic requirements of the customers and as such
they determine the extent of customer satisfaction. And if these can be provided at
a minimum cost, then the value of goods produced or services rendered increases.
Thus the objectives of production management are “to produce goods and services
of the right quality, in the right quantities, according to the time schedule and a
minimum cost”. Objectives of production management may be amplified as under:
• Producing the right kind of goods and services that satisfy customers’ needs
(effectiveness objective). • Maximizing output of goods and services with
minimum resource inputs (efficiency objective). • Ensuring that goods and services
produced conform to pre-set quality specifications (quality objective). •
Minimizing throughput-time- the time that elapses in the conversion process- by
reducing delays, waiting time and idle time (lead time objective). • Maximizing
utilization of manpower, machines, etc. (Capacity utilization objective). •
Minimizing cost of producing goods or rendering a service (Cost objective). Key
elements of Operations Management

1.Product selection and design

The right kind of products and good designs of the products are crucial for the
success of an organizing. A wrong selection of the product and/or poor design of
the products can render the company’s operation ineffective and non-competitive.
Products/services, therefore, must be chosen after detailed evaluation of the
product/services alternatives in conformity with the organization’s objectives.
Techniques like value engineering may be employed in creating alternate designs,
which are free from unnecessary features and meet the intended functions at the
lowest cost. 2. Process selection and planning
POM3 Selection of the optimal “conversion system” is as important as choice of
products/services and their design. Process selection decisions include decisions
concerning choice of technology, Equipment, machines, material handling systems,
mechanization and automation. Process planning involves detailing of processes if
resource conversion required and their sequence.

3Facilities (Plant) location

Plant location decisions are strategic decisions and once plant is set up at a
location, it is comparatively immobile and can be shifted later only at a
considerable cost and interruption of production. Although problem of location
choice does not fall within preview the production function and it occurs
infrequently, yet it is of crucial importance because of its major effect on the
performance of every department including production. Therefore, it is important
to choose the right location, which will minimize total “delivered customer” cost
(Production and distribution cost). Locational decisions involve evaluation of
locational alternatives against multiplicity of relevant factors considering their
relative importance to the organization and selecting those, which are operationally
advantageous to the organization. 4. Facilities (Plant) layout and materials handling
Plant layout is concerned with relative location of one department (Work centre)
with another in order to facilitate material flow and processing of a product in the
most efficient manner through the shortest possible time. A good layout reduces
material handling cost, eliminates delays and congestion, improves co-ordination,
provide good housekeeping etc. while a poor layout results in congestion, waste,
frustration, inefficiency and loss of profit. 5. Capacity Planning

Capacity planning concerns determination and acquisition of productive resource

to ensure that their availability matches the demand. Capacity decisions have a
direct Influence on performance of production system in respect of both resource
productivity and customer service (i.e. delivery performance). Excess capacity
results in low resource productivity while inadequate capacity leads to poor
customer service. Capacity planning decisions can be short-term decisions. Long-
term capacity planning decisions concern expansion/contraction of major facilities
required in the conversion process, economics of multiple shift operation,
development of vendors for major components etc. Short term capacity planning
decisions concern issues like overtime working, sub-contracting, shift adjustments
etc. Break even analysis is a valuable tool for capacity planning. 6. Production
Planning and Control (PPC)

Production planning is the system for specifying the production procedure to

obtain the desired output in a given time at optimum cost in conformance with
specified standard of quality, and control is essential to ensure that Page 2

POM3 manufacturing takes place in the manner stated in the plan. 7. Inventory
control

Inventory control deals with determination of optimal inventory levels of raw

materials, components, parts, tools; finished goods, spares and supplies to ensure
their availability with minimum capital lock up. Material requirement planning
(MRP) and just-in-Time (JIT) are the latest techniques that can help the firm to
reduce inventory.

8.Quality assurance and control

Quality is an important aspect of production system and it must ensure that

services and products produced by the company conform to the declared quality
standards at the minimum cost A total quality assurance system includes such
aspects as setting standards of quality, inspection of purchased and sub-contracted
parts, control of quality during manufacture and inspection of finished product
including performance testing etc. 9. Work study and job design

Work-study, also called time and motion study, is concerned with improvement of
productivity in the existing jobs and the maximization of productivity in the design
of new jobs. Two principal component of work-study are: (i) (ii) Method study
Work measurement

Method study has been defined (BS 3138) as the systematic recording and critical
examination of the existing and proposed ways of doing work, as a means of
developing and applying easier and more effective methods and reducing costs.
Method study when applied to production methods yields one or more of the
following benefits: • • • • • • • • 10. Improved work environment Improved facility
layout Better utilization of facilities Greater safety Lesser materials handling
Smooth production flow Lower work-in-process Higher earnings for the workmen
Maintenance and replacement

Maintenance and replacement involve selection of optimal maintenance Preventive

and/or breakdown) policy to ensure higher equipment availability at minimum
maintenance and repair cost. Preventive maintenance, which includes Page 3
POM3 preventive inspection, planned lubrication, periodic cleaning and upkeep,
planned replacement of parts, condition monitoring of the equipment and
machines, etc. is most appropriate for critical machines.

Cost reduction and cost control

Effective production management must ensure minimum cost of production and in

this context cost reduction and cost control acquires significant importance. There
are large number of tools and techniques available that can help to make a heavy
dent on the production cost. Q.2) What is batch Production? What are its key
characteristics? Compare these characteristics with those of project production.
Answer.2) Batch production is characterized by the manufacture of a limited
number of a product (but many such quantities of different products) produced at
periodic intervals and stocked in warehouses as finished goods (or finished parts)
awaiting sales (or withdrawal for assembly). Typical examples of batch production
are: process industries such as pharmaceuticals, paints, chemicals; medium and
heavy engineering industry engaged in the manufacture of electric motors, switch
gears, heavy motor vehicles, internal combustion engines; manufacture of ready
made garments; manufacture of assembly shops such as machine tools; sub
contractors which take on machining of batches of components to the drawings of
a large manufacture etc. Characteristics of batch production (a) Short runs:

Short production runs and frequent changes of set also characterize batch
production up. The equipment and the assembly set up is used for a limited number
of parts or assemblies and is then changed to make a different product. The
production is generally made to stock. (b) Skilled labour in specific trades: The
labour force is expected to posses skill in one specific manufacturing process,
Turning, milling, drilling, welding, grinding, hobbing, fitting etc. The operator may
perform simpler machine set-ups but the separate machine tool setter performs
those involving complex operations. (c) Supervision to possess knowledge of a
specific process The supervision has considerable knowledge of a specific process.
Supervisor in the grinding section for example, may not expert in turning and
drilling work but s expected to possess a find of knowledge of different types of
grinding operations. Page 4
POM3 Similarly a supervisor in the gear shop is expected to have sound
knowledge in working of different types of gear cutting machines. (d) Limited span
of control: The amount of supervision required in batch production is lower than
that of jobbing production. The ration of direct workmen to supervisors is more or
less a function of batch size. The smaller the batches, the lower are the ratio of
direct workers to supervisors, and vice versa. This is because smaller lots require
each supervisor to spend a great deal of his time in allocating new work, giving
instructions, follow up on the shop floor for proper movement of materials from
and to the machines, identifying delays and interruptions, and arranging, in
consultation with planning, work load in his section to keep his men busy. (e)
General purpose machines and process type of layout Plant and equipment is
procured and arranged to obtain maximum flexibility. General purpose machines
and handling equipment capable of performing variety of operations with
minimum set –up times are installed in lieu of variety of products. The machines
are arranged to give process layout-layout by function. Similar machines capable
of doing similar types of operations are grouped together and kept at one place.
Presses for example, are put together and kept at one place milling machines are
placed together at another place, drilling machines are kept at the third place, gear
cutting machines are located at the fourth place and so on. Each Group of machines
is usually designated as a work centre or a section or a shop. (f) Manual materials
handling: Materials handling in batch production as compared to jobbing
production are small. Individual components and parts are placed in trolleys and
trays and are transported as unit loads. Materials handling may be mechanized by
deploying power driven trucks. (g) Manufacturing cycle time affected due to
queues: The manufacture cycle time is comparatively smaller than jobbing
production but is much more than mass and flow production. The batches of work
tend to queue up at different machines due to differing cycles times, batch sizes
and sequence of operations. (h) Large work-in-progress: Work in progress is
comparatively large due to varying work content of different components,
imbalance in manufacturing times, formation of queues between the machines. (i)
Flexibility of production schedules: Disruptions due to machine breakdown or
absenteeism do not seriously affect production as job can be shifted to another
machine or another operator from another machine can be shifted. (j) Need to have
production planning and control: Functions of production planning and control in a
batch production unit are more complex than those in jobbing production or mass
and flow production: Page 5
POM3 • Materials control and tools control functions are important. kind of
replenishment system needs to be used to ensure routine replenishment Some

• Detailed operational layout and route sheets are prepared for each part of the
product. • Loading and scheduling needs to be more detailed and more
sophisticated since every machine requires to be individually scheduled. •
Progressing function is very important to collect information on progress of work.
A separate progress card needs to be maintained to record progress of each
component. • Expediting is generally necessary since quite often jobs, due to
imbalances in work content, tend to lag behind

Q.3) (a) Why are locational decisions important? What factors should be
taken into account while deciding location of a unit to manufacture washing
machines?
Answer.3a) Locational decisions generally arise when:
• A new manufacturing (or servicing) unit is to be set up.
• Existing plant operations are difficult to expand due to poor selection of site
earlier.
• The growth of the business makes it advisable to establish additional facilities in
new territories.
• There is emergence of new social (chronic labour problems) political (political
instability or economic conditions that suggest a change in the location of the
existing plant.
• The product development has over weighted the advantages of the existing plant.
• The changes in the industrial Policy of the Government, favoring decentralizing
and dispersal of industries to achieve overall development of the country, do not
permit expansion of the existing plant

FACTORS GOVERNING PLANT LOCATION Plant location studies are

conducted in three phases: (i) (ii) (iii) 1. General territory selection Community
selection, and Site selection Proximity to market: Page 6
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. The ratio of selling
costs to sales generally increases with distance. Therefore, in the choice of location
o the plant, the factor of “proximity to the market” is given the highest priority.
Locating a plant nearer to the market is preferred if: • The • The • The • The
significantly product is fragile. product is susceptible to spoilage. promptness of
service is required. product is relatively inexpensive and transportation costs add to
the cost.

Bread, soap factories, etc. require the market to be nearby. If factory cannot be
started in Bombay, it may be started in Thane, Kalyan or Poona. If the product is
exported, location near ports is desirable. This is particularly important for
producers who sell bulky commodities, which incur high transportation costs

Nearness to market not only lowers transportation costs but also gives many other
benefits namely: • A good many administrative problems, which cause perpetual
headaches and add to costs, are avoided. • Liaison with dealers or whole sellers can
be maintained economically and easily • Other costs such as commission to
middlemen, which at times run as high as 20 to 50 percent can be reduced
significantly. • Customer’s accounts do not remain outstanding for settlement. This
recovery is easy and less time saving which itself reduces selling costs. 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 in the neighborhood
of some source which can meet the raw materials requirement of the unit
“Proximity to supply of raw materials” factor assumes still greater importance if
raw materials are of perishable nature or if they are expensive to transport, or if
their weight is substantially reduced by processing. Proximity to sources of raw
materials is equally important for small units. This is because usually small units
are not considered important customers. Page 7
POM3 They get least priority and in the event of scarcity are the one to be struck
off first from the list. The availability of materials to small units to a large extent
thus depends on their follow up and personal visits to the supplier’s plant which is
possible only if the buyer’s plant is close by. 3. Infrastructural facilities:

Infrastructural facilities consider availability of utilities like power water, disposal

of waste etc. These form the life-blood of many types of industries without which
there facilities may come to a stand still. Underestimating the need of any one of
the utilities can be extremely costly and inconvenient. Certain industries, for
example, aluminium, steel, etc are power intensive and must be located close to the
sites of power generation failing which the shortage of, or increase in cost of
generating power may spell problems for their survival. Similarly, chemical
process industries like paper and pulp, cement, steel, sugar laundries, metal plating,
food preparation etc. requires perennial source of water. Mineral content of water
may also be an important factor. Treatment of water is an expense to be considered
while comparing economics of different locations. Drainage facilities are important
for process industries otherwise disposal of process waster can create lot of
difficulties. 4. Transport facilities:

Transportation cost to the value added is a key determinant of the plant location.
The structure of the transportation cost depends on (i) Characteristics of the
commodity (ii) average distance of shipment (iii) medium of shipment: rail, road,
and air sea. The need for transport arises because raw materials and fuel are to be
moved to factory site and finished goods are to be transported from factory to
markets. Other things being equal since transport cost has a major effect on product
cost, the regions well served by transport facilities are most suitable for industrial
locations. 5. Labour and wages:

Plant location should be such that required labour is easily available in the
neighbourhood. Importing labour from outside is usually costly and it causes lot of
administrative problems. Availability of required labour locally is better since
problem of arranging accommodation and other related problems do not arise.
Since normally workers with specific skills are required, some sort of training
facility should also be available in the neighborhood. Skilled employees are easily
available if ITI’s, or Engineering colleges are there in the neighbourhood. 6.
Legislation and taxation:

POM3 The policies of the state Government and Local Bodies relating to issue of
licenses, building codes, labour laws, etc. are the factors in selecting/rejecting a
particular community/site. In order to disperse industries and ensure balanced
economic growth, both Central and State government offer a package of incentives
for setting up industries in particular locations. Exemption from excise duty, sales
tax and octroi, soft loans from financial institutions, subsidy in electricity charges,
etc. are some of the incentives offered. Since taxes and duties levied by the State
Government and Local bodies substantially influence product cost, the incidence of
such taxes/levies must be taken into account while selecting a community/site. 7.
Climatic conditions:

Climatic factors may not have a major influence these days because of modern air
conditioning facilities available today. However, it may be important factor for
certain industries like textile mills, which require high humidity. 8. Industrial and
labour attitudes:

Community attitudes towards supporting hostile trade union activities are an

important factor. Locating facilities in a certain region/community may not be
desirable as frequent labour problems and interruptions are harmful to the plant in
the long run. Political situation in the state and attitude of the government towards
labour activities also influences selection of the site for the plant. 9. Safety
requirement:

Safety factor may be important for certain industries such as: Nuclear power plants
Explosive factories Location of such industries close to border areas is undesirable.
10.Community facilities (or social infrastructure):

Community facilities imply accommodation, educational, entertainment and

transport facilities. Accommodation is needed unless the employees are local
residents. Accommodation should be easily available, comparatively cheap and
near some public transport stop. The locational area should be fully developed, be
accessible by road and should have a convenient and efficient public transport
system operating between the area and the township to enable employees, officials,
customers and suppliers to make easy trips for their work Page 9
POM3 11. Community attitudes:

Community attitudes towards work (i.e. whether the people in the location are hard
working or otherwise) as well as their attitudes towards the incoming entrepreneurs
(helpful and cooperative or otherwise) can make or mar an industry. Locational
decisions, therefore, must take such factors also into account particularly while
setting up labour intensive units.
12.Supporting industries and services:

Locational factors should also include proximity of services needed by the firm. A
firm desirous of getting some or all parts made from outside or some of the
operations done from outside must see that such sub-contractors are located in the
neighbourhood. Getting a job done from units located at far off places will mean
not only additional transportation cost but also time consuming and costly. Also if
units are too far off, the control on quality of work done by them cannot be
exercised. 13. Suitability of the land:

Site selection should also take into account topography and soil structure of the
land. The soil structure must be capable of bearing loads of foundations. Though
modern building techniques can overcome the limitations of the soil, but if
considerable improvement is required then selection of a low cost and may
ultimately turn out to be expensive.

14.Availability and cost of the land:

Site size (Plot size) must be large enough to accommodate the present production
facilities, parking and access facilities but also leave sufficient room for future
expansion. As a general rule, a site five times the actual plant size is considered
minimum for all these things including future expansion.

ECONOMY SURVEY OF THE SITE SELECTION: An ideal location is one

where the cost of obtaining materials and processing them into finished product
plus the cost of distributing the finished product to customers is minimum.
Q.12 (a) What is critical path? What does it signify? How is it identified?
Answer.2)(a) Critical path analysis, an important aid to planning, scheduling and
coordinating the activities if large scale projects. Is a synthesis of two independent
techniques: Programme Evaluation and Review Technique (PERT) and Critical
Path Method (CPM). Though the two techniques were developed independently,
they are only superficially different. The two method have many features in
common and are now combined into a technique called Critical Path Analysis
(CPA) or Network Analysis. There are three basic different between a PERT
network and CPM network: • PERT is event oriented while CPM is activity
oriented (i.e. PERT prepares network from events while CPM builds if from
activities) • PERT provides for an allowance for uncertainty while CPM does not
(i.e. PERT makes three time estimates for each activity while CPM makes one time
estimate)

Page 16
POM3 • Activity time in CPM technique are related to costs while it is not so in
PERT since it is event oriented Significance of critical path Critical path analysis
offers several advantages. It

(i) Forces through pre-planning. Each and every activity compromising the project
is identified and recorded. Nothing is left to memory or chance which prevents
crises in scheduling (ii) Increases coordination of tasks as technological
relationship between the activities suggests which activities can run simultaneously
and which should succeed others. (iii) Helps computations of different project
duration’s for different level of resources and thereby select a plan that minimizes
total project cost. (iv) Indicates optimal start and finish times of each activity of the
project. (v) Defines areas of responsibility of different departmental heads for
timely execution of the project. (vi) Facilitates progress reporting and limits
unnecessary discussion at the progress meetings. (vii) Identifies troubles spot often
in advance and apply remedial measures. (viii) Enables the plan to be revised in
accordance with changes/changing circumstances. (ix) Helps to exercise “control
by exception” and prevents cost overruns. A Project comprises a series of activities
and the identification of the individual activities requires knowledge and
experience of the men responsible for the planning of the project. Even the
preliminaries-mere listing of the activities-make the operating personnel: • Think
of details about the project well in advance.

• Observe critically the way in which the various activities interact or compete for
scarce resources • Improve upon the original plans even before network is formally
drawn and analyzed. A project, therefore, must be torn into a set of identifiable
activities. are no set rules but general guidelines are as under: There

• An activity should represent the smallest unit of the operation or set of operations
over which management desires control. • An activity should represent an
operation or set of operations, which can be performed using a particular kind of
equipment or a special skill. For example in construction project, plumbing is
considered as one activity while wiring can be considered as another activity since
the first activity requires plumbers and the second activity needs electricians.
Page 17
POM3

Q.12) (b) Activity 1-2 1-3 1-4 2-5 3-5 4-5 4-6 5-6 Optimistic 02 03 02 04 02 06 01
01 04 05 02 03 02 05 03 05 Most Likely 10 06 10 01 12 04 08 13 Pessimistic

Answer:

Page 18
POM3 (a) Expected time of an activity can be obtained from the three time
estimates using the formula: te = a + 4m +b 6 where a m b a m b te = = = = = = =
Optimistic time most likely time pessimistic time 2 3 10

For activity (1-2)

2 + 4 x 3 + 10 6 24 6 = 4

te

Expected times of all activities of the network, calculated on above lines, are
tabulated below. Activity 1-2 1-3 1-4 2-5 3-5 4-5 4-6 5-6 Three time estimates 02-
03-10 4 02-04-06 4 02-06-10 6 01-01-01 1 04-05-12 6 02-03-04 3 02-05-08 5 03-
05-13 6 Expected time

66

44

61
Page 19
POM3 Critical path is 1-3,3-5,5-6 and the duration for the project is 16 weeks
(4+6+6) Variance is

Vi

(b –a) X (b – a) 6 6 4 9 16 9 25 9

V1-3

V3-5

V5-6

VV

==

V1-3 + V3-5 + V5-6 5 = T - Tcp

Standard deviation Z ? = ?5 19 -16

= 2.236 = 1.34

The approximate probability value when Z = 1.34 is 0.9099 ?The probability of

completion of critical path by the schedule time of 19 weeks = 91% Q.5) What is
preventive maintenance? Why it is better than Breakdown Maintenance? What are
the key activities of Preventive Maintenance? Answer.5) Preventive maintenance
anticipates failures and adopts necessary actions to check failures before they
occur. It includes activities like inspection, lubrication cleaning and unkeeps, minor
adjustments and replacements found necessary at the time of inspection etc.
Preventive maintenance can be either: running maintenance or “shut down
maintenance”. Running maintenance includes maintenance activities (e.g. minor
adjustments In machines revealed through inspections, lubrication, cleaning and
unkeep etc.) Which are carried out when the machine is still running. Shutdown
maintenance includes preventive maintenance activities such as minor component
replacement whose needs are identified through inspections, which require
stoppage of Machines. Page 20
POM3 Preventive inspection is one of the key activities of preventive maintenance
which is usually performed by making use of human senses – watch) eye), listen
(ear), Touch (hand, leg, body) smell (nose) and taste (tongue) – but the trend is
Changing towards use of condition monitoring instruments. Such maintenance.
Practice is known as predictive maintenance or condition based maintenance.

Q.10) (a) What are X-R Charts? How are they made and used in controlling a
process? Answer.10) X-R chart is a pair of chart consisting of a average (called X
chart) and a range Chart (called R chart) placed one below another on a piece of
graph paper. The X chart is used to control the mean value of the characteristic an
R-chart is used to restrict the range of variations in the values. X-R charts are
drawn when the characteristics are measurable. Each chart consists of three values:
a central line, upper control limit and lower control limit. The central line
represents the arithmetic average of the sample means which equals the mean of
the population, u. The upper and lower control limits are located at three standard
deviation on either side of the central line. Samples of fixed size are drawn at
regular intervals and measurements are taken. The samples wise values of the
mean and range are plotted in their respective X and R charts. The spread of
sample points in the charts is studied to decide the remedial action (if any) to be
taken. The X chart analyses whether or not the mean of the quality Characteristics
is within control while R-chart analyses whether or not the variability is within
control. STEPS TO PREPARE X-R CHART A pre-requisite to the preparation of
the chart is the decision on the following aspects: • Quality Characteristics refer to
the property of the product, which is to be assessed. The quality characteristics
must be capable of being measured. In case of more than quality characteristics,
separate chart is made for each quality characteristic. • Sample size refers to
number of pieces comprising each sample. Sample size is an important decision. It
is a common practice to use sample of n = 4 or 5 to have low appraisal cost. Large
samples such as n = 15 or 20 are used if the process standard deviation is large. •
Sample Population refers to the number of samples to be collected to construct a
control chart. The number of samples must be sufficient. Usually, 20 samples each
of size 4 or 5 are enough to have good estimates of the process average (X) and
dispersion (R). • Time Interval measures the time gap between consecutive
samples. Time interval, as a genera rule, should be proportional to the average
frequency of out-of-control conditions. It is a fairly complex decision since a
number of factors such as cost economy, susceptibility of the process to Page 21
POM3 disturbances; convenience of the inspector etc. requires to be considered.
The making of X-R Charts involves the following Steps: Step 1: Collect Data

(a) Collect sufficient samples spread over a reasonable period. Each sample must
be of equal size. (b) Measure each component comprising the sample for the given
quality characteristic (c) Record individual measurements on a work data sheet.
Step 2: Calculate mean (X) and Range (R) of each sample

A The mean which is written as X (X bar) is average of each sample and is

Obtained by totaling the individual measurements of the units comprising the
sample and dividing the total by the sample size (number of units in each sample)
B The range, which is written as R, is obtained as the difference between the
highest and the lowest measurement of a sample. C The values of X and R are
recorded sample wise either on the extreme right of the individual measurements
on the data sheet or in a separate table.

Step 3: Calculate grand Average (X) and mean Range (R) A The grand average,
which is written as, X (X double bar) is the average of the sample averages and is
obtained by dividing the total of the averages of all the samples by the total number
of samples. B The mean range, which is written as, R (R bar) is the average of the
ranges and is obtained by dividing the total of the ranges of the samples by the
total number of samples.

Step 4:

Set up Control chart for the average

A Set up a control chart with the central line drawn at X (X double bar), upper
control limit located X + A2R (R bar) and the lower control limit set up at X-A2R.
B Plot the averages to see whether the process was under control when samples
were drawn. C If all points fall within the control limits, the process is said to be
under control D If process is not under control (indicated by some points falling
outside the control limits), eliminate points outside the control limits and compute
new trial control limits for the remaining points. E Repeat step 4 (d) until all points
fall within the control limits F Control limits in a particular situation should be
revised from time to time as additional data is accumulated. Step 5: Calculate
control limits of the range chart Page 22
POM3 A The control chart for range chart is set up with central line as R, upper
control limit (UCLR) located at D4R above the central line and lower control limit
(LCL) at D3R below the central line B Plot the value of the range of each sample.
C If all points fall within the control limits no modification is necessary unless it is
desired to reduce the process dispersion D if range chart exhibits lack of control
indicated by some points falling outside the control limits, eliminate those points
out of control and compute new trial control limits E Repeat step 5 (d) until all
points fall within the control limits. F Control limits in a practical situation should
be revised time to time as additional data is accumulated.

Step 6: Use control chart A Collect samples of fixed size at specified intervals of
time. B Measure each unit of the sample for the quality characteristics, calculate
mean and the range of each sample. C charts D action Plot the values of X and R of
each sample in their respective Study the trend of the points to interpret and
suggest remedial

Q10 (b) ABC company produces a solvent, which must contain 3 percent of
alcohol. It tries to maintain the actual percentage at 3 + 0.3 percent. It tests hourly
in samples of five. The following table shows the results of last five samples. Set
up a control chart for mean and examine whether the process is under control. A)
Solution: (i) Collect data (ii) Calculate mean (X bar) and range(R bar)

Page 23
Sample No. 1 2 3 4 5 (iii) X(X bar) 2.92 2.98 3.06 3 3

POM3 Arithmetic Mean (X bar) Range(R) 0.3 0.1 0.1 0 0.2

Calculate grand average and the mean range = 2.92 + 2.98 + 3.06 + 3 + 3 5 = 2.992

0.3 + 0.1 + 0.1 + 0 + 0.2 5 = 0.14

(iv)

Set Up control chart for the average = = 2.992 UCLx = X (X bar) + A2.R(R bar)

Central Line = CLx = X(X bar) Upper Control Limit = = 2.992 + 0.5768 x 0.14
3.476

Lower Control Limit = = 2.992 - 0.5768 x 0.14 2.507

UCLx = X (X bar) - A2.R(R bar)

(v)
Set up a range chart = R(R bar) = LCLR = = 0.14 D3.R (R

Central line CLR Lower control limit bar)

0 x 0.14

POM3 = Lower control limit bar) = 0 UCLR = D4.R (R

==

2.114 x 0.14 0.29596

POM3 One of the most commonly used approaches consists of following steps:
Step 1: Prepare a list of all relevant factors.

Step 2: Estimate expenses on materials, transport, wages, power etc for each
location on each of the above factors. Step 3: Collect data on intangible factors like
community facilities, community attitudes etc. Step 4: Analyse the tangible data
for each location and calculate rate of return on investment. Step 5: Select
provisionally a locational based on financial data.
Step 6: Compare the intangible data for the different locations and select the
optimal location considering intangible data. Q.3) (b) What are objectives of a
good layout? Discuss any six principles of a good layout? Answer.3)(b)
OBJECTIVE OF A GOOD PLANT LAYOUT Only through an efficient layout, the
organization can attain the following objectives: (i) (ii) (iii) (iv) (v) Economy in
handling of materials, work-in-process and finished goods. Minimization of
product delays. Lesser work-in-progress and minimum manufacturing cycle time.
Efficient utilization of available space. Easy supervision and better production
control.

(vi) Greater flexibility for changes in product design and for future expansion. (vii)
Better working conditions by eliminating causes of excessive noise, objectionable
odor smoke etc.

PRINCIPLES OF A GOOD LAYOUT (i) Overall integration of factors: A good

layout is one that integrates men, materials, machines and supporting activities and
others in a way that the best compromise is obtained No layout can satisfy each
and every principle of a good layout. Page 11 Some
POM3 criterion may conflict with some other criterion and as a result no layout
can be ideal it has to integrate all factors into the best possible compromise. (ii)
Minimum movement: A good layout is one that permits the minimum movement
between the operations. The plant and machinery in case of product layout and
departments in case of process layout should be arranged as per sequence of
operations of most of the products. ? Since straight line is the shortest distance
between any two points, men and materials as far as possible should be made to
move along the straight path A door may be made in a wall or a hole may be drilled
in a ceiling if that eliminates or reduces material handling in place of stairs or a
distant door.

(iii) Uni-direction flow: A good layout is one that makes the materials move only
in the forward direction, towards stage of completion, with any backtracking. ?
Since straight line is the shortest distance between any two, points, materials as far
as possible should be made to move on the principle of straight line flow. And
when straight line flow is not possible, other flows like U-shaped flow, circular
flow or zig zag flow may be adopted, but the layout may ensure that materials
move in the forward direction (Fig 4.1) ? To ensure forward flow, equipment if
necessary may be duplicated.

(iv) Effective use of available space: A good layout is one that makes effective use
of available space both horizontal and vertical • Backtracking and duplicated
movements consume more time, involve un-necessary materials handling, add to
cost and lead to inefficiency. • Raw materials, work-in-progress and finished goods
should be piled vertically one above another rather than being strewn on the floor. •
Pallets or equivalents should be made use of to pile up several layers one above
another • Area below the work tables or in the cupboards built into the wall are
welcome since they reduce requirement of space

(v) Maximum visibility: A good layout is one that makes men, machines and
materials ready observable

POM3 at all times.

• All departments should be smoothly integrated, convenient to service and easy to
supervise • Every piece of positioning or screening or partitioning should be
scrutinized and carefully planned. • Special cupboards, enclosures, offices,
partitions etc. should be avoided except when their utility is established beyond
doubt. (vi) Maximum accessibility: A good layout is one that makes all servicing
and maintenance point readily accessible. • Machines should be kept sufficiently
apart and with reasonable clearance from The wall so that lubrication, adjustment
and replacement of belts, removal of parts at the time of repairs etc can be done
conveniently by the maintenance staff. Area in front of electrical panels and fire
extinguishers should be kept free from obstructions.

Q.4) How does production planning differ from production control? What are
the key functions of production planning and control?
Answer.4) Production planning versus production control. Planning (Planning the
work) Control (Working the Plan) Planning involves collection and maintenance of
data regarding time standards, materials and their specifications, machines and
their quantities, tools and their process capabilities, drawings and operational
layouts etc. Planning is seeing that requirements tool, machines, men, instructions,
authorization and the like-will be available at the right time and in the right
quantities and are of proper quality. Planning involves preparations of load charts
and fitting various work orders into uncommitted time available on the company’s
facilities (men or machines). Planning involves preparation of all necessary forms
and paper work. Planning involves designing suitable feed back as to what may
happen.

Planning involves forwarding thinking regarding the remedial action to be taken if

the job falls behind schedule. Planning therefore is a centralized Page 13
POM3 Activity (in the office) and includes such functions as materials control,
tools control, process planning and scheduling. Control involves dissemination of
data preparation of reports regarding output, machine and labour efficiency,
percent defectives etc.
Control is seeing the requirements are actually made available at the right place
and in the right quantities.

Control involves actual seeing that the jobs are started and completed as per
schedule prepared by the scheduling cell of the PPC. Control involves actual issue
of forms and paper work. Control involves keeping track of what is happening and
collecting information as to what has happened. Control involves suggesting
remedial action when the job is falling behind schedule. Control is thus a diffused
activity (in the shops) and includes functions such as dispatching, progressing and
expediting.

FUNCTIONS OF PRODUCTION PLANNING AND CONTROL: Production

planning and control is normally assigned two sets of functions: (I)Regular
functions and (ii) Optional functions. (i) Regular functions are those, which are
generally assigned to PPC in most of the organizations through the importance of
the function, may vary from industry to industry. (ii) Optional functions are those,
which may be assigned to PPC depending upon policy of the management of the
firm.
POM3 Common (or Regular Functions) Optional Functions

Order Preparation includes activities like making of work orders, converting work
orders to shop orders, preparing auxiliary orders and releasing such orders to those
concerned to authorize their activities

Materials control concerns preparations of materials estimates, indenting non-stock

materials, ascertaining availability of materials purchased to stock, continual
follow-up with purchase and stores for timely receipt of materials, and advising
stores to allocate required quantities or available materials (alternatively on their
receipt) against specific shop orders.

Process planning or Routing concerns fixation of method of manufacture:

operations and their sequence, machine tool for each operation, jigs and fixtures,
measuring instruments and gauges etc. to enable shops to produce goods of the
right quality at the lowest cost. Tools control concerns preparations of estimates of
cutting tools (Standards as week As non-standards tools), gauges and measuring
instruments, jigs and fixtures etc indenting non-stick tooling: follow up with tool
room for timely manufacture of jigs and fixtures; periodical replenishment of
worn-out-non-consumable tooling (e.g. work arbors, collets, copying masters,
Allen keys, spanners, etc.

Scheduling concerns preparation of machine loads, fixation of calendar dates of

various operations to be performed on a job, coordination with sales to confirm
delivery dates of new items and periodical preparation of dispatch schedules of
regular items.

Dispatching concerns preparation and distribution of shop orders and

manufacturing instructions to the concerned department as their authority to
perform the work according to the predetermined schedule. Progressing concerns
collection of data from manufacturing shops, recording of progress of work, and
comparing progress against the plan. Expediting concerns intensive progress
chasing to identify delays and interruptions which may hold up production,
devising cures from time to time to keep rate of production in line with the
schedule, communicating possible failure in delivery commitments to Sales
Department. Cost Estimation concerns preparations of Preproduction cost
estimates to be used by sales department for quotation purposes (Alternatively this
may be assigned to Costing Department Or Industrial Engineering Department)

POM3 Work measurement concern fixation of time to be allowed to a qualified

workman to carry out a specific task, under specified conditions and at the defined
level of performance. Work measurement employs scientific, well-known
techniques like time study, work sampling standard data, production study,
analytical estimating etc. (Alternatively, work measurement function may be
assigned to Industrial Engineering department. Sub-Contract concerns offloading
of certain work on outside vendors for economic reasons or to augment the existing
manufacturing facilities (Sub-contract work alternatively) be handled by
Materials/purchase Department)

Capacity planning concerns estimation of requirements of men and machines as the

basis of decision making to meet the firm’s increased volume of business (Some
companies prefer to assign this function to Engineering department.

Demand forecasting concerns making projection of company’s product market.

Though, long term forecasts are given by Sales Department but short term
forecasts required for materials planning, machine loading, sub contracting etc may
be prepared by PPC department
Q.6) What is method study? Describe the procedural steps to develop easier and
effective methods. Answer.6) Method study is the systematic recording and critical
examination of existing and proposed ways of doing work, as a means of
developing and applying easier and more effective methods and reducing costs.
Method study is an organized approach and its investigation rests on the following
six basic steps outlined in the block diagram • Select the work to be analyzed. •
Record all facts relating to the existing method. • Examine the recorded facts
critically but impartially. • Develop the most economical method commensurate
with plant Requirements • Install the new method as standard practice. • Maintain
the new method.

Selection of the job Selections of the jobs to be studied for methods improvement
by the method study practioner is a managerial responsibility and it (selection) may
be based on economic technical or human consideration. Economic consideration
justifies selection based on the economic worth (i.e. money saving potential) of the
job. Technical consideration identifies jobs, which require studies to overcome
manufacturing difficulties (excessive rejection, relaxation in prefixed performance
standards, inability if the shops to stick to specified machining parameters such as
speeds, feeds, depth of cut etc., inconsistent quality etc.) Human consideration in
job selection is usually given weightage while introducing method study practices
for the first time. Recording of facts Systematic recording is the most crucial step
in method improvement. Since recording by long hand (or by descriptive method)
has its limitations, it is not recommended for use in method study. Instead, five
symbols and eight charting conventions are used to record facts relating to the job
under study.

POM3 Five typical symbols are O, ||, ?, D and V and eight charting conventions
concern composition of the chart, reject, rework, repletion, change of state,
introducing of new material, combined events and numbering of events. The
document on which details of the process are recorded by the above referred
symbols and conventions is called chart. There are four basic types of chart: (i)
operation process chart (ii) Flow process chart (iii) multiple activity charts and (iv)
two handed process chart. Besides charts, two types of diagrams-flow diagram and
string diagram are drawn when recording details of an existing layout. Travel chart
is another typical chart, which is used to record frequency of movements (weight x
distance) between work centres/departments.
Repetitive short cycle operation which involves quick hand/feel motions (i.e.
microscopic motions) may be studied with micro motion study. Glibreth, founder
father of micro motion study, also developed photographic techniques called
cyclograph and chronocylegraph to record path of the motions of the members of
the body. Critical examination Critical examination aims to analyze the facts
critically and thereby give rise to alternatives, which form the basis of selection
and development of easier, and effective methods. Critical examination is
conducted through a systematic and methodical questioning process. Each activity
recorded on the chart, whether it relates to processing or inspection, or material
handling, or to any other aspect, is picked up one at a time and is examined
minutely. The questioning process is considered under five major heads, namely
the purpose, the place, the sequence, the person and the means. These five aspects
in critical examination are referred to as five governing considerations.
Development and selection: Development and selection stage concerns short listing
of ideas generated at the critical examination stage, testing each short listed idea
for its technical and economic feasibility, and making selection among the
alternatives wherever choice exists. To develop ideas and to ascertain their
technical and economical feasibility, the method study practioner needs to solicit
the cooperation of personnel from different departments of the company. Various
techniques available for the development and selection purpose are: cost benefit
analysis, break even analysis, investment analysis and critical path analysis.
Installation ‘Installation’ (or implementation) of the proposed method involves
preparation of project report on recommendations making oral presentation to the
top

POM3 management, securing approval of the decision maker, assisting line

management during implementation, arranging training of workmen, and getting
jobs (operations) retime after implementation, arranging training of workmen, and
getting jobs (operations) retimed after implementation. Maintenance “
Maintenance” phase is the follow up phase after implementation, which serves as a
monitoring and control mechanism. It helps to ensure that the revised methods are
set into concrete and workmen do not revert back to old methods. It also provides
an opportunity to the practitioner to assess the effectiveness of the approach
followed by him and makes changes in the methodology (if required).
Q.9) (a) What desirable conditions need to be present to be present to guarantee
success of an incentive scheme? Answer.9) A good wage incentive plan should
have the following characteristics. • Administrative simplicity: The incentive
system should be simple and must be easily understood by the workers and their
representatives. An incentives scheme, which can be understood, only by engineers
and mathematicians or a scheme which involves the use of complex formulate or
references and cross-references is sure to fail. The incentive scheme should be such
that workmen can calculate their own earnings easily and quickly. • Minimum
clerical work: The system should fit into existing system of production and cost
control. should not involve any significant addition to the clerical work.

It

• Maximum coverage: The system should cover as many workmen as possible. A

scheme if applied to a few workmen creates a demoralizing effect on the morale of
those not covered by the scheme. • Direct Incentive payments should increase at
least in direct proportion to the increase in output by the operator. There are two
reasons: Firstly because it is more difficult to producer extra units and secondly
because saving in the overheads are far greater at higher levels of production. •
Period of Payment The period of payment should be as short as possible •
Adequate guaranteed minimum hourly rate The scheme must ensure adequate
guaranteed minimum hourly rate to all Page 27
POM3 incentive workers regardless of their output. Such an hourly guaranteed rate
is normally referred to as the guaranteed base rate. The guaranteed base rate must
be realistic and should be at least equal to the hourly rate payable to a non-
incentive worker doing similar job in the industry. Incentive earnings of the
workers should never be regarded as a substitute for poor wages. • Accurate and
yet attainable performance standards Performance standards should be set through
systematic work measurement studies. The experts to that there is no dispute or
malpractice and yet the standards are attainable so that a worker working at normal
pace can attain them should base the standards of measurement on the assessment.

Further the incentive plan should be such that it provides an opportunity to all
average workers to earn reasonable earnings. • Consistency of the standards
Standards once fixed should not be changed unless there is a permanent change in
methods, or change in equipment, or change in material and plan should provide
for the provisions to modify the performance standards. • Inbuilt check on process
rejections A good incentive scheme should exercise a check on the operator against
achieving higher bonus by poor workmanship. Payment should be made only for
pieces declared acceptable by the inspection department and a workman constantly
producing substandard pieces should be liable for disciplinary action. • Payment of
partially completed jobs The problem of payment for the incomplete work arises
only in case of long cycle jobs. Situations do arise when the jobs are of very long
cycle duration and cannot be finished within the bonus period. Similarly, a semi-
finished job may require to be handed over by one operator to another at the end of
shift, or prior to having a holiday. The scheme should clearly spell out as how
assessment of work done by the workmen on the same job will be carried out and
how disputes arising out of such assessment would be resolved. • Payment of Idle
Time Adequate safeguards must be provided to compensate the operator for the
time lost due to reasons beyond his control. A good incentive scheme should
ensure that an operator does not suffer financial loss for reasons attributable to the
managerial weakness, e.g.: lack of material due to bad buying, breakdowns of the
machines due to poor maintenance practices, non-availability of work etc. Thus an
operator rendered idle because of factors attributable to the management should be
given a lieu bonus.
Page 28
POM3 • Safeguards The scheme should be fair not only to the employees but also
to the employer. Safeguarding clauses as under should be incorporated to protect.
a. Management’s right to change a standard when there are changes in methods.
Materials and machines b. Management’s right to withdraw or discontinue
temporarily a scheme during bad period. c. Management’s right to initiate
disciplinary action against operators who continually produce sub-standard articles.
d. Management’s right to initiate disciplinary action against employees who, time
and again, do not achieve minimum standard of production even in the presence of
fair and accurate standards. e. Management’s right to initiate disciplinary action
against employees who, time and again are found using speeds and feeds higher
than those recommended in the process sheet (or operational layouts) • Maximum
ceiling on the earnings The system should have built-in-control against higher
earnings beyond a certain limit. Firstly, the system should discourage workers to
work beyond a certain limit otherwise too attractive an incentive scheme may
induce the worker to work more and more and thereby adversely affect his health.
Secondly, the system should ensure that in case of loose standards the company
does not lose financially. • Consistency of Plan The plan should be consistent over
a period of time. Frequent changes in the plan make it’s functioning difficult. Faith
in plan is lost if there are frequent revisions. • Acceptance of Labour Body The
scheme should finally have acceptance of the labour body. The body of workers’
representatives to prevent any misunderstanding and ill-feeling later on must
accept the basic incentive plan and its provisions. • Continuous Use The scheme
should be in continuous use. The temporary use of the scheme in good times and
its discontinuation in bad times makes it’s functioning difficult. • Define End
Results The plan must result in reduction in per unit labor cost.

Page 29
POM3

Q 13) Answer 13) i) Average Cycle time = 0.22 + 0.24 + 0.28 + 0.26 + 0.25 5 =
Normal Time = 0.25

Observed time x Rating 100 = 0.25 x 80 100 0.2

Similarly, average cycle time and normal time for all the elements are calculated
and tabulated as below Element A B C D E Avg. cycle time 0.25 80 0.15 100 0.35
120 0.102 90 0.12 100 Rating 0.2 0.15 0.42 0.0918 0.12 Normal time

Total Normal time

= Page 30

0.2 + 0.15 + 0.42 + 0.0918 +

POM3 0.12 Total Normal time = 0.9818

ii)

Relaxation Allowance

15 100 =

0.9818

0.1473 x 0.9818

Contingency Allowance

5 100 0.0491

?Standard time

=
Normal time + Relaxation Allowance + Contingency Allowance = ?Standard time
0.9818 + 0.1473 + 0.0491 = 1.1782